Exhibit 10.A
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SECURITIES PURCHASE AGREEMENT
dated as of December 20, 2000
by and among
THE FINOVA GROUP INC.
and
LEUCADIA NATIONAL CORPORATION
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TABLE OF CONTENTS
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ARTICLE I DEFINITIONS.....................................................1
1.1 Definitions.....................................................1
1.2 Terms Defined Elsewhere in the Agreement........................7
1.3 Other Definitional Provisions...................................8
ARTICLE II PURCHASE OF SERIES B PREFERRED STOCK AND WARRANTS...............9
2.1 Authorization of Issue..........................................9
2.2 Purchase of Series B Preferred Stock and Warrant................9
2.3 Closing.........................................................9
ARTICLE III PURCHASER'S REPRESENTATIONS....................................10
3.1 Corporate Existence............................................10
3.2 Corporate Power; Authorization; Enforceable Obligations........10
3.3 Investment Intention...........................................10
3.4 Accredited Investor............................................11
3.5 Sufficiency of Funds...........................................11
ARTICLE IV COMPANY'S REPRESENTATIONS AND WARRANTIES.......................11
4.1 Authorized and Outstanding Shares of Capital Stock;
Options and Other Rights to Acquire Capital Stock..............11
4.2 Authorization and Issuance of the Securities...................12
4.3 Securities Laws................................................12
4.4 Corporate Existence; Compliance with Law.......................13
4.5 Subsidiaries...................................................13
4.6 Corporate Power; Authorization; Enforceable Obligations........13
4.7 SEC Documents..................................................14
4.8 Financial Statements...........................................14
4.9 No Undisclosed Liabilities.....................................14
4.10 Absence of Certain Changes.....................................15
4.11 Ownership of Property..........................................16
4.12 Material Contracts.............................................17
4.13 Environmental Matters..........................................17
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TABLE OF CONTENTS
(CONTINUED)
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4.14 Labor Matters..................................................20
4.15 Taxes..........................................................20
4.16 No Litigation..................................................21
4.17 Brokers........................................................21
4.18 [Intentionally left blank].....................................22
4.19 Intellectual Property..........................................22
4.20 ERISA..........................................................22
4.21 Insurance......................................................25
4.22 Related Party Transactions.....................................25
4.23 Opinions of Financial Advisor..................................25
4.24 Takeover Statutes..............................................25
4.25 Amendment to the Company Rights Agreement......................26
4.26 Refinancing Representations....................................26
4.27 Financing Contracts; Portfolio Property........................26
4.28 Full Disclosure................................................27
ARTICLE V COVENANTS RELATING TO CONDUCT OF BUSINESS......................27
5.1 Conduct of Business of Company.................................27
5.2 Access to Information..........................................29
ARTICLE VI ADDITIONAL AGREEMENTS..........................................30
6.1 Commercially Reasonable Efforts................................30
6.2 Supplemental Disclosure........................................30
6.3 Announcements..................................................30
6.4 No Solicitation................................................31
6.5 Refinancing of Existing Company Bank Debt......................32
6.6 Certificate of Designations....................................32
6.7 Board Representation...........................................32
6.8 Management Fee.................................................33
6.9 Reservation of Common Stock....................................33
6.10 Legends........................................................33
6.11 Rights Offering................................................34
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TABLE OF CONTENTS
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6.12 Retention Program..............................................35
6.13 Alternative Transaction........................................35
6.14 Sharing Distribution...........................................36
6.15 Taxes..........................................................40
6.16 Merger or Consolidation, Liquidation or Dissolution............40
6.17 Further Assurances.............................................40
ARTICLE VII CONDITIONS PRECEDENT....................................40
7.1 Conditions to Each Party's Obligations.........................40
7.2 Conditions to Obligations of Purchaser.........................41
7.3 Conditions to Obligations of Company...........................42
ARTICLE VIII TERMINATION AND AMENDMENT...............................42
8.1 Voluntary Termination..........................................42
8.2 Effect of Termination..........................................44
8.3 Fees and Expenses..............................................44
8.4 Break-Up Fee...................................................44
8.5 Amendment......................................................45
8.6 Extension; Waiver..............................................45
ARTICLE IX INDEMNIFICATION.........................................45
9.1 Survival of Representation and Warranties......................45
9.2 Indemnification................................................45
9.3 Procedures.....................................................46
ARTICLE X MISCELLANEOUS...........................................46
10.1 Notices........................................................46
10.2 Binding Effect; Benefits.......................................47
10.3 Complete Agreement.............................................48
10.4 Assignability..................................................48
10.5 Remedies.......................................................48
10.6 Section and Other Headings.....................................48
10.7 Severability...................................................48
10.8 Counterparts...................................................49
10.9 Governing Law; Waiver of Jury Trial............................49
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Exhibit A Certificate of Designation - Convertible Preferred Stock
Exhibit B Warrant
Exhibit C Registration Rights Agreement
Exhibit D Management Agreement
iv
SECURITIES PURCHASE AGREEMENT
SECURITIES PURCHASE AGREEMENT, dated as of December 20, 2000, by and among
The FINOVA Group Inc., a Delaware corporation having an office at ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇ ("Company"), and Leucadia
National Corporation, a New York corporation having an office at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ("Purchaser").
WITNESSETH:
WHEREAS, Company has agreed to issue and sell to Purchaser, and Purchaser
has agreed to purchase from Company, upon the terms and conditions hereinafter
provided, (i) one million shares of Company's Series B Convertible Preferred
Stock, $0.01 par value per share, the terms, preferences and limitations of
which are set forth in the Certificate of Designation attached as EXHIBIT A
hereto (the "Series B Preferred Stock"), and (ii) a ten-year warrant to purchase
shares of Company's Common Stock, $0.01 par value per share ("Common Stock"),
substantially in the form attached as EXHIBIT B hereto; and
WHEREAS, as soon as practicable following the purchase of the Series B
Preferred Stock by Purchaser, Company will issue up to an additional six hundred
thousand shares of Company's Series C Convertible Preferred Stock, $0.01 par
value per share, the terms, preferences and limitations of which are set forth
in the Certificate of Designation attached as EXHIBIT A hereto and which are
identical to those of the Series B Preferred Stock (the "Series C Preferred
Stock" and together with the Series B Preferred Stock, the "Convertible
Preferred Stock"), upon exercise of rights to be issued by Company to its
existing holders of Common Stock, and Purchaser has agreed to act as a standby
purchaser of up to four hundred thousand shares of Series C Preferred Stock that
are not subscribed to by holders of Common Stock or their transferees in such
rights offering.
NOW, THEREFORE, in consideration of the premises and the covenants
hereinafter contained, it is agreed as follows:
ARTICLE I
DEFINITIONS
1.1 DEFINITIONS. For purposes of this Agreement, the following terms shall
have the meanings set forth below:
"Acquisition Proposal" shall mean any proposal or offer of any Person,
other than a proposal or offer by Purchaser or any of its Affiliates, relating
to (i) any merger, consolidation, share exchange, recapitalization, business
combination or other similar transaction involving Company, (ii) any sale, lease
or exchange, mortgage, pledge, transfer or other disposition of 20% or more of
the assets of Company, in a single transaction or in a series of transactions or
(iii) any tender offer, exchange offer for securities of Company or any purchase
or other acquisition of beneficial ownership of 20% or more of the equity of
Company (or securities convertible into 20% or more of the equity of Company).
Notwithstanding the foregoing, "Acquisition Proposal" shall not include any
transaction set forth on SCHEDULE 1.1A.
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"Affiliate" shall mean, with respect to any Person, any other Person
directly or indirectly controlling, controlled by or under common control with
such Person. The term "control" (including, with correlative meaning, the terms
"controlled by" and "under common control with"), as used with respect to any
Person, means the possession, directly or indirectly, of the power to direct or
cause the direction of the management and policies of such Person, whether
through the ownership of voting securities, by contract or otherwise.
"Bank Debt" shall mean Company's existing indebtedness to the Lenders in
the principal amount of approximately $4.7 billion as of December 18, 2000
pursuant to the agreements set forth on SCHEDULE 1.1B.
"Board of Directors" shall mean the Board of Directors of Company.
"Bond Indebtedness" shall mean indebtedness outstanding as of the date
hereof and issued pursuant to the indentures set forth on SCHEDULE 1.1C.
"Business Day" shall mean any day that is not a Saturday, a Sunday or a day
on which banks are required or permitted to be closed in the State of New York.
"Certificate of Designation" shall mean the Certificate of Designation,
Rights and Preferences setting forth the rights and preferences of the
Convertible Preferred Stock attached as EXHIBIT A hereto.
"Common Stock" shall have the meaning set forth in the recitals hereto.
"Convertible Preferred Stock" shall have the meaning set forth in the
recitals hereto.
"Credit Enhancement" shall mean any (i) security deposit, unapplied advance
rental payment or dealer investment, (ii) investment certificate, certificate of
deposit, authorization to hold funds, hypothecation of account or like
instrument, (iii) letter of credit, repurchase agreement, agreement of
indemnity, guarantee, lease guarantee bond or postponement agreement, (iv)
recourse agreement, (v) security agreement, (vi) Property, (vii) certificate
representing shares or the right to purchase capital of or interests in, any
Person or (viii) bond or debenture, in each case pledged, assigned, mortgaged,
made, delivered or transferred as security for the performance of any obligation
under or with respect to any Financing Contract.
"DGCL" shall mean the General Corporation Law of the State of Delaware, as
amended from time to time.
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"ERISA" shall mean the Employee Retirement Income Security Act of 1974 (or
any successor legislation thereto), as amended from time to time and any
applicable regulations thereunder.
"ERISA Affiliate" shall mean, with respect to Company, any trade or
business (whether or not incorporated) under common control with Company and
which, together with Company, are treated as a single employer within the
meaning of Sections 414(b), (c), (m) or (o) of the IRC, excluding Purchasers and
each other person which would not be an ERISA Affiliate if Purchasers did not
own any issued and outstanding shares of stock of Company.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended,
and all rules and applicable regulations thereunder.
"Executive Officer" shall mean those officers of Company and the
Subsidiaries designated as executive officers for SEC reporting purposes.
"Financing Contract" shall mean any contract (including any schedule or
amendment thereto or assignment, assumption, renewal or novation thereof) in
existence on or prior to the Closing in the form of (i) a lease of or rental
agreement with respect to Property, (ii) a sale contract (including an
installment sale contract or conditional sale agreement) arising out of the sale
of Property, (iii) a secured or unsecured financing of Property, or (iv) a
secured or unsecured loan, and in each case, which with respect thereto: (A)
Company is the lessor, seller, lender, secured party or obligee (whether
initially or as an assignee), or (B) is between an obligor, on the one hand, and
a lessor, seller, obligee, secured party or assignee of any of the foregoing, on
the other hand, and (1) which would be a Financing Contract if Company were the
lessor, seller, obligee, secured party or assignee of any of the foregoing
thereunder and (2) with respect to which Company is an assignee of the revenues
or claims with respect thereto.
"GAAP" shall mean generally accepted accounting principles in the United
States of America as in effect from time to time.
"Governmental Authority" shall mean any nation or government, any state or
other political subdivision thereof, and any agency, department or other entity
exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government.
"HSR Act" means the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976,
as amended.
"IRC" shall mean the Internal Revenue Code of 1986, as amended, and any
successor thereto.
"IRS" shall mean the Internal Revenue Service, or any successor thereto.
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"Lenders" shall mean the banks, other financial institutions and other
lenders who are lenders to Company pursuant to the credit agreements set forth
on SCHEDULE 1.1B.
"Lien" shall mean any mortgage or deed of trust, pledge, hypothecation,
assignment, deposit arrangement, lien, charge, claim, security interest,
easement, encumbrance (including, without limitation, any conditional sale or
other title retention agreement and any financing lease having substantially the
same economic effect as any of the foregoing).
"Material Adverse Effect" shall mean, with respect to any Person, a
material adverse effect (i) on the business, assets, operations or financial
condition of such Person and its Subsidiaries, if any, taken as a whole, or (ii)
on the ability of such Person to perform on a timely basis any material
obligation under this Agreement or any other Transaction Document or to
consummate the transactions contemplated hereby or thereby, except any such
effect resulting from or arising in connection with (a) changes in circumstances
or conditions affecting the financial services industry in general or affecting
any segment thereof in which such Person or its Subsidiaries operates, (b)
changes in general economic or regulatory conditions or financial markets in the
United States or, (c) any transaction to which Purchaser shall have consented or
requested in writing. Notwithstanding the foregoing, (x) none of the matters set
forth in SCHEDULE 1.1C shall constitute a "Material Adverse Effect" with respect
to Company and (y) any acceleration of Company's Bond Indebtedness shall
constitute a "Material Adverse Effect" with respect to Company.
"Material Contracts" means (i) all of Company's and its Subsidiaries'
contracts, agreements, leases or other instruments to which Company or any of
its Subsidiaries is a party or by which Company, its Subsidiaries or its
properties are bound, which involve payments by Company or its Subsidiaries of
more than $15 million annually, (ii) all of Company's and its Subsidiaries' loan
agreements, bank lines of credit agreements, indentures, mortgages, deeds of
trust, pledge and security agreements, factoring agreements, conditional sales
contracts, letters of credit or other debt instruments which represent
obligations of Company or its Subsidiaries in excess of $15 million, (iii) all
non-competition agreements which restrict Company's ability to compete, (iv) all
contracts for the employment of any officer or employee of Company or its
Subsidiaries who is still employed with the Company or its Subsidiaries and
received an annual compensation for 1999 in excess of $250,000 or who will
receive base compensation in 2000 in excess of $200,000 or which has a term of
more than 3 years, (v) all consulting agreements which require minimum payments
by Company in excess of $1,000,000 annually and (vi) all other material
contracts not made in the Ordinary Course of Business; provided, however, that
"Material Contracts" shall not include any agreements, financing agreements,
leases, Financing Contracts, Credit Enhancements or other similar agreements
between Company or its Subsidiaries and borrowers, lessees, guarantors or
customers entered into in the Ordinary Course of Business.
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"Non-Disclosure Agreement" means the Confidentiality Agreement between
Purchaser and Company dated August 14, 2000.
"NYSE" shall mean the New York Stock Exchange, Inc.
"Ordinary Course of Business" shall mean the ordinary and usual course of
business of Company, consistent with Company's past practices. Ordinary Course
of Business shall not include any material modification to any Benefit Plan,
compensation agreement, arrangement or policy (except to the extent to reflect
changes in position, responsibilities or duties) without the consent of
Purchaser.
"PBGC" shall mean the Pension Benefit Guaranty Corporation or any successor
thereto.
"Permit" shall mean any domestic or foreign, federal, state, provincial,
local, municipal or other governmental consent, license, permit, franchise,
concession, grant, authorization, approval, exemption or similar right.
"Permitted Lien" shall mean Taxes and general and special assessments not
in default and payable without penalty and interest; other Liens which do not
materially interfere with Company's or any of its Subsidiaries' use and
enjoyment of the property to which they relate or materially detract from or
diminish the value thereof; ▇▇▇▇▇▇▇'▇, mechanic's and other similar Liens; Liens
relating to assets which have been leased to Third Parties in the Ordinary
Course of Business; Liens reflected in the Company Financial Statements and the
notes thereto; Liens on any property or assets of a Subsidiary granted in favor
of Company or any of its Subsidiaries; and Liens granted with the consent of
Purchaser.
"Person" shall mean any individual, sole proprietorship, partnership,
limited liability company, joint venture, trust, unincorporated organization,
association, corporation, institution, public benefit corporation, entity or
government (whether federal, state, county, city, municipal or otherwise,
including, without limitation, any instrumentality, division, agency, body or
department thereof).
