Exhibit 2-1
AGREEMENT AND PLAN OF MERGER
BY AND BETWEEN
PEOPLE'S UNITED FINANCIAL, INC.
AND
FINANCIAL FEDERAL CORPORATION
DATED AS OF NOVEMBER 22, 2009
TABLE OF CONTENTS
Page
ARTICLE I THE MERGER 1
1.1. The Merger 1
1.2. Effective Time 1
1.3. Effects of the Merger 2
1.4. Closing 2
1.5. Certificate of Incorporation 2
1.6. Bylaws 2
1.7. Directors of the Surviving Company 2
1.8. Officers of the Surviving Company 2
ARTICLE II CONSIDERATION 2
2.1. Effect on Company Common Stock 2
2.2. No Fractional Shares 3
2.3. Acquiror Common Stock; Acquiror Preferred Stock 3
2.4. Treatment of Options and Other Stock Based Awards 3
2.5. Reservation of Right to Revise Structure 4
2.6. Withholding Rights 4
2.7. Certain Adjustments 4
ARTICLE III EXCHANGE OF CERTIFICATES FOR MERGER CONSIDERATION 5
3.1. Acquiror to Make Merger Consideration Available 5
3.2. Exchange of Certificates 5
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE COMPANY 7
4.1. Corporate Organization 7
4.2. Capitalization 8
4.3. Authority; No Violation 10
4.4. Consents and Approvals 11
4.5. SEC Documents; Other Reports; Internal Controls 12
4.6. Financial Statements; Undisclosed Liabilities 13
4.7. Broker's Fees 13
4.8. Absence of Certain Changes or Events 14
4.9. Legal Proceedings 14
4.10. Taxes 14
4.11. Employees; Employee Benefit Plans 16
4.12. Board Approval; Stockholder Vote Required 18
4.13. Compliance with Applicable Law 18
4.14. Certain Contracts 19
4.15. Agreements with Regulatory Agencies 20
4.16. Company Information 20
-i-
4.17. Title to Property 20
4.18. Insurance 21
4.19. Environmental Liability 21
4.20. Opinion of Financial Advisor 22
4.21. Intellectual Property 22
4.22. Finance Receivable Matters 23
4.23. Securitization Matters 24
4.24. Transactions with Affiliates 25
4.25. Labor Matters 25
4.26. Derivative Instruments and Transactions 26
4.27. Approvals 26
ARTICLE V REPRESENTATIONS AND WARRANTIES OF ACQUIROR 26
5.1. Corporate Organization 27
5.2. Capitalization 27
5.3. Authority; No Violation 28
5.4. Consents and Approvals 28
5.5. SEC Documents; Other Reports; Internal Controls 29
5.6. Financial Statements; Undisclosed Liabilities 30
5.7. Broker's Fees 31
5.8. Absence of Certain Changes or Events 31
5.9. Legal Proceedings 31
5.10. Board Approval; No Stockholder Vote Required 31
5.11. Compliance with Applicable Law 32
5.12. Agreements with Regulatory Agencies 32
5.13. Acquiror Information 32
5.14. Approvals 33
5.15. Tax-Free Reorganization Treatment 33
ARTICLE VI COVENANTS RELATING TO CONDUCT OF BUSINESS 33
6.1. Conduct of Business Prior to the Effective Time 33
6.2. Company Forbearances 33
6.3. No Fundamental Acquiror Changes 37
6.4. Company Dividends 37
ARTICLE VII ADDITIONAL AGREEMENTS 37
7.1. Regulatory Matters 37
7.2. Access to Information 38
7.3. Stockholder Approval 39
7.4. Acquisition Proposals 40
7.5. Reasonable Best Efforts 42
7.6. Employees; Employee Benefit Plans 42
7.7. Indemnification; Directors' and Officers' Insurance 43
7.8. Advice of Changes 44
-ii-
7.9. Financial Statements and Other Current Information 44
7.10. Stock Exchange Listing 45
7.11. Takeover Laws 45
7.12. Stockholder Litigation 45
7.13. Exemption from Liability 45
7.14. Tax-Free Reorganization Treatment 46
7.15. Offer Letters 46
ARTICLE VIII CONDITIONS PRECEDENT 46
8.1. Conditions to Each Party's Obligation to Effect the Merger 46
8.2. Conditions to Obligations of Acquiror 46
8.3. Conditions to Obligations of the Company 47
ARTICLE IX TERMINATION AND AMENDMENT 48
9.1. Termination 48
9.2. Effect of Termination. 49
9.3. Amendment 51
9.4. Extension; Waiver 51
ARTICLE X GENERAL PROVISIONS 51
10.1. Nonsurvival of Representations, Warranties and Agreements 51
10.2. Expenses 51
10.3. Notices 51
10.4. Interpretation 52
10.5. Counterparts 53
10.6. Entire Agreement 53
10.7. Governing Law; Consent to Jurisdiction; Waiver of Jury
Trial 53
10.8. Severability 54
10.9. Publicity 54
10.10.Assignment; Third Party Beneficiaries 55
00.00.Xxxxxxxxxxxx 55
10.12.Specific Performance 55
-iii-
INDEX OF DEFINED TERMS
Acquiror 1 ERISA Employee Benefit Plan 16
Acquiror Common Stock 3 Exchange Act 8
Acquiror Disclosure Letter 26 Exchange Agent 5
Acquiror Plans 42 Exchange Fund 5
Acquiror Preferred Stock 3 Exchange Ratio 3
Acquiror Regulatory Agreement 32 Finance Receivables 23
Acquiror Reports 29 Form S-4 11
Acquisition Proposal 40 GAAP 7
affiliate 25 Governmental Entity 11
Agreement 1 HSR Act 11
Articles of Merger 1 Indemnified Parties 43
Business Day 2 Insurance Amount 44
Capitalization Date 8 IT Assets 23
CERCLA 21 knowledge 53
Certificate of Merger 1 Law 11
Certificates 5 Liens 10
Change in Company Recommendation 39 Material Adverse Effect 7
Closing 2 Materials of Environmental
Closing Date 2 Concern 22
Code 1 Merger 1
Company 1 Merger Consideration 3
Company Board Approval 18 NASDAQ 3
Company Common Stock 2 Notice Period 39
Company Contract 19 NRS 1
Company Disclosure Letter 7 Option Consideration 3
Company Employees 17 Per Share Amount 4
Company Financing 24 person 53
Company Insiders 45 Plans 17
Company Option 3 Proprietary Rights 22
Company Preferred Stock 8 Proxy Statement/Prospectus 11
Company Recommendation 39 Required Company Vote 18
Company Regulatory Agreement 20 Requisite Regulatory
Company Reports 12 Approvals 46
Company Securitization Documents 25 RSU 4
Company Securitization Trust 25 SEC 11
Company Stock Incentive Plans 4 Section 16 Information 45
Company Stockholders Meeting 39 Securities Act 12
Compensation Agreements 17 Significant Subsidiary 8
Confidentiality Agreement 38 Subsidiary 8
control 25 Superior Proposal 41
Conversion Rate 3 Surviving Company 1
Derivative Transaction 26 Tax 16
DGCL 1 Tax Return 16
Effective Time 2 Taxes 16
End Date 48 Termination Notice Period 49
Environmental Laws 21 Termination Payment 50
ERISA 16 willful and material breach 50
-iv-
AGREEMENT AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER, dated as of November 22, 2009
(as amended, supplemented or otherwise modified from time to time, this
"Agreement"), is entered into by and between PEOPLE'S UNITED FINANCIAL,
INC., a Delaware corporation ("Acquiror"), and FINANCIAL FEDERAL
CORPORATION, a Nevada corporation (the "Company").
WHEREAS, Acquiror and the Company have agreed to enter into a
business combination transaction pursuant to which the Company will merge
with and into Acquiror, with Acquiror surviving the merger (the "Merger")
on the terms and subject to the conditions set forth in this Agreement;
WHEREAS, the respective boards of directors of each of Acquiror
and the Company have determined that it is in the best interests of their
respective companies and stockholders to consummate the Merger and related
transactions provided for herein;
WHEREAS, for United States federal income tax purposes, it is
intended that the Merger shall qualify as a reorganization under Section
368(a) of the Internal Revenue Code of 1986, as amended (the "Code"), and
this Agreement is intended to be, and is hereby, adopted as a plan of
reorganization within the meaning of Treasury Regulation Section 1.368-
2(g); and
WHEREAS, this Agreement contains the "plan of merger" described
in Section 92A.100 of the Nevada Revised Statutes (as in effect from time
to time, the "NRS").
NOW, THEREFORE, in consideration of the mutual covenants,
representations, warranties and agreements contained herein, subject to the
conditions set forth herein, and intending to be legally bound hereby, the
parties hereby agree as follows:
ARTICLE I
THE MERGER
1.1. The Merger
Upon the terms and subject to the conditions of this
Agreement, in accordance with the Delaware General Corporation Law (as in
effect from time to time, the "DGCL") and the NRS, at the Effective Time
(as defined in Section 1.2), the Company shall merge with and into
Acquiror, whereupon the separate corporate existence of the Company shall
cease. Acquiror shall be the surviving corporation (hereinafter sometimes
referred to as the "Surviving Company") in the Merger, and shall continue
its corporate existence under the Laws (as defined in Section 4.3(b)) of
the State of Delaware.
1.2. Effective Time
On the Closing Date (as defined in Section 1.4), the Company
and Acquiror shall cause the Merger to be consummated by filing (i) a
certificate of merger (the "Certificate of Merger") with the Secretary of
State of the State of Delaware, in such form as required by, and executed
in accordance with, the relevant provisions of the DGCL and (ii) an
articles of merger (the "Articles of Merger") with the Secretary of State
of the State of Nevada, in such form as required by, and executed in
accordance with, the relevant provisions of the NRS. The Merger shall
become effective upon (I) the later of (x) such filing of the Certificate
of Merger with the Secretary of State of the State of Delaware and (y) such
filing of the Articles of Merger with the Secretary of State of the State
of Nevada, or (II) such later date and time specified in the Certificate of
Merger and the Articles of Merger (such time as the Merger becomes
effective is referred to herein as the "Effective Time").
1.3. Effects of the Merger
At and after the Effective Time, the Merger shall have the
effects set forth in the DGCL and the NRS.
1.4. Closing
Subject to the terms and conditions of this Agreement, the closing
of the Merger (the "Closing") shall take place at 10:00 a.m., Eastern time
(i) promptly after, and in no event later than on the date that is the
third Business Day after, the satisfaction or waiver of the conditions set
forth in Article VIII hereof, other than conditions which by their terms
are to be satisfied at Closing or (ii) such other date or time as the
parties may mutually agree (the date on which the Closing occurs, the
"Closing Date"). The Closing shall be held at the offices of Xxxxxxx
Xxxxxxx & Xxxxxxxx LLP, 000 Xxxxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000,
unless another place is agreed upon in writing by the parties. For
purposes of this Agreement, a "Business Day" shall mean any day that is not
a Saturday, a Sunday or other day on which banking organizations in New
York City are required or authorized by Law to be closed.
1.5. Certificate of Incorporation
The certificate of incorporation, as amended, of Acquiror, as
in effect as of immediately prior to the Effective Time, shall be the
certificate of incorporation of the Surviving Company following the Merger
until thereafter amended in accordance with the provisions thereof and of
applicable Law.
1.6. Bylaws
The bylaws, as amended, of Acquiror, as in effect as of
immediately prior to the Effective Time, shall be the bylaws of the
Surviving Company until thereafter amended in accordance with the
provisions thereof, of the certificate of incorporation of the Surviving
Company and of applicable Law.
1.7. Directors of the Surviving Company
The directors of Acquiror immediately prior to the Effective
Time shall be the directors of the Surviving Company as of the Effective
Time, each to hold office in accordance with the certificate of
incorporation and bylaws of the Surviving Company, until their respective
successors are duly elected or appointed (as the case may be) and
qualified.
1.8. Officers of the Surviving Company
The officers of Acquiror immediately prior to the Effective Time
shall be the officers of the Surviving Company as of the Effective Time,
each to hold office in accordance with the certificate of incorporation and
bylaws of the Surviving Company, until their respective successors are duly
appointed, or their earlier death, resignation or removal.
ARTICLE II
CONSIDERATION
2.1. Effect on Company Common Stock
At the Effective Time, by virtue of the Merger and without any
action on the part of the holder of any shares of common stock, par value
$0.50 per share, of the Company (the "Company Common Stock"):
-2-
(a) All shares of Company Common Stock that are (i) owned directly by the
Company as treasury stock or (ii) owned directly by Acquiror (other than,
in the case of clause (ii), shares in trust accounts, managed accounts and
the like for the benefit of customers or shares held in satisfaction of a
debt previously contracted) shall be cancelled and retired and no shares of
common stock, par value $0.01 per share, of Acquiror ("Acquiror Common
Stock"), cash or other consideration shall be delivered in exchange
therefor.
(b) Except as otherwise provided in Section 2.1(a), and subject to Section
2.2, each share of Company Common Stock outstanding immediately prior to
the Effective Time shall be cancelled and converted into the right to
receive (i) one (1.0) share of Acquiror Common Stock (the "Exchange Ratio")
plus (ii) $11.27 in cash. For the purposes of this Agreement, the "Merger
Consideration" means the right to receive the consideration described in
the preceding sentence pursuant to the Merger with respect to each share of
Company Common Stock (together with any cash in lieu of fractional shares
as specified in Section 2.2).
2.2. No Fractional Shares
Notwithstanding any other provision of this Agreement, neither
certificates nor scrip for fractional shares of Acquiror Common Stock shall
be issued in the Merger. Each holder of Company Common Stock who otherwise
would have been entitled to a fraction of a share of Acquiror Common Stock
shall receive in lieu thereof cash (without interest) in an amount
determined by multiplying the fractional share interest to which such
holder would otherwise be entitled (after taking into account all shares of
Company Common Stock owned by such holder at the Effective Time to be
converted into Acquiror Common Stock) by the closing price of Acquiror
Common Stock on the NASDAQ Global Select Market ("NASDAQ") as reported on
the NASDAQ website (or such other source as may be mutually agreed to by
Acquiror and the Company) (such conversion rate, the "Conversion Rate"), on
the last trading day immediately preceding the Closing Date. No such
holder shall be entitled to dividends, voting rights or any other rights in
respect of any fractional share.
2.3. Acquiror Common Stock; Acquiror Preferred Stock
At and after the Effective Time, each share of Acquiror Common
Stock and each share of preferred stock, par value $0.01 per share, of
Acquiror (the "Acquiror Preferred Stock"), if any, issued and outstanding
immediately prior to the Effective Time shall remain an issued and
outstanding share of Acquiror Common Stock or Acquiror Preferred Stock, as
the case may be, and shall not be affected by the Merger.
2.4. Treatment of Options and Other Stock Based Awards
(a) Each option to purchase shares of Company Common Stock (a "Company
Option") issued pursuant to any Company Stock Incentive Plan (as defined in
Section 2.4(c)) that is outstanding and unexercised immediately prior to
the Effective Time, whether or not vested and exercisable, shall become
fully vested and exercisable immediately prior to, and shall be cancelled
at, the Effective Time, and the holder thereof shall be entitled to receive
from Acquiror an amount in cash equal to the product of (i) the excess, if
any, of (x) the Per Share Amount over (y) the exercise price per share of
Company Common Stock subject to such Company Option, with the aggregate
amount payable rounded up to the nearest cent, and (ii) the total number of
shares of Company Common Stock subject to such Company Option as in effect
immediately prior to the Effective Time, less any required withholding
taxes (the "Option Consideration"). The Option Consideration shall be paid
in a lump sum as soon as practicable after the Effective Time but in no
event later than ten (10) Business Days following the Effective Time. For
purposes of this Agreement, the "Per Share Amount" shall mean $11.27 plus
-3-
the product of (A) the Exchange Ratio and (B) the volume weighted average
of the per share prices of Acquiror Common Stock on the NASDAQ for the five
(5) consecutive trading days ending two (2) days prior to the Effective
Time.
(b) Each right to receive one share of Company Common Stock granted by the
Company under any Company Stock Incentive Plan in the form of "stock units"
or "restricted stock" (an "RSU") that is outstanding immediately prior to
the Effective Time shall, as of the Effective Time, become a vested right
to receive the Merger Consideration in accordance with the provisions of
Section 2.1(b), as if the holder of any such RSU were, immediately prior to
the Effective Time, a holder of Company Common Stock.
(c) The 2006 Stock Incentive Plan, the Amended and Restated 2001
Management Incentive Plan and the Supplemental Executive Retirement Plan
and the Amended and Restated 1998 Stock Option/Restricted Stock Plan
(collectively, the "Company Stock Incentive Plans") and any other plan,
program or arrangement providing for the issuance or grant of any other
interest in respect of the capital stock of the Company or any Subsidiary
(as defined in Section 4.1(b)) thereof shall terminate as of the Effective
Time, and the Company shall ensure that following the Effective Time no
holder of any equity-based right shall have any right to acquire equity
securities of the Company or the Surviving Company.
2.5. Reservation of Right to Revise Structure
Acquiror may at any time change the method of effecting the business
combination contemplated by this Agreement if and to the extent that it
deems such a change to be desirable; provided, however, that no such change
shall (A) alter or change the amount or kind of the consideration to be
issued to holders of Company Common Stock, Company Options or RSUs as
merger consideration, (B) materially impede or delay consummation of the
business combination contemplated by this Agreement or (C) adversely affect
the federal income tax treatment of holders of Company Common Stock,
Company Options or RSUs in connection with the business combination
contemplated by this Agreement. In the event Acquiror elects to make such
a change, the parties agree to execute appropriate documents to reflect the
change.
2.6. Withholding Rights
Each of the Exchange Agent (as defined in Section 3.1), Acquiror or
any of Acquiror's Subsidiaries shall be entitled to deduct and withhold
from any payment otherwise payable pursuant to this Agreement such amounts
as are required to be deducted and withheld with respect to such payment
under all applicable Tax (as defined in Section 4.10(n)) Laws. To the
extent that amounts are so deducted or withheld, such amounts shall be
treated for all purposes of this Agreement as having been paid to the
recipient of the payment in respect of which such deduction and withholding
was made.
2.7. Certain Adjustments
The Exchange Ratio shall be subject to appropriate adjustments from
time to time after the date of this Agreement in the event that, subsequent
to the date of this Agreement but prior to the Effective Time, the
outstanding Acquiror Common Stock shall have been increased, decreased,
changed into or exchanged for a different number or kind of shares or
securities through any reorganization, recapitalization, reclassification,
stock dividend, stock split, reverse stock split or other like changes in
Acquiror's capitalization.
-4-
ARTICLE III
EXCHANGE OF CERTIFICATES FOR MERGER CONSIDERATION
3.1. Acquiror to Make Merger Consideration Available
At or promptly after the Effective Time, Acquiror shall deposit, or
shall cause to be deposited, with an exchange agent selected by Acquiror
(subject to the consent, not to be unreasonably withheld, of the Company)
(the "Exchange Agent"), for the benefit of the holders of (a) certificates
that immediately prior to the Effective Time evidenced shares of Company
Common Stock (the "Certificates") and (b) evidence of shares in book-entry
form that immediately prior to the Effective Time evidenced shares of
Company Common Stock, for exchange in accordance with this Article III, (i)
certificates or, at Acquiror's option, evidence of shares of Acquiror
Common Stock in book-entry form issuable pursuant to Section 2.1 and (ii)
cash sufficient to make the payments under Sections 2.1 and 2.2. With
respect to any cash deposited by Acquiror with the Exchange Agent as
described in the immediately preceding sentence, the Exchange Agent shall
invest such cash in the Exchange Fund as directed by Acquiror; provided
that during the first nine (9) months after the Effective Time such
investments shall consist solely of (i) obligations of or guaranteed by the
United States of America or any agency or instrumentality thereof, (ii)
money market accounts, certificates of deposit, bank repurchase agreements
or banker's acceptances of inbound deposits with commercial banks having a
combined capital and surplus of at least $500 million, (iii) commercial
paper obligations rated P-1 or A-1 or better by Standard and Poor's or
Xxxxx'x or (iv) institutional cash management funds. Any interest and
other income resulting from such investments shall be paid to and be income
of Acquiror. For purposes of this Agreement, the "Exchange Fund" shall
mean all Acquiror Common Stock and cash deposited with the Exchange Agent
pursuant to this Section 3.1. In the event that there is insufficient cash
in the Exchange Fund at any time during the first nine (9) months after the
Effective Time to enable the Exchange Agent to make the payments under
Sections 2.1 and 2.2, Acquiror shall deposit, or cause to be deposited,
with the Exchange Agent the amount necessary to cause there to be
sufficient cash in the Exchange Fund to make such payments.
