EXHIBIT 2.1
AGREEMENT AND PLAN OF MERGER
Dated as of March 4, 1998
Among
FIRST UNION CORPORATION,
FIRST UNION NATIONAL BANK,
and
THE MONEY STORE INC.
TABLE OF CONTENTS
ARTICLE I THE MERGER
SECTION 1.1. THE MERGER.................................1
SECTION 1.2. EFFECTIVE TIME.............................2
SECTION 1.3. CLOSING....................................2
SECTION 1.4. EFFECTS OF THE MERGER......................2
SECTION 1.5. CERTIFICATE OF INCORPORATION AND BYLAWS....2
SECTION 1.6. DIRECTORS..................................3
SECTION 1.7. OFFICERS...................................3
ARTICLE II CONVERSION OF SECURITIES; EXCHANGE OF CERTIFICATES
SECTION 2.1. EFFECT ON CAPITAL STOCK....................3
SECTION 2.2. EXCHANGE OF CERTIFICATES...................5
SECTION 2.3. COMPANY OPTIONS............................8
SECTION 2.4. EXCHANGE AGENT.............................9
SECTION 2.5. TRANSFER OF SHARES AFTER THE EFFECTIVE
TIME.......................................9
SECTION 2.6. FURTHER ASSURANCES.........................9
SECTION 2.7. RESERVATION OF RIGHT TO REVISE
TRANSACTION................................10
ARTICLE III REPRESENTATIONS
SECTION 3.1. ORGANIZATION; AUTHORITY....................10
SECTION 3.2 SUBSIDIARIES...............................11
SECTION 3.3. CAPITALIZATION.............................11
SECTION 3.4. AUTHORIZATION..............................12
SECTION 3.5. CONSENT AND APPROVALS; NO VIOLATIONS.......12
SECTION 3.6. SEC REPORTS AND FINANCIAL STATEMENTS.......13
SECTION 3.7. ABSENCE OF CERTAIN CHANGES OR EVENTS.......13
SECTION 3.8. NO UNDISCLOSED LIABILITIES.................14
SECTION 3.9. INFORMATION SUPPLIED.......................15
SECTION 3.10. BENEFIT PLANS..............................15
SECTION 3.11. LITIGATION.................................17
SECTION 3.12. COMPLIANCE WITH APPLICABLE LAW.............18
SECTION 3.13. TAX MATTERS................................18
SECTION 3.14. STATE TAKEOVER STATUTES; DISSENTERS
RIGHTS.....................................19
SECTION 3.15. BROKERS; SCHEDULE OF FEES AND EXPENSES.....19
SECTION 3.16. OPINION OF FINANCIAL ADVISOR...............20
SECTION 3.17. MATERIAL CONTRACTS.........................20
SECTION 3.18. LABOR MATTERS..............................20
SECTION 3.19. ENVIRONMENTAL MATTERS......................21
SECTION 3.20. PROPRIETARY RIGHTS.........................22
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB
SECTION 4.1. ORGANIZATION...............................22
SECTION 4.2. CAPITALIZATION.............................22
SECTION 4.3. AUTHORIZATION..............................23
SECTION 4.4. CONSENTS AND APPROVALS; NO VIOLATIONS......23
SECTION 4.5. SEC REPORTS AND FINANCIAL STATEMENTS.......24
SECTION 4.6. ABSENCE OF CERTAIN CHANGES OR EVENTS.......24
SECTION 4.7. NO UNDISCLOSED LIABILITIES.................25
SECTION 4.8. INTERIM OPERATIONS OF SUB..................25
SECTION 4.9 LITIGATION.................................25
SECTION 4.10. COMPLIANCE WITH APPLICABLE LAW.............25
SECTION 4.11. TAX RETURNS................................26
SECTION 4.12. BROKERS....................................26
SECTION 4.13. REGISTRATION STATEMENT.....................26
SECTION 4.14. ISSUANCE OF PARENT STOCK...................26
SECTION 4.15. COMPANY STOCK..............................27
SECTION 4.15. TAX FREE REORGANIZATION....................27
ARTICLE V COVENANTS
SECTION 5.1. AFFIRMATIVE COVENANTS OF THE COMPANY.......27
SECTION 5.2. NEGATIVE COVENANTS OF THE COMPANY..........27
SECTION 5.3. NEGATIVE COVENANTS OF PARENT...............29
ARTICLE VI ADDITIONAL AGREEMENTS
SECTION 6.1. ACCESS AND INFORMATION.....................30
SECTION 6.2. CONFIDENTIALITY............................30
SECTION 6.3. REGISTRATION STATEMENT; PROXY STATEMENT....31
SECTION 6.4. STOCKHOLDER APPROVAL.......................33
SECTION 6.5. FURTHER ACTION; REASONABLE BEST EFFORTS....33
SECTION 6.6. PUBLIC ANNOUNCEMENTS.......................34
SECTION 6.7. DIRECTORS' AND OFFICERS' INSURANCE AND
INDEMNIFICATION............................34
SECTION 6.8. HRS ACT MATTERS............................35
SECTION 6.9. NO SOLICITATION............................35
SECTION 6.10. AFFILIATE AGREEMENTS.......................37
SECTION 6.11. LISTING OF PARENT SHARES; BLUE SKY LAWS....37
SECTION 6.12. EXPENSES...................................37
SECTION 6.13. LETTER OF PARENT'S ACCOUNTANTS.............38
SECTION 6.14. LETTER OF THE COMPANY'S ACCOUNTANTS........38
SECTION 6.15. TAX TREATMENT..............................38
SECTION 6.16. ASSUMPTION OF CERTAIN OBLIGATIONS..........38
SECTION 6.17. NO ACTION..................................39
SECTION 6.18. CONDUCT OF BUSINESS OF SUB.................39
SECTION 6.19. EMPLOYEE BENEFIT PLANS.....................39
SECTION 6.20. EMPLOYMENT CONTRACTS.......................39
SECTION 6.21. PERFORMANCE BONUS PLAN.....................40
SECTION 6.22. FINAL TAX RETURNS..........................40
SECTION 6.23. DIVIDEND COORDINATION......................40
SECTION 6.24. RESTRICTIONS ON CERTAIN ACTIONS............40
SECTION 6.25. CERTAIN POLICIES OF THE COMPANY............41
ARTICLE VII CLOSING CONDITIONS
SECTION 7.1. CONDITIONS TO OBLIGATIONS OF PARENT, SUB
AND THE COMPANY TO EFFECT THE MERGER.......41
SECTION 7.2. ADDITIONAL CONDITIONS TO OBLIGATIONS OF
PARENT AND SUB.............................42
SECTION 7.3. ADDITIONAL CONDITIONS TO OBLIGATIONS OF
THE COMPANY................................43
ARTICLE VIII TERMINATION, AMENDMENT AND WAIVER
SECTION 8.1. TERMINATION................................43
SECTION 8.2. EFFECT OF TERMINATION......................45
ARTICLE IX GENERAL PROVISIONS
SECTION 9.1. NONSURVIVAL OF REPRESENTATIONS,
WARRANTIES AND AGREEMENTS.................45
SECTION 9.2. NOTICES...................................46
SECTION 9.3. CERTAIN DEFINITIONS.......................47
SECTION 9.4. HEADINGS..................................48
SECTION 9.5. ENTIRE AGREEMENT..........................48
SECTION 9.6 SEVERABILITY..............................48
SECTION 9.7. NO THIRD PARTY BENEFICIARIES..............48
SECTION 9.8. GOVERNING LAW.............................49
SECTION 9.9. DISCLOSURE SCHEDULES......................49
SECTION 9.10. COUNTERPARTS..............................49
EXHIBITS
EXHIBIT A FORM OF COMPANY AFFILIATE AGREEMENT
EXHIBIT B FORM OF EXECUTIVE EMPLOYMENT AGREEMENT
EXHIBIT C FORM OF GENERAL EMPLOYMENT AGREEMENT
EXHIBIT D FORM OF SPECIAL EMPLOYMENT AGREEMENT
SCHEDULES
SCHEDULE 6.16 INDEBTEDNESS TO BE ASSUMED
SCHEDULE 6.20(E)(I) SENIOR EXECUTIVES TO BE OFFERED EMPLOYMENT AGREEMENTS
SCHEDULE 6.20(E)(II) EMPLOYEES TO BE OFFERED EMPLOYMENT AGREEMENTS
SCHEDULE 6.20(E)(III) CERTAIN EMPLOYEES TO BE OFFERED SPECIAL EMPLOYMENT
AGREEMENT A
SCHEDULE 6.20(E)(IV) EMPLOYEES WHOSE EMPLOYMENT AGREEMENTS SHALL BE AMENDED
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER (this "Agreement"), dated as of March 4, 1998,
among First Union Corporation, a North Carolina corporation ("Parent"), First
Union National Bank, a corporation organized under the laws of the United States
("Bank"), and The Money Store Inc., a New Jersey corporation (the "Company").
WHEREAS, the respective Boards of Directors of Parent and the Company deem
it advisable, consistent with their respective long-term business strategies and
in the best interests of their respective stockholders, that an indirect, wholly
owned subsidiary of Parent and a direct, wholly owned subsidiary of Bank, which
will be incorporated under the laws of the State of New Jersey promptly after
the date hereof ("Sub"), merge with and into the Company (the "Merger") pursuant
to the terms and subject to the conditions set forth in this Agreement and in
accordance with the New Jersey Business Corporation Act (the "NJBCA"), and such
Boards of Directors have approved the Merger and this Agreement;
WHEREAS, for federal income tax purposes, it is intended that the Merger
will qualify as a tax-free reorganization pursuant to Section 368(a)(1)(B) of
the Internal Revenue Code of 1986, as amended (the "Code"), and this Agreement
is intended to be and is hereby adopted as a plan of reorganization.
NOW, THEREFORE, in consideration of the foregoing and the mutual
representations, warranties, covenants and agreements herein contained, and
intending to be legally bound hereby, Parent and the Company hereby agree as
follows:
ARTICLE I
THE MERGER
SECTION 1.1. THE MERGER. Upon the terms and subject to the conditions set
forth in this Agreement, and in accordance with the NJBCA, at the Effective Time
(as defined in Section 1.2) the Company and Sub shall consummate the Merger. At
the Effective Time, the separate corporate existence of Sub shall cease, Sub
shall be merged with and into the Company, the Company shall continue as the
surviving corporation (Sub and the Company are sometimes referred to herein as
the "Constituent Corporations" and the Company is sometimes referred to herein
as the "Surviving Corporation") and the Company shall succeed to and assume all
the rights and obligations of Sub in accordance with the NJBCA. The name of the
Surviving Corporation shall be The Money Store Inc.
SECTION 1.2. EFFECTIVE TIME. As promptly as practicable after the
satisfaction or waiver of the conditions set forth in Article VII, the parties
shall cause the Merger to be consummated by filing a certificate of merger (the
"Certificate of Merger"), together with any required related certificates, with
the Secretary of State of the State of New Jersey, in such form as required by,
and executed in accordance with the applicable provisions of, the NJBCA and in
such form as approved by the Company and Parent prior to such filing. The Merger
shall become effective at the time the original, properly executed Certificate
of Merger is filed in the office of the Secretary of State of the State of New
Jersey in accordance with the NJBCA or at such other time which the parties
hereto shall have agreed upon and designated in the Certificate of Merger as the
Effective Time. The Certificate of Merger shall be submitted for filing at the
time of the Closing and a draft thereof may be submitted prior thereto for
pre-clearance. The time at which the Merger shall become effective is referred
to herein as the "Effective Time."
SECTION 1.3. CLOSING. Upon the terms and subject to conditions of this
Agreement, the closing of the Merger (the "Closing") will take place at 3:00
p.m., New York time, on a date and at a place to be mutually agreed by Parent
and the Company (or, failing such agreement, on the second business day) after
satisfaction or waiver of the conditions set forth in Article VII (the "Closing
Date"), unless another date or time is agreed to in writing by the parties
hereto.
SECTION 1.4. EFFECTS OF THE MERGER. The Merger shall have the effects set
forth in this Agreement, the Certificate of Merger and the applicable provisions
of the NJBCA. Without limiting the generality of the foregoing, and subject
thereto, at the Effective Time, the Surviving Corporation shall possess all the
rights, privileges, powers, immunities, purposes and franchises of a public and
of a private nature, and be subject to all the restrictions, disabilities and
duties of each of the Constituent Corporations; and all of the rights,
privileges, powers and franchises of each of the Constituent Corporations, and
all property, tangible, intangible, real, personal and mixed, and all debts due
to either of the Constituent Corporations on whatever account, as well as for
stock subscriptions, and all other things in action or belonging to each of the
Constituent Corporations shall be vested in the Surviving Corporation; and all
property, rights, privileges, powers and franchises, and all and every other
interest of the Constituent Corporations shall thereafter effectually be the
property of the Surviving Corporation as they were of the respective Constituent
Corporations, and the title to any real estate vested, by deed or otherwise, in
either of the Constituent Corporations, shall not revert or be in any way
impaired; but all rights of creditors and all liens upon any property of either
of the Constituent Corporations shall be preserved unimpaired, and all debts,
liabilities and duties of the respective Constituent Corporations shall
thereafter attach to the Surviving Corporation, and may be enforced against it
to the same extent as if said debts and liabilities had been incurred or
contracted by it.
SECTION 1.5. CERTIFICATE OF INCORPORATION AND BYLAWS. At the Effective
Time:
(a) The articles of incorporation of the Company in effect
immediately prior to the Effective Time shall be amended and restated
in their entirety to read substantially the same as the articles of
incorporation of Sub, except that such articles of incorporation shall
state the name of the Company as The Money Store Inc. and, as so
amended and restated, shall be the articles of incorporation of the
Surviving Corporation (the "Surviving Corporation Articles of
Incorporation") until amended in accordance with the terms thereof and
applicable law.
(b) The bylaws of the Company in effect immediately prior to the
Effective Time shall be amended and restated in their entirety to read
as substantially the same as the bylaws of Sub and, as so amended and
restated, shall be the bylaws of the Surviving Corporation (the
"Surviving Corporation Bylaws") until amended in accordance with the
terms thereof and applicable law.
SECTION 1.6. DIRECTORS. The directors of Sub at the Effective Time shall,
after the Effective Time, be the directors of the Surviving Corporation, each to
hold office from the Effective Time and until his or her successor is duly
appointed and qualified or until his or her earlier death, resignation or
removal in accordance with the Surviving Corporation Articles of Incorporation
and Surviving Corporation Bylaws.
SECTION 1.7. OFFICERS. The officers of the Company and the Sub shall, after
the Effective Time, be the officers of the Surviving Corporation, each to hold
office from the Effective Time and until his or her successor is duly appointed
and qualified or until his or her earlier death, resignation or removal in
accordance with the Surviving Corporation Articles of Incorporation and
Surviving Corporation Bylaws.
ARTICLE II
CONVERSION OF SECURITIES; EXCHANGE OF CERTIFICATES
SECTION 2.1. EFFECT ON CAPITAL STOCK. Subject to the provisions of this
Article II, at the Effective Time, by virtue of the Merger and without any
action on the part of Sub, the Company, or any holder of shares of the Company's
common stock, no par value (the "Company Common Stock"), shares of the Company's
$1.72 Mandatory Convertible Preferred Stock, no par value (the "Company
Preferred Stock" and, collectively with the Company Common Stock, the "Company
Stock"), or shares of the capital stock of Sub:
(a) CANCELLATION OF TREASURY STOCK AND PARENT-OWNED STOCK. All
shares of Company Stock that are owned, as of the Effective Time, by
the Company as treasury stock and all shares of Company Stock owned,
as of the Effective Time, by Parent, Sub or any other direct or
indirect subsidiary of Parent (excluding such shares held in a
fiduciary capacity or as a result of debts previously contracted), if
any, shall be canceled and retired and shall cease to exist
(collectively the "Canceled Shares") and no stock of Parent or other
consideration shall be delivered in exchange therefor.
(b) CONVERSION OF COMPANY COMMON STOCK. Each issued and
outstanding share of Company Common Stock (other than shares of
Company Common Stock which constitute Canceled Shares) shall be
automatically converted into the right to receive that number of fully
paid, non-assessable shares of the Parent's common stock, par value
$3.33 1/3 per share, together with the rights issued pursuant to a
Shareholder Protection Rights Agreement, dated December 18, 1990,
attached thereto (the "Parent Stock"), equal to the result of dividing
$34.00 by the Market Price (such quotient, rounded down to four
decimal places, the "Exchange Ratio"). The "Market Price" means the
average of the per share closing sales price of Parent Stock, rounded
to four decimal places, as reported under "NYSE Composite Reports" in
THE WALL STREET JOURNAL for each of the five trading days in the
period ending on the trading day prior to the Effective Time. In the
event of any dividend or distribution of or with respect to the Parent
Stock (other than quarterly dividends paid or declared in the ordinary
course of business and consistent with past practice), subdivision,
reclassification, recapitalization, split or reverse stock split,
exchange of shares or the like affecting the number of shares of
Parent Stock outstanding or the price per share of the Parent Stock
between the date on which the Market Price calculation commences and
the Effective Time, the number of shares of Parent Stock to be issued
in the Merger shall be appropriately adjusted so that each holder of
Company Common Stock shall receive in the Merger the number of shares
of Parent Stock such holder would have been entitled to receive if the
Effective Time had been immediately prior to such event. All of the
shares of Company Common Stock to be converted into Parent Stock
pursuant to this Section 2.1(b) shall cease to be outstanding, shall
automatically be canceled and retired and shall cease to exist, and
each holder of a certificate representing any such shares of Company
Common Stock shall cease to have any rights with respect thereto,
except the right to receive the number of shares of Parent Stock
issuable therefor upon the surrender of such certificate in accordance
with Section 2.2 hereof, without interest, and cash in lieu of
fractional shares as contemplated by Section 2.2(e).
(c) CONVERSION OF SUB COMMON STOCK. Each issued and outstanding
share of common stock, par value $1.00 per share ("Sub Common Stock"),
of Sub, shall be converted into one share of common stock, no par
value ("Surviving Corporation Common Stock"), of the Surviving
Corporation and shall constitute the only issued and outstanding
Surviving Corporation Common Stock and shall be owned directly by
First Union National Bank.
(d) CONVERSION OF COMPANY PREFERRED STOCK. Subject to the
following sentence, each share of Company Preferred Stock issued and
outstanding at the Effective Time (other than shares to be canceled in
accordance with Section 2.1(a)) shall be converted into the right to
receive the number of the shares of Parent Stock equal to the product
of the Exchange Ratio and 0.92. If an approval of the holders of the
Company Preferred Stock that may be required in order to deliver
Parent Common Stock in exchange therefor shall not be received, then
each share of Company Preferred Stock issued and outstanding
immediately prior to the Effective Time (other than shares cancelled
in accordance with Section 2.1(a)) shall instead be converted into the
right to receive one validly issued fully paid and nonassessable share
of $1.72 Mandatory Convertible Preferred Stock, no-par value ("New
Parent Preferred Stock"), of Parent at the Effective Time. The
certificate of designations (the "Parent Certificate of Designations")
of the New Parent Preferred Stock shall have terms substantially
similar to the terms of the Company Preferred Stock, except that such
New Parent Preferred Stock will have voting rights in respect of all
matters to be voted on by the Parent Stock, voting on an
as-converted-basis with such Parent Stock and not as a separate class.
As of the Effective Time, all such shares of Company Preferred Stock
shall no longer be outstanding and shall automatically be canceled and
retired and shall cease to exist, and each holder of a certificate
representing any such shares of Company Preferred Stock (a "Preferred
Stock Certificate") shall cease to have any rights with respect
thereto, except the right to receive the shares of Parent Stock or New
Parent Preferred Stock, as the case may be, to be issued in
consideration thereof upon surrender of such Preferred Stock
Certificates in accordance with Section 2.2 and any dividends or other
distributions to which such holder is entitled to pursuant to Section
2.2(c), in each case without interest. The parties hereto hereby
acknowledge that holders of Company Preferred Stock, from and after
the date hereof and prior to the Effective Time, shall have the option
to convert such shares of Company Preferred Stock into Company Common
Stock at the Conversion Rate (as such term is defined in the Company
Articles of Incorporation (as defined in Section 3.1 hereof)) in
effect on the date immediately preceding the Merger.
SECTION 2.2. EXCHANGE OF CERTIFICATES.
