Redacted Format
ASSET PURCHASE AGREEMENT
AMONG
TEXTRON INC.,
AVCO FINANCIAL SERVICES, INC.
and
ASSOCIATES FIRST CAPITAL CORPORATION
As of August 11, 1998
TABLE OF CONTENTS
RECITALS 1
ARTICLE I
DEFINITIONS
1.1 Definitions 2
ARTICLE II
PURCHASE AND SALE OF ASSETS AND
ASSUMPTION OF LIABILITIES
2.1 Purchase and Sale of Assets 10
2.2 Assumption of Liabilities 10
2.3 Purchase Price 11
2.4 Closing 14
2.5 Closing Obligations 14
ARTICLE III
REPRESENTATIONS AND WARRANTIES
OF PARENT AND THE COMPANY
3.1 Corporate Organization and Qualification 16
3.2 Stock of Subsidiaries 17
3.3 Authority Relative to This Agreement 18
3.4 Consents and Approvals; No Violations 19
3.5 SEC Reports; Financial Statements 21
3.6 Statutory Statements 22
3.7 Absence of Certain Changes or Events 22
3.8 Litigation 23
3.9 Taxes 23
3.10 Employee Benefit Plans; Labor Matters 25
3.11 Environmental Laws and Regulations 28
3.12 Compliance with Laws 28
3.13 Material Contracts 28
3.14 Insurance 29
3.15 Brokers and Finders 30
3.16 Intercompany Loans 30
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER
4.1 Corporate Organization and Qualification 30
4.2 Authority Relative to This Agreement 30
4.3 Consents and Approvals; No Violations 31
4.4 Financing 31
4.5 Brokers and Finders 32
4.6 Certain Proceedings 32
ARTICLE V
COVENANTS RELATING TO CONDUCT OF
BUSINESS AND OTHER AGREEMENTS
5.1 Conduct of Business of the Company 32
5.2 Access to Information 37
5.3 Other Actions 38
5.4 Advice of Changes 38
5.5 HSR Act Filing 39
5.6 Consents and Reasonable Efforts 39
5.7 Further Assurances 43
5.8 Publicity 43
5.9 Indemnification 44
5.10 Employees 45
5.11 Tax Allocation Agreement 48
5.12 Intercompany Transactions 48
5.13 No Negotiation 49
5.14 Non-Disclosure 49
5.15 Management of Risk Regarding Currency Translations 50
ARTICLE VI
CONDITIONS TO CONSUMMATION OF THE TRANSACTION
6.1 Conditions to Each Party's Obligations to
Complete the Transaction 50
6.2 Additional Conditions to the Obligation
of Buyer 51
6.3 Additional Conditions to the Obligation of the Company 53
ARTICLE VII
TERMINATION
7.1 Termination by Mutual Consent 54
7.2 Termination by Any Party 54
7.3 Termination by Buyer 54
7.4 Termination by Parent and the Company 55
7.5 Effect of Termination 55
ARTICLE VIII
OBLIGATIONS AFTER CLOSING
8.1 Survival of Representations and Covenants;
Indemnification 56
8.2 Guarantees 62
8.3 Name Changes 62
8.4 Other Matters 62
8.5 Non-Competition 63
ARTICLE IX
MISCELLANEOUS AND GENERAL
9.1 Interpretation 64
9.2 Payment of Expenses and Other Payments 65
9.3 Amendment 65
9.4 Waiver and Extension 65
9.5 Counterparts 65
9.6 Governing Law 66
9.7 Notices 66
9.8 Entire Agreement; Assignment 67
9.9 Parties in Interest 68
9.10 Validity 68
9.11 Captions 68
9.12 Bulk Transfer Laws 68
9.13 Transfer, Sales and Stamp Taxes 69
EXHIBIT 1 -- Xxxx of Sale, Assignment and Assumption Agreement
EXHIBIT 2 -- Tax Allocation Agreement
EXHIBIT 3 -- Separation Agreement
ASSET PURCHASE AGREEMENT
AGREEMENT, dated as of August 11, 1998, (the
"Agreement") among Textron Inc., a Delaware corporation
("Parent"), Avco Financial Services, Inc. (the
"Company"), a Delaware corporation and a wholly owned
subsidiary of Textron Inc., and Associates First Capital
Corporation, a Delaware corporation ("Buyer").
RECITALS
WHEREAS, the Company desires to sell, and the
Buyer desires to purchase, substantially all of the
assets and liabilities of the Company for the
consideration and on the terms and subject to the
conditions set forth in this Agreement;
NOW, THEREFORE, in consideration of the mutual
representations, warranties, covenants and agreements set
forth herein, Parent, the Company and Buyer hereby agree
as follows:
1
ARTICLE I
7DEFINITIONS
1.1 Definitions. For purposes of this Agreement,
except as otherwise expressly provided or unless the context
clearly requires otherwise:
"Adjusted Stockholder's Equity" shall have the
meaning ascribed to it in Section 6.2(c).
"Affiliate" of any Person shall mean any other
Person that directly or indirectly, through one or more
intermediaries, controls, is controlled by, or is under common
control with, such first Person.
"Agreement" shall have the meaning ascribed to it
in the Preamble.
"Assets" shall have the meaning ascribed to it in
Section 2.1.
"Buyer" shall have the meaning ascribed to it in
the Preamble.
"Claim" shall have the meaning ascribed to it in
Section 8.1(d).
"Closing" shall have the meaning ascribed to it in
Section 2.4.
"Closing Date" shall have the meaning ascribed to
it in Section 2.4.
"Code" shall mean the Internal Revenue Code of
1986, as amended.
"Company" has the meaning ascribed to it in the
Preamble.
"Company Employee" shall have the meaning ascribed
to it in Section 5.10(k).
"Company Indemnified Parties" shall have the
meaning ascribed to it in Section 5.9(a).
"Company Plan" shall mean each bonus, incentive,
deferred compensation, pension, retirement, profit-sharing,
thrift, savings, employee stock ownership, stock bonus, stock
purchase, restricted stock, stock option, employment, consulting,
termination, retention, severance, change-in-control,
compensation, medical, health or other plan, agreement, policy,
program, or arrangement that covers current or former employees,
officers or directors of the Company or the Subsidiaries.
"Company's Profit Sharing Plan" shall have the
meaning ascribed to it in Section 5.10(f).
"Company Properties" shall mean all parcels and
interests of real property owned in fee or leased by the Company
or any Subsidiary excluding any real property which is owned as a
result of foreclosure, settlements in lieu of foreclosure,
troubled loans or debt restructuring or other action taken with
respect to property which was security for the repayment of a
loan or other advance of funds by the Company or any Subsidiary.
"Company SAP Statements" shall have the meaning
ascribed to it in Section 3.6.
"Company SEC Reports" shall have the meaning
ascribed to it in Section 3.5(a).
"Confidentiality Agreement" shall mean the
agreement between Parent and Buyer dated June 5, 1998.
"Consent" shall mean any consent, approval,
authorization, clearance, exemption, waiver, or similar
affirmation by, or filing with or notification to, a person
pursuant to any Contract, Law, Order or Permit.
"Contract" shall mean any written or oral
agreement, arrangement, commitment, contract, indenture,
instrument, lease or other obligation of any kind or character,
or other obligation that is binding on any Person or its capital
stock, properties or business.
"Default" shall mean (i) any breach or violation
of or default under any Contract, Order or Permit, (ii) any
occurrence of any event that with the passage of time or the
giving of notice or both would constitute a breach or violation
of or default under any Contract, Order or Permit, or (iii) any
occurrence of any event that with or without the passage of time
or the giving of notice would give rise to a right to terminate
or revoke, change the current terms of, or renegotiate, or to
accelerate, increase, or impose any liability under, or create
any Lien in connection with, any Contract, Order or Permit.
"Designated Subsidiary" shall mean Avco Financial
Services International, Inc. (Nebraska); Avco Financial Services
Management Company; Newport Management Company; Balboa Life
Insurance Company; Balboa Insurance Company; Avco Group Limited
(U.K.); Avco Trust PLC (U.K.); Avco Financial Services (Asia)
Limited (Hong Kong); Avco Australia Pty. Ltd.; Textron Financial
Corporation (Australia) Pty. Ltd.; Avco Financial Services
Limited (Australia); Avco Access Ltd. (Australia); Avco Financial
Services Canada Limited; Textron Financial Corporation (Canada);
Atlantic Reinsurance Company; Hallmark General Insurance Company
(Australia); Hallmark Life Insurance Company (Australia); and
London and Midland Insurance Company (Canada).
"Directly Owned Subsidiaries" shall have the
meaning ascribed to it in Section 3.2(a).
"Disclosure Schedule" shall mean the Disclosure
Schedule prepared by the Company and delivered to Buyer
concurrently with the execution of this Agreement.
"E&Y" shall mean Ernst & Young LLP, independent
accountants of the Company.
"Employee Welfare Benefit Plan" shall mean an
employee welfare benefit plan as defined in Section 3(1) of ERISA
and any comparable plan in locations outside the United States.
"Environmental Claim" shall mean any
investigation, notice of violation, demand, allegation, action,
suit, Order, consent decree, penalty, fine, Lien, proceeding or
claim (whether administrative, judicial or private in nature)
arising: (i) pursuant to, or in connection with, an actual or
alleged violation of any Environmental Law; (ii) in connection
with any Hazardous Material or actual or alleged activity
associated with any Hazardous Material; (iii) from any abatement,
removal, remedial, corrective or other response action in connec
tion with any Hazardous Material, Environmental Law or Order; or
(iv) from any actual or alleged damage, injury, threat or harm to
health, safety, natural resources or the environment.
"Environmental Law" shall mean any Law pertaining
to: (i) the protection of health, safety and the indoor or
outdoor environment; (ii) the conservation, management or use of
natural resources and wildlife; (iii) the protection or use of
surface water and ground water; (iv) the management, manufacture,
possession, presence, use, generation, transportation, treatment,
storage, disposal, release, threatened release, abatement,
removal, remediation or handling of, or exposure to, any
Hazardous Material; or (v) pollution (including any release to
air, land, surface water and ground water); and includes, without
limitation, the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended, 42 U.S.C.
9601 et seq., and the Solid Waste Disposal Act, as amended, 42
U.S.C. 6901 et seq.
"ERISA" shall have the meaning ascribed to it in
Section 3.10(a).
"ERISA Affiliate" shall mean any corporation or
trade or business, whether or not incorporated, that together
with an entity or any subsidiary of such entity would be deemed a
"single employer" within the meaning of Section 4001 of ERISA, or
considered as being members of a controlled group of corpora
tions, under common control, or members of an affiliated service
group within the meaning of Subsections 414(b), (c), (m) or (o)
of the Code or Section 4001(a)(14) of ERISA.
"Finance Subsidiary" shall mean any Subsidiary
whose principal business is financial as identified in Schedule A
hereto.
"Financial Statements" shall have the meaning
ascribed to such term in Section 3.5(b).
"Foreign Competition Laws" shall mean foreign
statutes, rules, regulations, orders, decrees, administrative and
judicial directives, and other foreign laws, that are designed or
intended to prohibit, restrict or regulate actions having the
purpose or effect of monopolization, lessening of competition or
restraint of trade.
"GAAP" shall have the meaning ascribed to it in
Section 3.5(b).
"Guarantees" shall have the meaning ascribed to it
in Section 5.6(c).
"Governmental Entity" shall have the meaning
ascribed to it in Section 3.4(a).
"Hazardous Material" shall mean any substance,
chemical, compound, product, solid, gas, liquid, waste, by-
product, pollutant, contaminant or material which is hazardous or
toxic, and includes without limitation, asbestos or any substance
containing asbestos, polychlorinated biphenyls, petroleum
(including crude oil or any fraction thereof), and any hazardous
or toxic waste, material or substance regulated under any Environ
mental Law.
"Indemnified Party" shall have the meaning
ascribed to it in Section 8.1.(b).
"Indemnifying Party" shall have the meaning
ascribed to it in Section 8.1.(b).
"Insurance Subsidiary" shall mean any Subsidiary
whose principal business is insurance as identified in Schedule A
hereto.
"Interest Rate" shall mean six (6) percent per
year calculated on the basis of a 365 day year and charged for
the actual number of days elapsed.
"Interim Statements" shall have the meaning
ascribed to it in Section 2.3(b).
"Law" shall mean any federal, state, local or
foreign law, statute, ordinance, rule, regulation, Order,
judgment or decree, administrative or judicial decision, and any
other executive or legislative proclamation.
"Liabilities" shall have the meaning ascribed to
it in Section 2.2.
"License" shall mean any license, Permit,
certificate of authority or any other instrument issued by any
governmental authority relating to the ability to do business by
the Company and the Subsidiaries.
"Lien" shall mean any conditional sale agreement,
default of title, easement, encroachment, encumbrance,
hypothecation, infringement, lien, mortgage, option, pledge,
reservation, restriction, security interest, title retention or
other security arrangement, or any adverse right or interest,
charge, or claim of any nature whatsoever of, on, or with respect
to any property or property interest.
"Litigation" shall mean any suit, action, arbi
tration, cause of action, claim, complaint, criminal prosecution,
investigation, demand letter, governmental or other admin
istrative proceeding, whether at law or at equity, before or by
any federal, state or foreign court, tribunal, or agency or
before any arbitrator.
"Losses" shall mean any and all actual losses,
liabilities, costs and expenses (including reasonable attorneys'
fees and costs of investigation).
"Material Adverse Effect" shall mean any adverse
change in the business, assets, liabilities, financial condition,
or results of operations of the Company or any of the
Subsidiaries which, individually or together with any other such
adverse change, is material to the Company and the Subsidiaries
taken as a whole, other than any such effect attributable to or
resulting from (i) the public announcement of the transactions
contemplated hereby, (ii) any change in banking, insurance,
consumer finance, commercial finance, thrift, fair lending or
similar Laws of general applicability or interpretations thereof
by courts or governmental authorities, (iii) any change in
general economic conditions, in interest rates, currency exchange
rates, or in conditions affecting banking, insurance, consumer
finance, commercial finance, or thrift industries generally, (iv)
any act or omission of the Company or any Subsidiary taken with
the prior consent of the Buyer pursuant to Article V or (v)
actions taken by the Company at the specific request of Buyer.
"Material Contract" shall have the meaning
ascribed to it in Section 3.13.
"Order" shall mean any administrative decision or
award, decree, injunction, judgment, order, quasi-judicial
decision or award, ruling, or writ of any federal, state, local
or foreign or other court, arbitrator, mediator, tribunal,
administrative agency or authority.
"Permit" shall mean any federal, state, local or
foreign governmental approval, authorization, certificate,
declaration, easement, filing, franchise, license, notice,
permit, variance, clearance, exemption, closure or right to which
any person is a party or that is or may be binding upon or inure
to the benefit of any person or its securities, properties or
business.
"Person" shall mean any individual, corporation,
partnership, joint venture, trust, association, organization,
governmental authority or other entity.
"Purchase Price" shall have the meaning ascribed
to it in Section 2.3(a).
"Representatives" shall have the meaning ascribed
to it in Section 5.2(a).
"Requisite Regulatory Approvals" shall have the
meaning ascribed to it in Section 3.4(a).