3.2. Exchange of Certificates
(a) As soon as reasonably practicable after the Effective Time, the
Exchange Agent shall mail to each holder of record of a Certificate
immediately prior to the Effective Time whose shares of Company Common
Stock were converted into the right to receive shares of Acquiror Common
Stock pursuant to Section 2.1 a customary form of letter of transmittal
(which shall specify that delivery shall be effected, and risk of loss and
title to the Certificates shall pass, only upon delivery of the
Certificates to the Exchange Agent) containing instructions for use in
effecting the surrender of the Certificates in exchange for the Merger
Consideration. Upon proper surrender of a Certificate for exchange and
cancellation to the Exchange Agent, together with a letter of transmittal,
duly completed and validly executed in accordance with the instructions
thereto, and such other documents as may be required pursuant to such
instructions, the holder of such Certificate shall be entitled to receive
in exchange therefor the Merger Consideration which such holder has the
right to receive in respect of the shares of Company Common Stock formerly
represented by such Certificate and such Certificate so surrendered shall
forthwith be cancelled. No interest will be paid or accrued for the
benefit of holders of the Certificates on the Merger Consideration payable
upon the surrender of the Certificates. Notwithstanding anything to the
contrary contained in this Agreement, any holder of Company Common Stock
that holds such shares in book-entry form (rather than through a
Certificate) shall not be required to deliver a Certificate or an executed
-5-
letter of transmittal to the Exchange Agent in order to receive the Merger
Consideration that such holder is entitled to receive pursuant to Article II.
(b) No dividends or other distributions with respect to Acquiror Common
Stock with a record date after the Effective Time shall be paid to the
holder of any unsurrendered Certificate with respect to shares of Acquiror
Common Stock that such holder would be entitled to receive upon surrender
of such Certificate and no cash payment in lieu of fractional shares shall
be paid to any such holder pursuant to Section 2.2 until such holder shall
surrender such Certificate in accordance with this Article III. After the
surrender of a Certificate in accordance with this Article III, such holder
thereof entitled to receive shares of Acquiror Common Stock shall be
entitled to receive any such dividends or other distributions, without any
interest thereon, with a record date after the Effective Time and which
theretofore had become payable with respect to whole Acquiror Common Stock
issuable to such holder in respect of such Certificate.
(c) If the payment of the Merger Consideration is to be made to a person
other than the registered holder of the Certificate surrendered in exchange
therefor, it shall be a condition of payment that the Certificate so
surrendered shall be properly endorsed (or accompanied by an appropriate
instrument of transfer) and otherwise in proper form for transfer, and that
the person requesting such payment shall pay to the Exchange Agent in
advance any applicable stock transfer or other Taxes or shall establish to
the reasonable satisfaction of the Exchange Agent that such Taxes have been
paid or are not payable.
(d) At and after the Effective Time, there shall be no transfers on the
stock transfer books of the Company of the shares of Company Common Stock
that were issued and outstanding immediately prior to the Effective Time.
If, after the Effective Time, Certificates representing such shares are
presented for transfer to the Exchange Agent, they shall be cancelled and
exchanged for the Merger Consideration as provided in this Article III.
(e) Any portion of the property deposited with the Exchange Agent pursuant
to Section 3.1 that remains unclaimed by the stockholders of the Company
for nine (9) months after the Effective Time shall be paid, at the request
of Acquiror, to or as directed by Acquiror. Any stockholders of the
Company who have not theretofore complied with this Article III shall
thereafter look only to Acquiror for payment of the Merger Consideration
(including cash in lieu of fractional shares) and unpaid dividends and
distributions on the Acquiror Common Stock deliverable in respect of each
share of Company Common Stock held by such stockholder at the Effective
Time as determined pursuant to this Agreement, in each case, without any
interest thereon. Notwithstanding anything to the contrary contained
herein, none of Acquiror, the Company, the Exchange Agent or any other
person shall be liable to any former holder of shares of Company Common
Stock for any amount properly delivered to a public official pursuant to
applicable abandoned property, escheat or similar Laws.
(f) In the event any Certificate shall have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the person
claiming such Certificate to be lost, stolen or destroyed and, if required
by Acquiror, the posting by such person of a bond in such amount as
Acquiror or one of its Subsidiaries may determine is reasonably necessary
as indemnity against any claim that may be made against it with respect to
such Certificate, the Exchange Agent will issue in exchange for such lost,
stolen or destroyed Certificate the Merger Consideration deliverable in
respect thereof pursuant to this Agreement.
-6-
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to Acquiror that, (i)
except as set forth on the Company Disclosure Letter delivered by the
Company to Acquiror prior to the execution of this Agreement (the "Company
Disclosure Letter"), it being understood and agreed that each item in a
particular section of the Company Disclosure Letter applies only to such
section and to any other section to which its relevance is reasonably
apparent and (ii) other than with respect to Sections 4.2, 4.5(a), 4.6(a)
and 4.8(a), except as disclosed in the Company Reports (as defined in
Section 4.5(a)) filed prior to the date of this Agreement and on or after
August 1, 2008 (excluding any disclosures set forth in any "risk factor"
section thereof or under the heading "Forward-Looking Statements" in any
such filings):
4.1. Corporate Organization
(a) The Company is a corporation duly organized, validly existing and
in good standing under the Laws of the State of Nevada. The Company has
all requisite corporate power and authority to own, lease or operate all of
its properties, rights and assets and to carry on its business as it is now
being conducted, and is duly licensed or qualified to do business in each
jurisdiction in which the nature of the business conducted by it or the
character or location of the properties, rights and assets owned, leased or
operated by it makes such licensing or qualification necessary, except
where the failure to be so licensed or qualified has not had and would not
reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect on the Company. As used in this Agreement, the
term "Material Adverse Effect" means, with respect to the Company or
Acquiror, as the case may be, any fact, circumstance, event, change,
effect, development or occurrence that, individually or in the aggregate
with all other facts, circumstances, events, changes, effects, developments
or occurrences, (x) has a material adverse effect on the business, results
of operations or financial condition of such party and its Subsidiaries
taken as a whole or (y) that prevents such party's ability to consummate
the transactions contemplated hereby no later than the End Date (as defined
in Section 9.1(c)); provided, however, that in determining whether a
Material Adverse Effect has occurred pursuant to clause (x) above and, with
respect to clause (ii) below only, clause (y) above, there shall be
excluded any effect on the referenced party the cause of which is (i) any
change after the date of this Agreement in Laws, rules or regulations of
general applicability or in United States generally accepted accounting
principles ("GAAP") or regulatory accounting requirements, (ii) the
announcement of this Agreement, any action of any party to this Agreement
or any of its Subsidiaries expressly required to be taken by it under this
Agreement or any action or omission of any party to this Agreement or any
of its Subsidiaries taken with the prior written consent of the other party
to this Agreement, (iii) any changes or developments after the date of this
Agreement in general economic, business or financial conditions in the
United States (including changes in interest rates, credit availability and
price levels or trading volumes in securities markets), provided, that the
effect of such changes or developments described in this clause (iii)
(including changes in interest rates, credit availability and price levels
or trading volumes in securities markets) shall not be excluded to the
extent of the disproportionate impact, if any, they have on such party and
its Subsidiaries (relative to other participants in the industries in which
such party and its Subsidiaries operate), and provided, further, that a
decrease in the trading or market prices of a party's capital stock or
failure to meet projections shall not be considered, by itself, to
constitute a Material Adverse Effect (it being understood and agreed that
the facts and circumstances giving rise to such decrease or failure may be
-7-
taken into account in determining whether there has been a Material Adverse
Effect), and (iv) changes in national or international political conditions
including the engagement by the United States in hostilities, whether or
not pursuant to the declaration of a national emergency or war, or the
occurrence of any military or terrorist attack upon or within the United
States, or any of its territories, possessions, diplomatic or consular
offices or upon any military installation, equipment or personnel of the
United States, provided, that the effect of such changes described in this
clause (iv) shall not be excluded to the extent of the disproportionate
impact, if any, they have on such party and its Subsidiaries (relative to
other participants in the industries in which such party and its
Subsidiaries operate). The articles of incorporation and bylaws of the
Company, copies of which have been made available to Acquiror, are true,
complete and correct copies of such documents as in full force and effect
as of the date of this Agreement.
(b) Section 4.1(b) of the Company Disclosure Letter sets forth, as of the
date hereof, each Subsidiary of the Company and all other entities in which
the Company or any of its Subsidiaries owns, directly or indirectly, any
shares of capital stock or equity interests. Each Subsidiary of the
Company (i) is duly organized and validly existing as a corporation,
partnership or other entity and is in good standing under the laws of its
jurisdiction of organization, (ii) is duly licensed or qualified to do
business and is in good standing in all jurisdictions (whether federal,
state, local or foreign) where its ownership or leasing of property or the
conduct of its business requires it to be so licensed or qualified and
(iii) has all requisite corporate or other power and authority to own or
lease its properties, rights and assets and to carry on its business as now
conducted, except, in the case of clauses (ii) and (iii), where the failure
to be so licensed or qualified to do business or to have such power or
authority has not had and would not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect on the Company.
"Subsidiary" means, with respect to any person, any corporation,
partnership, joint venture, limited liability company or any other entity
(i) of which such person or a subsidiary of such person is a general
partner or (ii) at least a majority of the securities or other interests of
which having by their terms ordinary voting power to elect a majority of
the board of directors or persons performing similar functions with respect
to such entity is directly or indirectly owned by such person and/or one or
more subsidiaries thereof. The articles of incorporation, bylaws and
similar governing documents of each Significant Subsidiary of the Company,
copies of which have been made available to Acquiror, are true, complete
and correct copies of such documents as in full force and effect as of the
date of this Agreement. "Significant Subsidiary" has the meaning ascribed
to that term in Rule 1-02 of Regulation S-X under the Securities Exchange
Act of 1934, as amended (the "Exchange Act").
4.2. Capitalization
(a) The authorized capital stock of the Company consists of 100,000,000
shares of Company Common Stock and 5,000,000 shares of preferred stock, par
value $1.00 per share, of the Company (the "Company Preferred Stock"). As
of the close of business on November 20, 2009 (the "Capitalization Date"),
there were 26,257,347 shares of Company Common Stock outstanding and no
shares of Company Preferred Stock outstanding. As of the close of business
on the Capitalization Date, 1,695,593 shares of Company Common Stock were
held in the Company's treasury. No other shares of Company Common Stock or
Company Preferred Stock were issued or outstanding. As of the close of
business on the Capitalization Date, no shares of Company Common Stock or
Company Preferred Stock were reserved for issuance, except for (i) an
aggregate of 651,113 shares of Company Common Stock reserved for issuance
upon the exercise of Company Options pursuant to the Company Stock
-8-
Incentive Plans and (ii) an aggregate of 272,084 shares of Company Common
Stock reserved for issuance upon the vesting of any RSU. All of the issued
and outstanding shares of Company Common Stock have been duly authorized
and validly issued and are fully paid, nonassessable and free of preemptive
rights, with no personal liability attaching to the ownership thereof. No
Subsidiary of the Company owns any shares of Company Common Stock (other
than shares in trust accounts, managed accounts and the like for the
benefit of customers or shares held in satisfaction of a debt previously
contracted). From the close of business on the Capitalization Date through
the date of this Agreement, there have been no issuances of shares of the
capital stock or equity securities of the Company or any other securities
of the Company other than issuances of shares of Company Common Stock
pursuant to the exercise of Company Options or the settlement of RSU rights
outstanding as of the Capitalization Date under the Company Stock Incentive
Plans. Other than with respect to the Company Options and RSUs described
in the third preceding sentence, neither the Company nor any of its
Subsidiaries has or is bound by any outstanding subscriptions, options,
warrants, calls, convertible securities, preemptive rights, redemption
rights, stock appreciation rights, stock-based performance units or other
similar rights, agreements or commitments of any character relating to the
purchase or issuance of any shares of the capital stock of the Company or
of any of its Subsidiaries or other equity securities of the Company or any
of its Subsidiaries or any securities representing the right to purchase or
otherwise receive any shares of the capital stock of the Company or any of
its Subsidiaries (including any rights plan or agreement) or equity-based
awards, nor is there any other agreement to which the Company or any of its
Subsidiaries is a party obligating the Company or any of its Subsidiaries
to (A) issue, transfer or sell any shares of capital stock or other equity
interests of the Company or any of its Subsidiaries or securities
convertible into or exchangeable for such shares or equity interests, (B)
issue, grant, extend or enter into any such subscription, option, warrant,
call, convertible securities, stock-based performance units or other
similar right, agreement, arrangement or commitment, (C) redeem or
otherwise acquire any such shares of capital stock or other equity
interests or (D) provide a material amount of funds to, or make any
material investment (in the form of a loan, capital contribution or
otherwise) in, the Company or any of its Subsidiaries. No Company Options
or RSUs have been issued or granted on or after the Capitalization Date
through the date of this Agreement. Neither the Company nor any of its
Subsidiaries has any other trust capital securities or other similar
securities outstanding.
(b) Section 4.2(b) of the Company Disclosure Letter contains a list
setting forth, as of the date of this Agreement, all outstanding Company
Options and all other equity or equity-based awards relating to Company
Common Stock, the names of the optionees or grantees thereof,
identification of any such optionees or grantees that are not current or
former employees, directors or officers of the Company, the date each such
Company Option or other award was granted, the number of shares of Company
Common Stock subject to each such Company Option or underlying each such
other award, the expiration date of each such Company Option or other
award, any vesting schedule with respect to a Company Option which is not
yet fully vested and the date on which each other award is scheduled to be
settled or become free of restrictions, the price at which each such
Company Option may be exercised (or base price with respect to stock
appreciation rights, if any) and the closing price of one share of Company
Common Stock on the date of grant of each of the foregoing. The exercise
price per share of each Company Option was, on the applicable date of grant
of the Company Option, no less than the fair market value of one share of
Company Common Stock on such grant date.
-9-
(c) Section 4.2(c) of the Company Disclosure Letter lists the name,
jurisdiction of incorporation, authorized and outstanding shares of capital
stock or other equity interests and record and beneficial owners of such
capital stock or other equity interests for each Subsidiary. The Company
owns, directly or indirectly, all of the issued and outstanding shares of
capital stock of or all other equity interests in each of the Company's
Subsidiaries, free and clear of any liens, pledges, charges, encumbrances,
adverse rights or claims and security interests whatsoever ("Liens"), and
all of such shares or other equity interests are, to the extent applicable,
duly authorized and validly issued and are fully paid, nonassessable and
free of preemptive rights, with no personal liability attaching to the
ownership thereof.
(d) Except for the ownership of the Company's Subsidiaries and for
investments held in a fiduciary capacity for the benefit of customers or
acquired after the date of this Agreement in satisfaction of debts
previously contracted in good faith, neither the Company nor any of its
Subsidiaries beneficially owns or controls, directly or indirectly, any
shares of stock or other equity interest in any corporation, firm,
partnership, joint venture or other entity.
(e) The Company does not have outstanding any bonds, debentures, notes or
other indebtedness having the right to vote (or are convertible into, or
exchangeable for, securities having the right to vote) on any matters on
which its stockholders may vote, and neither it nor any of its Subsidiaries
is a party to any voting agreement with respect to the voting of its
capital stock, voting securities or other equity interests. Neither the
Company nor any of its Subsidiaries has any outstanding obligations to
repurchase, redeem or otherwise acquire any of its shares of capital stock,
voting securities, other equity interests or rights (other than a cashless
exercise of Company Options outstanding as of the date hereof in accordance
with the terms thereof).
4.3. Authority; No Violation
(a) The Company has full corporate power and authority to
execute and deliver this Agreement and, subject to the approval of this
Agreement by the Required Company Vote (as defined in Section 4.12(b)), to
consummate the transactions contemplated hereby. The execution and
delivery of this Agreement and the consummation by the Company of the
transactions contemplated hereby have been duly and validly approved by all
necessary corporate and stockholder action of the Company, and no other
corporate or stockholder proceedings on the part of the Company (subject,
in the case of the consummation of the Merger, to the approval of this
Agreement by the Required Company Vote) are necessary to approve this
Agreement or to consummate the transactions contemplated hereby. This
Agreement has been duly and validly executed and delivered by the Company
and (assuming due authorization, execution and delivery by Acquiror)
constitutes a valid and binding obligation of the Company, enforceable
against the Company in accordance with its terms, except as enforcement may
be limited by general principles of equity whether applied in a court of
law or a court of equity and by bankruptcy, insolvency and similar laws
affecting creditors' rights and remedies generally.
(b) Neither the execution and delivery of this Agreement by the Company
nor the consummation by the Company of the transactions contemplated
hereby, nor compliance by the Company with any of the terms or provisions
hereof, will (i) violate any provision of the articles of incorporation or
bylaws of the Company or any of the similar governing documents of any of
its Subsidiaries or (ii) assuming that the consents, approvals and waiting
periods referred to in Section 4.4 are duly obtained or satisfied, (x)
violate any law, statute, code, ordinance, rule, regulation, judgment,
-10-
order, award, writ, decree or injunction issued, promulgated or entered
into by or with any Governmental Entity (as defined in Section 4.4) (each,
a "Law") applicable to the Company or any of its Subsidiaries or any of
their respective properties, rights or assets, or (y) violate, conflict
with, result in a breach of any provision of or the loss of any benefit
under, or require redemption or repurchase or otherwise require the
purchase or sale of any securities, constitute a default under, result in
the termination of or a right of termination, modification or cancellation
under, accelerate the performance required by, or result in the creation of
any Lien (or have any of such results or effects upon notice or lapse of
time, or both) upon any of the respective properties, rights or assets of
the Company or any of its Subsidiaries under, any of the terms, conditions
or provisions of any note, bond, mortgage, indenture, deed of trust,
license, lease, agreement, contract, permit, concession, franchise or other
instrument or obligation to which the Company or any of its Subsidiaries is
a party, or by which they or any of their respective properties, rights,
assets or business activities may be bound or affected, except (in the case
of clause (y) above) for such violations, conflicts, breaches, defaults or
other events which have not had and would not reasonably be expected to
have, individually or in the aggregate, a Material Adverse Effect on the
Company.
(c) In accordance with Section 92A.390 of the NRS, no appraisal or
dissenters' rights shall be available to holders of the Company Common
Stock in connection with the Merger.
4.4. Consents and Approvals
Except for (i) the filing with NASDAQ of a notification of the
listing on NASDAQ, subject to official notice of issuance, of the shares of
Acquiror Common Stock to be issued in accordance with Article III hereof,
(ii) the filing with the Securities and Exchange Commission (the "SEC") of
a proxy statement in definitive form relating to the meeting of the
stockholders of the Company to be held to vote on the approval of this
Agreement (the "Proxy Statement/Prospectus") and the filing and declaration
of effectiveness of the registration statement on Form S-4 (the "Form S-4")
in which the Proxy Statement/Prospectus will be included as a prospectus
and any filings or approvals under applicable state securities laws, (iii)
the filing of the Certificate of Merger with the Secretary of State of the
State of Delaware and the Articles of Merger with the Secretary of State of
the State of Nevada, (iv) the approval of this Agreement by the Required
Company Vote, (v) the consents and approvals set forth in Section 4.4 of
the Company Disclosure Letter, (vi) any notices or filings under the Xxxx-
Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended (the "HSR
Act"), and the expiration or termination of any applicable waiting periods
thereunder, (vii) the consents, authorizations, approvals, filings or
exemptions in connection with the applicable provisions of federal or state
securities Laws or the rules or regulations of any applicable self-
regulatory organization, in any such case relating to the regulation of
collateralized lending, financing and leasing services and (viii) the
consents, authorizations, approvals, filings and registrations of third
parties which are not Governmental Entities, the failure of which to obtain
or make has not had and would not be reasonably expected to have,
individually or in the aggregate, a Material Adverse Effect on the Company
or Acquiror, no consents or approvals of, or filings or registrations with,
any court, administrative agency or commission or other governmental or
regulatory authority or instrumentality or self-regulatory organization
(each, a "Governmental Entity") or of or with any other third party by and
on behalf of the Company are necessary in connection with (A) the execution
and delivery by the Company of this Agreement and (B) the consummation by
-11-
the Company of the Merger and the other transactions contemplated hereby.
4.5. SEC Documents; Other Reports; Internal Controls
(a) The Company has filed all required reports, forms,
schedules, registration statements and other documents with the SEC since
August 1, 2006 (the "Company Reports") and has paid all fees and
assessments due and payable in connection therewith. As of their
respective dates of filing with the SEC (or, if amended or superseded by a
subsequent filing prior to the date hereof, as of the date of such
subsequent filing), the Company Reports complied as to form in all material
respects with the requirements of the Securities Act of 1933, as amended
(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
Reports, and none of the Company Reports when filed with the SEC, or if
amended prior to the date hereof, as of the date of such amendment,
contained any untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were
made, not misleading. The Company has made available to Acquiror true,
correct and complete copies of all written correspondence between the SEC
and the Company and any of its Subsidiaries occurring since January 1, 2008
and prior to the date of this Agreement. There are no outstanding comments
from or unresolved issues raised by the SEC with respect to any of the
Company Reports. None of the Company's Subsidiaries is required to file
periodic reports with the SEC pursuant to Section 13 or 15(d) of the
Exchange Act.
(b) The Company and each of its Subsidiaries have timely filed all
reports, forms, schedules, registrations, statements and other documents,
together with any amendments required to be made with respect thereto, that
they were required to file since August 1, 2006 with any Governmental
Entity (other than the SEC) and have paid all fees and assessments due and
payable in connection therewith. Except for normal examinations conducted
by a Governmental Entity in the regular course of the business of the
Company and its Subsidiaries, no Governmental Entity has notified the
Company that it has initiated any proceeding or, to the knowledge of the
Company, threatened an investigation into the business or operations of the
Company or any of its Subsidiaries since August 1, 2006. There is no
material unresolved violation or exception by any Governmental Entity with
respect to any report, form, schedule, registration, statement or other
document filed by, or relating to any examinations by any such Governmental
Entity of, the Company or any of its Subsidiaries.