"Portfolio Property" shall mean Property with respect to which Company is
the lessor, seller or secured party, as the case may be, pursuant to the terms
of a Financing Contract (whether initially or as an assignee).
"Property" shall mean all property and assets of whatsoever nature
including but not limited to personal property, whether tangible or intangible,
and claims, rights and chooses in action.
"Purchaser" shall have the meaning set forth in the recitals hereto.
"Registration Rights Agreement" shall mean the Registration Rights
Agreement by and between Company and Purchaser, substantially in the form
attached hereto as EXHIBIT C, as such agreement may be amended, supplemented or
otherwise modified from time to time in accordance with the terms thereof.
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"Schedule" shall refer to one of several written Schedules to this
Agreement, each of which is hereby incorporated into and made a part of this
Agreement for all purposes.
"SEC" shall mean the U.S. Securities and Exchange Commission, or any
successor thereto.
"Securities" shall mean the Series B Preferred Stock and the Warrant.
"Securities Act" shall mean the Securities Act of 1933, as amended, and all
rules and regulations promulgated thereunder.
"Series B Preferred Stock" shall have the meaning set forth in the recitals
hereto.
"Series C Preferred Stock" shall have the meaning set forth in the recitals
hereto.
"Subsidiary" shall mean, with respect to any Person, (i) each corporation,
partnership, joint venture or other legal entity of which such Person owns,
either directly or indirectly, more than 50% of the stock or other equity
interests the holders of which are generally entitled to vote for the election
of the board of directors or similar governing body of such corporation,
partnership, joint venture or other legal entity, (ii) each partnership in which
such Person or another Subsidiary of such Person is the general or managing
partner and (iii) each limited liability company in which such Person or another
Subsidiary of such Person is the managing member or otherwise controls (by
contract, through ownership of membership interests or otherwise).
"Tax" or "Taxes" shall mean any and all domestic or foreign, taxes,
charges, fees, imposts, levies or other assessments by any Governmental
Authority, including all net income, gross receipts, capital, sales, use, ad
valorem, value added, transfer, franchise, profits, inventory, capital stock,
license, withholding, payroll, employment, social security, unemployment,
excise, severance, stamp, occupation, property and estimated taxes, customs
duties, fees, assessments and charges of any kind whatsoever, together with any
interest and any penalties, fines, additions to tax or additional amounts
imposed by any taxing authority (domestic or foreign) and shall include any
liability in respect of Taxes as a transferee or as an indemnitor, guarantor,
surety or in a similar capacity under any contract, Tax sharing agreement, Tax
indemnity agreement, Tax reimbursement agreement, Tax assumption agreement,
arrangement, agreement, understanding or commitment (whether oral or written)
and any liability in respect of Taxes which is payable by reason of contract,
assumption, operation of law, Treasury Regulation Section 1.1502-6 (or any
predecessor or successor thereof or any analogous or similar provision under
state, local or foreign law) or otherwise.
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"Tax Return" shall mean any report, return, statement, information return
or other information required to be supplied to a taxing authority in connection
with Taxes (including any attachment thereto or amendment thereof), including,
but not limited to, any claim for refund, declaration of any estimated Tax and
combined or consolidated return for any group of entities that includes Company
or any of its Subsidiaries.
"Treasury Regulation" shall mean the regulations, including but not limited
to proposed and temporary regulations, promulgated under the IRC, as amended
from time to time.
"Third Party" shall mean any Person other than Purchaser and Company.
"Transaction Documents" shall mean this Agreement, the Certificate of
Designation, the Warrant and the Registration Rights Agreement.
"Warrant" shall mean the Warrant to purchase Common Stock to be issued by
Company to Purchaser hereunder, substantially in the form attached hereto as
EXHIBIT B.
References to this "Agreement" shall mean this Securities Purchase
Agreement, including all amendments, modifications and supplements and any
exhibits or schedules to any of the foregoing, and shall refer to the Agreement
as the same may be in effect at the time such reference becomes operative.
1.2 TERMS DEFINED ELSEWHERE IN THE AGREEMENT. For purposes of this
Agreement, the following terms have the meanings set forth in the sections
indicated:
TERM SECTION
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Actual Gain 6.14
Actual Loss 6.14
After-Tax Gain 6.14
After-Tax Loss 6.14
Agent Banks 6.4(b)
Baseline 6.14
Benefit Plans 4.20
Closing 2.3
Closing Date 2.3
Company Financial Advisors 4.23
Company Financial Statements 4.8
Company Representatives 6.4
Company Rights Agreement 4.25
Company SEC Documents 6.4(b)
Covered Transactions 6.4(b)
Damages 9.2
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TERM SECTION
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Downside Distribution 6.14
Environmental Costs and Liabilities 4.13(a) (i)
Environmental Law 4.13(a) (ii)
Environmental Permits 4.13(b)
Fully Diluted Equity 6.14
Hazardous Material 4.13(a) (iii)
Indemnified Party 9.3
Indemnifying Party 9.3
Material Adverse Effect 7.2(a)
Old S/H Ownership 6.14
Other Equity Ownership 6.14
Portfolio 6.14
Preferred Ownership 6.14
Preferred Percentage of Other Equity 6.14
Purchaser Designees 6.7
Refinancing 6.5
Registration Statement 6.11(b)
Release 4.13(a) (iv)
Remedial Action 4.13(a) (v)
Rights 4.25
Rights Offering 6.11(a)
Rights Ownership 6.14
Rights Percentage of Other Equity 6.14
Sharing Amount 6.14
Standby Shares 6.11(a)
Superior Proposal 6.4
Term Sheet 6.4(b)
TOPrS 4.1
Upside Distribution 6.14
Warrant Ownership 6.14
Warrant Percentage of Other Equity 6.14
1.3 OTHER DEFINITIONAL PROVISIONS. (a) Any accounting term used in this
Agreement shall have, unless otherwise specifically provided herein, the meaning
customarily given such term in accordance with GAAP.
(b) The words "hereof", "herein", and "hereunder" and words of similar
import, when used in this Agreement, shall refer to this Agreement as a whole,
including the Exhibits and Schedules hereto, as the same may from time to time
be amended, modified or supplemented, and not to any particular provision of
this Agreement.
(c) Terms defined in the singular shall have a comparable meaning when used
in the plural, and vice versa.
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(d) The terms "dollars" and "$" shall mean United States dollars unless
otherwise stated.
(e) The term "including" shall be deemed to be immediately followed by the
term "but not limited to."
(f) The term "knowledge" as it applies to the knowledge of Company, means
the knowledge of any of the individuals named on SCHEDULE 1.3(E) (the "Company
Officers") in each case after due inquiry.
(g) Whenever in this Agreement a party is permitted to make a decision or
take an action in its "sole and absolute discretion" or terms of similar
latitude, such Person shall be entitled to consider only such interests and
factors as it desires and shall have no duty or obligation to give any
consideration to any interest of, or factors affecting, any other Person.
ARTICLE II
PURCHASE OF SERIES B PREFERRED STOCK AND WARRANTS
2.1 AUTHORIZATION OF ISSUE. Prior to the Closing, Company shall have duly
authorized the issuance and sale to Purchaser of (i) the number of shares of
Series B Preferred Stock set forth in Section 2.2(a) below, (ii) the Warrant and
(iii) the aggregate number of shares of Common Stock issuable upon conversion of
the Series B Preferred Stock and exercise of the Warrant.
2.2 PURCHASE OF SERIES B PREFERRED STOCK AND WARRANT. (a) Subject to the
terms and conditions set forth in this Agreement, Purchaser agrees to subscribe
for and purchase from Company, and Company agrees to issue and sell to
Purchaser, on the Closing Date an aggregate of one million shares of Series B
Preferred Stock containing the terms, preferences and limitations set forth in
the Certificate of Designation.
(b) Subject to the terms and conditions set forth in this Agreement,
Company agrees to issue to Purchaser, on the Closing Date, the Warrant
containing the terms set forth in EXHIBIT B hereto.
(c) The aggregate purchase price for the aggregate number of shares of
Series B Preferred Stock subscribed for by Purchaser and the Warrant is
$250,000,000, payable in full on the Closing Date. Notwithstanding anything to
the contrary contained herein, Company and Purchaser hereby further acknowledge
and agree that for United States federal, state and local income tax purposes
such aggregate purchase price shall be allocated between the Series B Preferred
Stock and the Warrant. This allocation shall be determined in accordance with
applicable rules, and for this purpose Purchaser shall provide good faith
determinations of the value of each of the Series B Preferred Stock and the
Warrant. Company and Purchaser agree to use the foregoing allocation for all tax
purposes.
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(d) The parties hereto acknowledge that, pursuant to the Certificate of
Designation and Section 6.14 of this Agreement, Company in 2006 may be required
to make a payment to the holders of the Series B Preferred Stock and Purchaser,
depending upon certain results of Company's operations through 2005. Company and
Purchaser agree to treat any such payment as a reduction to the purchase price
for the Securities for all Tax purposes.
2.3 CLOSING. (a) The closing of the purchase and sale of the Series B
Preferred Stock and the issuance of the Warrant (the "Closing") shall take place
within five Business Days after the satisfaction or waiver of the conditions set
forth in Article VII hereof or such date and time as shall be mutually agreed to
by the parties hereto (the "Closing Date") at the offices of Weil, Gotshal &
▇▇▇▇▇▇ LLP, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇, or such other place as shall
be mutually agreed to by the parties hereto.
(b) On the Closing Date, Company will deliver to Purchaser (i) a
certificate representing the Series B Preferred Stock and (ii) the Warrant to be
purchased by Purchaser against delivery by Purchaser of the purchase price
therefor by wire transfer of immediately available funds to an account of
Company designated in writing by Company no later than two Business Days prior
to the Closing.
ARTICLE III
PURCHASER'S REPRESENTATIONS
Purchaser makes the following representations and warranties to Company,
each and all of which shall survive the execution and delivery of this Agreement
and the Closing hereunder:
3.1 CORPORATE EXISTENCE. Purchaser is a corporation duly organized, validly
existing and in good standing under the laws of its jurisdiction of
incorporation with all requisite power to enable it to own, lease and operate
its assets and properties and to conduct its business as currently being
conducted and is qualified and in good standing to do business in each
jurisdiction in which the nature of the business conducted by it or the
character or location of the properties owned or leased by it requires such
qualification, except where the failure to be so duly qualified and in good
standing does not and would not reasonably be expected to have, individually or
in the aggregate, a Material Adverse Effect on Purchaser.
3.2 CORPORATE POWER; AUTHORIZATION; ENFORCEABLE OBLIGATIONS. The execution,
delivery and performance by Purchaser of this Agreement and the other
Transaction Documents to be executed by it: (i) are within Purchaser's corporate
power; (ii) have been duly authorized by all necessary corporate action; (iii)
are not in contravention of any provision of Purchaser's certificate of
incorporation or by-laws; and (iv) will not violate any law or regulation
applicable to Purchaser, or any order or decree of any court or governmental
instrumentality binding on Purchaser. This Agreement has been, and at or prior
to the Closing Date, each of the other Transaction Documents to which Purchaser
is a party shall have been, duly executed and delivered by Purchaser and this
Agreement constitutes, and at the Closing date each of the other Transaction
Documents to which Purchaser is a party will constitute, the legal, valid and
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binding obligations of Purchaser, enforceable against it in accordance with
their respective terms, subject to applicable bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and similar laws affecting creditors'
rights and remedies generally, and subject, as to enforceability, to general
principles of equity, including principles of commercial reasonableness, good
faith and fair dealing (regardless of whether enforcement is sought in a
proceeding at law or in equity).
3.3 INVESTMENT INTENTION. Purchaser is purchasing the Securities for its
own account, for investment purposes and not with a view to the distribution
thereof. Purchaser will not, directly or indirectly, offer, transfer, sell,
assign, pledge, hypothecate or otherwise dispose of any of the Securities (or
solicit any offers to buy, purchase, or otherwise acquire any of the
Securities), except in compliance with the Securities Act. Neither Purchaser nor
any Person acting on its behalf has taken or will take action (including,
without limitation, any offering of any securities of Company under
circumstances which would require the integration of such offering with the
offering of the Securities under the Securities Act and the rules and
regulations of the SEC thereunder) which might subject the offering, issuance or
sale of the Securities to the registration requirement of Section 5 of the
Securities Act.
3.4 ACCREDITED INVESTOR. Purchaser is an "accredited investor" (as that
term is defined in Rule 501 of Regulation D under the Securities Act) and by
reason of its business and financial experience, it has such knowledge,
sophistication and experience in business and financial matters as to be capable
of evaluating the merits and risks of the prospective investment, is able to
bear the economic risk of such investment and is able to afford a complete loss
of such investment.
3.5 SUFFICIENCY OF FUNDS. Purchaser has sufficient cash to consummate the
transactions contemplated by this Agreement.
ARTICLE IV
COMPANY'S REPRESENTATIONS AND WARRANTIES
Company makes the following representations and warranties to Purchaser
except as otherwise contemplated by this Agreement or as set forth in the
Schedules to this Agreement:
4.1 AUTHORIZED AND OUTSTANDING SHARES OF CAPITAL STOCK; OPTIONS AND OTHER
RIGHTS TO ACQUIRE CAPITAL STOCK. The authorized capital stock of Company
consists of (i) 400,000,000 shares of Common Stock, $0.01 par value per share
and (ii) 20,000,000 shares of Preferred Stock, par value $0.01 per share, of
which (A) 600,000 shares have been designated as Series A Junior Participating
Preferred Stock and reserved for issuance under the Company Rights Agreement,
and (B) 250,000 shares of Preferred Stock are reserved for issuance under the
Benefit Plans. As of December 11, 2000, there were outstanding: (i) 61,301,410
11
shares of Common Stock; (ii) employee and director stock options to purchase an
aggregate of 3,964,601 shares of Common Stock; (iii) performance-based
restricted stock agreements that provide for the issuance of up to 482,510
shares of Common Stock, (iv) trust originated preferred securities ("TOPrS")
convertible into 2,938,020 shares of Common Stock, and (v) no shares of
Preferred Stock. As of December 11, 2000, 3,547,895 shares of Common Stock were
held by Company in its treasury or by Company's Subsidiaries. All of such issued
and outstanding shares are validly issued, fully paid and non-assessable. Since
December 11, 2000, no options, warrants or other securities convertible into or
exchangeable for capital stock of Company have been issued or otherwise
committed by Company to be issued, except as provided for in this Agreement.
Other than (i) as set forth on SCHEDULE 4.1, and (ii) in connection with the
transactions contemplated by the Transaction Documents, (a) there is no existing
option, warrant, call, commitment or other agreement to which Company is a party
requiring, and there are no convertible securities of Company outstanding which
upon conversion would require, the issuance of any additional shares of capital
stock of Company or other securities convertible into shares of equity
securities of Company, other than the Securities, (b) there are no agreements to
which Company is a party with respect to the voting or transfer of the capital
stock of Company or with respect to any other aspect of Company's affairs, and
(c) there are no stockholders' preemptive rights, nor are there any rights of
first refusal or other similar rights with respect to the issuance of capital
stock by Company to which Company is a party. Except as set forth on SCHEDULE
4.1, there are no voting trusts or other agreements or understandings to which
Company or any of its Subsidiaries is a party with respect to the voting of
capital stock of Company.