"Section 5.9 Indemnified Parties" shall have the
meaning ascribed to it in Section 5.9.(b).
"Separation Agreement" shall mean the Separation
Agreement of even date herewith entered into by and among Parent,
the Company and Buyer, attached hereto as Exhibit 3.
"Shares" shall have the meaning ascribed to it in
Section 2.1.
"Statement" shall have the meaning ascribed to it
in Section 2.3(b).
"Subsidiary" shall mean each corporation
identified in Schedule A to this Agreement.
"Tax" or "Taxes" shall mean all United States
federal, state, provincial, local, territorial and foreign
income, profits, franchise, license, capital, transfer, ad
valorem, wage, severance, occupation, import, custom, gross
receipts, payroll, sales, employment, use, property, real estate,
excise, value added, estimated, stamp, alternative or add-on
minimum, environmental, withholding and any other taxes, duties,
assessments or governmental tax charges of any kind whatsoever.
"Tax Authority" shall mean any domestic, foreign,
federal, national, state, provincial, county or municipal or
other local government, any subdivision, agency, commission or
authority thereof, or any quasi-governmental body exercising any
taxing authority or any other authority exercising Tax regulatory
authority.
"Tax Return" shall mean any return, report or
similar statement required to be filed with respect to any Tax
(including any attached schedules), including any information
return, claim for refund, amended return or declaration of
estimated Tax.
"Transaction" shall mean the purchase of Assets
and the assumption of Liabilities described in Sections 2.1 and
2.2.
"Tax Allocation Agreement" shall mean the Tax
Allocation Agreement of even date herewith by and among Parent,
the Company and Buyer attached hereto as Exhibit 2.
"Transferred Employee" shall have the meaning
ascribed to it in Section 5.10(a).
ARTICLE II
PURCHASE AND SALE OF ASSETS
AND ASSUMPTION OF LIABILITIES
2.1 Purchase and Sale of Assets. Subject to the
terms and conditions of this Agreement, at the Closing the
Company shall sell, transfer, convey, assign and deliver to Buyer
and Buyer shall purchase, acquire and accept from the Company:
(a) all the outstanding capital stock owned by the Company in the
Directly Owned Subsidiaries (the "Shares"); and (b) all of the
Company's other rights, properties, assets, claims, contracts and
businesses of every kind, character and description, whether
tangible or intangible, whether real, personal or mixed, whether
accrued, contingent or otherwise, and wherever located; except
for (v) the shares of Parent Series D Cumulative Preferred Stock,
(w) the Company's National Bank Charter, (x) any rights in or to
the names "Textron" and "TFC", alone or in combination with any
other words, and any trade names, trademarks or service marks
relating thereto, and (y) any documents or records which the
Company is required by law to retain in its possession. (The
Shares and the items listed in Section 2.1(b) which are being
purchased by Buyer are collectively referred to as the "Assets").
2.2 Assumption of Liabilities. Subject to the terms
and conditions of this Agreement, the Tax Allocation Agreement
and the Separation Agreement, at the Closing the Buyer shall
assume all of the liabilities and obligations of the Company
(known and unknown and whether absolute, accrued, contingent or
otherwise) existing as of the Closing Date, whether asserted
before or after such time, other than the liabilities and
obligations of the Company (i) in connection with the
transactions contemplated by this Agreement, (ii) in connection
with the deferred tax liability associated with the Parent Series
D Cumulative Preferred Stock or (iii) pursuant to, or as a result
of a breach of, this Agreement or any other Contract entered into
in connection with the Transaction. (The liabilities and
obligations being assumed hereunder are collectively referred to
as the "Liabilities".)
2.3 (a) Purchase Price. Subject to the terms and
conditions of this Agreement including the provisions of Section
6.1(b) hereof and in consideration of the sale, assignment,
transfer and delivery of the Assets, Buyer shall pay to the
Company on the Closing Date, in immediately available funds by
wire transfer to an account designated in writing at least two
business days in advance by the Company, the sum of three
billion, nine hundred million dollars ($3,900,000,000) (the
"Purchase Price").
(b) Closing Date Statements.
(1) As soon as practical, but in any event within
sixty (60) days following the Closing Date, unless otherwise
extended by the mutual agreement of the parties, the Company
shall deliver to the Buyer at Buyer's expense (i) the audited
consolidated statement of financial position of the Company and
its consolidated Subsidiaries as of the Closing Date (the
"Statement") together with the report thereon of Ernst & Young
LLP, independent accountants of the Company ("E&Y"), stating that
such Statement has been prepared in conformity with GAAP applied
on a basis consistent with the preparation of the audited
December 31, 1997 balance sheet as contained in the SEC Reports;
(ii) a schedule of the intercompany accounts receivables between
Parent or an affiliate of Parent (other than the Company and the
Subsidiaries) on the one hand and the Company or any Subsidiary
on the other hand set forth in the Statement; (iii) a schedule of
deferred tax accounts for each Directly Owned Subsidiary as set
forth in the Statement;(iv) a schedule of all intercompany
payments between Parent and its Affiliates (other than the
Company and the Subsidiaries) on the one hand and the Company and
the Subsidiaries on the other hand from the date of the Interim
Statements to the Closing Date; and (v) a schedule setting forth
the contingent tax reserves as adjusted in accordance with the
Tax Allocation Agreement. The term "Interim Statements" shall
mean the Financial Statements of the Company and its consolidated
subsidiaries as of, and for the six month period ending on,
June 30, 1998. If requested by Buyer, the Company shall request
that E&Y conduct a full audit of the Company and its
consolidated Subsidiaries at Buyer's expense and deliver a
statement of stockholders' equity and cash flows.
(2) Subject to Section 2.3(d), the Statement shall
be final, binding and conclusive on the parties hereto as they
relate to the calculation of the Purchase Price but shall not
affect Parent's or the Company's liability under any other
Section of this Agreement.
(c) Settlement of Purchase Price. Subject to the
provisions of Section 2.3(d), within forty-five (45) days after
the date of receipt by the Buyer of the Statement, in the event
that the Adjusted Stockholder's Equity (as defined in Section
6.2(c)) and delivered pursuant to this Section 2.3 is (i) more
than $1,227,400,000, then the Buyer shall pay the difference to
the Company, as an adjustment to the Purchase Price, or (ii) less
than $1,227,400,000, then the Company shall pay the difference to
the Buyer, as an adjustment to the Purchase Price prior to 11:00
a.m. local time in New York. All payments pursuant to this
Section 2.3(c) or Section 2.3(d) ("Purchase Price Adjustment
Payments") shall be made by wire transfer of immediately
available funds and shall be made together with interest thereon
at the Interest Rate, payable for the period commencing on the
Closing Date and ending on the day immediately prior to the date
of such Purchase Price Adjustment Payment.
(d) Closing Date Statement Disputes.
(i) Buyer may dispute any amounts reflected on
the Statement; provided, however, that the Buyer shall
notify the Company in writing (the "Dispute Notice") of each
disputed item, specifying the amount thereof in dispute and
setting forth, in reasonable detail, the basis for such
dispute, within forty-five (45) days of Buyer's receipt of
the Statement as so submitted; and provided, further,
however, that if an account or item is recorded or treated
in a manner consistent with past practice, then, provided
that such recording or treatment does not prevent the
Statement from being in accordance with GAAP, it must be
accepted as correct by Buyer for purposes of this Section.
Buyer shall submit only one Dispute Notice containing all
disputed items. In the event of such a dispute, the Buyer
and the Company shall attempt to reconcile their difference
and any resolution by them as to any disputed amounts shall
be final, binding and conclusive on the parties hereto. If
the Buyer and the Company are unable to reach a resolution
with such effect within thirty (30) days of the receipt by
the Company of the Buyer's written notice of dispute, the
Buyer and the Company shall submit the items remaining in
dispute for resolution to the Independent Accounting Firm
(as defined below) which shall, within thirty (30) days
after submission, determine and report to the parties upon
such remaining disputed items, and such report shall be
final, binding and conclusive on the parties hereto. All
costs and expenses of the Independent Accounting Firm
relating to the disputed items shall be allocated between
the Buyer and the Company in the same proportion that the
aggregate dollar amount of the items unsuccessfully disputed
by each party bears to the total dollar amount of the items
disputed hereunder. The term "Independent Accounting Firm"
shall mean Xxxxxx Xxxxxxxx & Co., Certified Public
Accountants or such other firm as the Buyer and the Company
shall agree.
(i) Notwithstanding any dispute pursuant to this
Section 2.3(d) of any amounts payable pursuant to Section
2.3(c), each applicable party shall at the time specified in
Section 2.3(c) pay that portion of the amounts payable by it
pursuant to Section 2.3(c) and not subject at the time of
such payment to such dispute. Subject to the preceding
sentence, any Purchase Price Adjustment Payment made
pursuant to this Section 2.3(d) shall be paid within five
(5) business days following the resolution thereof.
(e) Access to Books and Records. During the periods
in which (x) the Statement is being prepared, or (y) any dispute
may be raised as contemplated by Section 2.3(d), Parent, the
Company and the Buyer shall provide each other, including their
authorized agents and representatives, with reasonable access,
during normal business hours and without disruption to their
normal business, to their respective books, records, facilities,
employees, accountants, counsel or other representatives
pertaining to the Company and the transactions contemplated
hereby to the extent affecting the Company including any
consolidated or combined returns, schedules, consolidated or
combined work papers and other related documents and shall
promptly provide to the Company copies of all books, records,
contracts, reports and other information which the Company or E&Y
may reasonably request in connection with the preparation of the
Statement; provided, however, that with respect to consolidated,
combined, unitary or similar Tax Returns which include Parent (or
any of its Affiliates other than the Company and the
Subsidiaries) on the one hand and the Company (or any of the
Subsidiaries) on the other hand, Buyer shall only have access to
portions of such Tax Returns relevant to the Company and the
Subsidiaries.
2.4 Closing. The Company shall as promptly as
possible notify the Buyer, and the Buyer shall as promptly as
possible notify the Company when the conditions to such party's
obligations to complete the Transaction have been satisfied or
waived. The closing of the Transaction (the "Closing") shall
take place at the offices of Skadden, Arps, Slate, Xxxxxxx & Xxxx
LLP, Xxx Xxxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx at 10:00 a.m.
Boston time on the last day of the month in which all of the
conditions set forth in Article VI have been satisfied or waived,
provided, however, that if the day on which such conditions have
been satisfied or waived is not at least three business days
prior to the last day of such month then the Closing shall occur
on the last day of the following month, or at such other time,
date and place as the Company and Buyer may agree in writing;
provided, further, however, that if the conditions set forth in
Article VI are not satisfied or waived prior to the third
business day prior to November 30, 1998 the Closing shall, at the
election of Parent, not occur prior to the first business day of
January 1999. (The date on which the Closing occurs is hereafter
referred to as the "Closing Date".)
2.5 Closing Obligations.
(a) At the Closing, the Company shall deliver to Buyer:
(i) certificates representing the Shares duly endorsed
(or accompanied by duly executed stock powers) for transfer
to Buyer;
(ii) a duly executed Xxxx of Sale, Assignment and
Assumption Agreement in the form attached as Exhibit 1
hereto;
(iii) the Officer's Certificate described in
Section 6.2(e);
(iv) the resignation of any officer or director of any
Subsidiary who is an employee or director of Parent;
(v) all such other documents as may be necessary to
convey to Buyer the right, title and interest of the Company
and the Subsidiaries in and to the Assets;
(vi) a certificate executed by the Secretary or
Assistant Secretary of the Company as to the Certificate of
Incorporation and By-Laws of the Company and the resolutions
of the Board of Directors of the Company authorizing and
approving the execution, delivery and performance of this
Agreement and the transactions contemplated hereby, a list
of officers of the Company and setting forth that such
Certificate of Incorporation, By-Laws, and authorizations
and approvals are in full force and effect on the Closing
Date;
(vii) a certificate executed by the Secretary or
Assistant Secretary of each Designated Subsidiary as to the
Certificate of Incorporation and By-Laws of such Subsidiary,
a list of officers of such Designated Subsidiary and setting
forth that such Certificate of Incorporation and By-Laws are
in full force and effect on the Closing Date; and
(viii) a certificate under Section 1445(b)(2) of the
Code providing that the Company is not a foreign Person, in
form and substance reasonably satisfactory to Buyer.
(b) At the Closing, the Buyer shall deliver to the Company:
(i) a duly executed Xxxx of Sale, Assignment and
Assumption Agreement in the form attached as Exhibit 1
hereto;
(ii) documents in a form reasonably satisfactory to the
Company and Buyer under which Buyer assumes the Company's
obligations under the agreements identified in Section
3.4(a)(vi) of the Disclosure Schedule;
(iii) the Officer's Certificate described in
Section 6.3(d); and
(iv) the Purchase Price in the manner set forth in
Section 2.3.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
OF PARENT AND THE COMPANY
Parent and the Company jointly and severally represent
and warrant to Buyer that:
3.1 Corporate Organization and Qualification.
(a) Parent, the Company and each Designated Subsidiary
is a corporation duly organized, validly existing and in good
standing under the Laws of its jurisdiction of incorporation.
Each Subsidiary other than the Designated Subsidiaries is a
corporation duly organized, validly existing and in good standing
under the Laws of its jurisdiction of incorporation except where
the failure to be duly organized, validly existing and in good
standing is not reasonably likely to have a Material Adverse
Effect. Parent, the Company and each of its Subsidiaries is
qualified and in good standing as a foreign corporation in each
jurisdiction where the properties owned, leased or operated, or
the business conducted, by it require such qualification, except
where the failure to so qualify or be in good standing is not
reasonably likely to have a Material Adverse Effect. Parent, the
Company and each of its Subsidiaries has all requisite corporate
power and authority and all necessary governmental Consents to
own, lease and operate its properties and to carry on its
business as it is now being conducted, except where the failure
to have such power and authority is not reasonably likely to have
a Material Adverse Effect. The Company has or will have made
available to Buyer prior to Closing complete and correct copies
of the articles of organization or articles of or certificates of
incorporation, as the case may be, and by-laws or other
equivalent organizational documents of it and each Designated Sub
sidiary as in effect as of the date hereof.
(b) Each Finance Subsidiary has the necessary Licenses
or other certificates of authority to conduct its business as is
being currently conducted in each jurisdiction where such
Licenses or certificates are required except where the failure to
be so licensed or authorized is not reasonably likely to result
in a Material Adverse Effect.
(c) Each Insurance Subsidiary is (i) duly licensed or autho
rized as an insurance company in its jurisdiction of incorpora
tion as set forth in Schedule A to the Agreement and is not
deemed to be "commercially domiciled" in any other jurisdiction,
(ii) duly licensed or authorized as an insurance company in each
other jurisdiction where it is required to be so licensed or
authorized, and (iii) duly authorized in its jurisdiction of
incorporation and each other applicable jurisdiction to write
each line of business reported as being written in the Company
SAP Statements, except, in any such case, where the failure to be
so licensed or authorized is not reasonably likely to result in a
Material Adverse Effect.