(c) The Company has disclosed, based on its most recent evaluation prior
to the date hereof, to the Company's auditors and the audit committee of
the Company's board of directors and in Section 4.5(c) of the Company
Disclosure Letter (i) any significant deficiencies and material weaknesses
in the design or operation of internal controls over financial reporting
which are reasonably likely to adversely affect in any material respect the
Company's ability to record, process, summarize and report financial
information and (ii) any fraud, whether or not material, that involves
management or other employees who have a significant role in the Company's
internal controls over financial reporting.
(d) The Company and its Subsidiaries have devised and maintain a system of
internal accounting controls sufficient to provide reasonable assurances
regarding the reliability of financial reporting and the preparation of
financial statements for external purposes in accordance with GAAP.
-12-
(e) The Company has designed and implemented disclosure controls and
procedures (within the meaning of Rules 13a-15(e) and 15d-15(e) of the
Exchange Act) to ensure that material information relating to the Company
and its Subsidiaries is (i) recorded, processed, summarized and reported
within the time periods specified in the rules and forms of the SEC and
(ii) accumulated and communicated to the management of the Company by
others within those entities as appropriate to allow timely decisions
regarding required disclosure and to make the certifications required by
the Exchange Act with respect to the Company Reports.
(f) Since August 1, 2006, (x) neither the Company nor any of its
Subsidiaries nor, to the knowledge of the Company, any director, officer,
employee, auditor, accountant or representative of the Company or any of
its Subsidiaries has received or otherwise had or obtained knowledge of any
material complaint, allegation, assertion or claim, whether written or
oral, regarding the accounting or auditing practices, procedures,
methodologies or methods of the Company or any of its Subsidiaries or their
respective internal accounting controls, including any material complaint,
allegation, assertion or claim that the Company or any of its Subsidiaries
has engaged in questionable accounting or auditing practices, and (y) no
attorney representing the Company or any of its Subsidiaries, whether or
not employed by the Company or any of its Subsidiaries, has reported
evidence of a material violation of securities laws, breach of fiduciary
duty or similar violation by the Company or any of its officers, directors,
employees or agents to the board of directors of the Company or any
committee thereof or to any director or officer of the Company.
4.6. Financial Statements; Undisclosed Liabilities
(a) The financial statements of the Company (including any
related notes and schedules thereto) included in the Company Reports
complied as to form, as of their respective dates of filing with the SEC
(or, if amended or superseded by a subsequent filing prior to the date
hereof, as of the date of such subsequent filing), in all material
respects, with all applicable accounting requirements and with the
published rules and regulations of the SEC with respect thereto (except, in
the case of unaudited statements, (i) for normal adjustments and accruals
necessary to provide a fair presentation for the periods presented and (ii)
as permitted by Form 10-Q of the SEC), have been prepared in accordance
with GAAP applied on a consistent basis during the periods involved (except
as may be disclosed therein), and fairly present, in all material respects,
the consolidated financial position of the Company and its Subsidiaries and
the consolidated results of operations, changes in stockholders' equity and
cash flows of such companies as of the dates and for the periods shown.
The books and records of the Company and its Subsidiaries have been, and
are being, maintained in all material respects in accordance with
applicable legal and accounting requirements and reflect only actual
transactions.
(b) Except for (i) those liabilities that are reflected or reserved for in
the consolidated financial statements of the Company included in its Annual
Report on Form 10-K for the fiscal year ended July 31, 2009, as filed with
the SEC or (ii) liabilities incurred since July 31, 2009 in the ordinary
course of business consistent with past practice, neither the Company nor
any of its Subsidiaries has incurred any material liability of any nature
whatsoever (whether absolute, accrued or contingent or otherwise and
whether due or to become due).
4.7. Broker's Fees
Except for Xxxxx, Xxxxxxxx & Xxxxx, Inc., neither the Company
nor any Subsidiary thereof nor any of their respective officers or
directors has employed any broker or finder or incurred any liability for
any broker's fees, commissions or finder's fees in connection with the
-13-
Merger or any other transaction contemplated by this Agreement. True,
correct and complete copies of all agreements with Xxxxx, Xxxxxxxx & Xxxxx,
Inc. relating to any such fees or commissions have been furnished to
Acquiror prior to the date hereof.
4.8. Absence of Certain Changes or Events
Since July 31, 2009 (a) no event has occurred or circumstance
has arisen which has had or would reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect on the Company
and (b) none of the Company or any of its Subsidiaries has taken any action
that would have been prohibited by Section 6.2 (other than subsection (i))
if taken after the date of this Agreement.
4.9. Legal Proceedings
(a) Neither the Company nor any of its Subsidiaries (or, to
the knowledge of the Company, any of the current or former directors or
executive officers of the Company or any of its Subsidiaries) is a party to
any, and there are no pending or, to the Company's knowledge, threatened
legal, administrative, arbitral or other proceedings or actions or, to the
Company's knowledge, claims or governmental or regulatory investigations
(i) of any material nature against such person (in the case of any such
proceeding, claim, action or investigation relating to such a director or
executive officer, to the extent related to or affecting the business of
the Company or any of its Subsidiaries) or (ii) as of the date hereof
challenging the validity of the transactions contemplated by this
Agreement.
(b) There is no material injunction, order, award, judgment, settlement,
decree or regulatory restriction imposed upon or entered into by the
Company, any of its Subsidiaries or the assets of the Company or any of its
Subsidiaries other than in connection with a workout in the ordinary course
of business consistent with past practice of a Finance Receivable (as
defined in Section 4.22(a)).
(c) Since August 1, 2007, (i) there have been no subpoenas, written
demands, inquiries or information requests received by the Company or any
of its Subsidiaries from any Governmental Entity other than (x) in matters
in which the Company or any of its Subsidiaries is a plaintiff and involved
in a workout in the ordinary course of business consistent with past
practice of a Finance Receivable, (y) for subpoenas, written demands,
inquiries or information requests received in the ordinary course of
business consistent with past practice relating to customers of the Company
or any of its Subsidiaries who have outstanding Finance Receivables or (z)
with respect to matters relating to any Tax and (ii) no Governmental Entity
has requested that the Company or any of its Subsidiaries enter into a
settlement negotiation or tolling agreement with respect to any matter
related to any such subpoena, written demand, inquiry or information
request other than (x) in the context of the bankruptcy of a party to a
Finance Receivable (other than the Company or any of its Subsidiaries) or
(y) with respect to matters relating to any Tax.
4.10. Taxes
(a) With respect to the Company or any of its Subsidiaries (i) no audit
assessment, dispute or claim concerning any material Tax liability is being
conducted, is to the Company's knowledge pending or has been threatened by
a Governmental Entity; (ii) each has (x) duly and timely filed (including
pursuant to applicable extensions granted without penalty) all material Tax
Returns (as defined in Section 4.10(n)) required to be filed by it, and
such Tax Returns are true, correct and complete in all material respects,
and (y) timely paid in full all material Taxes due or, where payment is not
-14-
yet due, has made adequate provision in the financial statements of the
Company (in accordance with GAAP) for all such Taxes, whether or not shown
as due on such Tax Returns; (iii) no material deficiencies for any Taxes
have been proposed, threatened, asserted or assessed against or with
respect to any Taxes due by or Tax Returns of the Company or any of its
Subsidiaries; (iv) there are no material Liens for Taxes upon the assets of
either the Company or its Subsidiaries; and (v) no written claim has ever
been made by any Governmental Entity in a jurisdiction where neither the
Company nor any of its Subsidiaries files Tax Returns that it is or may be
subject to any material Tax liability by that jurisdiction.
(b) Neither the Company nor any of its Subsidiaries (i) is or has ever
been a member of an affiliated group (other than a group the common parent
of which is the Company) filing a consolidated tax return or (ii) has any
material liability for Taxes of any person arising from the application of
Treasury Regulation Section 1.1502-6 or any analogous provision of state,
local or foreign law, or as a transferee or successor, by contract, or
otherwise.
(c) None of the Company or any of its Subsidiaries is a party to, is bound
by or has any obligation under any Tax sharing, Tax indemnity or Tax
allocation agreement or similar contract or arrangement.
(d) No closing agreement pursuant to Section 7121 of the Code (or any
similar provision of state, local or foreign law) has been entered into by
or with respect to the Company or any of its Subsidiaries.
(e) None of the Company or any of its Subsidiaries has been either a
"distributing corporation" or a "controlled corporation" in a distribution
occurring during the last five (5) years in which the parties to such
distribution treated the distribution as one to which Section 355 of the
Code is applicable.
(f) All material Taxes required to be withheld, collected or deposited by
or with respect to the Company and each Subsidiary have been timely
withheld, collected or deposited as the case may be, and to the extent
required, have been paid to the relevant Governmental Entity. The Company
and each of its Subsidiaries have complied in all material respects with
all information reporting requirements imposed by the Code (or any similar
provision under any state or local law).
(g) Neither the Company nor any of its Subsidiaries has requested or been
granted any waiver of any federal, state, local or foreign statute of
limitations with respect to, or any extension of a period for the
assessment or collection of, any material Tax.
(h) Neither the Company nor any of its Subsidiaries has entered into any
transactions that are or would be part of any "reportable transaction" or
that could give rise to any list maintenance obligation under Sections
6011, 6111 or 6112 of the Code (or any similar provision under any state or
local law) or the regulations thereunder.
(i) Neither Acquiror nor any of its Subsidiaries will be required to
include any item of income in, or exclude any item of deduction from,
taxable income for any taxable period ending after the Effective Time as a
result of any (i) change in method of accounting either imposed by the
-15-
Internal Revenue Service or voluntarily made by the Company or any of its
Subsidiaries on or prior to the Closing Date, (ii) intercompany transaction
(including any intercompany transaction subject to Sections 367 or 482 of
the Code) or excess loss account described in Treasury Regulations under
Section 1502 of the Code (or any similar provision of state, local, or
foreign income Tax law), (iii) installment sale or open transaction arising
in a taxable period (or portion thereof) ending on or prior to the Closing
Date, (iv) a prepaid amount received or paid prior to the Closing Date, or
(v) deferred gains arising prior to the Closing Date.
(j) Neither the Company nor any of its Subsidiaries is or has been a
United States real property holding corporation within the meaning of
Section 897(c)(2) of the Code.
(k) The Company has provided Acquiror with complete and accurate
information regarding all material Financial Accounting Standards Board
(FASB) Interpretation No. 48 matters with respect to the Company and its
Subsidiaries, including any work papers and supporting statements relevant
to such matters.
(l) Neither the Company nor any of its Subsidiaries has taken or agreed to
take any action or has knowledge of any fact, agreement, plan or other
circumstance that is reasonably likely to prevent or impede the Merger from
qualifying as a "reorganization" under Section 368(a) of the Code.
(m) Neither the Company nor any of its Subsidiaries is or has been an
investment company within the meaning of Section 368(a)(2)(F)(iii) and (iv)
of the Code.
(n) For purposes of this Agreement:
(i) "Tax" or "Taxes" shall mean all federal, state, local, foreign and
other taxes, levies, imposts, assessments, duties, customs, fees,
impositions or other similar government charges, including, but not limited
to income, estimated income, business, occupation, franchise, real
property, payroll, personal property, sales, transfer, stamp, use, escheat,
employment-related, commercial rent or withholding, net worth, occupancy,
premium, gross receipts, profits, windfall profits, deemed profits,
license, lease, severance, capital, production, corporation, ad valorem,
excise, duty, utility, environmental, value-added, recapture or other
taxes, including any interest, penalties, fines and additions (to the
extent applicable) thereto, whether disputed or not; and
(ii) "Tax Return" shall mean any return, report, declaration, information
return or other document (including any related or supporting information)
filed with or submitted to, or required to be filed with or submitted to
any Governmental Entity with respect to Taxes, including all information
returns relating to Taxes of third parties, any claims for refunds of Taxes
and any amendments, supplements or attached schedules to any of the
foregoing.
4.11. Employees; Employee Benefit Plans
(a) Each (i) "employee benefit plan" (within the meaning of
Section 3(3) of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), including multiemployer plans within the meaning of
ERISA Section 3(37)) (an "ERISA Employee Benefit Plan") and (ii) stock
purchase, stock incentive, severance, employment, loan, change-in-control,
fringe benefit, collective bargaining, bonus, incentive, deferred
-16-
compensation and all other employee benefit plans, agreements, programs,
policies or other arrangements, whether or not subject to ERISA (including
any funding mechanism therefor now in effect or required in the future as a
result of the transactions contemplated by this Agreement or otherwise)
under which (x) any current or former employee, officer, director,
consultant or independent contractor of the Company or any of its
Subsidiaries ("Company Employees") has any present or future right to
benefits and which are contributed to, sponsored by or maintained by the
Company or any of its Subsidiaries or (y) under which the Company or any of
its Subsidiaries has any present or future liability (all arrangements
described in this clause (ii), collectively, the "Compensation Agreements")
shall be collectively referred to as the "Plans". Section 4.11(a) of the
Company Disclosure Letter contains a true and complete list of all material
Compensation Agreements and each material ERISA Employee Benefit Plan.
(b) With respect to each material Plan, the Company has delivered to
Acquiror or made available a current, accurate and complete copy thereof
and, to the extent applicable: (i) any related trust agreement or other
funding instrument; (ii) the most recent determination letter, if
applicable; (iii) the most recent summary plan description and any
subsequent summaries of material modifications and any material written
communications by the Company or any of its Subsidiaries to Company
Employees within the most recent 12 months regarding any commitments to
provide additional benefits or compensation to any such Company Employees;
and (iv) for the three (3) most recent years (A) the Form 5500 and attached
schedules, (B) audited financial statements and (C) actuarial valuation
reports.
(c) Except as has not had and would not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect on the Company,
(i) each Plan has been established and administered in all respects in
accordance with its terms, and in all respects in compliance with the
applicable provisions of ERISA, the Code and other applicable Laws; (ii) no
"prohibited transaction" (as such term is defined in Section 406 of ERISA
and Section 4975 of the Code) has occurred with respect to any Plan; and
(iii) each "nonqualified deferred compensation plan" (as defined in Section
409A(d)(1) of the Code) has been operated in good faith compliance with
Section 409A of the Code and the guidance promulgated thereunder by the
Department of Treasury.
(d) Each Plan which is intended to be qualified within the meaning of
Section 401(a) of the Code has received a favorable determination letter or
opinion letter as to its qualification, and nothing has occurred, whether
by action or failure to act, that could reasonably be expected to cause the
loss of such qualification.
(e) No Plan is a multiemployer plan (within the meaning of Section
4001(a)(3) of ERISA), and no Plan is subject to Title IV of ERISA.
(f) With respect to any Plan, except as has not had and would not
reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect on the Company, (i) no actions, suits or claims
(other than routine claims for benefits in the ordinary course) are pending
or, to the knowledge of the Company, threatened, and (ii) no administrative
investigation, audit or other administrative proceeding by the Department
of Labor, the Department of Treasury, the Internal Revenue Service or other
governmental agencies are pending or, to the knowledge of the Company,
threatened.
-17-
(g) No material Plan exists that would reasonably be expected to (i)
result in the payment to any present or former Company Employee of any
money or other property, (ii) accelerate or provide any other rights or
benefits to any present or former Company Employee or (iii) require the
funding of any trust for the benefit of any present or former Company
Employee, in each case as a result of the transactions contemplated by this
Agreement (whether alone or in connection with any subsequent event(s)).
There is no Plan that, individually or collectively, would reasonably be
expected to give, or which has given, rise to the payment of any amount
that would not be deductible pursuant to the terms of Section 280G in
connection with the transactions contemplated under this Agreement.
(h) No RSU provides for the deferral, beyond the Closing Date, of the
payment of any compensation under any Plan that is subject to Section 409A
of the Code.
4.12. Board Approval; Stockholder Vote Required
(a) The board of directors of the Company, by resolutions
duly adopted by unanimous vote of the entire board of directors at a
meeting duly called and held (the "Company Board Approval"), has (i)
determined that this Agreement, the Merger and the other transactions
contemplated hereby are fair to and in the best interests of the Company
and its stockholders and declared the Merger to be advisable, (ii) approved
this Agreement, the Merger and the other transactions contemplated hereby,
and (iii) recommended that the stockholders of the Company adopt this
Agreement and directed that such matter be submitted for consideration by
the stockholders of the Company at the Company Stockholders Meeting (as
defined in Section 7.3(a)).
(b) The affirmative vote of the holders of at least a majority of the
outstanding shares of Company Common Stock to adopt this Agreement (the
"Required Company Vote") is the only vote of the holders of any class or
series of the Company capital stock necessary to approve and adopt this
Agreement and the transactions contemplated hereby (including the Merger).
(c) None of the requirements of the "control share" statute set forth in
Section 78.378 et seq. of the NRS, the "business combination" statute set
forth in Section 78.411 et seq. of the NRS or any other "moratorium,"
"control share," "fair price," "affiliate transaction," "business
combination" or other anti-takeover laws and regulations of any state are
applicable to this Agreement, the Merger and the other transactions
contemplated hereby. The Company has taken all action required to be taken
by it in order to make this Agreement, the Merger and the other
transactions contemplated hereby comply with, and this Agreement, the
Merger and the other transactions contemplated hereby do comply with, the
requirements of any articles, sections or provisions of the Company's
articles of incorporation or bylaws concerning "business combination,"
"fair price," "voting requirement," "constituency requirement" or other
related provisions.
4.13. Compliance with Applicable Law
The Company and each of its Subsidiaries hold, and have since
August 1, 2006 held, all licenses, franchises, permits and authorizations
which are required for the lawful conduct of their respective businesses
and ownership of their respective properties, rights and assets under and
pursuant to applicable Law, except where the failure to hold such license,
franchise, permit or authorization has not had and would not reasonably be
expected to have, individually or in the aggregate, a Material Adverse
Effect on the Company. The Company and each of its Subsidiaries have
-18-
complied in all material respects with, and are not in default or violation
in any material respect of, any applicable Law, including without
limitation, all Laws related to data protection or privacy, the USA Patriot
Act, the Bank Secrecy Act, the Equal Credit Opportunity Act and any other
Law relating to discriminatory lending, financing or leasing practices, and
the Xxxxxxxx-Xxxxx Act. The Company and each of its Subsidiaries have
complied with, and are not in default or violation of, any posted or
internal privacy policies relating to data protection or privacy, including
without limitation, the protection of personal information, except where
the failure to so comply or the default or violation thereof has not had
and would not reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect on the Company. Neither the Company
nor any of its Subsidiaries has knowledge of, or has received, since August
1, 2006, notice of, any material defaults or material violations of any
applicable Law.
4.14. Certain Contracts
(a) As of the date hereof, neither the Company nor any of its
Subsidiaries is a party to or is bound by any contract, arrangement,
commitment or understanding (whether written or oral) (i) which is a
material contract (as defined in Item 601(b)(10) of Regulation S-K of the
SEC or required to be disclosed by the Company on a Current Report on Form
8-K) to be performed in whole or in part after the date of this Agreement,
(ii) which limits the freedom of the Company or any of its Subsidiaries to
compete in any line of business, in any geographic area or with any person,
or to use the name Financial Federal Corporation or any variant thereof, or
which requires referrals of business or requires the Company or any of its
Subsidiaries to make available investment opportunities to any person on a
priority or exclusive basis, (iii) which relates to the incurrence of
indebtedness by the Company or any of its Subsidiaries, including any sale
and leaseback transactions, capitalized leases and other similar financing
transactions, (iv) which grants any right of first refusal, right of first
offer or similar right with respect to any material assets, rights or
properties of the Company or any of its Subsidiaries, (v) which limits the
payment of dividends by the Company or any of its Subsidiaries, (vi) which
relates to a joint venture, partnership, limited liability company
agreement or other similar agreement or arrangement, or to the formation,
creation or operation, management or control of any partnership or joint
venture with any third parties, (vii) which relates to an acquisition,
divestiture, merger or similar transaction and which contains material
representations, covenants, indemnities or other obligations (including
indemnification, "earn-out" or other contingent obligations) that are still
in effect, (viii) which provides for material payments to be made by the
Company or any of its Subsidiaries upon a change in control thereof, (ix)
which is a consulting agreement or data processing, software programming or
licensing contract involving the payment of more than $500,000 per annum
(other than any such contracts which are terminable by the Company or its
applicable Subsidiary on 60 days or less notice without any required
payment or other conditions (other than the condition of notice)), (x)
which is not of the type described in clauses (i) through (ix) above and
which involved payments by, or to, the Company or any of its Subsidiaries
in fiscal year ended July 31, 2009, or which could reasonably be expected
to involve such payments during fiscal year ending July 31, 2010, of more
than $500,000 (other than pursuant to Finance Receivables), or (xi) which
relates to material Proprietary Rights (as defined in Section 4.21)
(including permitting the use of the name Financial Federal Corporation or
any variant thereof). Each contract, arrangement, commitment or
understanding of the type described in this Section 4.14(a), whether or not
publicly disclosed in the Company Reports filed since January 1, 2009 and
prior to the date hereof, is referred to herein as a "Company Contract".
The Company has made available to Acquiror true, correct and complete
copies of each written Company Contract.