(a) EXCHANGE AGENT. Following the Closing Date, Parent shall
deposit, or cause to be deposited, with First Union National Bank (the
"Exchange Agent"), in trust for the benefit of the holders of shares
of Company Common Stock, shares of Company Preferred Stock and Company
Options (as defined in Section 2.3), for exchange in accordance with
this Article II, through the Exchange Agent, certificates representing
(i) the shares of Parent Stock issuable pursuant to Section 2.1(b) or
2.1(d) in exchange for outstanding shares of Company Common Stock,
(ii) the shares of Parent Stock or New Parent Preferred Stock, as the
case may be, issuable pursuant to Section 2.1(d) in exchange for
outstanding shares of Company Preferred Stock and (iii) the shares of
Parent Stock issuable pursuant to Section 2.3 in exchange for
outstanding Company Options, all of which shares of Parent Stock and,
if applicable, New Parent Preferred Stock shall be deemed to be issued
at the Effective Time, together, in the case of shares of Parent
Stock, with cash to be paid in lieu of fractional shares pursuant to
Section 2.2 (e) (such certificates representing such shares of Parent
Stock and shares of New Parent Preferred Stock, as the case may be,
together with any dividends or distributions with respect thereto
contemplated by Section 2.2(c) and cash in lieu of fractional shares,
if any, being hereinafter referred to as the "Exchange Fund"). The
Exchange Agent shall, pursuant to irrevocable instructions from
Parent, deliver the shares of Parent Stock and shares of New Parent
Preferred Stock, as the case may be, contemplated to be issued
pursuant to Sections 2.1 and 2.3 and cash payments for fractional
shares, if any, out of the Exchange Fund. The Exchange Fund shall not
be used for any other purpose.
(b) EXCHANGE PROCEDURES. As soon as practicable after the
Effective Time, Parent shall cause the Exchange Agent to mail to each
holder of record of a certificate or certificates which immediately
prior to the Effective Time represented outstanding shares of Company
Common Stock or Company Preferred Stock (the "Stock Certificates" and,
collectively with the Option Certificates (as defined in Section 2.3),
the "Certificates") whose shares were converted pursuant to Section
2.1 into the right to receive shares of Parent Stock in the case of
Company Common Stock, Parent Stock or New Parent Preferred Stock, as
the case may be, in the case of Company Preferred Stock, and to each
holder of an Option Certificate named in Item 3.3 of the Company
Disclosure Schedule (as defined in the first paragraph of Article III)
whose Company Options were converted pursuant to Section 2.3 into the
right to receive shares of Parent Stock (i) a letter of transmittal
(which shall specify that delivery shall be effected, and risk of loss
and title to the Certificates shall pass, only upon proper delivery of
the Certificates to the Exchange Agent and shall be in such other form
and have such other provisions as Parent and the Company may
reasonably specify) and (ii) instructions for use in effecting the
surrender of the Certificates in exchange for certificates
representing shares of Parent Stock or, if applicable, New Parent
Preferred Stock, as the case may be, and cash in lieu of fractional
shares, if any. Upon surrender by a holder of a Certificate or
Certificates representing all the shares of Company Common Stock
and/or Company Preferred Stock owned by such holder for cancellation
to the Exchange Agent or to such other agent or agents as may be
appointed by Parent, together with such letter of transmittal, duly
completed and properly executed in accordance with instructions
thereto and such other customary documents and tax forms as may
reasonably be required pursuant to such instructions and, if
applicable and not already provided, the agreement referred to in
Section 6.10, the holder of such Certificate or Certificates shall be
entitled to receive in exchange therefor (A) a certificate
representing that number of whole shares of Parent Stock or New Parent
Preferred Stock, as the case may be, which such holder has the right
to receive pursuant to the provisions of this Article II, (B) cash in
lieu of any fractional shares of Parent Stock to which such holder is
entitled pursuant to Section 2.2(e) hereof, after giving effect to any
required tax withholdings, and (C) any dividends or distributions to
which such holder is entitled pursuant to Section 2.2(c), after giving
effect to any required tax withholding (the items referred to in
clauses (A), (B) and (C) being, collectively, the "Merger
Consideration"), and the Certificate so surrendered shall forthwith be
canceled. In the event of a transfer of ownership of Company Common
Stock or Company Preferred Stock which is not registered in the
transfer records of the Company, the Merger Consideration may be
issued to a transferee if the Certificate representing such Company
Common Stock or Company Preferred Stock is presented to the Exchange
Agent, accompanied by all documents required to evidence and effect
such transfer and by evidence that any applicable stock transfer taxes
have been paid. Unless prohibited by law, former holders of record of
Company Common Stock shall be entitled to vote, after the Effective
Time, at any meeting of stockholders of Parent the record date for
which is after the Effective Time, the number of whole shares of
Parent Stock into which their respective shares of Company Common
Stock are converted, regardless of whether such holders have exchanged
their Certificates in accordance with this Section 2.2. Unless
prohibited by law, former holders of record of Company Preferred Stock
shall be entitled to vote, after the Effective Time, at any meeting of
stockholders of Parent the record date for which is after the
Effective Time, the number of whole shares of Parent Stock, or if
applicable, New Parent Preferred Stock into which their respective
shares of Company Preferred Stock are converted, regardless of whether
such holders have exchanged their Certificates in accordance with this
Section 2.2 (it being understood that holders of shares of New Parent
Stock shall be entitled to only 0.8333 votes per share). Until
surrendered as contemplated by this Section 2.2, each Certificate
shall be deemed at any time after the Effective Time to represent only
the right to receive upon such surrender the Merger Consideration,
subject to any required withholding taxes.
(c) DISTRIBUTIONS WITH RESPECT TO UNEXCHANGED Shares. No
dividends or other distributions declared or made after the Effective
Time with respect to Parent Stock or New Parent Preferred Stock, as
the case may be, with a record date after the Effective Time shall be
paid to the holder of any unsurrendered Certificate with respect to
the shares of Parent Stock or New Parent Preferred Stock, as the case
may be, which such holder is entitled to receive upon the surrender
thereof in accordance with this Section 2.2, and no other part of the
Merger Consideration shall be paid to any such holder pursuant hereto,
until the holder of record of such Certificate shall so surrender such
Certificate. Subject to the effect of applicable laws, following
surrender of any such Certificate, there shall be paid by Parent or
the Exchange Agent to the record holder of the certificates
representing whole shares of Parent Stock or New Parent Preferred
Stock, as the case may be, issued in exchange therefor, without
interest, (i) at the time of such surrender, the amount of any cash
payable in lieu of any fractional share of Parent Stock to which such
holder is entitled pursuant to Section 2.2(e) and the amount of
dividends or other distributions with a record date after the
Effective Time theretofore paid with respect to such whole shares of
Parent Stock or New Parent Preferred Stock, as the case may be, and
(ii) at the appropriate payment date, the amount of dividends or other
distributions with a record date after the Effective Time but prior to
such surrender and a payment date subsequent to surrender payable with
respect to such whole shares of Parent Stock or New Parent Preferred
Stock, as the case may be.
(d) NO FURTHER OWNERSHIP RIGHTS IN COMPANY COMMON STOCK. All
shares of Parent Stock issued upon the surrender for exchange of
shares of Company Common Stock or Company Options in accordance with
the terms hereof (including any cash paid pursuant to Section 2.2(c)
or 2.2(e)) and all shares of New Parent Preferred Stock, if any,
issued upon the surrender for exchange of shares of Company Preferred
Stock in accordance with the terms hereof (including any cash pursuant
to Section 2.2(c)) shall be deemed to have been issued in full
satisfaction of all rights pertaining to such shares of Company Common
Stock, Company Preferred Stock or Company Options, as the case may be.
There shall be no further registration of transfers on the stock
transfer books of the Surviving Corporation of the shares of Company
Common Stock or Company Preferred Stock which were outstanding
immediately prior to the Effective Time. If, after the Effective Time,
Certificates are presented to the Surviving Corporation for any
reason, they shall be canceled and exchanged as provided in this
Article II.
(e) NO FRACTIONAL SHARES. No certificate or scrip representing
fractional shares of Parent Stock shall be issued in the Merger. Any
such fractional share interests will not entitle the owner thereof to
vote or to any rights of a stockholder of Parent. In lieu of any such
fractional shares, each holder of Company Common Stock or Company
Options who would otherwise have been entitled to a fraction of a
share of Parent Stock upon surrender of Certificates for exchange will
be entitled to receive a cash payment in lieu of such fractional share
in an amount equal to such fractional interest multiplied by the
Market Price.
(f) LOST, STOLEN OR DESTROYED CERTIFICATES. In the event any
Certificate evidencing shares of Company Common Stock, Company
Preferred Stock or Company Options shall have been lost, stolen or
destroyed, upon the making of an affidavit setting forth that fact by
the Person claiming such lost, stolen or destroyed Certificate(s) and,
if required by Parent, granting an indemnity satisfactory to Parent
against any claim that may be made against Parent, the Surviving
Corporation or the Exchange Agent with respect to such Certificate(s),
Parent shall cause the Exchange Agent to pay to such Person the Merger
Consideration with respect to such lost, stolen or destroyed
Certificate(s).
(g) SUB CERTIFICATES. Parent, or Parent's direct subsidiary, as
the sole stockholder of Sub, shall, upon surrender to the Surviving
Corporation of certificates representing the Sub Common Stock, receive
a certificate representing the number of shares of the Surviving
Corporation Common Stock into which such Sub Common Stock shall have
been converted pursuant to Section 2.1.
SECTION 2.3. COMPANY OPTIONS. Effective as of the Effective Date, all
outstanding options (each a "Company Option" and, collectively, the "Company
Options") to purchase Company Common Stock held by employees of the Company,
whether or not such options are then exercisable, shall be assumed by Parent and
shall be exercisable upon the same terms and conditions as under the applicable
option and the Company stock option or stock incentive plan, except that each
such option shall be exercisable for a whole number of shares of Parent Stock
equal to (a) the number of shares of Company Common Stock subject to the Company
Option, multiplied by (b) the Exchange Ratio (such product rounded down to the
nearest whole number) (a "Replacement Option"), at an exercise price per share
(rounded to the nearest whole cent) equal to (y) the aggregate exercise price
for the shares of Company Stock which were purchasable pursuant to such Company
Option divided by (z) the number of full shares of Parent Stock subject to such
Replacement Option in accordance with the foregoing. As is contemplated by the
foregoing, each Company Option (as defined in Section 422 of the Code) shall be
adjusted in accordance with the requirements of Section 424 of the Code. The
Company reserves the right to amend any of the 1997 Stock Incentive Plan of the
Company, the 1995 Stock Incentive Plan of the Company or the 1991 Stock Option
Plan of the Company (each, a "Stock Plan" and collectively, the "Stock Plans")
to provide for accelerated vesting of options held by employees of the Company,
whether or not exercisable, upon (i) termination by the Company without cause;
(ii) termination with good reason by the holder; (iii) retirement after age 62
or (iv) termination by reason of death or disability and further to provide that
if any such event shall occur then the holder shall have 90 days following
termination, retirement, death or disability in which to exercise such options.
Any such amendment or modification of a Stock Plan by the Company shall not give
rise to a covenant default under Section 5.2 of this Agreement.
SECTION 2.4. EXCHANGE AGENT. Parent shall ensure that (i) the Exchange
Agent shall maintain the Exchange Fund as a separate fund to be held for the
benefit of the holders of the Company Stock and Company Options, which shall be
promptly applied by the Exchange Agent to making the payments provided for in
Section 2.2; (ii) any portion of the Exchange Fund that has not been paid to
holders of the Company Stock and Company Options pursuant to Section 2.2 prior
to that date which is one year from the Effective Time shall be delivered to
Parent, and any holders of Company Stock and Company Options who shall not have
therefore complied with Section 2.2 shall thereafter look only to Parent for the
Merger Consideration; (iii) the Exchange Fund shall not be used for any purpose
that is not provided for herein, and (iv) all expenses of the Exchange Agent
(including taxes on any income earned by the Exchange Fund) shall be paid
directly by Parent. Promptly following the date which is one year from the
Effective Time, the Exchange Agent shall return to Parent all cash, securities
and any other instruments in its possession relating to the transactions
described in this Agreement, and the Exchange Agent's duties shall terminate.
Thereafter, each holder of Certificates may surrender such Certificates to
Parent and (subject to applicable abandoned property, escheat and similar laws)
receive in exchange therefor the Merger Consideration payable with respect
thereto, without interest, but shall have no greater rights against Parent than
may be accorded to general creditors of Parent under the North Carolina Business
Corporation Act (the "NCBCA"). The Exchange Agent shall not be entitled to vote
or exercise any rights of ownership with respect to the Parent Stock or New
Parent Preferred Stock held by it from time to time hereunder. Neither Parent
nor the Surviving Corporation, nor any subsidiary of either of them, shall be
liable to any holder of shares of Company Stock, Company Preferred Stock or
Company Options for any Merger Consideration from the Exchange Fund delivered to
a public official pursuant to any applicable abandoned property, escheat or
similar law.
SECTION 2.5. TRANSFER OF SHARES AFTER THE EFFECTIVE TIME. No transfers of
shares of Company Stock shall be made on the stock transfer books of the Company
after the Effective Time.
SECTION 2.6. FURTHER ASSURANCES. If, at any time after the Effective Time,
the Surviving Corporation shall consider or be advised that any further deeds,
assignments or assurances in law or any other acts are necessary, desirable or
proper (a) to vest, perfect or confirm, of record or otherwise, in the Surviving
Corporation, the title to any property or right of the Company or Sub acquired
or to be acquired by reason of, or as a result of, the Merger, or (b) otherwise
to carry out the purposes of this Agreement, the Company and Sub agree that the
Surviving Corporation and its proper officers and directors shall and will
execute and deliver all such deeds, assignments and assurances in law and do all
acts necessary, desirable or proper to vest, perfect or confirm title to such
property or right in the Surviving Corporation and otherwise to carry out the
purposes of this Agreement, and that the proper officers and directors of the
Surviving Corporation are fully authorized in the name of the Company and Sub or
otherwise to take any and all such action.
SECTION 2.7. RESERVATION OF RIGHT TO REVISE TRANSACTION. Parent may at any
time change the method of effecting the acquisition of the Company (including
without limitation the provisions of this Article II) if, and to the extent, it
deems such change to be desirable; PROVIDED, HOWEVER, that no such change shall,
in the reasonable opinion of the Company, (A) alter or change (i) the amount or
kind of consideration to be issued to holders of the Company Common Stock,
Company Preferred Stock or the Company Options or (ii) executive compensation
arrangements as provided for in, or as contemplated by, this Agreement, (B)
adversely affect the intended tax-free treatment to the Company or to the
Company's stockholders as a result of receiving such consideration, or (C)
materially impede or delay receipt of any approval referred to in Section 6.4 or
the consummation of the transactions contemplated by this Agreement; and,
PROVIDED, FURTHER, however, if the Company reasonably determines that any such
proposed change would violate any of the preceding provisions of sub-clauses
(A)-(C), then Parent must proceed with the acquisition in the manner prescribed
by this Agreement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Parent and Sub, subject, in the case
of each Section of this Article III, to the exceptions set forth and identified
in the separate disclosure schedule executed and delivered by the Company
concurrently with the execution and delivery of this Agreement (the "Company
Disclosure Schedule"), as follows:
SECTION 3.1. ORGANIZATION; AUTHORITY. Each of the Company and its
subsidiaries is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation and has all
requisite corporate power and authority to carry on its business as now being
conducted. Each of the Company and its subsidiaries is duly qualified or
licensed to do business and in good standing in each jurisdiction in which the
property owned, leased or operated by it or the nature of the business conducted
by it makes such qualification or licensing necessary (each of which
jurisdictions is identified in Item 3.1 of the Company Disclosure Schedule) and
except in such jurisdictions where any failure to be so duly qualified or
licensed and in good standing would not, in the aggregate have a material
adverse effect on the business, properties, assets, financial condition or
results of operations of the Company and its subsidiaries taken as a whole (a
"Company Material Adverse Effect") or prevent or materially delay the
consummation of the Merger. The Company has delivered to Parent complete and
correct copies of its Restated Articles of Incorporation, as in effect on the
date hereof (the "Company Articles of Incorporation"), and its Amended and
Restated Bylaws, as in effect on the date hereof (the "Company Bylaws").
SECTION 3.2 SUBSIDIARIES. Item 3.2 of the Company Disclosure Schedule lists
each direct and indirect subsidiary of the Company. Except as set forth in Item
3.2 of the Company Disclosure Schedule, all the outstanding shares of capital
stock of each such subsidiary are owned, directly or indirectly, by the Company,
free and clear of all pledges, claims, liens, charges, encumbrances and security
interests of any kind or nature whatsoever (collectively, "Liens"), and are duly
authorized, validly issued, fully paid and nonassessable. Except for the capital
stock of its subsidiaries and except as otherwise indicated in Item 3.2 of the
Company Disclosure Schedule, the Company does not own, directly or indirectly,
any capital stock or other ownership interest in any corporation, partnership,
joint venture or other entity.
SECTION 3.3. CAPITALIZATION. As of the date of this Agreement, the
authorized capital stock of the Company consists of 250,000,000 shares of
Company Common Stock and 10,000,000 shares of Company preferred stock, no par
value, of which the Company Preferred Stock is the only authorized or
outstanding series. At the close of business on March 3, 1998, (i) 58,422,735
shares of Company Common Stock were issued and outstanding, (ii) 5,215,000
shares of Company Preferred Stock were issued and outstanding, (iii) no shares
of Company Common Stock and no shares of Company Preferred Stock were held by
the Company in its treasury, (iv) 8,284,375 shares of Company Common Stock were
reserved for issuance upon exercise of Company Options issued pursuant to the
Stock Plans and (v) 5,215,000 shares of Company Common Stock were reserved for
issuance upon conversion of Company Preferred Stock. Except as set forth above,
as of March 3, 1998, no shares of capital stock or other voting securities of
the Company are issued, reserved for issuance or outstanding. All outstanding
shares of capital stock of the Company are, and all shares which may be issued
will be, when issued, duly authorized, validly issued, fully paid and
nonassessable and not subject to preemptive rights. There are no bonds,
debentures, notes or other indebtedness of the Company having the right to vote
(or convertible into, or exercisable or exchangeable for, securities having the
right to vote) on any matters on which stockholders of the Company may vote.
Except as set forth above or on Item 3.3 of the Company Disclosure Schedule, as
of the date hereof, there are no securities, options, warrants, calls, rights,
commitments, agreements, arrangements or undertakings of any kind to which the
Company or any of its subsidiaries is a party or by which any of them is bound
obligating the Company or any of its subsidiaries to issue, deliver or sell, or
cause to be issued, delivered or sold, additional shares of capital stock or
other voting securities of the Company or of any of its subsidiaries or
obligating the Company or any of its subsidiaries to issue, grant, extend or
enter into any such security, option, warrant, call, right, commitment,
agreement, arrangement or undertaking. Except as set forth on Item 3.3 of the
Company Disclosure Schedule, as of the date of this Agreement, there are no
outstanding contractual obligations of the Company or any of its subsidiaries
(i) to repurchase, redeem or otherwise acquire any shares of capital stock of
the Company or (ii) to vote or to dispose of any shares of the capital stock of
any of the Company's subsidiaries.
SECTION 3.4. AUTHORIZATION. The Board of Directors of the Company, at a
meeting duly called and held on March 3, 1998, at which a majority of the
directors were present, has duly adopted resolutions unanimously approving this
Agreement and the Merger, determining that the terms of the Merger are fair to,
and in the best interests of the Company's stockholders and directing that the
plan of merger contained herein be submitted to a vote at a meeting of
stockholders in accordance with Section 6.4. The Company has the requisite
corporate power and authority to execute and deliver this Agreement and, subject
to the approval and adoption of the plan of merger contained in this Agreement
by the holders of a majority of the votes of the holders of shares of Company
Common Stock cast thereon (the "Company Stockholder Approval"), to consummate
the transactions contemplated hereby. The execution, delivery and performance of
this Agreement and the consummation by the Company of the Merger and of the
other transactions contemplated hereby have been duly authorized by all
necessary corporate action on the part of the Company and no other corporate
proceedings on the part of the Company are necessary to authorize this Agreement
or to consummate the transactions so contemplated (in each case, other than with
respect to the Merger and the Company Stockholder Approval). This Agreement has
been duly executed and delivered by the Company and, assuming this Agreement
constitutes a valid and binding obligation of Parent and Sub, constitutes a
valid and binding obligation of the Company, enforceable against the Company in
accordance with its terms, subject to applicable bankruptcy, insolvency,
moratorium or other similar laws relating to creditors' rights generally and to
general principles of equity.