3.2 Stock of Subsidiaries.
(a) Schedule A to the Agreement identifies each Subsidiary
of the Company and separately identifies each Subsidiary whose
capital stock is directly owned by the Company (the "Directly
Owned Subsidiaries"). The Company does not own, directly or
indirectly, any equity interests in any other Person.
(b) All of the shares of capital stock of the Directly
Owned Subsidiaries, except for any directors' qualifying shares,
are owned by the Company, free and clear of all Liens, and have
been duly authorized, validly issued and are fully paid and
nonassessable and were not issued in violation of any preemptive
rights. Except for (i) any director's qualifying shares and (ii)
as set forth in Section 3.2(b) of the Disclosure Schedule, all of
the shares of the other Subsidiaries are owned by the Company or
another Subsidiary or Subsidiaries free and clear of all Liens
and have been duly authorized, validly issued and are fully paid
and nonassessable and were not issued in violation of any
preemptive rights except for any such Liens or where any such
failures to be duly authorized, validly issued, and fully paid or
nonassessable would not reasonably be expected to have a Material
Adverse Effect.
(c) Except as set forth in Section 3.2(c) of the
Disclosure Schedule, there are no options, warrants, convertible
securities or other rights, agreements, arrangements or
commitments relating to the capital stock of, or other equity
interest in, the Subsidiaries obligating the Company or a
Subsidiary to issue, sell, transfer or otherwise dispose of or
sell any shares of capital stock of, or other equity interest in,
a Subsidiary.
(d) Upon consummation of the Transaction, the Buyer
will acquire valid title to the Shares free and clear of all
Liens. Except as set forth in Section 3.2(d) of the Disclosure
Schedule, there are no voting trusts, stockholder or registration
rights agreements, proxies or other agreements or understandings
in effect with respect to the voting or transfer of the shares of
capital stock of the Subsidiaries.
3.3 Authority Relative to This Agreement. Each of
Parent and the Company has the requisite corporate power and au
thority to execute and deliver this Agreement and to consummate
the transactions contemplated hereby. This Agreement and the con
summation by each of Parent and the Company of the transactions
contemplated hereby have been duly and validly authorized by the
Board of Directors of each of Parent and the Company and the
stockholder of the Company and no other corporate proceeding on
the part of the Company or Parent is necessary to authorize this
Agreement or to consummate the transactions contemplated hereby.
This Agreement has been duly and validly executed and delivered
by Parent and the Company and, assuming this Agreement consti
tutes the valid and binding agreement of Buyer, constitutes the
valid and binding agreement of Parent and the Company,
enforceable against Parent and the Company in accordance with its
terms, except that the enforcement hereof may be limited by (a)
bankruptcy, insolvency, reorganization, moratorium or other
similar Laws now or hereafter in effect relating to creditors'
rights generally and (b) general principles of equity (regardless
of whether enforceability is considered in a proceeding in equity
or at law).
3.4 Consents and Approvals; No Violations.
(a) Except for (i) the filing of applications and
notices, as applicable, with federal and state regulatory
authorities governing consumer finance, commercial finance,
mortgage lending and insurance in the states in which the Company
and its domestic Subsidiaries operate their respective businesses
and the approval of such applications or the grant of required
Licenses by such authorities, (ii) the filing of applications and
notices, as applicable, with the foreign governmental authorities
regulating consumer finance, commercial finance, mortgage lending
and insurance in the foreign jurisdictions in which the
Subsidiaries operate their businesses, and the approval of such
applications or the grant of required Licenses by such
authorities, (iii) the filing of notification and report forms
with the United States Federal Trade Commission and the United
States Department of Justice under the Xxxx-Xxxxx-Xxxxxx
Antitrust Improvements Act of 1976, as amended (the "HSR Act")
and the expiration or termination of any applicable waiting
period thereunder, (iv) the filing of applications and notices,
as applicable, with foreign governmental authorities under the
Foreign Competition Laws, and the approval of such applications
by such authorities, if required (including, without limitation,
(x) in the instance of Australia, receipt of approval from the
Treasurer under the Foreign Acquisitions and Takeovers Act, (y)
in the instance of Canada, receipt of either an Advanced Ruling
Certificate or no-action letter from the Bureau of Competition,
in such form and to such effect as would be determined to be
reasonably satisfactory, and (z) in the instance of the United
Kingdom, receipt of a response from either the Office of Fair
Trading or the Monopolies and Mergers Commission under the Merger
Control Law, in such form and to such effect as would be
determined to be reasonably satisfactory), (v) the Consents of
third parties under the Contracts listed in Section 3.4(a)(v) of
the Disclosure Schedule, and (vi) the assumption by Buyer of the
Company's obligations under the Contracts identified in Section
3.4(a)(vi) of the Disclosure Schedule, no notices to, Consents or
approvals of, or filings or registrations with, any court,
administrative agency or commission or other governmental
authority or instrumentality (each, a "Governmental Entity") or
with any self-regulatory authority or with any third party are
necessary in connection with the execution and delivery by Parent
and the Company of this Agreement and the consummation by Parent
and the Company of the transactions contemplated hereby, except
for such notices, Consents, approvals, filings or registrations,
the failure of which to be made or obtained would not reasonably
be expected to have a Material Adverse Effect. The notices,
Consents, or approvals, filings or registrations, and expirations
or terminations of waiting periods referred in clauses 3.4(a)(i)
through 3.4(a)(iv), without giving effect for purposes of this
definition to any qualifier as to materiality or Material Adverse
Effect are hereinafter referred to as the "Requisite Regulatory
Approvals". As of the date hereof, neither Parent nor the
Company knows of any reason why the Requisite Regulatory
Approvals should not be obtained.
(b) Neither the execution and delivery of this
Agreement by Parent or the Company nor the consummation by Parent
and the Company of the transactions contemplated hereby, does nor
will (i) conflict with or result in any breach of any provisions
of the certificate of incorporation or by-laws of the Parent or
Company or the certificate of incorporation or by-laws or other
equivalent organizational documents of any of the Subsidiaries;
(ii) subject to obtaining the Consents listed in Section
3.4(a)(v) of the Disclosure Schedule and the Buyer assuming the
Company's obligations under the Contracts identified in Section
3.4(a)(vi) of the Disclosure Schedule, and except as set forth in
Section 3.4(b) of the Disclosure Schedule, conflict with, result
in a violation or breach of, or constitute a Default (or give
rise to any right of termination, cancellation or acceleration)
under, any of the terms, conditions or provisions of any note,
bond, mortgage, indenture, License, Contract, agreement or other
instrument or obligation to which the Parent or Company or any of
the Subsidiaries is a party or by which any of them or any of
their respective properties or assets may be bound; (iii)
conflict with, result in a violation or breach of, or constitute
a Default (or give rise to any right of termination, cancellation
or acceleration) under, any of the terms, conditions or
provisions of any License or Permit; or (iv) subject to giving
the notices, making the filings or registrations or obtaining the
Consents or approvals referred to in clauses (i) through (vi) in
paragraph (a) above, conflict with, violate any order, writ,
injunction, decree, statute, rule or regulation applicable to the
Company, any of the Subsidiaries or any of their respective
properties or assets, except, in the case of clauses (ii), (iii)
or (iv) of this paragraph (b) for violations, breaches or
Defaults which would not reasonably be expected to have a
Material Adverse Effect.
3.5 SEC Reports; Financial Statements.
(a) The Company has timely filed all reports required
to be filed by it with the Securities and Exchange Commission
(the "SEC") since January 1, 1997 pursuant to the federal securi
ties Laws and the SEC rules and regulations thereunder which com
plied in all material respects with applicable requirements of
the Securities Exchange Act of 1934, as amended (collectively,
the "Company SEC Reports"). None of the Company SEC Reports, as
of their respective dates, contained or will contain any untrue
statement of a material fact or omitted or will omit to state a
material fact required to be stated therein or necessary in order
to make the statements therein, in light of the circumstances
under which they were made, not misleading.
(b) The consolidated statements of financial position and
the related consolidated statements of operations, stockholders'
equity and cash flows (including the related notes thereto) of
the Company included in the Company SEC Reports (the "Financial
Statements") complied in all material respects with applicable ac
counting requirements and the published rules and regulations of
the SEC with respect thereto, have been prepared in conformity
with United States generally accepted accounting principles
("GAAP") (except, in the case of unaudited statements, as
permitted by Form 10-Q of the SEC) applied on a basis consistent
with prior periods (except as otherwise noted therein), and
present fairly the consolidated financial position of the Company
as of their respective dates, and the consolidated results of its
operations and its cash flows for the periods presented therein
(subject, in the case of the unaudited interim financial
statements, to normal and recurring year-end adjustments that
have not been and are not expected to be material in amount).
3.6 Statutory Statements. Each of the Insurance Sub
sidiaries has filed all annual or quarterly statements, together
with all exhibits and schedules thereto, required to be filed
with or submitted to the appropriate regulatory authorities of
the jurisdiction in which it is domiciled on forms prescribed or
permitted by such authority (collectively, the "Company SAP State
ments") since January 1, 1997. Financial statements included in
the Company SAP Statements and prepared on a statutory basis, in
cluding the notes thereto, have been prepared in all material re
spects in accordance with accounting practices prescribed or per
mitted by applicable regulatory authorities in effect as of the
date of the respective statements and such accounting practices
have been applied in all material respects on a consistent basis
throughout the periods involved, except as expressly set forth in
the notes or schedules thereto, and such financial statements
present fairly the respective statutory financial positions and
results of operation of each of the Insurance Subsidiaries as of
their respective dates and for the respective periods presented
therein.
3.7 Absence of Certain Changes or Events.
(a) Except as disclosed in the Company SEC Reports
filed prior to the date of this Agreement, or as set forth in Sec
tion 3.7(a) of the Disclosure Schedule or as a consequence of, or
as expressly contemplated by, this Agreement, since December 31,
1997, (i) the business of the Company has been carried on only in
the ordinary and usual course consistent with past practice, and
(ii) there has not occurred any event, development or change
which has resulted or is reasonably likely to result in a
Material Adverse Effect; provided, however, that if the Material
Adverse Effect results from a lawsuit identified in Section 3.8
of the Disclosure Schedule, Parent may cure the Material Adverse
Effect by contribution to the capital of the Company in an amount
sufficient to avoid a Material Adverse Effect.
(b) Except as set forth in the Company SEC Reports
filed prior to the date of this Agreement or as listed in Section
3.7(b) of the Disclosure Schedule, and except for liabilities and
obligations incurred in the ordinary course of business
consistent with past practice, since December 31, 1997, neither
the Company nor any of its Subsidiaries has any liabilities or
obligations (i) of any nature (whether accrued, absolute,
contingent or otherwise) required by GAAP to be recognized or
disclosed on a consolidated balance sheet of the Company and its
consolidated subsidiaries or in the notes thereto except for
liabilities or obligations which have not resulted in or are not
reasonably likely to have a Material Adverse Effect or (ii) of
any other nature (whether accrued, absolute, contingent or
otherwise) which exceed in the aggregate three hundred and twenty-
five million dollars ($325,000,000), before giving effect to any
related reduction in Taxes. The reference to a threshold of $325
million in this Section 3.7(b)(ii) shall not be deemed in any way
to define the terms "material" or "Material Adverse Effect" and
shall not be construed to limit or qualify in any way the right
of Buyer to claim that any other representation or warranty set
forth in this Agreement has been inaccurate or has been breached;
provided, however, that if the Material Adverse Effect results
from a lawsuit identified in Section 3.8 of the Disclosure
Schedule, Parent may cure the Material Adverse Effect by a cash
contribution to the capital of the Company in an amount
sufficient to avoid a Material Adverse Effect.
3.8 Litigation. Except as set forth in Section 3.8
of the Disclosure Schedule, there is no Litigation pending, or to
the knowledge of the members of the Executive Committee of the
Board of Directors of the Company (which includes the General
Counsel of the Company), threatened, the outcome of which is rea
sonably likely to have a Material Adverse Effect.
3.9 Taxes.
(a) Tax Returns Filed and Taxes Paid. Each of the
Company and the Subsidiaries has timely filed all material Tax
Returns that it was required to file and all such Tax Returns
were correct and complete in all material respects. Each of the
Company and the Subsidiaries has timely paid in full all Taxes
that are due or owing.
(b) Tax Payments and Withholdings. Each of the
Company and the Subsidiaries has withheld and paid all Taxes
required to have been withheld and paid in connection with
amounts paid or owing to any employee, independent contractor,
creditor, stockholder, or other third party.
(c) No Liens. There are no Liens or other
encumbrances on any of the material assets or properties of the
Company and the Subsidiaries that arose in connection with any
failure (or alleged failure) to pay Tax.
(d) Tax Positions. No position has been asserted in
writing by any Tax Authority with respect to Taxes of the Company
and the Subsidiaries which, if asserted by such Tax Authority in
a Tax period ending after the Closing Date would reasonably be
expected to have a Material Adverse Effect on the Company and the
Subsidiaries.
(e) No Pending Ruling, Closing Agreements, or Changes
in Accounting Method. There are no outstanding requests for
rulings with any Tax Authority that would have a Material Adverse
Effect on the operations of the Company or the Subsidiaries for
periods after the Closing Date. None of the Company and the
Subsidiaries has (i) executed, become subject to, or entered into
any closing agreement pursuant to Code Section 7121 or any
similar or predecessor provisions thereof under the Code or other
Tax Law, or (ii) received approval to make or agreed to a change
in accounting method, which closing agreement or change in
accounting method would have a Material Adverse Effect on the
Company or any of the Subsidiaries for any Tax period ending
after the Closing Date. None of the Company and the Subsidiaries
has any application pending with any Tax Authority requesting
permission for any change in accounting method that would have a
Material Adverse Effect on the Company or the Subsidiaries for
any Tax period ending after the Closing Date.
(f) No Affiliated Group Liability. No liability has
been asserted against the Company or the Subsidiaries with
respect to Taxes of any affiliated group within the meaning of
Section 1504(a) of the Code of which the Company or the
Subsidiaries have been a member and of which Parent was not the
common parent corporation.
(g) No Tax Indemnities. No liability has been
asserted against the Company or the Subsidiaries with respect to
Taxes of any other Person pursuant to any Tax allocation or
sharing agreement with any such Person, or any agreement to
indemnify any such Person with respect to Taxes.
3.10 Employee Benefit Plans; Labor Matters.
(a) A copy of each (i) employee benefit plan covered
by the Employee Retirement Income Security Act of 1974, as
amended ("ERISA")(and comparable foreign plans) (ii) each stock
option plan and (iii) each employment agreement with any officer
of the Company or a Subsidiary will be made available to Buyer
prior to Closing.
(b) Each Company Plan has been operated in accordance
with its terms and the requirements of ERISA, the Code, and all
other applicable Laws, except where the failure to have been so
operated is not reasonably likely to result in a Material Adverse
Effect. All reports and disclosures relating to the Company
Plans required to be filed or furnished to any governmental
entity, participants or beneficiaries prior to the Closing Date
have been or will be filed or furnished in a timely manner and in
accordance in all respects with applicable Law, except where the
failure to be so filed or furnished is not reasonably likely to
have a Material Adverse Effect.