-19-
(b) Except as would not be material to the Company and its Subsidiaries
taken as a whole, (i) each Company Contract is valid and binding on the
Company or its applicable Subsidiary and in full force and effect and, to
the knowledge of the Company, is valid and binding on the other parties
thereto, (ii) the Company and each of its Subsidiaries and, to the
knowledge of the Company, each of the other parties thereto, has performed
all obligations required to be performed by it to date under each Company
Contract and (iii) no event or condition exists which constitutes or, after
notice or lapse of time or both, would constitute a breach or default on
the part of the Company or any of its Subsidiaries or, to the knowledge of
the Company, any other party thereto, under any such Company Contract.
4.15. Agreements with Regulatory Agencies
Neither the Company nor any of its Subsidiaries is subject to
any cease-and-desist or other order issued by, or is a party to any written
agreement, consent agreement or memorandum of understanding with, or is a
party to any commitment letter or similar undertaking to, or is a recipient
of any extraordinary supervisory letter from, or is subject to any order or
directive by, or has adopted any board resolutions at the request of (each,
whether or not set forth in Section 4.15 of the Company Disclosure Letter,
a "Company Regulatory Agreement") any Governmental Entity that restricts,
or by its terms will in the future restrict, the conduct of its business or
that in any manner relates to its capital adequacy, its credit or risk
management policies, its dividend policies, its management, its business or
its operations, nor has the Company or any of its Subsidiaries been
notified by any Governmental Entity that it is considering issuing or
requesting (or is considering the appropriateness of issuing or requesting)
any Company Regulatory Agreement. To the knowledge of the Company, there
are no investigations relating to any material regulatory matters pending
before any Governmental Entity with respect to the Company or any of its
Subsidiaries.
4.16. Company Information
The information relating to the Company and its Subsidiaries
to be provided by the Company for inclusion in the Proxy
Statement/Prospectus, the Form S-4, any filing pursuant to Rule 165 or Rule
425 under the Securities Act or Rule 14a-12 under the Exchange Act, or in
any other document filed with any other Governmental Entity in connection
herewith, will not contain any untrue statement of a material fact or omit
to state a material fact necessary to make the statements therein, in light
of the circumstances in which they are made, not misleading. The Proxy
Statement/Prospectus (except for such portions thereof as relate only to
Acquiror or any of its Subsidiaries) will comply as to form in all material
respects with the provisions of the Exchange Act and the rules and
regulations thereunder.
4.17. Title to Property
(a) The Company and its Subsidiaries do not own any real
property other than real property which the Company or any if its
Subsidiaries has foreclosed in connection with the enforcement of rights
under a Finance Receivable and which real property, as of the date hereof,
is set forth in Section 4.17(a) of the Company Disclosure Letter.
(b) The Company and its Subsidiaries have good, valid and marketable title
to all tangible personal property owned by them, free and clear of all
Liens (other than Liens (i) arising out of any securitization facility,
(ii) for Taxes, assessments and similar charges not yet due or being
contested in good faith and (iii) mechanics, materialman's, carrier's,
repairer's and other similar Liens arising in the ordinary course or
business), except as have not had and would not reasonably be expected to
have, individually or in the aggregate, a Material Adverse Effect on the
Company.
-20-
(c) All leases of real property by the Company or a Subsidiary, as lessee,
are valid and binding in accordance with their respective terms, and there
is not under any such lease any material existing default by the Company or
such Subsidiary or, to the knowledge of the Company, any other party
thereto, or any event which with notice or lapse of time or both would
constitute such a default, and, in the case of leased premises, the Company
or such Subsidiary quietly enjoys the use of the premises provided for in
such lease, except in any such case as has not had and would not reasonably
be expected to have, individually or in the aggregate, a Material Adverse
Effect on the Company. Section 4.17(c) of the Company Disclosure Letter
sets forth a true, correct and complete list of all material leases of real
property under which the Company or any of its Subsidiaries leases any real
property or interests in real property, identifying the owner and address
thereof. The Company has made available to Acquiror true, correct and
complete copies of each such material lease of real property.
4.18. Insurance
The Company and its Subsidiaries are insured with financially
sound insurers against such risks and in such amounts as the management of
the Company reasonably has determined to be prudent and consistent with
industry practice. Section 4.18 of the Company Disclosure Letter contains
a true, correct and complete list and a brief description (including name
of insurer, agent, coverage and expiration date) of all material insurance
policies in force on the date hereof with respect to the business and
assets of the Company and its Subsidiaries (other than insurance policies
under which the Company or any Subsidiary thereof is named as a loss payee,
insured or additional insured as a result of its position as a secured
lender on specific Finance Receivables). The Company and its Subsidiaries
are in compliance with their insurance policies and are not in default
under any of the terms thereof, each such policy is outstanding and in full
force and effect, except for policies insuring against potential
liabilities of officers, directors and employees of the Company and its
Subsidiaries, the Company or the relevant Subsidiary thereof is the sole
beneficiary of such policies, all premiums and other payments due under any
such policy have been paid, and all claims thereunder have been filed in
due and timely fashion, except, in each case, as has not had and would not
reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect on the Company.
4.19. Environmental Liability
Except as have not had and would not reasonably be expected to
have, individually or in the aggregate, a Material Adverse Effect on the
Company, there are no legal, administrative, arbitral or other proceedings,
claims, actions, or to the knowledge of the Company private environmental
investigations or remediation activities or governmental investigations of
any nature seeking to impose, or that reasonably could be expected to
result in the imposition, on the Company or any of its Subsidiaries of any
liability or obligation arising under common law standards relating to
environmental protection, human health or safety, or under any local, state
or federal Law relating to the protection of the environment or human
health or safety, including the Comprehensive Environmental Response,
Compensation and Liability Act of 1980 ("CERCLA"), as amended
(collectively, the "Environmental Laws"), pending or, to the knowledge of
the Company, threatened against the Company or any of its Subsidiaries.
Except as have not had and would not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect on the Company,
to the knowledge of the Company, there are no past, present, or reasonably
anticipated future facts, occurrences or circumstances that would
reasonably be expected to give rise to any such proceeding, claim, action
or governmental investigation that would impose any such liability or
obligation other than with respect to real property securing Finance
-21-
Receivables or on which the Company or any of its Subsidiaries may
foreclose in connection with the enforcement of rights under a Finance
Receivable. Other than with respect to real property securing Finance
Receivables or on which the Company or any of its Subsidiaries foreclosed
in connection with the enforcement of rights under a Finance Receivable,
during or, to the knowledge of the Company prior to, the period of (i) its
or any of its Subsidiaries' ownership or operation of any of their
respective current or to the Company's knowledge former properties, (ii)
its or any of its Subsidiaries' participation in the management of any
property, or (iii) its or any of its Subsidiaries' holding of a security
interest or other interest in any property, there were no releases or
threatened releases of hazardous, toxic, radioactive or dangerous
materials, gasoline or petroleum (including crude oil or any fraction
thereof) or petroleum products, polychlorinated biphenyls, urea-
formaldehyde insulation, asbestos, pollutants, contaminants or other
materials regulated pursuant to, or that would reasonably be expected to
give rise to liability under Environmental Laws ("Materials of
Environmental Concern") in, on, under or affecting any such property which
have had or would reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect on the Company. Neither the Company
nor any of its Subsidiaries is subject to any agreement, order, judgment,
decree, letter or memorandum by or with any court, governmental authority,
regulatory agency or third party imposing any material liability or
obligation pursuant to or under any Environmental Law or relating to
Materials of Environmental Concern.
4.20. Opinion of Financial Advisor
The Company has received the opinion of Xxxxx, Xxxxxxxx &
Xxxxx, Inc., dated as of the date of this Agreement, to the effect that, as
of such date, the Merger Consideration is fair from a financial point of
view to the holders of Company Common Stock.
4.21. Intellectual Property
Except as has not had and would not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect on the Company,
(i) the Company and each of its Subsidiaries owns or possesses, or is
licensed or otherwise has the right to use, all proprietary and
intellectual property rights, including all trademarks, trade dress, trade
names, service marks, domain names, patents, technology, inventions, trade
secrets, know-how and copyrights and works of authorship ("Proprietary
Rights"), that are used in the conduct of their existing businesses free
and clear of all Liens and any claims of ownership by current or former
employees or contractors, (ii) neither the Company nor any of its
Subsidiaries is bound by or a party to any licenses or agreements of any
kind with respect to any Proprietary Rights which it claims to own or
possess, license or otherwise have the right to use (other than
nonexclusive licenses to the Company or its Subsidiaries for the use of
products, services, software or data in the ordinary course of business,
including any shrink-wrap, click-through or other commercially available or
non-customized licenses) and (iii) neither the Company nor any of its
Subsidiaries to the Company's knowledge is infringing, diluting,
misappropriating or violating, nor has the Company or any of its
Subsidiaries received any communications alleging that any of them has
infringed, diluted, misappropriated or violated, any of the Proprietary
Rights of any other person. To the Company's knowledge, no other person is
infringing, diluting, misappropriating or violating, nor has the Company or
any or its Subsidiaries sent any communications within the past two (2)
years alleging that any person has infringed, diluted, misappropriated or
violated, any of the Proprietary Rights of the Company and its
Subsidiaries. The Company and each of its Subsidiaries take reasonable
actions to protect and maintain all (a) material Proprietary Rights and (b)
the security and integrity of their software, databases, networks, systems,
-22-
equipment and hardware and protect same against unauthorized use,
modification, or access thereto, or the introduction of any viruses or
other unauthorized or damaging or corrupting elements. The Company's and
its Subsidiaries' computers, computer software, firmware, middleware,
servers, workstations, routers, hubs, switches, data communication lines
and all other information technology equipment and all associated documents
(the "IT Assets") operate and perform in all material respects in
accordance with their documentation and functional specifications and
otherwise as required by the Company in connection with its business, and
have not materially malfunctioned or failed within the past two (2) years.
To the Company's knowledge, no person has gained unauthorized access to the
IT Assets. The Company has implemented reasonable backup and disaster
recovery technology consistent with industry practices.
4.22. Finance Receivable Matters
(a) (i) Section 4.22(a) of the Company Disclosure Letter sets
forth a list of all outstanding loans, leases, installment sales and other
extensions of credit (including commitments to extend credit) ("Finance
Receivables") as of the date hereof by the Company and its Subsidiaries to
any directors, executive officers and principal stockholders of the Company
or any of its Subsidiaries, (ii) there are no employee, officer, director
or other affiliate Finance Receivables on which the borrower is paying a
rate other than that reflected in the note, lease, installment sale
contract or other relevant credit or security agreement or on which the
borrower is paying a rate which was below market at the time the Finance
Receivable was originated and (iii) all such Finance Receivables are and
were originated in compliance in all material respects with all applicable
Laws.
(b) Each outstanding Finance Receivable was solicited and originated, and
is and has been since August 1, 2006 administered and, where applicable,
serviced, and the relevant Finance Receivable files are being maintained,
in all material respects in accordance with the relevant notes, leases,
installment sale contracts or other credit or security documents, the
Company's written underwriting standards (and, in the case of Finance
Receivables held for resale to investors, the underwriting standards, if
any, of the applicable investors) and with all applicable requirements of
Laws, except for such exceptions as have not had and would not reasonably
be expected to have, individually or in the aggregate, a Material Adverse
Effect on the Company.
(c) Neither the Company nor any of its Subsidiaries is party to any
agreement pursuant to which the Company or any of its Subsidiaries has sold
Finance Receivables or pools of Finance Receivables or participations in
Finance Receivables or pools of Finance Receivables.
(d) Section 4.22(d) of the Company Disclosure Letter identifies (A) each
Finance Receivable that as of July 31, 2009 had an outstanding balance
and/or unfunded commitment of $500,000 or more and that as of such date (i)
was contractually past due 90 days or more in the payment of principal
and/or interest other than those for which there is adequate collateral or
short term remediation, (ii) was on non-accrual status, (iii) where a
specific reserve allocation exists in connection therewith, or (iv) which
is required to be accounted for as a troubled debt restructuring in
accordance with Statement of Financial Accounting Standards No. 15 and (B)
each asset of the Company or any of its Subsidiaries with a value over
$500,000 that as of July 31, 2009 was classified as an asset to satisfy
Finance Receivables, including repossessed equipment, and the book value
thereof as of such date. For each Finance Receivable identified in
response to clause (A) above, Section 4.22(d) of the Company Disclosure
-23-
Letter sets forth the outstanding balance, including accrued and unpaid
interest, on each such Finance Receivable and the identity of the borrower
thereunder.
(e) Except as would not have a material impact on the Company and its
Subsidiaries taken as a whole, each outstanding Finance Receivable (i) is
evidenced by notes, agreements or other evidences of indebtedness that are
true, genuine and what they purport to be, (ii) to the extent secured, has
been secured by valid Liens which have been perfected and (iii) to the
Company's knowledge, is a legal, valid and binding obligation of the
obligor named therein, enforceable in accordance with its terms, in each of
clauses (ii) and (iii) subject to bankruptcy, insolvency, fraudulent
conveyance and other laws of general applicability relating to or affecting
creditors' rights and to general equity principles. The notes, leases,
installment sale contracts or other credit or security documents with
respect to each such outstanding Finance Receivable were in compliance in
all material respects with all applicable Laws at the time of origination
or purchase by the Company or its Subsidiaries and are complete and correct
in all material respects.
4.23. Securitization Matters
(a) None of the Company or any of its Subsidiaries has entered
into any Company Securitization Document (as defined in Section 4.23(d))
other than in connection with on balance sheet financings with indebtedness
secured by bank conduits (each, a "Company Financing"). No Company
Financing includes any certificates, gain on sale transactions, variable
interests or retained equity, and the Company consolidates all indebtedness
and related assets for each Company Financings as required by GAAP.
(b) Each of the Company Securitization Documents to which the Company, any
of its Subsidiaries, or any Company Securitization Trust (as defined in
Section 4.23(d)), as the case may be, is a party, is in full force and
effect and is a valid, binding and enforceable obligation of the Company,
such Subsidiary or any Company Securitization Trust, as the case may be,
and, to the knowledge of the Company, of the other parties thereto, subject
to bankruptcy, insolvency, fraudulent transfer, moratorium, reorganization
or similar laws of general applicability relating to or affecting the
rights of creditors generally and general principles of equity. The
Company, each of its Subsidiaries and each Company Securitization Trust
and, to the knowledge of the Company, each of the other parties thereto,
has performed all obligations required to be performed by it to date under
each Company Securitization Document to which the Company, any of its
Subsidiaries, or any Company Securitization Trust, as the case may be, is a
party. No event or condition exists which does now or with either notice
or the passage of time would constitute a default or event of default under
any Company Securitization Document to which the Company, any of its
Subsidiaries, or any Company Securitization Trust, as the case may be, is a
party.
(c) Since August 1, 2006, neither the Company nor any of its Subsidiaries
nor, to the knowledge of the Company, any director, officer, employee,
auditor, accountant or representative of the Company or any of its
Subsidiaries has received or otherwise had or obtained knowledge of any
material complaint, allegation, assertion or claim, whether written or
oral, regarding the accounting or auditing practices, procedures,
methodologies or methods of any Company Securitization Trust or their
respective internal accounting controls.
(d) For purposes of this Agreement, the following terms shall have the
meanings assigned below:
-24-
"Company Securitization Documents" includes each security issued
by any Company Securitization Trust, and each loan sale agreement, pooling
and servicing agreement, indenture, bond insurance agreement (and related
policy), pool insurance agreement (and related policy), guarantee, swap or
derivative contract, prospectus, offering circular, underwriting agreement,
purchase agreement and each other material agreement related to any such
security and each supplement, terms or pricing agreement or other agreement
relating to the foregoing and each document required to be delivered in
connection therewith.
"Company Securitization Trust" means any trust or other special
purpose vehicle created by the Company.
4.24. Transactions with Affiliates
There are no agreements, contracts, plans, arrangements or other
transactions between the Company or any of its Subsidiaries, on the one
hand, and any (i) officer or director of the Company or any of its
Subsidiaries, (ii) record or beneficial owner of five percent (5%) or more
of the voting securities of the Company, (iii) affiliate or family member
of any such officer or director or any such record or beneficial owner or
(iv) any other affiliate of the Company, on the other hand, except for (a)
those of a type available to employees of the Company generally, (b) RSUs,
Company Options and agreements, contracts, plans or arrangements otherwise
related to employee compensation and (c) as disclosed in the Company
Reports, the purchases from time to time (including since the most recent
Company Report) by officers and directors of the Company or its
Subsidiaries of the Company's commercial paper. As used in this Agreement,
"affiliate" means (unless otherwise specified), with respect to any person,
any other person that directly, or indirectly through one or more
intermediaries, controls, is controlled by or is under common control with,
such specified person and "control," with respect to the relationship
between or among two or more persons, means the possession, directly or
indirectly, of the power to direct or cause the direction of the affairs or
management of a person, whether through the ownership of voting securities,
as trustee or executor, by contract or any other means.
4.25. Labor Matters
Neither the Company nor any of its Subsidiaries is a party to
or is bound by or is currently negotiating any collective bargaining
agreement, contract or other agreement or understanding with a labor union
or labor organization. Neither the Company nor any of its Subsidiaries is
the subject of a proceeding asserting that it or any such Subsidiary has
committed an unfair labor practice (within the meaning of the National
Labor Relations Act) or seeking to compel the Company or any such
Subsidiary to bargain with any labor organization as to wages or conditions
of employment, nor, to the Company's knowledge, is any such proceeding
threatened, and there is no strike or other material labor dispute or
disputes involving it or any of its Subsidiaries pending, or to the
Company's knowledge, threatened. To the knowledge of the Company, there is
no activity involving its or any of its Subsidiaries' employees involving
an attempt to certify a collective bargaining unit or other organizational
activity. No material action, suit, arbitration, proceeding or, to the
Company's knowledge, claim or investigation by or before any court,
governmental agency, administrative agency or commission brought by or on
behalf of any employee, prospective employee, former employee, retiree,
labor organization or other representative of the Company or any of its
Subsidiaries' employees is pending or, to the knowledge of the Company,
threatened. The Company and its Subsidiaries are in material compliance
with all applicable laws, agreements, contracts, and policies relating to
employment, employment practices, wages, hours, and terms and conditions of
employment, and each individual who is treated by the Company or its
-25-
Subsidiaries as an exempt employee under any federal or state law, or as an
independent contractor, is properly so treated under applicable law. As of
the date hereof, neither the Company nor any of its Subsidiaries have
closed any plant or facility or effectuated any layoffs of employees, nor
has any such action or program been announced for the future, that would
reasonably be expected to give rise to any material liability under the
Worker Adjustment and Retraining Notification Act or any similar state or
local law or regulation.
4.26. Derivative Instruments and Transactions
(a) All Derivative Transactions (as defined in Section 4.26(b)) whether
entered into for the account of the Company or any of its Subsidiaries or
for the account of a customer of the Company or any of its Subsidiaries,
(i) were entered into in the ordinary course of business consistent with
past practice and in accordance with applicable rules, regulations and
policies of all applicable Governmental Entities and with counterparties
believed to be financially responsible at the time, (ii) are legal, valid
and binding obligations of the Company or one of its Subsidiaries and, to
the knowledge of the Company, each of the counterparties thereto and (iii)
are in full force and effect and enforceable in accordance with their
terms. The Company or its Subsidiaries and, to the knowledge of the
Company, the counterparties to all such Derivative Transactions, have duly
performed, in all material respects, their obligations thereunder to the
extent that such obligations to perform have accrued. To the knowledge of
the Company, there are no material breaches, violations or defaults or
allegations or assertions of such by any party pursuant to any such
Derivative Transactions. The financial position of the Company and its
Subsidiaries on a consolidated basis under or with respect to each such
Derivative Transaction has been reflected in the books and records of the
Company and such Subsidiaries in accordance with GAAP consistently applied.
(b) For purposes of this Agreement, the term "Derivative Transaction"
means any swap transaction, option, warrant, forward purchase or sale
transaction, futures transaction, cap transaction, floor transaction or
collar transaction relating to (i) one or more currencies, commodities,
bonds, equity securities, loans, interest rates, catastrophe events,
weather-related events, credit-related events or conditions or any indexes,
or (ii) any other similar transaction (including any option with respect to
any of these transactions) or combination of any of these transactions,
including collateralized mortgage obligations or other similar instruments
or any debt or equity instruments evidencing or embedding any such types of
transactions, and any related credit support, collateral or other similar
arrangements related to such transactions.
4.27. Approvals
As of the date of this Agreement, the Company has no knowledge of
any reason relating to it or its Subsidiaries why all regulatory approvals
from any Governmental Entity required to consummate the transactions
contemplated hereby should not be obtained on a timely basis.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF ACQUIROR
Acquiror hereby represents and warrants to the Company that, (i)
except as set forth on the Acquiror Disclosure Letter delivered by Acquiror
to the Company prior to the execution of this Agreement (the "Acquiror
Disclosure Letter"), it being understood and agreed that each item in a
particular section of the Acquiror Disclosure Letter applies only to such
section and to any other section to which its relevance is reasonably
apparent and (ii) other than with respect to Sections 5.2, 5.5(a), 5.6(a)
and 5.8, except as disclosed in the Acquiror Reports (as defined in Section
-26-
5.5(a)) filed prior to the date of this Agreement and on or after January
1, 2008 (excluding any disclosures set forth in any "risk factor" section
thereof or under the heading "Forward-Looking Statements" in any such
filings):
5.1. Corporate Organization
Acquiror is duly organized and validly existing as a savings
and loan holding company incorporated under the Laws of the State of
Delaware. Acquiror has all requisite corporate power and authority to own,
lease or operate all of its properties, rights and assets and to carry on
its business as it is now being conducted, and is duly licensed or
qualified to do business in each jurisdiction in which the nature of the
business conducted by it or the character or location of the properties,
rights and assets owned, leased or operated by it makes such licensing or
qualification necessary, except where the failure to be so licensed or
qualified has not had and would not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect on Acquiror.