SECTION 3.5. CONSENT AND APPROVALS; NO VIOLATIONS. Except for filings,
permits, authorizations, consents and approvals as may be required under, and
other applicable requirements of, the Securities Exchange Act of 1934, as
amended (the "Exchange Act") (including the filing with the Securities and
Exchange Commission (the "SEC") of a proxy statement in definitive form relating
to any required Company Stockholder Approval (together with any amendments
thereof or supplements thereto, in each case in the form or forms mailed to the
Company's stockholders, the "Proxy Statement")), the Bank Holding Company Act of
1956, as amended (the "BHCA"), the National Bank Act, as amended (the "NBA"),
the Xxxx-Xxxxx- Xxxxxx Antitrust Improvements Act of 1976, as amended (the "HSR
Act"), the filing of the Certificate of Merger and any required related
certificates under the NJBCA, and the other matters referred to in Item 3.5 of
the Company Disclosure Schedule (collectively, the "Company Required
Approvals"), neither the execution, delivery or performance of this Agreement by
the Company nor the consummation by the Company of the transactions contemplated
hereby will (i) conflict with or result in any breach of any provision of the
Company Articles of Incorporation or Company Bylaws, (ii) require any filing
with, or permit, authorization, consent or approval of, any federal, state or
local government or any court, tribunal, administrative agency or commission or
other governmental or other regulatory authority or agency, domestic or foreign
(a "Governmental Entity") (except where the failure to obtain such permits,
authorizations, consents or approvals or to make such filings would not have,
individually or in the aggregate, a Company Material Adverse Effect or would not
reasonably be expected to prevent or materially delay the consummation of the
Merger), (iii) result in a violation or breach of, or constitute (with or
without due notice or lapse of time or both) a default (or give rise to any
right of termination, amendment, cancellation or acceleration) under, any of the
material terms, conditions or provisions of any loan or credit agreement, note,
bond, mortgage, indenture, lease, permit, concession, franchise, license,
contract, agreement or other instrument or obligation to which the Company or
any of its subsidiaries is a party or by which any of them or any of their
properties or assets may be bound or (iv) violate any order, writ, injunction,
decree, statute, rule or regulation applicable to the Company, any of its
subsidiaries or any of their respective properties or assets, except in the case
of clauses (iii) or (iv) for violations, breaches or defaults that would not,
individually or in the aggregate, have a Company Material Adverse Effect or that
would not, individually or in the aggregate, be reasonably expected to prevent
or materially delay the consummation of the Merger.
SECTION 3.6. SEC REPORTS AND FINANCIAL STATEMENTS. The Company has filed
with the SEC, and has heretofore made available to Parent, true and complete
copies of, all forms, reports, schedules, statements and other documents
required to be filed by it since December 31, 1996, under the Exchange Act or
the Securities Act of 1933, as amended (the "Securities Act") (such forms,
reports, schedules, statements and other documents, including any financial
statements or schedules included therein but excluding any such forms, reports,
schedules, statements or other documents which relate solely to the Company's
securitization transactions, are referred to as the "Company SEC Documents").
Except to the extent revised or superseded by a subsequently filed Company SEC
Document (a copy of which has been provided to Parent prior to the date hereof),
the Company SEC Documents, (i) did not at the time filed (and, in the case of
any Company SEC Document filed after the date hereof, will not at the time
filed) contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading and (ii) complied (and, in the case of any Company SEC Document
filed after the date hereof, will comply) in all material respects with the
applicable requirements of the Exchange Act and the Securities Act, as the case
may be, and the applicable rules and regulations of the SEC thereunder. The
financial statements of the Company included or incorporated by reference in the
Company SEC Documents complied, as of the time filed, and will comply as to form
in all material respects with applicable accounting requirements and with the
published rules and regulations of the SEC with respect thereto, have been
prepared in accordance with generally accepted accounting principles ("GAAP")
applied on a consistent basis during the periods involved (except as may be
indicated in the notes thereto or, in the case of the unaudited statements, as
permitted by Form 10-Q of the SEC) and fairly present (subject, in the case of
the unaudited statements, to normal, recurring, year-end audit adjustments) the
consolidated financial position of the Company and its consolidated subsidiaries
as at the dates thereof and the consolidated results of their operations and
cash flows for the periods indicated therein.
SECTION 3.7. ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as disclosed in
the Company SEC Documents filed prior to execution hereof and the Current Report
on Form 8-K referred to in Section 3.8 (the "Company Filed SEC Documents") or as
disclosed in Item 3.7 of the Company Disclosure Schedule, since December 31,
1997, the Company and its subsidiaries have conducted their respective
businesses only in the ordinary course consistent with past practice, and there
has not been, in the aggregate, (i) any material adverse change with respect to
the business, properties, assets, financial condition or results of operations
of the Company and its subsidiaries taken as a whole (other than changes
generally affecting the industries in which the Company or any of its
subsidiaries operate or changes contemplated by this Agreement), (ii) any
declaration, setting aside or payment of any dividend or other distribution with
respect to its capital stock or any redemption, purchase or other acquisition of
any of its capital stock (except for its ordinary quarterly cash dividends with
respect to the Company Stock), (iii) any split, combination or reclassification
of any of its capital stock or any issuance or the authorization of any issuance
of any capital stock or any options, warrants, rights or other securities in
respect of, in lieu of or in substitution for, shares of its capital stock, (iv)
(A) any granting by the Company or any of its subsidiaries to any officer or
employee of the Company or any of its subsidiaries of any increase in
compensation, except in the ordinary course of business (including in connection
with promotions) consistent with past practice or as was required under
employment agreements in effect as of December 31, 1997, (B) any granting by the
Company or any of its subsidiaries to any such officer or employee of any
increase in severance or termination pay, except as was required under
employment, severance or termination agreements in effect as of December 31,
1997 and previously made available to Parent, or (C) any entry by the Company or
any of its subsidiaries into any employment, severance or termination agreement
with any such officer or employee, (v) any event, circumstance, damage,
destruction or loss, whether or not covered by insurance, that has or reasonably
could be expected to have a Company Material Adverse Effect, (vi) any
revaluation by the Company of any of its material assets (except for any action
taken by the Company pursuant to Section 6.25) that has or reasonably could be
expected to have a Company Material Adverse Effect in the aggregate. (vii) any
material change in accounting methods, principles or practices by the Company or
(viii) any adoption, amendment or termination of any bonus, profit sharing,
incentive, severance or other plan, contract or commitment for the benefit of
any of its directors, officers or employees.
SECTION 3.8. NO UNDISCLOSED LIABILITIES. Except as set forth in the
Company's audited, consolidated financial statements included in the Company's
Current Report on Form 8-K filed with the SEC under the Exchange Act on March 4,
1998 (which Form 8-K shall be identical in substance (except for DE MINIMIS
favorable adjustments) to the version supplied to Parent for its review prior to
execution hereof) or in Item 3.8 of the Company Disclosure Schedule, as of
December 31, 1997 neither the Company nor any of its subsidiaries has any
material liabilities or obligations of any nature, whether or not accrued,
contingent or otherwise. Since December 31, 1997, except as set forth in the
Company Filed SEC Documents and except for liabilities incurred by the Company
or its subsidiaries in the ordinary course of business, neither the Company nor
any of its subsidiaries has incurred any material liabilities of any nature,
whether or not accrued, contingent or otherwise, and that in the aggregate would
be reasonably expected to have a Company Material Adverse Effect.
SECTION 3.9. INFORMATION SUPPLIED. None of the information supplied or to
be supplied by the Company specifically for inclusion or incorporation by
reference in the Proxy Statement, will, at the time the Proxy Statement is first
mailed to the Company's stockholders or at the time of the Stockholders' Meeting
(as defined in Section 6.4), contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they are made, not misleading, except that no representation or warranty is made
by the Company with respect to statements made or incorporated by reference
therein based on information supplied by Parent or Sub specifically for
inclusion or incorporation by reference therein.
SECTION 3.10. BENEFIT PLANS.
(a) Except as disclosed in the Company Filed SEC Documents or as
disclosed in Item 3.10 of the Company Disclosure Schedule, since the
date of the most recent audited financial statements included in the
Company Filed SEC Documents, there has not been any adoption or
amendment in any material respect by the Company or any of its
subsidiaries of any collective bargaining agreement or any bonus,
pension, profit sharing, deferred compensation, incentive
compensation, stock ownership, stock purchase, stock option, phantom
stock, retirement, vacation, severance, disability, death benefit,
hospitalization , medical or other plan, arrangement or understanding
(whether or not legally binding) providing benefits to any current or
former employee, officer or director of the Company or any of its
subsidiaries (collectively, "Benefit Plans"). Except as disclosed in
Item 3.10 of the Company Disclosure Schedule, there exist no
employment, consulting, severance, termination or indemnification
agreement, split dollar life insurance, rabbi trust, outplacement
services or estate planning arrangements or understandings between the
Company or any of its subsidiaries and any current or former employee,
officer or director of the Company or any of its subsidiaries
(collectively, "Compensation Agreements").
(b) Item 3.10 of the Company Disclosure Schedule contains a list
of all "employee pension benefit plans" (as defined in Section 3(2) of
the Employee Retirement Income Security Act of 1974, as amended
("ERISA")) (sometimes referred to herein as "Pension Plans"),
"employee welfare benefit plans" (as defined in Section 3(1) of ERISA)
and all other Benefit Plans maintained, or contributed to, by the
Company or any of its subsidiaries for the benefit of any current or
former employees, officers or directors of the Company or any of its
subsidiaries. The Company has delivered to Parent true, complete and
correct copies of (i) each Benefit Plan (or, in the case of any
unwritten Benefit Plans, descriptions thereof) and all amendments
thereto, (ii) the most recent annual report on Form 5500 filed with
the Internal Revenue Service with respect to each Benefit Plan (if any
such report was required), (iii) the most recent summary plan
description for each Benefit Plan for which such summary plan
description is required, (iv) each trust agreement and group annuity
contract relating to any Benefit Plan and (v) each Compensation
Agreement (or in the case of any unwritten Compensation Agreements,
descriptions thereof) and all amendments thereto.
(c) Except as disclosed in Item 3.10 of the Company Disclosure
Schedule, all Pension Plans (other than the Supplemental Executive
Retirement Plan) have been the subject of determination letters from
the Internal Revenue Service to the effect that such Pension Plans are
qualified and exempt from Federal income taxes under Section 401(a)
and 501(a), respectively, of the Code, and no such determination
letter has been revoked nor, to the best knowledge of the Company, has
revocation been threatened, nor has any such Pension Plan been amended
since the date of its most recent determination letter or application
therefor in any respect that would adversely affect its qualification
or materially increase its costs. There is no material pending or, to
the Company's knowledge, threatened litigation relating to any of the
Benefit Plans or the Compensation Agreements.
(d) No Pension Plan that is subject to Title IV of ERISA and that
the Company or any of its subsidiaries maintains, or to which the
Company or any of its subsidiaries is obligated to contribute, other
than any Pension Plan that is a "multiemployer plan" (as such term is
defined in Section 4001(a)(3) of ERISA; collectively, the
"Multiemployer Pension Plans"), had, as of the respective last annual
valuation date for each such Pension Plan, an "unfunded benefit
liability" (as such term is defined in Section 4001(a)(18) of ERISA),
based on actuarial assumptions contained in the Pension Plan's most
recent actuarial valuation, and there has been no material change in
the financial condition of such Pension Plan since such annual
valuation date. None of the Pension Plans has an "accumulated funding
deficiency" (as such term is defined in Section 302 of ERISA or
Section 412 of the Code), whether or not waived. Neither the Company
nor any of its subsidiaries has provided, or is required to provide,
security to any Pension Plan pursuant to Section 401(a)(29) of the
Code. None of the Company, any of its subsidiaries, any officer of the
Company or any of its subsidiaries or any of the Benefit Plans which
are subject to ERISA, including the Pension Plans, any trusts created
thereunder or any trustee or administrator thereof, has engaged in a
"prohibited transaction" (as such term is defined in Section 406 of
ERISA or Section 4975 of the Code) or any other breach of fiduciary
responsibility that could subject the Company, any of its subsidiaries
or any officer of the Company or any or its subsidiaries to any
material tax or penalty on prohibited transactions imposed by such
Section 4975 or to any material liability under Section 502(i) or (1)
of ERISA. None of such Benefit Plans or trusts has been terminated,
nor has there been any "reportable event" (as that term is defined in
Section 4043 of ERISA) with respect thereto, during the last five
years, nor has any liability under Subtitle C or D of Title IV of
ERISA been incurred by the Company or any of its subsidiaries with
respect to any ongoing, frozen or terminated "single-employer plan,"
within the meaning of Section 4001(a)(15) of ERISA, currently or
formerly maintained by any of them. Neither the Company nor any of its
subsidiaries has suffered or otherwise caused a "complete withdrawal,"
or a "partial withdrawal" (as such terms are defined in Section 4203
and Section 4205, respectively, of ERISA) since the effective date of
such Sections 4203 and 4205 with respect to any of the Multiemployer
Pension Plans or any other multiemployer plan .
(e) With respect to any Benefit Plan that is an employee welfare
benefit plan, except as disclosed in Item 3.10 of the Company
Disclosure Schedule, (i) no such Benefit Plan is unfunded or funded
through a "welfare benefits fund," as such term is defined in Section
419(e) of the Code, (ii) each such Benefit Plan that is a "group
health plan," as such term is defined in Section 5000(b)(1) of the
Code, complies in all material respects with the applicable
requirements of Section 4980B(f) of the Code and (iii) each such
Benefit Plan (including any such Plan covering retirees or other
former employees) may be amended or terminated without material
liability to the Company or any of its subsidiaries at any time. There
has been no written or, to the Company's knowledge, oral communication
to employees by the Company or any of its subsidiaries that would
reasonably be expected to promise or guarantee such employees retiree
health or life insurance or other retiree death benefits on a
permanent basis.
(f) The consummation of the transactions contemplated by this
Agreement will not (x) entitle any employees of the Company or any of
the subsidiaries to severance pay, (y) accelerate the time of payment
or vesting or trigger any payment of compensation or benefits under,
increase the amount payable or trigger any other material obligation
pursuant to, any of the Benefit Plans or the Compensation Agreements
or (z) result in any material breach or violation of, or a default
under, any of the Benefit Plans or the Compensation Agreements.
(g) Except as set forth in Item 3.10 of the Company Disclosure
Schedule, all Benefit Plans covering current or former non-U.S.
employees comply in all material respects with applicable local law.
The Company and its subsidiaries have no material unfunded liabilities
with respect to any Pension Plan that covers such non-U.S. employees.
SECTION 3.11. LITIGATION. Except as set forth in Item 3.11 of the Company
Disclosure Schedule, there is no suit, claim, action, proceeding or
investigation pending or, to the best knowledge of the Company, threatened
against the Company or any of its subsidiaries that could reasonably be expected
to have, directly or indirectly or in the aggregate, a Company Material Adverse
Effect or prevent or materially delay the consummation of the Merger. Except as
set forth in Item 3.11 of the Company Disclosure Schedule, neither the Company
nor any of its subsidiaries is subject to any outstanding order, writ,
injunction or decree that could reasonably be expected to have, directly or
indirectly, in the aggregate, a Company Material Adverse Effect or prevent or
materially delay the consummation of the Merger.
SECTION 3.12. COMPLIANCE WITH APPLICABLE LAW. The Company and its
subsidiaries hold all permits, licenses, variances, exemptions, orders,
concessions, franchises and approvals of all Governmental Entities necessary to
own or lease their respective assets and to conduct their respective businesses
(the "Company Permits"), except for failures to hold such permits, licenses,
variances, exemptions, orders, concessions, franchises and approvals that would
not, in the aggregate, have a Company Material Adverse Effect or prevent or
materially delay the consummation of the Merger. The Company and its
subsidiaries are in compliance with the terms of the Company Permits, except
where the failure so to comply would not, in the aggregate, have a Company
Material Adverse Effect or prevent or materially delay the consummation of the
Merger. Except as disclosed in the Company SEC Documents, (a) the businesses of
the Company and its subsidiaries are not being conducted in violation of any
law, ordinance or regulation of any Governmental Entity and (b) neither the
Company nor any subsidiary has received, on or after December 31, 1997, any
written notification or communication from any Governmental Entity nor is there
currently pending any proceeding or investigation asserting that the Company or
any of its subsidiaries is not in compliance with any of the statutes,
regulations or ordinances which any such Governmental Entity enforces, except
for such possible violations or failures of compliance that would not in the
aggregate reasonably be expected to have a Company Material Adverse Effect or
reasonably be expected to prevent or materially delay the consummation of the
Merger. Except as set forth in Item 3.12 of the Company Disclosure Schedule, as
of the date of this Agreement, to the best knowledge of the Company, no
investigation or review by any Governmental Entity with respect to the Company
or any of its subsidiaries is pending, or to the best knowledge of the Company,
threatened, nor has any Governmental Entity indicated an intention to conduct
any such investigation or review, other than, in each case, those the outcome of
which would not be reasonably expected, in the aggregate to have a Company
Material Adverse Effect or prevent or materially delay the consummation of the
Merger.
SECTION 3.13. TAX MATTERS. Except as set forth in Item 3.13 of the Company
Disclosure Schedule:
(a) The Company and each of its subsidiaries has filed all
Federal income tax returns and all other material tax returns and
reports (including information returns) required to be filed by it.
All such returns and reports are complete and correct in all material
respects. The Company and each of its subsidiaries has paid (or the
Company has paid on its subsidiaries' behalf) all taxes (as defined
below) shown as due on such returns and all material taxes for which
no return was required to be filed, and the most recent financial
statements contained in the Company SEC Documents reflect an adequate
reserve for all taxes payable by the Company and its subsidiaries for
all taxable periods and portions thereof through the date of such
financial statements.
(b) No material tax return of the Company or any of its
subsidiaries is under audit or examination by any taxing authority,
and no written notice of such an audit or examination has been
received by the Company or any of its subsidiaries. Each material
deficiency resulting from any audit or examination relating to taxes
by any taxing authority has been paid, except for deficiencies being
contested in good faith. No material issues relating to taxes were
raised in writing by the relevant taxing authority during any
presently pending audit or examination. None of the Federal income tax
returns of the Company nor any of its subsidiaries consolidated in
such returns for any period have been examined by the Internal Revenue
Service.
(c) There is no agreement or other document extending, or having
the effect of extending, the period of assessment or collection of any
taxes and no power of attorney with respect to any taxes has been
executed or filed with any taxing authority.
(d) No material liens for taxes exist with respect to any assets
or properties of the Company or any of its subsidiaries, except for
statutory liens for taxes not yet due.
(e) As used in this Agreement, "taxes" shall include all Federal,
state, local and foreign income, profits, franchise, gross receipts,
payroll, employment, property, sales, excise, withholding and other
taxes, tariffs or governmental charges of any nature whatsoever,
together with all interest, penalties and additions imposed with
respect to such amounts.
(f) The Company has received an opinion of counsel that each
"REMIC" in which the Company holds a "residual interest" qualifies as
a REMIC for federal income tax purposes, and it is not aware of any
change in circumstances which would negatively affect the continuing
validity of any such opinion.
(g) Assuming the accuracy of the representation made in Section
4.15, the Company is aware of no circumstances or events that would
prevent the Merger from being treated as a tax-free reorganization
pursuant to Section 368(a)(1)(B) of the Code.
SECTION 3.14. STATE TAKEOVER STATUTES; DISSENTERS' RIGHTS. The only
stockholder vote required for consummation of the transactions contemplated by
this Agreement is the approval of a majority of the votes cast by those holders
of Company Stock entitled to vote at the Stockholders' Meeting. The action of
the Board of Directors of the Company in approving the Merger and this Agreement
is sufficient to render inapplicable to the Merger and this Agreement and the
transactions contemplated by this Agreement (a) any applicable state takeover
laws, including the provisions of the New Jersey Shareholder Protection Act
(N.J.S.A. 14A:10A-1), (b) any applicable takeover provisions in the Company
Articles of Incorporation and (c) any takeover provisions set forth in any
agreement to which the Company is a party or may be bound. Holders of Company
Stock do not have dissenters' rights in connection with the Merger.
SECTION 3.15. BROKERS; SCHEDULE OF FEES AND EXPENSES. No broker, investment
banker, financial advisor or other Person, other than Prudential Securities
Incorporated (the fees and expenses of which will be paid by the Company), is
entitled to any broker's, finder's, financial advisor's or other similar fee or
commission in connection with the transactions contemplated by this Agreement
based upon arrangements made by or on behalf of the Company. The Company has
heretofore furnished Parent with a true and complete copy of its engagement
letter with Prudential Securities Incorporated (which letter sets forth the
method of calculation of any fees to be payable to Prudential Securities
Incorporated).
SECTION 3.16. OPINION OF FINANCIAL ADVISOR. The Company has received the
opinion of Prudential Securities Incorporated, dated the date of this Agreement,
to the effect that, as of the date of this Agreement, the Merger Consideration
to be received in the Merger by the Company's stockholders is fair to the
Company's stockholders from a financial point of view (the "Fairness Opinion"),
and a complete and correct signed copy of such opinion has been, or promptly
upon receipt thereof will be, delivered to Parent.
SECTION 3.17. MATERIAL CONTRACTS. None of the Company or its subsidiaries,
nor any of their respective assets, business or operations, is a party to, or is
bound or affected by, or receives benefits under, any contract or agreement or
amendment thereto that in each case is required to be filed as an exhibit to an
Annual Report on Form 10-K filed by the Company that has not been filed as an
exhibit to the Company's Annual Report on Form 10-K filed for the fiscal year
ended December 31, 1996 or as an exhibit to another filed Company SEC Document.