(c) (i) Neither the Company, any Subsidiary, any
Company Plan, any trust created thereunder nor any trustee or
administrator thereof has engaged in any transaction with the
Company or any ERISA Affiliate, any Company Plan, any such trust,
or any trustee or administrator thereof, or any party dealing
with any Company Plan or any such trust, which could result in a
liability assessed pursuant to Section 409 or 502(i) of ERISA or
a tax imposed pursuant to Section 4975 of the Code; and (ii) the
Company, the Subsidiaries, and all fiduciaries (as defined in
Section 3(21) of ERISA) with respect to the Company Plans, have
complied in all material respects with Section 404 of ERISA.
(d) Determination Letters. (i) Each Company Plan
currently in effect which is intended to be qualified under
Section 401(a) of the Code has received a favorable determination
letter from the Internal Revenue Service with respect to the
Code, or an application has been filed for such determination
letter on a timely basis and is currently pending, and
(ii) nothing has occurred that could reasonably be expected to
adversely affect the qualified status of such Company Plan.
(e) Except as is not reasonably likely to result in a
Material Adverse Effect, no event or condition has occurred, or
failed to occur, in connection with which the Company or any
ERISA Affiliate or any of the Subsidiaries is or may reasonably
be expected to be, directly or indirectly through any Affiliate,
subject to any liability, lien or encumbrance with respect to any
plan under ERISA or other applicable Law or under any agreement,
instrument or understanding pursuant to or under which the
Company or the Subsidiaries are required to indemnify any person
against such liability, lien or encumbrance. No liability under
Subtitle C, D or E of Title IV of ERISA has been or is expected
to be incurred by the Company or any Subsidiary with respect to
any ongoing frozen or terminated "single-employer plan", within
the meaning of Section 4001(a)(15) of ERISA, or "multi-employer
plan" within the meaning of Section 4001(a)(3) of ERISA,
currently or formerly maintained by any of them, or the single-
employer plan of any ERISA Affiliate. The Company and the
Subsidiaries have not sponsored, maintained, contributed, or been
obligated to contribute, to a multi-employer plan under Subtitle
E of Title IV of ERISA. No notice of a "reportable event"
within the meaning of Section 4043 of ERISA, for which the 30-day
reporting requirement has not been waived, has been required to
be filed for any Company Plan or by any ERISA Affiliate within
the 12-month period ending on the date hereof or will be required
to be filed in connection with the transactions contemplated by
this Agreement.
(f) All contributions required to be made under the
terms of any Company Plan as of the Closing Date have been or
will be timely made on or prior to the Closing Date. No single-
employer plan of the Company has an "accumulated funding
deficiency" (whether or not waived) within the meaning of Section
412 of the Code or Section 302 of ERISA. Neither the Company nor
any Subsidiary has provided, or is required to provide, security
to any plan pursuant to Section 401(a)(29) of the Code.
(g) The consummation of the transactions contemplated
in this Agreement will not, except as set forth in Schedule
3.10(g) (which may be amended any time prior to September 15,
1998), (A) entitle any employees of the Company or the
Subsidiaries to severance pay, (B) accelerate the time of payment
or vesting or trigger any payment of compensation or benefits
under, increase the amount payable or trigger any other material
obligation pursuant to, any of the Company Plans or (C) result in
any breach or violation of, or a default under, any of the
Company Plans.
(h) Except as is not reasonably likely to result in a
Material Adverse Effect, the Company and the Subsidiaries have
complied with all applicable provisions of Section 6.01 et seq.
of ERISA and Section 4980B of the Code and with all applicable
provisions of the Health Insurance Portability and Accountability
Act of 1996.
(i) Since January 1, 1997, except as is not reasonably
likely to result in a Material Adverse Effect, neither the
Company nor any of the Subsidiaries has in the past or is now
engaged in any unfair labor practice, nor is any complaint
against the Company or any of the Subsidiaries pending or
threatened before the National Labor Relations Board; (i) there
is no labor strike, dispute, slowdown or stoppage actually
pending or threatened with respect to any employees of the
Company or any of the Subsidiaries; (ii) no attempt to organize
any group or all of the employees of the Company or the
Subsidiaries has been made, or to the best of the Company's
knowledge, proposed; and (iii) no grievance which might have an
adverse effect on the Company or the Subsidiaries or the conduct
of their business is pending in accordance with the Company's and
the Subsidiaries' established procedures for handling grievances
and no claim therefor has been asserted. Except as is not
reasonably likely to have a Material Adverse Effect, (i) no
agreement restricts the Company or any of the Subsidiaries from
relocating, closing or terminating any of their operations or
facilities; and (ii) in the past three years there has not been
any work stoppage at the Company or any Subsidiary. Neither the
Company nor any of the Subsidiaries is now, and the consummation
of the transactions contemplated by this Agreement will not cause
the Company or the Subsidiaries to become bound by, obligated
under or responsible for any labor contract, collective
bargaining agreement, consent decree or conciliation agreement
relating to employment (other than plans or arrangements of a
type described in Section 3.10(a)).
(j) The Company and the Subsidiaries are in compliance
with their obligations pursuant to the Worker Adjustment and
Retraining Notification Act of 1988 ("WARN" Act). The Company
and the Subsidiaries have not effectuated a "mass layoff" (as
defined under the WARN Act) affecting in whole or in part any
site of employment, facility, operating unit or employees of the
Company or any Subsidiary.
3.11 Environmental Laws and Regulations. Except as
disclosed in Section 3.11 of the Disclosure Schedule, or except
as is not reasonably likely to result in a Material Adverse
Effect: (a) the Company and the Subsidiaries and each of the
Company Properties are and have been in compliance with all
applicable Environmental Laws with respect to the Company
Properties; (b) the Company and the Subsidiaries have obtained
all Permits required for the operation of the Company Properties
by any applicable Environmental Law; (c) neither the Company nor
any Subsidiary has, and the Company has no knowledge of any other
person who has caused any release, threatened release or disposal
of any Hazardous Material at any of the Company Properties; (d)
the Company has no knowledge that any of the Company Properties
are adversely affected by any release, threatened release or
disposal of a Hazardous Material originating or emanating from
any other property; (e) neither the Company nor any Subsidiary
has manufactured, used, generated, stored, treated, transported,
disposed of, arranged for the disposal of, released, or otherwise
managed any Hazardous Material at the Company Properties or at
any other Property; (f) neither the Company nor any Subsidiary
(i) has any liability for response or corrective action, natural
resources damage, or any other harm pursuant to any Environmental
Law involving any of the Company Properties, (ii) is subject to,
has notice or knowledge of, or is required to give any notice of
any Environmental Claim involving any of the Company Properties
or (iii) has knowledge of any condition or occurrence at any of
the Company Properties which could form the basis of an Environ
mental Claim against the Company, any Subsidiary or any of the
Company Properties; (g) the Company Properties are not subject to
any, and the Company has no knowledge of any imminent, re
striction on the ownership, occupancy, use or transferability of
the Company Properties with respect to any (i) Environmental Law
or (ii) release, threatened release or disposal of any Hazardous
Material; and (h) there are no conditions or circumstances at any
of the Company Properties that pose a risk to the environment or
the health or safety of any person; provided, however, that for
purposes of clauses (c),(d), (e),(f) and (h) of this Section 3.11
Company Properties shall be deemed to include any Property
previously owned or leased by the Company or any Subsidiary that
would qualify as a Company Property were such Property owned by
the Company or a Subsidiary as of the date hereof.
3.12 Compliance with Laws. The Company and each
Subsidiary are in compliance with all applicable Laws, Orders,
Permits and Licenses except for instances of non-compliance which
are not reasonably likely to have a Material Adverse Effect.
Except as set forth in Section 3.12 of the Disclosure Schedule,
since January 1, 1996, neither the Company nor any Subsidiary has
received any written notification or written communication from
any agency or department of foreign, federal, state, or local
government (a) asserting that the Company or any Subsidiary is
not in compliance with any of the Laws, Orders, Licenses or
Permits of any governmental agency or authority or that any such
agency or authority enforces, except such instances of non-com
pliance that are not reasonably likely to have a Material Adverse
Effect, or (b) requiring the Company or any Subsidiary to enter
into or consent to the issuance of a cease and desist order,
formal agreement, directive or commitment which restricts
materially the conduct of the Company's business or its assets,
liabilities, financial condition, results of operations, capital,
credit or reserve policies, its management, or the payment of
dividends.
3.13 Material Contracts. Each Material Contract is in
full force and effect, and is a legal, valid and binding
obligation of the Company or a Subsidiary and, to the knowledge
of the Company, each of the other parties thereto, enforceable in
accordance with its terms, except that the enforcement thereof
may be limited by (a) bankruptcy, insolvency, reorganization,
moratorium or other similar Laws now or hereafter in effect relat
ing to creditors' rights generally and (b) general principles of
equity (regardless of whether enforceability is considered in a
proceeding in equity or at law) and except as would not
reasonably be likely to have a Material Adverse Effect. No
condition exists or event has occurred which (whether with or
without notice or lapse of time or both, or the happening or
occurrence of any other event) would constitute a default by the
Company or a Subsidiary or, to the knowledge of the Company, any
other party thereto under, or result in a right in termination
of, any Material Contract, except as would not reasonably be
likely to have a Material Adverse Effect. The term "Material
Contract" shall mean any Contract which is material to the
Company and the Subsidiaries taken as a whole.
3.14 Insurance. Parent or the Company and the
Subsidiaries self-insure or maintain with third parties policies
of fire and casualty, liability and other forms of insurance in
such amounts, with such deductibles and retained amounts, and
against such risks and losses, as are reasonable for the conduct
of the business as conducted on the date hereof and for the
assets of the Company and the Subsidiaries. Parent and the
Company shall, or shall cause the Subsidiaries to, maintain in
full force and effect all such self-insurance or insurance, as
the case may be, during the period from the date of this
Agreement through the Closing Date.
3.15 Brokers and Finders. Other than Xxxxxxx, Xxxxx &
Co. and X.X. Xxxxxx and Co. (the fees and expenses of which shall
be borne solely by Parent), neither Parent nor the Company have
employed any investment banker, broker, finder, consultant or
intermediary in connection with the transactions contemplated by
this Agreement which would be entitled to any investment banking,
brokerage, finder's, financial advisory or similar fee or
commission in connection with this Agreement or the transactions
contemplated hereby.
3.16 Intercompany Loans. Neither the Company nor any
Subsidiary (i) have outstanding loans to Parent or any Affiliate
of Parent (other than the Company or any Subsidiary) whose
aggregate balance exceeds five million dollars ($5,000,000), (ii)
have loans outstanding to customers of Parent or any Affiliate of
Parent which in the aggregate exceeds twelve million dollars
($12,000,000), or (iii) have any other significant commercial
relationships with Parent or any Affiliate of Parent (other than
the Company or any Subsidiary).
1.13
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER
The Buyer represents and warrants to the Company that:
4.1 Corporate Organization and Qualification. The
Buyer is a corporation duly organized, validly existing and in
good standing under the Laws of the State of Delaware.
4.2 Authority Relative to This Agreement. The Buyer
has the requisite corporate power and authority to execute and
deliver this Agreement and to consummate the transactions contem
plated hereby. This Agreement and the consummation by Buyer of
the transactions contemplated hereby have been duly and validly
authorized by its Board of Directors and no other corporate pro
ceedings on the part of Buyer are necessary to authorize this
Agreement or to consummate the transactions contemplated hereby.
This Agreement has been duly and validly executed and delivered
by Buyer and, assuming this Agreement constitutes the valid and
binding agreement of Parent and the Company, constitutes the
valid and binding agreement of Parent and Buyer, enforceable
against it in accordance with its terms, except that the enforce
ment hereof may be limited by (a) bankruptcy, insolvency,
reorganization, moratorium or other similar Laws now or hereafter
in effect relating to creditors' rights generally and (b) general
principles of equity (regardless of whether enforceability is con
sidered in a proceeding at law or in equity).
4.3 Consents and Approvals; No Violations. Neither
the execution, delivery or performance of this Agreement by Buyer
nor the consummation by Buyer of the transactions contemplated
hereby nor compliance by Buyer with any of the provisions hereof
will (a) conflict with or result in any breach of any provision
of its certificate of incorporation, or articles of organization,
as the case may be, or respective by-laws or other equivalent
organizational documents, of Buyer or any of its subsidiaries;
(b) require any Consent of any governmental or regulatory authori
ty except for the Requisite Regulatory Approvals and Consents
which are not reasonably likely to have an adverse material
effect on Buyer or its ability to consummate the transactions
hereunder; (c) result in a Default under any of the terms,
conditions or provisions of any Contract to which Buyer or any of
the Buyer's subsidiaries or any of their respective assets may be
bound, except for such Defaults as to which requisite waivers or
Consents have been obtained or which are not reasonably likely to
have a Material Adverse Effect on Buyer or its ability to
consummate the transactions hereunder; or (d) assuming the Con
sents referred to in this Section 4.3 are duly and timely ob
tained or made, violate any Order or Law applicable to Buyer or
any of its subsidiaries or to any of their respective assets,
except for violations which are not reasonably likely to have a
Material Adverse Effect on Buyer or its ability to consummate the
transactions hereunder. As of the date hereof, Buyer knows of no
reason why the Requisite Regulatory Approvals should not be
obtained.
4.4 Financing. Buyer has or will have on the Closing
Date sufficient funds available to pay the Purchase Price for all
of the Assets being purchased under this Agreement.
4.5 Brokers and Finders. Except as set forth in
Schedule 4.5 to this Agreement, Buyer has not employed any in
vestment banker, broker, finder, or intermediary in connection
with the transactions contemplated by this Agreement which would
be entitled to any investment banking, brokerage, finder's,
financial advisory or similar fee or commission in connection
with this Agreement or the transactions contemplated hereby.
4.6 Certain Proceedings. There is no pending
proceeding that has been commenced against Buyer that challenges,
or may have the effect of preventing, delaying, making illegal,
or otherwise interfering with, Buyer's performance of the
Agreement or the consummation by Buyer of the transaction
contemplated hereby. To Buyer's knowledge, no such proceeding
has been threatened.
ARTICLE V
COVENANTS RELATING TO CONDUCT OF
BUSINESS AND OTHER AGREEMENTS
5.1 Conduct of Business of the Company. Except as set
forth in Section 5.1 of the Disclosure Schedule, during the
period from the date of this Agreement to the Closing Date (un
less Buyer shall otherwise agree in writing and except as other
wise expressly contemplated by this Agreement), the Company will
conduct and will cause the Subsidiaries to conduct their opera
tions in the ordinary course of business consistent with past
practice and shall use all reasonable efforts to preserve intact
their Assets and current business organizations, keep available
the services of their current officers and employees, maintain
their Licenses and Contracts and preserve their relationships
with customers, suppliers, creditors, reinsurers, brokers, agents
and others having business dealings with them. Without limiting
the generality of the foregoing, and except as otherwise
expressly contemplated by this Agreement, or as set forth in
Section 5.1 of the Disclosure Schedule, or as agreed to in
writing by the Buyer, the Company agrees as to itself and its
Subsidiaries that:
(a) Issuance of Securities. The Company and its
Subsidiaries shall not issue, sell, grant, dispose of, pledge or
otherwise encumber or transfer, or cause, authorize or propose
the issuance, sale, grant, disposition or pledge or other encum
brance or transfer of (i) any additional shares of capital stock
of any class, or any securities or rights convertible into,
exchangeable for, or evidencing the right to subscribe for any
shares of capital stock, or any rights, warrants, options, calls,
commitments or any other agreements of any character to purchase
or acquire any shares of capital stock or any securities or
rights convertible into, exchangeable for, or evidencing the
right to subscribe for, any shares of capital stock or (ii) any
other securities in respect of, in lieu of, or in substitution
for, shares outstanding on the date hereof.
