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AGREEMENT AND PLAN OF MERGER
by and among
Xxxxxxx Xxxxx, Inc.,
Merger Sub
and
Oxford Resources Corp.
Dated as of January 14, 1997
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TABLE OF CONTENTS
PAGE
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ARTICLE I
THE MERGER
1.1. The Merger.......................................................... 2
1.2. Effective Time; Effects of the Merger............................... 2
1.3. Conversion of Company Common Stock.................................. 3
1.4. Stock Options....................................................... 5
1.5. Parent Common Stock................................................. 6
1.6. Conversion of Merger Sub Common Stock............................... 7
1.7. Restated Certificate of Incorporation,
By-laws........................................................... 7
1.8. Directors and Executive Officers.................................... 7
1.9. Tax Consequences.................................................... 7
ARTICLE II
EXCHANGE OF SHARES
2.1. Parent to Make Shares Available..................................... 8
2.2. Exchange of Shares.................................................. 8
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
3.1. Corporate Organization.............................................. 13
3.2. Capitalization...................................................... 15
3.3. Authority; No Violation............................................. 18
3.4. Consents and Approvals.............................................. 21
3.5. Reports; Examinations............................................... 22
3.6. Financial Statements................................................ 22
3.7. Broker's Fees....................................................... 24
3.8. Absence of Certain Changes or Events................................ 25
3.9. Legal Proceedings................................................... 26
3.10 Taxes............................................................... 27
3.11. Employees........................................................... 31
3.12. Company Information................................................. 34
3.13. Compliance with Applicable Law...................................... 34
3.14. Certain Contracts................................................... 35
3.15. SEC Reports......................................................... 37
3.16. Undisclosed Liabilities............................................. 38
3.17. State Takeover Laws................................................. 39
3.18. Property............................................................ 39
3.19. Reorganization...................................................... 40
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3.20. Insurance........................................................... 40
3.21. Intellectual Property............................................... 41
3.22. Environmental Matters............................................... 41
3.23. Contracts and Leases................................................ 44
3.24. Securitization Transactions......................................... 46
3.25. Affiliated Party Transactions....................................... 48
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF PARENT
4.1. Corporate Organization.............................................. 48
4.2. Capitalization...................................................... 50
4.3. Authority; No Violation............................................. 52
4.4. Consents and Approvals.............................................. 55
4.5. Reports; Examinations............................................... 56
4.6. Financial Statements................................................ 57
4.7. Broker's Fees....................................................... 59
4.8. Absence of Certain Changes or Events................................ 59
4.9. Legal Proceedings................................................... 59
4.10. Parent Information.................................................. 60
4.11. Compliance with Applicable Law...................................... 60
4.12. SEC Reports......................................................... 61
4.13. Undisclosed Liabilities............................................. 62
4.14. Ownership of Company Common Stock................................... 63
ARTICLE V
COVENANTS RELATING TO CONDUCT OF BUSINESS
5.1. Covenants of the Company............................................ 63
5.2. Covenants of Parent................................................. 69
ARTICLE VI
ADDITIONAL AGREEMENTS
6.1. Regulatory and Other Matters........................................ 71
6.2. Access to Information............................................... 73
6.3. Legal Conditions to Merger.......................................... 77
6.4. Affiliates.......................................................... 78
6.5. Employee Benefit Plans.............................................. 78
6.6. Indemnification..................................................... 78
6.7. Stock Exchange Listing.............................................. 80
6.8. Subsequent Interim Financial Statements. ........................... 81
6.9. Advice of Changes................................................... 81
6.10. Current Information................................................. 82
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6.11. Merger Sub.......................................................... 83
6.12. Accountant's Letter................................................. 83
6.13. Reconciliation of Accounts.......................................... 83
6.14. Lease Financing..................................................... 83
6.15. Termination of Certain Activities................................... 84
ARTICLE VII
CONDITIONS PRECEDENT
7.1. Conditions to Each Party's Obligation
To Effect the Merger................................................ 84
7.2. Conditions to Obligations of Parent
and Merger Sub.................................................... 86
7.3. Conditions to Obligations of the Company............................ 90
ARTICLE VIII
TERMINATION AND AMENDMENT
8.1. Termination......................................................... 94
8.2. Effect of Termination............................................... 97
8.3. Amendment........................................................... 97
8.4. Extension; Waiver................................................... 98
ARTICLE IX
GENERAL PROVISIONS
9.1. Closing............................................................. 98
9.2. Alternative Structure............................................... 99
9.3. Nonsurvival of Representations,
Warranties and Agreements......................................... 99
9.4. Expenses........................................................... 100
9.5. Notices............................................................ 100
9.6. Interpretation..................................................... 101
9.7. Counterparts....................................................... 101
9.8. Entire Agreement................................................... 102
9.9. Governing Law...................................................... 102
9.10. Severability....................................................... 102
9.11. Publicity.......................................................... 102
9.12. Assignment; No Third Party Beneficiaries........................... 103
9.13. Enforcement of Agreement........................................... 103
9.14. Waiver............................................................. 104
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of January 14, 1997, by and
among Xxxxxxx Xxxxx, Inc., a Florida corporation ("Parent"), a corporation
to be organized under the laws of the State of New York as a direct
wholly owned subsidiary of Parent ("Merger Sub") and Oxford Resources
Corp., a corporation organized under the laws of the State of New York
(the "Company").
WHEREAS, the Boards of Directors of Parent and the Company have
determined that it is in the best interests of their respective companies and
their shareholders to consummate the business combination transaction
provided for herein in which Merger Sub will, subject to the terms and
conditions set forth herein, merge with and into the Company; and
WHEREAS, the parties desire to make certain representations,
warranties and agreements in connection with the Merger and also to prescribe
certain conditions to the Merger.
NOW, THEREFORE, in consideration of the mutual covenants,
representations, warranties and agreements contained herein, and intending to be
legally bound hereby, the parties agree as follows:
ARTICLE I
THE MERGER
1.1 THE MERGER. Subject to the terms and conditions of this
Agreement, in accordance with the applicable provisions of the New York Business
Corporation Law (the "BCL"), at the Effective Time (as defined in Section 1.2
hereof), Merger Sub shall merge with and into the Company (the "Merger"). The
Company shall be the surviving corporation (hereinafter sometimes called the
"Surviving Corporation") in the Merger, and shall continue its existence as a
corporation under the laws of the State of New York. The name of the Surviving
Corporation shall be Oxford Resources Corp. Upon consummation of the Merger,
the separate existence of Merger Sub shall terminate.
1.2 EFFECTIVE TIME; EFFECTS OF THE MERGER. The Merger shall become
effective as set forth in the certificate of merger (the "Certificate of
Merger") which shall be filed with the Secretary of State of the State of New
York (the "Secretary") on the Closing Date (as defined in Section 9.1 hereof).
The term "Effective Time" shall be the date and time when the Merger becomes
effective, as set forth in the Certificate of Merger. At and after the
Effective Time, the Merger shall have the effects set forth in Section 906 of
the BCL.
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1.3 CONVERSION OF COMPANY COMMON STOCK. (a) At the Effective Time,
subject to Section 2.2(e) hereof, each share of the Class A Common Stock, par
value $.01 per share, of the Company (the "Class A Common Stock") and each share
of the Class B Common Stock, par value $.01 per share, of the Company (the
"Class B Common Stock" and, together with the Class A Common Stock, the "Company
Common Stock") issued and outstanding immediately prior to the Effective Time
(other than Dissenting Shares (as defined in Section 1.3(b) hereof) and other
than shares of Company Common Stock owned directly or indirectly by Parent or
the Company (except for shares held in managed accounts, trust accounts or
otherwise in a fiduciary capacity that are beneficially owned by third parties)
shall, by virtue of this Agreement and without any action on the part of the
holder thereof, be converted into and exchangeable for .9085 shares (the
"Exchange Ratio") of the common stock, par value $2.00 per share, of Parent
(together with the number of Parent Rights (as defined in Section 4.2 hereof)
associated therewith) ("Parent Common Stock"). All of the shares of Company
Common Stock converted into Parent Common Stock pursuant to this Article I shall
no longer be outstanding and shall automatically be cancelled and shall cease to
exist, and each certificate (each a "Certificate") previously representing any
such shares of Company Common
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Stock shall thereafter only represent the right to receive (i) the number of
whole shares of Parent Common Stock and (ii) the cash in lieu of fractional
shares of Parent Common Stock into which the shares of Company Common Stock
represented by such Certificate have been converted pursuant to this Agreement.
Certificates previously representing shares of Company Common Stock shall be
exchanged for certificates representing whole shares of Parent Common Stock and
cash in lieu of fractional shares issued in consideration therefor upon the
surrender of such Certificates in accordance with Section 2.2 hereof, without
any interest thereon. If prior to the Effective Time, Parent should split or
combine the Parent Common Stock, or pay a dividend or other distribution in the
Parent Common Stock, then the Exchange Ratio shall be appropriately adjusted to
reflect such split, combination, dividend or distribution. At the Effective
Time, all shares of Company Common Stock owned directly or indirectly by Parent
or the Company (except for shares in managed accounts, trust accounts or
otherwise is a fiduciary capacity that are beneficially owned by third parties)
shall be cancelled and shall cease to exist and no stock of Parent or other
consideration shall be delivered in exchange therefor.
(b) Notwithstanding anything in this Agreement to the contrary, any
shares of Company Common Stock which
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are outstanding immediately prior to the Effective Time and which are held by
shareholders who shall not have voted such shares in favor of the Merger and who
shall have filed with the Company a written objection to the Merger and a demand
for appraisal of such shares in the manner provided in Section 623 of the BCL
("Dissenting Shares") shall not be converted into the right to receive, or be
exchangeable for, the consideration provided for in Section 1.3(a) hereof, but,
instead, the holders thereof shall be entitled to payment of the appraised value
of such Dissenting Shares in accordance with the provisions of Section 623 of
the BCL. The Company shall (x) give Parent prompt written notice of the receipt
of any notice from a shareholder of his intent to demand payment for his shares,
(y) not settle or offer to settle any such demands without the prior written
consent of Parent and (z) not, without the prior written consent of Parent,
waive any failure to timely deliver a written objection to the Merger and a
demand for appraisal of such shares in accordance with Section 623 of the BCL.
1.4 STOCK OPTIONS. At the Effective Time, each option granted by the
Company to purchase shares of Class A Common Stock pursuant to the Company's
1993 Stock Option Plan (the "Stock Option Plan") which is outstanding and
unexercised immediately prior thereto shall be converted automatically into an
option to purchase shares
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of Parent Common Stock in an amount and at an exercise price determined as
provided below (and otherwise be subject to the terms of the Stock Option Plan):
(i) The number of shares of Parent Common Stock to
be subject to the new option shall be equal to the product
of the number of shares of Class A Common Stock subject to
the original option and the Exchange Ratio, provided that
any fractional shares of Parent Common Stock resulting from
such multiplication shall be rounded down to the nearest
share; and
(ii) The exercise price per share of Parent Common
Stock under the new option shall be equal to the exercise
price per share of Class A Common Stock under the original
option divided by the Exchange Ratio, provided that such
exercise price shall be rounded up to the nearest cent.
The adjustment provided herein with respect to any options which are
"incentive stock options" (as defined in Section 422 of the Internal Revenue
Code of
6
1986, as amended (the "Code")) shall be and is intended to be effected in a
manner which is consistent with Section 424(a) of the Code. The duration and
other terms of the new option shall be the same as the original option, except
that all references to the Company shall be deemed to be references to Parent.
1.5 PARENT COMMON STOCK. The shares of Parent Common Stock issued and
outstanding immediately prior to the Effective Time shall be unaffected by the
Merger and at the Effective Time, such shares shall remain issued and
outstanding.
1.6 CONVERSION OF MERGER SUB COMMON STOCK. At the Effective Time,
each of the shares of capital stock of Merger Sub issued and outstanding
immediately prior to the Effective Time shall, by virtue of the Merger,
automatically and without any action on the part of Parent, become and be
converted into one share of Class A Common Stock, which shall thereafter
constitute all of the issued and outstanding shares of the capital stock of the
Surviving Corporation.
1.7 RESTATED CERTIFICATE OF INCORPORATION, BY-LAWS. At the Effective
Time, the Restated Certificate of Incorporation (the "Restated Certificate") and
By-laws of the Company, as in effect at the Effective Time, shall be the
Restated Certificate and By-laws of the Surviving Corporation.
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1.8 DIRECTORS AND EXECUTIVE OFFICERS. The directors and executive
officers of the Company immediately prior to the Effective Time along with such
directors and officers that Parent shall designate shall be the directors and
executive officers of the Surviving Corporation, each to hold office in
accordance with the Restated Certificate and By-Laws of the Surviving
Corporation until their respective successors are duly elected or appointed and
qualified.
1.9 TAX CONSEQUENCES. It is intended that the Merger constitute a
reorganization within the meaning of Section 368(a) of the Code, and that this
Agreement constitute a "plan of reorganization" for purposes of Section 368 of
the Code.
ARTICLE II
EXCHANGE OF SHARES
2.1 PARENT TO MAKE SHARES AVAILABLE. At or prior to the Effective
Time, Parent shall deposit, or shall cause to be deposited, with a bank or trust
company (the "Exchange Agent"), selected by Parent and reasonably satisfactory
to the Company, for the benefit of the holders of Company Common Stock, for
exchange in accordance with this Article II, certificates representing the
shares of Parent Common Stock and the cash in lieu of fractional shares (such
cash and/or certificates for shares of Parent Common Stock, together with any
divi-
8
dends or distributions with respect thereto, being hereinafter referred to as
the "Exchange Fund") to be issued pursuant to Section 1.3(a) and paid pursuant
to Section 2.2(a) in exchange for outstanding shares of Company Common Stock.
2.2 EXCHANGE OF SHARES. (a) As soon as practicable after the
Effective Time, the Exchange Agent shall mail to each holder of record of
Company Common Stock as of the Effective Time a form letter of transmittal
(which shall specify that delivery shall be effected, and risk of loss and title
to the Certificates shall pass, only upon delivery of the Certificates to the
Exchange Agent) and instructions for use in effecting the surrender of the
Certificates in exchange for certificates representing the shares of Parent
Common Stock and the cash in lieu of fractional shares into which the shares of
Company Common Stock represented by such Certificate shall have been converted
pursuant to the Merger. Upon surrender of a Certificate for exchange and
cancellation to the Exchange Agent, together with such letter of transmittal,
duly executed, the holder of such Certificate shall be entitled to receive in
exchange therefor (x) a certificate representing that number of whole shares of
Parent Common Stock to which such holder of Company Common Stock shall have
become entitled pursuant to the provisions of Article I hereof and (y) a check
9
representing the amount of cash in lieu of a fractional share of Parent Common
Stock, if any, which such holder has the right to receive in respect of the
Certificate surrendered pursuant to the provisions of this Article II, and the
Certificate so surrendered shall forthwith be cancelled. No interest will be
paid or accrued on the cash in lieu of fractional shares and unpaid dividends
and distributions, if any, payable to holders of Company Common Stock.