4.2 AUTHORIZATION AND ISSUANCE OF THE SECURITIES. (a) The issuance and sale
of the Securities has been duly authorized by all necessary corporate action on
the part of Company and, upon delivery to Purchaser of the Securities against
payment in accordance with the terms hereof, the Securities will have been
validly issued and the Series B Preferred Stock will be fully paid and
non-assessable), free and clear of all Liens and preemptive rights. The issuance
of shares of Common Stock upon conversion of the Convertible Preferred Stock and
exercise of the Warrant has been duly authorized by all necessary corporate
action on the part of Company and, when issued upon conversion of the
Convertible Preferred Stock and exercise of the Warrant, as applicable, in each
case in accordance with their respective terms such Common Stock will have been
validly issued and fully paid and non-assessable. Company has duly reserved
1,000,000 shares of Series B Preferred Stock for issuance pursuant to this
Agreement, 600,000 shares of Series C Preferred Stock for issuance pursuant to
the Rights Offering and 317,539,000 shares of Common Stock for issuance pursuant
to the terms of the Convertible Preferred Stock and the Warrant.
(b) The Board of Directors has, by unanimous vote of those present (who
constituted 100% of the directors then in office), duly and validly authorized
the execution and delivery of this Agreement and the other Transaction Documents
and approved the consummation of the transactions contemplated hereby and
thereby, and taken all corporate actions required to be taken by the Board of
Directors for the consummation of the transactions contemplated hereby and
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thereby and has resolved to deem this Agreement and the other Transaction
Documents and the transactions contemplated hereby and thereby, taken together,
advisable and fair to, and in the best interests of, Company and its
stockholders.
4.3 SECURITIES LAWS. In reliance on the investment representations
contained in Sections 3.3 and 3.4, the offer, issuance, sale and delivery of the
Securities, as provided in this Agreement, are exempt from the registration
requirements of the Securities Act and all applicable state securities laws.
Neither Company nor any Person acting on its behalf has taken or will take any
action (including, without limitation, any offering of any securities of Company
under circumstances which would require the integration of such offering with
the offering of the Securities under the Securities Act and the rules and
regulations of the SEC thereunder) which might subject the offering, issuance or
sale of the Securities to the registration requirements of Section 5 of the
Securities Act.
4.4 CORPORATE EXISTENCE; COMPLIANCE WITH LAW. Company and each of its
Subsidiaries (i) is a corporation, partnership or limited liability company duly
formed, validly existing and in good standing under the laws of the State of
Delaware in the case of Company and set forth on SCHEDULE 4.4 in the case of its
Subsidiaries; (ii) is duly qualified as a foreign corporation, partnership or
limited liability company and in good standing under the laws of each
jurisdiction where its ownership or lease of property or the conduct of its
business requires such qualification (except for jurisdictions in which such
failure to so qualify or to be in good standing would not have a Material
Adverse Effect on Company); (iii) has the requisite corporate, partnership or
limited liability company power and authority and the legal right to own,
pledge, mortgage or otherwise encumber and operate its properties, to lease the
property it operates under lease, and to conduct its business as now being
conducted; (iv) has, or has applied for, all material Permits from or by, and
has made all material filings with, and has given all material notices to, all
Governmental Authorities having jurisdiction, to the extent required for such
ownership, operation and conduct; (v) is in compliance with its certificate or
articles of incorporation and by-laws or, if not a corporation, its governing
documents; and (vi) is in compliance with all applicable provisions of law,
except with respect to clauses (ii) through (vi) where such failure,
individually or in the aggregate, would not have a Material Adverse Effect on
Company.
4.5 SUBSIDIARIES. SCHEDULE 4.4 sets forth a complete list of Subsidiaries
of Company. Except for TOPrS and the related convertible debentures, there are
no options, warrants, rights to purchase or similar rights covering capital
Stock for any such Subsidiary.
4.6 CORPORATE POWER; AUTHORIZATION; ENFORCEABLE OBLIGATIONS. Except as set
forth on SCHEDULE 4.6, the execution, delivery and performance by Company of
this Agreement, the other Transaction Documents to which it is a party, the
issuance and sale of the Securities and the consummation of the other
transactions contemplated by any of the foregoing: (i) are within Company's
corporate power and authority; (ii) have been duly authorized by all necessary
13
corporate action; (iii) are not in contravention of any provision of Company's
certificate of incorporation or by-laws; (iv) will not violate any law or
regulation applicable to Company or its Subsidiaries, or any order or decree of
any court or governmental instrumentality binding upon Company or its
Subsidiaries; (v) will not conflict with or result in the breach or termination
of, the loss of any benefit to which Company is entitled under, constitute a
default or require any payment to be made by Company under, or accelerate any
performance required by, any indenture, mortgage, deed of trust, loan, credit
agreement, lease, agreement or other instrument to which Company or any of its
Subsidiaries is a party or by which Company, any of its Subsidiaries or any of
their property is bound; (vi) will not result in the creation or imposition of
any Lien upon any of the property of Company or any of its Subsidiaries and
(vii) do not require the consent or approval of, or any filing with, any
Governmental Authority or any other Person (except (A) for the filing of the
Certificate of Designation with the Secretary of State of the State of Delaware,
(B) for those filings required by the Exchange Act, (C) for those filings
required by the Registration Rights Agreement, (D) for those required by the HSR
Act and (E) to the extent previously obtained or made), other than, in the case
of clauses (iv) through (vii), any such violation, conflict, breach,
termination, loss, default, payment, acceleration, creation, imposition or
failure to obtain the consent or approval, individually or in the aggregate,
that would be immaterial to the Company and its Subsidiaries taken as a whole or
to the Company's ability to own its assets and conduct its business. At or prior
to the Closing Date, each of this Agreement and the other Transaction Documents
shall have been duly executed and delivered by Company and each shall then
constitute a legal, valid and binding obligation of Company, enforceable against
it in accordance with its terms, subject to applicable bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and similar laws affecting
creditors' rights and remedies generally, and subject, as to enforceability, to
general principles of equity, including principles of commercial reasonableness,
good faith and fair dealing (regardless of whether enforcement is sought in a
proceeding at law or in equity), and the Certificate of Designation shall have
been duly filed with the Secretary of State of the State of Delaware.
4.7 SEC DOCUMENTS. Company has made available to Purchaser a true and
complete copy of each report, schedule, registration statement and definitive
proxy statement filed by Company with the SEC since January 1, 1998 and prior to
the date of this Agreement, as any such filings have been amended or restated
(the "Company SEC Documents"), which are all the documents (other than
preliminary material) that Company was required to file with the SEC since such
date. As of their respective dates, the Company SEC Documents complied in all
material respects with the requirements of the Securities Act or the Exchange
Act, as the case may be, and the rules and regulations of the SEC thereunder
applicable to such Company SEC Documents, and none of the Company SEC Documents
contained any untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading.
4.8 FINANCIAL STATEMENTS. The financial statements of Company included in
the Company SEC Documents (the "COMPANY FINANCIAL STATEMENTS") comply as to form
14
in all material respects with applicable accounting requirements and with the
published rules and regulations of the SEC with respect thereto, have been
prepared in accordance with GAAP applied on a consistent basis during the
periods involved (except as may be indicated in the notes thereto) and fairly
present (subject, in the case of the unaudited financial statements, to normal,
recurring audit adjustments) the consolidated financial position of Company and
its consolidated Subsidiaries as at the dates thereof and the consolidated
results of their operations and cash flows for the periods then ended.
4.9 NO UNDISCLOSED LIABILITIES. Except as and to the extent publicly
disclosed by Company in the Company SEC Documents filed as of the date of this
Agreement, none of Company or any of its Subsidiaries has any material
indebtedness or obligations, contingent or otherwise, including, without
limitation, liabilities for charges, long-term leases or unusual forward or
long-term commitments, required to be included in a financial statement prepared
in accordance with GAAP, other than:
(a) liabilities and obligations disclosed or provided for in the Company
Financial Statements or in the notes thereto or in any of the Company SEC
Documents;
(b) liabilities and obligations incurred or entered into in the Ordinary
Course of Business since the date of the most recent financial statements
included in the Company SEC Documents that would not, individually or in the
aggregate, have, or be reasonably expected to have, a Material Adverse Effect on
Company; and
(c) liabilities and obligations under this Agreement or incurred in
connection with the transactions contemplated hereby.
4.10 ABSENCE OF CERTAIN CHANGES. Except as disclosed in the Company SEC
Documents or as set forth on SCHEDULE 4.10, since September 30, 2000 there has
not been any event, occurrence or development or a state of circumstances or
facts that has had or could be reasonably expected to have a Material Adverse
Effect on Company. Except as set forth on SCHEDULE 4.10, as disclosed in the
Company SEC Documents or as contemplated by this Agreement, since September 30,
2000:
(a) neither Company nor any of its Subsidiaries has sold, leased,
transferred, or assigned any of its assets, tangible or intangible, other than
in the Ordinary Course of Business;
(b) no Person (including Company) has accelerated, terminated, modified, or
canceled any Material Contract other than in the Ordinary Course of Business;
(c) neither Company nor any of its Subsidiaries has canceled, compromised,
waived or released any right or claim (or series of related rights and claims),
in any case, material to Company and its Subsidiaries, taken as a whole, other
than in the Ordinary Course of Business;
15
(d) there has been no change made or authorized in the certificate of
incorporation or bylaws of Company;
(e) neither Company nor any of its Subsidiaries has experienced any
material damage, destruction or loss (whether or not covered by insurance) to
its tangible property that had or would reasonably be expected to have a
Material Adverse Effect on Company;
(f) neither Company nor any of its Subsidiaries has made any loan to, or
entered into any other transaction with, any of its directors, officers or
employees, except for any advances made to employees in the Ordinary Course of
Business;
(g) neither Company nor any of its Subsidiaries has (i) granted any
material increase in the compensation of any of its directors, Company Officers
or, to the extent material individually or in the aggregate, of any of its
officers, employees, consultants or independent contractors, or made any other
material change in employment terms for any of its directors, Company Officers
or, to the extent material individually or in the aggregate, officers, employees
or, to the extent material individually or in the aggregate, in the terms of its
agreements with any consultants or independent contractors except, in each case,
to the extent to reflect changes in responsibility, position, or duties or (ii)
adopted, amended or modified in any material respect or terminated any bonus,
profit-sharing, incentive, stock option, severance, retention, or other plan,
contract, or commitment for the benefit of any of the directors, officers, and
employees of the Company or its Subsidiaries (or taken any such action with
respect to any other Benefit Plan);
(h) neither Company nor any of its Subsidiaries has made or rescinded any
material express or deemed election relating to Taxes, settled or compromised
any material claim, action, suit, litigation, proceeding, arbitration,
investigation, audit or controversy relating to Taxes, entered into any Tax
ruling, agreement, contract, arrangement or plan, filed any amended Tax Return,
or except as may be required by applicable law, made any change to any of its
material methods of reporting income or deductions for federal income Tax
purposes from those employed in the preparation of its most recently filed
federal income tax return;
(i) there has not been any declaration or payment of any dividends, other
than regular quarterly dividends declared and paid with respect to the TOPrS, or
other distributions in respect of the outstanding shares of Company or any
Subsidiary of Company (except for any dividends declared by any Subsidiary that
was paid solely to Company);
(j) neither Company nor any Subsidiary has entered into a contract or
settlement with any taxing authority;
(k) neither Company nor any Subsidiary has entered into any arrangement or
commitment, whether written or oral, to do any of the foregoing.
16
4.11 OWNERSHIP OF PROPERTY. Except as set forth on SCHEDULE 4.11(A),
neither Company nor any of its Subsidiaries owns any real estate. Each of
Company and its Subsidiaries has good and marketable and insurable fee simple
title to its material owned real property, free and clear of all Liens. Each of
Company and its Subsidiaries has valid and marketable leasehold interests in the
leases described in SCHEDULE 4.11(B) hereto, and, except as set forth on
SCHEDULE 4.11(B), good and marketable title to, or valid leasehold interests in,
all of its other material properties and assets free and clear of all Liens
other than Permitted Liens.
All material real property leased or subleased by Company and its
Subsidiaries is set forth on SCHEDULE 4.11(B). Each of such leases is valid and
enforceable in accordance with its terms (subject to applicable bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and similar laws
affecting creditors' rights and remedies generally, and subject, as to
enforceability, to general principles of equity, including principles of
commercial reasonableness, good faith and fair dealing (regardless of whether
enforcement is sought in a proceeding at law or in equity)) and is in full force
and effect. Company has made available to Purchasers true and complete copies of
each of such leases set forth on SCHEDULE 4.11(B) and all documents affecting
the rights or obligations of Company or any of its Subsidiaries, including,
without limitation, any non-disturbance and recognition agreements,
subordination agreements, attornment agreements and agreements regarding the
term or rental of any of the leases. Except as set forth on SCHEDULE 4.11(B),
none of Company, any of its Subsidiaries nor, to its knowledge, any other party
to any such lease is in default of its obligations thereunder or has delivered
or received any notice of default under any such lease, nor has any event
occurred which, with the giving of notice, the passage of time or both, would
constitute a default under any such lease. None of such leases is subject to any
Liens, other than Permitted Liens.
Except as disclosed on SCHEDULE 4.11(C), and except for leveraged,
operating and financing leases entered into with Company or its Subsidiaries as
lessor or sublessor, neither Company nor any of its Subsidiaries is obligated
under or a party to, any option, right of first refusal or any other contractual
right to purchase, acquire, sell, assign or dispose of any material real
property owned or leased by Company or such Subsidiary.
4.12 MATERIAL CONTRACTS. Other than (i) Material Contracts included in the
Company SEC Documents and (ii) any other Material Contracts entered into after
the date hereof in accordance with Section 5.1 hereof, SCHEDULE 4.12 contains a
true, correct and complete list and description of all Material Contracts. Each
Material Contract is a valid and binding agreement of Company or its
Subsidiaries (as the case may be) enforceable against Company or such Subsidiary
in accordance with its terms (subject to applicable bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and similar laws affecting
creditors' rights and remedies generally, and subject, as to enforceability, to
general principles of equity, including principles of commercial reasonableness,
good faith and fair dealing (regardless of whether enforcement is sought in a
proceeding at law or in equity)), and neither Company nor any of its
Subsidiaries has any knowledge that any Material Contract is not a valid and
17
binding agreement against the other parties thereto. Except as set forth in
SCHEDULE 4.12, Company and each of its Subsidiaries has fulfilled all
obligations required pursuant to the Material Contract to have been performed by
Company or such Subsidiary on its part. Except as set forth in SCHEDULE 4.12,
neither Company nor any of its Subsidiaries is in default or breach, nor to
Company's or such Subsidiary's knowledge is any third party in default or
breach, under or with respect to any Material Contract.
4.13 ENVIRONMENTAL MATTERS. (a) For purposes of this Agreement:
(i) "Environmental Costs and Liabilities" means any and all losses,
liabilities, obligations, damages (including compensatory, punitive and
consequential damages), fines, penalties, judgments, actions, claims, costs
and expenses (including, without limitation, reasonable fees, disbursements
and expenses of legal counsel, experts, engineers and consultants and the
costs of investigation, feasibility studies and the costs to clean up,
remove, treat, or in any other way address any Hazardous Materials (as
hereinafter defined)) arising from, under or pursuant to any Environmental
Law (as hereinafter defined);
(ii) "Environmental Law" means any applicable federal, state, local or
foreign law (including common law), statute, or other legal requirement
relating to the protection of natural resources, the environment and public
and employee health and safety or pollution or the release or exposure to
Hazardous Materials (as hereinafter defined) as such laws have been and may
be amended or supplemented as of the Closing Date;
(iii) "Hazardous Material" means any substance, material or waste
which is regulated, classified or otherwise characterized as hazardous,
toxic, pollutant, contaminant or words of similar meaning or regulatory
effect by any Governmental Authority, and includes, without limitation,
petroleum, petroleum by-products and wastes, asbestos and polychlorinated
biphenyl's;
(iv) "Release" means any release, spill, effluent, emission, leaking,
pumping, injection, deposit, disposal, discharge, dispersal, leaching, or
migration into the indoor or outdoor environment, or into or out of any
property owned, operated or leased by Company or its Subsidiaries; and
(v) "Remedial Action" means all actions, including, without
limitation, any capital expenditures, required by a Governmental Authority
or required under or taken pursuant to any Environmental Law to (A) clean
up, remove, treat, or in any other way, ameliorate or address any Hazardous
Materials or other substance in the indoor or outdoor environment; (B)
prevent the Release or threat of Release, or minimize the further Release
of any Hazardous Material so it does not endanger or threaten to endanger
the public health or welfare of the indoor or outdoor environment; (C)
perform pre-remedial studies and investigations or post-remedial monitoring
and care pertaining or relating to a Release; or (D) bring the applicable
party into compliance in all material respects with any Environmental Law.