(b) Dividends. The Company shall not, nor shall it
permit any Subsidiary to (i) split, combine, subdivide or reclas
sify any shares of its capital stock or (ii) declare, set aside
for payment or pay any dividend, or make any other actual, con
structive or deemed distribution in respect of, or redeem or
repurchase, any of its capital stock or otherwise make any pay
ments to Parent in its capacity as a stockholder, the effect of
which, in the case of this clause (ii), shall be to cause the
closing condition contained in Section 6.2(c) to be incapable of
being satisfied.
(c) Restructuring. The Company and its Subsidiaries
shall not adopt a plan of complete or partial liquidation,
dissolution, merger, consolidation, restructuring, recapitaliza
tion or other reorganization of the Company or any Subsidiary.
(d) Governing Documents. The Company and its
Subsidiaries shall not adopt any amendments to their articles of
organization or to the articles or certificates of incorporation,
as the case may be, or their by-laws or other equivalent
organizational documents, or alter through merger, liquidation,
reorganization, restructuring or in any other fashion the cor
porate structure or ownership of the Company or any Subsidiary.
(e) Indebtedness. The Company and the Subsidiaries
shall not incur any indebtedness for money borrowed other than in
the ordinary course of business consistent with past practice or
guarantee any such indebtedness of another Person (other than the
Company or any other Subsidiary), enter into any "keep well" or
other agreement to maintain any financial condition of another
Person (other than the Company or any other Subsidiary) or enter
into any arrangement having the economic effect of any of the
foregoing.
(f) No Acquisitions. Except in connection with
foreclosure, settlements in lieu of foreclosure or troubled loan
or debt restructurings and the acquisition from time to time of
receivables within the limits set forth in Section 5.1(f) of the
Disclosure Schedule, the Company and the Subsidiaries shall not
acquire or agree to acquire (i) by merging or consolidating with,
or by purchasing a substantial portion of the assets of, or by
any other manner, any business or any corporation, limited
liability company, partnership, joint venture, association or
other business organization or division thereof or (ii) any
assets that, individually or in the aggregate, are material to
the Company and the Subsidiaries.
(g) No Dispositions. Except in the ordinary course of
business consistent with past practice including the sale of
receivables within the limits set forth in Section 5.1(g) of the
Disclosure Schedule, the Company and the Subsidiaries shall not
sell, lease, license or otherwise encumber or subject to any Lien
or otherwise dispose of any of the properties or assets of the
Company or any Subsidiary.
(h) Capital Expenditures. The Company and the
Subsidiaries shall not make or agree to make any capital
expenditures relating to a single project in excess of two
hundred and fifty thousand dollars ($250,000) or in the aggregate
in excess of one million dollars ($1,000,000).
(i) Contracts. Except in the ordinary course of
business consistent with past practice, the Company and the
Subsidiaries shall not (y) enter into any Material Contract, or
(z) modify, amend or transfer in any material respect or
terminate any Material Contract to which the Company or any
Subsidiary is a party or waive, release or assign any material
rights or claims thereunder.
(j) Employee Matters. Except as required by Law or in
the ordinary course of business consistent with past practice or
in accordance with this Agreement, the Company and the
Subsidiaries shall not (i) increase the compensation or fringe
benefits of any of their respective employees, (ii) enter into
any Contract with any of their respective employees, officers or
directors regarding his or her employment, compensation or
benefits, or (iii) adopt any plan, arrangement or policy which
would become a Company Plan or amend any Company Plan to the
extent such adoption or amendment would create or increase any
liability or obligation on the part of the Company or the
Subsidiaries.
(k) Approvals. The Company and its subsidiaries shall
not take any action or enter into any agreement that could
reasonably be expected to jeopardize or delay in any material
respect the receipt of any Requisite Regulatory Approval.
(l) Accounting Policies and Procedures. The Company
and its Subsidiaries shall not make any change to their
accounting methods, principles or practices, except as may be
required by GAAP, Regulation S-X promulgated by the SEC, or
applicable statutory accounting principles.
(m) Liens. The Company shall not, and shall not
permit any of its Subsidiaries to, create, incur, suffer to exist
or assume any material Lien on any of their material assets.
(n) Claims. The Company and its Subsidiaries shall
not settle any material claim, action or proceeding or waive,
assign or release any material rights or claims except in either
case (i) in the ordinary course of business consistent with past
practice and (ii) to settle any Litigation which settlement would
not (A) impose either material restrictions on the conduct of the
business of the Company or any Subsidiary or (B) for any
individual Litigation item settled for money, exceed $250,000 in
cost to the Company or any Subsidiary. The Company and the
Subsidiaries shall not pay, discharge or satisfy any Liabilities
or obligations (absolute, accrued, asserted or unasserted,
contingent or otherwise), except in the ordinary course of
business consistent with past practice or in accordance with
their terms as in effect of the date hereof.
(o) Interest Rate and Foreign Exchange. Except in the
ordinary course of business consistent with past practice, the
Company and its Subsidiaries shall not materially restructure or
materially change its gap position, through purchases, sales,
xxxxxx, swaps, caps or collars or otherwise or the manner in
which any current xxxxxx are classified or reported.
(p) Representations and Warranties. The Company and
the Subsidiaries shall not (i) take, or agree or commit to take
any action that would make any representation and warranty of the
Company hereunder that is qualified as to materiality from being
untrue or inaccurate in any respect or any such representation or
warranty that is not so qualified from being untrue or inaccurate
in any material respect on the Closing Date (except for
representations and warranties which speak as of a particular
date or period of time, which need be accurate only as of such
date or period of time), or (ii) omit, or agree to omit, to take
any action necessary to prevent any such representation or war
ranty that is qualified as to materiality from being untrue or
inaccurate in any respect or any such representation or warranty
that is not so qualified from being untrue or inaccurate in any
material respect on the Closing Date; provided, however, that the
Company and any Subsidiary shall be permitted to take or omit to
take such action which can be cured, and in fact is cured, at or
prior to the Closing Date.
(q) Taxes. The Company and the Subsidiaries shall not
make any Tax election or settle or compromise any material Tax
liability, except in respect of ongoing matters or in the
ordinary course of business consistent with past practice;
provided, however, that the foregoing restrictions shall not
apply to any Tax matter involving a Tax Return filed by the
Company as part of any Parent consolidated group.
(r) No Agreements. The Company and the Subsidiaries
shall not authorize, recommend, propose or announce an intention
to do any of the foregoing, or agree or enter into any Contract
to do any of the foregoing.
5.2 Access to Information.
(a) Upon reasonable notice, the Company shall (and
shall cause each of the Subsidiaries to) afford to officers, em
ployees, counsel, accountants, financing sources and other autho
rized representatives of the Buyer ("Representatives"), in order
to evaluate the transactions contemplated by this Agreement,
reasonable access, during normal business hours throughout the
period prior to the Closing Date, to its officers, directors,
employees, accountants and other advisors and agents, properties,
books, records and Contracts and, during such period, it shall
(and shall cause each of the Subsidiaries to) furnish promptly to
such Representatives all financial, operating and other data and
other information concerning its business, properties and
personnel as may reasonably be requested.
(b) Buyer agrees that it will, and will cause its
Representatives to, use any information obtained pursuant to this
Section only in connection with the consummation of the transac
tions contemplated by this Agreement.
(c) The Confidentiality Agreement shall apply with re
spect to Information, as defined therein, furnished to the
Representatives pursuant to this Section.
(d) As reasonably requested by Buyer, Parent shall
cause Company to provide Buyer with (i) a list of all affiliated
groups within the meaning of Section 1504(a) of the Code of which
the Company or the Subsidiaries have been a member and of which
Parent was not the common parent corporation, (ii) a list of all
Tax allocation or Tax sharing agreements to which the Company and
the Subsidiaries is a party with any Person and any agreements
that provide for the Company and the Subsidiaries to indemnify
any Person with respect to Taxes, (iii) a list of the federal,
state and foreign income Tax Returns and other Tax Returns which
are material and that were filed by the Company and each of the
Subsidiaries during the three year period ending on the date of
the latest balance sheet included with the Financial Statements
indicating periods for which such Tax Returns were filed that are
closed under applicable statutes of limitation, and (iv) copies
of all United States federal pro forma consolidated income Tax
Return information of the Company and the Subsidiaries and all
material, state, local, and foreign income or franchise Tax
Returns of the Company and the Subsidiaries (including only the
relevant portions of Parent's Tax Returns that relate solely to
the Company and the Subsidiaries) for all Tax periods ending on
or after the date which is three years prior to the Closing Date.
(e) Prior to September 1, 1998, the Company shall
provide to Buyer a list of all material services provided to the
Company or any Subsidiary by Parent or any Affiliate of Parent
(other than the Company or any Subsidiary) or pursuant to
Contracts between Parent or any Affiliate of Parent (other than
the Company or any Subsidiary) and third parties. If requested
by Buyer, Parent shall enter into an amendment to the Separation
Agreement to provide, to the extent feasible and not otherwise
prohibited by Law, for the continuation for a reasonable period
subsequent to the Closing of any services included on such list,
any such services to be provided on commercially reasonable
terms.
5.3 Other Actions. Parent, the Company, the Buyer
and their respective subsidiaries shall not take any action that
would, or could reasonably be expected to, result in any of the
conditions to the consummation of the Transaction set forth in
Article VI not being satisfied.
5.4 Advice of Changes. Parent, the Company and
Buyer shall promptly advise the other party orally and in writing
of (a) any representation or warranty made by it contained in
this Agreement that is qualified as to materiality becoming
untrue or inaccurate in any respect or any such representation or
warranty that is not so qualified becoming untrue or inaccurate
in any material respect, (b) the failure by it to comply with or
satisfy in any material respect any covenant, condition or
agreement to be complied with or satisfied by it under this
Agreement or (c) any change or event (i) having, or which,
insofar as can reasonably be foreseen, would have, in the case of
Buyer, a material adverse effect on Buyer, and, in the case of
the Company, a Material Adverse Effect, or (ii) which has
resulted, or which, insofar as can reasonably be foreseen, would
result, in any of the conditions set forth in Article VI not
being satisfied; provided, however, that no such notification
shall affect the representations, warranties, covenants or
agreements of the parties or the conditions to the obligations of
the parties under this Agreement.
5.5 HSR Act Filing. Each party hereto shall, as
promptly as practicable, file, or cause to be filed, any required
notification and report forms under the HSR Act with the Federal
Trade Commission (the "FTC") and the Antitrust Division of the
United States Department of Justice (the "Antitrust Division") in
connection with the transactions contemplated by this Agreement,
and will use their respective commercially reasonable efforts to
respond as promptly as practicable to all inquiries received from
the FTC or the Antitrust Division for additional information or
documentation and to cause the waiting periods under the HSR Act
to terminate or expire at the earliest possible date. Each party
hereto will each furnish to the other such necessary information
and reasonable assistance as the other may reasonably request in
connection with its preparation of necessary filings or
submissions to any governmental or regulatory agency, including,
without limitation, any filings necessary under the provisions of
the HSR Act.
5.6 Consents and Reasonable Efforts.
(a) Prior to September 1, 1998, the Company will
provide Buyer with a list of each material License and shall
cooperate with Buyer to determine a list of all Requisite
Regulatory Approvals.
(b) Upon the terms and subject to the conditions set
forth in this Agreement, each of the parties hereto agrees to use
all commercially reasonable efforts to take, or cause to be
taken, all actions, and to do, or cause to be done, and to assist
and cooperate with the other party or parties in doing, all
things necessary, proper or advisable to consummate and make
effective the transactions contemplated by this Agreement as
promptly as practicable (it being recognized that time is of the
essence), including, (i) obtaining all Consents, approvals and
agreements of, and giving and making all notices and filings
with, any governmental and regulatory authorities necessary to
authorize, approve or permit the consummation of the transactions
contemplated by this Agreement, including, the Requisite
Regulatory Approvals and (ii) obtain all other approvals and
Consents to the transactions contemplated by this Agreement
including (x) the Consents of third parties required to assign or
otherwise transfer to Buyer the Contracts identified in Section
3.4(a)(v) of the Disclosure Schedule, and (y) the approvals of
third parties to Buyer's assumption of the Company's obligations
under the Contracts identified in Section 3.4(a)(vi) of the
Disclosure Schedule. In connection with and in furtherance of
the foregoing, Buyer agrees to use its commercially reasonable
efforts to file all required applications with state insurance
commissioners or departments on Form A and all comparable forms
in Canada, the U.K., Australia and New Zealand, not later than
thirty (30) days from the date hereof. Each of the Company and
Buyer shall promptly inform the other of any material
communication received by such party or any of its Affiliates
from any regulatory agency regarding any of the transactions
contemplated hereby. Each of the Company and Buyer shall advise
the other promptly of any understandings, undertakings or
agreements which such party or any of its affiliates proposes to
make or enter into with any regulatory agency in connection with
the transactions contemplated hereby. The Company shall be
entitled to notice of and to participate in all hearings of any
regulatory agency held in connection with or relating to any of
the transactions contemplated hereby.
(c) The Company and Buyer shall use all commercially
reasonable efforts to terminate the guarantees by the Company of
obligations of Subsidiaries as identified in Section 5.6(c) of
the Disclosure Schedule (the "Guarantees"), and arrange for Buyer
to assume the obligations of the Company under the Guarantees.
(d) In the event and to the extent that Buyer and the
Company are unable to obtain any required approval or Consent of
any person other than a Governmental Entity to any Contract to be
assigned to Buyer hereunder, (i) the Company shall use
commercially reasonable efforts in cooperation with Buyer to (x)
provide or cause to be provided to Buyer the benefits of any such
Contract, (y) cooperate in any arrangement, reasonable and lawful
as to the Company and Buyer, designed to provide such benefits to
Buyer and (z) enforce for the account of Buyer any rights of the
Company arising from such Contract, including the right to elect
to terminate in accordance with the terms thereof on the advice
of Buyer; (ii) Buyer shall use commercially reasonable efforts to
perform the obligations of the Company arising under such
Contract, to the extent that, by reason of the transactions
consummated pursuant to this Agreement, Buyer has control over
the resources necessary to perform such obligations; and (iii)
the consummation of the transactions contemplated hereby shall
not be deemed to have resulted in the assignment of such
Contract. If and when any such approval or Consent shall be
obtained or such Contract shall otherwise become assignable, the
Company shall promptly assign all of its rights and obligations
thereunder to Buyer without the payment of further consideration
and Buyer shall, without the payment of any further consideration
therefor, assume such rights and obligation and the Company shall
be relieved of any and all obligation or liability hereunder.