The copies of the certificate of incorporation and bylaws of Acquiror which
have been made available to the Company, are true, correct and complete
copies of such documents as in full force and effect as of the date of this
Agreement.
5.2. Capitalization
The authorized capital stock of Acquiror consists of 1,950,000,000
shares of Acquiror Common Stock and 50,000,000 shares of Acquiror Preferred
Stock. As of the close of business on the Capitalization Date, there were
348,313,919 shares of Acquiror Common Stock outstanding and no shares of
Acquiror Preferred Stock outstanding. As of the close of business on the
Capitalization Date, no shares of Acquiror Common Stock or Acquiror
Preferred Stock were reserved for issuance, except for (i) an aggregate of
10,920,513 shares of Acquiror Common Stock reserved for issuance upon the
exercise of options to purchase Acquiror Common Stock, (ii) 8,781,998
shares of Acquiror Common Stock reserved for issuance pursuant to the
Acquiror 2008 Long-Term Incentive Plan, (iii) 6,036,630 shares of Acquiror
Common Stock reserved for issuance pursuant to the Acquiror 2007 Stock
Option Plan, (iv) 3,205,268 shares of Acquiror Common Stock reserved for
issuance pursuant to the Acquiror 2007 Recognition and Retention Plan and
(v) 312,765 shares of Acquiror Common Stock reserved for issuance pursuant
to the Acquiror Directors' Equity Compensation Plan. All of the issued and
outstanding shares of Acquiror Common Stock have been duly authorized and
validly issued and are fully paid, nonassessable and free of preemptive
rights, with no personal liability attaching to the ownership thereof. As
of the close of business on the Capitalization Date, except as set forth in
this Section 5.2, neither Acquiror nor any of its Subsidiaries has or is
bound by any outstanding subscriptions, options, warrants, calls,
convertible securities, preemptive rights, redemption rights, stock
appreciation rights, stock-based performance units or other similar rights,
agreements, arrangements or commitments of any character relating to the
purchase or issuance of any shares of Acquiror's capital securities or
other equity securities of Acquiror or any securities representing the
right to purchase or otherwise receive any shares of Acquiror's capital
securities or equity-based awards, nor is there any agreement, to which
Acquiror or any of its Subsidiaries is a party obligating Acquiror or any
of its Subsidiaries to (A) issue, transfer or sell any shares of capital
stock or other equity interests of Acquiror or securities convertible into
or exchangeable for such shares or equity interests, (B) issue, grant,
extend or enter into any such subscription, option, warrant, call,
convertible securities, stock-based performance units or other similar
right, agreement, arrangement or commitment, (C) redeem or otherwise
acquire any such shares of capital stock or other equity interests or (D)
provide a material amount of funds to, or make any material investment (in
-27-
the form of a loan, capital contribution or otherwise) in, Acquiror or any
of its Subsidiaries. Neither Acquiror nor any of its Subsidiaries has any
other trust capital securities or other similar securities outstanding.
The shares of Acquiror Common Stock to be issued pursuant to the Merger
have been duly authorized and, at the Effective Time, all such shares will
be validly issued, fully paid, nonassessable and free of preemptive rights,
with no personal liability attaching to the ownership thereof.
5.3. Authority; No Violation
(a) Acquiror has full corporate power and authority to execute and
deliver this Agreement and to consummate the transactions contemplated
hereby. The execution and delivery of this Agreement and the consummation
by Acquiror of the transactions contemplated hereby has been duly and
validly approved by all necessary corporate and stockholder action of
Acquiror, and no other corporate or stockholder proceedings on the part of
Acquiror is necessary to approve this Agreement or to consummate the
transactions contemplated hereby. This Agreement has been duly and validly
executed and delivered by Acquiror and (assuming due authorization,
execution and delivery by the Company) constitutes a valid and binding
obligation of Acquiror, enforceable against Acquiror in accordance with its
terms, except as enforcement may be limited by general principles of equity
whether applied in a court of law or a court of equity and by bankruptcy,
insolvency and similar laws affecting creditors' rights and remedies
generally.
(b) Neither the execution and delivery of this Agreement by Acquiror, nor
the consummation by Acquiror of the transactions contemplated hereby, nor
compliance by Acquiror with any of the terms or provisions hereof, will (i)
violate any provision of the certificate of incorporation, bylaws or
similar governing documents of Acquiror or any of the similar governing
documents of any of its Subsidiaries or (ii) assuming that the consents,
approvals and waiting periods referred to in Section 5.4 are duly obtained
or satisfied, (x) violate any Law applicable to Acquiror or any of its
Subsidiaries or any of their respective properties, rights or assets, or
(y) violate, conflict with, result in a breach of any provision of or the
loss of any benefit under, constitute a default under, result in the
termination of or a right of termination, modification or cancellation
under, accelerate the performance required by, or result in the creation of
any Lien (or have any of such results or effects upon notice or lapse of
time, or both) upon any of the respective properties, rights or assets of
Acquiror or any of its Subsidiaries under, any of the terms, conditions or
provisions of any note, bond, mortgage, indenture, deed of trust, license,
lease, agreement, contract, permit, concession, franchise or other
instrument or obligation to which Acquiror or any of its Subsidiaries is a
party, or by which they or any of their respective properties, rights,
assets or business activities may be bound or affected, except (in the case
of clause (y) above) for such violations, conflicts, breaches, defaults or
other events which have not had and would not reasonably be expected to
have, individually or in the aggregate, a Material Adverse Effect on
Acquiror.
5.4. Consents and Approvals
Except for (i) the filing with NASDAQ of a notification of the
listing on NASDAQ, subject to official notice of issuance, of the shares of
Acquiror Common Stock to be issued in accordance with Article III hereof,
(ii) the filing with the SEC of the Proxy Statement/Prospectus and the
filing and declaration of effectiveness of the registration statement on
Form S-4 in which the Proxy Statement/Prospectus will be included as a
prospectus and any filings or approvals under applicable state securities
laws, (iii) the filing of the Certificate of Merger with the Secretary of
State of the State of Delaware and the Articles of Merger with the
Secretary of State of the State of Nevada, (iv) the approval of this
Agreement by the Required Company Vote, (v) the consents and approvals set
-28-
forth in Section 5.4 of the Acquiror Disclosure Letter, (vi) any notices or
filings under the HSR Act and the expiration or termination of any
applicable waiting periods thereunder, (vii) the consents, authorizations,
approvals, filings or exemptions in connection with the applicable
provisions of federal or state securities Laws or the rules or regulations
of any applicable self-regulatory organization, in any such case relating
to the regulation of broker-dealers, investment companies and investment
advisors and (viii) the consents, authorizations, approvals, filings and
registrations of third parties which are not Governmental Entities, the
failure of which to obtain or make has not had and would not be reasonably
expected to have, individually or in the aggregate, a Material Adverse
Effect on Acquiror, no consents or approvals of, or filings or
registrations with, any Governmental Entity or of or with any other third
party by and on behalf of Acquiror are necessary in connection with (A) the
execution and delivery by Acquiror of this Agreement and (B) the
consummation by Acquiror of the Merger and the other transactions
contemplated hereby.
5.5. SEC Documents; Other Reports; Internal Controls
(a) Acquiror has filed all required reports, forms,
schedules, registration statements and other documents with the SEC since
January 1, 2007 (the "Acquiror Reports") and has paid all fees and
assessments due and payable in connection therewith. As of their
respective dates of filing with the SEC (or, if amended or superseded by a
subsequent filing prior to the date hereof, as of the date of such
subsequent filing), the Acquiror Reports complied as to form 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 Acquiror Reports, and none of the Acquiror
Reports when filed with the SEC, or if amended prior to the date hereof, as
of the date of such amendment, 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. There are no outstanding
comments from or unresolved issues raised by the SEC, as applicable, with
respect to any of the Acquiror Reports. None of Acquiror's Subsidiaries is
required to file periodic reports with the SEC pursuant to Section 13 or
15(d) of the Exchange Act.
(b) Acquiror and each of its Subsidiaries have timely filed all reports,
schedules, forms, registrations, statements and other documents, together
with any amendments required to be made with respect thereto, that they
were required to file since January 1, 2007 with any Governmental Entity
(other than the SEC) and have paid all fees and assessments due and payable
in connection therewith. Except for normal examinations conducted by a
Governmental Entity in the regular course of the business of Acquiror and
its Subsidiaries, no Governmental Entity has notified Acquiror that it has
initiated any proceeding or, to the knowledge of Acquiror, threatened an
investigation into the business or operations of Acquiror or any of its
Subsidiaries since January 1, 2007. There is no material unresolved
violation or exception by any Governmental Entity with respect to any
report, form, schedule, registration, statement or other document filed by,
or relating to any examinations by any such Governmental Entity of,
Acquiror or any of its Subsidiaries.
(c) Acquiror has disclosed, based on its most recent evaluation prior to
the date hereof, to Acquiror's auditors and the audit committee of
Acquiror's board of directors and in Section 5.5(c) of the Acquiror
Disclosure Letter (i) any significant deficiencies and material weaknesses
in the design or operation of internal controls over financial reporting
which are reasonably likely to adversely affect in any material respect
Acquiror's ability to record, process, summarize and report financial
-29-
information and (ii) any fraud, whether or not material, that involves
management or other employees who have a significant role in Acquiror's
internal controls over financial reporting.
(d) Acquiror and its Subsidiaries have devised and maintain a system of
internal accounting controls sufficient to provide reasonable assurances
regarding the reliability of financial reporting and the preparation of
financial statements for external purposes in accordance with GAAP.
(e) Acquiror has designed and implemented disclosure controls and
procedures (within the meaning of Rules 13a-15(e) and 15d-15(e) of the
Exchange Act) to ensure that material information relating to Acquiror and
its Subsidiaries is (i) recorded, processed, summarized and reported within
the time periods specified in the rules and forms of the SEC and (ii)
accumulated and communicated to the management of Acquiror by others within
those entities as appropriate to allow timely decisions regarding required
disclosure and to make the certifications required by the Exchange Act with
respect to the Acquiror Reports.
(f) Since January 1, 2007, (x) neither Acquiror nor any of its
Subsidiaries nor, to the knowledge of Acquiror, any director, officer,
employee, auditor, accountant or representative of Acquiror or any of its
Subsidiaries has received or otherwise had or obtained knowledge of any
material complaint, allegation, assertion or claim, whether written or
oral, regarding the accounting or auditing practices, procedures,
methodologies or methods of Acquiror or any of its Subsidiaries or their
respective internal accounting controls, including any material complaint,
allegation, assertion or claim that Acquiror or any of its Subsidiaries has
engaged in questionable accounting or auditing practices, and (y) no
attorney representing Acquiror or any of its Subsidiaries, whether or not
employed by Acquiror or any of its Subsidiaries, has reported evidence of a
material violation of securities laws, breach of fiduciary duty or similar
violation by Acquiror or any of its officers, directors, employees or
agents to the board of directors of Acquiror or any committee thereof or to
any director or officer of Acquiror.
5.6. Financial Statements; Undisclosed Liabilities
(a) The financial statements of Acquiror (including any
related notes and schedules thereto) included in the Acquiror Reports
complied as to form, as of their respective dates of filing with the SEC
(or, if amended or superseded by a subsequent filing prior to the date
hereof, as of the date of such subsequent filing), in all material
respects, with all applicable accounting requirements and with the
published rules and regulations of the SEC (except, in the case of
unaudited statements, (i) for normal adjustments and accruals necessary to
provide a fair presentation for the periods presented and (ii) as permitted
by Form 10-Q of the SEC), have been prepared in accordance with GAAP
applied on a consistent basis during the periods involved (except as may be
disclosed therein), and fairly present, in all material respects, the
consolidated financial position of Acquiror and its Subsidiaries and the
consolidated results of operations, changes in stockholders' equity and
cash flows of such companies as of the dates and for the periods shown.
The books and records of Acquiror and its Subsidiaries have been, and are
being, maintained in all material respects in accordance with applicable
legal and accounting requirements and reflect only actual transactions.
(b) Except for (i) those liabilities that are reflected or reserved for in
the consolidated financial statements of Acquiror included in its Annual
Report to Shareholders filed on Form 10-K for the fiscal year ended
-30-
December 31, 2008, as filed with the SEC, or otherwise disclosed in the
Acquiror Reports filed subsequent to the date of the filing of such annual
financial statements and prior to the date hereof or (ii) liabilities
incurred since December 31, 2008 in the ordinary course of business
consistent with past practice, neither Acquiror nor any of its Subsidiaries
has incurred any material liability of any nature whatsoever (whether
absolute, accrued or contingent or otherwise and whether due or to become
due).
5.7. Broker's Fees
Except for Xxxxxx Xxxxxxx & Co. Inc., whose fees and expenses
shall be paid by Acquiror, neither Acquiror nor any Subsidiary thereof nor
any of their respective officers or directors has employed any broker or
finder or incurred any liability for any broker's fees, commissions or
finder's fees in connection with the Merger or any other transaction
contemplated by this Agreement.
5.8. Absence of Certain Changes or Events
Since September 30, 2009 no event has occurred or circumstance
has arisen which has had or would reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect on Acquiror.
5.9. Legal Proceedings
(a) Neither Acquiror nor any of its Subsidiaries (or, to the
knowledge of Acquiror, any of the current or former directors or executive
officers of Acquiror or any of its Subsidiaries) is a party to any, and
there are no pending or, to Acquiror's knowledge, threatened legal,
administrative, arbitral or other proceedings or actions or, to Acquiror's
knowledge, claims or governmental or regulatory investigations (i) of any
material nature against such person (in the case of any such proceeding,
claim, action or investigation relating to a director or executive officer,
to the extent related to or affecting the business of Acquiror or any of
its Subsidiaries), or (ii) as of the date hereof challenging the validity
of the transactions contemplated by this Agreement.
(b) There is no material injunction, order, judgment, settlement, decree,
or regulatory restriction imposed upon or entered into by Acquiror, any of
its Subsidiaries or the assets of Acquiror or any of its Subsidiaries.
(c) Since January 1, 2008, (i) there have been no subpoenas or written
demands, inquiries or information requests received by Acquiror or any of
its Subsidiaries from any Governmental Entity other than (x) in matters in
which Acquiror or any of its Subsidiaries is a plaintiff, (y) for
subpoenas, written demands, inquiries or information requests received in
the ordinary course of business consistent with past practice relating to
customers of Acquiror or any of its Subsidiaries or (z) with respect to
matters relating to any Tax, and (ii) no Governmental Entity has requested
that the Acquiror or any of its Subsidiaries enter into a settlement
negotiation or tolling agreement with respect to any matter related to any
subpoena, or written demand, inquiry or information request other than with
respect to matters relating to any Tax.
5.10. Board Approval; No Stockholder Vote Required
(a) The board of directors of Acquiror has duly approved this
Agreement, the Merger and the other transactions contemplated hereby and
has declared it advisable for Acquiror to enter into this Agreement.
(b) No vote of the holders of shares of Acquiror Common Stock is necessary
to approve and adopt this Agreement and the transactions contemplated
hereby.
-31-
5.11. Compliance with Applicable Law
Acquiror and each of its Subsidiaries hold, and have since
January 1, 2007 held, all licenses, franchises, permits and authorizations
which are necessary for the lawful conduct of their respective businesses
and ownership of their respective properties, rights and assets under and
pursuant to each, and have complied with and are not in default or
violation of any, applicable Law relating to Acquiror or any of its
Subsidiaries, except where the failure to hold such license, franchise,
permit or authorization or such noncompliance, default or violation has not
had and would not reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect on Acquiror. Acquiror and each of its
Subsidiaries have complied in all material respects with, and are not in
default or violation in any material respect of, any applicable Law,
including without limitation, all Laws related to data protection or
privacy, the USA Patriot Act, the Bank Secrecy Act, the Equal Credit
Opportunity Act and any other Law relating to discriminatory lending,
financing or leasing practices, and the Xxxxxxxx-Xxxxx Act. Acquiror and
each of its Subsidiaries have complied with, and are not in default or
violation of, any posted or internal privacy policies relating to data
protection or privacy, including without limitation, the protection of
personal information, except where the failure to so comply or the default
or violation thereof has not had and would not reasonably be expected to
have, individually or in the aggregate, a Material Adverse Effect on
Acquiror. Neither Acquiror nor any of its Subsidiaries has knowledge of,
or has received, since January 1, 2007, notice of, any material defaults or
material violations of any applicable Law.
5.12. Agreements with Regulatory Agencies
Neither Acquiror nor any of its Subsidiaries is subject to any
cease-and-desist or other order issued by, or is a party to any written
agreement, consent agreement or memorandum of understanding with, or is a
party to any commitment letter or similar undertaking to, or is a recipient
of any extraordinary supervisory letter from, or is subject to any order or
directive by, or has adopted any board resolutions at the request of (each,
whether or not set forth in Section 5.12 of the Acquiror Disclosure Letter,
"Acquiror Regulatory Agreement"), any Governmental Entity that restricts
the conduct of its business or that in any manner relates to its capital
adequacy, its credit or risk management policies, its dividend policy, its
management, its business or its operations, nor has Acquiror or any of its
Subsidiaries been notified by any Governmental Entity that it is
considering issuing or requesting (or is considering the appropriateness of
issuing or requesting) any Acquiror Regulatory Agreement. To the knowledge
of Acquiror, there are no investigations relating to any material
regulatory matters pending before any Governmental Entity with respect to
Acquiror or any of its Subsidiaries.
5.13. Acquiror Information
The information relating to Acquiror and its Subsidiaries to
be provided by Acquiror for inclusion in the Proxy Statement/Prospectus,
the Form S-4, any filing pursuant to Rule 165 or Rule 425 under the
Securities Act or Rule 14a-12 under the Exchange Act, or in any other
document filed with any other Governmental Entity in connection herewith,
will not contain any untrue statement of a material fact or omit to state a
material fact necessary to make the statements therein, in light of the
circumstances in which they are made, not misleading. The Form S-4 and the
prospectus contained therein (except for such portions thereof as relate
only to the Company or any of its Subsidiaries) will comply as to form in
all material respects with the provisions of the Securities Act and the
rules and regulations thereunder.
-32-
5.14. Approvals
As of the date of this Agreement, Acquiror knows of no reason
relating to it or its Subsidiaries why all regulatory approvals from any
Governmental Entity required to consummate the transactions contemplated
hereby should not be obtained on a timely basis.
5.15. Tax-Free Reorganization Treatment
Acquiror has not taken or agreed to take any action and has no
knowledge of any fact, agreement, plan or other circumstance that is
reasonably likely to prevent or impede the Merger from qualifying as a
"reorganization" under Section 368(a) of the Code.
ARTICLE VI
COVENANTS RELATING TO CONDUCT OF BUSINESS
6.1. Conduct of Business Prior to the Effective Time
Except as otherwise expressly contemplated or permitted by
this Agreement or with the prior written consent of Acquiror (which consent
shall not be unreasonably withheld or delayed), during the period from the
date of this Agreement to the Effective Time, the Company shall, and shall
cause each of its Subsidiaries to, use its commercially reasonable efforts
to (i) conduct its business only in the usual, regular and ordinary course
consistent with past practice and (ii) maintain and preserve intact its
business organization, and its rights, authorizations, franchises and other
authorizations issued by Governmental Entities, preserve its advantageous
business relationships with customers, vendors and others doing business
with it and retain the services of its officers and key employees.