(b) No dividends or other distributions declared after the
Effective Time with respect to Parent Common Stock and payable to the holders of
record thereof shall be paid to the holder of any shares of Company Common Stock
until the holder thereof shall surrender the Certificate representing such
shares in accordance with this Article II. After such surrender, the record
holder thereof shall be entitled to receive any such dividends or other
distributions, without any interest thereon, which theretofore had become
payable with respect to shares of Parent Common Stock to which such holder shall
become entitled pursuant to Article I hereof.
(c) If any certificate representing shares of Parent Common Stock
is to be issued in a name other than that in which the Certificate surrendered
in exchange therefor is registered, it shall be a condition of the issuance
thereof that the Certificate so surren-
10
dered shall be properly endorsed (or accompanied by an appropriate instrument of
transfer) and otherwise in proper form for transfer, and that the person
requesting such exchange shall pay to the Exchange Agent in advance any transfer
or other taxes required by reason of the issuance of a certificate representing
shares of Parent Common Stock in any name other than that of the registered
holder of the Certificate surrendered, or required for any other reason, or
shall establish to the satisfaction of the Exchange Agent that such tax has been
paid or is not payable.
(d) After the Effective Time, there shall be no transfers on the
stock transfer books of the Company of the shares of Company Common Stock which
were issued and outstanding immediately prior to the Effective Time. If, after
the Effective Time, Certificates representing such shares are presented for
transfer to the Exchange Agent, they shall be cancelled and exchanged for
certificates representing shares of Parent Common Stock as provided in this
Article II.
(e) Notwithstanding anything to the contrary contained herein, no
certificates or scrip representing fractional shares of Parent Common Stock
shall be issued upon the surrender for exchange of Certificates, no dividend or
distribution with respect to Parent Common Stock shall be payable on or with
respect
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to any fractional share, and such fractional share interests shall not entitle
the owner thereof to voting rights or to any other rights of a shareholder of
Parent. In lieu of the issuance of any such fractional share, Parent shall pay
to each former shareholder of the Company who otherwise would be entitled to
receive a fractional share of Parent Common Stock an amount in cash determined
by multiplying (i) the average of the closing sales prices of Parent Common
Stock on the New York Stock Exchange (the "NYSE") as reported by THE WALL STREET
JOURNAL (or, if not reported thereby, another authoritative source) for the
five trading days immediately preceding the date on which the Effective Time
shall occur by (ii) the fraction of a share of Parent Common Stock to which such
holder would otherwise be entitled to receive pursuant to Section 1.3 hereof.
(f) Any portion of the Exchange Fund that remains unclaimed by
the shareholders of the Company for six months after the Effective Time shall be
paid to Parent. Any shareholders of the Company who have not theretofore
complied with this Article II shall thereafter look only to Parent for payment
of their shares of Parent Common Stock, cash in lieu of fractional shares and
unpaid dividends and distributions on the Parent Common Stock deliverable in
respect of each share of Company Common Stock such shareholder holds as
determined pursu-
12
ant to this Agreement, in each case, without any interest thereon.
Notwithstanding the foregoing, none of Parent, the Company, the Exchange Agent
or any other person shall be liable to any former holder of shares of Company
Common Stock for any amount properly delivered to a public official pursuant to
applicable abandoned property, escheat or similar laws.
(g) In the event any Certificate shall have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the person claiming
such Certificate to be lost, stolen or destroyed and, if required by Parent, the
posting by such person of a bond in an amount equal to such value as indemnity
against any claim that may be made against it with respect to such Certificate,
the Exchange Agent will issue in exchange for such lost, stolen or destroyed
Certificate the shares of Parent Common Stock, cash in lieu of fractional shares
and unpaid dividends and distributions on the Parent Common Stock deliverable in
respect thereof pursuant to this Agreement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to Parent as follows:
13
3.1. CORPORATE ORGANIZATION. (a) The Company is a corporation duly
organized, validly existing and in good standing under the laws of the State of
New York. The Company has the corporate power and authority to own or lease all
of its properties and assets and to carry on its business as it is now being
conducted, and is duly licensed or qualified to do business in each jurisdiction
in which the nature of the business conducted by it or the character or location
of the properties and assets owned or leased by it makes such licensing or
qualification necessary, except where the failure to be so licensed or qualified
has not had and would not be reasonably likely to have a Material Adverse Effect
(as defined below) on the Company. Attached hereto as Exhibit 3.1 are true,
complete and correct copies of the Restated Certificate and By-laws of the
Company as in effect as of the date of this Agreement. As used in this
Agreement, the term (i) "Material Adverse Effect" means, with respect to Parent
or the Company, as the case may be, a material adverse effect on the business,
properties, assets, liabilities, results of operations or financial condition of
such party and its Subsidiaries, taken as a whole, and (ii) "Subsidiary" when
used with respect to any party means any corporation, partnership or other
organization, whether incorporated or unincorporated,
14
which is consolidated with such party for financial reporting purposes.
(b) Each of the Company's Subsidiaries is a corporation duly
organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation or organization. Each of the Company's
Subsidiaries has the corporate power and authority to own or lease all of its
properties and assets and to carry on its business as it is now being conducted
and is duly licensed or qualified to do business in each jurisdiction in which
the nature of the business conducted by it or the character or the location of
the properties and assets owned or leased by it makes such licensing or
qualification necessary, except where the failure to be so licensed or qualified
has not had and would not be reasonably likely to have a Material Adverse Effect
on the Company. The certificate of incorporation, by-laws or similar governing
documents of each Subsidiary of the Company, copies of which have previously
been delivered to Parent, are true, complete and correct copies of such
documents as in effect as of the date of this Agreement.
(c) The minute books of the Company and each of its Subsidiaries
contain true and accurate records in all material respects of all meetings and
other corporate actions held or taken since December 31, 1993 of their
respective shareholders and Boards of Directors
15
(including committees of their respective Boards of Directors).
3.2. CAPITALIZATION. (a) The authorized capital stock of the Company
consists of 62,000,000 shares of Class A Common Stock, 8,000,000 shares of Class
B Common Stock and 10,000,000 shares of preferred stock, par value $.01 per
share (the "Preferred Stock"). As of the date of this Agreement, there are (x)
7,845,285 shares of Class A Common Stock issued and outstanding, 7,102,774
shares of Class B Common Stock issued and outstanding and no shares of Company
Common Stock held in the Company's treasury, (y) no shares of Company Common
Stock reserved for issuance upon exercise of outstanding stock options or
otherwise except for (i) 1,300,000 shares of Class A Common Stock reserved for
issuance pursuant to the Stock Option Plan (including shares of Class A Common
Stock previously issued pursuant to the exercise of options granted thereunder),
(ii) 7,102,744 shares of Class A Common Stock reserved for issuance upon the
conversion of a like number of shares of Class B Common Stock, (iii) shares to
be issued pursuant to the terms of the Agreement and Plan of Reorganization,
dated November 22, 1996, between the Company and the shareholders of Electronic
Vehicle Remarketing, Inc. (the "EVRI Agreement") and (iv) 2,974,658 shares of
Class A Common Stock reserved for issuance upon exercise of the option
16
issued to Parent pursuant to the Stock Option Agreement, dated as of the date
hereof, between Parent and the Company (the "Option Agreement") and (z) no
shares of Preferred Stock issued or outstanding, held in the Company's treasury
or reserved for issuance upon exercise of outstanding stock options or
otherwise. All of the issued and outstanding shares of Company Common Stock
have been duly authorized and validly issued and are fully paid, nonassessable
and free of preemptive rights, with no personal liability attaching to the
ownership thereof. Except as referred to above or reflected in Section 3.2(a)
of the Disclosure Schedule which is being delivered to Parent concurrently
herewith (the "Company Disclosure Schedule"), the Company does not have and is
not bound by any outstanding subscriptions, options, warrants, calls,
commitments or agreements of any character calling for the purchase or issuance
of any shares of Company Common Stock or Preferred Stock or any other equity
security of the Company or any securities representing the right to purchase or
otherwise receive any shares of Company Common Stock or Preferred Stock or any
other equity security of the Company. The names of the optionees, the date of
each option to purchase Class A Common Stock granted, the number of shares of
Class A Common Stock subject to each such option, the expiration date of each
such option, and the price at which each
17
such option may be exercised under the Stock Option Plan are set forth in
Section 3.2(a) of the Company Disclosure Schedule.
(b) Section 3.2(b) of the Company Disclosure Schedule sets forth
a true and correct list of all of the Subsidiaries of the Company as of the date
of this Agreement. Except as set forth in Section 3.2(b) of the Company
Disclosure Schedule, the Company owns, directly or indirectly, all of the issued
and outstanding shares of the capital stock of each of such Subsidiaries, free
and clear of all liens, charges, encumbrances and security interests whatsoever,
and all of such shares are duly authorized and validly issued and are fully
paid, nonassessable and free of preemptive rights, with no personal liability
attaching to the ownership thereof. No Subsidiary of the Company has or is
bound by any outstanding subscriptions, options, warrants, calls, commitments or
agreements of any character calling for the purchase or issuance of any shares
of capital stock or any other equity security of such Subsidiary or any
securities representing the right to purchase or otherwise receive any shares of
capital stock or any other equity security of such Subsidiary and none of the
options granted under the Stock Option Plan have related stock appreciation
rights. Assuming compliance by Parent with Section 1.4 hereof, at the Effective
Time, there will not be any out-
18
standing subscriptions, options, warrants, calls, commitments or agreements of
any character by which the Company or any of its Subsidiaries will be bound
calling for the purchase or issuance of any shares of the capital stock of the
Company or any of its Subsidiaries.
3.3. AUTHORITY; NO VIOLATION. (a) The Company has full corporate
power and authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby have been duly and
validly approved by the Board of Directors of the Company. The Board of
Directors of the Company has directed that this Agreement and the transactions
contemplated hereby be submitted to the Company's shareholders for approval at a
meeting of such shareholders and, except for the adoption of this Agreement by
the vote of two-thirds of the votes eligible to be cast at such meeting by the
holders of the Class A Common Stock and Class B Common Stock voting together as
a class, no other corporate proceedings on the part of the Company are necessary
to approve this Agreement and to consummate the transactions contemplated
hereby. This Agreement has been duly and validly executed and delivered by the
Company and (assuming due authorization, execution and delivery by Parent and
Merger Sub) constitutes a valid and binding obligation of the Company,
19
enforceable against the Company in accordance with its terms, except as
enforcement may be limited by general principles of equity whether applied in a
court of law or a court of equity and by bankruptcy, insolvency and similar laws
affecting creditors' rights and remedies generally.
(b) Except as set forth in Section 3.3(b) of the Company
Disclosure Schedule, neither the execution and delivery of this Agreement by the
Company nor the consummation by the Company of the transactions contemplated
hereby nor compliance by the Company with any of the terms or provisions hereof
will (i) violate any provision of the Restated Certificate or By-laws of the
Company, or (ii) assuming that the consents and approvals referred to in Section
3.4 hereof are duly obtained, (x) violate any statute, code, ordinance, rule,
regulation, judgment, order, writ, decree or injunction applicable to the
Company or any of its Subsidiaries, or any of their respective properties or
assets, or (y) violate, contravene, result in a breach of any provision of or
the loss of any benefit under, constitute a default (or an event which, with
notice or lapse of time, or both, would constitute a default) under, result in
the termination of or a right of termination or cancellation under, accelerate
the performance required by, or result in the creation of any lien, pledge,
security interest, charge or
20
other encumbrance upon any of the respective properties or assets of the Company
or any of its Subsidiaries under, any of the terms, conditions or provisions of
any note, bond, mortgage, indenture, deed of trust, license, lease, agreement or
other instrument or obligation to which the Company or any of its Subsidiaries
is a party, or by which they or any of their respective properties or assets may
be bound or affected, except (only in the case of clause (y) above) for such
violations, conflicts, breaches or defaults which, either individually or in the
aggregate, have not had and would not be reasonably likely to have a Material
Adverse Effect on the Company.
3.4. CONSENTS AND APPROVALS. Except for (a) the approval of this
Agreement by the requisite vote of the shareholders of the Company, (b) the
filing with the Securities and Exchange Commission (the "SEC") of a proxy
statement in definitive form relating to the transactions contemplated hereby
(the "Proxy Statement") and the mailing of such Proxy Statement to the Company's
shareholders, (c) review of this Agreement and the transactions contemplated
hereby by the U.S. Department of Justice ("DOJ") and the Federal Trade
Commission ("FTC") under federal antitrust laws and any filings or notifications
in connection therewith, (d) the filing of the Certificate of Merger with the
Secretary pursuant to the BCL, (e) any filings, authorizations or approvals as
may be
21
required under the New Jersey Industrial Site Recovery Act ("ISRA"), and (f)
such filings, authorizations or approvals as may be set forth in Section 3.4 of
the Company Disclosure Schedule, no consents or approvals of or filings or
registrations with any court, administrative agency or commission or other
governmental authority or instrumentality, in each case, whether federal, state
or local (each a "Governmental Entity") or with any third party are necessary in
connection with the execution and delivery by the Company of this Agreement and
the consummation by the Company of the Merger and the other transactions
contemplated hereby.
3.5. REPORTS; EXAMINATIONS. Each of the Company and its Subsidiaries
has timely filed all material reports, registrations and statements, together
with any amendments required to be made with respect thereto, that it was
required to file since December 31, 1991 with any Governmental Entity and has
paid all fees and assessments due and payable in connection therewith. Except
for normal examinations conducted by a Governmental Entity in the regular course
of the business of the Company and its Subsidiaries and except as set forth in
Section 3.5 of the Company Disclosure Schedule, no Governmental Entity has
initiated any proceeding or, to the Best Knowledge of the Company, investigation
into the business or operations of the Company or any of its
22
Subsidiaries since December 31, 1991. There is no unresolved material
violation, criticism, or exception by any Governmental Entity with respect to
any report or statement relating to any examinations of the Company or any of
its Subsidiaries. As used herein, the term "Best Knowledge" means with respect
to the Company the actual knowledge of any of the persons set forth on Schedule
3.5.