18
(b) Except as set forth in SCHEDULE 4.13:
(i) Company and its Subsidiaries have been and, as of the Closing
Date, will be, in material compliance with all Environmental Laws, except
where the failure to so comply does not or would not be reasonably expected
to have, individually or in the aggregate, a Material Adverse Effect on
Company, and, to Company's knowledge, there are no facts, circumstances or
conditions relating to the current or former operations of Company and its
Subsidiaries or any real property currently or formerly owned, operated or
leased by Company or its Subsidiaries, which without material capital
expenditures, would prevent material compliance in the future;
(ii) Company and its Subsidiaries have obtained and will, as of the
Closing Date, maintain all permits, authorizations, licenses or similar
approvals required under applicable Environmental Laws ("Environmental
Permits") for the continued operations of their respective businesses as
currently operated and as will be operated as of the Closing Date, except
such Environmental Permits the lack of which do not or would not be
reasonably expected to have, individually or in the aggregate, a Material
Adverse Effect on Company;
(iii) Company and its Subsidiaries are not subject to any outstanding
written orders or parties to material contracts with any Governmental
Authority or other person respecting (A) Environmental Laws, (B) Remedial
Action or (C) any Release or threatened Release of a Hazardous Material
except for such orders or contracts that would not reasonably be expected
to have a Material Adverse Effect on Company;
(iv) Company and its Subsidiaries have not received any written
communication alleging, with respect to any such party, the violation of or
liability (real or potential) under any Environmental Law, and to Company's
knowledge there are no investigations or proceedings pending or threatened
against Company regarding potential liability under Environmental Laws
which violation or liability would reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect on Company;
(v) To the knowledge of Company, neither Company nor any of its
Subsidiaries has any contingent liability in connection with the Release of
any Hazardous Material (whether on-site or off-site) which does or would
reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect on Company;
19
(vi) The operations of Company or its Subsidiaries do not involve the
transportation, treatment, storage or disposal of hazardous waste, as
defined and regulated under 40 C.F.R. Parts 260-270 (in effect as of the
date of this Agreement) or any state equivalent at quantities or for
durations requiring an Environmental Permit;
(vii) There is not now, nor to Company's knowledge, has there been in
the past, on or in any property of Company or its Subsidiaries any of the
following: (A) any underground storage tanks or surface impoundments, (B)
any asbestos-containing materials, or (C) any polychlorinated biphenyls,
the presence of which would reasonably be expected to have a Material
Adverse Effect on Company; and
(c) None of the exceptions set forth on SCHEDULE 4.13 are reasonably likely
to result in Company and its Subsidiaries incurring Environmental Costs and
Liabilities which would reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect on Company.
(d) Company has made available to Purchaser copies of all environmentally
related assessments, audits, investigations, sampling or similar reports
relating to Company or its Subsidiaries or any real property currently or
formerly owned, operated or leased by Company and its Subsidiaries, to the
extent in the possession, custody or control of Company or its Subsidiaries.
4.14 LABOR MATTERS. There are no strikes or other collective labor disputes
against Company or any of its Subsidiaries pending or, to Company's or its
Subsidiaries' knowledge, threatened. Neither Company nor any of its Subsidiaries
is, or during the five years preceding the date hereof was, a party to any labor
or collective bargaining agreement and there are no labor or collective
bargaining agreements which pertain to employees of Company or any of its
Subsidiaries.
4.15 TAXES. Except as set forth on SCHEDULE 4.15:
(a) all federal, state, local and foreign Tax Returns required to be filed
by Company and its Subsidiaries have been properly prepared and timely filed
with the appropriate Governmental Authority, and all such Tax Returns are true,
correct and complete in all material respects. All Taxes due and payable for any
period have been paid when due. With respect to any period for which Taxes are
not yet due or owing, Company and its Subsidiaries have made due and sufficient
current accruals for such Taxes in their books and records, including without
limitation in the Company Financial Statements. Proper amounts have been
withheld by Company and its Subsidiaries for all periods in compliance with the
Tax withholding provisions of applicable federal, state, local and foreign law
and such withholdings have been timely paid to the respective Governmental
Authority;
20
(b) neither Company nor any of its Subsidiaries has executed or filed with
the IRS or any other Governmental Authority any agreement or other document
extending the period for assessment or collection of any Taxes;
(c) no Tax audits or other administrative or judicial proceedings are
pending or threatened in writing with regard to any Taxes for which Company or
any Subsidiary may be liable, no assessment of Taxes is proposed against Company
or any Subsidiary and no audit report has been issued in the five years prior to
the date of this Agreement relating to Taxes due from or with respect to Company
or its Subsidiaries, their respective incomes, assets or operations;
(d) neither Company nor any of its Subsidiaries has filed a consent
pursuant to IRC Section 341(f) or agreed to have IRC Section 341(f)(2) apply to
any dispositions of subsection (f) assets (as such term is defined in IRC
Section 341(f)(4));
(e) there is no contract, plan or arrangement involving Company or its
Subsidiaries and covering any Person that, individually or collectively, could
give rise to the payment of any amount that would not be deductible by Company
or any of its Subsidiaries by reason of Section 280G or Section 162(m) of the
IRC;
(f) neither Company nor any of its Subsidiaries has constituted either a
"distributing corporation" or a "controlled corporation" (within the meaning of
Section 355(a)(1)(A) of the IRC) in a distribution of stock qualifying for
tax-free treatment under Section 355 of the IRC (A) in the two years prior to
the date of this Agreement or (B) in a distribution which could otherwise
constitute part of a "plan" or "series of related transactions" (within the
meaning of Section 355(e) of the IRC) in conjunction with the transactions
contemplated by this Agreement;
(g) all of the lease agreements that the Company or any of its Subsidiaries
have treated as true leases for federal income tax purposes are true leases for
federal income tax purposes;
(h) neither Company nor any of its Subsidiaries (i) engaged in any
"intercompany transactions" in respect of which material gain was and continues
to be deferred pursuant to Treasury Regulation Section 1.1502-13 or any
predecessor or successor thereof or analogous or similar provision under state,
local or foreign law or (ii) has material "excess loss accounts" in respect of
the stock of any subsidiary pursuant to Treasury Regulation Section 1.1502-19,
or any predecessor or successor thereof or analogous or similar provision under
state, local or foreign law;
(i) no prior ownership change (within the meaning of Section 382 of the
IRC) has occurred (i) that would result in the imposition of a limitation upon
the use of net operating losses or upon the future deductibility of any tax
basis or built-in deduction item of Company or any of its Subsidiaries, or (ii)
that resulted in a readjustment of the tax basis of the assets of Company or any
of its Subsidiaries under Section 56(g)(4)(G) of the IRC; and
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(j) (i) the TOPrS are treated as debt for federal income Tax purposes; (ii)
the federal income tax treatment of securitization transactions of the Company
or any of its Subsidiaries are as set forth on Schedule 4.15(j); and (iii) there
is no entity or asset included in Company Financial Statements which is not
included in the consolidated federal income tax return filed by Company as the
common parent.
4.16 NO LITIGATION. Except as disclosed in the Company SEC Documents, or as
set forth on SCHEDULE 4.16, no action, suit, claim, proceeding or investigation
is now pending or, to the knowledge of Company or its Subsidiaries, threatened
against Company or any of its Subsidiaries, at law, in equity or otherwise,
before any court, board, commission, agency or instrumentality of any federal,
state, or local government or of any agency or subdivision thereof, or before
any arbitrator or panel of arbitrators, which would be reasonably expected to
have a Material Adverse Effect on Company.
4.17 BROKERS. Except as set forth on SCHEDULE 4.17, no broker or finder
acting on behalf of Company or any of its Subsidiaries brought about the
consummation of the transactions contemplated pursuant to this Agreement and
neither Company nor any of its Subsidiaries has any obligation to any Person in
respect of any finder's or brokerage fees (or any similar obligation) in
connection with the transactions contemplated by this Agreement. Company is
solely responsible for the payment of all such finder's or brokerage fees.
4.18 [INTENTIONALLY LEFT BLANK].
4.19 INTELLECTUAL PROPERTY. Company and each of its Subsidiaries owns or
has a right to use all licenses, patents, patent applications, copyrights,
service marks, trademarks and registrations and applications for registration
thereof, and trade names necessary to continue to conduct its business as
heretofore conducted by it and now being conducted by it, each of which is
listed, together with Patent and Trademark Office or Copyright Office
application or registration numbers, where applicable, on SCHEDULE 4.19 hereto.
To Company's knowledge, Company and each of its Subsidiaries conducts its
businesses without infringement or claim of infringement of any license, patent,
copyright, service ▇▇▇▇, trademark, trade name, trade secret or other
intellectual property right of others, except as such would not reasonably
expected to have a Material Adverse Effect or as set forth on SCHEDULE 4.19
hereto. To Company's knowledge, there is no infringement by others of any
license, patent, copyright, service ▇▇▇▇, trademark, trade name, trade secret or
other intellectual property right of Company or any of its Subsidiaries, except
as set forth on SCHEDULE 4.19 hereto.
4.20 ERISA. (a) SCHEDULE 4.20 sets forth: (i) all "employee benefit plans",
as defined in Section 3(3) of ERISA, and all severance, retention, sick leave,
vacation pay, salary continuation, retirement, deferred compensation, bonus or
other incentive compensation, stock option, stock purchase, hospitalization,
medical, life insurance and scholarship plans, programs or agreements (the
"Benefit Plans") to which Company or any of its Subsidiaries has any obligation
or liability (contingent or otherwise).
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(b) None of the Benefit Plans is a "multiemployer plan" within the meaning
of Section 3(37) of ERISA or a plan subject to Section 4063 of ERISA.
(c) The Benefit Plans intended to be qualified under Section 401 of the IRC
have been determined by the I.R.S. to be so qualified and the trusts maintained
pursuant thereto have been determined by the I.R.S. to be exempt from federal
income taxation under Section 501(a) of the IRC.
(d) All contributions required by law or pursuant to the terms of the
Benefit Plans to any funds or trusts established thereunder or in connection
therewith have been made by the due date therefor (including any valid
extension).
(e) True, correct and complete copies of the following documents, with
respect to each of the Benefit Plans, have been made available or delivered to
Purchasers by Company: (A) any plans and related trust documents, and amendments
thereto, (B) the most recent Forms 5500 (including any schedules thereto) and
the most recent actuarial valuation report, if any, (C) the last IRS
determination letter and (D) the most recent summary plan descriptions.
(f) Except as set forth in SCHEDULE 4.15 there are no pending actions,
audits, claims or lawsuits which have been asserted or instituted against the
Benefit Plans, the assets of any of the trusts under such Benefit Plans or the
Benefit Plan sponsor or the Benefit Plan administrator, or against any fiduciary
of the Benefit Plans with respect to the operation of such Benefit Plans (other
than routine benefit claims), which, if adversely determined, could reasonably
be expected to result in a Material Adverse Effect nor does Company or any of
its Subsidiaries have knowledge of facts which could form the basis for any such
claim or lawsuit.
(g) Except as set forth in SCHEDULE 4.20(G), the consummation of the
transactions contemplated by this Agreement shall not result, with respect to
any current or former employee or director of Company or any of its
Subsidiaries, (i) in any acceleration of payment or vesting of any compensation
or benefits, (ii) in any increase in compensation or benefits, (iii) in any
requirement to fund any compensation or benefits, or (iv) in any vesting of
rights with respect to compensation benefits.
(h) The Benefit Plans have been maintained, in all material respects, in
accordance with their terms and with all applicable Federal and state law,
except for non-compliance which could not reasonably be expected to result in a
Material Adverse Effect.
(i) Except as set forth in SCHEDULE 4.20(I), neither Company or any of its
ERISA Affiliates sponsors, maintains or has established any welfare plan, as
defined in Section 3(1) of ERISA, which provides for continuing benefits or
coverage for any participant or any beneficiary of a participant after such
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participant's termination of employment, except as may be required by Code
section 4980B or Section 601 (ET SEQ.) of ERISA, or under any applicable state
law, and at the expense of the participant or the beneficiary of the
participant.
(j) Company and its ERISA Affiliates have filed or caused to be filed every
material return, report statement, notice, declaration and other document
required by any law or governmental agency, federal, state and local (including,
without limitation, the IRS and the Department of Labor) with respect to each
such Benefit Plan, each of such filings has been complete and accurate in all
material respects and neither Company or any of its ERISA Affiliates has
incurred any liability in connection with such filings.
(k) Company and its ERISA Affiliates have delivered or caused to be
delivered to every participant, beneficiary and other party entitled to such
material, all material plan descriptions, returns, reports, schedules, notices,
statements and similar materials, including, without limitation, summary plan
descriptions and summary annual reports, as are required under Title I of ERISA,
the Code, or both and neither Company or any of its ERISA Affiliates has
incurred any material liability in connection with such requirements.
(l) Neither Company or any of its ERISA Affiliates is delinquent in making
contributions or payments to or in respect of any Benefit Plan as to which any
is obligated to make contributions or payments (without regard to any waiver
granted by the IRS under Code Section 412), nor has Company or any of its ERISA
Affiliates failed to pay any assessments made with respect to any such Benefit
Plan. All contributions and payments (including salary deferral contributions
elected by employees) with respect to Benefit Plans that are due and owing or
required to be made by Company or any of its ERISA Affiliates with respect to
periods ending on or before the Closing Date (including periods from the first
day of the current plan year or policy year to the Closing Date) have been, or
will be, made before the Closing Date in accordance with the appropriate plan
document, actuarial report, collective bargaining agreements or insurance
contracts or arrangements or as otherwise required by ERISA or the Code.
(m) With respect to each Benefit Plan, to the Company's knowledge there has
not occurred, and no person or entity is contractually bound to enter into, any
"prohibited transaction" within the meaning of Section 4975(c) of the Code or
Section 406 of ERISA, which transaction is not exempt under Section 4975(d) of
the Code or Section 408 of ERISA.
(n) There has not been any "Reportable Event," as described in Section 4043
of ERISA, with respect to any Benefit Plan (other than such events for which the
thirty (30) day notification period has been waived by the Pension Benefit
Guaranty Corporation ("PBGC")) subject to Title IV of ERISA.
24
(o) Neither Company or any of its ERISA Affiliates has incurred: (i) any
liability to the PBGC or to a trust (for plan terminations instituted prior to
December 18, 1987) described in Section 4049 of ERISA (prior to its repeal),
(ii) any multiemployer Plan (as defined in Section 4001(a)(3) of ERISA
("Multiemployer Plan")) withdrawal liability (and no event has occurred which,
with the giving of the notice under Section 4219 of ERISA, would result in such
liability) under Section 4201 of ERISA as a result of a complete or partial
withdrawal (within the meaning of Sections 4203 or 4205 or ERISA, respectively)
from, or on behalf of, a Multiemployer Plan, or (iii) any other liability under
Title IV of ERISA other than premiums incurred in the Ordinary Course of
Business.