6.2. Company Forbearances
Except as expressly contemplated or permitted by this
Agreement, for the payment of documented fees and expenses incurred in
connection with the transactions contemplated hereunder or as set forth in
Section 6.2 of the Company Disclosure Letter, during the period from the
date of this Agreement to the Effective Time, the Company shall not, and
shall not permit any of its Subsidiaries to, without the prior written
consent of Acquiror (which consent shall not be unreasonably withheld or
delayed):
(a) (i) adjust, split, combine or reclassify any capital stock or other
equity interest; (ii) set any record or payment dates for the payment of
any dividends or distributions on its capital stock or other equity
interest or make, declare or pay any dividend or make any other
distribution on, or directly or indirectly redeem, purchase or otherwise
acquire, any shares of its capital stock or other equity interest or any
securities or obligations convertible into or exchangeable for any shares
of its capital stock or other equity interest or stock appreciation rights
or grant any person any right to acquire any shares of its capital stock or
other equity interest, other than (A) regular quarterly cash dividends on
Company Common Stock and RSUs equal to the rate paid during the fiscal
quarter immediately preceding the date hereof with record and payment dates
consistent with past practice (subject to the Company's obligations
pursuant to Section 6.4); and (B) dividends paid by any of the Subsidiaries
of the Company so long as such dividends are only paid to the Company or
any of its other wholly owned Subsidiaries; or (iii) issue or commit to
issue any additional shares of capital stock or other equity interest
(except pursuant to the exercise of Company Options and conversion of RSUs,
in each case outstanding as of the date hereof and disclosed in Section
4.2(b) of the Company Disclosure Letter), or any securities convertible
into or exercisable for, or any rights, warrants or options to acquire, any
additional shares of capital stock or other equity interest (including
Company Options);
-33-
(b) enter into any new line of business or change its lending, risk and
asset-liability management and other material lending, financing, leasing
or operating policies in any material respect, except as required by Law or
by policies imposed by a Governmental Entity;
(c) sell, license, lease, transfer, mortgage, encumber or otherwise
dispose of or discontinue, or abandon or fail to maintain, any of its
material rights, assets, business or properties or cancel or release any
material indebtedness owed to any such person or any claims held by any
such person, in each case, outside of workouts in the ordinary course of
business consistent with past practice of Finance Receivables, except (i)
sales of Finance Receivables and repossessions and sales of investment
securities subject to repurchase, in each case in the ordinary course of
business consistent with past practice or (ii) as expressly required by the
terms of any contracts or agreements in force at the date of this Agreement
and set out in Section 6.2(c) of the Company Disclosure Letter;
(d) make any acquisition of or investment in any other person, by purchase
or other acquisition of stock or other equity interests (other than in a
fiduciary capacity in the ordinary course of business consistent with past
practice), by merger, consolidation, asset purchase or other business
combination, or by formation of any joint venture or other business
organization or by contributions to capital; or make any purchases or other
acquisitions of any debt securities, property or assets (including any
investments or commitments to invest in real estate or any real estate
development project) in or from any person other than a wholly owned
Subsidiary of the Company, except for (i) foreclosures and other similar
acquisitions in connection with securing or collecting debts previously
contracted, and (ii) transactions that, together with all other such
transactions, are not material to the Company, and in each case in the
ordinary course of business consistent with past practice;
(e) (A) enter into, renew, extend or terminate (i) any Company Contract
(other than the type described in Section 4.14(a)(iii) or if related to
indebtedness in Section 4.14(a)(v)) or (ii) any broker agreement referenced
in Section 4.7 (or any other agreement with any broker or finder in
connection with the Merger or any other transaction contemplated by this
Agreement); or (B) make any material change in any of such Company
Contracts or broker agreements; other than in the case of clause (A)(i),
renewals of such Company Contracts for a term of one (1) year or less
without material changes to the terms thereof;
(f) except as required by Law or any Plan disclosed in Section 4.11(a) of
the Company Disclosure Letter or as expressly provided in Section 2.4(a) of
this Agreement: (i) increase (or decrease) the compensation or benefits of
any Company Employee (other than, if the Effective Time occurs after March
31, 2010, in the ordinary course (other than any delay caused by this
Section 6.2) consistent with past practice with respect to Company
Employees (other than Company Employees who as of the date of this
Agreement have entered into an employment agreement or other individually-
negotiated agreement with Acquiror), increases in annual rates of base
salary or wages, which increase occurs as a result of the Company's annual
review of compensation in February 2010, and results in an increase in the
annual rate of salary or wages of the Company Employee of no more than
2.5%); (ii) grant or pay any change-in-control, retention bonus, severance
or termination pay to any Company Employee except as required under the
terms of any Plan and disclosed in Section 4.11(a) of the Company
Disclosure Letter; (iii) loan or advance any money or other property to, or
sell, transfer or lease any properties, rights or assets to, any Company
Employee; (iv) establish, adopt, enter into, amend, terminate or grant any
-34-
waiver or consent under any Plan or any plan, agreement, program, policy,
trust, fund or other arrangement that would be a Plan if it were in
existence as of the date of this Agreement; (v) grant any equity or equity-
based awards; or (vi) hire, or terminate the employment of, any Company
Employee (other than (A) with respect to Company Employees not listed on
Section 6.2(f) of the Company Disclosure Letter, terminations for cause or
(B), with respect to marketing Company Employees whose annual salary does
not exceed $150,000, and with respect to other Company Employees whose
annual salary is less than $100,000, hiring or terminations, in any such
case in the ordinary course of business consistent with past practice);
provided that the Company may, in its discretion, accelerate the vesting
and/or payment of any RSU (other than "stock units") held by any Company
Employee that is outstanding on the date of this Agreement, but only to the
extent that the Company reasonably and in good faith determines that, as a
result of such acceleration, such Company Employee would not be subject to
an excise tax imposed under Section 4999 of the Code that would otherwise
apply as a result of the transactions contemplated by this Agreement, and,
for purposes of this provision, the Company's reasonable and good faith
determination regarding the imposition of such excise tax must be based on
good faith estimates by the compensation consulting firm of Towers Xxxxxx,
provided that (x) Towers Xxxxxx considers in developing such estimates any
calculations and estimates provided by the Company, and (y) Towers Xxxxxx
provides its estimates to the Company as soon as practicable after the date
of this Agreement and in no event later than December 15, 2009.
(g) (i) make, or commit to make, any capital expenditures in excess of
$100,000 in the aggregate, except in accordance with the expenditures
budgeted in the capital expenditure budget delivered to Acquiror prior to
the date hereof or (ii) incur any indebtedness for borrowed money or
assume, guarantee, endorse or otherwise as an accommodation become
responsible for the long-term indebtedness of any other person (other than
indebtedness of the Company's Subsidiaries to the Company or any of its
wholly owned Subsidiaries and indebtedness under existing lines of credit
and renewals or extensions thereof), provided that the Company and its
Subsidiaries may renew or replace an existing debt facility so long as the
renewed or new debt facility does not contain any prepayment penalty, make-
whole or similar payment that is required to be made upon early termination
or prepayment of such debt facility.
(h) open, relocate or close any operation center or similar facility where
credit analysis and approval, collection and marketing functions are
performed;
(i) except for Finance Receivables (or increases thereof) or commitments
for Finance Receivables that have previously been approved by the Company
prior to the date of this Agreement, without previously notifying and
consulting with Acquiror, (i) originate or acquire any new Finance
Receivable or issue a commitment for any new Finance Receivable (A) in
excess of $15 million or (B) (x) that is not originated in conformity, in
all material respects, with the Company's or its Subsidiaries' ordinary
course lending policies and guidelines in effect as of the date hereof and
(y) in excess of $500,000; or (ii) increase an existing Finance Receivable
(A) if the amount of such increase is in excess of $15 million or (B) if
such increase is (x) made in a manner not in conformity, in all material
respects, with the Company's or its Subsidiaries' ordinary course lending
policies and guidelines in effect as of the date hereof and (y) in an
amount in excess of $500,000;
(j) except pursuant to agreements or arrangements in effect on the date
hereof and specified in Section 6.2(j) of the Company Disclosure Letter,
-35-
pay, loan or advance any amount to, or sell, transfer or lease any
properties, rights or assets (real, personal or mixed, tangible or
intangible) to, or enter into any agreement or arrangement with, any of its
officers or directors or any of their family members, or any affiliates or
associates (as such term is defined under the Exchange Act) of any of its
officers or directors other than (i) Finance Receivables originated in the
ordinary course of the business of the Company and its Subsidiaries and
(ii) such agreements or arrangements relating to compensation, fringe
benefits, severance or termination pay or related matters otherwise
permitted pursuant to this Section 6.2;
(k) other than in connection with workouts in the ordinary course of
business of Finance Receivables (A) settle any claim, action or proceeding
involving monetary damages in excess of $50,000, or waive or release any
material rights or claims, other than any claim, action or proceeding that
is controlled by an insurance carrier for which the Company is responsible
solely for amounts up to the deductible under the applicable insurance
policy, or (B) agree or consent to the issuance of any injunction, decree,
order or judgment restricting or otherwise affecting its business or
operations in any material respect;
(l) other than as permitted by Section 7.4(a), adopt or implement any
amendment of its articles of incorporation, bylaws or similar governing
documents, or enter into a plan of consolidation, merger, share exchange,
share acquisition, reorganization or complete or partial liquidation with
any person (other than consolidations, mergers or reorganizations solely
among wholly owned subsidiaries of the Company), or a letter of intent,
memorandum of understanding or agreement in principle with respect thereto;
(m) except as required by Law, make any material changes in its policies
and practices with respect to (i) underwriting, pricing, originating,
acquiring, selling, servicing, or buying or selling rights to service
Finance Receivables or (ii) its hedging practices and policies;
(n) make any changes in its methods, practices or policies of financial or
Tax accounting, except as may be required under Law, rule, regulation or GAAP;
(o) (i) enter into, renew, extend or terminate any Company Securitization
Document or other securitizations of any Finance Receivables other than in
connection with the renewal or replacement of any existing Company
Securitization Document or other securitization so long as the renewed or
new Company Securitization Document or other securitization does not
contain any prepayment penalty, make-whole or similar payment that is
required to be made upon early termination or prepayment of such
securitization, (ii) make any material change in any such Company
Securitization Document or other securitization or (iii) create any special
purpose funding or variable interest entity;
(p) introduce any material new products or services, any material
marketing campaigns or any material new sales compensation or incentive
programs or arrangements;
(q) except as required by Law, make or change any Tax election, file any
amended Tax Returns, settle or compromise any material Tax liability of the
Company or any of its Subsidiaries, agree to an extension or waiver of the
statute of limitations with respect to the assessment or determination of
Taxes of the Company or any of its Subsidiaries, enter into any closing
agreement with respect to any Tax or surrender any right to claim a Tax
refund; or
-36-
(r) agree to, or make any commitment to, take any of the actions
prohibited by this Section 6.2.
6.3. No Fundamental Acquiror Changes
Except as expressly contemplated or permitted by this
Agreement, or as required by applicable Law, during the period from the
date of this Agreement to the Effective Time, Acquiror shall not, without
the prior written consent of the Company, amend its certificate of
incorporation or bylaws in a manner that would materially and adversely
affect the economic benefits of the Merger to the holders of Company Common
Stock.
6.4. Company Dividends
From the date hereof until the Effective Time, the Company
shall consult with Acquiror regarding the record dates and the payment
dates relating to any dividends in respect of Company Common Stock, it
being the intention of the Company and Acquiror that holders of Company
Common Stock shall not receive two dividends (or fail to receive one
dividend), for any single calendar quarter with respect to their shares of
Company Common Stock and/or any Acquiror Common Stock that any such holder
receives in exchange therefor pursuant to the Merger.
ARTICLE VII
ADDITIONAL AGREEMENTS
7.1. Regulatory Matters
(a) Acquiror and the Company shall cooperate in preparing and
promptly cause to be filed with the SEC the Proxy Statement/Prospectus, and
Acquiror shall cooperate in preparing and promptly cause to be filed with
the SEC the Form S-4. Each of Acquiror and the Company shall use
reasonable best efforts to have the Form S-4 declared effective under the
Securities Act as promptly as practicable after such filing and to keep the
Form S-4 effective as long as is necessary to consummate the Merger and the
other transactions contemplated hereby, and the Company shall mail or
deliver the Proxy Statement/Prospectus to its stockholders as promptly as
practicable after the Form S-4 is declared effective. Acquiror and the
Company shall, as promptly as practicable after receipt thereof, provide
the other party with copies of any written comments and advise the other
party of any oral comments with respect to the Proxy Statement/Prospectus
or the Form S-4 received from the SEC. Each party shall cooperate and
provide the other party with a reasonable opportunity to review and comment
on any amendment or supplement to the Proxy Statement/Prospectus and the
Form S-4 prior to filing such with the SEC.
(b) Subject to the other provisions of this Agreement, Acquiror and the
Company agree to cooperate with each other and use reasonable best efforts
to promptly prepare and file all necessary documentation, to effect all
applications, notices, petitions and filings, to obtain as promptly as
practicable all permits, consents, approvals and authorizations of all
third parties and Governmental Entities which are necessary or advisable to
consummate the transactions contemplated by this Agreement (including the
Merger) and to comply with the terms and conditions of all such permits,
consents, approvals and authorizations of all such third parties and
Governmental Entities, including by filing a Notification and Report Form
pursuant to the HSR Act, and supplying as promptly as reasonably
practicable any additional information and documents requested pursuant to
the HSR Act. Without limiting the foregoing, the Company shall have the
right to review in advance and be consulted on any notice provided to the
Office of Thrift Supervision by Acquiror with respect to the Merger and the
-37-
other transactions contemplated hereby. Acquiror shall promptly notify the
Company of any material communications with the Office of Thrift
Supervision relating to such notice.
(c) Acquiror and the Company shall, upon request, furnish each other with
all information concerning themselves, their Subsidiaries, directors,
officers and stockholders and such other matters as may be reasonably
necessary or advisable in connection with the preparation of the Proxy
Statement/Prospectus, the Form S-4 or any other statement, filing, notice
or application made by or on behalf of Acquiror, the Company or any of
their respective Subsidiaries to any Governmental Entity in connection with
the Merger and the other transactions contemplated by this Agreement.
Acquiror and the Company shall make any necessary filings with respect to
the Merger under the Securities Act and the Exchange Act and the rules and
regulations thereunder.
(d) Acquiror and the Company shall promptly advise each other upon
receiving any communication from any Governmental Entity whose consent or
approval is required for consummation of the transactions contemplated by
this Agreement which causes such party to believe that there is a
reasonable likelihood that any Requisite Regulatory Approval will not be
obtained or that the receipt of any such approval will be materially
delayed or conditioned.
7.2. Access to Information
(a) Upon reasonable notice and subject to applicable Laws
relating to the exchange of information, the Company shall, and shall cause
each of its Subsidiaries to, afford to the officers, employees,
accountants, counsel and other representatives of Acquiror access, during
normal business hours during the period prior to the Effective Time, to all
its properties, books, contracts, commitments and records (including Tax
Returns and work papers of independent auditors), and to its officers,
employees, accountants, counsel and other representatives, in each case and
in the aggregate, in a manner not unreasonably disruptive to the operation
of the business of the Company and its Subsidiaries and, during such
period, the Company shall, and shall cause its Subsidiaries to, make
available to Acquiror (i) a copy of each report, schedule, registration
statement and other document filed or received by it during such period
pursuant to the requirements of the federal securities laws or federal or
state lending, financing or leasing or consumer finance or protection Laws
(other than reports or documents which the Company is not permitted to
disclose under applicable Law) and (ii) all other information concerning
its business, properties and personnel as Acquiror may reasonably request.
Without limiting the foregoing, Acquiror and its Subsidiaries shall not
directly contact any Company Employee without first obtaining the consent
of an officer of the Company. Neither the Company nor any of its
Subsidiaries shall be required to provide access to or to disclose
information where such access or disclosure would jeopardize the attorney-
client privilege of the institution in possession or control of such
information or contravene any Law applicable to the institution in
possession or control of such information or violate any contractual or
other duty of confidentiality. The parties hereto will make appropriate
substitute disclosure arrangements under circumstances in which the
restrictions of the preceding sentence apply.
(b) Acquiror shall hold all information furnished by the Company or any of
its Subsidiaries or representatives pursuant to Section 7.2(a) in
confidence to the extent required by, and in accordance with, the
provisions of the Confidentiality Agreement, dated August 20, 2009, between
Acquiror and the Company (the "Confidentiality Agreement").
-38-
(c) No investigation by any of the parties or their respective
representatives shall constitute a waiver of or otherwise affect the
representations, warranties, covenants or agreements of the others set
forth herein.
7.3. Stockholder Approval
(a) The Company shall duly take all lawful action to call,
give notice of, convene and hold a meeting of its stockholders as promptly
as practicable following the date upon which the Form S-4 becomes effective
(the "Company Stockholders Meeting") for the purpose of obtaining the
Required Company Vote and, subject to Section 7.3(b), shall take all lawful
action to solicit the approval of this Agreement by such stockholders. The
board of directors of the Company shall recommend approval of this
Agreement by the stockholders of the Company (the "Company Recommendation")
in the Proxy Statement/Prospectus and shall not directly or indirectly (x)
withdraw, modify or qualify in any manner adverse to Acquiror such
recommendation or (y) take any other action or make any other public
statement in connection with the Company Stockholders Meeting, or in
reference to an Acquisition Proposal (as defined in Section 7.4(b)), that
is inconsistent with such recommendation (any action or public statement
described in clause (x) or (y) being referred to as a "Change in Company
Recommendation"), except as and to the extent expressly permitted by
Section 7.3(b) or 7.4(a).
(b) Notwithstanding the foregoing, prior to the date of the Company
Stockholders Meeting, the Company and its board of directors shall be
permitted to effect a Change in Company Recommendation if and only to the
extent that:
(i) it has complied in all material respects with Section 7.4,
(ii) its board of directors, based on the advice of its outside counsel,
determines in good faith that it is required to take such action in order
to comply with its fiduciary duties under applicable Law, and
(iii) if the Company's board of directors intends to effect a Change in
Company Recommendation following an Acquisition Proposal, (A) such
Acquisition Proposal was unsolicited and the Company's board of directors
has concluded in good faith that such Acquisition Proposal constitutes a
Superior Proposal (as defined in Section 7.4(c)) after giving effect to all
of the adjustments which may be offered by Acquiror pursuant to clause (C)
below, (B) the Company has notified Acquiror in writing, at least five (5)
Business Days in advance, of its intention to effect a Change in Company
Recommendation (the "Notice Period"), specifying the material terms and
conditions of any such Superior Proposal (including the identity of the
party making such Superior Proposal) and furnishing to Acquiror a copy of
the relevant proposed transaction agreements with the party making such
Superior Proposal and all other material documents and (C) during the
Notice Period, and in any event, prior to effecting such a Change in
Company Recommendation, the Company has negotiated, and has caused its
financial and legal advisors to negotiate, with Acquiror in good faith (to
the extent Acquiror desires to negotiate) to make such adjustments in the
terms and conditions of this Agreement so that such Acquisition Proposal
ceases to constitute a Superior Proposal.
-39-
In the event of any material revisions to the Superior Proposal, the
Company shall be required to deliver a new written notice to Acquiror and
to again comply with the requirements of this Section 7.3(b) with respect
to such new written notice, except that the Notice Period shall be reduced
to three (3) Business Days.
7.4. Acquisition Proposals
(a) From the date hereof until the Effective Time or, if
earlier, the date on which this Agreement is terminated in accordance with
Article IX, the Company shall not, and shall cause its Subsidiaries and its
and their respective officers, directors, employees, agents and
representatives (including any investment bankers, attorneys or accountants
retained by it or any of its Subsidiaries) not to, directly or indirectly,
(i) initiate, solicit, knowingly encourage or knowingly facilitate
(including by way of providing information) the submission of any
inquiries, proposals or offers (whether firm or hypothetical) that
constitute or may reasonably be expected to lead to, any Acquisition
Proposal, (ii) have any discussions with or provide any confidential
information or data to any person relating to an Acquisition Proposal, or
engage in any negotiations concerning an Acquisition Proposal, (iii)
approve or recommend, or publicly propose to approve or recommend, any
Acquisition Proposal, (iv) approve or recommend, or publicly propose to
approve or recommend, or execute or enter into, any letter of intent,
agreement in principle, memorandum of understanding, merger agreement,
asset or share purchase or share exchange agreement, option agreement or
other similar agreement related to any Acquisition Proposal, (v) enter into
any agreement or agreement in principle requiring, directly or indirectly,
the Company to abandon, terminate or fail to consummate the transactions
contemplated hereby or breach its obligations hereunder, or (vi) propose or
agree to do any of the foregoing. Notwithstanding the foregoing provisions
of this Section 7.4(a), in the event that the Company receives an
unsolicited bona fide written Acquisition Proposal and the Company's board
of directors concludes in good faith that such Acquisition Proposal
constitutes or is reasonably likely to result in a Superior Proposal, the
Company may, and may permit its Subsidiaries and its and their officers,
directors, employees, agents and representatives to, prior to (but not
after) the date of the Company Stockholders Meeting, (A) take any action
described in clause (ii) above and (B) to the extent permitted by and in
compliance with Section 9.1(h), authorize the execution of a definitive
agreement with respect to a Superior Proposal, in each case to the extent
that its board of directors concludes in good faith (after receiving the
advice of its outside counsel) that it is required to take such actions in
order to comply with its fiduciary duties under applicable Law; provided,
however, that prior to providing (or causing to be provided) any
confidential information or data permitted to be provided pursuant to this
sentence, the Company shall have entered into a written confidentiality
agreement with such third party on terms no less favorable to the Company
than the Confidentiality Agreement; and provided, further, that the Company
shall promptly provide Acquiror with any non-public information concerning
the Company or its Subsidiaries provided to such person which was not
previously provided to Acquiror (or its representatives).
(b) For purposes of this Agreement, "Acquisition Proposal" means any
inquiry, proposal or offer from any person (other than Acquiror or any of
its Subsidiaries) relating to any direct or indirect (i) acquisition,
purchase or sale of a business or assets that constitute 20% or more of the
consolidated revenues, net income or assets (including stock of the
Company's Subsidiaries) of the Company and its Subsidiaries, (ii) merger,
reorganization, share exchange, consolidation, business combination,
recapitalization, liquidation, dissolution or similar transaction involving
the Company or any of its Significant Subsidiaries, or (iii) purchase or
-40-
sale of, or tender or exchange offer (including a self-tender offer) for,
securities of the Company or any of its Significant Subsidiaries that, if
consummated, would result in any person (or the stockholders of such
person) beneficially owning securities representing 20% or more of the
equity or total voting power of the Company, any of its Significant
Subsidiaries or the surviving parent entity in such transaction.