3.6. FINANCIAL STATEMENTS. The Company has previously delivered to
Parent copies of (a) the consolidated balance sheets of the Company and its
Subsidiaries as of June 30 for the fiscal years 1995 and 1996, and the related
consolidated statements of operations, shareholders' equity and cash flows for
the fiscal years 1994 through 1996, inclusive, as reported in the Company's
Annual Report on Form 10-K for the fiscal year ended June 30, 1996 (the "10-K")
filed with the SEC pursuant to the rules and regulations of the SEC, in each
case accompanied by the audit report of BDO Xxxxxxx LLP, independent public
accountants with respect to the Company, and (b) the unaudited consolidated
balance sheets of the Company and its Subsidiaries as of September 30, 1996 and
September 30, 1995 and the related unaudited consolidated statements of
operations for the three month periods then ended as reported in the Company's
Quarterly Report on Form 10-Q for the period ended September 30, 1996 filed
23
with the SEC pursuant to the rules and regulations of the SEC. The June 30,
1996 consolidated balance sheet of the Company and its Subsidiaries (including
the related notes, where applicable) fairly presents the consolidated financial
position of the Company and its Subsidiaries as of the date thereof, and the
other financial statements referred to in this Section 3.6 (including the
related notes, where applicable) fairly present, and the financial statements of
the Company referred to in Section 6.8 will fairly present (subject, in the case
of the unaudited statements, to recurring audit adjustments normal in nature and
amount), the results of the consolidated operations and financial position of
the Company and its Subsidiaries for the respective fiscal periods or as of the
respective dates therein set forth; each of such statements (including the
related notes, where applicable) comply, and the financial statements of the
Company referred to in Section 6.8 will comply, in all material respects with
applicable accounting requirements and with the published rules and regulations
of the SEC with respect thereto; and each of such statements (including the
related notes, where applicable) has been, and the financial statements of the
Company referred to in Section 6.8 will be, prepared in accordance with
generally accepted accounting principles ("GAAP") consistently applied during
the periods involved, except as indicated in
24
the notes thereto. The books and records of the Company and its Subsidiaries
have been, and are being, maintained in all material respects in accordance with
GAAP and any other applicable legal and accounting requirements and reflect only
actual transactions.
3.7. BROKER'S FEES. Neither the Company nor any of its Subsidiaries
nor any of their respective officers or directors has employed any broker or
finder or incurred any liability for any broker's fees, commissions or finder's
fees in connection with any of the transactions contemplated by this Agreement
or the Option Agreement, except that the Company has engaged, and will pay a fee
or commission to, Prudential Securities Incorporated ("Prudential") as set forth
on Exhibit 3.7.
3.8. ABSENCE OF CERTAIN CHANGES OR EVENTS. (a) Except as may be set
forth in Section 3.8(a) of the Company Disclosure Schedule, (i) since June 30,
1996, no event, circumstance or condition has occurred or has failed to occur
which has caused, or is reasonably likely to cause, individually or in the
aggregate, a Material Adverse Effect on the Company, and (ii) since June 30,
1996, the Company and its Subsidiaries have carried on their respective
businesses in the ordinary course consistent with their past practices
(excluding the execution of this Agreement and related matters).
25
(b) Except as set forth in Section 3.8(b) of the Company
Disclosure Schedule, since June 30, 1996, neither the Company nor any of its
Subsidiaries has (i) increased the wages, salaries, compensation, pension, or
other fringe benefits or perquisites payable to any executive officer, employee,
or director from the amount thereof in effect as of June 30, 1996 (which amounts
have been previously disclosed to Parent) other than increases as would be
permitted under Section 5.1 hereof, granted any severance or termination pay,
entered into any contract to make or grant any severance or termination pay, or
paid any bonus other than year-end bonuses for fiscal 1996 as listed in Section
3.8(b) of the Company Disclosure Schedule, (ii) suffered any strike, work
stoppage, slow-down or other labor disturbance, (iii) been a party to a
collective bargaining agreement, contract or other agreement or understanding
with a labor union or organization, or (iv) to the Best Knowledge of the
Company, had any union organizing activities.
3.9. LEGAL PROCEEDINGS. Except as set forth in Section 3.9 of the
Company Disclosure Schedule, neither the Company nor any of its Subsidiaries is
a party to any, and there are no pending or, to the Best Knowledge of the
Company, threatened, legal, administrative, arbitral or other proceedings,
claims, actions or governmental or regulatory investigations of any nature
against
26
the Company or any of its Subsidiaries or challenging the validity or propriety
of the transactions contemplated by this Agreement as to which in either case
there is a reasonable probability of an adverse determination and which, if
adversely determined, would, individually or in the aggregate, be reasonably
likely to have a Material Adverse Effect on the Company or materially impair the
ability of the Company or Parent to consummate the transactions contemplated
hereby. There is no injunction, order, judgment, decree, or regulatory
restriction imposed upon the Company or any of its Subsidiaries or any of their
respective assets or properties which has had, or could reasonably be expected
to have, a Material Adverse Effect on the Company.
3.10. TAXES. (a) Except as set forth in Section 3.10(a) of the
Company Disclosure Schedule, each of the Company and its Subsidiaries has (i)
duly and timely filed or will duly and timely file (including applicable
extensions granted without penalty) all Tax Returns (as hereinafter defined)
required to be filed at or prior to the Effective Time, and such Tax Returns are
true, correct and complete in all material respects, and (ii) paid in full or
made adequate provision in the financial statements of the Company (in
accordance with GAAP) for all Taxes (as hereinafter defined) and will pay in
full or make adequate provision for all Taxes. No deficien-
27
cies for any Taxes have been proposed, asserted, assessed or, to the Best
Knowledge of the Company, threatened against or with respect to the Company or
any of its Subsidiaries. Except as set forth in Section 3.10(a) of the Company
Disclosure Schedule, (i) there are no liens for Taxes upon the assets of either
the Company or its Subsidiaries except for statutory liens for current Taxes not
yet due, (ii) neither the Company nor any of its Subsidiaries has requested any
extension of time within which to file any Tax Returns in respect of any fiscal
year which have not since been filed and no request for waivers of the time to
assess any Taxes are pending or outstanding, (iii) with respect to each taxable
period of the Company and its Subsidiaries, the federal and state income Tax
Returns of the Company and its Subsidiaries have been audited by the Internal
Revenue Service (the "IRS") or appropriate state tax authorities or the time for
assessing and collecting income Tax with respect to such taxable period has
closed and such taxable period is not subject to review, (iv) neither the
Company nor any of its Subsidiaries has filed or been included in a combined,
consolidated or unitary income Tax Return other than one in which the Company
was the parent of the group filing such Tax Return, (v) neither the Company nor
any of its Subsidiaries is a party to any agreement providing for the allocation
or sharing of Taxes (other than the
28
allocation of federal income taxes as provided by Treasury regulation Section
1.1552-1(a)(1)) or indemnification for Taxes (including without limitation, with
respect to the spin-off of WLNY-TV, Inc. ("WLNY")), (vi) neither the Company nor
any of its Subsidiaries is required to include in income any adjustment pursuant
to Section 481(a) of the Code (or any similar or corresponding provision or
requirement of state, local or foreign income Tax law), by reason of the
voluntary change in accounting method (nor has any taxing authority proposed in
writing any such adjustment or change of accounting method), (vii) neither the
Company nor any of its Subsidiaries has filed a consent pursuant to Section
341(f) of the Code, (viii) neither the Company nor any of its Subsidiaries has
made any payment or will be obligated to make any payment (by contract or
otherwise) which will not be deductible by reason of Section 280G of the Code,
(ix) neither the Company nor any of its Subsidiaries has undergone an "ownership
change" within the meaning of Section 382 of the Code, (x) neither the Company
nor any of its Subsidiaries has any losses which are subject to a "separate
return limitation year" limitation within the meaning of Treasury regulation
Section 1.1502, and (xi) each of the Company and its Subsidiaries has complied
and will comply with all applicable laws, rules and regulations relating to the
payment and withholding of Taxes
29
and has, within the time and in the manner prescribed by law, withheld from
employee wages and paid over to the proper governmental authorities all amounts
required to be so withheld and paid over under all applicable laws.
(b) Except as set forth in Section 3.10(b) of the Company
Disclosure Schedule, neither the Company nor any of its Subsidiaries owns,
directly or indirectly (including, without limitation, through partnerships,
corporations, trusts or other entities), interests in real property ("Real
Property Interests") situated in (A) New York State, which by reason of the
Merger would be subject to the New York State Real Property Transfer Tax (the
"New York Transfer Taxes"), or (B) any state other than New York State which by
reason of the Merger would be subject to any tax similar to the New York
Transfer Taxes. For purposes of this Section 3.10(b), Real Property Interests
include, without limitation, titles in fee, leasehold interests, beneficial
interests, encumbrances, development rights or any other interests with the
right to use or occupy real property or the right to receive rents, profits or
other income derived therefrom, or any options or contracts to purchase real
property.
(c) As of June 30, 1996, the Company had federal net operating
loss carryforwards of approximately $123,400,000 and state net operating loss
carryforwards
30
of the approximate amounts set forth in Section 3.10(c) of the Company
Disclosure Schedule.
(d) For purposes of this Agreement, "Taxes" shall mean all
taxes, charges, fees, levies, penalties or other assessments imposed by any
United States federal, state, local or foreign taxing authority, including, but
not limited to income, use, ad valorem, luxury, excise, property, sales,
transfer, franchise, payroll, withholding, social security or other taxes,
including any interest, penalties or additions attributable thereto.
(e) For purposes of this Agreement, "Tax Return" shall mean any
return, report, information return or other document (including any related or
supporting information) with respect to Taxes.
3.11. EMPLOYEES. (a) Section 3.11(a) of the Company Disclosure
Schedule sets forth a true and complete list of each employee benefit plan,
arrangement or agreement (including, without limitation, each employment,
severance and similar agreement) that is maintained or contributed to or
required to be contributed to as of the date of this Agreement (the "Plans") by
the Company or any of its Subsidiaries or by any trade or business, whether or
not incorporated (an "ERISA Affiliate"), all of which together with the Company
would be deemed a "single employer" within the meaning of Section 4001 of
31
the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), for
the benefit of any employee or former employee of the Company, any of its
Subsidiaries or any ERISA Affiliate.
(b) The Company has heretofore delivered to Parent true and
complete copies of each of the Plans and all related documents, including but
not limited to (i) the actuarial report for such Plan (if applicable) for each
of the last two years, and (ii) the most recent determination letter from the
IRS (if applicable) for such Plan.
(c) Except as set forth in Section 3.11(c) of the Company
Disclosure Schedule, (i) each of the Plans has been operated and administered in
all material respects in accordance with its terms and applicable law, including
but not limited to ERISA and the Code, (ii) each of the Plans intended to be
"qualified" within the meaning of Section 401(a) of the Code either (1) has
received a favorable determination letter from the IRS, or (2) is or will be the
subject of an application for a favorable determination letter, and the Company
is not aware of any circumstances likely to result in the revocation or denial
of any such favorable determination letter, (iii) with respect to each Plan
which is subject to Title IV of ERISA, the present value of accrued benefits
under such Plan, based upon the actuarial assump-
32
tions used for funding purposes in the most recent actuarial report prepared by
such Plan's actuary with respect to such Plan, did not, as of its latest
valuation date, exceed the then current value of the assets of such Plan
allocable to such accrued benefits, (iv) no Plan provides benefits, including
without limitation death or medical benefits (whether or not insured), with
respect to current or former employees of the Company, its Subsidiaries or any
ERISA Affiliate beyond their retirement or other termination of service, other
than (w) coverage mandated by applicable law, (x) death benefits or retirement
benefits under any "employee pension plan," as that term is defined in Section
3(2) of ERISA, (y) deferred compensation benefits accrued as liabilities on the
books of the Company, its Subsidiaries or the ERISA Affiliates or (z) benefits
the full cost of which is borne by the current or former employee (or his
beneficiary), (v) no liability under Title IV of ERISA has been incurred by the
Company, its Subsidiaries or any ERISA Affiliate that has not been satisfied in
full, and no condition exists that presents a material risk to the Company, its
Subsidiaries or an ERISA Affiliate of incurring a material liability thereunder,
(vi) no Plan is a "multiemployer pension plan," as such term is defined in
Section 3(37) of ERISA, (vii) all contributions or other amounts payable by the
Company, its Subsidiaries or any ERISA Affil-
33
iates as of the Effective Time with respect to each Plan in respect of current
or prior plan years have been paid or accrued in accordance with GAAP and
Section 412 of the Code, (viii) neither the Company, its Subsidiaries nor any
ERISA Affiliate has engaged in a transaction in connection with which the
Company, its Subsidiaries or any ERISA Affiliate could be subject to either a
civil penalty assessed pursuant to Section 409 or 502(i) of ERISA or a tax
imposed pursuant to Section 4975 or 4976 of the Code, (ix) there are no pending,
or, to the Best Knowledge of the Company, threatened or anticipated claims
(other than routine claims for benefits) by, on behalf of or against any of the
Plans or any trusts related thereto and (x) the consummation of the transactions
contemplated by this Agreement will not (A) entitle any current or former
employee or officer of the Company or any ERISA Affiliate to severance pay,
termination pay or any other payment, except as expressly provided in this
Agreement or (B) accelerate the time of payment or vesting or increase the
amount of compensation due any such employee or officer.
3.12. COMPANY INFORMATION. The information provided in writing by the
Company relating to the Company and its Subsidiaries to be contained in the
Proxy Statement and in the registration statement on Form S-4 (the "S-4") of
which the Proxy Statement will be included
34
as a prospectus, or in any other document filed with any Governmental Entity in
connection herewith, will not contain any untrue statement of a material fact or
omit to state a material fact necessary to make the statements therein, in light
of the circumstances in which they are made, not misleading.
3.13. COMPLIANCE WITH APPLICABLE LAW. The Company and each of its
Subsidiaries hold, and have at all times held, all material licenses,
registrations, franchises, permits and authorizations, or written exemptions
therefrom, necessary for the lawful conduct of their respective businesses under
and pursuant to all, and have complied with and are not in default in any
respect under any, applicable law, statute, order, rule, regulation, policy
and/or guideline of any Governmental Entity relating to the Company or any of
its Subsidiaries (including, without limitation, each statute, rule or
regulation set forth under the caption "Regulatory Matters" contained in the
10-K), except where the failure to hold such license, franchise, permit or
authorization or such noncompliance or default has not had and would not,
individually or in the aggregate, be reasonably likely to have a Material
Adverse Effect on the Company, and neither the Company nor any of its
Subsidiaries knows of, or has received any notice of, any material violations of
any of the above.
35
3.14. CERTAIN CONTRACTS. (a) Except as set forth in Section 3.14(a)
of the Company Disclosure Schedule or in the exhibit index to the 10-K, neither
the Company nor any of its Subsidiaries is a party to or is bound by any
contract, arrangement, commitment or understanding (whether written or oral) (i)
with respect to the employment of any directors, officers, employees or
consultants which, solely in the case of consultants, provide for payments in
excess of $100,000 per annum or cannot be terminated upon 30 days' or less
notice without penalty, (ii) which, upon the consummation of the transactions
contemplated by this Agreement will (either alone or upon the occurrence of any
additional acts or events) result in any payment (whether of severance pay or
otherwise) becoming due from Parent, the Company, the Surviving Corporation or
any of their respective Subsidiaries to any director, officer or employee
thereof, (iii) which is a material contract (as defined in Item 601(b)(10) of
Regulation S-K of the SEC) to be performed after the date of this Agreement,
(iv) which is a contract or agreement not otherwise described by clause (iii)
hereof involving the payment of more than $100,000 per annum, (v) which
materially restricts the conduct of any line of business by the Company or any
of its Subsidiaries or (vi) under which any of the benefits will be increased,
or the vesting of the benefits will be accelerated, by the occur-
36
rence of any of the transactions contemplated by this Agreement, or the value of
any of the benefits of which will be calculated on the basis of any of the
transactions contemplated by this Agreement. Each contract, arrangement,
commitment or understanding of the type described in this Section 3.14(a),
whether or not set forth in Section 3.14(a) of the Company Disclosure Schedule
or in the exhibit index to the 10-K, is referred to herein as a "Company
Contract". The Company has previously delivered to Parent true and correct
copies of each Company Contract.