(p) Neither Company or any of its ERISA Affiliates, or any organization
which is a successor or parent corporation of such entities, within the meaning
of ERISA Section 4069(b), has engaged in a transaction described in ERISA
Section 4069.
(q) Except as otherwise previously disclosed, the value of the assets of
each Benefit Plan subject to Title IV of ERISA (other than a Multiemployer Plan)
equal or exceed the present value of "Benefit Liabilities" (as defined in
Section 4001(a)(16) of ERISA) of each such Benefit Plan as of the last day of
the plan year most recently ended using PBGC termination actuarial assumptions
currently in effect or other actuarial assumptions certified by the Benefit
Plan's actuary as reasonable for purposes of a standard termination (as
described in 4041(b) of ERISA) with respect to any defined benefit pension plan.
(r) With respect to each Benefit Plan maintained by Company or any of its
ERISA Affiliates, such plan permits the plan sponsor to amend or terminate the
plan at any time and without any liability, subject to the applicable
requirements of ERISA and the Code for plan termination.
(s) To the Company's knowledge, no assets of, and no assets managed by, Company
or any of its ERISA Affiliates constitute "plan assets" as defined in 29 C.F.R.
Section 2510.3-101, and none of the transactions contemplated by this Agreement
(including those transactions occurring after the Closing) with constitute a
"prohibited transaction" within the meaning of Section 4975(c) of the Code or
Section 406 of ERISA, which transaction is not exempt under Section 4975(d) of
the Code or Section 408 of ERISA.
4.21 INSURANCE. Other than insurance maintained in connection with the
business, assets or operations of Company's or the Subsidiaries' borrowers or
lessees or insurance insuring residual values, SCHEDULE 4.21 hereto contains a
complete and correct list of all policies of insurance of any kind or nature
covering Company and its Subsidiaries, including, without limitation, policies
of life, fire, theft, employee fidelity and other casualty and liability
insurance, indicating the type of coverage, name of insured, the insurer, the
premium, the expiration date of each policy and the amount of coverage, and such
policies are in full force and effect. Complete and correct copies of each such
25
policy have been furnished or made available to Purchasers. Such policies are in
amounts customary for the industry in which Company or such Subsidiary operates.
4.22 RELATED PARTY TRANSACTIONS. Except as disclosed in the Company SEC
Documents or as set forth in SCHEDULE 4.22, no director or Executive Officer of
Company nor any Affiliate of Company (other than a Subsidiary of Company) or of
any such director or Executive Officer (i) has borrowed any money from or has
outstanding, directly or indirectly, any indebtedness or other similar
obligations to Company or any Subsidiary thereof; (ii) to the knowledge of
Company, owns any direct or indirect interest equal to or in excess of 5% of the
equity in, or controls or is a director, officer or partner of, or consultant or
lender to, or borrower from, or has the right to participate in the profits of,
any Person which is a competitor, lender, landlord, lessor or creditor of
Company; (iii) is a party to any contract with Company; or (iv) has entered into
any other transaction with the Company or its Subsidiaries which would require
disclosure thereof under Item 404 of Regulation S-K under the Securities Act.
4.23 OPINIONS OF FINANCIAL ADVISOR. Credit Suisse First Boston and ▇▇▇▇▇▇
Brothers (the "Company Financial Advisors") have delivered to the Board of
Directors their opinions to the effect that the transactions contemplated hereby
are fair to Company from a financial point of view, and such opinions have not
been withdrawn or modified.
4.24 TAKEOVER STATUTES. Company has taken all action required to be taken
by it in order to exempt each of this Agreement and the other Transaction
Documents and each of the transactions contemplated hereby and thereby including
the conversion or exercise of any Securities (the "Covered Transactions") from,
and each of this Agreement, the other Transaction Documents and the Covered
Transactions is exempt from the requirements of any "moratorium", "control
share", "fair price", "affiliate transaction", "business combination" or other
antitakeover laws and regulations of any state, including Section 203 of the
DGCL, or any antitakeover provision in Company's restated certificate of
incorporation (including the approval of each Covered Transaction under Section
2(A) of Article IX thereof) and bylaws. The provisions of Section 203 of the
DGCL do not apply to this Agreement, the Other Transaction Documents or the
Covered Transactions.
4.25 AMENDMENT TO THE COMPANY RIGHTS AGREEMENT. The Board of Directors of
Company has taken all necessary action (including any amendment thereof) under
the Company Rights Agreement, dated as of February 15, 1992, as amended and
restated as of September 14, 1995, between Company and Bank One, Arizona, NA
(succeeded by ▇▇▇▇▇▇ Trust & Savings Bank, NA), as Rights Agent, as amended (the
"Company Rights Agreement") so that none of the execution or delivery of this
Agreement or the other Transaction Documents or consummation of each Covered
Transaction will cause (i) the rights (the "Rights") issued pursuant to the
Company Rights Agreement to become exercisable under the Company Rights
Agreement, (ii) Purchaser to be deemed an "Acquiring Person" (as defined in the
26
Company Rights Agreement), or (iii) the "Distribution Date" (as defined in the
Company Rights Agreement) to occur upon any such event.
4.26 REFINANCING REPRESENTATIONS. Company hereby incorporates for the
benefit of Purchaser any representation and warranty made or to be made to the
Lenders in connection with the consummation of the Refinancing as if such
representation and warranty was specifically incorporated herein.
4.27 FINANCING CONTRACTS; PORTFOLIO PROPERTY.
(a) Except as set forth on Schedule 4.27, each Financing Contract and
Credit Enhancement (i) is valid, binding and enforceable by Company or its
Subsidiaries against the lessee, obligor or borrower thereunder in accordance
with its terms, except (x) as may be limited by bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium or similar laws affecting
creditors rights and remedies generally and, with respect to enforceability, by
general principles of equity and fair dealing, and (y) to the extent that the
failure of any Financing Contract or Credit Enhancement to be valid, binding and
enforceable would not, individually or in the aggregate, reasonably be likely to
have a Material Adverse Effect on Company and (ii) arose out of a bona fide
business transaction entered into in the Ordinary Course of Business.
(b) Except as set forth on Schedule 4.27, to the knowledge of Company, (i)
each Financing Contract and Credit Enhancement is held free and clear of Liens
(in the case of Credit Enhancements, to the extent of any Liens that are
superior to Company's Liens) other than Permitted Liens, and is not subject to
any defense, offset, right of rescission or counterclaim by the obligor,
borrower or lessee under such Financing Contract in the case of a Financing
Contract or by the obligor thereunder in the case of a Credit Enhancement,
except where such Lien or defense, offset, right of rescission or counterclaim
would not, individually or in the aggregate, reasonably be likely to have a
Material Adverse Effect on Company and (ii) Company is not in breach of or in
default under any Financing Contract or Credit Enhancement and no other event
has occurred which, with notice and/or lapse of time, would constitute a default
by Company or any other party thereunder, except where such breach or default
would not, individually or in the aggregate, reasonably be likely to have a
Material Adverse Effect on Company.
(c) Company and its Subsidiaries maintain appropriate and customary
documentation in their files evidencing their respective Financing Contracts and
Credit Enhancements and the Company's or such Subsidiary's title thereto, except
where the failure to maintain such documentation would not reasonably be likely
to have a Material Adverse Effect on Company. Such documentation has been made
available to Purchaser. Company and its Subsidiaries have taken all commercially
reasonable action to ensure that Company or such Subsidiary, as the case may be,
has good and valid title to its Portfolio Property, Financing Contracts and
Credit Enhancements, in each case free and clear of all Liens other than
Permitted Liens or, in the case of Credit Enhancements, Liens that are junior to
Company's Liens, except where the failure to take such action or to have good
27
and valid title would not reasonably be likely to have a Material Adverse Effect
on Company.
(d) Except as set forth on SCHEDULE 4.27, Company has, with respect to each
item of Portfolio Property and to each Financing Contract and Credit
Enhancement, good and valid title to such Property (or, with respect to
Portfolio Property, a valid security interest in such Portfolio Property),
Financing Contract and Credit Enhancement, free and clear of all Liens other
than Permitted Liens, except where the failure to have such title or security
interest would not, individually or in the aggregate, reasonably be likely to
have a Material Adverse Effect on Company.
4.28 FULL DISCLOSURE. No information contained in this Agreement, any other
Transaction Document or any written statement furnished by or on behalf of
Company pursuant to the terms of this Agreement (or any Schedules hereto)
contains an untrue statement of a material fact or omits to state a material
fact necessary to make the statements contained herein or therein not misleading
in light of the circumstances under which made.
ARTICLE V
COVENANTS RELATING TO CONDUCT OF BUSINESS
5.1 CONDUCT OF BUSINESS OF COMPANY. Except as otherwise expressly permitted
by the terms of this Agreement or as set forth on SCHEDULE 5.1, from the date
hereof to the Closing, Company shall, and shall cause each of its Subsidiaries
to, carry on their respective businesses in the Ordinary Course of Business in
substantially the same manner as presently conducted and in compliance in all
material respects with applicable laws, and use their respective reasonable best
efforts consistent with past practices to preserve their relationships with
customers, suppliers and others with whom they deal. Company shall not, and
shall cause each of its Subsidiaries not to, take any action that would, or that
is reasonably likely to, result in any of the representations and warranties of
Company set forth in Article IV being untrue in any material respect as of the
date made or as of the Closing Date or in any of the conditions to the
consummation of the transactions contemplated hereby not being satisfied. In
addition, and without limiting the generality of the foregoing, except as
otherwise expressly permitted or required by the terms of this Agreement, during
the period from the date hereof to the Closing, Company shall not, and shall
cause any of its Subsidiaries not to, without the written consent of Purchaser,
which decision regarding consents shall be made promptly (in light of its
circumstances) after receipt of notice seeking such consent:
(i) amend its certificate of incorporation, bylaws or other comparable
organizational documents or those of any Subsidiary of Company;
(ii) except (A) pursuant to the exercise or conversion of outstanding
securities, (B) for issuances of Common Stock upon the exercise of
outstanding options under the Benefit Plans, (C) in connection with other
awards outstanding on the date of this Agreement under any Benefit Plan, or
(D) upon conversion of TOPrS, redeem or otherwise acquire any shares of its
28
capital stock, or issue or sell any securities (including securities
convertible into or exchangeable for any shares of its capital stock), or
grant any option, warrant or right relating to any shares of its capital
stock, or split, combine or reclassify any of its capital stock or issue
any securities in exchange or in substitution for shares of its capital
stock;
(iii) make any material amendment to any existing, or enter into any
new, employment, consulting, severance, change in control or similar
agreement, or establish any new compensation or benefit or commission plans
or arrangements for directors or employees, or amend or agree to amend any
existing benefit plan;
(iv) other than in connection with foreclosures in the Ordinary Course
of Business and mergers or consolidations among wholly-owned Subsidiaries
of Company, merge, amalgamate or consolidate with any other entity in any
transaction, sell all or any substantial portion of its business or assets,
or acquire all or substantially all of the business or assets of any other
Person;
(v) enter into any plan of reorganization or recapitalization,
dissolution or liquidation of Company;
(vi) declare, set aside or make any dividends, payments or
distributions in cash, securities or property to the stockholders of
Company in respect of any capital stock of Company other than dividends and
distributions by a direct or indirect wholly owned Subsidiary of Company to
its parent and for any quarterly dividends payable with respect to the
TOPrS;
(vii) except for borrowings under credit facilities or lines of credit
existing on the date hereof, incur or assume any indebtedness of the
Company or any of its Subsidiaries, except indebtedness of the Company or
any of its Subsidiaries incurred in the Ordinary Course of Business;
(viii) refinance any existing indebtedness with a principal amount in
excess of $15 million;
(ix) voluntarily grant any material Lien on any of its material
assets, other in the Ordinary Course of Business;
(x) take any action that would have a material impact on the
consolidated federal income tax return filed by Company as the common
parent, make or rescind any express or deemed material election relating to
Taxes, settle or compromise any material claim, action, suit, litigation,
proceeding, arbitration, investigation, audit or controversy relating to
Taxes, enter into any material Tax ruling, agreement, contract, arrangement
or plan, file any amended Tax Return, or, except as required by applicable
law or GAAP or in accordance with past practices, make any material change
29
in any method of accounting for Taxes or otherwise or any Tax or accounting
practice or policy;
(xi) enter into any Contract, understanding or commitment that
restrains, restricts, limits or impedes the ability of Company or any of
its Subsidiaries, or the ability of Purchaser, to compete with or conduct
any business or line of business in any geographic area;
(xii) enter into, or amend the terms of, any Contract relating to
interest rate swaps, caps or other hedging or derivative instruments
relating to Indebtedness of Company or any of its Subsidiaries; or
(xiii) agree or commit, whether in writing or otherwise, to do any of
the foregoing.
5.2 ACCESS TO INFORMATION. (a) From the date hereof until the Closing,
Company shall, and shall cause each of its Subsidiaries to, permit Purchaser and
its representatives to have reasonable access during normal business hours to
the management, facilities, accounts, books, stock transfer records and other
records (including budgets, forecasts and personnel files and records),
contracts and other written materials of Company and each of its Subsidiaries
and, with the consent of Company which shall not be withheld unreasonably, the
names and other reasonably requested information concerning Company's borrowers,
as is reasonably requested by Purchaser or such representatives and to make
available to Purchaser and its representatives the officers, employees and
independent accountants of Company and each of its Subsidiaries for interviews
for the purpose, among other things, of verifying the information furnished to
Purchaser. Such access shall be conducted by Purchaser and its representatives
during normal business hours, upon reasonable advance notice and in such a
manner as not to interfere unreasonably with the business or operations of
Company and its Subsidiary.
(b) Purchaser will hold, and will cause its consultants and advisers to
hold, in confidence all documents and information furnished to it by or on
behalf of Company in connection with the transactions contemplated by this
Agreement pursuant to the terms of the Non-Disclosure Agreement.
ARTICLE VI
ADDITIONAL AGREEMENTS
6.1 COMMERCIALLY REASONABLE EFFORTS. Subject to the terms and conditions of
this Agreement, each of the parties hereto agrees to use its commercially
reasonable efforts to take, or cause to be taken, all action and to do, or cause
to be done, all things necessary, proper or advisable under applicable laws to
consummate and make effective the transactions contemplated by this Agreement,
including (a) the obtaining of all necessary actions, waivers, consents and
approvals from Governmental Authorities and the making of all necessary
registrations and filings (including filings required under the HSR Act), and
30
the taking of all reasonable steps as may be necessary to obtain an approval or
waiver from, or to avoid an action or proceeding by, any Governmental Authority,
(b) the obtaining of all necessary consents, approvals or waivers from Third
Parties and (c) the execution and delivery of any additional instruments
necessary to consummate the transactions contemplated by this Agreement;
PROVIDED, HOWEVER, that nothing herein shall limit or diminish each party's
right to approve the Refinancing referred to in Section 6.5. In furtherance of
the foregoing, Purchaser and Company each shall furnish to the other such
necessary information and reasonable assistance as the other may request in
connection with obtaining any consents required to be obtained by it hereunder.
6.2 SUPPLEMENTAL DISCLOSURE. Company shall promptly notify Purchaser of,
and furnish Purchaser with, any information it may reasonably request with
respect to, any event or condition or the existence of any fact that would cause
any of the conditions to Purchaser's obligation to consummate the transactions
contemplated hereby not to be completed, and Purchaser shall promptly notify
Company of, and furnish Company any information it may reasonably request with
respect to, any event or condition or the existence of any fact that would cause
any of the conditions to Company's obligation to consummate the transactions
contemplated hereby not to be completed.