(e) (i) If, on the Closing Date, there has not been
obtained any Requisite Regulatory Approval with respect to
any Subsidiary in the absence of which the conditions
precedent to the Closing set forth in Article VI would
nevertheless be satisfied, the securities (or other
ownership interests) representing all of the Company's
ownership of such Subsidiary (the "Deferred Securities")
shall not be delivered to Buyer at Closing and, if owned by
another Subsidiary, shall be transferred, by dividend or
otherwise, from such Subsidiary to the Company immediately
prior to Closing; provided that, Buyer may, at its election,
proceed to take delivery of the Deferred Securities if such
action would not (i) subject Parent or any subsidiary or
Affiliate of Parent (other than a Subsidiary), or any
officer, director or agent of any such Person, to any
liability or penalty or (ii) be in violation of any Law or
Order applicable to or binding on Parent or any subsidiary
or Affiliate or Parent (other than a Subsidiary), or any
officer, director or agent of any such Person. From and
after the Closing, the parties hereto, at their respective
expense, shall continue to use reasonable best efforts to
obtain all Requisite Regulatory Approvals relating to the
Deferred Securities or the transfer thereof.
(ii) Until such time as any Deferred Securities have
been transferred to Buyer or a third party in accordance
with this Section 5.6(e) (each a "Deferred Transfer"), the
Subsidiaries to which any Deferred Securities relate shall
be managed and operated by the Company in the manner
hereinafter provided from the Closing and until the
respective Deferred Transfer, with all gains, income, excess
cash flow, losses, expenses, Taxes or other items generated
thereby to be for the account of such Subsidiaries and not
in any respect for the account of Parent or its other
Affiliates. From the Closing Date to the date of the
Deferred Transfer, the Company shall hold the Deferred
Securities and operate the Subsidiaries to which the
Deferred Securities relate only in the ordinary course
substantially consistent with past practice and shall use
all reasonable efforts to preserve intact such Subsidiaries'
business, keep available such Subsidiaries' officers and
employees, maintain such Subsidiaries' Licenses and
Contracts and preserve such Subsidiaries' relationships with
customers, suppliers, creditors, reinsurers, brokers, agents
and others having business dealings with them.
(iii) Unless otherwise transferred upon Buyer's
instructions in accordance with this Section 5.6(e), the
certificates for the relevant Deferred Securities, duly
endorsed in blank and with all necessary transfer stamps
affixed thereto or such other assignments, deeds, share
transfer forms or other instruments or documents are
necessary in order to effectively transfer the Deferred
Securities, will be delivered to Buyer free and clear of all
Liens, without the payment of any additional consideration
by Buyer, on the date which is no more than five business
days after all Requisite Regulatory Approvals relating to
any such Deferred Securities or the transfer thereof shall
have been obtained or on such other date as the parties may
mutually agree.
(iv) The Company shall, on the Buyer's written
instructions at any time after the Closing Date (subject to
applicable Law), or may at any time after 12 months after
the Closing Date, for Buyer's benefit, sell or dispose of
the Deferred Securities or the assets of the Subsidiaries to
which such Deferred Securities relate, on such terms and
conditions as Buyer shall reasonably determine, and remit
the proceeds of such sale to Buyer; provided that the
Company shall have no liability to any transferee of such
Deferred Securities or assets other than for negligence or
wilful misconduct.
(v) The Company shall provide Buyer with a quarterly
accounting, as well as an accounting as of the date of any
Deferred Transfer, covering all transactions entered into on
behalf of Buyer from the Closing Date or, if more recent,
the date as of which any previous accounting was measured,
to the date as of which such accounting is measured. Buyer
shall have full access, subject to applicable Law, upon
reasonable notice and during normal business hours to the
properties, officers, employees, books, papers and records
of any Subsidiary to which Deferred Securities relate.
5.7 Further Assurances. On and after the Closing
Date, (a) the parties hereto shall use all reasonable efforts to
take or cause to be taken all appropriate action and do, or cause
to be done, all things necessary or appropriate to consummate and
make effective the transactions contemplated hereby, including
the execution of any additional documents, instruments or
conveyances of any kind (not containing additional
representations and warranties) which may be reasonably necessary
or appropriate to carry out any of the provisions hereof,
including putting Buyer in full possession and operating control
of the Assets and causing Buyer to have full unencumbered
ownership of all Shares, and giving effect to the assumption of
Liabilities by Buyer as contemplated by this Agreement and (b) as
requested by Buyer, Parent and the Company shall use all
reasonable best efforts to deliver to the Buyer, originals of all
Contracts, agreements, commitments, books, records, files,
certificates, Licenses, Permits and plans of the Company and the
Subsidiaries in possession of the Company or a Subsidiary and
copies of all documents and records identified in clause (y) of
Section 2.1.
5.8 Publicity. The parties will consult with each
other and will mutually agree upon any press releases pertaining
to the purchase of assets under this Agreement and shall not
issue any such press releases prior to such consultation and
agreement, except as may be required by applicable Law or by
obligations pursuant to any listing agreement with any national
securities exchange, in which case the party proposing to issue
such press release shall use its reasonable efforts to consult in
good faith with the other party before issuing any such press re
leases.
5.9 Indemnification.
(a) Buyer agrees that all rights to indemnification
and exculpation existing in favor of the directors, officers,
employees and agents of the Company and its Subsidiaries in their
capacity as such (the "Company Indemnified Parties"), with
respect to matters occurring at or prior to the Closing Date,
under the provisions existing on the date hereof of the
applicable certificate of incorporation or by-laws or other
equivalent organizational documents shall survive and continue in
full force after Closing, and that after the Closing, Buyer shall
assume any obligations of the Company and Parent in respect
thereof as to any claim or claims asserted after the Closing
Date.
(b) Buyer shall cause to be maintained in effect for
the Section 5.9 Indemnified Parties (as defined below) for not
less than six years after the Closing Date policies of directors'
and officers' liability insurance with respect to matters
occurring at or prior to the Closing Date (including, without
limitation, the transactions contemplated by this Agreement)
providing substantially the same coverage and containing terms
and conditions which are no less advantageous, in any material
respect, to those currently maintained for the benefit of the
Company's present or former directors, officers, employees or
agents covered by such insurance policies prior to the Closing
Date (the "Section 5.9 Indemnified Parties"); provided, however,
that Buyer may, in lieu of maintaining such existing insurance as
provided above, cause comparable coverage to be provided under
any policy maintained for the benefit of Buyer or any of the
Buyer's subsidiaries, so long as the material terms thereof are
no less advantageous than such existing insurance.
(c) This Section 5.9 is intended to benefit the
Company Indemnified Parties and the Section 5.9 Indemnified Par
ties and shall be binding on all successors and assigns of Buyer.
(d) The Company shall use its reasonable efforts to
provide all required or appropriate notices under such existing
insurance with respect to potential claims of which it is aware
prior to the Closing Date.
5.10 Employees.
(a) Buyer shall offer employment on terms
substantially similar in the aggregate to those currently
provided by the Company to all of the employees of the Company
whose employment with the Company has not ended as of the Closing
Date (it being understood that individuals who are on long-term
disability as of the Closing Date shall not be considered to be
employed by the Company as of the Closing Date); provided,
however, that no such continued employment shall be construed to
limit the ability of Buyer to terminate any such employee at any
time for any reason. Each employee of the Company or the
Subsidiaries who accepts continued employment and becomes an
employee of Buyer on the Closing Date or continues to be an
employee of a Subsidiary (or, in the case of any employee offered
continued employment upon returning to work from a leave of
absence, on such date as such employee becomes an employee of
Buyer) shall be hereinafter referred to as a "Transferred
Employee." Notwithstanding anything to the contrary, employment
of the Transferred Employees shall be subject to all of Buyer's
policies and practices, including the policy of employment-at-
will. Buyer agrees to provide and pay the severance benefits and
other payments as set forth in the documents identified in
Section 3.7 (a)(2) of the Disclosure Schedule.
(b) On and after the Closing Date, Buyer shall provide
the Transferred Employees with the employee benefits generally
provided to other employees of Buyer, subject to the terms and
conditions of Buyer's plans; provided, however, that Buyer may
elect to provide vacation benefits under the Company's or any
Subsidiaries' plans (and not under Buyer's vacation policies).
(At Buyers's option, welfare plan benefits may be provided in the
manner set forth in the Separation Agreement described in Section
8.4(a).) Company and the Subsidiaries shall use their best
efforts to provide Buyer prior to the Closing Date with such
information as Buyer requires to implement the provisions of this
Section 5.10.
(c) Buyer shall grant for purposes of all of Buyer's
Employee Welfare Benefit Plans and, if applicable, Buyer's
vacation policy past service credit to all Transferred Employees
for all periods of time credited to such Transferred Employees
under the Employee Welfare Benefit Plans and vacation policy
maintained for the Transferred Employees immediately prior to the
Closing Date; provided, however, that Buyer shall not be required
to grant past service credit to Transferred Employees for any
purposes under Buyer's retiree medical plan; and provided,
further, that with respect to Buyer's short-term disability plan,
past service credit shall be granted to Transferred Employees
only for purposes of determining eligibility and not for purposes
of determining the applicable schedule.
(d) With respect to any benefits provided under any
Employee Welfare Benefit Plan, Buyer shall (i) waive all
limitations as to preexisting conditions, exclusions, and waiting
periods with respect to participation and coverage requirements
applicable to the Transferred Employees so that the Transferred
Employees may be eligible to participate in such plans after the
Closing Date, other than limitations or waiting periods that are
already in effect with respect to such employees and that have
not been satisfied as of the Closing Date under any Employee
Welfare Benefit Plan maintained for the Transferred Employees
immediately prior to the Closing Date, and (ii) provide each
Transferred Employee with credit for any co-payments and
deductibles paid prior to the Closing Date in satisfying any
applicable deductible or out-of-pocket requirements under any
Employee Welfare Benefit Plans that the Transferred Employees are
eligible to participate in after the Closing Date; provided,
however, that (i) and (ii) above shall apply only to the extent
that the Company, Parent and the Subsidiaries provide Buyer with
the information Buyer requires to administer such provisions.
(e) Buyer shall assume all liability for, and any
obligations under, to the extent any such liability or
obligations pertain to Company Employees, any retiree medical,
dental and life insurance plans maintained for any of the Company
Employees immediately prior to the Closing Date.
(f) As soon as practicable after the Closing Date,
Buyer shall assume and agrees to be the plan sponsor (as the term
is defined in ERISA Section 3(16)(B)) of the Avco Financial
Services, Inc. Profit Sharing Retirement Plan (the "Company's
Profit Sharing Plan"), and accordingly, shall assume
responsibility and authority over the Company's Profit Sharing
Plan and the related trust, which is intended to qualify under
Section 401(a) and Section 501(a) of the Code. Upon such
assumption, Buyer shall assume all of the Company's rights and
obligations and shall indemnify Company from any and all
liabilities with respect to the Company's Profit Sharing Plan and
the Company shall be relieved of all such rights and obligations
including liabilities regarding such accrued benefits under the
Company's Profit Sharing Plan.
(g) Buyer shall advise the Transferred Employees, in a
written communication issued to such employees within sixty days
following the date of this Agreement, of Buyer's undertakings set
forth in this Section 5.10. Any general communication prepared
by the Company, Parent or any Subsidiary specifically referencing
any action to be taken by Buyer relating to the subjects covered
in Section 5.10 shall be approved in advance by Buyer, to the
extent of such specific references.
(h) Transferred Employees shall receive credit for
their service with the Company and the Subsidiaries for
eligibility and vesting purposes only under the Associates
Savings and Profit-Sharing Plan; provided, however, that such
past service credit shall be granted under the Associates Savings
and Profit-Sharing Plan only to the extent that such service was
recognized and credited to such Transferred Employees under the
Company's Profit Sharing Plan. Transferred Employees shall not
receive credit for their service with the Company and the
Subsidiaries for any purposes under Buyer's tax-qualified defined
benefit pension plan. Parent shall take the action necessary to
vest, to the extent necessary, Transferred Employees who
participate in the Textron Savings Plan in their accrued benefits
under such plan as of the Closing Date.
(i) For a period of two (2) years from and after the
Closing Date, neither Parent nor the Company nor any of the
Parent's subsidiaries shall, without Buyer's consent, solicit or
employ the Transferred Employees.
(j) Nothing contained in this Agreement, whether
expressed or implied, is intended to confer upon any employee of
the Company or the Subsidiaries or any Transferred Employee or
their legal representatives, any rights or remedies, including,
without limitation, any rights of employment for any period of
any nature or kind whatsoever under or by reason of this
Agreement.
(k) Except for claims or demands relating to the
Textron Savings Plan and any matter subject to indemnification
pursuant to Section 8.1(b)(iii), after Closing, Buyer shall
assume, discharge, pay and be solely liable for and shall
indemnify, defend and hold harmless the Company, Parent and any
of their present and former officers, directors, employees,
agents, assigns and representatives from and against all Losses
arising directly or indirectly from any claims or demands by any
person employed by the Company or the Subsidiaries on or prior to
the Closing Date ("Company Employee") or their family members
arising out of the employment by Company or the Subsidiaries of
the Company Employees including any claims relating to any
severance arrangements and any Employee Welfare Benefit Plans.
5.11 Tax Allocation Agreement. Parent and Buyer have
executed as of the date hereof the Tax Allocation Agreement
relating to the allocation of the purchase price, the payment of
taxes, elections under Section 338 of the Code, and related
matters.
5.12 Intercompany Transactions. Intercompany
transactions shall be treated in accordance with the Separation
Agreement. At or prior to the Closing, Parent and the Company
will obtain the release of all Liens on assets of the Company or
any Subsidiary securing, and all guarantees by the Company or any
Subsidiary of, any indebtedness of Parent or any of its
Affiliates (other than the Company and the Subsidiaries). Except
as otherwise provided in the Separation Agreement, Parent and any
Affiliate of Parent (other than the Company or a Subsidiary) will
(a) cancel any indebtedness for money borrowed by the Company or
any Subsidiary from Parent or any Affiliate of Parent (other than
the Company or any Subsidiary) and (b) repay any indebtedness for
money borrowed by Parent or any Affiliate of Parent (other than
the Company or any Subsidiary) from the Company or any
Subsidiary.
5.13 No Negotiation. Neither the Company, any
Subsidiary nor Parent will, directly or indirectly, through any
director, employee, representative, affiliate or agent of the
Company, any Subsidiary or Parent, or otherwise (i) solicit,
initiate, encourage or assist in the submission of any inquiries,
proposals or offers from any Person or group relating to any
acquisition or purchase of any assets of, or any equity interest
in, the Company or any Subsidiary or any form of recapitalization
transaction, merger, consolidation, business combination, spin-
off, liquidation or similar transaction involving, directly or
indirectly, the Company or any Subsidiary (each an "Acquisition
Proposal"), (ii) participate in any discussions or negotiations
regarding any Acquisition Proposal or furnish to any Person any
information concerning the Company, any Subsidiary or any
Acquisition Proposal or (iii) otherwise cooperate in any way
with, or assist or participate in, facilitate or encourage, any
effort or attempt by any other Person to make or enter into an
Acquisition Proposal. If the Company, any Subsidiary or the
Parent receives any inquiry, proposal or offer to enter into any
transaction of any type referred to above, such party agrees to
inform the Buyer promptly of the terms thereof and the identity
of the party making such inquiry, proposal or offer.