(b) Except as set forth in Section 3.14(b) of the Company
Disclosure Schedule, (i) each Company Contract is valid and binding and in full
force and effect, (ii) the Company and each of its Subsidiaries have in all
material respects performed all obligations required to be performed by it to
date under each Company Contract, except where such noncompliance, individually
or in the aggregate, has not had and would not be reasonably likely to have a
Material Adverse Effect on the Company, (iii) no event or condition exists which
constitutes or, after notice or lapse of time or both, would constitute, a
material default on the part of the Company or any of its Subsidiaries under any
such Company Contract, except where such default, individually or in the
aggregate, has not had and would not be reasonably likely
37
to have a Material Adverse Effect on the Company and (iv) no other party to such
Company Contract is, to the Best Knowledge of the Company, in default in any
respect thereunder, except where such default, individually or in the aggregate,
has not had and would not be reasonably likely to have a Material Adverse Effect
on the Company.
3.15. SEC REPORTS. The Company has previously made available to
Parent an accurate and complete copy of each (a) final registration statement,
prospectus, report, schedule and definitive proxy statement filed since December
1, 1993 by the Company with the SEC pursuant to the Securities Act of 1933, as
amended (the "Act"), or the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), or the rules and regulations of the SEC (the "Company Reports")
and (b) communication mailed by the Company to its shareholders since December
1, 1993, and no such Company Report or communication contained any untrue
statement of a material fact or omitted to state any material fact required to
be stated therein or necessary in order to make the statements therein, in light
of the circumstances in which they were made, not misleading, except that
information as of a later date shall be deemed to modify information as of an
earlier date. The Company has timely filed all Company Reports and other
documents required to be filed by it pursuant to the Act and the Exchange Act,
and, as of their respective dates,
38
all Company Reports complied in all material respects with the published rules
and regulations of the SEC with respect thereto.
3.16. UNDISCLOSED LIABILITIES. Except (a) as set forth in Section
3.16 of the Company Disclosure Schedule, (b) for those liabilities that are
fully reflected or reserved against on the consolidated balance sheet of the
Company and its Subsidiaries as of June 30, 1996, (c) for expenses incurred in
connection with the transactions contemplated by this Agreement and (d) for
liabilities incurred in the ordinary course of business consistent with past
practice since June 30, 1996 that, either alone or when combined with all
similar liabilities, have not had, and could not reasonably be expected to have,
a Material Adverse Effect on the Company, neither the Company nor any of its
Subsidiaries has incurred any liability of any nature whatsoever (whether
absolute, accrued, contingent or otherwise and whether due or to become due).
3.17. STATE TAKEOVER LAWS. Assuming the accuracy of the
representation set forth in Section 4.14, the Company has taken all such actions
so that the provisions of Section 912 of BCL will not apply to this Agreement or
any of the transactions contemplated hereby, and no other state takeover law
imposes requirements on this Agreement or the transactions contemplated hereby.
39
3.18. PROPERTY. Each of the Company and its Subsidiaries has good and
marketable title free and clear of all liens, encumbrances, mortgages, pledges,
charges, defaults or equitable interests to all of the properties and assets,
real and personal, tangible or intangible, which, individually or in the
aggregate, are material, and which are reflected on the balance sheet of the
Company as of June 30, 1996 or acquired after such date, except for (i) liens
for taxes not yet due and payable, (ii) such imperfections of title, easements
and encumbrances, if any, as are not material in character, amount or extent or
(iii) dispositions and encumbrances of, or on, such properties or assets for
adequate consideration in the ordinary course of business. All leases pursuant
to which the Company or any Subsidiary of the Company, as lessee, leases real or
personal property which, individually or in the aggregate, are material are
valid and enforceable in accordance with their respective terms and neither the
Company nor any of its Subsidiaries nor, to the Best Knowledge of the Company,
any other party thereto is in default in any material respect thereunder.
3.19. REORGANIZATION. The Company has no reason to believe that the
Merger will fail to qualify as a reorganization under Section 368(a) of the
Code.
3.20. INSURANCE. The Company and each of its Subsidiaries maintain
insurance in amounts reasonably
40
necessary for their operations and, to the Best Knowledge of the Company,
similar in scope and coverage to that maintained by other entities engaging in
the same businesses. Since June 30, 1996, neither the Company nor any of its
Subsidiaries have received any notice of a premium increase or cancellation with
respect to any of its insurance policies or bonds, and since December 31, 1993,
neither the Company nor any of its Subsidiaries has been refused any insurance
coverage sought or applied for, and the Company has no reason to believe that
existing insurance coverage cannot be renewed as and when the same shall expire,
upon terms and conditions as favorable as those presently in effect, other than
possible increases in premiums or unavailability in coverage that have not
resulted from any extraordinary loss experience of the Company or any Subsidiary
of the Company.
3.21. INTELLECTUAL PROPERTY. Except as set forth in Section 3.21 of
the Company Disclosure Schedule, the Company and its Subsidiaries own or possess
all trademarks, service marks, trade names, licenses, copyrights and proprietary
or other confidential information currently employed by them in connection with
their respective businesses, and neither the Company nor any such Subsidiary has
received any notice of infringement of or conflict with asserted rights of any
third party with respect to any of the foregoing which, individually
41
or in the aggregate, if the subject of an unfavorable decision, ruling or
finding, would be reasonably likely to result in a Material Adverse Effect on
the Company.
3.22 ENVIRONMENTAL MATTERS. (a) Except as set forth in Section
3.22(a) of the Company Disclosure Schedule, each of the Company and its
Subsidiaries is in material compliance with all applicable Environmental Laws
and with the requirements set forth in Section 8.3 of the Agreement of Sale,
dated August 28, 1995, regarding the purchase by a Subsidiary of the Company of
real property located in New Jersey (the "New Jersey Property"). Except as set
forth in Section 3.22(a) of the Company Disclosure Schedule, neither the Company
nor any of its Subsidiaries has received any communication (written or oral),
whether from a Governmental Entity, citizens group, employee or otherwise, that
alleges that the Company or any of its Subsidiaries is not in such material
compliance, and to the Best Knowledge of the Company, there are no circumstances
that may prevent or interfere with such material compliance in the future.
There has been no change in the use of the New Jersey Property since the closing
of the Company's purchase thereof in November, 1995.
(b) Except as set forth in Section 3.22(b) of the Company
Disclosure Schedule, there is no Environmental Claim pending or, to the Best
Knowledge of the Company, threatened against the Company or any of its
Subsidiaries or, to the Best Knowledge of the
42
Company, against any person or entity whose liability for any Environmental
Claim the Company or any of its Subsidiaries has or may have retained or assumed
either contractually or by operation of law.
(c) Except as set forth in Section 3.22(c) of the Company
Disclosure Schedule, there are no past or present actions, activities,
circumstances, conditions, events or incidents, including, without limitation,
the release, emission, discharge or disposal of any Material of Environmental
Concern, that could form the basis of any material Environmental Claim against
the Company or any of its Subsidiaries or, to the Best Knowledge of the Company,
against any person or entity whose liability for any Environmental Claim the
Company or any of its Subsidiaries has or may have retained or assumed either
contractually or by operation by law.
(d) As used herein the term, "Environmental Claim" means any
notice (written or oral) by any person or entity alleging potential liability
(including, without limitation, potential liability for investigatory costs,
cleanup costs, governmental response costs, natural resources damages, property
damages, personal injuries, or penalties) arising out of, based on or resulting
from (i) the presence, or release into the environment,
43
of any Material of Environmental Concern at any location that is owned or
operated by the Company or any of its Subsidiaries or (ii) circumstances forming
the basis of any violation, or alleged violation, of any Environmental Law.
As used herein the term, "Environmental Laws" means all federal,
state, local and foreign laws and regulations relating to pollution or
protection of human health or the environment (including, without limitation,
ambient air, surface water, ground water, land surface or subsurface strata),
including, without limitation, laws and regulations relating to emissions,
discharges, releases or threatened releases of Materials of Environmental
Concern, or otherwise relating to the manufacture, processing, distribution,
use, treatment, storage, disposal, transport or handling of Materials of
Environmental Concern.
As used herein the term, "Materials of Environmental Concern" means
chemicals, pollutants, contaminants, wastes, toxic substances, petroleum and
petroleum products.
3.23. CONTRACTS AND LEASES. (a) Except where the failure,
individually or in the aggregate, to be true and correct has not had and would
not be reasonably likely to have a Material Adverse Effect on the Company, all
of the following are true and correct: (i) all Con-
44
tracts (as defined in the 10-K) and all leases (the "Leases") pursuant to which
the Company or any of its Subsidiaries, as lender, lessor or sublessor,
finances, leases or subleases automobiles, have been duly executed by a borrower
or lessee, as the case may be, of legal capacity, are enforceable against the
borrower or the lessee, as the case may be, in accordance with their terms
(except as enforcement thereof may be limited by bankruptcy, insolvency or other
similar laws affecting the enforcement of creditors' rights generally and by
general principles of equity (whether applied in a proceeding in equity or at
law)), and conform to all applicable Regulations (as defined below), (ii) the
Documents (as defined below) were, upon origination or purchase of the Contract
or Lease, as the case may be, and currently are in compliance with applicable
Regulations and are complete in all material respects, (iii) there exist no
facts or circumstances which would entitle an Investor (as defined below) to
demand the repurchase of a Contract, and (iv) no event or condition exists which
constitutes or, after notice or lapse of time or both, would constitute, a
material default on the part of the Company or any of its Subsidiaries under any
Document entered into with a Lender (as defined in the 10-K) in connection with
a Lease.
45
(b) As used herein, the term "Regulations means all (i) Federal,
state and local laws, rules and regulations with respect to the origination,
purchase, sale, pooling, servicing, subservicing, master servicing or filing of
claims in connection with a Contract or Lease, (ii) the responsibilities and
obligations set forth in any agreement between the Company or any of its
Subsidiaries and any purchaser of a Contract (an "Investor"), any trust,
corporation, partnership or other entity (a "Securitization Entity") which holds
Contracts in connection with a Securitization Transaction, any Affiliate (as
such term is defined under the rules and regulations of the SEC) of the Company
which is the issuer or depositor of securities issued in a Securitization
Transaction (a "Securitization Issuer") or any entity which is a trustee for any
Securitization Transaction (a "Securitization Trustee"), and (iii) the laws,
rules, regulations, guidelines, handbooks and other requirements of an Investor,
Securitization Entity, Securitization Issuer or Securitization Trustee.
(c) As used herein, the term "Documents" means the agreements,
instruments, certificates, or other documents at any time evidencing, governing,
executed in connection with, or as security for, or otherwise relating to, a
Contract or Lease, and all amendments, modifi-
46
cations, renewals, extensions, rearrangements, and substitutions with respect to
any of the foregoing.
3.24 SECURITIZATION TRANSACTIONS. Except where the failure,
individually or in the aggregate, to be true and correct has not had and would
not be reasonably likely to have a Material Adverse Effect on the Company, all
of the following are true and correct: (a) each Affiliate of the Company which
is the servicer (a "Securitization Servicer") of any outstanding transaction
under which the Company or any of its Affiliates sold or pledged Contracts in a
securitization registered or not registered under the Act (a "Securitization
Transaction") has complied with all agreements and all conditions to be
performed or satisfied by it with respect to all agreements and arrangements
pursuant to which it is bound under such Securitization Transaction (such
agreements and arrangements are collectively referred to as the "Securitization
Instruments"), (b) each Securitization Issuer, Securitization Trustee and
Securitization Servicer has performed all of its respective obligations under
the Securitization Instruments and, if applicable, under the Exchange Act or any
other existing law relating to Securitization Transactions, and has made all
filings required to be made by or under the Exchange Act, (c) no Securitization
Issuer, Securitization Trustee or Securitization Servicer has taken any action
which would ad-
47
versely affect the characterization or tax treatment for federal, state or local
income or franchise tax purposes, of any Securitization Entity or any securities
issued in a Securitization Transaction, and all required federal, state and
local tax and information returns relating to any Securitization Transaction
have been properly filed, and (d) there is no breach or violation of any
representation, warranty or covenant made by the Company, any Affiliate of the
Company, or any other person pursuant to the Securitization Instruments. No
Securitization Issuer, Securitization Trustee, or Securitization Servicer has
taken any action which would cause any Securitization Entity to be registered as
an investment company pursuant to the Investment Company Act of 1940, as amended
(the "Investment Company Act"), or which would cause any Securitization Entity
to be "controlled by" an investment company within the meaning of the Investment
Company Act.
3.25 AFFILIATED PARTY TRANSACTIONS. Except as set forth in Section
3.25 of the Company Disclosure Schedule, no director or officer of the Company
or any of its Subsidiaries, nor any of their respective Affiliates (i) has any
ownership interest directly or indirectly, in any competitor, supplier or
customer of the Company or any of its Subsidiaries; (ii) has any outstanding
loan or other extension of credit to or from the Company or any of its
Subsidiaries; (iii) is a party to, or has any
48
interest in, any contract or agreement with the Company or any of its
Subsidiaries; or (iv) has engaged in any transaction with the Company or any of
its Subsidiaries during the periods covered by the financial statements referred
to in Section 3.6.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF PARENT
Parent hereby represents and warrants to the Company as follows:
4.1. CORPORATE ORGANIZATION. (a) Parent is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Florida. Parent has the corporate power and authority to own or lease all of
its properties and assets and to carry on its business as it is now being
conducted, and is duly licensed or qualified to do business in each jurisdiction
in which the nature of the business conducted by it or the character or location
of the properties and assets owned or leased by it makes such licensing or
qualification necessary, except where the failure to be so licensed or qualified
would not have a Material Adverse Effect on Parent. Parent is duly registered
as a bank holding company under the BHC Act.
(b) Upon its formation, Merger Sub will be a corporation duly
organized, validly existing and in
49
good standing under the laws of the State of New York. Each of Parent's
Subsidiaries that is a "Significant Subsidiary" (as such term is defined in
Regulation S-X promulgated by the SEC) is duly organized, validly existing and
in good standing under the laws of the jurisdiction of its incorporation. Each
Significant Subsidiary of Parent has the corporate power and authority to own or
lease all of its properties and assets and to carry on its business as it is now
being conducted, and is duly licensed or qualified to do business in each
jurisdiction in which the nature of the business conducted by it or the
character or location of the properties and assets owned or leased by it makes
such licensing or qualification necessary, except where the failure to be so
licensed or qualified would not have a Material Adverse Effect on Parent.