(c) For purposes of this Agreement, "Superior Proposal" means a bona fide
written Acquisition Proposal to acquire, directly or indirectly, a majority
of the total voting power of the Company (or a majority of the total voting
power of the resulting or surviving entity of such transaction or the
ultimate parent of such resulting or surviving entity), which the board of
directors of the Company concludes in good faith, after consultation with
its financial advisors and receiving the advice of its outside counsel,
taking into account timing and all legal, financial, regulatory and other
aspects of the proposal and the person making the proposal (including any
break-up fees, expense reimbursement provisions and conditions to
consummation), (i) is more favorable to the stockholders of the Company
from a financial point of view than the transactions contemplated by this
Agreement and (ii) is reasonably capable of being consummated on the terms
proposed.
(d) The Company will immediately cease and cause to be terminated any
activities, discussions or negotiations conducted before the date of this
Agreement with any persons other than Acquiror with respect to any
Acquisition Proposal and will use its reasonable best efforts to enforce,
and not waive or amend any provision of, any confidentiality, standstill or
similar agreement relating to an Acquisition Proposal, including by
requiring the other parties thereto to promptly return or destroy any
confidential information previously furnished by or on behalf of the
Company thereunder. The Company will promptly (and in all events within 24
hours) following receipt of any Acquisition Proposal or any inquiry which
could reasonably be expected to lead to an Acquisition Proposal advise
Acquiror of the material terms thereof (including the identity of the
person making such Acquisition Proposal), and will keep Acquiror apprised
of any related developments, discussions and negotiations and the status
and terms thereof (including providing Acquiror with a copy of all material
documentation and correspondence relating thereto) on a reasonably current
basis. Without limiting the foregoing, the Company shall notify Acquiror
orally and in writing within 24 hours after it enters into discussions or
negotiations with another person regarding an Acquisition Proposal,
executes and delivers a confidentiality agreement with another person in
connection with an Acquisition Proposal, or provides non-public information
or data to another person in connection with an Acquisition Proposal.
(e) Nothing contained in this Agreement shall prevent the Company or its
board of directors from complying with Rule 14d-9 and Rule 14e-2(a)(2)-(3)
promulgated under the Exchange Act with respect to an Acquisition Proposal;
provided, that such Rules will in no way eliminate or modify the effect
that any action pursuant to such Rules would otherwise have under this
Agreement; and provided, further, that any such disclosure (other than a
"stop, look and listen" or similar communication of the type contemplated
by Rule 14d-9(f) under the Exchange Act) shall be deemed to be a Change in
Company Recommendation unless the board of directors of the Company
expressly and concurrently reaffirms the Company Recommendation.
-41-
7.5. Reasonable Best Efforts
(a) Subject to the terms and conditions of this Agreement,
each of Acquiror and the Company shall, and shall cause their respective
Subsidiaries to, use their reasonable best efforts (i) to take, or cause to
be taken, all actions necessary, proper or advisable to comply promptly
with all legal requirements which may be imposed on such party or its
Subsidiaries with respect to the Merger, to satisfy the conditions set
forth in Article VIII hereof and, subject to the satisfaction of the
conditions set forth in Article VIII hereof, consummate the transactions
contemplated by this Agreement and (ii) to obtain (and to cooperate with
the other party to obtain) any consent, authorization, order or approval
of, or any exemption by, any Governmental Entity and any other third party
which is required to be obtained by the Company or Acquiror or any of their
respective Subsidiaries in connection with the Merger and the other
transactions contemplated by this Agreement.
(b) Subject to the terms and conditions of this Agreement, each of
Acquiror and the Company agrees to use reasonable best efforts to take, or
cause to be taken, all actions, and to do, or cause to be done, all things
necessary, proper or advisable to consummate and make effective, as soon as
practicable after the date of this Agreement, the transactions contemplated
hereby, including using reasonable best efforts to (i) modify or amend any
contracts, plans or arrangements to which Acquiror or the Company is a
party (to the extent permitted by the terms thereof) if necessary in order
to satisfy the conditions to closing set forth in Article VIII hereof, (ii)
lift or rescind any injunction or restraining order or other order
adversely affecting the ability of the parties to consummate the
transactions contemplated hereby and (iii) defend any litigation seeking to
enjoin, prevent or delay the consummation of the transactions contemplated
hereby or seeking material damages.
7.6. Employees; Employee Benefit Plans
(a) On or as soon as practicable following the Effective Time, the Company
Employees who are employees of the Company or a Subsidiary of the Company
at the Effective Time shall become eligible to participate in the employee
benefit plans sponsored or maintained by Acquiror or People's United Bank,
as applicable (the "Acquiror Plans"), to the same extent and on the same
terms (or, on more favorable terms) as similarly situated employees of
People's United Bank (it being understood that inclusion of Company
Employees in such Acquiror Plans may occur at different times with respect
to different plans). Until such time, such Company Employees shall
continue to participate in the Plans (excluding equity-based Plans and any
Company Common Stock fund feature of the Company's 401(k) Plan) in which
each such Company Employee participated before the Effective Time on the
same (or more favorable) terms as in effect immediately prior to the
Effective Time); provided, however, that (i) nothing contained herein shall
require Acquiror or any of its Subsidiaries to make any grants to any
Company Employee under any equity-based Acquiror Plans, it being understood
that any such grants are completely discretionary and (ii) nothing
contained herein shall require a Company Employee's participation in any
Acquiror Plan that is a defined benefit pension plan.
(b) With respect to each Acquiror Plan, for purposes of determining
eligibility to participate, vesting, entitlement to benefits and vacation
entitlement (but not for accrual of benefits under any post-retirement
welfare benefit Acquiror Plan), service with the Company or any Subsidiary
shall be treated as service with Acquiror; provided, however, that such
service shall not be recognized to the extent that such recognition would
result in a duplication of benefits. Such service also shall apply for
purposes of satisfying any waiting periods, evidence of insurability
-42-
requirements, or the application of any pre-existing condition limitations
with respect to any Acquiror Plan. Each Acquiror Plan shall waive pre-
existing condition limitations to the same extent waived under the
applicable Plan. The Company Employees shall be given credit for amounts
paid under a corresponding Company or any Subsidiary benefit plan during
the same period for purposes of applying deductibles, co-payments, out-of-
pocket maximums and similar payments as though such amounts had been paid
in accordance with the terms and conditions of the Acquiror Plan during the
applicable plan year.
(c) The Company and Acquiror acknowledge and agree that all provisions
contained herein with respect to employees, officers, directors,
consultants and independent contractors are included for the sole benefit
of the Company and Acquiror and shall not create any right (i) in any other
person, including Plans or any beneficiary thereof or (ii) to continued
employment with Acquiror or any of its affiliates.
7.7. Indemnification; Directors' and Officers' Insurance
(a) From and after the Effective Time, in the event of any
claim, action, suit, proceeding or investigation, whether civil, criminal
or administrative, in which any person who is now, or has been at any time
prior to the date of this Agreement, or who becomes prior to the Effective
Time, a director or officer of the Company or any of its Subsidiaries (the
"Indemnified Parties") is, or is threatened to be, made a party based in
whole or in part on, or arising in whole or in part out of, or pertaining
to (i) the fact that he or she is or was a director or officer of the
Company, any of its Subsidiaries or any of their respective predecessors or
(ii) this Agreement, or any of the transactions contemplated hereby and all
actions taken by an Indemnified Party in connection herewith, in each case
in his or her capacity as a director or officer of the Company or any of
its Subsidiaries, whether in any case asserted or arising before or after
the Effective Time, Acquiror shall cause the Surviving Company to indemnify
and hold harmless, as and to the fullest extent provided in the articles of
incorporation and bylaws of the Company as in effect on the date of this
Agreement and permitted by applicable Law, each such Indemnified Party
against any losses, claims, damages, liabilities, costs, expenses
(including reasonable attorneys' fees and expenses in advance of the final
disposition of any claim, suit, proceeding or investigation to each
Indemnified Party upon receipt of an undertaking, from such Indemnified
Party to repay such advanced expenses if it is determined by a final and
nonappealable judgment of a court of competent jurisdiction that such
Indemnified Party was not entitled to indemnification hereunder),
judgments, fines and amounts paid in settlement in connection with any such
actual or threatened claim, action, suit, proceeding or investigation,
whether civil, criminal, administrative or investigative. Any Indemnified
Party wishing to claim indemnification under this Section 7.7, upon
learning of any such claim, action, suit, proceeding or investigation,
shall promptly notify Acquiror in writing thereof, provided, that the
failure to so notify shall not affect the obligations of Acquiror under
this Section 7.7 except (and only) to the extent such failure to notify
materially prejudices Acquiror.
(b) For a period of six (6) years after the Effective Time, Acquiror shall
cause the persons serving as officers and directors of the Company
immediately prior to the Effective Time to be covered by the directors' and
officers' liability insurance policy or policies maintained by Acquiror or
one of its Subsidiaries (provided, that Acquiror's directors' and officers'
liability insurance policy or policies provide at least the same coverage
and amounts containing terms and conditions which are, in the aggregate,
not materially less advantageous to such directors and officers of the
Company than the terms and conditions of the existing directors' and
-43-
officers' liability insurance policy of the Company) with respect to claims
arising from facts or events that existed or occurred at or prior to the
Effective Time. Notwithstanding the foregoing, in no event will Acquiror
be required to expend, in the aggregate and on an annual basis, an amount
in excess of 250% of the annual premiums currently paid by the Company for
such insurance, which current premiums are set forth in Section 7.7(b) of
the Company Disclosure Letter (the "Insurance Amount"), and if Acquiror is
unable to maintain or obtain the insurance called for by this Section
7.7(b) for an amount per year equal to or less than the Insurance Amount,
Acquiror shall use its reasonable best efforts to obtain as much comparable
insurance as may be available for the Insurance Amount. The provisions of
this Section 7.7(b) shall be deemed to have been satisfied if prepaid
policies have been obtained by Acquiror or by the Company with Acquiror's
consent, which policies provide the persons covered by the Company's
directors' and officers' liability insurance policy immediately prior to
the Effective Time with coverage for a period of not less than six (6)
years after the Effective Time with respect to claims arising from facts or
events that occurred at or prior to the Effective Time; provided, that such
prepaid policies shall not be obtained at an annual cost that is higher
than the Insurance Amount. If such prepaid policies have been obtained by
the Company prior to the Effective Time with Acquiror's consent, Acquiror
shall maintain such policies in full force and effect and continue to honor
all obligations thereunder.
(c) The provisions of this Section 7.7 are intended to be for the benefit
of, and shall be enforceable by, each Indemnified Party and his or her
heirs and representatives, and shall be in addition to any other rights
each Indemnified Party may have pursuant to law, contract, or otherwise.
(d) If Acquiror, the Surviving Company or any of its successors or assigns
(i) consolidates with or merges into any other person and shall not be the
continuing or surviving corporation or entity of such consolidation or
merger, or (ii) transfers or conveys all or substantially all of its
properties and assets to any person, then, and in each such case, to the
extent necessary, proper provision shall be made so that the successors and
assigns of Acquiror or the Surviving Company, as the case may be, shall
assume the obligations set forth in this Section 7.7.
7.8. Advice of Changes
Acquiror and the Company shall promptly advise the other of
any change or event which, individually or in the aggregate with other such
changes or events, has or would reasonably be expected to have a Material
Adverse Effect on it or which it believes would or would be reasonably
likely to cause or constitute a material breach of any of its
representations, warranties or covenants contained herein; provided,
however, that any noncompliance with the foregoing shall not constitute the
failure to be satisfied of a condition set forth in Article VIII or give
rise to any right of termination under Article IX unless the underlying
breach shall independently constitute such a failure or give rise to such a
right.
7.9. Financial Statements and Other Current Information
The Company shall (a) furnish to Acquiror consolidated and
consolidating income statements and balance sheets in accordance with
currently available information and practice (it being understood that the
Company and its Subsidiaries do not currently close their books on a
monthly basis), in each case, as soon as reasonably practicable after they
become available, but in no event more than 30 days after the end of each
calendar month ending after the date of this Agreement, (b) use its
reasonable best efforts to develop a process by the Effective Time for
-44-
preparing monthly consolidated and consolidating financial statements
(including balance sheets, statements of operations and stockholders'
equity) of the Company and each of its Subsidiaries as of and for such
month then ended and (c) to the extent the financial statements described
in clause (b) become available after the date of this Agreement, furnish
such financial statements to Acquiror as they become available. In
addition, and to the extent permitted by applicable Law, the Company shall
furnish Acquiror with a copy of each report filed by the Company or any of
its Subsidiaries with a Governmental Entity within three (3) Business Days
following the filing thereof. All information furnished by the Company to
Acquiror pursuant to this Section 7.9 shall be held in confidence to the
same extent of Acquiror's obligations under Section 7.2(b).
7.10. Stock Exchange Listing
Acquiror shall notify NASDAQ of the listing on NASDAQ, subject
to official notice of issuance, of the Acquiror Common Stock to be issued
in the Merger.
7.11. Takeover Laws
The Company shall (i) use reasonable best efforts to ensure that no
state takeover Law or similar Law or any takeover-related provision in the
Company's articles of incorporation or bylaws is or becomes applicable to
this Agreement, the Merger or any of the other transactions contemplated by
this Agreement and (ii) if any state takeover Law or similar Law or any
takeover-related provision in the Company's articles of incorporation or
bylaws becomes applicable to this Agreement, the Merger or any of the other
transactions contemplated by this Agreement, use reasonable best efforts
with respect to such Laws or provisions to ensure that the Merger and the
other transactions contemplated by this Agreement may be consummated as
promptly as practicable on the terms contemplated by this Agreement and
otherwise to minimize the effect of such Law on this Agreement, the Merger
and the other transactions contemplated by this Agreement.
7.12. Stockholder Litigation
The Company shall give Acquiror the opportunity to participate at
its own expense in the defense or settlement of any stockholder litigation
against the Company and/or its directors relating to the transactions
contemplated by this Agreement, and no such settlement shall be agreed to
without Acquiror's prior written consent (such consent not to be
unreasonably withheld or delayed).
7.13. Exemption from Liability
Assuming that the Company delivers to Acquiror the Section 16
Information reasonably in advance of the Effective Time, the board of
directors of Acquiror, or a committee of Non-Employee Directors thereof (as
such term is defined for purposes of Rule 16b-3(d) under the Exchange Act),
shall reasonably promptly thereafter and in any event prior to the
Effective Time adopt a resolution providing that the receipt by the Company
Insiders of Acquiror Common Stock (including any securities convertible
into or exercisable for, or any rights, warrants or options to acquire
Acquiror Common Stock) in exchange for shares of Company Common Stock
(including any securities convertible into or exercisable for, or any
rights, warrants or options to acquire Company Common Stock) pursuant to
the transactions contemplated hereby and to the extent such securities are
listed in the Section 16 Information provided by the Company to Acquiror
prior to the Effective Time, are intended to be exempt from liability
pursuant to Section 16(b) under the Exchange Act such that any such receipt
shall be so exempt. "Section 16 Information" shall mean information
accurate in all respects regarding the Company Insiders, the number of
shares of Company Common Stock held by each such Company Insider and the
number and description of the derivative securities held by each such
Company Insider. "Company Insiders" shall mean those officers and
-45-
directors of the Company who are subject to the reporting requirements of
Section 16(a) of the Exchange Act and who are listed in the Section 16
Information.
7.14. Tax-Free Reorganization Treatment
The parties to this Agreement intend that the Merger will qualify
as a reorganization under Section 368(a) of the Code and each shall not,
and shall not permit any of their respective affiliates to, take any
action, or fail to take any action, that would reasonably be expected to
jeopardize the qualifications of the Merger as a reorganization under
Section 368(a) of the Code. The parties to this Agreement shall use their
reasonable best efforts to deliver the representation letters referred to
in Sections 8.2(c) and 8.3(c) hereof.
7.15. Offer Letters
On or prior to the earlier of (a) ninety (90) days after the
Closing Date and (b) the date on which this Agreement is terminated in
accordance with Article IX, Acquiror shall not revoke or modify the offer
letters (including the offers of employment and severance described
therein) previously provided to the individuals listed on Section 7.15 of
the Company Disclosure Letter.
ARTICLE VIII
CONDITIONS PRECEDENT
8.1. Conditions to Each Party's Obligation to Effect the Merger
The respective obligation of each party to effect the Merger
shall be subject to the satisfaction at or prior to the Effective Time of
the following conditions:
(a) Stockholder Approval. The Company shall have obtained the Required
Company Vote in connection with the approval of this Agreement.
(b) Regulatory Approvals. All regulatory approvals required to consummate
the transactions contemplated hereby that are set forth in Section 8.1(b)
of the Company Disclosure Letter shall have been obtained and shall remain
in full force and effect and all statutory waiting periods in respect
thereof shall have expired or been terminated (all such approvals and the
expiration or termination of all such waiting periods being referred to
herein as the "Requisite Regulatory Approvals").
(c) Form S-4 Effectiveness. The Form S-4 shall have become effective
under the Securities Act, no stop order suspending the effectiveness of the
Form S-4 shall have been issued and no proceedings for that purpose shall
have been initiated or threatened by the SEC.
(d) No Injunctions or Restraints; Illegality. No order, injunction or
decree issued by any court or agency of competent jurisdiction or other
legal restraint or prohibition preventing the consummation of the Merger or
the other transactions contemplated by this Agreement shall be in effect.
No Law shall have been enacted, entered, promulgated or enforced by any
Governmental Entity which prohibits or makes illegal the consummation of
the Merger.
8.2. Conditions to Obligations of Acquiror
The obligation of Acquiror to effect the Merger is also
subject to the satisfaction or waiver by Acquiror at or prior to the
Effective Time of the following conditions:
-46-
(a) Representations and Warranties. The representations and warranties of
the Company set forth in this Agreement shall be true and correct in all
respects as of the date of this Agreement and (except to the extent such
representations and warranties speak as of an earlier date) as of the
Closing Date as though made on and as of the Closing Date; provided,
however, that for purposes of determining the satisfaction of this
condition, no effect shall be given to any exception or qualification in
such representations and warranties (other than the representations and
warranties set forth in Sections 4.8(a) and 4.14(a)) relating to
materiality or a Material Adverse Effect, and provided, further, that, for
purposes of this condition, such representations and warranties (other than
those set forth in Section 4.2(a), which shall be true and correct in all
material respects, and Section 4.8(a), which shall be true and correct in
all respects) shall be deemed to be true and correct in all respects unless
the failure or failures of such representations and warranties to be so
true and correct, individually or in the aggregate, results or would
reasonably be expected to result in a Material Adverse Effect on the
Company. Acquiror shall have received a certificate signed on behalf of
the Company by the Chief Executive Officer or the Chief Financial Officer
of the Company to the foregoing effect.
(b) Performance of Obligations of the Company. The Company shall have
performed in all material respects all obligations required to be performed
by it under this Agreement at or prior to the Closing Date, and Acquiror
shall have received a certificate signed on behalf of the Company by the
Chief Executive Officer or the Chief Financial Officer of the Company to
such effect.
(c) Tax Opinion. Acquiror shall have received a written opinion from
Xxxxxxx Xxxxxxx & Xxxxxxxx LLP, counsel to Acquiror, dated as of the
Closing Date, to the effect that the Merger will qualify as a
reorganization under Section 368(a) of the Code. Such counsel shall be
entitled to rely upon representation letters from each of the Company,
Acquiror and others, in each case, in form and substance reasonably
satisfactory to such counsel. Each such representation letter shall be
dated as of the date of such opinion.
8.3. Conditions to Obligations of the Company
The obligation of the Company to effect the Merger is also
subject to the satisfaction or waiver by the Company at or prior to the
Effective Time of the following conditions:
(a) Representations and Warranties. The representations and warranties of
Acquiror set forth in this Agreement shall be true and correct in all
respects as of the date of this Agreement and (except to the extent such
representations and warranties speak as of an earlier date) as of the
Closing Date as though made on and as of the Closing Date; provided,
however, that for purposes of determining the satisfaction of this
condition, no effect shall be given to any exception or qualification in
such representations and warranties (other than the representation and
warranty set forth in Section 5.8) relating to materiality or a Material
Adverse Effect, and provided, further, that, for purposes of this
condition, such representations and warranties (other than those set forth
in Section 5.2, which shall be true and correct in all material respects,
and Section 5.8, which shall be true and correct in all respects) shall be
deemed to be true and correct in all respects unless the failure or
failures of such representations and warranties to be so true and correct,
individually or in the aggregate, results or would reasonably be expected
to result in a Material Adverse Effect on Acquiror. The Company shall have
received a certificate signed on behalf of Acquiror by the Chief Executive
Officer or the Chief Financial Officer of Acquiror to the foregoing effect.
-47-
(b) Performance of Obligations of Acquiror. Acquiror shall have performed
in all material respects all obligations required to be performed by it
under this Agreement at or prior to the Closing Date, and the Company shall
have received a certificate signed on behalf of Acquiror by the Chief
Executive Officer or the Chief Financial Officer of Acquiror to such
effect.