True and correct copies of such contracts, and any agreements or amendments
thereto, have been made available for review by Parent. None of the Company or
the subsidiaries is in default under any contract, agreement, commitment,
arrangement, lease, insurance policy or other instrument to which it is a party,
by which its respective assets, business or operations may be bound or affected,
or under which it or any of its respective assets, business or operations
receives benefits, which default, in the aggregate, is reasonably likely to have
a Company Material Adverse Effect, and there has not occurred any event that,
with lapse of time or giving of notice or both, would constitute such a default.
Except as disclosed in the Company SEC Documents, neither the Company nor any
subsidiary is subject to, or bound by, any contract containing covenants which
(i) limit the ability of the Company or any subsidiary to compete in any line of
business or with any person, or (ii) involve any restriction of geographical
area in which, or method by which, the Company or any subsidiary may carry on
its business (other than as may be required by law or any applicable
Governmental Entity).
SECTION 3.18. LABOR MATTERS. Neither the Company nor any of its
subsidiaries is a party to, or is bound by, any collective bargaining agreement,
contract or other agreement or understanding with a labor union or labor
organization, nor is the Company or any of its subsidiaries the subject of a
proceeding asserting that it or any such subsidiary has committed an unfair
labor practice (within the meaning of the National Labor Relations Act) or
seeking to compel it or such subsidiary to bargain with any labor organization
as to wages and conditions of employment, nor is there any strike or other labor
dispute involving the Company or any of its subsidiaries, pending or, to the
best of its knowledge, threatened, nor is it aware of any activity involving its
or any of the subsidiaries' employees seeking to certify a collective bargaining
unit or engaging in any other organization activity. Except as disclosed in Item
3.18 of the Company Disclosure Schedule, neither the Company or any of its
subsidiaries has been within the last three (3) years, nor is likely to become,
the subject of or involved in any investigation, complaint or proceeding by the
United States Department of Labor, the Office of Federal Contract Compliance,
the Equal Employment Opportunity Commission or any similar federal, state or
local body dealing with any employment policies and practices of the Company or
such subsidiaries or any Person currently employed by them, except for any such
investigation, complaint or proceeding that, in the aggregate, would not be
reasonably likely to have a Company Material Adverse Effect or prevent or
materially delay the consummation of the Merger.
SECTION 3.19. ENVIRONMENTAL MATTERS. Except as set forth in Item 3.19 the
Company Disclosure Schedule and except for matters which are not reasonably
likely, in the aggregate, to have a Company Material Adverse Effect: (i) to the
Company's knowledge, the Company and each subsidiary have complied at all times
with applicable Environmental Laws; (ii) to the Company's knowledge, no real
property (including buildings or other structures), other than real property
acquired by the Company or any of its subsidiaries through foreclosure or
similar means in the ordinary course of business, currently or formerly owned or
operated by the Company or any subsidiary has been contaminated with, or has had
any release of, any Hazardous Substance; (iii) neither the Company nor any
subsidiary has received any written notice, demand letter, claim or request for
information alleging any violation of, or liability under, any Environmental
Law; (iv) neither the Company nor any subsidiary is subject to any order,
decree, injunction or other agreement with any Governmental Entity or any third
party relating to any Environmental Law; (v) to the Company's knowledge there
are no circumstances or conditions (including asbestos, underground storage
tanks, lead, polychlorinated biphenyls, petroleum sales or dry- cleaning)
involving any currently or formerly owned or operated property of the Company or
any subsidiary, other than real property acquired by the Company or any of its
subsidiaries through foreclosure or similar means in the ordinary course of
business, that could reasonably be expected to result in any claims, liability
or investigations with respect to the Company or any subsidiary or result in any
restrictions on the ownership, use, or transfer of any property pursuant to any
Environmental Law; and (vi) the Company has made available to Parent copies of
all environmental reports, studies, sampling data, correspondence, filings and
other environmental information in its possession or reasonably available to it
relating to Company, any subsidiary or any currently or formerly owned or
operated property.
As used herein, the term "ENVIRONMENTAL LAW" means any federal, state or
local law, regulation, order, decree, permit, authorization, common law or
agency requirement relating to: (A) the protection of the environment, health,
safety, or natural resources, (B) the handling, use, presence, disposal, release
or threatened release of any Hazardous Substance or (C) noise, odor, wetlands,
indoor air, pollution, contamination or any injury or threat of injury to
persons or property involving any Hazardous Substance and the term "HAZARDOUS
SUBSTANCE" means any substance in any concentration that is listed, classified
or regulated pursuant to any Environmental Law.
SECTION 3.20. PROPRIETARY RIGHTS. The term "PROPRIETARY RIGHTS" shall mean
all of the Company's and its subsidiaries' (i) registration of trademarks and
other marks, service marks, trade names or other trade rights, (ii) pending
applications for any such registration, (iii) rights in or to patents and
copyrights and pending applications therefor and (iv) right to other trademarks,
service marks and other marks, trade names and other trade rights and all other
trade secrets, designs, plans, specifications, technology, know-how, methods,
designs, concepts, and other proprietary rights, whether or not registered.
Except as would not be reasonably likely in the aggregate to have a Company
Material Adverse Effect or prevent or materially delay consummation of the
Merger, (i) the Company and each of its subsidiaries is the sole owner of and
has the exclusive right to use, its Proprietary Rights, free from any Liens, and
no Person has a right to receive a royalty or similar payment in respect of any
Proprietary Rights, whether pursuant to any contractual arrangements entered
into by the Company or any of its subsidiaries or otherwise; (ii) to the
Company's knowledge, none of the Proprietary Rights, nor the Company's or any of
its subsidiaries' use thereof, infringe or otherwise violate the rights of any
third party; and (iii) to the Company's knowledge, the Company is not aware of
any infringement or violation of the Company or any of its subsidiaries' rights
in or to the Proprietary Rights by any third party.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF PARENT AND SUB
Parent and Sub represent and warrant to the Company, subject to the
exceptions set forth in the separate disclosure schedule executed and delivered
by the Parent and Sub concurrently with the execution and delivery of this
Agreement (the "Parent Disclosure Schedule"), as follows:
SECTION 4.1. ORGANIZATION. Each of Parent and Sub is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation and has all requisite corporate power and
authority to carry on its business as now being conducted. Each of Parent and
Sub is duly qualified or licensed to do business and in good standing in each
jurisdiction in which the property owned, leased or operated by it or the nature
of the business conducted by it makes such qualification or licensing necessary,
except in such jurisdictions where any failure to be so duly qualified or
licensed and in good standing would not, in the aggregate, have a material
adverse effect on the business, properties, assets, financial condition or
results of operation of Parent and its subsidiaries taken as a whole (a "Parent
Material Adverse Effect") or prevent or materially delay the consummation of the
Merger.
SECTION 4.2. CAPITALIZATION. The authorized capital stock of the Parent
consists of 2,000,000,000 shares of the Parent Stock, 4,000,000 shares of Class
A preferred stock, no-par value per share (the "Parent Class A Preferred") and
10,000,000 shares of the preferred stock, no-par per share (the "Parent
Preferred" and together with the Parent Class A Preferred Stock the "Parent
Preferred Stock"). At the close of business on February 23, 1998, (i)
649,278,577 shares of the Parent Stock were issued and outstanding, (ii) no
shares of the Parent Preferred Stock were issued and outstanding, and (iii) no
shares of Parent Stock and no shares of Parent Preferred Stock were held by the
Parent in its treasury. All outstanding shares of capital stock of the Parent
are, and all shares which may be issued under this Agreement will be, when
issued, duly authorized, validly issued, fully paid and nonassessable and not
issued in violation of any preemptive rights. There are no bonds, debentures,
notes or other indebtedness of the Parent having the right to vote (or
convertible into, or exercisable or exchangeable for, securities having the
right to vote) on any matters on which stockholders of the Company may vote.
SECTION 4.3. AUTHORIZATION. Parent and Sub have requisite corporate power
and authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. The execution, delivery and performance of
this Agreement and the consummation by Parent and Sub of the transactions
contemplated hereby have been duly authorized by all necessary corporate action
on the part of Parent and Sub (including approval of the Merger and this
Agreement by the Board of Directors of Parent) and no other corporate
proceedings on the part of Parent or Sub are necessary to authorize this
Agreement or to consummate such transactions. No vote of Parent stockholders is
required to approve this Agreement or the transactions contemplated hereby. This
Agreement has been duly executed and delivered by Parent and Sub, as the case
may be, and, assuming this Agreement constitutes a valid and binding obligation
of the Company, constitutes a valid and binding obligation of each of Parent and
Sub, enforceable against them in accordance with its terms, subject to
applicable bankruptcy, insolvency, moratorium or other similar laws relating to
creditors' rights generally and to general principles of equity.
SECTION 4.4. CONSENTS AND APPROVALS; NO VIOLATIONS. Except for filings,
permits, authorizations, consents and approvals as may be required under, and
other applicable requirements of, the Exchange Act, the BHCA, the NBA, the HSR
Act, the filing of the Certificate of Merger and any required related
certificate under the NJBCA, the laws of other states in which Parent is
incorporated or qualified to do or is doing business and state takeover laws,
such filings and approvals as may be required under state laws in those
jurisdictions in which the Company or any of its subsidiaries is licensed or
holds a permit to engage in business and the other matters referred to in Item
4.4 of the Parent Disclosure Schedule (collectively, the "Parent Required
Consents"), neither the execution, delivery or performance of this Agreement by
Parent and Sub nor the consummation by Parent and Sub of the transactions
contemplated hereby will (i) conflict with or result in any breach of any
provision of the articles of incorporation (the "Parent Articles of
Incorporation") or bylaws (the "Parent Bylaws") of Parent, (ii) conflict with or
result in any breach of any provision of the certificate of incorporation (the
"Sub Certificate of Incorporation") or bylaws (the "Sub Bylaws") of Sub, (iii)
require any filing with, or permit, authorization, consent or approval of, any
Governmental Entity (except where the failure to obtain such permits,
authorizations, consents or approvals or to make such filings would not have,
individually or in the aggregate, a Parent Material Adverse Effect or would not
be reasonably expected to prevent or materially delay the consummation of the
Merger), (iv) result in a violation or breach of, or constitute (with or without
due notice or lapse of time or both) a default (or give rise to any right of
termination, amendment, cancellation or acceleration) under, any of the terms,
conditions or provisions of any loan or credit agreement, note, bond, mortgage,
indenture, permit, concession, franchise, license, lease, contract, agreement or
other instrument or obligation to which Parent or any of its subsidiaries is a
party or by which any of them or any of their properties or assets may be bound
or (v) violate any order, writ, injunction, decree, statute, rule or regulation
applicable to Parent, any of its subsidiaries or any of their properties or
assets, except in the case of clauses (iv) and (v) for violations, breaches or
defaults which would not, individually or in the aggregate, have a Parent
Material Adverse Effect or that would not, individually or in the aggregate, be
reasonably expected to prevent or materially delay the consummation of the
Merger.
SECTION 4.5. SEC REPORTS AND FINANCIAL STATEMENTS. The Parent has filed
with the SEC, and has heretofore made available to the Company, true and
complete copies of all forms, reports, schedules, statements and other documents
required to be filed by it since December 31, 1996 under the Exchange Act or the
Securities Act (such forms, reports, schedules, statements and other documents,
including any financial statements or schedules included therein, are referred
to as the "Parent SEC Documents"). Except to the extent revised or superseded by
a subsequently filed Parent SEC Document (which has been filed and a copy of
which has been provided to the Company prior to the date hereof), the Parent SEC
Documents, at the time filed, (i) did not and will not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading and (ii) complied
and will comply in all material respects with the applicable requirements of the
Exchange Act and the Securities Act, as the case may be, and the applicable
rules and regulations of the SEC thereunder. The financial statements of Parent
included or incorporated by reference in the Parent SEC Documents complied and
will comply, as of the time filed, as to form in all material respects with
applicable accounting requirements and with the published rules and regulations
of the SEC with respect thereto, have been and will be prepared in accordance
with GAAP applied on a consistent basis during the periods involved (except as
may be indicated in the notes thereto or, in the case of the unaudited
statements, as permitted by Form 10-Q of the SEC) and fairly present and will
fairly present (subject, in the case of the unaudited statements, to normal,
recurring, year-end audit adjustments) the consolidated financial position of
Parent and its consolidated subsidiaries as at the dates thereof and the
consolidated results of their operations and cash flows for the periods
indicated therein.
SECTION 4.6. ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as disclosed in
the Parent SEC Documents filed prior to the execution hereof (the "Parent Filed
SEC Documents") or as disclosed in Item 4.6 of the Parent Disclosure Schedule,
since September 30, 1997, Parent and its subsidiaries have conducted their
respective businesses only in the ordinary course, and there has not been (i)
any material adverse change with respect to the business, properties, assets,
financial condition or results of operations of the Parent and its subsidiaries
taken as a whole (other than changes generally affecting the industries in which
Parent or any of its subsidiaries operate or changes relating to the
transactions contemplated by the Agreement), (ii) any damage, destruction or
loss, whether or not covered by insurance, that has or reasonably could be
expected to have a Parent Material Adverse Effect, or (iii) any revaluation by
Parent of any of its material assets that has or reasonably could be expected to
have a Parent Material Adverse Effect in the aggregate.
SECTION 4.7. NO UNDISCLOSED LIABILITIES. Except as set forth in the
Parent's Annual Report on Form 10-K for the fiscal year ended December 31, 1996
previously filed with the SEC under the Exchange Act or in Item 4.7 of the
Parent Disclosure Schedule, neither the Parent nor any of its subsidiaries has
any material liabilities or obligations of any nature, whether or not accrued,
contingent or otherwise. Since December 31, 1996 except as set forth in the
Parent Filed SEC Documents and except for liabilities incurred by Parent and its
subsidiaries in the ordinary course of business, neither Parent nor any of its
subsidiaries has incurred any material liabilities of any nature, whether or not
accrued, contingent or otherwise that would be reasonably expected to have a
Parent Material Adverse Effect.
SECTION 4.8. INTERIM OPERATIONS OF SUB. Sub will be formed solely for the
purpose of engaging in the transactions contemplated hereby, and will not engage
in any other business activities, has incurred no liabilities except as
contemplated hereby, and will conduct its operations only as contemplated
hereby.
SECTION 4.9. LITIGATION. There is no suit, claim, action, proceeding or
investigation pending or, to the best knowledge of Parent, threatened against
Parent or any of its subsidiaries that could reasonably be expected to have,
directly or indirectly, or in the aggregate, a Parent Material Adverse Effect.
Neither Parent nor any of its subsidiaries is subject to any outstanding order,
writ, injunction or decree that could reasonably be expected to have, directly
or indirectly, or in the aggregate, a Parent Material Adverse Effect or prevent
or materially delay the consummation of the Merger.
SECTION 4.10. COMPLIANCE WITH APPLICABLE LAW. The Parent and its
subsidiaries hold all permits, licenses, variances, exemptions, orders,
concessions, franchises and approvals of all Governmental Entities necessary to
own or lease their respective assets and to conduct their respective businesses
(the "Parent Permits"), except for failures to hold such permits, licenses,
variances, exemptions, orders, concessions, franchises and approvals that would
not, in the aggregate, have a Parent Material Adverse Effect or prevent or
materially delay the consummation of the Merger. The Parent and its subsidiaries
are in compliance with the terms of the Parent Permits, except where the failure
so to comply would not have a Parent Material Adverse Effect or prevent or
materially delay the consummation of the Merger. Except as disclosed in the
Parent SEC Documents, to the best knowledge of the Parent, the businesses of the
Parent and its subsidiaries are not being conducted in violation of any law,
ordinance or regulation of any Governmental Entity, except for possible
violations that would not have a Parent Material Adverse Effect or reasonably
prevent or materially delay the consummation of the Merger. As of the date of
this Agreement, to the best knowledge of the Parent no investigation or review
by any Governmental Entity with respect to the Parent or any of its subsidiaries
is pending or threatened, nor has any Governmental Entity indicated an intention
to conduct any such investigation or review, other than, in each case, those the
outcome of which would not be reasonably expected to have a Parent Material
Adverse Effect or prevent or materially delay the consummation of the Merger.
SECTION 4.11. TAX RETURNS. Parent and each of its subsidiaries has filed
all Federal income tax returns and all other material tax returns and reports
required to be filed by it (taking into account all appropriately obtained
extensions).
SECTION 4.12. BROKERS. No broker, investment banker, financial advisor or
other Person, other than Xxxxxx Xxxxxxx, Xxxx Xxxxxx Discover & Co., is entitled
to any broker's, finder's, financial advisor's or other similar fee or
commission in connection with the transactions contemplated by this Agreement
based upon arrangements made by or on behalf of Parent or Sub.
SECTION 4.13. REGISTRATION STATEMENT. The prospectus forming part of the
registration statement on Form S-4 to be filed under the Securities Act with the
SEC by Parent for the purpose of registering the shares of Parent Stock and New
Parent Preferred Stock to be issued in the Merger and the shares of Parent Stock
issuable upon conversion of the New Parent Preferred Stock to be issued in the
Merger (together with any amendments thereto, the "Registration Statement") will
not at the time it becomes effective and at any date which a vote of
shareholders of the Company occurs with respect to the Merger, contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they are made, not misleading or
necessary to correct any statement in any earlier filing with the SEC of such
Registration Statement or any amendment or supplement thereto. The Registration
Statement, on the effective date thereof, will comply as to form in all material
respects with all applicable laws, including the provisions of the Securities
Act and the rules and regulations promulgated thereunder. Notwithstanding the
foregoing, no representation is made by Parent or Sub with respect to
information supplied by the Company or its representatives specifically for
inclusion therein.
SECTION 4.14. ISSUANCE OF PARENT STOCK. The shares of Parent Stock and New
Parent Preferred Stock to be issued in connection with the Merger, and the
shares of Parent Stock issuable upon conversion of the shares of New Parent
Preferred Stock to be issued in the Merger, have been duly authorized and, when
issued as contemplated by this Agreement and, in the case of shares of Parent
Stock issuable upon conversion of the shares of New Parent Preferred Stock, the
Parent Certificate of Designations, will be duly authorized, validly issued,
fully paid and non- assessable, and not in violation, free of any preemptive
rights created by statute, the Parent Certificate of Incorporation, the Parent
Bylaws or any agreement to which Parent is a party or by which Parent is bound
and will be registered under the Securities Act and registered or exempt from
registration under applicable Blue Sky laws and listed on the NYSE. Neither the
filing of the Registration Statement nor the offering or sale of any of the
shares of Parent Stock or New Parent Preferred Stock as contemplated by this
Agreement gives rise to any rights, other than those which have been waived or
satisfied, for or relating to the registration of any securities of Parent.
SECTION 4.15. COMPANY STOCK. Neither Parent, Sub nor any subsidiary of
Parent or Sub owns any capital stock of any class of the Company, either
directly or indirectly, or any rights to acquire or dispose of any capital stock
of any class of the Company the ownership of which would adversely affect the
intended tax-free nature of the transaction contemplated hereby.
SECTION 4.16. TAX FREE REORGANIZATION. Parent is aware of no circumstances
or events that would prevent the Merger from being treated as a tax-free
reorganization pursuant to Section 368(a)(1)(B) of the Code.
ARTICLE V
COVENANTS
SECTION 5.1. AFFIRMATIVE COVENANTS OF THE COMPANY. The Company hereby
covenants and agrees that, prior to the Effective Time, unless otherwise
expressly contemplated by this Agreement or consented to in writing by Parent,
which consent shall not be unreasonably withheld, the Company shall, and shall
cause each of its subsidiaries to, (a) operate its business in the usual and
ordinary course consistent with past practices and in accordance, in all
material respects, with applicable laws; (b) preserve substantially intact its
business organization, maintain its rights and franchises, use its commercially
reasonable efforts to retain the services of its respective principal officers
and key employees and maintain its relationships with its respective principal
suppliers, contractors, distributors, customers and others having material
business relationships with it; (c) maintain and keep its properties and assets
in as good repair and condition as at present, ordinary wear and tear excepted;
and (d) keep in full force and effect insurance comparable in amount and scope
of coverage to that currently maintained; PROVIDED, HOWEVER, that the loss of
any officers, employees, consultants, customers, payors or suppliers prior to
the Effective Time shall not constitute a breach of this Section 5.1 unless such
loss would have a Company Material Adverse Effect.