4.2. CAPITALIZATION. (a) As of December 31, 1996, the authorized
capital stock of Parent consists of 400,000,000 shares of Parent Common Stock
and 20,000,000 shares of preferred stock, par value $0.10 per share ("Parent
Preferred Stock"). As of December 31, 1996, there were (x) 189,668,922 shares
of Parent Common Stock issued and outstanding, (y) 8,489 shares of Parent
Preferred Stock issued and outstanding, which have been designated as Series B
Preferred Stock, (z) no shares of Parent Company Stock held in Parent's treasury
and (zz)
50
8,000,000 shares of Parent Common Stock issued to the Parent rabbi trust. As of
December 31, 1996, no shares of Parent Common Stock or Parent Preferred Stock
were reserved for issuance, except that (w) 11,094,645 shares of or held by
Parent Common Stock were reserved for issuance pursuant to Parent's Shareholder
Investment Plan, Employee Stock Purchase Plan, BEST Plan, Management Plan and
Retirement Plan and the Parent rabbi trust plans, (x) 16,033,233 shares of
Parent Common Stock were reserved for issuance upon the exercise of stock
options pursuant to the Parent 1989 Long Term Incentive Plan, (y) 2,000,000
shares of Parent Junior Participating Preferred Stock were reserved for issuance
upon exercise of the rights (the "Parent Rights") distributed to holders of
Parent Common Stock pursuant to the Shareholder Rights Agreement, dated as of
February 21, 1990, between Parent and First Chicago Trust Company of New York,
as Rights Agent (the "Rights Agreement"), (z) 44,510 shares of Parent Common
Stock were reserved for issuance upon conversion of issued and outstanding
shares of Parent Preferred Stock. All of the issued and outstanding shares of
Parent Common Stock and Parent Preferred Stock have been duly authorized and
validly issued and are fully paid, nonassessable and free of preemptive rights,
with no personal liability attaching to the ownership thereof. As of December
31, 1996, except as referred to above or
51
reflected in Section 4.2(a) of the Disclosure Schedule which is being delivered
by Parent to the Company herewith (the "Parent Disclosure Schedule") and except
for the Rights Agreement, Parent does not have and is not bound by any
outstanding subscriptions, options, warrants, calls, commitments or agreements
of any character calling for the purchase or issuance of any shares of Parent
Common Stock or Parent Preferred Stock or any other equity securities of Parent
or any securities representing the right to purchase or otherwise receive any
shares of Parent Common Stock or Parent Preferred Stock. The shares of Parent
Common Stock to be issued pursuant to the Merger will be duly authorized and
validly issued and, at the Effective Time, all such shares will be fully paid,
nonassessable and free of preemptive rights, with no personal liability
attaching to the ownership thereof.
(b) Except as set forth in Section 4.2(b) of the Parent
Disclosure Schedule, Parent owns, directly or indirectly, all of the issued and
outstanding shares of capital stock of each of the Significant Subsidiaries of
Parent, free and clear of all liens, charges, encumbrances and security
interests whatsoever, and all of such shares are duly authorized and validly
issued and are fully paid, nonassessable and free of preemptive rights, with no
personal liability attaching to the
52
ownership thereof. As of the date of this Agreement, no Significant Subsidiary
of Parent has or is bound by any outstanding subscriptions, options, warrants,
calls, commitments or agreements of any character with any party that is not a
direct or indirect Subsidiary of Parent calling for the purchase or issuance of
any shares of capital stock or any other equity security of such Significant
Subsidiary or any securities representing the right to purchase or otherwise
receive any shares of capital stock or any other equity security of such
Significant Subsidiary.
4.3. AUTHORITY; NO VIOLATION. (a) Parent has full corporate power and
authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby have been duly and
validly approved by the Board of Directors of Parent, and, except as set forth
in Section 4.3(b), no other corporate proceedings on the part of Parent are
necessary to consummate the transactions contemplated hereby. This Agreement
has been duly and validly executed and delivered by Parent and (assuming due
authorization, execution and delivery by the Company) constitutes a valid and
binding obligation of Parent, enforceable against Parent in accordance with its
terms, except as enforcement may be limited by gener-
53
al principles of equity whether applied in a court of law or a court of equity
and by bankruptcy, insolvency and similar laws affecting creditors' rights and
remedies generally.
(b) Upon its formation, Merger Sub will have full corporate power
and authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby will be duly and
validly approved by the Board of Directors of Merger Sub and by Parent as the
sole shareholder of Merger Sub, and, upon such approval, no other corporate
proceedings on the part of Merger Sub will be necessary to consummate the
transactions contemplated hereby. This Agreement will be duly and validly
executed and delivered by Merger Sub and (assuming due authorization, execution
and delivery by the Company) will constitute a valid and binding obligation of
Merger Sub, enforceable against Merger Sub in accordance with its terms, except
as enforcement may be limited by general principles of equity whether applied in
a court of law or a court of equity and by bankruptcy, insolvency and similar
laws affecting creditors' rights and remedies generally.
(c) Except as set forth in Section 4.3(c) of the Parent
Disclosure Schedule, neither the execution
54
and delivery of this Agreement by Parent or Merger Sub, nor the consummation by
Parent or Merger Sub of the transactions contemplated hereby, nor compliance by
Parent or Merger Sub with any of the terms or provisions hereof, will (i)
violate any provision of the Certificate of Incorporation or By-Laws of Parent,
or the articles of incorporation or by-laws or similar governing documents of
Merger Sub or (ii) assuming that the consents and approvals referred to in
Section 4.4 are duly obtained, (x) violate any statute, code, ordinance, rule,
regulation, judgment, order, writ, decree or injunction applicable to Parent,
Merger Sub or any of Parent's Subsidiaries or any of their respective properties
or assets, or (y) violate, conflict with, result in a breach of any provision of
or the loss of any benefit under, constitute a default (or an event which, with
notice or lapse of time, or both, would constitute a default) under, result in
the termination of or a right of termination or cancellation under, accelerate
the performance required by, or result in the creation of any lien, pledge,
security interest, charge or other encumbrance upon any of the respective
properties or assets of Parent, Merger Sub or any of Parent's Subsidiaries
under, any of the terms, conditions or provisions of any note, bond, mortgage,
indenture, deed of trust, license, lease, agreement or other instrument or
obligation to which Parent, Merger Sub or any of
55
Parent's Subsidiaries is a party, or by which they or any of their respective
properties or assets may be bound or affected, except (only in the case of
clause (y) above) for such violations, conflicts, breaches or defaults which
either individually or in the aggregate will not have or be reasonably likely to
have a Material Adverse Effect on Parent.
4.4. CONSENTS AND APPROVALS. Except for (a) the filing of
applications and notices, as applicable, with the Federal Reserve Board under
the BHC Act and approval of such applications and notices, (b) the filing with
the SEC of the S-4, (c) the filing of the Certificate of Merger with the
Secretary pursuant to the BCL, (d) review of this Agreement and the transactions
contemplated hereby by the DOJ and the FTC and any filings or notifications in
connection therewith, (e) the filing of an application with the NYSE to list the
Parent Common Stock to be issued in the Merger on the NYSE and the approval of
such application, (f) such filings as are required to be made in connection with
the formation of Merger Sub and (g) such filings, authorizations or approvals as
may be set forth in Section 4.4 of the Parent Disclosure Schedule, no consents
or approvals of or filings or registrations with any Governmental Entity or with
any third party are necessary in connection with the execution and delivery by
Parent and Merger Sub of this
56
Agreement and the consummation by Parent and Merger Sub of the transactions
contemplated hereby.
4.5. REPORTS; EXAMINATIONS. Except where the failure of any of the
following to be true and correct would not, individually or in the aggregate,
have a Material Adverse Effect on Parent: (i) each of Parent and its
Subsidiaries has timely filed all material reports, registrations and
statements, together with any amendments required to be made with respect
thereto, that it was required to file since December 31, 1991 with any
Governmental Entity and has paid all fees and assessments due and payable in
connection therewith; (ii) except for normal examinations conducted by a
Governmental Entity in the regular course of the business of Parent and its
Subsidiaries, no Governmental Entity has initiated any proceeding or, to the
best knowledge of Parent, investigation into the business or operations of
Parent or any of its Subsidiaries since December 31, 1991; and (iii) there is
no unresolved material violation, criticism, or exception by any Governmental
Entity with respect to any report or statement relating to any examinations of
Parent or any of its Subsidiaries.
4.6. FINANCIAL STATEMENTS. Parent has previously delivered to the
Company copies of (a) the consolidated balance sheets of Parent and its
Subsidiaries as of December 31, 1994 and 1995 and the related consolidated
57
statements of income, changes in shareholders' equity and cash flows for the
fiscal years 1993 through 1995, inclusive, as reported in Parent's Annual Report
on Form 10-K for the fiscal year ended December 31, 1995 filed with the SEC
under the Exchange Act, in each case accompanied by the audit report of Xxxxxx
Xxxxxxxx LLP, independent public accountants with respect to Parent, and (b) the
unaudited consolidated balance sheets of Parent and its Subsidiaries as of
September 30, 1996 and September 30, 1995 and the related unaudited consolidated
statements of income, changes in shareholders' equity and cash flows for the
nine-month periods then ended as reported in Parent's Quarterly Report on Form
10-Q for the period ended September 30, 1996 filed with the SEC under the
Exchange Act. The December 31, 1995 consolidated balance sheet of Parent
(including the related notes, where applicable) fairly presents the consolidated
financial position of Parent and its Subsidiaries as of the date thereof, and
the other financial statements referred to in this Section 4.5 (including the
related notes, where applicable) fairly present, and the financial statements of
Parent referred to in Section 6.8 will fairly present (subject, in the case of
the unaudited statements, to recurring audit adjustments normal in nature and
amount), the results of the consolidated operations and changes in shareholders'
equity and consolidated financial position
58
of Parent and its Subsidiaries for the respective fiscal periods or as of the
respective dates therein set forth; each of such statements (including the
related notes, where applicable) comply, and the financial statements of Parent
referred to in Section 6.8 will comply, in all material respects with applicable
accounting requirements and with the published rules and regulations of the SEC
with respect thereto; and each of such statements (including the related notes,
where applicable) has been, and the financial statements of Parent referred to
in Section 6.8 will be, prepared in accordance with GAAP consistently applied
during the periods involved, except as indicated in the notes thereto or, in the
case of unaudited statements, as permitted by Form 10-Q. The books and records
of Parent and its Subsidiaries have been, and are being, maintained in all
material respects in accordance with GAAP and any other applicable legal and
accounting requirements and reflect only actual transactions.
4.7. BROKER'S FEES. Neither Parent nor any of its Subsidiaries nor
any of their respective officers or directors has employed any broker or finder
or incurred any liability for any broker's fees, commissions or finder's fees in
connection with any of the transactions contemplated by this Agreement, except
that Parent has engaged, and will pay a fee or commission to, Xxxxxx
59
Xxxxxxx & Co. Incorporated ("Xxxxxx") in accordance with the terms of a letter
agreement between Xxxxxx and Parent, a true, complete and correct copy of which
has been previously delivered by Parent to the Company.
4.8. ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as may be set forth
in Section 4.8 of the Parent Disclosure Schedule, since December 31, 1995, no
event, circumstance or condition has occurred or has failed to occur which has
caused, or is reasonably likely to cause, individually or in the aggregate, a
Material Adverse Effect on Parent.
4.9. LEGAL PROCEEDINGS. Except as set forth in Section 4.9 of the
Parent Disclosure Schedule, neither Parent nor any of its Subsidiaries is a
party to any, and there are no pending or, to the best of Parent's knowledge,
threatened, legal, administrative, arbitral or other proceedings, claims,
actions or governmental or regulatory investigations of any nature against
Parent or any of its Subsidiaries or challenging the validity or propriety of
the transactions contemplated by this Agreement as to which there is a
reasonable probability of an adverse determination and which, if adversely
determined, would, individually or in the aggregate, have or be reasonably
likely to have a Material Adverse Effect on Parent or materially impair the
ability of the Company or Parent to consummate the transactions contemplated
here-
60
by. There is no injunction, order, judgment, decree, or regulatory restriction
imposed upon the Parent or any of its Subsidiaries or any of their respective
assets or properties which has had, or could reasonably be expected to have, a
Material Adverse Effect on Parent.
4.10. PARENT INFORMATION. The information relating to Parent and its
Subsidiaries to be contained in the S-4, or in any other document filed with any
Governmental Entity in connection herewith, will not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements therein, in light of the circumstances in which they are made,
not misleading.
4.11. COMPLIANCE WITH APPLICABLE LAW. Parent and each of its
Subsidiaries hold, and have at all times held, all material licenses,
franchises, permits and authorizations necessary for the lawful conduct of their
respective businesses under and pursuant to all, and have complied with and are
not in default in any respect under any, applicable law, statute, order, rule,
regulation, policy and/or guideline of any Governmental Entity relating to
Parent or any of its Subsidiaries, except where the failure to hold such
license, franchise, permit or authorization or such noncompliance or default
would not, individually or in the aggregate, have or be reasonably likely to
have a Material Adverse Effect on Parent, and
61
neither Parent nor any of its Subsidiaries knows of, or has received any notice
of, any material violations of any of the above.
4.12. SEC REPORTS. Parent has previously made available to the
Company to the extent requested an accurate and complete copy of each (a) final
registration statement, prospectus, report, schedule and definitive proxy
statement filed since January 1, 1994 by Parent with the SEC pursuant to the
Act or the Exchange Act (the "Parent Reports") and (b) communication mailed by
Parent to its shareholders since January 1, 1994, and no such registration
statement, prospectus, report, schedule, proxy statement or communication
contained any untrue statement of a material fact or omitted to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances in which they were made, not
misleading, except that information as of a later date shall be deemed to modify
information as of an earlier date. Parent has timely filed all Parent Reports
and other documents required to be filed by it under the Act and the Exchange
Act, and, as of their respective dates, all Parent Reports complied in all
material respects with the published rules and regulations of the SEC with
respect thereto.
62
4.13. UNDISCLOSED LIABILITIES. Except (a) as set forth in Section
4.13 of the Parent Disclosure Schedule, (b) for those liabilities that are fully
reflected or reserved against on the consolidated balance sheet of Parent and
its Subsidiaries as of December 31, 1995, (c) for expenses incurred in
connection with the transactions contemplated by this Agreement, and (d) for
liabilities incurred in the ordinary course of business consistent with past
practice since December 31, 1995 that, either alone or when combined with all
similar liabilities, have not had, and could not reasonably be expected to have,
a Material Adverse Effect on Parent, neither Parent nor any of its Subsidiaries
has incurred any liability of any nature whatsoever (whether absolute, accrued,
contingent or otherwise and whether due or to become due).
4.14. OWNERSHIP OF COMPANY COMMON STOCK. Except for the Option
Agreement, neither Parent nor any of its affiliates or associates (as such terms
are defined under Section 912 of the BCL), (i) beneficially own, directly or
indirectly, or (ii) is a party to any agreement, arrangement or understanding
for the purpose of acquiring, holding, voting or disposing of any shares of
capital stock of the Company (other than shares of Company Common Stock (x) held
directly or indirectly in trust accounts, managed accounts and the like or
otherwise held in a fiduciary capacity that are beneficially
63
owned by third parties and (y) held by Parent or any of its Subsidiaries in
respect of a debt previously contracted).