6.3 ANNOUNCEMENTS. Each of Company and Purchaser shall not, without the
prior written consent of the other (which consent shall not be unreasonably
withheld) issue any press release or otherwise make any public statement with
respect to this Agreement, the other Transaction Documents and the transaction
contemplated hereby and thereby, in each case except as may be required by
applicable law (including pursuant to U.S. federal securities laws) or rules of
the SEC or the NYSE, or as such party may be advised by its counsel is legally
necessary or advisable, in which event the party required to make the release or
announcement shall allow the other party reasonable time, in light of the
circumstances, to comment on such release or announcement in advance of such
issuance.
6.4 NO SOLICITATION. (a) To allow time for negotiation of the Refinancing,
from and after the date hereof until the earlier of (i) the Closing and (ii)
expiration of the provisions of this Section 6.4(a) pursuant to Section 6.4(b)
hereof, and except as expressly permitted by the following provisions of this
Section 6.4(a), Company shall not, and shall not authorize or permit any of
Company's officers, directors, employees, agents, investment bankers, attorneys,
financial advisors or other representatives (collectively, "Company
Representatives") to, directly or indirectly, solicit, initiate or encourage
(including by way of furnishing information or assistance), or take other action
to facilitate any inquiries or the making of any proposal that constitutes or
may reasonably be expected to lead to, an Acquisition Proposal from any Third
Party or engage in any discussions or negotiations relating thereto or in
furtherance thereof or furnish to any Person any information with respect to, or
accept or enter into any agreement that would result in, or waive any agreement
that would prevent or discourage, any Acquisition Proposal; PROVIDED, HOWEVER,
that nothing contained in this paragraph shall prohibit the Board of Directors
31
from (1) obtaining such information with respect to any unsolicited Acquisition
Proposal, which the Board of Directors determines, after consultation with
counsel, is necessary to determine whether such Acquisition Proposal would
constitute a Superior Proposal, or (2) furnishing information to, or entering
into discussions or negotiations with, any person that makes an unsolicited bona
fide, fully financed, written Acquisition Proposal which relates to the
acquisition by any Third Party of all of the equity of Company, whether by
merger, tender offer or otherwise, if and only to the extent that (A) the Board
of Directors, after consultation with independent legal counsel, determines in
good faith that such action is necessary for the Board of Directors to comply
with its fiduciary duties to Company's stockholders under applicable law, (B)
the Board of Directors determines in good faith after consultation with a
nationally recognized expert with experience in appraising the terms and
conditions of such unsolicited Acquisition Proposal, that such unsolicited
Acquisition Proposal after taking into account the strategic benefits to be
derived from the transaction with Purchaser and the long-term prospects of
Company, would, if consummated, result in a transaction more favorable to the
Company's stockholders from a financial point of view than the transactions
contemplated hereby (any such more favorable bona fide unsolicited Acquisition
Proposal being referred to as a "Superior Proposal"), and (C) prior to taking
such action, Company (i) notifies Purchaser of any Acquisition Proposal
(including, without limitation, the material terms and conditions thereof and
the identity of the person making the Acquisition Proposal) as promptly as
practicable (but in no case later than 24 hours) after receipt thereof, (ii)
provides Purchaser with a copy of any written Acquisition Proposal, (iii)
thereafter informs Purchaser on a prompt basis of the status of any discussion
or negotiations with such a Third Party and any material changes to the terms
and conditions of such Acquisition Proposal, (iv) promptly gives Purchaser a
copy of any information delivered to such Third Party which has not been
previously reviewed by Purchaser and (v) receives from such Third Party an
executed confidentiality agreement in reasonably customary form and in any event
containing terms at least as stringent as those contained in the Non-Disclosure
Agreement.
(b) The provisions of Section 6.4(a) shall expire (without affecting the
provisions of Section 8.4) if either (i) a term sheet for the Refinancing (which
shall have been agreed to by Company and Purchaser) (the "Term Sheet") is not
presented to the agent banks for the Company's Bank Debt (the "Agent Banks") by
December 21, 2000 assuming reasonable cooperation from Company, or (ii) if the
Agent Banks do not recommend approval of the Term Sheet (as such Term Sheet may
be amended from time to time with the approval of Company and Purchaser) to the
Lenders by February 27, 2001.
6.5 REFINANCING OF EXISTING COMPANY BANK DEBT. As soon as practicable after
the date hereof, Company and Purchaser shall use their respective commercially
reasonable efforts so that Company may complete a refinancing or restructuring
of the Bank Debt with the Lenders (the "Refinancing") upon terms acceptable both
to Purchaser and Company. Company has notified the Lenders of its agreement with
Purchaser and has requested the Lenders to commence negotiation of the
Refinancing with Company and Purchaser. Purchaser shall participate in the
Refinancing negotiations. Company and Purchaser shall keep the other party fully
32
informed in all respects to such negotiations. The parties shall make their
respective personnel available to each other in Scottsdale, Arizona, Los
Angeles, California or New York, New York and shall cause their personnel to
cooperate with the other in establishing a mutually acceptable plan for the
Refinancing and shall promptly notify the other party of any threatened event of
default, termination or acceleration of the Bank Debt or any long term
indebtedness of Company or its Subsidiaries. Company shall promptly notify
Purchaser of the receipt of any written notices from any Lender or any holder of
the Bond Indebtedness of Company or its Subsidiaries and shall promptly provide
a copy of same to Purchaser.
6.6 CERTIFICATE OF DESIGNATIONS. Prior to the Closing, Company shall cause
to be filed the Certificate of Designations with the Secretary of State of the
State of Delaware, as required pursuant to the laws of the State of Delaware.
6.7 BOARD REPRESENTATION. (a) Upon consummation of the purchase and sale of
the Series B Preferred Stock and the Warrant pursuant to Section 2.1 hereof,
Purchaser shall be entitled to designate for appointment to the Board of
Directors six (6) out of the ten (10) members of the Board of Directors, which
designees (the "Purchaser Designees") shall be distributed evenly among the
three classes of members of the Board of Directors. Prior to the Closing,
Company shall take all necessary corporate action to increase the size of its
Board of Directors to ten (10) members and obtain all necessary resignations in
consultation with Purchaser for existing directors to enable all six Purchaser
Designees to be appointed to the Board of Directors, and Company shall cause the
Board of Directors to fill the vacancies created thereby by electing the
Purchaser Designees effective as of the Closing. If a vacancy shall exist on the
Board of Directors as a result of the resignation, removal, death or failure to
stand for re-election of a Purchaser Designee, Purchaser shall be entitled to
designate a successor who shall be appointed to the Board of Directors by the
remaining Directors. If a vacancy shall exist on the Board of Directors as a
result of the resignation, removal, death or failure to stand for re-election of
a Continuing Director (as such term is defined in Article IX of Company's
Restated Certificate of Incorporation), the remaining Continuing Directors shall
be entitled to designate a successor who shall be appointed to the Board of
Directors by the remaining directors pursuant to the recommendation of the
remaining Continuing Directors. If, prior to Closing, the number of directors of
Company is increased by virtue of any right of security holders (in the event
dividends or other payments provided for under the terms of such securities are
not made, or otherwise), then such increase shall include a sufficient number of
directors of the Company, who shall be designated by Purchaser and appointed to
the Board of Directors by the Continuing Directors so that Purchaser's Designees
shall constitute a majority of such increased Board of Directors. Purchaser
agrees that it shall vote all Company securities beneficially owned by it that
are entitled to vote in the election of directors in favor of the Continuing
Directors' designees for election or re-election as Continuing Directors until
the first election of directors following the payment of the distribution
contemplated by Section 6.14 of this Agreement, and that it will require any
transferee of any such Company securities (other than transferees that acquire
such securities in a registered public offering or in a transaction pursuant to
33
Rule 144 of the Securities Act) to agree to vote such securities in the manner
provided herein. For so long as Purchaser is obligated to vote for the
Continuing Directors' designees, no Purchaser Designee shall be deemed to be a
Continuing Director for purposes of Article IX of Company's Restated Certificate
of Incorporation.
(b) Prior to the Closing, Purchaser shall timely furnish to Company all
information concerning the Purchaser Designees required to be included in the
information statement referred to in Section 7.2(d) so that such information may
be included in that information statement.
6.8 MANAGEMENT FEE. Upon consummation of the purchase and sale of the
Series B Preferred Stock and the Warrant pursuant to Section 2.1 hereof,
Purchaser and Company shall enter into a Management Agreement substantially in
the form of EXHIBIT D hereto, pursuant to which Purchaser shall receive an
annual management fee of $5,000,000 per year for a period of five years
commencing on the Closing Date. The management fee shall be payable quarterly in
advance at the beginning of each calendar quarter; PROVIDED, HOWEVER, that the
first quarterly installment on account of the annual management fee (in the
amount of $1,250,000) shall be paid at the Closing. Each payment on account of
the management fee shall be paid by wire transfer of immediate funds to an
account designated in writing by Purchaser and delivered to Company no later
than two Business Days prior to the scheduled payment date.
6.9 RESERVATION OF COMMON STOCK. Company shall take all action necessary to
reserve for issuance a sufficient number of shares of Common Stock to satisfy
its conversion obligations under the Certificate of Designation and the Warrant,
respectively. Company shall recommend amendments to its Restated Certificate of
Incorporation to increase the number of authorized shares of Common Stock
necessary to satisfy this provision.
6.10 LEGENDS.
Each of the certificates representing (i) shares of Series B Preferred
Stock, (ii) shares of Common Stock issued upon conversion of the Series B
Preferred Stock, (iii) the Warrant, and (iv) shares of Common Stock issued upon
exercise of the Warrant, unless registered pursuant to an effective registration
statement under the Securities Act, shall bear a legend substantially in the
following form:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT") OR
ANY STATE SECURITIES OR "BLUE SKY" LAWS AND MAY NOT BE SOLD OR
OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE ACT OR STATE SECURITIES OR "BLUE SKY" LAWS OR AN
EXEMPTION THEREFROM."
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6.11 RIGHTS OFFERING.
(a) As soon as practicable after the Closing, Company shall conduct a
rights offering (the "Rights Offering") whereby then existing holders of Common
Stock will be offered the right to purchase up to six hundred thousand shares of
Series C Preferred Stock to be issued by Company at a price of $250.00 per
share. Pursuant to the Rights Offering, each such holder of Common Stock shall
have the right to purchase from Company such number of shares of Series C
Preferred Stock (rounded up or down, with .5 being rounded up, to the nearest
whole number which could be zero or as otherwise required by the rules of the
NYSE) equal to the product of (i) a fraction, the numerator of which is the
number of shares of Common Stock then held by such holder and the denominator of
which is the total number of shares of Common Stock then outstanding, multiplied
by (ii) 600,000. The rights shall be transferable. If fewer than 400,000 shares
of Series C Preferred Stock are purchased pursuant to the Rights Offering,
Purchaser shall purchase a number of shares of Series C Preferred Stock (the
"Standby Shares") equal to the difference between (x) 400,000 and (y) the number
of shares of Series C Preferred Stock that are purchased in the Rights Offering
at a purchase price of $250.00 per share. In addition, Purchaser shall have the
right to purchase, but shall not be required to purchase, any shares of Series C
Preferred Stock offered in the Rights Offering (in addition to the Standby
Shares) that are not purchased in the Rights Offering. As compensation for
agreeing to act as standby purchaser of up to 400,000 shares of Series C
Preferred Stock that are not purchased in the Rights Offering, Company shall pay
Purchaser $5,000,000 in immediately available funds upon distribution of the
rights under the Rights Offering.
(b) Company shall, as promptly as practicable following the Closing prepare
and file with the SEC a registration statement, including a prospectus (the
"Registration Statement"), in connection with the registration under the
Securities Act of the Rights Offering, including shares of Series C Preferred
Stock (and the underlying share of Common Stock issuable upon conversion
thereof) issuable pursuant to the Rights Offering. Company will provide
Purchaser with a reasonable opportunity to review and comment on the
Registration Statement (including the prospectus contained therein) or any
amendment or supplement thereto prior to the filing thereof with the SEC.
Company and Purchaser shall consult and cooperate with each other in the
preparation and filing of the Registration Statement (including the Prospectus
contained therein) and will provide Purchaser with a copy of all such filings
with the SEC. Company shall, as promptly as practicable after the receipt
thereof, provide to Purchaser copies of any written comments and advise
Purchaser of any oral comments, with respect to the Registration Statement
received from the staff of the SEC. Company shall use commercially reasonable
efforts to cause the Registration Statement to be declared effective as promptly
as practicable after filing with the SEC, including, without limitation, using
commercially reasonable efforts to cause its accountants to deliver necessary or
required instruments, such as opinions, consents and certificates, and will take
any other action required or necessary to be taken under federal or state
35
securities laws or otherwise in connection with the registration process (other
than qualifying to do business in any jurisdiction in which it is not now so
qualified or filing a general consent to service of process in any such
jurisdiction). Each of the parties hereto shall furnish all information
concerning itself which is required or customary for inclusion in the
Registration Statement (including in response to any comments of the staff of
the SEC). The information provided by any party hereto for use in the
Registration Statement shall be true and correct in all material respects,
without misstatement of any material fact or omission of any material fact which
is necessary or required to make the statements therein, in light of the
circumstances under which they were made, not false or misleading and, in the
event any party becomes aware of any information that should be included in the
Registration Statement such that the Registration Statement shall not contain
any misstatement of any material fact or omission of any material fact which is
necessary or required to make the statements therein, in light of the
circumstances under which they were made, not false or misleading, such party
shall promptly notify the other party and, to the extent required by applicable
law, an appropriate amendment to the Registration Statement shall be promptly
prepared, filed with the SEC and disseminated to stockholders.
6.12 RETENTION PROGRAM. As promptly as practicable after the date of this
Agreement, Company shall adopt a retention program for senior executives and
other key employees of Company and its Subsidiaries acceptable to Purchaser as
to covered executives and employees and the terms of such program. Company shall
consult with Purchaser in the development of the retention program, which shall
commence immediately upon execution of this Agreement.
6.13 ALTERNATIVE TRANSACTION. Company and Purchaser agree that they will
cooperate in implementing this Agreement and the transactions contemplated
hereby pursuant to a proceeding under chapter 11 of title 11 of the United
States Code, 11 U.S.C. Sections 101 et seq. if, in the good faith judgment of
each of Company and Purchaser, such a proceeding would be feasible and the most
advantageous method of implementing this Agreement and the transactions
contemplated hereby. Company and Purchaser agree that this Section is not
intended to create any obligations on Company that it would not otherwise have
if this Section had not been included in the Agreement, nor shall this Section
operate to increase or decrease any claim that Purchaser otherwise would have
for a breach or rejection of this Agreement.
6.14 SHARING DISTRIBUTION. Company hereby agrees that, as soon as
practicable after December 31, 2005, but in no event later than May 31, 2006 (or
if not then permitted under Delaware law, as soon thereafter as it is legally
able to make such distribution), the Board of Directors shall determine the
Sharing Amount (as defined herein) and shall make the distribution provided
herein. If the Sharing Amount shall be a number other than zero, Company shall
make the required distribution to (a) the holders of shares of Common Stock that
were outstanding immediately prior to consummation of the transactions
contemplated by this Agreement, if the Sharing Amount results in an Upside
Distribution, or (b) the holders of the Other Equity determined pursuant to the
provisions of this Section, if the Sharing Amount results in a Downside
Distribution.
36
Company agrees that any equity securities of Company that may be issued on or
after the Closing Date (other than the Convertible Preferred Stock, the Warrant
or pursuant to the Rights Offering to the extent provided herein) shall not
participate in the Upside Distribution or the Downside Distribution and any such
securities shall have such limitation noted conspicuously on the face of such
securities. Company and Purchaser agree to modify this provision in a manner
that will achieve the same economic results if necessary to comply with Delaware
law or the rules of the NYSE.