SECTION 5.2. NEGATIVE COVENANTS OF THE COMPANY. Except as expressly
contemplated by this Agreement or otherwise consented to in writing by Parent or
as set forth in Item 5.2 of the Company Disclosure Schedule, from the date
hereof until the Effective Time, the Company shall not, and shall cause each of
its subsidiaries not to, do any of the following:
(a) (i) increase the compensation payable to or to become payable
to any of its directors, officers or employees, except (A) for
increases in salary, wages or bonuses payable or to become payable in
the ordinary course of business and consistent with past practice, or
(B) payments under and pursuant to the terms of the Company's 1998
Performance Bonus Plan in an aggregate amount not to exceed an amount
set forth in Item 5.2 of the Company Disclosure Schedule; (ii) grant
any severance or termination pay to, or enter into or modify any
employment or severance agreement with, any of its directors, officers
or employees, except as may be required by any settlement of pending
litigation and except for the execution of an employment agreement
with Xxxxx Xxxxxxxxx, the terms of which shall be acceptable to Parent
in its reasonable judgment; or (iii) adopt or amend any employee
benefit plan or arrangement, except as may be required by any
settlement of pending litigation or except as may be required by
applicable law;
(b) declare, set aside or pay any dividend on, or make any other
distribution in respect of, any of its capital stock (other than for
ordinary quarterly cash dividends declared by the Company with respect
to the Company Common Stock in an amount not exceeding $.04 per share
and with respect to the Company Preferred Stock in an amount not
exceeding the amount required by the terms thereof); PROVIDED,
HOWEVER, that this Section 5.2(b) shall not prohibit any wholly owned
(directly or indirectly) subsidiary of the Company from declaring,
setting aside or paying any dividend on, or making any distribution in
respect of, its capital stock;
(c) (i) redeem, repurchase or otherwise reacquire any share of
its capital stock or any securities or obligations convertible into or
exercisable or exchangeable for any share of its capital stock, or any
options, warrants or conversion or other rights to acquire any shares
of its capital stock or any such securities or obligations (other than
in connection with the exercise of any Company Options and the
delivery of Company Common Stock in payment of the exercise price
thereof); (ii) effect any reorganization or recapitalization; or (iii)
split, combine or reclassify any 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, shares of its capital stock;
(d) (i) issue, deliver, award, grant or sell, or authorize or
propose the issuance, delivery, award, grant or sale of, any shares of
any class of its capital stock (including shares held in treasury) or
other equity securities, any securities or obligations directly or
indirectly convertible into or exercisable or exchangeable for any
such shares, or any rights (including, without limitation, stock
appreciation or stock depreciation rights), warrants or options to
acquire, any such shares or securities or any rights, warrants or
options directly or indirectly to acquire any such shares or
securities (except for the issuance of shares upon the exercise of
Company Options outstanding as of the date hereof); or (ii) amend or
otherwise modify the terms of any such securities, obligations,
rights, warrants or options;
(e) acquire or agree to acquire, by merging or consolidating
with, by purchasing an equity interest in or a 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 acquire or agree to acquire all or substantially
all assets of any other Person (other than the purchase of receivables
in the ordinary course of business and consistent with past practice);
(f) sell, lease, exchange, mortgage, pledge, transfer or
otherwise dispose of, or agree to sell, lease, exchange, mortgage,
pledge, transfer or otherwise dispose of, any of its assets, except
for dispositions of assets in the ordinary course of business, sales
of receivables in the ordinary course of business, the grant of
security interests in receivables in connection with warehouse
borrowing and similar borrowing arrangements and the sale of the
Company's Sacramento headquarters pursuant to a sale/leaseback
transaction;
(g) propose or adopt any amendments to its articles of
incorporation or bylaws;
(h) (i) change any of its methods of accounting in effect at
December 31, 1997, or (ii) make or rescind any express or deemed
election relating to taxes, settle or compromise any claim, action,
suit, litigation, proceeding, arbitration, investigation, audit or
controversy relating to taxes, or change any of its methods of
reporting income or deductions for Federal income tax purposes from
those employed in the preparation of the Federal income tax returns
for the taxable year ending December 31, 1997, except, in the case of
clause (i) or clause (ii), as may be required by law or GAAP,
consistently applied;
(i) prepay, before the scheduled maturity thereof, any of its
long-term debt, or incur any obligation for borrowed money, whether or
not evidenced by a note, bond, debenture or similar instrument, other
than (i) indebtedness incurred in the ordinary course of business
under the existing loan agreements described in Item 5.2 of the
Company Disclosure Schedule or under any refinancing, renewal or
refunding thereof, and (ii) trade payables incurred in the ordinary
course of business consistent with past practice;
(j) take any action that would or could reasonably be expected to
result in any of its representations and warranties set forth in this
Agreement being untrue in any material respect or in any of the
conditions to the Merger set forth in Article VII not being satisfied
in any material respect; or
(k) agree in writing or otherwise to do any of the foregoing.
SECTION 5.3. NEGATIVE COVENANTS OF PARENT. Except as expressly contemplated
by this Agreement or otherwise consented to in writing by the Company, from the
date hereof until the Effective Time, Parent shall not take any action:
(a) that would prevent the Merger from being treated as a
tax-free reorganization pursuant to Section 368(a)(1)(B) of the Code;
or
(b) that would or could reasonably be expected to result in any
of its representations or warranties set forth in this Agreement being
untrue in any material respect (but without duplication of any
standard of materiality set forth in such representation or warranty)
or in any of the conditions to the Merger set forth in Article VII not
being satisfied in any material respect.
ARTICLE VI
ADDITIONAL AGREEMENTS
SECTION 6.1. ACCESS AND INFORMATION. From the date hereof to the Effective
Time, each party shall, and shall cause its subsidiaries to, afford to the other
party and its officers, employees, accountants, consultants, legal counsel and
other representatives of the other party (collectively, the "Representatives"),
reasonable access during normal business hours to the properties, executive
personnel and all information concerning the business, properties, contracts,
records and personnel of such party and its subsidiaries as the other party may
reasonably request; PROVIDED, HOWEVER, that no investigation pursuant to this
Section 6.1 or otherwise shall alter any representation or warranty of any party
hereto or the conditions to the obligations of the parties hereto.
SECTION 6.2. CONFIDENTIALITY. Each party agrees that it will not, and will
cause its representatives not to, use any information obtained pursuant to
Section 6.1 (as well as any other information obtained prior to the date hereof
in connection with the entering into this Agreement) for any purpose unrelated
to the consummation of the transactions contemplated by this Agreement. Subject
to the requirements of law, each party will keep confidential, and will cause
its representatives to keep confidential, all information and documents obtained
pursuant to Section 6.1 (as well as any other information obtained prior to the
date hereof in connection with the entering into of this Agreement) unless such
information (i) was already known to such party, (ii) becomes available to such
party from other sources not known by such party to be bound by a
confidentiality obligation, (iii) is disclosed with the prior written approval
of the party to which such information pertains or (iv) is or becomes readily
ascertainable from published information or trade sources. In the event that
this Agreement is terminated or the transactions contemplated by this Agreement
shall otherwise failed to be consummated, each party shall promptly cause all
copies of documents or extracts thereof containing information and data as to
another party hereto to be returned to the party which furnished the same.
SECTION 6.3. REGISTRATION STATEMENT; PROXY STATEMENT.
(a) As promptly as practicable after the execution of this
Agreement, Parent and the Company shall jointly prepare and file with
the SEC, subject to the prior approval of the other party, which
approval shall not be unreasonably withheld, preliminary proxy
materials which shall consist of the preliminary Proxy Statement in
connection with the vote of the Company's stockholders with respect to
the Merger and the other transactions contemplated hereby, and a
preliminary prospectus in connection with the registration under the
Securities Act of the Parent Stock and the New Parent Preferred Stock
to be issued in connection with the Merger and the Parent Stock
issuable upon conversion of the New Parent Preferred Stock to be
issued in the Merger. As promptly as practicable after all comments
are received from the SEC with respect to the preliminary proxy
materials and after the furnishing by Parent and the Company of all
information required to be contained therein, the Company shall file
with the SEC, subject to the prior approval of the other party, which
approval shall not be unreasonably withheld, the definitive Proxy
Statement to be sent or given in connection with the vote of the
Company's stockholders at the Stockholders' Meeting and Parent shall
file with the SEC, subject to the prior approval of the other party,
which approval shall not be unreasonably withheld, the Registration
Statement containing the Proxy Statement and form of prospectus to be
sent or given in connection with the registration under the Securities
Act of the Parent Stock and New Parent Preferred Stock to be issued in
connection with the Merger and the Parent Stock issuable upon
conversion of the New Parent Preferred Stock to be issued in the
Merger. Each of Parent and the Company will use their reasonable best
efforts to have or cause the Registration Statement to become
effective as promptly as practicable, and Parent shall take any action
required to be taken under any applicable Federal or state securities
or Blue Sky laws in connection with the issuance of shares of Parent
Stock and New Parent Preferred Stock in the Merger and the Parent
Stock issuable upon conversion of the New Parent Preferred Stock to be
issued in the Merger. Each of Parent and the Company shall furnish all
information concerning it and the holders of its capital stock as the
other may reasonably request in connection with such actions. Promptly
after the Registration Statement has become effective and all
applicable Blue Sky laws have been complied with, the Company shall
mail the joint proxy statement/prospectus included in the Registration
Statement to its stockholders.
(b) The information supplied by the Company for inclusion in the
Registration Statement shall not, at the time the Registration
Statement is declared effective (or at the time any amendment thereof
or supplement thereto is sent or given to the Company's stockholders),
contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which
they are made, not misleading. The information supplied by the Company
for inclusion in the Proxy Statement to be sent to the stockholders of
the Company in connection with the Stockholders' Meeting shall not, at
the date the Proxy Statement (or any amendment thereof or supplement
thereto) is first mailed to stockholders of the Company or, except to
the extent amended or supplemented, at the time of the Stockholders'
Meeting, contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary in
order to make the statements therein, in the light of the
circumstances under which they are made, not misleading. If at any
time prior to the Stockholders' Meeting any event or circumstance
relating to the Company or any of its affiliates, or its or their
respective officers or directors, should be discovered by the Company
which should be set forth in an amendment to the Registration
Statement or a supplement to the Proxy Statement, the Company shall
promptly inform Parent. All documents that the Company is responsible
for filing with the SEC in connection with the transactions
contemplated herein will comply as to form and substance in all
material respects with the applicable requirements of the Securities
Act and the Exchange Act.
(c) The information supplied by Parent for inclusion in the
Registration Statement shall not, at the time the Registration
Statement is declared effective (or at the time any amendment thereof
or supplement thereto is sent or given to the Company's stockholders),
contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which
they are made, not misleading. The information supplied by Parent for
inclusion in the Proxy Statement to be sent to the stockholders of the
Company in connection with the Stockholders' Meeting shall not, at the
date the Proxy Statement (or any amendment thereof or supplement
thereto) is first mailed to stockholders of the Company or, except to
the extent amended or supplemented, at the time of the Stockholders'
Meeting, contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary in
order to make the statements therein, in the light of the
circumstances under which they are made, not misleading. If at any
time prior to the Stockholders' Meeting any event or circumstance
relating to Parent or any of its respective affiliates, or its or
their respective officers or directors, should be discovered by Parent
which should be set forth in an amendment to the Registration
Statement or a supplement to the Proxy Statement, Parent shall
promptly inform the Company. All documents that Parent is responsible
for filing with the SEC in connection with the transactions
contemplated herein will comply as to form and substance in all
material respects with the applicable requirements of the Securities
Act and the Exchange Act.
(d) Notwithstanding the foregoing, no party makes any
representations or warranties with respect to any information that has
been supplied by the other party or by its auditors, attorneys,
financial advisors, other consultants or advisors specifically for use
in the Registration Statement, any Blue Sky filing, the Proxy
Statement, or any other documents to be filed with the SEC or any
regulatory agency in connection with the transactions contemplated
hereby.
SECTION 6.4. STOCKHOLDER APPROVAL. The Company, acting through its Board of
Directors, shall, in accordance with applicable law and the Company Articles of
Incorporation and the Company Bylaws (a) duly call, give notice of, convene and
hold one or more meetings of the Company's stockholders as soon as practicable
following the date on which the Registration Statement becomes effective, to
approve and adopt this Agreement and the Merger (the "Stockholders' Meeting"),
and (b) except as provided in Section 6.9 and the following sentence, include in
the Proxy Statement the recommendation of the Board of Directors that the
Company's stockholders approve and adopt this Agreement and the Merger. In the
event that the Company's Board of Directors withdraws or modifies its
recommendation, the Company nonetheless shall cause the Stockholders Meeting to
be convened and a vote taken with respect to the Merger and the Board of
Directors may communicate to the Company's stockholders its basis for such
withdrawal or modification in the Proxy Statement. Subject to the preceding
sentence, the Company shall use all its best efforts to solicit from
stockholders of the Company proxies in favor of the approval and adoption of
this Agreement and the Merger and to take all other actions reasonably necessary
or in Parent's reasonable judgment advisable to secure such vote as promptly as
practicable.
SECTION 6.5. FURTHER ACTION; REASONABLE BEST EFFORTS.
(a) Each of the parties shall use reasonable best efforts to
take, or cause to be taken, all appropriate action, and do, or cause
to be done, all things necessary, proper or advisable under applicable
laws or otherwise to consummate and make effective the transactions
contemplated by this Agreement as promptly as practicable, including,
without limitation, using its reasonable best efforts to obtain all
licenses, permits, consents, approvals, authorizations, qualifications
and orders of Governmental Entities and parties to contracts with the
Company and Parent as are necessary for the transactions contemplated
herein (it being understood that any amendments to the Registration
Statement (as hereinafter defined) or a resolicitation of proxies as a
consequence of an acquisition agreement by Parent or any of its
subsidiaries shall not violate this covenant).
(b) From the date of this Agreement until the Effective Time,
each of the parties shall promptly notify the other in writing of any
pending or, to the knowledge of such party, threatened action,
proceeding or investigation by any Governmental Entity or any other
Person (i) challenging or seeking damages in connection with the
Merger, or (ii) seeking to restrain or prohibit the consummation of
the Merger or otherwise limit the right of Parent to own or operate
all or any portion of the business or assets of the Company.
(c) The Company shall give prompt written notice to Parent, and
Parent and Sub shall give prompt written notice to the Company, of the
occurrence, or failure to occur, of any event, which occurrence or
failure to occur would be likely to cause any representation or
warranty contained in this Agreement to be untrue or inaccurate in any
material respect at any time from the date of this Agreement to the
Effective Time. Each party shall use its best efforts to take no
action, or enter into any transaction, which would cause any of its
representations or warranties contained in this Agreement to be untrue
or result in a breach of any covenant made by it in this Agreement.
SECTION 6.6. PUBLIC ANNOUNCEMENTS. Parent and the Company shall consult
with each other before issuing any press release or otherwise making any public
statements with respect to the Merger and shall not issue any such press release
or make any such public statement prior to such consultation, except as may be
required by law or any listing agreement of Parent or the Company with any
exchange on which the securities of the Company or Parent are traded.
SECTION 6.7. DIRECTORS' AND OFFICERS' INSURANCE AND INDEMNIFICATION.
(a) From and after the Effective Time and for not less than six
(6) years, Parent shall indemnify, defend and hold harmless each
person who on or prior to the Effective Time was an officer, director
or employee of the Company and its subsidiaries and who on or prior to
the Effective Time was entitled to indemnification pursuant to the
Company Articles of Incorporation or Company Bylaws (individually, an
"Indemnified Party" and collectively, the "Indemnified Parties"),
against all losses, claims, damages, liabilities, costs or expenses
(including attorneys' fees), judgments, fines, penalties and amounts
paid in settlement of or otherwise in connection with any claim,
action, suit, proceeding or investigation (a "Claim") arising out of
or pertaining to acts or omissions, or alleged acts or omissions, by
them in their capacities as such occurring at or prior to the
Effective Time (including, without limitation, the transactions
contemplated by this Agreement) to the same extent that such
Indemnified Parties are so entitled to indemnification as of the
Effective Time under the NJBCA, the Company Articles of Incorporation
and the Company By-laws. In the event of any such Claim, Parent shall
pay expenses in advance of the final disposition of any such action or
proceeding to each Indemnified Party to the fullest extent permitted
under the NJBCA, upon receipt from the Indemnified Party to whom
expenses are advanced of the undertaking to repay such advances
contemplated by Section 14A:3-5(6) of the NJBCA. The Parent also shall
cause the Surviving Corporation to honor any agreement in effect as of
the date hereof and previously disclosed to Parent providing for the
indemnification of any director, officer or employee or agent, in
accordance with the terms and conditions of such agreement.
(b) Parent shall cause to be maintained in effect for not less
than six (6) years after the Effective Time the current policies of
directors' and officers' liability insurance and fiduciary liability
insurance maintained by the Company with respect to Claims arising
from facts or events which occurred prior to the Effective Time;
PROVIDED, HOWEVER, that Parent may substitute therefor policies of at
least the same coverage and amounts containing terms and conditions
that are no less advantageous for the officers, directors and other
persons covered thereby.
(c) This Section 6.7 shall survive the consummation of the
Merger, is intended to benefit the Indemnified Parties and their
respective heirs and personal representatives, shall be binding on all
successors and assigns of Parent and the Surviving Corporation and
shall be enforceable by the foregoing parties as third party
beneficiaries.
SECTION 6.8. HSR ACT MATTERS. Parent, Sub and the Company (as may be
required pursuant to HSR Act) promptly will complete all documents required to
be filed with the Federal Trade Commission and the United States Department of
Justice in order to comply with the HSR Act and, not later than thirty (30) days
after the date hereof, together with the Persons who are required to join in
such filings, shall file the same with the appropriate Governmental Entities.
Parent, Sub and the Company shall promptly furnish all materials thereafter
required by any of the Governmental Entities having jurisdiction over such
filings, and shall take all reasonable actions and shall file and use best
efforts to have declared effective or approved all documents and notifications
with any such Governmental Entity, as may be required under the HSR Act or other
Federal antitrust laws for the consummation of the Merger and the other
transactions contemplated hereby.
SECTION 6.9. NO SOLICITATION.
(a) The Company and its subsidiaries and their respective
officers, directors, employees, representatives, agents or affiliates
shall cease any discussion or negotiations with any parties that may
be ongoing with respect to an Acquisition Proposal (as hereinafter
defined). The Company shall not, nor shall it permit any of its
subsidiaries to, and it shall use its best efforts to cause its
officers, directors, employees, agents or affiliates not to, directly
or indirectly, (i) solicit, initiate or knowingly encourage (including
by way of furnishing information, other than the Company SEC
Documents), or knowingly take any other action to facilitate, any
inquiries or the making of any proposal which constitutes, or may
reasonably be expected to lead to, any Acquisition Proposal (as
defined in this Section 6.9(a)), or (ii) participate in any
discussions or negotiations regarding any Acquisition Proposal;
PROVIDED, HOWEVER, that if the Board of Directors of the Company
determines in good faith, after consultation with, and based on the
advice of outside counsel, that it is required to do so in order to
comply with its fiduciary duties to the Company's stockholders under
applicable law, the Company may, in response to an unsolicited
Acquisition Proposal, and subject to compliance with Section 6.9(c),
(x) furnish information with respect to the Company to any Person
making such unsolicited Acquisition Proposal pursuant to an executed
confidentiality agreement with such Person containing terms
substantially similar to those in the letter dated December 31, 1997
with Parent, and (y) participate in discussions or negotiations
regarding such Acquisition Proposal. For purposes of this Agreement,
"Acquisition Proposal" means any bona fide proposal or offer from any
Person relating to any merger, consolidation, business combination,
sale of a significant amount of assets outside of the ordinary course
of business, sale of shares of capital stock, including the Company
Preferred Stock, outside of the ordinary course of business, tender or
exchange offer or similar transaction involving the Company or any of
its subsidiaries.
(b) Except as set forth in this Section 6.9, neither the Board of
Directors of the Company nor any committee thereof shall (i) withdraw
or modify, or propose to withdraw or modify, in a manner adverse to
Parent, the approval or recommendation by such Board of Directors or
such committee of the Merger or this Agreement, (ii) approve or
recommend, or propose to approve or recommend, any Acquisition
Proposal, or (iii) cause the Company to enter into any letter of
intent, agreement in principle, acquisition agreement or other similar
agreement (each, an "Acquisition Agreement") with respect to any
Acquisition Proposal. Notwithstanding the foregoing, in the event that
the Board of Directors of the Company determines in good faith, after
consultation with and based on the advice of outside counsel, that it
is required to do so in order to comply with its fiduciary duties to
the Company's stockholders under applicable law, the Board of
Directors of the Company may (subject to the following sentences) (x)
withdraw or modify its approval or recommendation of the Merger and
this Agreement (or decide not to recommend it before the Proxy
Statement is sent to the stockholders) only at a time that is after
the fifth business day following Parent's receipt of written notice
advising Parent that the Board of Directors of the Company has
received a Superior Proposal, specifying the material terms and
conditions of such Superior Proposal and identifying the Person making
such Superior Proposal or (y) terminate this Agreement by exercising
its termination right under Section 8.1(g). In addition, if the
Company proposes to terminate this Agreement pursuant to Section
8.1(g), it shall pay to Parent the Termination Fee (as defined in
Section 6.12(b)) at the time prescribed in Section 6.12(c). For
purposes of this Agreement, a "Superior Proposal" shall mean an
Acquisition Proposal made by a third party after March 4, 1998 which,
in the good faith judgment of the Board of Directors of the Company,
taking into account, to the extent deemed appropriate by the Board of
Directors, the various legal, financial and regulatory aspects of the
proposal and the Person making such proposal, (x) if accepted, is
reasonably likely to be consummated, and (y) if consummated, is
reasonably likely to result in a more favorable transaction than the
transaction contemplated hereunder considering, among other things,
and to the extent deemed appropriate in good faith by the Board of
Directors, the long-term prospects and interests of the Company and
its stockholders and other relevant constituencies.