ARTICLE V
COVENANTS RELATING TO CONDUCT OF BUSINESS
5.1. COVENANTS OF THE COMPANY. During the period from the date of
this Agreement and continuing until the Effective Time, except as expressly
contemplated or permitted by this Agreement or with the prior written consent of
Parent, each of the Company and its Subsidiaries shall carry on its business in
the ordinary course consistent with past practice. The Company will use all
reasonable efforts to (x) preserve its business organization and that of its
Subsidiaries intact, (y) keep available to itself and Parent the present
services of the employees of the Company and its Subsidiaries and (z) preserve
for itself and Parent the goodwill of the customers of the Company and its
Subsidiaries and others with whom business relationships exist. Without
limiting the generality of the foregoing, and except as set forth on Section 5.1
of the Company Disclosure Schedule or as otherwise contemplated by this
Agreement or consented to in writing by Parent, the Company shall not, and shall
not permit any of its Subsidiaries to:
64
(a) solely in the case of the Company, declare or pay any
dividends on, or make other distributions in respect of, any shares of its
capital stock;
(b)(i) split, combine or reclassify any shares of its capital
stock or issue or authorize or propose the issuance of any other securities in
respect of, in lieu of or in substitution for the outstanding shares of its
capital stock, or (ii) repurchase, redeem or otherwise acquire any shares of the
capital stock of the Company, or any securities convertible into or exercisable
for any shares of the capital stock of the Company;
(c) issue, deliver or sell, or authorize or propose the issuance,
delivery or sale of, any shares of its capital stock or any securities
convertible into or exercisable for, or any rights, warrants or options to
acquire, any such shares, or enter into any agreement with respect to any of the
foregoing, other than (i) the issuance of Company Common Stock pursuant to stock
options or similar rights to acquire Company Common Stock granted pursuant to
the Stock Option Plan and outstanding prior to the date of this Agreement, in
each case in accordance with their present terms and (ii) the Option Agreement;
(d) amend its Restated Certificate, By-laws or other similar
governing documents;
65
(e) authorize or permit any of its officers, directors, employees
or agents to directly or indirectly solicit, initiate or encourage any inquiries
relating to, or the making of any proposal which constitutes, a "takeover
proposal" (as defined below), or, except to the extent legally required for the
discharge of the fiduciary duties of the Board of Directors of the Company, (i)
recommend or endorse any takeover proposal, (ii) participate in any discussions
or negotiations with respect to a takeover proposal, or (iii) provide third
parties with any nonpublic information, relating to any such inquiry or
proposal; PROVIDED, HOWEVER, that the Company may communicate information about
any such takeover proposal to its shareholders if such communication is required
under applicable law. The Company will immediately cease and cause to be
terminated any existing activities, discussions or negotiations previously
conducted with any parties other than Parent with respect to any of the
foregoing. The Company will take all actions necessary or advisable to inform
the appropriate individuals or entities referred to in the first sentence hereof
of the obligations undertaken in this Section 5.1(e). The Company will notify
Parent immediately if any such inquiries or takeover proposals are received by,
any such information is requested from, or any such negotiations or discussions
are sought to be initiated or continued
66
with, the Company, and the Company will inform Parent immediately in writing of
all of the relevant details with respect to the foregoing. As used in this
Agreement, "takeover proposal" shall mean any tender or exchange offer, proposal
for a merger, consolidation or other business combination involving the Company
or any Subsidiary of the Company or any proposal or offer to acquire in any
manner a substantial equity interest in, or a substantial portion of the assets
of, the Company or any Subsidiary of the Company other than the transactions
contemplated or permitted by this Agreement and the Option Agreement;
(f) make any capital expenditures other than expenses which (i)
are made in the ordinary course of business or are necessary to maintain
existing assets in good repair and (ii) in any event are in an amount of no more
than $25,000 individually and $100,000 in the aggregate and other than the
purchase of automobiles for sale or lease;
(g) enter into any new line of business;
(h) acquire or agree to acquire, by merging or consolidating
with, or by purchasing a substantial equity interest in or a substantial portion
of the assets of, or by any other manner, any business or any corporation,
partnership, association or other business organization or division thereof or
otherwise ac-
67
quire any assets, which would be material, individually or in the aggregate, to
the Company;
(i) take any action that is intended or may reasonably be
expected to result in any of its representations and warranties set forth in
this Agreement being or becoming untrue in any material respect, or in any of
the conditions to the Merger set forth in Article VII not being satisfied, or in
a violation of any provision of this Agreement, except, in every case, as may be
required by applicable law;
(j) change its methods of accounting in effect at June 30, 1996,
except as required by changes in GAAP as concurred to by the Company's
independent auditors;
(k)(i) except as required by applicable law or to maintain
qualification pursuant to the Code, adopt, amend, renew or terminate any Plan or
any agreement, arrangement, plan or policy between the Company or any Subsidiary
of the Company and one or more of its current or former directors, officers or
employees or (ii) except for normal increases in the ordinary course of
business consistent with past practice or except as required by applicable law,
increase in any manner the compensation or fringe benefits of any director,
officer or employee or pay any benefit not required by any plan or agreement as
in effect as of the date hereof (includ-
68
ing, without limitation, the granting of stock options, stock appreciation
rights, restricted stock, restricted stock units or performance units or
shares);
(l) take or cause to be taken (or fail to take or cause to be
taken) any action which would disqualify the Merger as a tax free reorganization
under Section 368 of the Code, provided, however, that nothing contained herein
shall prevent the Company from taking any action required by the Option
Agreement;
(m) other than activities in the ordinary course of business
consistent with past practice, sell, lease, encumber, assign or otherwise
dispose of, or agree to sell, lease, encumber, assign or otherwise dispose of,
any of its material assets, properties or other rights or agreements;
(n) other than in the ordinary course of business consistent with
past practice, incur any indebtedness for borrowed money, assume, guarantee,
endorse or otherwise as an accommodation become responsible for the obligations
of any other individual, corporation or other entity;
(o) create, renew, amend or terminate or give notice of a
proposed renewal, amendment or termination of, any material contract, agreement
or lease for goods, services or office space to which the Company or any of its
Subsidiaries is a party or by which any of
69
them or their respective assets or properties is bound; or
(p) agree to do any of the foregoing.
5.2. COVENANTS OF PARENT. Except as set forth in Section 5.2 of the
Parent Disclosure Schedule or as otherwise contemplated by this Agreement or
consented to in writing by the Company, Parent shall not, and shall not permit
any of its Subsidiaries to:
(a) solely in the case of Parent, declare or pay any
extraordinary or special dividends on or make any other extraordinary or special
distributions in respect of any of its capital stock; PROVIDED, HOWEVER, that
nothing contained herein shall prohibit Parent from increasing the quarterly
cash dividend on the Parent Common Stock;
(b) take any action that is intended or may reasonably be
expected to result in any of its representations and warranties set forth in
this Agreement being or becoming untrue in any material respect, or in any of
the conditions to the Merger set forth in Section 7.1 or Section 7.3 not being
satisfied, or in a violation of any provision of this Agreement, except, in
every case, as may be required by applicable law;
(c) take or cause to be taken (or fail to take or cause to be
taken) any action which would dis-
70
qualify the Merger as a tax-free reorganization under Section 368 of the Code;
(d) amend its Certificate of Incorporation or By-laws or other
governing instrument in a manner which would adversely affect in any manner the
terms of the Parent Common Stock or the ability of Parent to consummate the
transactions contemplated hereby; or
(e) agree to do any of the foregoing.
ARTICLE VI
ADDITIONAL AGREEMENTS
6.1. REGULATORY AND OTHER MATTERS. (a) The Company and Parent shall
promptly prepare and file with the SEC the S-4, in which the Proxy Statement
will be included as a prospectus. Each of the Company and Parent shall use all
reasonable efforts to have the S-4 declared effective under the Act as promptly
as practicable after such filing, and the Company shall thereafter mail the
Proxy Statement to its shareholders. Parent and the Company shall cooperate to
ensure that all shares of Parent Common Stock to be issued in the Merger are
registered with the SEC or are subject to agreements which provide for such
registration.
(b) The Company shall take all steps necessary to duly call,
give notice of, convene and hold a meeting of its shareholders to be held as
soon as is
71
reasonably practicable after the date on which the S-4 is declared effective by
the SEC for the purpose of voting upon the approval of this Agreement and the
consummation of the transactions contemplated hereby. The Company shall,
through its Board of Directors, except to the extent legally required for the
discharge of the fiduciary duties of such board, recommend to its shareholders
approval of this Agreement and the transactions contemplated hereby.
(c) The parties hereto shall cooperate with each other and use
their best efforts to promptly prepare and file all necessary documentation, to
effect all applications, notices, petitions and filings, and to obtain as
promptly as practicable all permits, consents, approvals and authorizations of
all third parties and Governmental Entities which are necessary or advisable to
consummate the transactions contemplated by this Agreement (it being understood
that any amendments to the S-4 as a consequence of a subsequent proposed merger,
stock purchase or similar acquisition by Parent or any of its Subsidiaries shall
not violate this covenant). The parties hereto agree that they will consult
with each other with respect to the obtaining of all permits, consents,
approvals and authorizations of all third parties and Governmental Entities
necessary or advisable to consummate the transactions contemplated by this
72
Agreement and each party will keep the other apprised of the status of matters
relating to completion of the transactions contemplated herein.
(d) Parent and the Company shall, upon request, furnish each
other with all information concerning themselves, their Subsidiaries, directors,
officers and shareholders and such other matters as may be reasonably necessary
or advisable in connection with the Proxy Statement, the S-4 or any other
statement, filing, notice or application made by or on behalf of Parent, the
Company or any of their respective Subsidiaries to any Governmental Entity in
connection with the Merger and the other transactions contemplated by this
Agreement.
6.2. ACCESS TO INFORMATION. (a) Upon reasonable notice and subject to
applicable laws relating to the exchange of information, the Company shall
afford to the officers, employees, accountants, counsel and other
representatives of Parent, access, during normal business hours during the
period prior to the Effective Time, to all its properties, books, contracts,
commitments, records, officers, employees, accountants, counsel and other
representatives and, during such period, the Company shall make available to
Parent (i) a copy of each report, schedule, registration statement and other
document filed or received by it during such period pursuant to the requirements
of applicable Federal or state laws
73
(other than reports or documents which the Company is not permitted to disclose
under applicable law) and (ii) all other information concerning its business,
properties and personnel as Parent may reasonably request. The Company shall
not be required to provide access to or to disclose information where such
access or disclosure would violate or prejudice the rights of the Company's
customers, jeopardize any attorney-client privilege or contravene any law, rule,
regulation, order, judgment, decree, fiduciary duty or binding agreement entered
into prior to the date of this Agreement. The parties hereto will make
appropriate substitute disclosure arrangements under circumstances in which the
restrictions of the preceding sentence apply.
(b) Upon reasonable notice and subject to applicable laws
relating to the exchange of information, Parent shall, and shall cause its
Subsidiaries to, afford to the officers, employees, accountants, counsel and
other representatives of the Company, access, during normal business hours
during the period prior to the Effective Time, to such information regarding
Parent and its Subsidiaries as shall be reasonably necessary for the Company to
confirm that the representations and warranties of Parent contained herein are
true and correct and that the covenants of Parent contained herein have been
performed in all material respects. Neither Parent nor
74
any of its Subsidiaries shall be required to provide access to or to disclose
information where such access or disclosure would violate or prejudice the
rights of Parent's customers, jeopardize any attorney-client privilege or
contravene any law, rule, regulation, order, judgment, decree, fiduciary duty or
binding agreement entered into prior to the date of this Agreement. The parties
hereto will make appropriate substitute disclosure arrangements under
circumstances in which the restrictions of the preceding sentence apply.
(c) All information furnished by a party to the other party or
its representatives pursuant hereto shall be treated as the sole property of the
furnishing party and, if the Merger shall not occur, each party receiving
information and its representatives shall return to the furnishing party all of
such written information and all documents, notes, summaries or other materials
containing, reflecting or referring to, or derived from, such information. Each
party receiving information shall, and shall use its best efforts to cause its
representatives to, keep confidential all such information, and shall not
directly or indirectly use such information for any competitive or other
commercial purpose. The obligation to keep such information confidential shall
continue for five years from the date the proposed Merger is abandoned and shall
not apply to (i)
75
any information which (w) was already in the receiving party's possession prior
to the disclosure thereof by the furnishing party; (x) was then generally known
to the public other than as a result of disclosure by the receiving party in
violation of the provisions hereof; (y) was already in the receiving party's
possession as a result of the pre-existing business relationship between the
receiving party and the furnishing party or (z) was disclosed to the receiving
party by a third party not known by the receiving party to be bound by an
obligation of confidentiality or (ii) disclosures made as required by law. If
the receiving party is requested or required (by oral question or request for
information or documents in legal proceedings, interrogatories, subpoena, civil
investigative demand or similar process) to disclose any information concerning
the receiving party, the receiving party will promptly notify the furnishing
party of such request or requirement so that the furnishing party may seek an
appropriate protective order and/or waive the receiving party's compliance with
the provisions or this Agreement. It is further agreed that, if in the absence
of a protective order or the receipt of a waiver hereunder the receiving party
is nonetheless, in the opinion of its counsel, compelled to disclose information
concerning the furnishing party to any tribunal or governmental body or agency
or else stand liable for contempt or suffer
76
other censure or penalty, the receiving party may disclose such information to
such tribunal or governmental body or agency to the extent necessary to comply
with such order as advised by counsel without liability hereunder.
(d) No investigation by either of the parties or their respective
representatives shall affect the representations, warranties, covenants or
agreements of the other set forth herein.
6.3. LEGAL CONDITIONS TO MERGER. Each of Parent and the Company
shall, and shall cause its Subsidiaries to, use their best efforts (a) to take,
or cause to be taken, all actions necessary, proper or advisable to comply
promptly with all legal requirements which may be imposed on such party or its
Subsidiaries with respect to the Merger and, subject to the conditions set forth
in Article VII hereof, to consummate the transactions contemplated by this
Agreement and (b) to obtain (and to cooperate with the other party to obtain)
any consent, authorization, order or approval of, or any exemption by, any
Governmental Entity and any other third party which is required to be obtained
by the Company or Parent or any of their respective Subsidiaries in connection
with the Merger and the other transactions contemplated by this Agreement (it
being understood that each party shall be responsible for obtaining all such
consents, author-
77
izations, orders or approvals from such parties with whom it is in contractual
privity or from such Governmental Entities that such party is required to obtain
under the applicable law, statute, order, rule, regulation, policy and/or
guideline), and to comply with the terms and conditions of such consent,
authorization, order or approval.