5.14 Non-Disclosure. Each of Parent and the Company
agrees that, at all times from and after the date hereof, except
as required by law or by the order of any court or government
agency, it shall keep secret and retain in strictest confidence
and shall not, except with the express prior written consent of
Buyer, directly or indirectly disclose, communicate or divulge to
any Person or use for the benefit of any Person, any Proprietary
information (meaning, all information or data with respect to the
conduct or details of the businesses of the Company or any
Subsidiary as of the date hereof and the Closing Date, including,
without limitation, methods of operation, customers and customer
lists, details of contracts with customers, consultants,
suppliers or employees, products, proposed products, former
products, proposed, pending or completed acquisitions of any
company, divisions, product line or other business unit, prices
and pricing policies, fees, costs, plans, designs, technology,
inventions, trade secrets, know-how, software, marketing methods,
policies, plans, personnel, suppliers, competitors, markets or
other specialized information or proprietary matters of the
business of the Company or the Subsidiaries, as of the date
hereof and the Closing Date). The restrictions contained in the
preceding sentence shall not apply to any Proprietary Information
that (i) is or becomes a matter of public knowledge other than
through disclosure by Parent or the Company or (ii) is or becomes
known to Parent or the Company from another source which is under
no known obligation of confidentiality to Buyer.
5.15 Management of Risk Regarding Currency
Translations. At the request of Buyer, the Company or a
Subsidiary shall enter into transactions or arrangements to
manage the risk of foreign currency translations for periods
anticipated to be prior to Closing, provided that any such
transactions or arrangements are undertaken at the cost and risk
of, and for the benefit of, Buyer and Buyer shall indemnify,
defend and hold the Company and any Subsidiary harmless from any
liability associated therewith and the Company will make
available to Buyer any benefit associated therewith.
ARTICLE VI
CONDITIONS TO CONSUMMATION OF THE TRANSACTION
6.1 Conditions to Each Party's Obligations to Complete
the Transaction. The respective obligations of each party to
complete the Transaction are subject to the satisfaction at or
prior to the Closing Date of the following conditions:
(a) Injunction. There shall not be in effect any Law
or Order of a court or governmental or regulatory agency of
competent jurisdiction directing that the transactions
contemplated herein not be consummated as provided herein; provid
ed, however, that, subject to the terms and provisions herein
provided, prior to invoking this condition each party shall use
all reasonable efforts to have any such Order vacated.
(b) Governmental Filings and Consents. All Requisite
Regulatory Approvals shall have been obtained and be in effect as
of the Closing Date with respect to (i) (x) Finance Subsidiaries
incorporated in Canada, the United Kingdom and Australia, (y)
Finance Subsidiaries incorporated in the United States (excluding
the territory of Puerto Rico) which, as of December 31, 1997
accounted for at least 95% of the consolidated receivables of all
Finance Subsidiaries in the United States and (z) Finance
Subsidiaries which, as of December 31, 1997 accounted for at
least 90% of the consolidated receivables of all Finance
Subsidiaries, and (ii) (x) Insurance Subsidiaries incorporated in
Canada, the United Kingdom and Australia, (y) Insurance
Subsidiaries incorporated in the United States which accounted
for at least 95% of the revenue of all Insurance Subsidiaries in
the United States for the year ending December 31, 1997, and (z)
and Insurance Subsidiaries which accounted for at least 90% of
the revenues of all Insurance Subsidiaries for the year ending
December 31, 1997, and the waiting periods under the HSR Act
shall have expired or been terminated; provided, however, that in
the event that either all conditions to Closing set forth in this
Article VI have been satisfied or waived and the Requisite
Regulatory Approvals relating to operations of the Company or its
Subsidiaries in the Commonwealth of Puerto Rico (the "Puerto
Rican Regulatory Approvals") have not been obtained or all
conditions to Closing set forth in this Article VI have been
satisfied or waived other than the Puerto Rican Regulatory
Approvals, then at the election of Parent, either the Puerto
Rican Regulatory Approvals shall be a condition to Closing under
this Article VI or the Purchase Price shall be reduced by
$150,000,000 and Buyer and Seller shall be deemed to have waived
the Puerto Rican Regulatory Approvals.
(c) Third Party Consents. Consents of third parties
under the Contracts identified in Section 3.4(a)(v) of the
Disclosure Schedule have been obtained except where the failure
to obtain the Consents either individually or in the aggregate
shall not have a material adverse effect on the ability of the
Buyer to conduct the Company's business (taken as a whole) as
conducted by the Company as of the date hereof.
6.2 Additional Conditions to the Obligation of Buyer.
The obligation of Buyer to complete the Transaction is subject to
the satisfaction at or prior to the Closing Date of the following
conditions, any and all of which may be waived in whole or in
part by Buyer to the extent permitted by applicable law:
(a) Representations and Warranties. For purposes of
this Section 6.2(a), the accuracy of the representations and
warranties of the Company set forth in Article III of this
Agreement shall be assessed as of the date of this Agreement and
as of the Closing Date with the same effect as though all such
representations and warranties had been made on and as of the
Closing Date; provided, however, that representations and
warranties which are confined to a specified date or period of
time shall speak only as of such date or period of time. All
representations and warranties set forth in Article III hereof
which are qualified by reference to materiality or a Material
Adverse Effect shall be true and correct and all other representa
tions and warranties set forth in Article III of this Agreement
shall be true and correct in all material respects.
(b) Performance. Parent and the Company shall have
performed in all material respects all of their respective
covenants and agreements under this Agreement theretofore to be
performed.
(c) Adjusted Stockholder's Equity. Adjusted
Stockholder's Equity, as defined below, shall be greater than one
billion two hundred twenty-seven million four hundred thousand
dollars ($1,227,400,000). (If Adjusted Stockholder's Equity is
less than $1,227,400,000, this condition can be satisfied by a
contribution of cash to the capital of the Company on or before
Closing equal to the difference between Adjusted Stockholder's
Equity and $1,227,400,000.) For purposes of this Section, the
term "Adjusted Stockholder's Equity" shall mean stockholder's
equity (i.e., total consolidated assets, less total consolidated
liabilities) of the Company as set forth in the Statement
computed (i) without regard to (A) any securities valuation
adjustment and any currency translation adjustment and (B) the
Parent Series D Cumulative Preferred Stock and the deferred Tax
liability attributable thereto, (ii) without including any of the
assets referred to in clauses (w), (x) and (y) of Section 2.1 to
the extent such assets were reflected on the Interim Statements
(iii) by adding an amount equal to any accruals or payments made
after June 30, 1998 and prior to the Closing Date pursuant to the
agreements and programs identified as item 2 of Section 3.7(a) of
the Disclosure Schedule; and (iv) otherwise taking into account
Sections 19(b) and 19(c)of the Tax Allocation Agreement.
(d) Separation Agreement. Each of the Parent and the
Company shall have performed its respective obligations under the
Separation Agreement to be performed by it on or before the
Closing.
(e) Officer's Certificates. Buyer shall have received
on the Closing Date certificates dated the Closing Date and
executed by the Chief Executive Officer or the Chief Financial
Officer of each of Parent and the Company certifying to the ful
fillment of the conditions specified in Sections 6.2(a),(b),(c)
and (d) hereof.
6.3 Additional Conditions to the Obligation of the
Company. The obligation of Parent and the Company to complete
the Transaction is subject to the satisfaction at or prior to the
Closing Date of the following conditions, any and all of which
may be waived in whole or in part by the Company to the extent
permitted by applicable law:
(a) Representations and Warranties. For purposes of
this Section 6.3(a), the accuracy of the representations and
warranties set forth in Article IV of this Agreement shall be
assessed as of the date of this Agreement and as of the Closing
Date with the same effect as though all such representations and
warranties had been made on and as of the Closing Date; provided,
however, that representations and warranties which are confined
to a specified date or period of time shall speak only as of such
date or period of time. All representations and warranties set
forth in Article IV of this Agreement which are qualified by
reference to materiality shall be true and correct and all other
representations and warranties set forth in Article IV of this
Agreement shall be true and correct in all material respects.
(b) Performance. Buyer shall have performed in all
material respects its respective covenants and agreements under
this Agreement theretofore to be performed.
(c) Assumed Obligations. Buyer shall have assumed the
obligations of the Company under the Contracts identified in
Section 3.4(a)(vi) of the Disclosure Schedule in a form
reasonably satisfactory to the Company, the Buyer and the other
parties to said Contracts.
(d) Officer's Certificate. The Company shall have
received on the Closing Date a certificate dated the Closing Date
and executed by the Chief Executive Officer or the Chief
Financial Officer of the Buyer certifying to the fulfillment of
the conditions specified in Sections 6.3(a), (b) and (c) hereof.
ARTICLE VII
TERMINATION
7.1 Termination by Mutual Consent. This Agreement may
be terminated and the Transaction may be abandoned at any time
prior to the Closing Date, by the mutual written consent of the
Company and the Buyer.
7.2 Termination by Any Party. This Agreement may be
terminated and the Transaction may be abandoned by the Company or
the Buyer if (i) any court of competent jurisdiction in the
United States or some other governmental body or regulatory
authority shall have issued an Order permanently restraining, en
joining or otherwise prohibiting the Transaction and such Order
shall have become final and nonappealable; provided, however,
that the party seeking to terminate this Agreement pursuant to
this clause (i) shall have used all commercially reasonable
efforts to remove such Order, or (ii) the Transaction shall not
have been consummated by May 31, 1999; provided, however, that
the right to terminate this Agreement pursuant to this Section
7.2(ii) shall not be available to any party whose failure to
fulfill any of its material obligations under this Agreement
results in the failure of the Transaction to occur on or prior to
such date.
7.3 Termination by Buyer. This Agreement may be termi
nated by Buyer and the Transaction may be abandoned prior to the
Closing Date, (i) in the event of a material breach by Parent or
by the Company of any covenant or agreement contained in this
Agreement which, by its nature, cannot be cured prior to the
Closing or which has not been cured within 30 days after the
giving of written notice to Parent or the Company of such breach,
(ii) in the event of an inaccuracy of any representation or
warranty of Parent or the Company contained in this Agreement
which, by its nature, cannot be cured prior to the Closing or
which has not been cured within 30 days after the giving of
written notice to Parent or the Company of such inaccuracy and
which inaccuracy, in either case, would cause the conditions set
forth in Section 6.2(a) not to be satisfied, or (iii) in the
event that any of the conditions precedent to the obligations of
Buyer to consummate the Transaction cannot be satisfied or
fulfilled by the date set forth in Section 7.2(ii) of this Agree
ment, provided that the failure of such conditions to be so
satisfied shall not be as a result of Buyer's failure to fulfill
its material obligations under this Agreement.
7.4 Termination by Parent and the Company. This Agree
ment may be terminated by Parent and the Company and the
Transaction may be abandoned at any time prior to the Closing
Date, (i) in the event of a material breach by Buyer of any
covenant or agreement contained in this Agreement which, by its
nature, cannot be cured prior to the Closing or which has not
been cured within 30 days after the giving of written notice to
Buyer of such breach, (ii) in the event of an inaccuracy of any
representation or warranty of Buyer contained in this Agreement
which, by its nature, cannot be cured prior to the Closing or
which has not been cured within 30 days after the giving of
written notice to the Buyer of such inaccuracy and which inac
curacy, in either case, would cause the conditions set forth in
Section 6.3(a) not to be satisfied, or (iii) in the event that
any of the conditions precedent to the obligations of Parent and
the Company to consummate the Transaction cannot be satisfied or
fulfilled by the date set forth in Section 7.2(ii) of this
Agreement, provided that the failure of such conditions to be so
satisfied shall not be as a result of Parent's or the Company's
failure to fulfill its material obligations under this Agreement.
7.5 Effect of Termination. In the event of termi
nation of this Agreement and the abandonment of the Transaction
pursuant to this Article VII, written notice thereof shall as
promptly as practicable be given to the other party to this Agree
ment and this Agreement shall terminate and the transactions
contemplated hereby shall be abandoned, without further action by
any of the parties hereto. If this Agreement is terminated as
provided herein, this Agreement shall forthwith become void and
have no effect except that (i) the obligations of the Buyer set
forth in the Confidentiality Agreement shall remain in effect,
(ii) no party shall be relieved from any liabilities or damages
arising out of a willful breach of any provision of this
Agreement, and (iii) the respective obligations of the parties
set forth in Sections 5.15 and 9.2 shall remain in effect.
ARTICLE VIII
OBLIGATIONS AFTER CLOSING
8.1 Survival of Representations and Covenants;
Indemnification.
(a) ****[This section (approximately twenty-one
lines) has been omitted pursuant to a confidential treatment
request. The omitted portion has been filed separately with
the Commission.]****
(b) Agreement to Indemnify.
****[This section (approximately sixty-two
lines) has been omitted pursuant to a confidential treatment
request. The omitted portion has been filed separately with
the Commission.]****
(c) Limitation of Liability.
****[This section (approximately thirty
lines) has been omitted pursuant to a confidential treatment
request. The omitted portion has been filed separately with
the Commission.]****
(d) Notice of Claim.
If the Indemnified Party shall become aware of any claim,
proceeding or other matter (a "Claim") which may give rise to a
Loss that will be taken into account for purposes of calculating
whether the Indemnifying Party's indemnification obligation
arises pursuant to Section 8.1(c)(i) above, the Indemnified Party
shall promptly give notice thereof to the Indemnifying Party.
Such notice shall specify whether the Claim arises as a result of
a Claim by a Person against the Indemnified Party (a "Third Party
Claim") or whether the Claim does not so arise (a "Direct
Claim"), and shall also specify with reasonable particularity (to
the extent that the information is available) the factual basis
for the Claim and the amount of the Claim, if known.
If, through the fault of the Indemnified Party, the
Indemnifying Party does not receive notice of any Claim in time
to contest effectively the determination of any Loss susceptible
of being contested, the Indemnifying Party shall be entitled to
set off against the amount claimed by the Indemnified Party (to
be applied to the Deductible set forth in Section 8.1(c) or, if
the Deductible has been satisfied to be paid to the Indemnified
Party) the amount of any Losses incurred by the Indemnifying
Party resulting from the Indemnified Party's failure to give such
notice on a timely basis.
(e) Direct Claims.
With respect to any Direct Claim, following receipt of
notice from the Indemnified Party of the Claim, the Indemnifying
Party shall have 60 days to make such investigation of the Claim
as is considered necessary or desirable. For the purpose of such
investigation, the Indemnified Party shall make available to the
Indemnifying Party the information relied upon by the Indemnified
Party to substantiate the Claim, together with all such other
information as the Indemnifying Party may reasonably request. If
both parties agree at or prior to the expiration of such 60-day
period (or any mutually agreed upon extension thereof) to the
validity and amount of such Claim, they shall agree to apply it
to the Deductible, or if the Deductible has been satisfied, the
Indemnifying Party shall immediately pay to the Indemnified Party
the full agreed upon amount of the Claim, failing which the
matter shall be referred to binding arbitration in such manner as
the parties may agree or shall be determined by a court of
competent jurisdiction in the State of New York.