(c) In addition to the obligations of the Company set forth in
paragraphs (a) and (b) of this Section 6.9, the Company shall promptly
advise Parent orally and in writing of any request for information of
a nature which would assist a potential bidder in preparing an
Acquisition Proposal (other than the Company SEC Documents) or of any
Acquisition Proposal, the material terms and conditions of such
request or Acquisition Proposal and the identity of the Person making
such request or Acquisition Proposal. The Company will keep Parent
fully informed on a prompt and current basis of the status and details
(including amendments or proposed amendments) of any such request or
Acquisition Proposal.
(d) Nothing contained in this Section 6.9 shall prohibit the
Company from taking and disclosing to its stockholders a position
contemplated by Rule 14e-2(a) promulgated under the Exchange Act or
from making any disclosure to the Company's stockholders if, in the
good faith judgment of the Board of Directors of the Company, after
consultation with and based on the advice of outside counsel, failure
so to disclose would be inconsistent with its fiduciary duties to the
Company's stockholders under applicable law; PROVIDED, HOWEVER,
neither the Company, its Board of Directors nor any committee thereof
shall, except as permitted by Section 6.9(b), withdraw or modify, or
propose to withdraw or modify, its position with respect to this
Agreement or the Merger or approve or recommend, or propose to approve
or recommend, an Acquisition Proposal.
SECTION 6.10. AFFILIATE AGREEMENTS. (a) Not later than the 15th day prior
to the mailing of the Proxy Statement, the Company shall deliver to Parent a
schedule of each Person that, to the best of its knowledge, is or is reasonably
likely to be, as of the date of the Stockholders' Meeting, deemed to be an
"affiliate" of the Company (each, a "Company Affiliate") as that term is used in
Rule 145 under the Securities Act.
(b) The Company shall use its reasonable best efforts to cause each Person
who may be deemed to be a Company Affiliate to execute and deliver to Parent on
or before the date of mailing of the Proxy Statement an agreement in the form
attached hereto as Exhibit B. Such Company Affiliates will not receive
certificates representing Parent Stock until such agreement is delivered to
Parent.
SECTION 6.11. LISTING OF PARENT SHARES; BLUE SKY LAWS. Parent shall use its
best efforts to obtain the listing on NYSE, at or before the Effective Time, of
the shares of Parent Stock and New Parent Preferred Stock to be issued pursuant
to the Merger and the Parent Stock to be issued upon conversion of the New
Parent Preferred Stock. Parent shall take such steps as may be necessary to
comply with the Blue Sky Laws of all jurisdictions which are applicable to the
issuance of the Parent Stock and the New Parent Preferred Stock pursuant hereto.
SECTION 6.12. EXPENSES. (a) All costs and expenses incurred in connection
with this Agreement and the transactions contemplated hereby shall be paid by
the party incurring such expenses; PROVIDED, HOWEVER, that all costs and
expenses relating to printing, filing and mailing the Registration Statement,
the Proxy Statement and any other filings with the SEC and all SEC and other
regulatory filing fees incurred in connection with such filings shall be borne
by Parent.
(b) If (i) the Company terminates this Agreement pursuant to Section 8.1(g)
or (ii) Parent terminates this Agreement pursuant to Section 8.1(f) following
receipt by the Company of a proposal for an Acquisition Proposal (including a
Superior Proposal), then, within five business days of such termination in the
case of Clause (i) or (ii), the Company shall pay Parent by wire transfer in
immediately available funds a fee of $50,000,000 (the "Termination Fee");
PROVIDED, that if a Stockholders Meeting is held pursuant to the second sentence
of Section 6.4, then, notwithstanding the foregoing, the Termination Fee shall
be payable upon the first Business Day following such stockholders meeting, but
only if the stockholders of the Company do not approve and adopt this Agreement
and the Merger at such stockholders meeting.
SECTION 6.13. LETTER OF PARENT'S ACCOUNTANTS. Parent shall cause to be
delivered to the Company a letter of KPMG Peat Marwick LLP, independent auditors
of the Parent, dated a date within two business days before the date on which
the Registration Statement shall become effective and addressed to the Company,
in form and substance reasonably satisfactory to the Company and customary in
scope and substance for letters delivered by independent public accountants with
respect to certain financial statements and other financial information included
in the registration statements similar to the Registration Statement, which
letter shall be brought down to the Effective Time.
SECTION 6.14. LETTER OF THE COMPANY'S ACCOUNTANTS. The Company shall cause
to be delivered to Parent a letter of KPMG Peat Marwick LLP, the independent
auditors of the Company, dated a date within two business days before the date
on which the Registration Statement shall become effective and addressed to
Parent, in form and substance reasonably satisfactory to Parent and customary in
scope and substance for letters delivered by independent public accountants in
connection with registration statements similar to the Registration Statement,
which letter shall be brought down to the Effective Time.
SECTION 6.15. TAX TREATMENT. This Agreement is intended to constitute a
"plan of reorganization" within the meaning of Section 1.368-2(g) of the income
tax regulations promulgated under the Code. From and after the date of this
Agreement, each party hereto shall use its reasonable best efforts to cause the
Merger to qualify, and shall not, without the prior written consent of the other
parties hereto, knowingly take any actions or cause any actions to be taken
which could reasonably be expected to prevent the Merger from qualifying as a
reorganization under the provisions of Section 368 of the Code. Each party shall
provide the other party with such representations as shall be reasonably
requested in order to enable the respective counsel of such parties to render
the opinions set forth in Sections 7.1(h) and 7.1(i). In the event counsel for
either party is unable to render the opinion described in Section 7.1(h) and
7.1(i), respectively, then the parties hereto agree to negotiate in good faith
to restructure the Merger in order to permit each such counsel to render such
opinion. Following the Effective Time, and consistent with any such consent,
neither the Surviving Corporation nor Parent nor any of their respective
affiliates knowingly and voluntarily shall take any action or cause any action
to be taken which could reasonably be expected to cause the Merger to fail to
qualify as a reorganization under Section 368 of the Code.
SECTION 6.16. ASSUMPTION OF CERTAIN OBLIGATIONS. To the extent necessary,
Parent shall, or shall cause the Surviving Corporation to, enter into
supplemental indentures or otherwise affirmatively assume in writing the
obligations of the Company under the those indentures or other financing
agreements as set forth on Schedule 6.16.
SECTION 6.17. NO ACTION. Except as contemplated by this Agreement, no party
hereto will, nor will either such party permit any of its subsidiaries to, take
or agree or commit to take any action that is reasonably likely to make any of
its representations or warranties hereunder inaccurate in any material respect
at the date made (to the extent so limited) or as of the Effective Time.
SECTION 6.18. CONDUCT OF BUSINESS OF SUB. Parent shall as promptly as
practicable, cause Sub to be duly incorporated and to execute and deliver an
addendum to this Agreement making it a party hereto and take all other action
necessary to cause Sub to perform its obligations hereunder (including, but not
limited to, consummation of the Merger) and to otherwise comply with the terms
hereof. Sub shall not conduct any business from the date of this Agreement,
other than to consummate the Merger and the transactions contemplated by this
Agreement.
SECTION 6.19. EMPLOYEE BENEFIT PLANS.
(a) To the extent that a Company Employee (as defined below)
participates in pension, benefit and similar plans of Parent or its
subsidiaries, Parent shall cause such plan, program or arrangement to
treat the prior service with the Company and its affiliates at the
Effective Time ("Company Employees") as service rendered to Parent or
its affiliate, as the case may be, for purposes of eligibility to
participate and vesting.
(b) Subject to Section 6.19(c), Parent will continue, or cause
Sub to continue, the employee benefit plans that the Company has in
effect at the Effective Time until such time, no earlier than July 1,
1999, as Parent determines to convert such employee benefit plan to
employee benefit plans maintained by Parent.
(c) Each person employed by the Company and its affiliates prior
to the Effective Time who remains an employee of Parent or its
affiliates following the Effective Time (each a "Continued Employee")
shall be generally entitled, to continue to participate in the
employee benefits plans maintained in accordance with Section 6.19(b).
Upon the conversion of such benefits plans as contemplated by Section
6.19(b) each Continued Employee (if still then employed by Parent or
its affiliates) will be generally entitled to participate in the
pension, benefit and similar plans, of Parent and its subsidiaries
that are generally available to employees of Parent and its
affiliates. All such participation shall be subject to such terms of
such plans as may be in effect from time to time.
SECTION 6.20. EMPLOYMENT CONTRACTS. Since Parent deems the individuals
referred to in this Section 6.20 to be important to the continued business and
operations of the Surviving Corporation, the Company agrees, at the Parent's
request, that prior to the Effective Time (i) the Company shall offer employment
contracts, in substantially the form attached hereto as Exhibit B, to those
individuals listed on Schedule 6.20(e)(i) pursuant to the salaries, bonuses and
other terms opposite such individual's name on Schedule 6.20(e)(i); (ii) the
Company shall offer employment contracts, in substantially the form attached
hereto as Exhibit C, to those individuals listed on Schedule 6.20(e)(ii)
pursuant to the salaries and other terms opposite such individual's name on
Schedule 6.20(e)(ii); (iii) the Company shall offer employment contracts in
substantially the form attached hereto as Exhibit D, to the individual listed on
Schedule 6.20(e)(iii) pursuant to the salaries and other terms opposite such
individual's name on Schedule 6.20(e)(iii); (iv) the Company shall offer to
amend the employment contracts of those individuals listed on Schedule
6.20(e)(iv) to contain a severance provision substantially similar to Sections
7.D, 7.E and 8.D of Exhibit C; and (v) the Company shall offer to enter into an
employment contract with Xxxx X. Xxxxxxxxxx, in form and substance reasonably
satisfactory to the Company and Parent pursuant to which Xx. Xxxxxxxxxx shall
serve as chief executive officer of the Surviving Corporation for a term of
three years commencing at the Effective Time and providing for salary and bonus
in amounts commensurate with his position as chief executive officer but in no
event shall such amounts be less than the corresponding amounts paid to Xx.
Xxxxxxxxxx by the Company for the 1997 calendar year.
SECTION 6.21. PERFORMANCE BONUS PLAN. The Company Agrees that it will not
make any distribution from the Company's 1998 Performance Bonus Plan to any
individual referred to in Section 6.20 unless such individual has entered into
the employment contract or amendment to employment contract as contemplated by
Section 6.20.
SECTION 6.22. FINAL TAX RETURNS. Parent shall cause the Surviving
Corporation to timely prepare and file all Federal, state and local income tax
returns required to be filed by the Surviving Corporation for all tax periods
ending on or including the Closing Date, and each of the parties shall fully
cooperate with Parent with respect thereto.
SECTION 6.23. DIVIDEND COORDINATION. The Company's board of directors shall
cause its regular quarterly dividend record dates and payment dates for the
Company Common Stock to be the same as the Parent's regular quarterly dividend
record dates and payment dates for the Parent Stock (beginning in the quarter
following the quarter in which this Agreement is executed), and the Company
shall not thereafter change its regular dividend payment dates and record dates.
SECTION 6.24. RESTRICTIONS ON CERTAIN ACTIONS. Between the date on which
the Market Price calculation commences and the Effective Time, inclusive, Parent
shall not:
(i) effect any extraordinary dividend in respect of the
Parent Stock or fix a record date therefor or effect
any issuance or the authorization of any issuance of
any other securities in respect of, in lieu of or in
substitution for such shares of Parent Stock; and
(ii) make any material change in accounting methods,
principles or practices that is not required by GAAP.
SECTION 6.25. CERTAIN POLICIES OF THE COMPANY. The Company shall,
consistent with generally accepted accounting principles and regulatory
accounting principles, use its best efforts to record any accounting adjustments
required to conform its and the Company subsidiaries' loan, securitization,
litigation and other reserve, and real estate valuation policies and practices
(including securitization assumptions, loan classifications and levels of
reserves) so as to reflect consistently on a mutually satisfactory basis the
policies and practices of Parent; PROVIDED, HOWEVER, that the Company shall not
be obligated to take any such actions until immediately prior to the Effective
Time and PROVIDED, FURTHER, that such adjustment shall in no event result in any
representation or warranty by the Company hereunder being inaccurate, in the
breach of any of the Company's obligations hereunder or in the failure to
satisfy any condition to Parent's obligations hereunder.
ARTICLE VII
CLOSING CONDITIONS
SECTION 7.1. CONDITIONS TO OBLIGATIONS OF PARENT, SUB AND THE COMPANY TO
EFFECT THE MERGER. The respective obligations of Parent, Sub and the Company to
effect the Merger and the other transactions contemplated herein shall be
subject to the satisfaction at or prior to the Effective Time of the following
conditions, any or all of which may be waived, in whole or in part, to the
extent permitted by applicable law:
(a) STOCKHOLDER APPROVAL. The plan of merger contained in this
Agreement shall have been approved and adopted by the requisite vote
of the stockholders of the Company in accordance with applicable law.
(b) NO ORDER. No Governmental Entity or Federal or state court of
competent jurisdiction shall have enacted, issued, promulgated,
enforced or entered any statute, rule, regulation, executive order,
decree, judgment, injunction or other order (whether temporary,
preliminary or permanent), in any case which is in effect and which
prevents or prohibits consummation of the Merger or any other
transactions contemplated in this Agreement; PROVIDED, HOWEVER, that
the parties shall use their best efforts to cause any such decree,
judgment, injunction or other order to be vacated or lifted.
(c) REGULATORY APPROVALS. All regulatory approvals necessary to
consummate the transactions contemplated hereby shall have been
obtained and shall remain in full force and effect and all statutory
waiting periods in respect thereof shall have expired or been
terminated and no such approval shall contain a condition or
requirement that is reasonably likely, individually or in the
aggregate, to have a Company Material Adverse Effect or a material
adverse effect on the Surviving Corporation.
(d) THIRD PARTY CONSENTS. All consents or approvals of third
parties (other than the regulatory approvals referred to in the
preceding paragraph) required for consummation of the Merger shall
have been obtained and shall be in full force and effect, except for
any such consents or approvals the absence of which is not reasonably
likely, individually or in the aggregate, to have a Company Material
Adverse Effect or a material adverse effect on the Surviving
Corporation.
(e) EFFECTIVENESS OF THE REGISTRATION STATEMENT. The Registration
Statement shall have been declared effective by the SEC under the
Securities Act and shall not be the subject of any stop order or
proceeding by the SEC seeking a stop order.
(f) LISTING. The shares of Parent Stock and New Parent Preferred
Stock issuable pursuant to the Merger shall have been authorized for
listing on the NYSE, upon official notice of issuance.
(g) BLUE SKY APPROVALS. All permits and other authorizations
under state securities laws necessary to consummate the transactions
contemplated hereby and to issue the shares of Parent Stock and New
Parent Preferred Stock to be issued in the Merger shall have been
received and be in full force and effect.
(h) OPINION OF PARENT'S COUNSEL. Parent shall have received an
opinion of Xxxxxxxx & Xxxxxxxx, counsel to Parent, dated the Effective
Date, to the effect that, on the basis of facts, representations and
assumptions set forth in such opinion, the Merger constitutes a
"reorganization" within the meaning of Section 368 of the Code. In
rendering its opinion, Xxxxxxxx & Xxxxxxxx may require and rely upon
representations contained in letters from the Company, Parent and
stockholders of the Company.
(i) OPINION OF THE COMPANY'S COUNSEL. The Company shall have
received an opinion of Stroock & Stroock & Xxxxx LLP, counsel to the
Company, dated the Effective Date, to the effect that, on the basis of
facts, representations and assumptions set forth in such opinion, the
Merger constitutes a "reorganization" within the meaning of Section
368 of the Code. In rendering its opinion, Stroock & Stroock & Xxxxx
LLP may require and rely upon representations contained in letters
from the Company, Parent and stockholders of the Company.
SECTION 7.2. ADDITIONAL CONDITIONS TO OBLIGATIONS OF PARENT AND SUB.
The obligations of Parent and Sub to effect the Merger and the other
transactions contemplated in this Agreement are also subject to the following
conditions, any or all of which may be waived, in whole or in part, to the
extent permitted by applicable law:
(a) REPRESENTATIONS AND WARRANTIES. The representations and
warranties of the Company made in this Agreement shall be true and
correct in all material respects (but without duplication of any
standard of materiality set forth in any such representation or
warranty), on and as of the Effective Time with the same effect as
though such representations and warranties had been made on and as of
the Effective Time, except for representations and warranties that
speak as of a specific date or time other than the Effective Time
(which need only be true and correct in all material respects as of
such date or time). Parent shall have received a certificate of the
Chief Executive Officer or Chief Financial Officer of the Company to
that effect.
(b) AGREEMENTS AND COVENANTS. The agreements and covenants of the
Company required to be performed on or before the Effective Time shall
have been performed in all material respects. Parent shall have
received a certificate of the Chief Executive Officer or Chief
Financial Officer of the Company to that effect.
SECTION 7.3. ADDITIONAL CONDITIONS TO OBLIGATIONS OF THE COMPANY. The
obligations of the Company to effect the Merger and the other transactions
contemplated in this Agreement are also subject to the following conditions any
or all of which may be waived, in whole or in part, to the extent permitted by
applicable law:
(a) REPRESENTATIONS AND WARRANTIES. The representations and
warranties of Parent and Sub made in this Agreement shall be true and
correct in all material respects (but without duplication of any
standard of materiality set forth in any such representation or
warranty), on and as of the Effective Time with the same effect as
though such representations and warranties had been made on and as of
the Effective Time, except for representations and warranties that
speak as of a specific date or time other than the Effective Time
(which need only be true and correct in all material respects as of
such date or time). The Company shall have received a certificate of
the Chief Executive Officer or Chief Financial Officer of Parent to
that effect.
(b) AGREEMENTS AND COVENANTS. The agreements and covenants of
Parent and Sub required to be performed on or before the Effective
Time shall have been performed in all material respects. The Company
shall have received a certificate of the Chief Executive Officer or
Chief Financial Officer of Parent to that effect.
(c) PARENT CERTIFICATE OF DESIGNATIONS. If necessary, Parent
shall have filed the Parent Certificate of Designations with the
Secretary of State of the State of North Carolina.
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
SECTION 8.1. TERMINATION. This Agreement may be terminated and the
Merger may be abandoned at any time prior to the Effective Time, whether before
or after approval of the plan of merger contained in this Agreement and the
Merger by the stockholders of the Company:
(a) by mutual written consent of each of Parent and the Company;
(b) by Parent, if the Company shall have breached, or failed to
comply with, in any material respect any of its obligations under this
Agreement or any representation or warranty made by the Company in
this Agreement shall have been incorrect in any material respect when
made or shall have since ceased to be true and correct in any material
respect, such that as a result of such breach, failure or
misrepresentation the conditions set forth in Section 7.2(a) or 7.2(b)
would not be satisfied (a "Company Termination Breach"); PROVIDED,
HOWEVER, that if such Company Termination Breach is curable by the
Company within 45 days through the exercise of its reasonable efforts
and for so long as the Company continues to exercise such reasonable
efforts after notice of such breach, Parent may not terminate this
Agreement pursuant to this Section 8.1(b).
(c) by the Company, if Parent or Sub shall have breached, or
failed to comply with, in any material respect any of its obligations
under this Agreement or any representation or warranty made by Parent
or Sub shall have been incorrect in any material respect when made or
shall have since ceased to be true and correct in any material
respect, such that as a result of such breach, failure or
misrepresentation the conditions set forth in Section 7.3(a) or 7.3(b)
would not be satisfied (a "Parent Termination Breach"); PROVIDED,
HOWEVER, that if such Parent Termination Breach is curable by the
Parent or Sub within 45 days through the exercise of its reasonable
efforts and for so long as the Parent continues to exercise such
reasonable efforts after notice of such breach, Company may not
terminate this Agreement pursuant to this Section 8.1(c).