(a) The distribution shall be made by Company, out of funds legally
available therefore and shall be in an amount determined in accordance with the
applicable formula below:
For Upside Distributions, the formula for the distribution (D) shall be:
D = T [(.5-C) / E]
For Downside Distributions, the formula for the distribution (D) shall be:
D = T [(.5 - E)/C]
The letters in the foregoing formulas refer to terms defined in this
Section 6.14, as follows:
D: Amount of the Upside Distribution or Downside Distribution
T: Sharing Amount
C: Old S/H Ownership
E: Other Equity
(b) An Upside Distribution or Downside Distribution shall be paid in such
form or forms, including capital stock of Company, as the Board of Directors of
the Company shall determine. The valuation of any such securities or property
shall be determined by the Board of Directors, with the concurrence of a
majority of the Continuing Directors. The Continuing Directors collectively may
retain, at Company's expense, independent advisors to advise them on any
determinations required under Sections 6.14(b) and 6.14(d). If a majority of the
Board of Directors and a majority of the Continuing Directors are unable to
agree upon such valuation, the matter shall be referred for final determination
to an investment banking firm mutually acceptable to the majority of the Board
of Directors and a majority of the Continuing Directors. Company shall make
available to such investment banking firm all such information, books and
records as the investment banking firm may determine to be necessary for the
purpose of its determination and shall pay the fees and expenses of such firm.
No payments are guaranteed to be made under this Section. No interest shall be
payable in respect of any distribution pursuant to this Section.
37
(c) Company will maintain such records as may be required for calculation
of the Sharing Amount, including a cumulative record of the actual collection of
assets in the Portfolio measured against the gross amount recorded for each
asset as of June 30, 2000 or, in the case of commitments, actual collections
measured against the actual amount funded pursuant to or in connection with the
commitment. The gross amount recorded for each asset shall mean the amount
recorded before any specific or general reserves in respect of such asset. In
the case of loans, a particular loan will be deemed "collected" for purposes of
this calculation when the loan is collected, sold or written-off in full; it is
not deemed collected at such time as it is extended or modified. In the case of
a leased asset, the asset will be deemed "collected" for purposes of this
calculation when the leased asset is finally sold or otherwise disposed of. To
the extent the investment in any loan or lease is increased or extended pursuant
either to a revolving commitment or due to management's judgment that, to
protect collection of the loan or recovery of Company's investment in the lease,
such increase or extension is in the Company's best interest, the final
collection will be compared to the loan or lease as so increased.
(d) In determining the "Actual Gain" or "Actual Loss" for purposes of
determining the Sharing Amount hereunder, unrealized gains and unrealized
losses, if any, on the balance of the Portfolio outstanding at December 31, 2005
shall be estimated by the Board of Directors, which estimate shall be approved
by a majority of the Continuing Directors. If a majority of the Board of
Directors and a majority of the Continuing Directors are unable to agree upon
any such estimate, the matter shall be referred for final determination of an
independent accounting firm, (other than the Company's or Purchaser's
independent auditors), which is mutually acceptable to a majority of the Board
of Directors and a majority of the Continuing Directors. The Company shall make
available to such independent accounting firm all such information, books and
records as the independent accounting firm may determine to be necessary for the
purpose of its determination and shall pay the fees and expenses of such firm.
Any determination made by the Board of Directors, or where so required made by
the Board of Directors with the concurrence of a majority of the Continuing
Directors, or made by an independent accounting firm or investment banking firm
as herein provided, shall be conclusive and binding and shall not be subject to
challenge or dispute absent manifest error.
Set forth on SCHEDULE 6.14 are examples, solely for purposes of
illustration, of various calculations of the Sharing Amount and the Upside
Distribution or Downside Distribution relating to such Sharing Amounts.
(e) For purposes of this Section, the following definitions shall apply:
"Actual Loss" shall mean the actual cumulative loss on the Portfolio.
Actual cumulative loss on the Portfolio shall include all realized and
unrealized gains and losses as set forth in (c) and (d) above. Gains and losses
on the Portfolio shall be determined without reference to any specific or
general reserves in respect of the relevant assets.
38
"Actual Gain" shall mean the actual cumulative gain on the Portfolio.
Actual cumulative gain on the Portfolio shall include all realized and
unrealized gains and losses as set forth in (c) and (d) above. Gains and losses
on the Portfolio shall be determined without reference to any specific or
general reserves in respect of the relevant assets.
"After-Tax Loss" shall mean the Actual Loss multiplied by 60%.
"After-Tax Gain" shall mean the Actual Gain multiplied by 60%.
"Baseline" shall mean $780 million.
"Downside Distribution" shall mean the distribution made to the holders of
the Convertible Preferred Stock and the Purchaser in respect of the Warrant (the
"Other Equity") The allocation of any Downside Distribution shall be calculated
by multiplying the amount of the Downside Distribution by the Preferred
Percentage of Other Equity, the Warrant Percentage of Other Equity and the
Rights Percentage of Other Equity, respectively. Amounts in respect of the
Preferred Percentage of Other Equity shall be paid to the holders of record of
the Series B Preferred Stock and of the Series C Preferred Stock, if any,
purchased by Purchaser as a result of its standby commitment set forth in
Section 6.11(a), amounts in respect of the Warrant Percentage shall be paid to
Purchaser, and amounts in respect of the Rights Percentage shall be paid to
holders of record of Series C Preferred Stock purchased in the Rights Offering
(which shall exclude shares of Series C Preferred Stock, if any, purchased by
Purchaser as a result of its standby commitment set forth in Section 6.11(a),
but which shall include any shares of Series C Preferred Stock subsequently
purchased by Purchaser).
"Fully Diluted Equity" shall mean all outstanding shares of Common Stock of
Company and all other shares of Common Stock that may be issued by Company upon
the exercise, conversion or exchange of all rights, options, warrants or other
securities convertible into or exchangeable for shares of Common Stock
(including the Convertible Preferred Stock and the Warrant), whether or not such
rights, options, warrants or other securities are then vested, convertible or
exercisable.
"Other Equity Ownership" shall mean the sum of (i) Preferred Ownership,
(ii) Warrant Ownership, and (iii) Rights Ownership.
"Old S/H Ownership" shall mean the percentage of Fully Diluted Equity
represented by the shares of Common Stock of Company outstanding immediately
prior to Purchaser's acquisition of securities pursuant to the Purchase
Agreement.
"Portfolio" shall mean (a) all loans, advances, capital leases or other
investments included in the (i) gross "Investment in Financing Transactions," as
reflected on the Company's June 30, 2000 consolidated balance sheet (the "June
30 Balance Sheet"), (ii) "Investments," as reflected on the June 30 Balance
Sheet, (iii) "Offlease Aircraft," as reflected in the June 30 Balance Sheet and
(b) the aggregate amount of all unfunded commitments of the Company existing as
of June 30, 2000 as reflected on SCHEDULE 6.14(E), which shall be prepared by
39
Company upon consultation with Purchaser and shall be finalized and delivered
prior to the Closing Date, but only to the extent that such commitments have
been funded by the Company after June 30, 2000.
"Preferred Ownership" shall mean the percentage of Fully Diluted Equity of
Company owned by Purchaser by virtue of Purchaser's ownership of shares of
Convertible Preferred Stock (including any Convertible Preferred Stock owned by
Purchaser pursuant to Purchaser's obligations in connection with the Rights
Offering) based on the number of shares of Common Stock into which each share of
Convertible Preferred Stock may be converted, regardless of whether or not such
Convertible Preferred Stock is then convertible.
"Preferred Percentage of Other Equity" shall mean the fraction, expressed
as a percentage, the numerator of which is the Preferred Ownership and the
denominator of which is the Other Equity Ownership.
"Rights Ownership" shall mean the percentage of Fully Diluted Equity of
Company owned by stockholders (excluding Purchaser in respect of shares of
Series C Preferred Stock included in the Preferred Ownership, but including
shares of Series C Preferred Stock subsequently purchased by Purchaser) by
virtue of their respective ownership of shares of Series C Preferred Stock based
on the number of shares of Common Stock into which each share of Series C
Preferred Stock may be converted, regardless of whether or not such Series C
Preferred Stock is then convertible.
"Rights Percentage of Other Equity" shall mean the fraction, expressed as a
percentage, the numerator of which is the Rights Ownership and the denominator
of which is the Other Equity Ownership.
"Sharing Amount" shall mean the Baseline MINUS the After-Tax Loss or PLUS
the After-Tax Gain. If such amount is negative, it shall be divided by 60%.
"Upside Distribution" shall mean the distribution to be made to certain
holders of Common Stock, as contemplated by this Section 6.14, if the Sharing
Amount is a positive number.
"Warrant Ownership" shall mean the percentage of Fully Diluted Equity of
Company represented by the Warrant based on the number of shares of Common Stock
into which the Warrant is exercisable as of the date of determination,
regardless of whether or not the Warrant is then exercisable.
"Warrant Percentage of Other Equity" shall mean the fraction, expressed as
a percentage, the numerator of which is the Warrant Ownership and the
denominator of which is the Other Equity Ownership.
6.15 TAXES. Company shall consult with Purchaser in connection with any Tax
planning and in the fashioning and implementation of any transaction or course
40
of conduct that would materially impact Company's tax attributes, including
Company's tax attributes after completion of the transactions contemplated under
this Agreement; Company will not effectuate any such planning, transaction or
course of action without prior written consent of Purchaser, which consent may
not be unreasonably withheld.
6.16 MERGER OR CONSOLIDATION, LIQUIDATION OR DISSOLUTION. In case the
Company shall consolidate or merge with or into another corporation (where
Company is not the surviving corporation), the successor corporation shall
expressly assume the due and punctual observance and performance of Company's
obligations under Section 6.14. In case Company shall liquidate or dissolve
prior to December 31, 2005, Company and any trustee, receiver and similar person
shall make appropriate arrangements to satisfy Company's obligations under
Section 6.14. Company agrees that it will not enter into any agreements that
would reasonably be expected to restrict Company's ability to make the
distribution provided for in Section 6.14.
6.17 FURTHER ASSURANCES. Each of the parties hereto shall execute such
documents and other instruments and take such further actions as may be
reasonably required or desirable to carry out the provisions hereof and
consummate the transactions contemplated by this Agreement and the other
Transaction Documents. Upon the terms and subject to the conditions hereof, each
of the parties hereto shall take or cause to be taken all actions and to do or
cause to be done all other things necessary, proper or advisable to consummate
and make effective as promptly as practicable the transactions contemplated by
this Agreement and to obtain in a timely manner all necessary waivers, consents
and approvals and to effect all necessary registrations and filings.
ARTICLE VII
CONDITIONS PRECEDENT
7.1 CONDITIONS TO EACH PARTY'S OBLIGATIONS. The respective obligation of
each party to complete the purchase and sale of the Securities hereunder shall
be subject to the satisfaction prior to or concurrently with the Closing Date of
the following conditions:
(a) NO INJUNCTIONS OR RESTRAINTS. No statute, rule, regulation, injunction,
restraining order or decree of any court or Governmental Authority of competent
jurisdiction shall be in effect which restrains or prevents the transactions
contemplated hereby.
(b) HSR ACT. The waiting period applicable to the consummation of the
transaction contemplated hereunder under the HSR Act shall have expired or been
terminated.
(c) REFINANCING. The Refinancing shall have been consummated upon terms
acceptable to both Company and Purchaser (it being understood that in making
this determination, Purchaser may consider the effect such Refinancing will have
41
on Purchaser and on the value of the securities contemplated to be purchased
under this Agreement or the other Transaction Documents).
(d) BOND INDEBTEDNESS. Modification of the Bond Indebtedness on terms
acceptable to both Company and Purchaser shall have been consummated (it being
understood that in making this determination, Purchaser may consider the effect
this modification of the Bond Indebtedness will have on Purchaser and on the
value of the security contemplated to be purchased under this agreement or the
other Transaction Documents).
7.2 CONDITIONS TO OBLIGATIONS OF PURCHASER. The obligation of Purchaser to
complete the purchase of the Securities hereunder is subject to the satisfaction
of the following conditions, any or all of which may be waived in whole or in
part by Purchaser:
(a) REPRESENTATIONS AND WARRANTIES. The representations and warranties of
Company made hereunder shall be true and correct in all material respects
(except for those representations and warranties that are qualified as to
materiality, "Material Adverse Effect," which shall be true and correct), on and
as of the date hereof (except to the extent such representations and warranties
speak as of an earlier date) and after giving effect to consummation of the
Refinancing on and as of the Closing Date.
(b) AGREEMENTS. Company shall have performed and complied in all material
respects with all of its respective undertakings, covenants, conditions and
agreements required by this Agreement to be performed or complied with by it
prior to or at the Closing.
(c) CERTIFICATE OF DESIGNATION. The Certificate of Designation shall have
been filed with the Secretary of State of the State of Delaware in accordance
with the laws of that State.
(d) RULE 14F-1 INFORMATION STATEMENT. Company shall have filed with the SEC
and transmitted to all holders of record of securities of Company who would be
entitled to vote at a meeting for election of directors the information required
by Section 14(f) of the Exchange Act and Rule 14f-1 thereunder, and the Closing
shall not take place until at least ten days shall have elapsed after such
transmittal.
(e) OFFICER'S CERTIFICATE. Company shall have delivered to Purchaser (i) a
copy of the resolutions adopted by the Board of Directors, certified by the
Secretary or an Assistant Secretary of Company authorizing this Agreement and
evidencing compliance with Sections 4.24 and 4.25 hereof and (ii) a certificate
dated the Closing Date, of an appropriate officer of Company (without any
personal liability) certifying as to fulfillment of the conditions set forth in
Sections 7.2(a) and 7.2(b).
(f) REGISTRATION RIGHTS AGREEMENT. Company shall have executed and
delivered the Registration Rights Agreement.
42
(g) OPINION OF COMPANY'S COUNSEL. Purchaser shall have received an opinion
letter, dated as of the Closing Date, of ▇▇▇▇▇▇, ▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP, counsel to
Company, in form and substance reasonably satisfactory to Purchaser. In
rendering such opinion, ▇▇▇▇▇▇, ▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP may rely on the opinion of
Company's general counsel.
7.3 CONDITIONS TO OBLIGATIONS OF COMPANY. The obligation of Company to
complete the sale of the Securities hereunder is subject to the satisfaction of
the following conditions, any or all of which may be waived, in whole or in
part, by Company:
(a) REPRESENTATIONS AND WARRANTIES. The representations and warranties of
Purchaser made hereunder shall be true and correct in all material respects on
and as of the date hereof and (except to the extent such representations and
warranties speak as of an earlier date) on and as of the Closing Date as if made
on such date.
(b) AGREEMENTS. Purchaser shall have performed and complied in all material
respects with all of the undertakings, covenants, conditions and agreements
required by this Agreement to be performed or complied with by Purchaser prior
to or at the Closing.
(c) OFFICER'S CERTIFICATE. Company shall have received a certificate signed
by an appropriate officer of Purchaser certifying as to fulfillment of the
conditions set forth in Sections 7.3(a) and 7.3(b).
(d) OPINION OF PURCHASER'S COUNSEL. Company shall have received an opinion
letter, dated as of the Closing Date, of Weil, Gotshal & ▇▇▇▇▇▇ LLP, counsel to
Purchaser, in form and substance reasonably satisfactory to Company.