(f) Third Party Claims.
(i) With respect to any Third Party Claims, the
Indemnifying Party shall have the right, at its expense and
at its election, to assume control of the negotiation,
settlement and defense of the Claim through counsel of its
choice. In such event, the Indemnifying Party shall
reimburse the Indemnified Party for all the Indemnified
Party's reasonable out-of-pocket expenses as a result of
such assumption. The election of the Indemnifying Party to
assume such control shall be made within 60 days of receipt
of notice of the Third Party Claim, failing which the
Indemnifying Party shall be deemed to have elected not to do
so. If the Indemnifying Party elects to assume such
control, the Indemnified Party shall have the right to be
informed and consulted with respect to the negotiation,
settlement or defenses of such Third Party Claim and to
retain counsel to act on its behalf, but the fees and
disbursements of such counsel shall be paid by the
Indemnified Party unless the Indemnifying Party consents to
the retention of such counsel or unless the named parties to
any action or proceeding include both the Indemnifying Party
and the Indemnified Party and a representation of both the
Indemnifying Party and the Indemnified Party by the same
counsel would be inappropriate due to the actual or
potential differing interests between them (such as the
availability of different defenses). If the Indemnifying
Party, having elected to assume such control, thereafter
fails to defend the Third Party Claim within a reasonable
time, the Indemnified Party shall be entitled to assume such
control, and the Indemnifying Party shall be bound by the
results obtained by the Indemnified Party with respect to
the Third Party Claim. If any Third Party Claim is of a
nature such that the Indemnified party is required by
applicable Law to make a payment to any Person (a "Third
Party") with respect to the Third Party Claim before the
completion of settlement negotiations or related legal
proceedings, the Indemnified Party may make such payment and
the Indemnifying Party shall, subject to Section 8.1(b) and
Section 8.1(c) above, forthwith after demand by the
Indemnified Party, reimburse the Indemnified Party for such
payment. If the amount of any liability of the Indemnified
Party under the Third Party Claim in respect of which such
payment was made, as finally determined, is less than the
amount which was paid by the Indemnifying Party to the
Indemnified Party, the Indemnified party shall, promptly
after receipt of the difference from the Third Party, pay
the amount of such difference to the Indemnifying Party.
(ii) If the Indemnifying Party fails to assume control
of the defense of any Third Party Claim, the Indemnified
Party shall have the exclusive right to consent, settle or
pay the amount claimed. Whether or not the Indemnifying
Party assumes control of the negotiation, settlement or
defenses of any Third Party Claim, the Indemnifying Party
shall not settle any Third Party Claim without the written
consent of the Indemnified Party, which consent shall not be
unreasonably withheld or delayed; but then the liability of
the Indemnifying Party shall be limited to the proposed
settlement amount if any such consent is not obtained for
any reason.
(iii) The Indemnified Party and the Indemnifying
Party shall cooperate fully with each other with respect to
Third Party Claims, and, regardless of which party has
control thereof as provided for herein, shall keep each
other fully advised with respect thereto (including
supplying copies of all relevant documentation promptly as
it becomes available).
8.2 Guarantees. If any Guarantee shall be in effect
after Closing, Buyer shall pay or cause to be paid all debt
covered by the Guarantee as the same shall become due and
payable, and shall indemnify and hold the Company harmless with
respect to any payments made by Company pursuant to any Guarantee
provided that such payments have been made in good faith.
8.3 Name Changes.
(a) No later than three months after the Closing Date,
Buyer will change the names of the following corporations and
cease using the names Textron and TFC in any manner: Textron
Finance Company Limited (U.K.), Textron Finance Compagnie, S.A.
(France), Textron Finance Compagnie, SAS, TFC Location S.A.
(France), Textron Financial Corporation (Canada), Textron Finance
Corporation (Australia) Pty. Ltd., and Textron Australia Deposits
Pty. Ltd.
(b) No later than two business days after the Closing
Date the Company will change its name.
8.4 Other Matters.
(a) Parent and Buyer have executed as of the date
hereof, a Separation Agreement covering the treatment of services
provided to the Company and certain of the Subsidiaries by
Parent, and Contracts between Parent and third parties under
which goods or services are provided to the Company and certain
of the Subsidiaries, and other intercompany matters.
(b) Buyer shall indemnify, defend, and hold harmless
the Company and Parent and their present and former officers,
directors, employees, agents, assigns and representatives
following the Closing from all Losses resulting from the Assets
and Liabilities transferred to Buyer pursuant to this Agreement.
8.5 Non-Competition. Except for any Subsidiaries
retained by the Company because a Requisite Regulatory Approval
was not obtained prior to the Closing Date, Parent agrees that
for a period of two (2) years from the Closing Date hereof it
will not and it will cause its subsidiaries not to (a) engage in
consumer finance lending which has as its primary purpose direct
general consumer lending, except as otherwise contemplated by
this Agreement or (b) specifically target customers of the
Company or its Subsidiaries as of the Closing Date for financial
services or insurance products. Except for clause (b) in the
immediately preceding sentence, nothing herein shall be
interpreted, however, to restrict Parent or its subsidiaries from
engaging in consumer lending and leasing (secured or unsecured)
which is related to the purchase, financing or refinancing of (i)
timeshare intervals, whether fee simple, fractional, right to
use, membership, or any similar resort industry description; (ii)
memberships of any kind or classification in golf courses,
country clubs, boating clubs, or yacht clubs, or other clubs,
resorts or any organizations related to any of the foregoing;
(iii) aircraft, aircraft engines, avionics or flight related
equipment; (iv) products manufactured, distributed or sold by
Parent or any entity which formerly or may in the future be a
commercial finance customer of Parent or its subsidiaries,
whether or not such products are also financed by Parent or its
subsidiaries under a flooring or wholesale arrangement, (v)
residential real estate, improved or unimproved; or (vi) premiums
for any insurance products. It is expressly understood that
Parent and its subsidiaries are in the global commercial finance
and insurance business, and in the business of purchasing and/or
servicing consumer notes, invoices, accounts, mortgages, security
instruments and other paper, and nothing herein shall be
interpreted as restricting Parent's or its subsidiaries' right to
continue in those businesses. It is also expressly understood
that Parent and its subsidiaries routinely accept the pledge of
consumer notes, invoices, accounts, mortgages, security
instruments and other paper in connection with global commercial
finance transactions and nothing herein shall be interpreted as
restricting Parent's or its subsidiaries' continued right to
accept such security.
ARTICLE IX
MISCELLANEOUS AND GENERAL
9.1 Interpretation.
(a) When a reference is made in this Agreement to a
section or article, such reference shall be to a section or
article of this Agreement unless otherwise clearly indicated to
the contrary.
(b) Whenever the words "include", "includes" or
"including" are used in this Agreement they shall be deemed to be
followed by the words "without limitation."
(c) The words "hereof", "hereby" "herein" and
"herewith" and words of similar import shall, unless otherwise
stated, be construed to refer to this Agreement as a whole and
not to any particular provision of this Agreement, and article,
section, paragraph, exhibit and schedule references are to the
articles, sections, paragraphs, exhibits and schedules of this
Agreement unless otherwise specified.
(d) The plural of any defined term shall have a
meaning correlative to such defined term, and words denoting any
gender shall include all genders. Where a word or phrase is
defined herein, each of its other grammatical forms shall have a
corresponding meaning.
(e) A reference to any party to this Agreement or any
other agreement or document shall include such party's permitted
successors and permitted assigns.
(f) A reference to any legislation or to any provision
of any legislation shall include any modification or re-enactment
thereof, any legislative provision substituted therefor and all
regulations and statutory instruments issued thereunder or
pursuant thereto.
(g) The parties have participated jointly in the
negotiation and drafting of this Agreement. In the event an
ambiguity or question of intent or interpretation arises, this
Agreement shall be construed as if drafted jointly by the
parties, and no presumption or burden of proof shall arise
favoring or disfavoring any party by virtue of the authorship of
any provisions of this Agreement.
9.2 Payment of Expenses and Other Payments. Whether
or not the Transaction shall be consummated and except as
otherwise provided in this Agreement, each party hereto shall pay
its own expenses incident to preparing for, entering into and
carrying out this Agreement and the consummation of the transac
tions contemplated hereby; provided, however, that if the
transaction is consummated, all expenses of the Company and the
Subsidiaries shall be paid by Parent.
9.3 Amendment. This Agreement may be amended only by
a written agreement signed by all parties to this Agreement.
9.4 Waiver and Extension. At any time prior to the
Closing Date, the parties may (a) extend the time for the
performance of any of the obligations or other acts of the other
parties hereto, (b) waive any inaccuracies in the representations
and warranties contained herein or in any document delivered
pursuant hereto or (c) except to the extent prohibited by Law,
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
an instrument in writing signed on behalf of such party. The
failure of any party at any time or times to require performance
of any provision hereof shall in no manner affect the right of
such party at a later time to enforce the same or any other provi
sion of this Agreement. No waiver of any condition or of the
breach of any term contained in this Agreement in one or more
instances shall be deemed to be or construed as a further or
continuing waiver or such condition or breach or a waiver of any
condition or of the breach of any other term of this Agreement.
9.5 Counterparts. For the convenience of the parties
hereto, this Agreement may be executed in any number of counter
parts, each such counterpart being deemed to be an original
instrument, and all such counterparts shall together constitute
the same agreement.
9.6 Governing Law. This Agreement shall be governed
by, and construed in accordance with, the Laws of the State of
New York without giving effect to the principles of conflicts of
law thereof.
9.7 Notices. Any notice, request, instruction or
other document to be given hereunder by any party to another
party shall be in writing and shall be deemed given when
delivered personally, upon receipt of a transmission confirmation
(with a confirming copy sent by overnight courier) if sent by
facsimile or like transmission, and on the next business day when
sent by Federal Express, United Parcel Service, Express Mail, or
other reputable overnight courier, as follows:
(a) If to the Company, to
Avco Financial Services, Inc.
c/o Textron Inc.
00 Xxxxxxxxxxx Xxxxxx
Xxxxxxxxxx, Xxxxx Xxxxxx 00000
Attention: Xxxxxxx X. Key
(000) 000-0000 (telephone)
(000) 000-0000 (facsimile)
with a copy to:
Textron Inc.
00 Xxxxxxxxxxx Xxxxxx
Xxxxxxxxxx, Xxxxx Xxxxxx 00000
Attention: Xxxxx X. Xxxxxxx
(000) 000-0000 (telephone)
(000) 000-0000 (facsimile)
Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
Xxx Xxxxxx Xxxxxx
Xxxxxx, XX 00000
Attention: Xxxxxxxx X. Xxxxx,
Esq.
(000) 000-0000 (telephone)
(000) 000-0000 (facsimile)
(b) If to Parent, to
Textron Inc.
00 Xxxxxxxxxxx Xxxxxx
Xxxxxxxxxx, Xxxxx Xxxxxx 00000
Attention: Xxxxxxx X. Key
(000) 000-0000 (telephone)
(000) 000-0000 (facsimile)
with a copy to:
Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
Xxx Xxxxxx Xxxxxx
Xxxxxx, XX 00000
Attention: Xxxxxxxx X. Xxxxx,
Esq.
(000) 000-0000 (telephone)
(000) 000-0000 (facsimile)
(c) If to Buyer, to
000 Xxxx Xxxxxxxxx Xxxxxxx
Xxxxxx, Xxxxx 00000
Attention: President
(000) 000-0000 (telephone)
(000) 000-0000 (facsimile)
with a copy to:
000 Xxxx Xxxxxxxxx Xxxxxxx
Xxxxxx, Xxxxx 00000
Attention: General Counsel
(000) 000-0000 (telephone)
(000) 000-0000 (facsimile)
or to such other persons or addresses as may be designated in
writing by the party to receive such notice. Nothing in this
section shall be deemed to constitute consent to the manner and
address for service of process in connection with any legal
proceeding (including litigation arising out of or in connection
with this Agreement), which service shall be effected as required
by applicable Law.
9.8 Entire Agreement; Assignment. This Agreement and
the Confidentiality Agreement (a) constitute the entire agreement
among the parties with respect to the subject matter hereof and
supersede all other prior agreements and understandings, both
written and oral, among the parties or any of them with respect
to the subject matter hereof and (b) shall not be assigned by
operation of law or otherwise without the prior written consent
of the other party hereto; provided, however, that (i) the Buyer
may assign its rights, in whole or in part, to one or more of its
Affiliates and such Affiliate or Affiliates may assume Buyer's
obligations hereunder and (ii) the capital stock of any
Subsidiary may be purchased by any subsidiary of Buyer, provided
that in the case of each of clauses (i) and (ii) Buyer shall
remain jointly and severally liable hereunder with such
Affiliate, and provided further that no such assignment or
purchase by any subsidiary of Buyer may be made, if the effect
thereof would be to (x) result in an economic cost to Parent or
its Affiliates, (y) create any additional financial risk to the
Company or Parent under any document relating to indebtedness for
borrowed money or any Guarantee, or (z) delay or adversely affect
the satisfaction of the conditions set forth in Article VI.
9.9 Parties in Interest. This Agreement shall be bind
ing upon and inure solely to the benefit of each party hereto and
their respective successors and assigns and to the benefit of any
person or entity which is indemnified under this Agreement.
Nothing in this Agreement, express or implied, is intended to or
shall confer upon any other person any rights, benefits or
remedies of any nature whatsoever under or by reason of this
Agreement.
9.10 Validity. The invalidity or unenforceability of
any provision of this Agreement shall not affect the validity or
enforceability of any other provisions of this Agreement, each of
which shall remain in full force and effect.
9.11 Captions. The article, section and paragraph
captions herein are for convenience of reference only, do not
constitute part of this Agreement and shall not be deemed to
limit or otherwise affect any of the provisions hereof.
9.12 Bulk Transfer Laws. The Buyer acknowledges that
the Company will not comply with the provisions of any bulk
transfer laws of any jurisdiction in connection with the
transactions contemplated by the Agreement.
9.13 Transfer, Sales and Stamp Taxes. All transfer,
sales and stamp taxes and similar charges, fees and assessments
incurred in connection with this Agreement and the transactions
contemplated hereby shall be borne one-half by the Company and
one-half by Buyer. The Buyer shall prepare and file (or cause to
be filed), to the extent required by, or permissible under,
applicable Law, all necessary Tax Returns and other documentation
with respect to all such transfer, sales and stamp taxes and
similar charges, fees and assessments, and, if required by
applicable Law, the Company shall join in the execution of any
such Tax Returns and other documentation as reasonably requested
by Buyer.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their respective duly authorized
officers as of the date first above written.
TEXTRON INC.
By: /s/ Xxxxxxx X. Key
Name: Xxxxxxx X. Key
Title: Executive Vice President and
Chief Financial Officer
AVCO FINANCIAL SERVICES, INC.
By: /s/ Xxxxxxx X. Key
Name: Xxxxxxx X. Key
Title: Vice President
ASSOCIATES FIRST CAPITAL CORPORATION
By: /s/ Xxx X. Xxxxxxx
Name: Xxx X. Xxxxxxx
Title: Senior Executive Vice President,
Chief Financial Officer