(d) by either Parent or the Company, if any decree, permanent
injunction, judgment, order or other action by any court of competent
jurisdiction or any Governmental Entity preventing or prohibiting
consummation of the Merger (an "Order") shall have become final and
nonappealable; PROVIDED, THAT, the party seeking to terminate this
Agreement pursuant to this Section 8.1(d) must have used all
reasonable efforts to remove such Order;
(e) by either Parent or the Company, if the plan of merger
contained in this Agreement shall fail to receive the requisite vote
of the stockholders of the Company at the Stockholders' Meeting or at
any adjournment thereof;
(f) by Parent or Sub, if the Board of Directors of the Company or
any committee thereof shall have withdrawn or modified in any manner
adverse to Parent or Sub its approval or recommendation of the Merger
or this Agreement or approved or recommended or announced an intention
to approve or recommend any Acquisition Proposal;
(g) by the Company, upon five (5) business days' notice, in
accordance with Section 6.9(b), provided it has complied with the
provisions thereof and that it complies with the provisions of Section
6.12(b) related thereto; or
(h) by either the Company or Parent, if the Merger shall not have
been consummated before December 31, 1998 (the "Termination Date");
PROVIDED, HOWEVER, that (i) the right to terminate this Agreement
under this Section 8.1(h) shall not be available to the Company if the
Company's failure to use its best efforts to fulfill any obligation
under this Agreement has been the cause of, or resulted in, the
failure of the Effective Time to occur on or before the Termination
Date, and (ii) the right to terminate this Agreement under this
Section 8.1(h) shall not be available to Parent if Parent's or Sub's
failure to use its best efforts to fulfill any obligation under this
Agreement has been the cause of, or resulted in, the failure of the
Effective Time to occur on or before the Termination Date.
SECTION 8.2. EFFECT OF TERMINATION. In the event of the termination of
this Agreement pursuant to Section 8.1, this Agreement shall forthwith become
void, there shall be no liability on the part of Parent, Sub or the Company or
any of their respective officers or directors to the other parties hereto and
all rights and obligations of any party hereto shall cease except as otherwise
provided in Sections 6.12(b) and 9.1; PROVIDED, HOWEVER, that nothing herein
shall relieve any party from liability for the willful breach of any of its
representations, warranties, covenants or agreements set forth in this
Agreement, or from any obligation under the Confidentiality Agreement; PROVIDED,
FURTHER, that if Parent has received the fee contemplated by Section 6.12(b),
Parent shall not assert or pursue in any manner, directly or indirectly, any
claim or cause of action against the Company or any of its officers or directors
based upon its or their recommendation or approval of an Acquisition Proposal or
the exercise of the right of the Company to terminate this Agreement under
Section 8.1(g) (other than claims based on the Company's failure to act in good
faith or based on an alleged knowing or willful breach of this Agreement by the
Company or any of its officers, directors, employees, agents or affiliates).
ARTICLE IX
GENERAL PROVISIONS
SECTION 9.1. NONSURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS. The
representations, warranties and agreements in this Agreement (and in any
certificate delivered in connection with the Closing) shall be deemed to be
conditions to the Merger and shall not survive the Effective Time, except for
Section 6.7 (Indemnification and Insurance) which shall, to the extent
contemplated, survive the Effective Time or termination of this Agreement,
except for Section 6.2 (Confidentiality), Section 6.12 (Fees and Expenses) and
Section 8.2 (Effect of Termination) and 6.12 (Fees and Expenses), each of which
shall, to the extent contemplated therein, survive termination of this Agreement
indefinitely.
SECTION 9.2. NOTICES. All notices and other communications given or made
pursuant hereto shall be in writing and shall be deemed to have been duly given
or made as of the date delivered, mailed or transmitted, and shall be effective
upon receipt, if delivered personally, mailed by registered or certified mail
(postage prepaid, return receipt requested) to the parties at the following
addresses (or at such other address for a party as shall be specified by like
changes of address) or sent by electronic transmission to the telecopier number
specified below:
(a) If to Parent:
First Union Corporation
Xxx Xxxxx Xxxxx Xxxxxx
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000
Telecopier: (000) 000-0000
Attention: Xxxxxx X. Xxxxxx, Xx., Esq.
General Counsel
With a copy (which shall not constitute notice) to:
Xxxxxxxx & Xxxxxxxx
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopier: (000) 000-0000
Attention: Xxxxxxxx X. Xxxxx, Esq.
(b) If to the Company:
The Money Store Inc.
0000 X Xxxxxx, Xxxxx 000X
Xxxxxxxxxx, Xxxxxxxxxx 00000
Telecopier: (000) 000-0000
Attention: Chief Executive Officer
With a copy (which shall not constitute notice) to:
Stroock & Stroock & Xxxxx LLP
000 Xxxxxx Xxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopier: 000-000-0000
Attention: Xxxxx X. Xxxxxxxxx, Esq.
SECTION 9.3. CERTAIN DEFINITIONS. For purposes of this Agreement, the term:
(a) "affiliate" means a Person that directly or indirectly,
through one or more intermediaries, controls, is controlled by, or is
under common control with, the first mentioned Person;
(b) "beneficial owner" means with respect to any shares of
Company Common Stock a Person who shall be deemed to be the beneficial
owner of such shares (i) which such Person or any of its affiliates or
associates beneficially owns, directly or indirectly, (ii) which such
Person or any of its affiliates or associates (as such term is defined
in Rule 12b-2 of the Exchange Act) has, directly or indirectly, (A)
the right to acquire (whether such right is exercisable immediately or
subject only to the passage of time), pursuant to any agreement,
arrangement or understanding or upon the exercise of conversion
rights, exchange rights, warrants or options, or otherwise, or (B) the
right to vote pursuant to any agreement, arrangement or understanding,
(iii) which are beneficially owned, directly or indirectly, by any
other Person with whom such Person or any of its affiliates or
associates has any agreement, arrangement or understanding for the
purpose of acquiring, holding, voting or disposing of any such shares,
or (iv) pursuant to Section 13(d) of the Exchange Act and any rules or
regulations promulgated thereunder;
(c) "Blue Sky Laws" shall mean state securities or "blue sky"
laws;
(d) "business day" shall mean any day other than a day on which
banks in the State of New York, New Jersey, California or North
Carolina are authorized or obligated to be closed;
(e) "control" (including the terms "controlled by" and "under
common control with") means the possession, directly or indirectly or
as trustee or executor, of the power to direct or cause the direction
of the management or policies of a Person, whether through the
ownership of stock or as trustee or executor, by contract or credit
arrangement or otherwise;
(f) " in the aggregate," when used in or with respect to Article
IV, V or VI, includes all events, occurrences and circumstances,
whether individually or in aggregate, described in any Section of
those Articles and is not limited to any specific Section.
(g) "ordinary course of business" (or any similar reference) with
respect to the Company and its subsidiaries shall include (without
limitation) any securitization transactions of the types heretofore
entered into by the Company or any of its subsidiaries, any servicing
arrangements ancillary to such securitization transactions, any
transactions ancillary to such securitization transactions (including
hedging and other derivative transactions), any financing activities
in respect of any assets included in any such securitization
transaction, any accumulations and/or dispositions of such assets and
any other activities incidental to such securitization transactions,
to the extent that each of the foregoing is conducted in a manner
consistent with applicable law, GAAP and the Company's past practices.
(h) "Person" means an individual, corporation, partnership,
association, trust, unincorporated organization, other entity or group
(as defined in Section 13(d) of the Exchange Act).
(i) "subsidiary" means, with respect to any party, any
corporation or other organization, whether incorporated or
unincorporated, of which (i) such party or any other subsidiary of
such party is a general partner (excluding partnerships, the general
partnership interests of which held by such party or any subsidiary of
such party do not have a majority of the voting interest in such
partnership), or (ii) at least a majority of the securities or other
interests having by their terms ordinary voting power to elect a
majority of the board of directors or others performing similar
functions with respect to such corporation or other organization is
directly or indirectly owned or controlled by such party and/or by any
one or more of its subsidiaries.
SECTION 9.4. HEADINGS. The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
SECTION 9.5. ENTIRE AGREEMENT. This Agreement (together with the Exhibits,
the Schedules and the other documents delivered pursuant hereto) constitutes the
entire agreement of the parties and supersedes all prior agreements and
undertakings, both written and oral, between the parties, or any of them, with
respect to the subject matter hereof.
SECTION 9.6. SEVERABILITY. If any term or other provision of this Agreement
is invalid, illegal or incapable of being enforced by any rule of law or public
policy, all other conditions and provisions of this Agreement shall nevertheless
remain in full force and effect so long as the economic or legal substance of
the transactions contemplated hereby is not affected in any manner materially
adverse to any party. Upon such determination that any term or other provision
is invalid, illegal or incapable of being enforced, the parties hereto shall
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible in an acceptable manner to the end
that transactions contemplated hereby are fulfilled to the extent possible.
SECTION 9.7. NO THIRD PARTY BENEFICIARIES. Except as otherwise provided in
Section 6.7 hereof, this Agreement shall be binding upon and inure solely to the
benefit of each party hereto, and nothing in this Agreement, express or implied,
is intended to or shall confer upon any other Person any right, benefit or
remedy of any nature whatsoever under or by reason of this Agreement.
SECTION 9.8. GOVERNING LAW. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of New Jersey without giving
effect to applicable principles of conflicts of law.
SECTION 9.9. DISCLOSURE SCHEDULES. The disclosures made on any disclosure
schedule, including the Company Disclosure Schedule and the Parent Disclosure
Schedule, with respect to any representation or warranty shall be deemed to be
made with respect to any other representation or warranty requiring the same or
similar disclosure to the extent that the relevance of such disclosure to other
representations and warranties is evident from the information included in such
disclosure schedule. The inclusion of any matter on any disclosure schedule will
not be deemed an admission by any party that such listed matter is material or
that such listed matter has or would have a Company Material Adverse Effect or a
Parent Material Adverse Effect, as applicable.
SECTION 9.10. COUNTERPARTS. This Agreement may be executed and delivered in
one or more counterparts, and by the different parties hereto in separate
counterparts, each of which when executed and delivered shall be deemed to be an
original but all of which taken together shall constitute one and the same
agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement and Plan
of Merger to be executed and delivered as of the date first written above.
FIRST UNION CORPORATION
By: /S/ XXXXXXX X. STANELIFF
Name:____________________
Title:_____________________
FIRST UNION NATIONAL BANK
By: /S/ XXXXXXX X. STANELIFF
Name:____________________
Title:_____________________
THE MONEY STORE INC.
By: /S/ XXXX XXXXXXXXXX
Name:____________________
Title:_____________________
EXHIBIT A
FORM OF AFFILIATE'S LETTER
_________________, 1998
First Union Corporation
Xxx Xxxxx Xxxxx Xxxxxx
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000
Gentlemen:
Pursuant to the terms of the Agreement and Plan of Merger, dated as of
_____ (the "Plan"), by and among _____ (the "Company") and First Union
Corporation ("Parent"), the Company plans to merge with _____ (the "Merger") a
wholly owned, indirect subsidiary of Parent ("Sub"). As a result of the Merger,
the undersigned may receive shares of common stock, par value $3.33 1/3 per
share ("Parent Stock"), of Parent in exchange for shares of common stock, no par
value, or $1.72 Mandatory Convertible Preferred Stock, no par value
(collectively, "Company Stock").
The undersigned hereby represents, warrants and covenants with and to
Parent that in the event the undersigned receives any Parent Stock as a result
of the Merger:
(A) The undersigned will not sell, transfer or otherwise dispose of
such Parent Stock unless (i) such sale, transfer or other dispositlon has
been registered under the Securities Act of 1933, as amended (the "Act"),
(ii) such sale, transfer or other disposition is made in conformity with
the provisions of Rule 145 under the Act (as such rule may be hereafter
from time to time be amended), or (iii) in the opinion of counsel in form
and substance satisfactory to Parent, or under a "no action" letter
obtained by the undersigned from the staff of the Securities and Exchange
Commission (the "SEC"), such sale, transfer or other disposition will not
violate or is otherwise exempt from registration under the Act.
(B) The undersigned understands that Parent is under no obligation to
register the sale, transfer or other disposition of shares of Parent Stock
by the undersigned or on the undersigned's behalf under the Act or to take
any other action necessary in order to make compliance with an exemption
from such registration available.
(C) The undersigned also understands that stop transfer instructions
will be given to Parent's transfer agent with respect to the shares of
Parent Stock issued to the undersigned as a result of the Merger and that
there will be placed on the certificates for such shares, or any
substitution therefor, a legend stating in substance:
"The shares represented by this certificate were issued in a
transaction to which Rule 145(d) under the Securities act of 1933
applied. The shares represented by this certificate may only be
transferred in accordance with the terms of a letter agreement between
the registered holder hereof and the issuer, a copy of which agreement
is on file at the principal offices of the issuer."
(D) The undersigned also understands that, unless the transfer by the
undersigned of the Parent Stock issued to the undersigned as a result of
the Merger have been registered under the Act or a sale made in conformity
with the provisions of Rule 145(d) under the Act, Parent reserves the
right, in its sole discretion, to place the following legend on the
certificates issued to any transferee of such Parent Stock from the
undersigned:
"The shares represented by this certificate have not been registered
under the Securities Act of 1933 and were acquired from a person who
received such shares in a transaction to which Rule 145 under the
Securities Act of 1933 applies. The shares have been acquired by the holder
not with a view to, or for resale in connection with, any distribution
thereof within the meaning of the Securities Act of 1933 and may not be
offered sold pledged or otherwise transferred except in accordance with an
exemption from the registration requirements of the Securities Act of
1933."
It is understood and agreed that the legends set forth in paragraphs
(C) and (D) above shall be removed by delivery of substitute certificates
without such legend if the undersigned shall have delivered to Parent (i) a
copy of a "no action" letter from the staff of the SEC, or an opinion of
counsel in form and substance satisfactory to Parent, to the effect that
such legend is not required for purposes of the Act, or (ii) evidence or
representations satisfactory to Parent that the Parent Stock represented by
such certificates is being or has been sold in a transaction made in
conformity with the provisions of Rule 145(d).
(E) The undersigned further represents, warrants and covenants with
and to Parent that the undersigned will, and will cause each of the other
parties whose shares are deemed to be beneficially owned by the undersigned
pursuant to paragraph (F) below to, have all shares of Company Stock owned
by the undersigned or such parties registered in the name of the
undersigned or such parties, as applicable, prior to the effective date of
the Merger and not in the name of any bank, broker-dealer, nominee or
clearing house.
(F) The undersigned understands and agrees that this letter agreement
shall apply to all shares of the capital stock of Company and Parent that
are deemed to be beneficially owned by the undersigned pursuant to
applicable federal securities laws.
(G) The undersigned has carefully read this letter and discussed its
requirements and other applicable limitations upon the undersigned's
ability to sell, transfer or otherwise dispose of the capital stock of
company or Parent, to the extent the undersigned felt necessary, with the
undersigned's counsel or counsel for Company.
Very truly yours,
________________________
Name:
[add below the signature of all registered
owners of shares deemed beneficially owned by
the affiliate]
___________________________
Name:
___________________________
Name:
___________________________
Name:
Acknowledged this day of __________, 199_
FIRST UNION CORPORATION
By: _______________________
Name:
Title:
EXHIBIT B
FORM OF EXECUTIVE EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT, made and entered into as of this ___ day of March,
1998, by and between PREMIER CORPORATION, a New Jersey corporation having its
principal place of business at [Address] (the "Corporation"), and
____________________, an individual having an address at _______________________
(the "Executive").
W I T N E S S E T H :
WHEREAS, pursuant to that certain Agreement and Plan of Merger, dated as of
March __, 1998 (as it may be amended, supplemented or extended from time to
time, the "Merger Agreement"), among [Red], a North Carolina corporation (the
"Acquiror"), [Red Bank], a corporation organized under the laws of the United
States, and the Corporation, Acquiror will acquire the Corporation by means of a
merger or other business combination (the "Merger"); and
WHEREAS, the Acquiror and the Corporation desire that the Executive, who
has previously served the Corporation as its ___________, continue his
employment with the Corporation for a period commencing on the date the Merger
becomes effective (the "Effective Date") and the Executive is agreeable to
accepting such continued employment, in each case subject to the terms of this
Agreement;
NOW, THEREFORE, in consideration of the premises and the mutual covenants
herein contained, the parties agree as follows:
1. Subject to the consummation of the Merger and the other terms and
conditions of this Agreement, the Corporation hereby agrees to continue to
employ the Executive and the Executive hereby agrees to continue to accept
employment as ____________________ of the Corporation. The Executive's
employment by the Corporation pursuant to the terms of this Agreement shall
commence as of the Effective Date (from time to time also referred to herein as
the "Commencement Date") and shall continue in full force and effect until the
earlier to occur of the third anniversary of the Commencement Date (the
"Termination Date") or the date on which the Executive is terminated or resigns
from the Corporation pursuant to Section 4, 5 or 6 hereof; provided, that if the
Corporation has given ninety (90) days' notice to the Executive before the
Termination Date (or any previously extended Termination Date) that the
Corporation wishes to extend this Agreement, then the term of the Agreement
shall be extended for one year and the last day of the extended period shall be
the new Termination Date hereunder. The term of this Agreement shall equal the
period of time from the Commencement Date to the last Termination Date.
2. (a) During the period of employment hereunder, the Executive, except as
hereinafter provided, shall devote his full business time and efforts to the
business and affairs of the Corporation, use his best efforts to promote the
business of the Corporation, hold the offices in the Corporation or any
subsidiary or affiliate thereof to which from time to time he may be elected or
appointed (provided, however, that Executive shall not be entitled to additional
compensation for serving as a Director of the Corporation or any subsidiary or
affiliate thereof if so elected), and perform such duties as shall be assigned
to him by the Board of Directors of the Corporation or any other executive of
the Corporation or its affiliates to whom Executive reports. The Executive shall
be reimbursed for all reasonable travel and other business expenses incidental
to the performance of services hereunder in accordance with the usual practices
of the Corporation. The Executive shall be entitled to vacations in accordance
with the Corporation's existing vacation policy, and the Corporation shall
provide the Executive with perquisites in accordance with Acquiror's policies
and practices. The Corporation agrees that, to the extent not inconsistent with
the foregoing, the Executive may devote such time and attention as is reasonably
necessary to his personal and financial affairs.
(b) During the term of this Agreement, it shall not be a violation of this
Agreement for the Executive to (A) serve on corporate, civic or charitable
boards or committees, and (B) deliver lectures, fulfill speaking engagements or
teach at educational institutions, so long as such activities do not interfere
with the performance of the Executive's responsibilities as an employee of the
Corporation in accordance with this Agreement and are consistent with the
Corporation's policies. It is expressly understood and agreed that to the extent
that any such activities have been conducted by the Executive prior to the date
of the Merger Agreement, the continued conduct of such activities (or the
conduct of activities similar in nature and scope thereto) subsequent to such
date shall not thereafter be deemed to interfere with the performance of the
Executive's responsibilities to the Corporation.
3. The Corporation shall compensate the Executive for the services to be
rendered by him hereunder, including all services to be rendered as an officer
or director of the Corporation, by paying the Executive a base salary at the
rate of $__________ per annum. Such salary shall be payable in accordance with
the usual salary payment practices of the Corporation or as otherwise determined
by the Corporation. In addition to the Executive's salary as described above,
for each calendar year which ends during the term of this Agreement and prior to
the termination of the Executive's employment with the Corporation, the
Executive shall have the right to participate in the Executive Bonus Plan of the
Corporation or in any successor thereto (as it may be amended, supplemented or
replaced from time to time, the "Bonus Plan"). Furthermore, the Executive shall
be entitled to such raises in his base salary and to such additional bonuses as
may be determined from time to time in the discretion of the Board of Directors.
Notwithstanding the foregoing, for each calendar year which ends during the term
of this Agreement and prior to the termination of the Executive's employment
with the Corporation, the Executive shall be entitled to payment of the
difference, if any, between (i) $________ and (ii) the sum of the bonus payable
to him with respect to such year pursuant to the Bonus Plan and any additional
bonus awarded for such year, such difference (if any) to be paid to the
Executive in cash no later than the end of the fifth month following the end of
such year.
4. This Agreement may be terminated by the Corporation at any time for
Cause (as defined below), such termination to be effective on the date on which
written notice is given, or as of such later date as is otherwise specified in
the notice. If this Agreement is terminated for Cause, the Executive shall be
entitled only to any compensation payable to the Executive pursuant to Section 3
hereof up until the time of such termination. For purposes of this Agreement,
the term "Cause" shall mean only that the Executive (i) has been grossly
negligent in the performance of his duties hereunder, (ii) has willfully
disregarded his duties hereunder, (iii) has been convicted of a criminal offense
(other than minor infractions such as traffic violations or similar offenses) or
(iv) has committed a material violation of any of the restrictions or
prohibitions set forth in Section 7 or 8 of this Agreement.