ARTICLE VIII
TERMINATION AND AMENDMENT
8.1 VOLUNTARY TERMINATION. This Agreement may be terminated and the
transactions contemplated hereby may be abandoned at any time prior to the
Closing:
(a) by mutual written consent of Company and Purchaser;
(b) by Purchaser, if either (i) any of the conditions set forth in Section
7.1 or 7.2 shall have become impossible to satisfy, and shall not have been
waived by Purchaser, or (ii) Company shall breach in any material respect any of
its representations, warranties, covenants or obligations hereunder and such
breach shall not have been cured in all material respects or waived and Company
shall not have provided reasonable assurance that such breach will be cured in
all material respects on or before the Closing Date;
(c) by Company, if either (i) any of the conditions set forth in Section
7.1 or 7.3 shall have become impossible to satisfy, and shall not have been
waived by Company, or (ii) Purchaser shall breach in any material respect any of
43
its representations, warranties, covenants or obligations hereunder and such
breach shall not have been cured in all material respects or waived and
Purchaser shall not have provided reasonable assurance that such breach will be
cured in all material respects on or before the Closing Date;
(d) by Company if (i) Company is not in material breach of Section 6.4
hereof, (ii) the Board of Directors authorizes Company, subject to complying
with the terms of this Agreement, to enter into a binding written agreement
concerning a transaction that constitutes a Superior Proposal and Company
notifies Purchaser in writing that it intends to enter into such an agreement,
attaching the most current form of such agreement to such notice, and (iii)
during the three-day period after Company's notice, (A) Company shall have
negotiated with, and shall have caused its respective financial and legal
advisors to, negotiate with Purchaser to attempt to make such commercially
reasonable adjustments in the terms and conditions of this Agreement as would
enable Company to proceed with the transactions contemplated herein and (B) the
Board of Directors shall have concluded, after considering the results of such
negotiations, that any Superior Proposal giving rise to Company's notice
continues to be a Superior Proposal. Company may not effect such termination
unless contemporaneously therewith Company pays to Purchaser in immediately
available funds the fee required to be paid pursuant to Section 8.4. Company
agrees (x) that it will not enter into a binding agreement referred to in clause
(ii) above until at least the fourth day after it has provided the notice to
Purchaser required thereby and (y) to notify Purchaser promptly if its intention
to enter into a written agreement referred to in its notification shall change
at any time after giving such notification.
(e) by Purchaser, if Company accepts an offer or enters into a written
agreement for an Acquisition Proposal;
(f) by either Company or Purchaser, if the Closing shall not have occurred
on or before June 30, 2001;
(g) by either Company or Purchaser if, in the good faith judgment of the
Board of Directors, the Board determines that it is in the best interests of the
Company to commence a voluntary petition for reorganization relief pursuant to
chapter 11 of title 11 of the United States Code, 11 U.S.C. Sections 101 ET SEQ.
Company shall provide Purchaser notice of such determination as promptly as
practicable following the Board's determination; or
(h) by Company if, in its good faith judgment after reasonable inquiry of
Purchaser, Company determines that Purchaser is not pursuing the Refinancing in
good faith.
In the event of a termination by Company or Purchaser pursuant to this
Section 8.1, written notice thereof shall promptly be given to the other party
hereto. Notwithstanding the foregoing, a party shall not be permitted to
terminate this Agreement pursuant to clause (b) or (c) hereof if such party is
44
in breach of any of its representations, warranties, covenants or agreements
contained in this Agreement and such breach would have a material adverse effect
on the ability of such party to consummate the transactions contemplated hereby.
Neither party may rely on the failure of any condition precedent set forth in
Article VII to be satisfied if such failure was caused by such party's failure
to act in good faith or to use its commercially reasonable efforts to consummate
the transactions contemplated by this Agreement in accordance with Section 6.1.
8.2 EFFECT OF TERMINATION. In the event of a termination by Company or
Purchaser pursuant to Section 8.1, except as otherwise provided herein, the
transactions contemplated by this Agreement shall be terminated without further
action by any party, and such termination shall be without liability of either
party (or any stockholder, director, officer, partner, employee, agent,
consultant or representative of such party). Notwithstanding the foregoing,
nothing in this Section 8.2 shall be deemed to release any party from any
liability for (i) the willful failure of such party to fulfill a condition to
the performance of any obligation of the other party hereto, (ii) any breach by
such party of the terms and provisions of any covenant or agreement contained in
this Agreement, or (iii) the breach by such party of any representation or
warranty contained in this Agreement. The provisions of this Article VIII and
Article X and Sections 5.2(b) and 6.3 shall survive any termination of this
Agreement pursuant to Section 8.1 hereof. In the event of a termination pursuant
to Section 8.1(g), Purchaser shall have a liquidated damages claim of $3
million. Upon a termination of this Agreement pursuant to Section 8.1(g),
Purchaser shall be released from the restrictions set forth in paragraph 9 of
the Non-Disclosure Agreement.
8.3 FEES AND EXPENSES. Except as contemplated by Article IX hereof, each of
the parties hereto shall pay the fees and expenses of its counsel, accountants,
financial advisors and other experts and shall pay all other costs and expenses
incurred by it in connection with the conduct of due diligence reviews, the
negotiation, preparation and execution of this Agreement and the other
Transaction Documents and the consummation of the transactions contemplated
hereby and thereby.
8.4 BREAK-UP FEE. In the event that this Agreement is terminated by Company
or Purchaser for any reason and on or before November 10, 2001, Company accepts
an offer or enters into a written agreement with respect to, or consummates, an
Acquisition Proposal, Company shall pay to Purchaser in immediately available
funds, at Purchaser's option, either (I) $15 million or (II) in the case of an
Acquisition Proposal involving the Common Stock of Company, an amount equal to
the product of 3,000,000 multiplied by the excess of (x) the fair market value
of the consideration to be paid for each share of Common Stock pursuant to such
Acquisition Proposal over (y) $2.50; PROVIDED, HOWEVER, for the purpose of
determining the amount referred to in clause (II), the amount referred to in
clause (y) shall be adjusted downwards or upwards, as appropriate, to give
effect to any stock split or reverse split applicable to the Common Stock or to
any stock dividend or other distribution payable in shares of Common Stock which
occurs after the date hereof. Company hereby waives any right to set off or
counterclaim against Purchaser with respect to such payment.
45
8.5 AMENDMENT. This Agreement may be amended, modified or supplemented at
any time by an agreement in writing signed by the parties hereto by written
agreement of Purchaser and Company.
8.6 EXTENSION; WAIVER. At any time prior to the Closing, Purchaser and
Company may, to the extent legally allowed: (i) extend the time for the
performance of any of the obligations or other acts of the other party hereto;
(ii) waive any inaccuracies in the representations and warranties of the other
party contained herein or in any document delivered pursuant hereto; and (iii)
waive compliance by the other party with any of the agreements or conditions
contained herein. Any such extension or waiver shall be valid only if set forth
in a written instrument. The failure of Purchaser or Company to assert any of
its rights hereunder shall not constitute a waiver of such rights nor in any way
affect the validity of this Agreement or any part hereof or the right of such
party thereafter to enforce each and every provision of this Agreement. No
waiver of any breach of or non-compliance with this Agreement shall be held to
be a waiver of any other or subsequent breach or non-compliance.
ARTICLE IX
INDEMNIFICATION
9.1 SURVIVAL OF REPRESENTATION AND WARRANTIES. All representations and
warranties contained in this Agreement and all claims with respect thereto shall
terminate upon the expiration of the later of (i) 12 months after the Closing
Date or (ii) March 31 of the year following the year in which the Closing Date
occurs, except that the representations and warranties contained in Sections 4.1
and 4.2 shall survive indefinitely and the representations and warranties
contained in Section 4.15 and in the certificate delivered pursuant to section
7.2(e) as they relate to section 4.15 shall survive until the applicable statute
of limitations has run for the matters contained therein. Notwithstanding the
preceding sentence, any covenant, agreement, representation or warranty in
respect of which indemnity may be sought under this Agreement shall survive the
time at which it would otherwise terminate pursuant to the preceding sentence,
if notice of the inaccuracy or breach thereof giving rise to such right of
indemnity shall have been given to the party against whom such indemnity may be
sought prior to such time.
9.2 INDEMNIFICATION. (a) Company shall indemnify Purchaser against and
shall hold Purchaser harmless from any and all damages, loss, liability and
expense (including, without limitation, reasonable expenses of investigation and
reasonable attorneys' fees and expenses in connection with any action, suit or
proceeding, including any action, suit or proceeding against Company to enforce
its indemnification rights hereunder) ("Damages") incurred or suffered by
Purchaser arising out of any material misrepresentation or breach of warranty,
covenant or agreement made or to be performed by Company pursuant to this
Agreement; PROVIDED that (i) Company shall not be liable under this Section
9.2(a) with respect to any misrepresentation or breach of warranty unless the
aggregate amount of Damages with respect to all misrepresentations and breaches
of warranties exceeds $10 million, in which event Purchaser shall be entitled to
46
make a claim against Company for the full amount of such Damages with respect to
any misrepresentation or breach of warranty and (ii) Company's maximum liability
under this Section 9.2(a) with respect to any misrepresentation or breach of
warranty shall not exceed the aggregate amount invested by Purchaser in Company
pursuant to this Agreement and the Rights Offering, up to a maximum amount of
$350 million.
(b) Purchaser shall indemnify Company against and shall hold Company
harmless from any and all Damages (including any action, suit or proceeding
against Purchaser to enforce its indemnification rights hereunder) incurred or
suffered by Company arising out of any misrepresentation or breach of warranty,
covenant or agreement made or to be performed by Purchaser pursuant to this
Agreement; PROVIDED that (i) Purchaser shall not be liable under this Section
9.2(b) with respect to any misrepresentation or breach of warranty unless the
aggregate amount of Damages with respect to all misrepresentations and breaches
of warranties exceeds $10 million, in which event Company shall be entitled to
make a claim against the Purchaser for the full amount of such Damages and (ii)
Purchaser's maximum liability under this Section 9.2(b) with respect to any
misrepresentation or breach of warranty shall not exceed the aggregate amount
invested by Purchaser in Company pursuant to this Agreement and the Rights
Offering, up to a maximum of $350 million.
9.3 PROCEDURES. The party seeking indemnification under Section 9.2 (the
"Indemnified Party") agrees to give prompt notice to the party against whom
indemnity is sought (the "Indemnifying Party") of the assertion of any claim, or
the commencement of any suit, action or proceeding in respect of which indemnity
may be sought under such Section; PROVIDED, HOWEVER, that the failure of an
Indemnified Party to give prompt notice to the Indemnifying Party shall not
affect the rights of the Indemnified Party to indemnification hereunder except
(and then only to the extent that) the Indemnifying Party is actually materially
prejudiced by reason of such failure to give prompt notice. The Indemnifying
Party may at the request of the Indemnified Party participate in and control the
defense of any such suit, action or proceeding at its own expense. The
Indemnifying Party shall not be liable under Section 9.2 for any settlement
effected without its prior written consent (which shall not be unreasonably
withheld) of any claim, litigation or proceeding in respect of which indemnity
may be sought hereunder.
ARTICLE X
MISCELLANEOUS
10.1 NOTICES. All notices, requests, permissions, waivers, and other
communications hereunder shall be in writing and shall be deemed to have been
duly given, (a) five Business Days following sending by registered or certified
mail, postage prepaid, (b) when sent if sent by facsimile during the normal
business hours of the recipient, or one Business Day after the date sent if sent
by facsimile after the normal business hours of the recipient; PROVIDED that the
sending party receives written confirmation that the facsimile has been
successfully transmitted to the intended recipient, (c) when delivered, if
delivered personally to the intended recipient and (d) one Business Day
47
following sending by overnight delivery via a national courier service, and in
each case, addressed to a party at the following address for such party:
(i) If to Company, to:
The FINOVA Group Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Senior Vice-President,
General Counsel and Secretary
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy (which shall not
constitute notice) to:
▇▇▇▇▇▇, ▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
(ii) If to Purchaser, to:
Leucadia National Corporation
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, President
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy (which shall not
constitute notice) to:
Weil, Gotshal & ▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Facsimile No: (▇▇▇) ▇▇▇-▇▇▇▇
Such names and addresses may be changed by notice given in accordance with this
Section.
10.2 BINDING EFFECT; BENEFITS. Except as otherwise provided herein, this
Agreement shall be binding upon and inure to the benefit of the parties to this
Agreement and their respective successors and permitted assigns. Nothing in this
Agreement, express or implied, is intended or shall be construed to give any
Person other than the parties to this Agreement or their respective successors
or assigns any legal or equitable right, remedy or claim under or in respect of
any agreement or any provision contained herein, other than the Continuing
48
Directors and then solely with respect to the provisions of Sections 6.7 and
6.14 of this Agreement. The Continuing Directors shall be entitled to pursue
such rights, remedies and claims at Company's expense.
10.3 COMPLETE AGREEMENT. This Agreement (including the Exhibits and
Schedules attached hereto, all of which are a part hereof), together with the
Non-Disclosure Agreement and the Transaction Documents, constitute the complete
agreement and understanding of the parties with respect to the subject matter
hereof and thereof and supersede any previous agreement or understanding between
them relating thereto. No action taken pursuant to this Agreement, including,
without limitation, any investigation by or on behalf of any party, shall be
deemed to constitute a waiver by the party taking such action, of compliance
with any representations, warranties, covenants or agreements contained herein.
10.4 ASSIGNABILITY. Neither this Agreement nor any of the rights, interest
or obligations hereunder or under any other Transaction Document shall be
assigned by any of the parties hereto without the prior written consent of the
other party; PROVIDED, HOWEVER, that Purchaser shall have the right to assign
this Agreement and the other Transaction Documents to any wholly-owned
Subsidiary of Purchaser without obtaining such consent.
10.5 REMEDIES. Purchaser, in addition to being entitled to exercise all
rights granted by law, including recovery of damages, will be entitled to
specific performance of its rights under this Agreement and the other
Transaction Documents. Company agrees that monetary damages would not be
adequate compensation for any loss incurred by reason of a breach by it of the
provisions of this Agreement or any other Transaction Documents and hereby
agrees to waive the defense in any action for specific performance that a remedy
at law would be adequate. In any action or proceeding brought to enforce any
provision of this Agreement or any other Transaction Document or where any
provision hereof is validly asserted as a defense, the successful party shall be
entitled to recover reasonable attorneys' fees in addition to any other
available remedy.
10.6 SECTION AND OTHER HEADINGS. The section and other headings contained
in this Agreement are for reference purposes only and shall not affect the
meaning or interpretation of this Agreement. All references herein to
"Articles", "Sections" or "Exhibits" shall be deemed to be references to
Articles or Sections hereof or Exhibits hereto unless otherwise indicated.
10.7 SEVERABILITY. In the event that any one or more of the provisions
contained in this Agreement shall be determined to be invalid, illegal or
unenforceable in any respect for any reason, the validity, legality and
enforceability of any such provision or provisions in every other respect and
the remaining provisions of this Agreement shall not be in any way impaired.
49
10.8 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original and all of which
together shall be deemed to be one and the same instrument.
10.9 GOVERNING LAW; WAIVER OF JURY TRIAL. This Agreement shall be governed
by, construed and enforced in accordance with, the laws of the State of New York
without regard to the principles thereof relating to conflict of laws. Each of
the parties hereby submits to personal jurisdiction and waives any objection as
to venue in the federal or state courts located in the County of New York, State
of New York. Service of process on the parties in any action arising out of or
relating to this Agreement shall be effective if mailed to the parties in
accordance with Section 10.1 hereof. The parties hereto waive all right to trial
by jury in any action or proceeding to enforce or defend any rights under this
Agreement and any other Transaction Document.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK.]
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IN WITNESS WHEREOF, Company and Purchaser have executed this Agreement as
of the day and year first above written.
THE FINOVA GROUP INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: President & Chief Executive
Officer
LEUCADIA NATIONAL CORPORATION
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: President
51