6.4. AFFILIATES. The Company shall use its best efforts to cause each
director, executive officer and other person who is an "affiliate" (for purposes
of Rule 145 under the Act) of the Company to deliver to the Parent, as soon as
practicable after the date of this Agreement, a written agreement, in the form
of Exhibit 6.4 hereto.
6.5. EMPLOYEE BENEFIT PLANS. Parent agrees to use its best efforts to
provide to all eligible employees of the Company who remain employees of the
Surviving Corporation following the Effective Time ("Continuing Employees")
employee welfare and pension benefits substantially equivalent (in the
aggregate) to either (i) those uniformly provided from time to time to similarly
situated employees of Parent and its Subsidiaries or (ii) those currently
provided by the Company and its Subsidiaries.
6.6. INDEMNIFICATION. (a) Following the Effective Time, Parent shall
indemnify, defend and hold
78
harmless each person who is or was prior to Effective Time an officer or a
director of the Company or any of its Subsidiaries (each, an "Indemnified
Party") against all losses, expenses (including reasonable attorney's fees and
expenses in advance of the final disposition of any claim, action, suit,
proceeding or investigation to each Indemnified Party upon receipt of any
undertaking required by applicable law), claims, damages or liabilities arising
out of actions or omissions occurring on or prior to the Effective Time
(including, without limitation, the transactions contemplated by this Agreement)
to the full extent provided under New York law and the Restated Certificate and
By-laws of the Company as in effect on the date hereof to the extent any such
provisions are, at the time indemnification pursuant to this Section 6.6(a) is
sought, permitted under New York law. Any Indemnified Party wishing to claim
indemnification under this Section 6.6, upon learning of any such claim, action,
suit, proceeding or investigation, shall notify Parent thereof, provided that
the failure to so notify shall not affect the obligations of Parent under this
Section 6.6 except to the extent such failure to notify materially prejudices
Parent. Parent's obligations under this Section 6.6 continue in full force and
effect for a period of six (6) years from the Effective Time; PROVIDED, HOWEVER,
that all rights to indemnification in re-
79
spect of any claim (a "Claim") asserted or made within such period shall
continue until the final disposition of such Claim.
(b) In connection with its indemnification obligations hereunder,
Parent shall have the right to assume the defense of any Claim and upon such
assumption Parent shall not be liable to any Indemnified Party for any legal
expenses of other counsel or any other expenses subsequently incurred by any
Indemnified Party in connection with the defense thereof, except that if Parent
elects not to assume such defense or counsel for the Indemnified Parties
reasonably advises the Indemnified Parties that there are issues which raise
conflicts of interests between Parent and the Indemnified Parties, the
Indemnified Parties may retain counsel reasonably satisfactory to them after
consultation with Parent, and Parent shall pay the reasonable fees and expenses
of such counsel for the Indemnified Parties. Parent shall be obligated pursuant
to this paragraph to pay for only one firm of counsel for all Indemnified
Parties. Parent shall not be liable for any settlement effected without its
prior written consent (which consent shall not be unreasonably withheld).
(c) The provisions of this Section 6.6 are intended to be for the
benefit of, and shall be
80
enforceable by, each Indemnified Party and his or her heirs and representatives.
6.7. STOCK EXCHANGE LISTING. Parent shall use all reasonable efforts
to cause the shares of Parent Common Stock to be issued in the Merger (other
than shares that may be subject to a registration rights agreement) to be
approved for listing on the NYSE, subject to official notice of issuance, as of
the Effective Time.
6.8. SUBSEQUENT INTERIM FINANCIAL STATEMENTS. As soon as reasonably
available, but in no event more than 45 days after the end of each fiscal
quarter ending after September 30, 1996 (other than the last quarter of each
party's respective fiscal year), each party will deliver to the other party such
delivering party's Quarterly Report on Form 10-Q, as filed with the SEC under
the Exchange Act, and as soon as reasonably available, but in no event more than
90 days after the end of each fiscal year, each party will deliver to the other
party such delivering party's Annual Report on Form 10-K, as filed with the SEC
under the Exchange Act.
6.9. ADVICE OF CHANGES. Parent and the Company shall promptly advise
the other party of any change or event having a Material Adverse Effect on it or
which it believes would or would be reasonably likely to cause or constitute a
material breach of any of its representa-
81
tions, warranties or covenants contained herein. From time to time prior to the
Effective Time (and on the date prior to the Closing Date), each party will
promptly supplement or amend the Disclosure Schedules delivered in connection
with the execution of this Agreement to reflect any matter which, if existing,
occurring or known at the date of this Agreement, would have been required to be
set forth or described in such Disclosure Schedules or which is necessary to
correct any information in such Disclosure Schedules which has been rendered
inaccurate thereby. No supplement or amendment to such Disclosure Schedules
shall have any effect for the purpose of determining satisfaction of the
conditions set forth in Sections 7.2(a) or 7.3(a) hereof, as the case may be, or
the compliance by the Company or Parent, as the case may be, with the respective
covenants and agreements of such parties contained herein.
6.10. CURRENT INFORMATION. During the period from the date of this
Agreement to the Effective Time, the Company will cause one or more of its
designated representatives to confer on a regular and frequent basis (not less
than monthly) with designated representatives of Parent and to report the
general status of the ongoing operations of the Company and its Subsidiaries.
Each of the parties will promptly notify the other of any material change in the
normal course of business or in the
82
operation of the properties of it or any of its Subsidiaries and of any
governmental complaints, investigations or hearings (or communications
indicating that the same may be contemplated), or the institution or the threat
of significant litigation involving it or any of its Subsidiaries, and will keep
the other fully informed of such events.
6.11. MERGER SUB. Parent shall cause Merger Sub to be duly organized
and to execute and deliver a letter agreeing to be bound by this Agreement and
to take all necessary action to complete the transactions contemplated hereby,
subject to the terms and conditions hereof.
6.12. ACCOUNTANT'S LETTER. The Company shall use its reasonable
efforts to cause to be delivered to Parent a letter of its independent public
accountants dated (i) the date on which the S-4 shall become effective and (ii)
a date shortly prior to the Effective Time, and addressed to Parent, in form and
substance customary for "comfort" letters delivered by independent accountants
in accordance with Statement of Financial Accounting Standards No. 72.
6.13. RECONCILIATION OF ACCOUNTS. As soon as practicable after the
date of this Agreement, the Company shall reconcile to the general ledger of the
Company as of December 31, 1996 (i) all cash accounts on the books
83
and records of the Company or its Subsidiaries, (ii) any accounts on the books
and records of the Company or any of its Subsidiaries having a balance in excess
of $2,000,000 and (iii) any other accounts on the books and records of the
Company representing suspense or any other items.
6.14. LEASE FINANCING. The Company shall, and shall cause its
Subsidiaries to, use reasonable efforts to finance all automobile leases
originated by the Company or its Subsidiaries on terms designed to minimize any
pre-payment penalties that could be imposed on the Company or any of its
Subsidiaries.
6.15. TERMINATION OF CERTAIN ACTIVITIES. (a) Immediately prior to
the Effective Time, the Company shall terminate the management services
agreement with WLNY without further payment by the Company as a result of such
termination.
(b) Immediately prior to the Effective Time, the Company shall
terminate (on terms reasonably satisfactory to Parent) any activities conducted
by the Company that Parent determines cannot be conducted under banking laws
applicable to Parent or its Subsidiaries.
ARTICLE VII
CONDITIONS PRECEDENT
84
7.1. CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGER. The
respective obligation of each party to effect the Merger shall be subject to the
satisfaction at or prior to the Effective Time of the following conditions:
(a) SHAREHOLDER APPROVAL. This Agreement shall have been duly
and validly approved and adopted by the requisite vote of the shareholders of
the Company.
(b) NYSE LISTING. The shares of Parent Common Stock which shall
be issued to the shareholders of the Company upon consummation of the Merger
(other than shares that may be subject to a registration rights agreement) shall
have been authorized for listing on the NYSE, subject to official notice of
issuance.
(c) OTHER APPROVALS. All regulatory approvals or notifications
required to consummate the transactions contemplated hereby (including, without
limitation, any approvals required under ISRA and any notifications under the
Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended, but not
including any approvals required under state sales finance laws) shall have been
obtained and shall remain in full force and effect and all statutory waiting
periods in respect thereof shall have expired (all such approvals and the
expiration of all such waiting periods being referred to herein as the
"Requisite Regulatory Approvals").
85
(d) S-4. The S-4 shall have become effective under the Act and
shall not be subject to a stop order or threatened stop order by the SEC.
(e) NO INJUNCTIONS OR RESTRAINTS; ILLEGALITY. No order,
injunction or decree issued by any court or agency of competent jurisdiction or
other legal restraint or prohibition (an "Injunction") preventing the
consummation of the Merger or any of the other transactions contemplated by this
Agreement shall be in effect. No statute, rule, regulation, order, injunction
or decree shall have been enacted, entered, promulgated or enforced by any
Governmental Entity which prohibits, restricts or makes illegal consummation of
the Merger.
7.2. CONDITIONS TO OBLIGATIONS OF PARENT AND MERGER SUB. The
obligations of Parent and Merger Sub to effect the Merger are also subject to
the satisfaction or waiver by Parent at or prior to the Effective Time of the
following conditions:
(a) REPRESENTATIONS AND WARRANTIES. (I) The representations and
warranties of the Company set forth in Sections 3.2, 3.3(a), 3.3(b)(ii)(x) and
3.17 of this Agreement shall be true and correct in all respects as of the date
of this Agreement and (except to the extent such representations and warranties
speak as of an earlier date) as of the Closing Date as though made on and as of
the Closing Date; and (II) the representations
86
and warranties of the Company set forth in this Agreement other than those
specifically enumerated in clause (I) hereof shall be true and correct in all
respects as of the date of this Agreement and (except to the extent such
representations and warranties speak as of an earlier date) as of the Closing
Date as though made on and as of the Closing Date; PROVIDED, HOWEVER, that for
purposes of determining the satisfaction of the condition contained in this
clause (II), no effect shall be given to any exception in such representations
and warranties relating to materiality or a Material Adverse Effect, and
PROVIDED, FURTHER, HOWEVER, that, for purposes of this clause (II), such
representations and warranties shall be deemed to be true and correct in all
respects unless the failure or failures of such representations and warranties
to be so true and correct, individually or in the aggregate, represent a
Material Adverse Effect on the Company. Parent shall have received a
certificate signed on behalf of the Company by the Chief Executive Officer and
the Chief Financial Officer of the Company to the foregoing effect.
(b) PERFORMANCE OF OBLIGATIONS OF THE COMPANY. The Company shall
have performed in all material respects all obligations required to be performed
by it under this Agreement at or prior to the Closing Date, and Parent shall
have received a certificate signed on
87
behalf of the Company by the Chief Executive Officer and the Chief Financial
Officer of the Company to such effect.
(c) CONSENTS UNDER AGREEMENTS. The consent, approval or waiver
of each person (other than the Governmental Entities referred to in Section
7.1(b)) whose consent or approval shall be required in order to permit the
succession by the Surviving Corporation pursuant to the Merger to any
obligation, right or interest of the Company under any loan or credit agreement,
note, mortgage, indenture, lease, license or other agreement or instrument shall
have been obtained, except where the failure to obtain such consent, approval or
waiver would not so materially adversely affect the economic or business
benefits of the transactions contemplated by this Agreement to Parent as to
render inadvisable, in the reasonable good faith judgment of Parent, the
consummation of the Merger.
(d) NO PENDING GOVERNMENTAL ACTIONS. No proceeding initiated by
any Governmental Entity seeking an Injunction shall be pending.
(e) AMENDMENT OF CONTRACT. The Company shall have amended the
EVRI Agreement to provide that (i) the additional consideration payable in Class
A Common Stock under Section 3.01(a) thereunder shall instead be payable in
Parent Common Stock on the same terms and
88
conditions as contained in such Section 3.01(a) and in the same manner as
contemplated by Section 3.01(b) thereunder and (ii) the maximum consideration
payable (in Parent Common Stock) shall not exceed $2,800,000.
(f) FEDERAL TAX OPINION. Parent shall have received an opinion
of counsel to Parent (which opinion if not rendered by Skadden, Arps, Slate,
Xxxxxxx & Xxxx LLP ("SASMF") shall be rendered by counsel designated by the
Company and reasonably acceptable to Parent), in form and substance reasonably
satisfactory to Parent, dated as of the Effective Time, substantially to the
effect that, on the basis of facts, representations and assumptions set forth in
such opinion which are consistent with the state of facts existing at the
Effective Time, the Merger will be treated as a reorganization within the
meaning of Section 368(a) of the Code and that, accordingly, for federal income
tax purposes no gain or loss will be recognized by Parent, Merger Sub or the
Company as a result of the Merger. In rendering such opinion, counsel to Parent
may require and rely upon representations and covenants contained in
certificates of officers of Parent, Merger Sub, the Company and others.
(g) LEGAL OPINION. Parent shall have the received the opinion
of the Company's Counsel (as defined below) as to the matters set forth in
Exhibit 7.2(g).
89
(h) KEY EMPLOYEES. The Company shall have entered into
employment arrangements satisfactory to it with those employees of the Company
whose names are set forth set forth on Exhibit 7.2(h) attached hereto, such
employees shall be employed by the Company and shall not have indicated any
intent to leave the employ of the Company.
(i) DISSENTER'S RIGHTS. Holders of less than 5% of the Company
Common Stock shall have elected to exercise appraisal rights in accordance with
the BCL in connection with the Merger.
(j) SALES FINANCE APPROVALS. The Company shall have received
approval of the Merger under applicable state sales finance laws, rules and
regulations from states in which the Company originated at least 83% of the
aggregate principal amount of its retail installment contract portfolio for the
prior six months ending December 31, 1996. Notwithstanding anything to the
contrary contained herein, in the event this condition is satisfied, Parent
shall not be entitled to assert any breach by the Company of any representation,
warranty or covenant to the extent such representation, warranty or covenant
relates to the obtaining of the approvals contemplated by this Section 7.2(j).
7.3. CONDITIONS TO OBLIGATIONS OF THE COMPANY. The obligation of the
Company to effect the Merger is
90
also subject to the satisfaction or waiver by the Company at or prior to the
Effective Time of the following conditions:
(a) REPRESENTATIONS AND WARRANTIES. (I) The representations and
warranties of Parent set forth in Sections 4.3(a), 4.3(b) and 4.3(c)(ii)(x) of
this Agreement shall be true and correct in all respects as of the date of this
Agreement and (except to the extent such representations and warranties speak as
of an earlier date) as of the Closing Date as though made on and as of the
Closing Date; and (II) the representations and warranties of Parent set forth in
this Agreement other than those specifically enumerated in clause (I) hereof
shall be true and correct in all respects as of the date of this Agreement and
(except to the extent such representations and warranties speak as of an earlier
date) as of the Closing Date as though made on and as of the Closing Date;
PROVIDED, HOWEVER, that for purposes of determining the satisfaction of the
condition contained in this clause (II), no effect shall be given to any
exception in such representations and warranties relating to materiality or a
Material Adverse Effect, and PROVIDED, FURTHER, HOWEVER, that, for purposes of
this clause (II), such representations and warranties shall be deemed to be true
and correct in all respects unless the failure or failures of such
representations and warranties to be so true
91
and correct, individually or in the aggregate, represent a Material Adverse
Effect on Parent. The Company shall have received a certificate signed on
behalf of Parent by the Chief Executive Officer and the Chief Financial Officer
(or other appropriate executive officers reasonably satisfactory to the Company)
of Parent to the foregoing effect.