(c) Tax Opinion. The Company shall have received a written opinion from
Xxxxxxxxx & Xxxxxxx LLP, counsel to the Company, dated as of the Closing
Date, to the effect that the Merger will qualify as a reorganization under
Section 368(a) of the Code. Such counsel shall be entitled to rely upon
representation letters from each of the Company, Acquiror and others, in
each case, in form and substance reasonably satisfactory to such counsel.
Each such representation letter shall be dated as of the date of such
opinion.
ARTICLE IX
TERMINATION AND AMENDMENT
9.1. Termination
This Agreement may be terminated and the Merger may be
abandoned at any time prior to the Effective Time:
(a) by mutual consent of Acquiror and the Company in a written instrument;
(b) by either Acquiror or the Company if (i) any Governmental Entity which
must grant a Requisite Regulatory Approval has denied approval of the
Merger and such denial has become final and nonappealable or (ii) any
Governmental Entity of competent jurisdiction shall have issued a final
nonappealable order enjoining or otherwise prohibiting the consummation of
the transactions contemplated by this Agreement;
(c) by either Acquiror or the Company if the Effective Time shall not have
occurred on or before June 30, 2010 (the "End Date"), unless the failure of
the Effective Time to occur by such date shall be due to the failure of the
party seeking to terminate this Agreement to perform or observe the
covenants and agreements of such party set forth herein;
(d) by either Acquiror or the Company (provided, that the terminating
party is not then in material breach of any representation, warranty,
covenant or other agreement contained herein) if the other party shall have
breached (i) any of the covenants or agreements made by such other party
herein or (ii) any of the representations or warranties made by such other
party herein, and in either case, such breach (x) is not cured within 30
days following written notice to the party committing such breach, or which
breach, by its nature, cannot be cured prior to the End Date and (y) would
entitle the non-breaching party not to consummate the transactions
contemplated hereby under Article VIII hereof;
(e) by either Acquiror or the Company if the Required Company Vote shall
not have been obtained at the Company Stockholders Meeting or at any
adjournment or postponement thereof;
(f) by Acquiror if (i) the board of directors of the Company shall have
failed to recommend the Merger and the approval of this Agreement by the
stockholders of the Company, or shall have effected a Change in Company
Recommendation (or shall have resolved to take any of the foregoing
-48-
actions), whether or not permitted under this Agreement, (ii) the Company
shall have materially breached the terms of Section 7.4 in any respect
adverse to Acquiror or (iii) the Company shall have materially breached its
obligations under Section 7.3 by failing to call, give notice of, convene
and hold the Company Stockholders Meeting in accordance with Section 7.3;
(g) by Acquiror if a tender offer or exchange offer for 20% or more of the
outstanding shares of Company Common Stock is commenced (other than by
Acquiror or a Subsidiary thereof), and the board of directors of the
Company recommends that the stockholders of the Company tender their shares
in such tender or exchange offer or otherwise fails to recommend that such
stockholders reject such tender offer or exchange offer within the ten (10)
business day period specified in Rule 14e-2(a) under the Exchange Act; or
(h) by the Company in order to enter into a transaction that is a Superior
Proposal, if, prior to the receipt of the Required Company Vote, the
Company's board of directors authorizes the Company, subject to complying
with the terms of this Agreement, to enter into a definitive agreement with
respect to a bona fide Acquisition Proposal and (A) such Acquisition
Proposal was not solicited in violation of Section 7.4 and the Company's
board of directors has concluded in good faith after consultation with its
outside counsel and financial advisors that such Acquisition Proposal
constitutes a Superior Proposal after giving effect to all of the
adjustments which may be offered by Acquiror pursuant to clause (C) below,
(B) the Company has notified Acquiror in writing, at least five (5)
Business Days in advance, of its intention to enter into a definitive
agreement with respect to such Superior Proposal (the "Termination Notice
Period"), specifying the material terms and conditions of such Superior
Proposal (including the identity of the party making such Superior
Proposal) and furnishing to Acquiror a copy of the relevant proposed
transaction agreements with the party making such Superior Proposal and all
other material documents, (C) during the Termination Notice Period, and in
any event, prior to entering into a definitive agreement with respect to
such Superior Proposal, the Company has negotiated, and has caused its
financial and legal advisors to negotiate, with Acquiror in good faith (to
the extent Acquiror desires to negotiate) to make such adjustments in the
terms and conditions of this Agreement so that such Acquisition Proposal
ceases to constitute a Superior Proposal, and (D) concurrently with any
termination pursuant to this Section 9.1(h), the Company enters into a
definitive agreement with respect to such Superior Proposal; provided,
however, that the Company shall not terminate this Agreement pursuant to
this Section 9.1(h), and any purported termination pursuant to this Section
9.1(h) shall be void and of no force or effect, unless the Company pays to
Acquiror the Termination Payment (as defined in Section 9.2(b)) in
accordance with Section 9.2(b) prior to or concurrently with such
termination pursuant to this Section 9.1(h); and provided, further, that in
the event of any material revisions to such Superior Proposal, the Company
shall be required to deliver a new written notice to Acquiror and to again
comply with the requirements of this Section 9.1(h) with respect to such
new written notice, except that the Termination Notice Period shall be
reduced to three (3) Business Days.
9.2. Effect of Termination.
(a) In the event of termination of this Agreement by either Acquiror or
the Company as provided in Section 9.1, this Agreement shall forthwith
become void and have no effect, and none of Acquiror, the Company, any of
their respective Subsidiaries or any of the officers or directors of any of
-49-
them shall have any liability of any nature whatsoever hereunder, or in
connection with the transactions contemplated hereby, except that (i)
Sections 7.2(b) and this 9.2, and Article X, shall survive any termination
of this Agreement and (ii) notwithstanding anything to the contrary
contained in this Agreement, neither Acquiror nor the Company shall be
relieved or released from any liabilities or damages arising out of its
willful and material breach of any provision of this Agreement; provided,
that in no event shall any party hereto be liable for any punitive damages.
For purposes of this Agreement, "willful and material breach" shall mean a
material breach that is a consequence of an act undertaken by the breaching
party with the knowledge (actual or constructive) that the taking of such
act would, or would be reasonably expected to, cause a breach of this
Agreement.
(b) The Company shall pay Acquiror (as consideration for termination of
Acquiror's rights under this Agreement), by wire transfer of immediately
available funds, the sum of $25,830,000 (the "Termination Payment") if this
Agreement is terminated as follows:
(i) if this Agreement is terminated by Acquiror pursuant to Section 9.1(f)
or 9.1(g), then the Company shall pay to Acquiror the entire Termination
Payment on the second Business Day following such termination;
(ii) if this Agreement is terminated by the Company pursuant to Section
9.1(h), then the Company shall pay to Acquiror the entire Termination
Payment prior to or concurrently with such termination; and
(iii) if this Agreement is terminated by (A) Acquiror pursuant to
Section 9.1(d) due to a willful and material breach, (B) by either Acquiror
or the Company pursuant to Section 9.1(e) or (C) by either Acquiror or the
Company pursuant to Section 9.1(c) without a vote of the stockholders of
the Company contemplated by this Agreement at the Company Stockholders
Meeting having occurred, and in any such case an Acquisition Proposal with
respect to the Company shall have been publicly announced or otherwise
communicated or made known to the senior management or board of directors
of the Company (or any person shall have publicly announced, communicated
or made publicly known an intention, whether or not conditional, to make an
Acquisition Proposal) at any time after the date of this Agreement and on
or prior to the date of the Company Stockholders Meeting, in the case of
clause (B), or the date of termination, in the case of clauses (A) or (C),
then the Company shall pay to Acquiror (x) an amount equal to 10% of the
Termination Payment on the second Business Day following such termination,
and (y) if within 12 months after such termination the Company or any of
its Subsidiaries enters into a definitive agreement with respect to, or
consummates a transaction contemplated by, any Acquisition Proposal, then
the Company shall pay the remainder of the Termination Payment on the
earlier of the date of such execution or consummation, provided, however,
that for the purpose of this clause (y), all references in the definition
of Acquisition Proposal to "20% or more" shall instead refer to "50% or
more".
(c) The Company and Acquiror agree that the agreements contained in
Section 9.2(b) are integral parts of the transactions contemplated by this
Agreement, and that such amounts do not constitute a penalty. If the
Company fails to pay Acquiror the amounts due under such Section 9.2(b)
within the time periods specified in such section, the Company shall pay
the costs and expenses (including reasonable legal fees and expenses)
-50-
incurred by Acquiror in connection with any action, including the filing of
any lawsuit, taken to collect payment of such amounts, together with
interest on the amount of any such unpaid amounts at the prime lending rate
prevailing during such period as published in the New York City edition of
the The Wall Street Journal, calculated on a daily basis from the date such
amounts were required to be paid until the date of actual payment.
9.3. Amendment
Subject to compliance with applicable Law, this Agreement may
be amended by the parties hereto, by action taken or authorized by their
respective boards of directors, at any time before or after approval of the
matters presented in connection with the Merger by the stockholders of the
Company; provided, however, that after any such approval, no amendment
shall be made which by Law requires further approval by such stockholders
without such further approval. This Agreement may not be amended except by
an instrument in writing signed on behalf of each of the parties hereto.
9.4. Extension; Waiver
At any time prior to the Effective Time, the parties hereto
may, to the extent legally allowed, (a) extend the time for the performance
of any of the obligations or other acts of the other parties hereto, (b)
waive any inaccuracies in the representations and warranties contained
herein or in any document delivered pursuant hereto and (c) waive
compliance with any of the agreements or conditions contained herein. Any
agreement on the part of a party hereto to any such extension or waiver
shall be valid only if set forth in a written instrument signed on behalf
of such party, but such extension or waiver or failure to insist on strict
compliance with an obligation, covenant, agreement or condition shall not
operate as a waiver of, or estoppel with respect to, any subsequent or
other failure.
ARTICLE X
GENERAL PROVISIONS
10.1. Nonsurvival of Representations, Warranties and Agreements
None of the representations, warranties, covenants and
agreements in this Agreement or in any instrument delivered pursuant to
this Agreement shall survive the Effective Time, except for those covenants
and agreements contained herein and therein which by their terms apply or
are to be performed in whole or in part after the Effective Time.
10.2. Expenses
Except as provided in Section 9.2 hereof, all costs and
expenses incurred in connection with this Agreement, the Merger and the
other transactions contemplated hereby shall be paid by the party incurring
such expense whether or not the Merger is consummated.
10.3. Notices
All notices and other communications hereunder shall be in
writing and shall be deemed given if delivered personally, telecopied (upon
telephonic confirmation of receipt), on the first Business Day following
the date of dispatch if delivered by a recognized next day courier service,
or on the third Business Day following the date of mailing if delivered by
registered or certified mail, return receipt requested, postage prepaid.
All notices hereunder shall be delivered as set forth below or pursuant to
such other instructions as may be designated in writing by the party to
receive such notice.
(a) if to Acquiror, to:
-51-
People's United Financial, Inc.
Bridgeport Center
000 Xxxx Xxxxxx
X.X. Xxx 0000
Xxxxxxxxxx, XX 00000
Attn: Xxxxxx X. Xxxxxxxxxxx, Chief Executive
Officer
Fax: (000) 000-0000
with a copy to (which shall not constitute notice):
People's United Financial, Inc.
Bridgeport Center
000 Xxxx Xxxxxx
X.X. Xxx 0000
Xxxxxxxxxx, XX 00000
Attn: Xxxxxx X. Xxxxxxxxx, General Counsel
Fax: (000) 000-0000
and
Xxxxxxx Xxxxxxx & Xxxxxxxx LLP
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attn: Xxx X. Xxxxxxxx
Fax: (000) 000-0000
(b) if to the Company, to:
Financial Federal Corporation
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attn: Xxxx X. Xxxxxxx
Fax: (000) 000-0000
with a copy to (which shall not constitute notice):
Xxxxxxxxx & Xxxxxxx LLP
The New York Times Building
000 Xxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxx X. Xxxxx and Xxxx Xxxxxx
Fax: (000) 000-0000
10.4. Interpretation
The words "hereof," "herein" and "hereunder" and words of
similar import when used in this Agreement shall refer to this Agreement as
a whole and not to any particular provision of this Agreement, and Section
references are to this Agreement unless otherwise specified. Whenever the
words "include," "includes" or "including" are used in this Agreement, they
-52-
shall be deemed to be followed by the words "without limitation." The term
"person" as used in this Agreement shall mean any individual, corporation,
limited liability company, limited or general partnership, joint venture,
government or any agency or political subdivision thereof, or any other
entity or any group (as defined in Section 13(d)(3) of the Exchange Act)
comprised of two or more of the foregoing. The table of contents and
headings contained in this Agreement are for reference purposes only and
shall not affect in any way the meaning or interpretation of this
Agreement. In this Agreement, all references to "dollars" or "$" are to
United States dollars. The term "knowledge", when used in this Agreement
means, (i) with respect to Acquiror, the actual knowledge of the
individuals set forth in Section 10.4 of the Acquiror Disclosure Letter,
and (ii) with respect to the Company, the actual knowledge of the
individuals set forth in Section 10.4 of the Company Disclosure Letter
10.5. Counterparts
This Agreement may be executed by facsimile (or other
electronic means) and in counterparts, all of which shall be considered an
original and one and the same agreement and shall become effective when
counterparts have been signed by each of the parties and delivered to the
other parties, it being understood that all parties need not sign the same
counterpart.
10.6. Entire Agreement
This Agreement (together with the documents and the
instruments referred to herein) constitutes the entire agreement and
supersedes all prior agreements and understandings, both written and oral,
among the parties with respect to the subject matter hereof, other than (i)
the Confidentiality Agreement, which shall survive the execution and
delivery of this Agreement to the extent provided in Section 7.2(b), and
(ii) the Confidentiality Agreement, dated October 14, 2009, between the
Company and Acquiror, which shall survive the execution and delivery of
this Agreement in accordance with the provisions thereof.
10.7. Governing Law; Consent to Jurisdiction; Waiver of Jury Trial
This Agreement shall be governed and construed in accordance with the
Laws of the State of Delaware (except to the extent that mandatory
provisions of federal Law or the NRS are applicable).
(a) Each of Acquiror and the Company hereby irrevocably and
unconditionally consents to submit to the exclusive jurisdiction and venue
of the United States District Court for Delaware and in the courts hearing
appeals therefrom unless no basis for federal jurisdiction exists, in which
event each party hereto irrevocably consents to the exclusive jurisdiction
and venue of any state court of the State of Delaware, and the courts
hearing appeals therefrom, for any action, suit or proceeding arising out
of or relating to this Agreement and the transactions contemplated hereby.
Each of Acquiror and the Company hereby irrevocably and unconditionally
waives, and agrees not to assert, by way of motion, as a defense,
counterclaim or otherwise, in any such action, suit or proceeding, any
claim that it is not personally subject to the jurisdiction of the
aforesaid courts for any reason, other than the failure to serve process in
accordance with this Section 10.7, that it or its property is exempt or
immune from jurisdiction of any such court or from any legal process
commenced in such courts (whether through service of notice, attachment
prior to judgment, attachment in aid of execution of judgment, execution of
judgment or otherwise), and to the fullest extent permitted by applicable
Law, that the action, suit or proceeding in any such court is brought in an
inconvenient forum, that the venue of such action, suit or proceeding is
improper, or that this Agreement, or the subject matter hereof, may not be
enforced in or by such courts and further irrevocably waives, to the
-53-
fullest extent permitted by applicable Law, the benefit of any defense that
would hinder, xxxxxx or delay the levy, execution or collection of any
amount to which the party is entitled pursuant to the final judgment of any
court having jurisdiction. Each of Acquiror and the Company irrevocably
and unconditionally waives, to the fullest extent permitted by applicable
Law, any and all rights to trial by jury in connection with any action,
suit or proceeding arising out of or relating to this Agreement or the
transactions contemplated hereby.
(b) Each of Acquiror and the Company further irrevocably consents to the
service of process out of any of the aforementioned courts in any action,
suit or proceeding arising out of or relating to this Agreement by the
mailing of copies thereof by registered mail, postage prepaid, to such
party at its address specified pursuant to Section 10.3, such service of
process to be effective upon acknowledgment of receipt of such registered
mail.
(c) Each of Acquiror and the Company expressly acknowledges that the
foregoing waivers are intended to be irrevocable under the laws of the
State of Delaware and of the United States of America; provided, that
consent by Acquiror and the Company to jurisdiction and service contained
in this Section 10.7 is solely for the purpose referred to in this Section
10.7 and shall not be deemed to be a general submission to said courts or
in the State of Delaware other than for such purpose.
10.8. Severability
Any term or provision of this Agreement which is determined by
a court of competent jurisdiction to be invalid, illegal or unenforceable
in any jurisdiction shall, as to that jurisdiction, be ineffective to the
extent of such invalidity or unenforceability without rendering invalid,
illegal or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity, legality or enforceability of any of
the terms or provisions of this Agreement in any other jurisdiction, and if
any provision of this Agreement is determined to be so broad as to be
unenforceable, the provision shall be interpreted to be only so broad as is
enforceable, in all cases so long as neither the economic nor legal
substance of the transactions contemplated hereby is affected in any manner
materially adverse to any party or its stockholders. Upon any such
determination, the parties shall negotiate in good faith in an effort to
agree upon a suitable and equitable substitute provision to effect the
original intent of the parties.
10.9. Publicity
Acquiror and the Company shall consult with each other before
issuing any press release or making any public statement with respect to
this Agreement, the Merger or the other transactions contemplated hereby
and shall not issue any such press release or make any such public
statement without the prior consent of the other party, which shall not be
unreasonably withheld; provided, however, that a party may, without the
prior consent of the other party (but after prior consultation, to the
extent practicable in the circumstances) issue such press release or make
such public statement as may upon the advice of outside counsel be required
by Law or the rules and regulations of the New York Stock Exchange or
NASDAQ, as the case may be. Without limiting the preceding sentence,
Acquiror and the Company shall cooperate to develop all public announcement
materials and make appropriate management available at presentations
related to the transactions contemplated by this Agreement as reasonably
requested by the other party. In addition, the Company and its
Subsidiaries shall (a) consult with Acquiror regarding communications with
customers, stockholders, prospective investors and employees related to the
transactions contemplated hereby, (b) provide Acquiror with stockholder
lists of the Company from time to time as requested by Acquiror and (c)
-54-
allow and facilitate Acquiror contact with stockholders of the Company and
other prospective investors.
10.10. Assignment; Third Party Beneficiaries
Neither this Agreement nor any of the rights, interests or
obligations of any party hereunder shall be assigned by any of the parties
hereto (whether by operation of law or otherwise) without the prior written
consent of the other party (which shall not be unreasonably withheld or
delayed). Subject to the preceding sentence, this Agreement will be
binding upon, inure to the benefit of and be enforceable by the parties and
their respective successors and permitted assigns. Except as otherwise
specifically provided in Section 7.7 hereof, this Agreement (including the
documents and instruments referred to herein) is not intended to confer
upon any person other than the parties hereto any rights or remedies
hereunder.
10.11. Construction
This Agreement and any documents or instruments delivered pursuant
hereto or in connection herewith shall be construed without regard to the
identity of the person who drafted the various provisions of the same.
Each and every provision of this Agreement and such other documents and
instruments shall be construed as though all of the parties participated
equally in the drafting of the same. Consequently, the parties acknowledge
and agree that any rule of construction that a document is to be construed
against the drafting party shall not be applicable either to this Agreement
or such other documents and instruments.
10.12. Specific Performance
Each of Acquiror and the Company agree that irreparable damage
would occur if any of the provisions of this Agreement were not performed
in accordance with their terms on a timely basis or were otherwise
breached. It is accordingly agreed that Acquiror and the Company shall be
entitled to injunctive or other equitable relief to prevent breaches of
this Agreement and to enforce specifically the terms and provisions hereof
in any court identified in Section 10.7(a) without having to post any bond
or other security or undertaking, in addition to any other remedy to which
they are entitled at law or in equity. Each of Acquiror and the Company
agree that the harm to the party seeking such injunction or other equitable
relief would, were the injunction not to issue or equitable relief not be
granted, outweigh the harm to the party seeking to avoid the injunction or
equitable relief, were such injunction to issue or equitable relief be
granted. In any proceeding between the parties hereto regarding any such
breach, neither Acquiror nor the Company shall take any position
inconsistent with the matters set forth in this Section 10.12. Each of
Acquiror and the Company agree that the agreements contained in this
Section 10.12 are in integral part of the transactions contemplated by this
Agreement and that, without these agreements, neither party would have
entered into this Agreement.
[Remainder of page intentionally left blank]
-55-
IN WITNESS WHEREOF, Acquiror and the Company have caused this
Agreement to be executed by their respective officers hereunto duly
authorized as of the date first above written.
PEOPLE'S UNITED FINANCIAL, INC.
By: /s/ Xxxxxx X. Xxxxxxxxxxx
----------------------------
Name: Xxxxxx X. Xxxxxxxxxxx
Title: President and Chief
Executive Officer
FINANCIAL FEDERAL CORPORATION
By: /s/ Xxxx X. Xxxxxxxxxx
----------------------------
Name: Xxxx X. Xxxxxxxxxx
Title: President, Chief
Executive Officer
and Chairman
[Signature Page to Agreement and Plan of Merger]