(b) PERFORMANCE OF OBLIGATIONS OF PARENT. Parent shall have
performed in all material respects all obligations required to be performed by
it under this Agreement at or prior to the Closing Date, and the Company shall
have received a certificate signed on behalf of Parent by the Chief Executive
Officer and the Chief Financial Officer (or other appropriate executive officers
reasonably satisfactory to the Company) of Parent to such effect.
(c) CONSENTS UNDER AGREEMENTS. The consent, approval or waiver
of each person (other than the Governmental Entities referred to in Section
7.1(b)) whose consent or approval shall be required in connection with the
transactions contemplated hereby under any loan or credit agreement, note,
mortgage, indenture, lease, license or other agreement or instrument to which
Parent or any of its Subsidiaries is a party or is otherwise bound, except those
for which failure to obtain such consents and approvals would not, individually
or in the
92
aggregate, have a Material Adverse Effect on Parent (after giving effect to the
transactions contemplated hereby), shall have been obtained.
(d) NO PENDING GOVERNMENTAL ACTIONS. No proceeding initiated by
any Governmental Entity seeking an Injunction shall be pending.
(e) FEDERAL TAX OPINION. The Company shall have received an
opinion of Rosenman & Colin LLP (the "Company's Counsel"), in form and substance
reasonably satisfactory to the Company, dated as of the Effective Time,
substantially to the effect that, on the basis of facts, representations and
assumptions set forth in such opinion which are consistent with the state of
facts existing at the Effective Time, the Merger will be treated as a
reorganization within the meaning of Section 368(a) of the Code and that,
accordingly, for federal income tax purposes:
(i) No gain or loss will be recognized by the
Company as a result of the Merger;
(ii) No gain or loss will be recognized by the
shareholders of the Company who exchange all of their
Company Common Stock solely for Parent Common Stock pursuant
to the Merger (except with respect to cash
93
received in lieu of a fractional share interest in Parent Common
Stock);
(iii) The aggregate tax basis of the Parent Common
Stock received by shareholders who exchange all of their
Company Common Stock solely for Parent Common Stock pursuant
to the Merger will be the same as the aggregate tax basis of
the Company Common Stock surrendered in exchange therefor.
In rendering such opinion, the Company's Counsel may require and rely
upon representations and covenants contained in certificates of officers of
Parent, the Company and others.
(f) LEGAL OPINION. The Company shall have the received the opinion
of SASMF (and, to the extent that any such opinions involve matters relating to
laws other than Federal or New York law, of local counsel to Parent) as to the
matters set forth in Exhibit 7.3(f).
ARTICLE VIII
TERMINATION AND AMENDMENT
8.1. TERMINATION. This Agreement may be terminated at any time prior
to the Effective Time:
94
(a) by mutual consent of the Company and Parent in a written
instrument, which consent in the case of the Company shall require a vote of a
majority of the members of the Company's entire Board of Directors;
(b) by either Parent or the Company upon written notice to the
other party (i) 30 days after the date on which any request or application for a
Requisite Regulatory Approval shall have been denied or withdrawn at the request
or recommendation of the Governmental Entity which must grant such Requisite
Regulatory Approval, unless within the 30-day period following such denial or
withdrawal a petition for rehearing or an amended application has been filed
with the applicable Governmental Entity, PROVIDED, HOWEVER, that no party shall
have the right to terminate this Agreement pursuant to this Section 8.1(b)(i) if
such denial or request or recommendation for withdrawal shall be due to the
failure of the party seeking to terminate this Agreement to perform or observe
the covenants and agreements of such party set forth herein or (ii) if any
Governmental Entity of competent jurisdiction shall have issued a final
nonappealable order enjoining or otherwise prohibiting the consummation of any
of the transactions contemplated by this Agreement;
(c) by either Parent or the Company if the Merger shall not have
been consummated on or before
95
September 30, 1997, unless the failure of the Closing to occur by such date
shall be due to the failure of the party seeking to terminate this Agreement to
perform or observe the covenants and agreements of such party set forth herein;
(d) by either Parent or the Company (provided that the
terminating party is not then in material breach of any representation,
warranty, covenant or other agreement contained herein) if there shall have been
a material breach of any of the representations or warranties set forth in this
Agreement on the part of the other party, which breach is not cured within
thirty days following written notice to the party committing such breach, or
which breach, by its nature, cannot be cured prior to the Closing; PROVIDED,
HOWEVER, that neither party shall have the right to terminate this Agreement
pursuant to this Section 8.1(d) unless the breach of representation or warranty,
together with all other such breaches, would entitle the party receiving such
representation not to consummate the transactions contemplated hereby under
Section 7.2(a) (in the case of a breach of representation or warranty by the
Company) or Section 7.3(a) (in the case of a breach of representation or
warranty by Parent);
(e) by either Parent or the Company (provided that the
terminating party is not then in material
96
breach of any representation, warranty, covenant or other agreement contained
herein) if there shall have been a material breach of any of the covenants or
agreements set forth in this Agreement on the part of the other party, which
breach shall not have been cured within thirty days following receipt by the
breaching party of written notice of such breach from the other party hereto; or
(f) by either Parent or the Company (provided that the Company
shall not be entitled to terminate this Agreement pursuant to this Section
8.1(f) if it is in material breach of any of its obligations under Section
6.1(b) and any related obligations hereunder) if any approval of the
shareholders of the Company required for the consummation of the Merger shall
not have been obtained at a duly held meeting of such shareholders or at any
adjournment or postponement thereof.
8.2. EFFECT OF TERMINATION. In the event of termination of this
Agreement by either Parent or the Company as provided in Section 8.1, this
Agreement shall forthwith become void and have no effect except (i) Section
6.2(c) and Sections 8.2 and 9.4 shall survive any termination of this Agreement,
(ii) no party shall have any liability hereunder arising out of such party's
non-willful breach of any provision of this Agreement and (iii) that
notwithstanding anything to the contrary contained in this Agreement, no party
shall be relieved or
97
released from any liabilities or damages arising out of its willful breach of
any provision of this Agreement.
8.3. AMENDMENT. Subject to compliance with applicable law, this
Agreement may be amended by the parties hereto, by action taken or authorized by
their respective Boards of Directors; PROVIDED, HOWEVER, there may not be,
without further approval of the shareholders of the Company, any amendment of
this Agreement which reduces the amount or changes the form of the consideration
to be delivered to the shareholders of the Company hereunder. This Agreement
may not be amended except by an instrument in writing signed on behalf of each
of the parties hereto.
8.4. EXTENSION; WAIVER. At any time prior to the Effective Time, the
parties hereto, to the extent legally allowed, (a) extend the time for the
performance of any of the obligations or other acts of the other parties hereto,
(b) waive any inaccuracies in the representations and warranties contained
herein or in any document delivered pursuant hereto and (c) waive compliance
with any of the agreements or conditions contained herein. Any agreement on the
part of a party hereto to any such extension or waiver shall be valid only if
set forth in a written instrument signed on behalf of such party, but such
extension or waiver or failure to insist on strict compliance with an
obligation, covenant, agree-
98
ment or condition shall not operate as a waiver of, or estoppel with respect to,
any subsequent or other failure.
ARTICLE IX
GENERAL PROVISIONS
9.1. CLOSING. Subject to the terms and conditions of this Agreement,
the closing of the Merger (the "Closing") will take place at 10:00 a.m. on a
date to be specified by the parties, which unless Parent shall in its sole
discretion determine otherwise, shall be the first day which is (a) at least ten
business days after the satisfaction or waiver (subject to applicable law) of
the latest to occur of the conditions set forth in Article VII hereof and (b)
the first or last business day of a month (the "Closing Date"), at the offices
of Parent.
9.2. ALTERNATIVE STRUCTURE. Notwithstanding anything to the contrary
contained in this Agreement, prior to the Effective Time, Parent shall be
entitled to revise the structure of the Merger in order to provide that Merger
Sub shall be owned by a Subsidiary of Parent provided that any such revised
structure shall (i) not subject any of the shareholders of the Company to
adverse tax consequences or change the amount of consideration to be received by
such shareholders, (ii) not materially delay the Closing and (iii) not
jeopardize the satisfaction of any of the conditions set forth in Article VII.
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This Agreement and any related documents shall be appropriately amended in order
to reflect any such revised structure.
9.3. NONSURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS. None
of the representations, warranties, covenants and agreements in this Agreement
or in any instrument delivered pursuant to this Agreement shall survive the
Effective Time, except for those covenants and agreements contained herein and
therein which by their terms apply in whole or in part after the Effective Time.
9.4. EXPENSES. All costs and expenses incurred in connection with
this Agreement and the transactions contemplated hereby shall be paid by the
party incurring such expense, PROVIDED, HOWEVER, that the costs and expenses of
printing and mailing the Information Statement to the shareholders of the
Company, and all filing and other fees paid to the SEC or any other Governmental
Entity in connection with the Merger and the other transactions contemplated
hereby, shall be borne equally by Parent and the Company.
9.5. NOTICES. All notices and other communications hereunder shall be
in writing and shall be deemed given if delivered personally, telecopied (with
confirmation), mailed by registered or certified mail (return receipt requested)
or delivered by an express courier
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(with confirmation) to the parties at the following addresses (or at such other
address for a party as shall be specified by like notice):
(a) if to Parent, to:
Xxxxxxx Xxxxx, Inc.
00 Xxxxx Xxxxx Xxxxxx
Xxxxxxxxxxxx, Xxxxxxx 00000
Attn: Xxxxxx Xxxxxx, Xx.,
Executive Vice President
with a copy to:
Skadden, Arps Slate, Xxxxxxx & Xxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxx X. Xxxxx, III, Esq.
and
(b) if to the Company, to:
Oxford Resources Corp.
000 Xxxxx Xxxxxxx Xxxx
Xxxxxxxx, Xxx Xxxx 00000
Attn: Chief Executive Officer
with a copy to:
Rosenman & Colin LLP
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxx X. Xxxxxxx, Esq.
9.6. INTERPRETATION. When a reference is made in this Agreement to
Sections, Exhibits or Schedules, such reference shall be to a Section of or
Exhibit or Schedule to this Agreement unless otherwise indicated. The phrases
"the date of this Agreement", "the date hereof" and terms of similar import,
unless the context otherwise requires, shall be deemed to refer to January 14,
1997.
101
9.7. COUNTERPARTS. This Agreement may be executed in counterparts,
all of which shall be considered one and the same agreement and shall become
effective when counterparts have been signed by each of the parties and
delivered to the other parties, it being understood that all parties need not
sign the same counterpart.
9.8. ENTIRE AGREEMENT. This Agreement (including the documents, the
Company Disclosure Schedule, the Parent Disclosure Schedule and the instruments
referred to herein) constitutes the entire agreement and supersedes all prior
agreements and understandings, both written and oral, among the parties with
respect to the subject matter hereof.
9.9. GOVERNING LAW. This Agreement shall be governed and construed in
accordance with the laws of the State of New York, without regard to any
applicable conflicts of law principles thereof.
9.10. SEVERABILITY. Any term or provision of this Agreement which is
invalid or unenforceable in any jurisdiction shall, as to that jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other ju-
102
risdiction. If any provision of this Agreement is so broad as to be
unenforceable, the provision shall be interpreted to be only so broad as is
enforceable.
9.11. PUBLICITY. Except as otherwise required by law or the rules of
the NYSE or NASDAQ, so long as this Agreement is in effect, neither Parent nor
the Company shall, or shall permit any of its Subsidiaries to, issue or cause
the publication of any press release or other public announcement with respect
to, or otherwise make any public statement concerning, the transactions
contemplated by this Agreement without the consent of the other party, which
consent shall not be unreasonably withheld.
9.12. ASSIGNMENT; NO THIRD PARTY BENEFICIARIES. Neither this
Agreement nor any of the rights, interests or obligations hereunder shall be
assigned by any of the parties hereto (whether by operation of law or otherwise)
without the prior written consent of the other parties. Subject to the
preceding sentence, this Agreement will be binding upon, inure to the benefit of
and be enforceable by the parties and their respective successors and assigns.
Except as otherwise expressly provided herein, this Agreement is not intended to
confer upon any person other than the parties hereto any rights or remedies
hereunder.
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9.13. ENFORCEMENT OF AGREEMENT. The parties hereto agree that
irreparable damage would occur in the event that the provisions contained in
this Agreement were not performed in accordance with their specific terms or
were otherwise breached. It is accordingly agreed that the parties shall be
entitled to an injunction or injunctions to prevent breaches of this Agreement
and to enforce specifically the terms and provisions hereof in any court of the
United States or any state thereof having jurisdiction, this being in addition
to any other remedy to which they are entitled in law or in equity.
9.14. WAIVER. In any proceeding by or against the Company or any of
its current shareholders (collectively, the "Company Parties") (x) wherein
Parent, Merger Sub or the corporation surviving the Merger (the "Surviving
Corporation" and, together with Parent and Merger Sub, the "Parent Parties")
assert or prosecute any claim under, or otherwise seek to enforce, this
Agreement or any document, instrument or agreement executed and delivered in
connection therewith or (y) wherein the Company Parties assert or prosecute any
claim under, or otherwise seek to enforce this Agreement or any document,
instrument or agreement executed and delivered in connection therewith, each of
the Parent Parties agrees in connection with such proceeding (i)
104
that neither any of the Parent Parties nor its counsel will move to seek
disqualification of Rosenman & Colin LLP and (ii) to consent to the
representation of any Company Party by Rosenman & Colin LLP, notwithstanding
that Rosenman & Colin LLP has or may have represented such Company Party as
counsel in connection with any matter, including, without limitation, any
transaction (including, without limitation, the transaction contemplated by this
Agreement), negotiations, investigation, proceeding or action, prior to the time
of the Closing.
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IN WITNESS WHEREOF, Parent and the Company have caused this Agreement
to be executed by their respective officers thereunto duly authorized as of the
date first above written.
XXXXXXX XXXXX, INC.
By /s/ Xxxxxx X. Xxxxxx, Xx.
----------------------------
Name: Xxxxxx X. Xxxxxx, Xx.
Title: Exec. Vice President
Attest:
/s/ Xxxxx X. Xxxxx
-------------------------
Name: Xxxxx X. Xxxxx
OXFORD RESOURCES CORP.
By /s/ Xxxxxxx X. Xxxxxxxx
----------------------------
Name: Xxxxxxx X. Xxxxxxxx
Title: Chairman
Attest:
/s/ Xxxx X. Xxxxxxx
-------------------------
Name: Xxxx X. Xxxxxxx