5. (a) If the Executive's employment is terminated (i) by the Corporation
without Cause, (ii) by reason of death or (iii) on account of the Executive
having become "Disabled", the period of employment hereunder shall terminate on
the date of such termination and the Executive (or his estate with regard to
Subsections (1), (2), (3), (4) and (6)) shall be entitled to the following:
(1) base salary earned but not paid prior
to the date of the termination of his
employment;
(2) all bonuses with respect to any
calendar year prior to the calendar
year of the termination of the
Executive's employment which have
been earned but not paid;
(3) an amount equal to the greater of
(i) the aggregate base salary with
respect to a period equal to the
remainder of the term of this
Agreement which would have applied
in the absence of any termination
pursuant to Section 4 or 6, or this
Section 5, or (ii) one year's base
salary (based in either case on the
base salary in effect on the date of
termination of this Agreement) (the
"Salary Continuation Period") which
amount shall be payable in a lump
sum without discount;
(4) a bonus (at an annual rate equal to
the entire amount of all bonuses
paid or payable (excluding any bonus
paid or payable under the
Corporation's Performance Bonus
Plan) to the Executive with respect
to the calendar year which ends on
or prior to the date of termination
of the Executive's employment,
including any minimum bonus
payable pursuant to the last
sentence of Section 3) for each year
or fraction of a year remaining in
the Salary Continuation Period, but
taking into account any bonus
previously paid with respect to such
year or fraction thereof, which
amount shall be payable in a lump
sum without discount;
(5) continued accrual of service credit
through the end of the Salary
Continuation Period for the purpose
of the Corporation's Supplemental
Executive Retirement Plan if the
Executive is a participant in such
Plan;
(6) any amounts earned, accrued or owing
to the Executive but not yet paid
under Section 2 above;
(7) for the Salary Continuation Period,
life, disability, accident and group
health insurance benefits
substantially similar to those which
the Executive was receiving
immediately prior to the
termination; provided, however, that
benefits otherwise receivable by the
Executive pursuant to this Section
5(a)(7) shall be reduced to the
extent comparable benefits are
actually received by the Executive
during the Salary Continuation
Period, and Executive shall report
to the Corporation any such benefits
actually received by the Executive;
and
(8) other or additional benefits in
accordance with applicable plans,
programs and/or arrangements of the
Corporation;
provided further, that, in all cases and without limiting any other remedies the
Corporation may have, the Corporation shall have no further obligation to make
any payments or provide any benefits under this Section 5(a) on and after any
material violation by Executive of Section 7 or 8 (without regard to whether
such payment or benefit shall have been accrued or owed prior to the date of
such violation). The payments due under Subsections (1), (2), (3), (4), and (6)
shall be paid to the Executive (or his estate, if applicable) within thirty (30)
days of the date of a termination of employment described in this Section 5(a)
or the date of death or the Executive having become Disabled, as the case may
be.
For purposes of this Agreement, the term "Disabled" shall mean that the
Executive has suffered a physical or mental disability such that he no longer is
able to substantially perform, for a period of at least 90 consecutive days, or
180 days in any one-year period, the business functions he was performing
immediately prior to such disability.
(b) The Executive may terminate his employment hereunder for Good Reason
(as defined below), but only if:
(1) the Executive notifies the
Corporation in writing during the
45-day period following the date of
the first occurrence of an event
which constitutes Good Reason of his
intention to terminate his
employment for Good Reason;
(2) the Corporation fails to correct or
cure the event which constitutes
Good Reason within 45 days of
receipt of the Executive's written notice
(the "Correction Period"); and
(3) the Executive terminates his
employment for Good Reason during
the 270-day period following the
expiration of the Correction Period.
Upon a termination by the Executive of his employment for Good Reason, the
Executive shall be entitled to the same payments and benefits as provided in
Section 5(a) above; provided, however, that if the Executive terminates his
employment for Good Reason based on a reduction in base salary or bonus under
Section 3 above, then the base salary or bonus, as the case may be, to be used
in determining the payments to the Executive in accordance with Sections
5(a)(1), 5(a)(2), 5(a)(3) and 5(a)(4) above shall be the base salary or bonus,
respectively, in effect immediately prior to such reduction. For purposes of
this Agreement, the term "Good Reason" shall mean the occurrence of any of the
following events:
(1) a reduction in the Executive's base
salary;
(2) a material reduction in the
Executive's position, duties or
responsibilities with respect to his
employment by the Corporation under
this Agreement without the
Executive's prior written consent;
(3) a reduction in the Executive's
annual bonus amount (excluding any
bonus paid or payable under the
Corporation's Performance Bonus
Plan), other than a reduction in
annual bonus from the prior year
(but not below the minimum bonus
amount set forth in Section 3) which
is solely attributable to lower
earnings of the Corporation and its
affiliates and which reduces bonuses
of similarly situated employees generally;
(4) an actual change in the Executive's
place of employment which is not
within a 35-mile radius of his place
of employment immediately before such
change, without the Executive's prior
written consent; or
(5) any breach of this Agreement by the
Corporation, unless such breach is
immaterial.
6. The Executive may resign from his duties hereunder for any reason,
including retirement, by giving 180 days prior written notice to the
Corporation. Upon any such resignation, the Executive shall be entitled only to
any compensation payable to the Executive pursuant to Section 3 up until the
effective date of such resignation.
7. Except as approved in writing by the Board of Directors of the
Corporation, during the term of the Executive's actual employment hereunder and
(i) for a further period of one year thereafter, or (ii) for a further period of
two years thereafter if, prior to the third anniversary of the Commencement
Date, the Executive resigns other than for Good Reason or is terminated by the
Corporation for Cause, the Executive shall not:
(a) Engage in or carry on, directly or indirectly, either for himself or as
a member, stockholder, investor, lender, officer, director, employee or agent
of, or consultant or advisor to, any person, partnership, corporation, joint
venture or enterprise (other than the Corporation), or in any capacity on behalf
of any trust or other organization or entity, any business in competition with
(as defined below) any business then carried on by the Corporation as long as
any like business is carried on by the Corporation or by any person,
corporation, partnership, trust or other organization or entity deriving title
to the good will of such business, directly or indirectly, from the Corporation;
provided, however, that nothing herein contained shall prevent the Executive
from purchasing securities of any publicly owned company, the securities of
which are listed on a national securities exchange or registered pursuant to
Section 12(g) of the Securities Exchange Act of 1934 (the "Exchange Act"), but
the total holding of any such security so listed or registered shall be limited
to 1% of the amount of any such security outstanding. For the purposes of this
Section 7(a), the term "any business in competition with" shall mean any
business engaged principally or in part in the business of the Corporation as
described in its Registration Statement on Form S-1 (Registration No. 33-41172)
relating to the registration of shares of common stock of the Corporation (the
"Registration Statement") and in any other filing hereafter made by the
Corporation with the Securities and Exchange Commission pursuant to the
Securities Act of 1933, as amended, or the Exchange Act ("Subsequent Filings");
or
(b) Solicit, raid, entice, induce or attempt to persuade, directly or
indirectly, any person that presently is or at any time during the term of
employment hereunder shall be (or, in the case of termination, is at the time of
termination) an employee of the Corporation to become employed by any person,
firm, partnership, corporation or other enterprise or entity, and the Executive
shall not approach any such employee for such purpose or authorize the taking of
such actions by any other person, firm, partnership, corporation or other
enterprise or entity.
8. The Executive agrees that, during the term, or at any time after the
termination of this Agreement, the Executive shall not divulge, furnish or make
accessible to any person, corporation, partnership, trust or other organization
or entity, any information, trade secrets, technical data or know-how relating
to the business, business practices, methods, attorney-client communications,
pending or contemplated acquisitions or other transactions, products, processes,
equipment or any confidential or secret aspect of the business of the
Corporation or its affiliates without the prior written consent of the
Corporation, unless such information shall have become public knowledge or shall
have become known generally to competitors of the Corporation through sources
other than the Executive.
9. The following provisions shall apply to the covenants contained in
Sections 7 and 8 hereof:
(a) The covenants contained in Section 7 shall apply within the territories
in which the Corporation is actively engaged in the conduct of business during
the term of employment hereunder including, without limitation, the territories
in which customers are then being solicited.
(b) Without limiting the right of the Corporation to pursue all other legal
and equitable remedies, including recovery of damages, available for violation
by the Executive of the covenants contained in Sections 7 and 8 hereof, the
Corporation will be entitled to specific performance of its rights under such
Sections. The Executive agrees that monetary damages would not be adequate
compensation for any loss incurred by the Corporation by reason of a breach by
him of the provisions of Sections 7 and 8 hereof, and that the Corporation would
sustain irreparable harm and, therefore, further agrees that the Corporation
shall be entitled to injunctive relief to prevent any such breach or any
continuing breach thereof.
(c) Each party intends and agrees that if, in any action before any court
or agency legally empowered to enforce the covenants contained in Sections 7 and
8 hereof, any term, restriction, covenant or promise contained therein is found
to be unreasonable and accordingly unenforceable, then such term, restriction,
covenant or promise shall be deemed modified to the extent necessary to make it
enforceable by such court or agency.
10. The Executive shall be entitled to participate in the life insurance,
major medical group plan and pension or retirement plan of the Corporation, and
in any other plan that the Corporation has or may establish and maintain for the
benefit of the senior executive employees of the Corporation, in each case
subject to and in accordance with the terms thereof. The Executive shall be
entitled to participate in any stock option, stock incentive, phantom stock or
similar equity based plan or arrangement which the Acquiror has or may establish
for the benefit of the senior executives of the Acquiror, subject to and in
accordance with the terms thereof and Acquiror's policies and practices.
11. The Executive agrees that the Corporation may procure insurance on the
life of the Executive, in such amounts as the Corporation may in its discretion
determine, and with the Corporation named as the beneficiary under the policies.
The Executive agrees that upon request from the Corporation he will submit to a
physical examination and will execute such applications and other documents as
may be required for the procurement of such insurance.
12. The provisions of this Agreement shall survive the conclusion of the
period of employment hereunder.
13. This Agreement sets forth the entire agreement and understanding
between the parties and supersedes all proposals, commitments, writings,
negotiations, discussions, agreements and understandings, oral or written, of
every kind and nature between them concerning the subject matter hereof,
including any prior employment agreement between (a) the Executive and (b) the
Corporation or its affiliates (which agreements will terminate and be of no
further force and effect on the Commencement Date). This Agreement may not be
amended or otherwise modified except in a writing signed by both parties hereto.
No discharge of the terms hereof shall be deemed valid unless by full
performance by the parties or by a writing signed by the parties. A waiver by
any party of any breach or violation of any part of this Agreement shall not be
deemed or construed as a waiver of any other breach or violation hereof.
14. All notices, requests, demands and other communications provided for by
this Agreement shall be in writing (including telecopier or similar writing) and
shall be deemed to have been given at the time when mailed in any general or
branch office of the United States Postal Service, enclosed in a registered or
certified postpaid envelope, or sent by Federal Express or other similar
overnight courier service, addressed to the address of the parties stated above
or to such changed address as such party may have fixed by notice or, if given
by telecopier, when such telecopy is transmitted and the appropriate answerback
is received.
15. This Agreement shall inure to the benefit of and be binding upon the
Corporation, its successors and assigns, including, without limitation, any
corporation which may acquire all or substantially all of the Corporation's
assets and business or with or into which the Corporation may be consolidated or
merged, and the Executive, his heirs, executors, administrators and legal
representatives, provided that the obligations of the Executive hereunder may
not be delegated.
16. This Agreement shall be governed by and construed in accordance with
the laws of the State of New Jersey governing contracts to be made and performed
therein without giving effect to principles of conflicts of law, and, with
respect to any dispute arising out of this Agreement, each party hereby consents
to the exclusive jurisdiction of the courts sitting in such State.
17. In the event that any action or dispute is brought by the Executive to
contest whether or not a termination of employment by the Corporation was for
Cause, the Executive shall be entitled to recover his reasonable legal expenses
with respect thereto from the Corporation, unless the Corporation is the
prevailing party in any such action or dispute as determined by a final and
nonappealable decision or order. Except as provided in the preceding sentence,
the parties shall bear their own legal expenses and costs incurred in any action
or dispute concerning their rights under this Agreement.
18. Should any part, term, condition or provision hereof or the application
thereof be declared illegal, invalid or otherwise unenforceable or in conflict
with any other law by a court of competent jurisdiction, the validity of the
remaining parts, terms, conditions or provisions of this Agreement shall not be
affected thereby, and the illegal, invalid or unenforceable portions of this
Agreement shall be and hereby are redrafted to conform with applicable law,
while leaving the remaining portion of this Agreement intact, except to the
extent necessary to conform to the redrafted portions hereof.
19. This Agreement may be executed in several counterparts, each of which
shall be deemed an original, but all of which together shall constitute one and
the same document.
20. The Executive agrees that the amounts payable under Sections 4, 5, or 6
(as the case may be) by the Corporation upon termination of the Executive's
employment hereunder are in lieu of any other claims the Executive may have with
regard to his separation of employment and will be the Executive's sole and
exclusive remedy for or associated with a separation of employment.
Notwithstanding the foregoing, the Corporation acknowledges that the Executive's
rights under any "employee benefit plan" (as defined in Section 3(3) of the
Employee Retirement Income Security Act of 1974, as amended), but excluding any
severance plan or policy, or under any stock option, stock incentive or similar
plan, sponsored or maintained by the Corporation or any affiliate, to any
benefits or payments of any kind upon or following his termination of employment
for any reason shall not be reduced or diminished by any provision of this
Agreement, including but not limited to this Section 20.
21. The Executive acknowledges that Acquiror may, from time to time, make
available benefit plans or arrangements to employees of the Corporation, and,
notwithstanding any other provision of this Agreement, such Acquiror plans or
arrangements may replace plans or arrangements previously provided by the
Corporation and, to such extent, shall be substituted (for all purposes) for any
plan or arrangement of the Corporation referred to in this Agreement.
IN WITNESS WHEREOF, each of the parties hereto has executed this Agreement
as of the date first above written.
PREMIER CORPORATION
By:_____________________________
_____________________________
[NAME OF EXECUTIVE]
EXHIBIT C
FORM OF GENERAL EMPLOYMENT AGREEMENT
This Agreement is made and entered into by and between __________ (hereinafter
referred to as "Employee") and PREMIER CORPORATION (sometimes hereinafter
referred to as "TMS" or "the Company") for itself and its subsidiaries.
WHEREAS, pursuant to that certain Agreement and Plan of Merger, dated as of
March __, 1998 (as it may be amended, supplemented or extended from time to
time, the "Merger Agreement"), among [Red], a North Carolina corporation (the
"Acquiror"), [Red Bank], a corporation organized under the laws of the United
States, and the Company, Acquiror will acquire the Company by means of a merger
or other business combination (the "Merger"); and
WHEREAS, the Acquiror and the Company desire that the Employee, who has
previously served the Company, continue his employment with the Company for a
period commencing on the date the Merger becomes effective (the "Effective
Date") and the Employee is agreeable to accepting such continued employment, in
each case subject to the terms of this Agreement;
NOW, THEREFORE, in consideration of the premises and the mutual covenants
contained herein, the parties agree as follows:
1. Subject to the consummation of the Merger, TMS hereby agrees to continue to
employ Employee and Employee hereby agrees to continue to provide services to
TMS upon the terms and conditions hereinafter set forth.
2. No modification or change of Employee's position, responsibilities, duties,
compensation, benefits and/or job description shall otherwise modify, change or
revoke any provision of this Employment Agreement.
3. TERM. Subject to the provisions for termination contained in paragraph 7
below, the term of this Agreement shall commence on the Effective Date and shall
expire on the _____ anniversary thereof, provided, however, that if TMS has
given ninety (90) days' notice to Employee before such date (or any later
anniversary date to which this Agreement was previously extended pursuant to
this paragraph 3) that TMS wishes to extend this Agreement, then the term of
this Agreement shall be extended for one additional year. During the term of
this Agreement, Employee shall be employed by TMS and Employee shall devote
his/her entire time, attention and energies to the business of TMS, and he/she
shall not, during the term of his/her employment, be employed by any firm other
than TMS.
4. COMPENSATION.
A. TMS shall pay to Employee the annual salary of not
less than __________ dollars ($ ).
B. Nothing in this Agreement shall limit or affect Employee's
eligibility to participate in TMS' merit review process,
Executive/Supplemental Bonus Plan (or any successor thereto,
as the same may be amended, supplemented or replaced from time
to time) or stock
option programs (if any).
5. BENEFITS. Employee shall be eligible for any and all benefits or plans which
TMS provides for substantially all other similarly situated employees of TMS,
including, but not limited to, vacation, holidays, sick leave, health plan, EAP
and 401(k) Plans.
6. RULES AND REGULATIONS. Employee agrees at all times during the term of this
Agreement to strictly adhere to and obey all of TMS' rules, policies and
regulations now in effect or as subsequently modified or hereafter adopted
governing the conduct of employees of TMS. Employee agrees that to the best of
his/her ability and experience, all of the duties and obligations either
expressly or implicitly required by the terms of this Agreement will be
performed at all times loyally and conscientiously.
7. TERMINATION. Notwithstanding any other provision of this Agreement to the
contrary, this Agreement may be terminated before the date on which it would
otherwise expire pursuant to paragraph 3 above upon any of the following:
A. By TMS at any time, without notice, for Cause. For
purposes of this Agreement, the term "Cause" shall
mean only that the Employee has committed a material
act of dishonesty, is guilty of gross carelessness or
misconduct, has unjustifiably neglected his/her
duties under this Agreement, has acted in any way that
has a direct, substantial and adverse effect on TMS'
business or reputation or has committed a material
violation of paragraph 11 or 13. Upon such
termination, no further compensation shall be due,
owing or paid by TMS to Employee except for those
wages and other benefits, if any, that are due and
owing to Employee at the conclusion of the last day
of Employee's employment.
B. Automatically if Employee dies. Upon Employee's
death, no further compensation shall be due, owing or
paid by TMS to Employee or his/her estate, except for
those wages and other benefits, including executive
bonus, if any, which are due and owing to Employee at
the conclusion of the last day of Employee's
employment. Upon Employee's death, the beneficiaries
named under the life insurance policy maintained by
TMS shall receive the proceeds of the policy as set
forth therein.
C. By TMS if Employee is unable, due to mental or physical
illness or injury lasting more than six (6) months, to perform
the essential functions of Employee's duties.
D. By TMS for any reason other than pursuant to subparagraph A, B
or C above, in which case Employee shall be entitled to the
severance pay provided in subparagraph D of paragraph 8 below.
E. By Employee for Good Reason (as defined below), in which case
Employee shall be entitled to the severance pay provided in
subparagraph D of paragraph 8 below, but only if:
(1) Employee notifies TMS in writing during the 60-day period
following the date of the first occurrence of an event which
constitutes Good Reason of his/her intention to terminate
his/her employment for Good Reason; (2) TMS fails to correct
or cure the event which constitutes Good Reason within 30 days
of receipt of Employee's written notice (the "Correction
Period"); and (3) Employee terminates his/her employment for
Good Reason during the 60-day period following the expiration
of the Correction Period.
For purposes of this Agreement, the term "Good Reason" shall
mean the occurrence of either (1) a reduction in Employee's
base salary, or (2) an actual change in Employee's place of
employment which is not within a 35-mile radius of Employee's
place of employment immediately before such change without
Employee's prior written consent.
8. SEVERANCE PAY.
A. If TMS terminates this Agreement for Cause, Employee shall not
be entitled to severance pay pursuant to company policy or any
other severance pay or provision of TMS.
B. If this Agreement terminates automatically due to Employee's
death, Employee's family representatives, estate, successors
and assigns shall not be entitled to severance pay pursuant to
company policy or any other severance pay or provision of TMS.
C. If TMS terminates this Agreement due to Employee's being on a
disability lasting more than six (6) months, Employee shall
not be entitled to severance pay pursuant to company policy or
any other severance pay or provision of TMS.
D. If this Agreement is terminated by TMS pursuant to
subparagraph D of paragraph 7 above or by Employee
pursuant to subparagraph E of paragraph 7 above, TMS
shall pay Employee, within thirty days of the date of
termination, as severance, in lieu of any severance
pay pursuant to company policy or any other severance
pay or provision of TMS, an amount equal to the
greater of (1) the aggregate base salary with respect
to a period equal to the remainder of the term of
this Agreement which would have applied in the
absence of any termination of this Agreement pursuant
to subparagraph D or E of paragraph 7 above, or (2)
one year's base salary (based in either case on the
base salary in effect on the date of the termination
of this Agreement), which amount shall be payable in
either case in a lump sum without discount; provided,
however, that if Employee terminates this Agreement
for Good Reason based on a reduction in base salary,
then the base salary to be used for purposes of
determining the amount of severance hereunder shall
be the base salary in effect immediately prior to such
reduction.
E. If Employee shall terminate employment with TMS
without Good Reason, Employee shall not be entitled
to severance pay pursuant to company policy or any
other severance pay or provision of TMS and no further
compensation shall be due, owing or paid by TMS to
Employee except for those wages and other benefits,
if any, that are due and owing to Employee at the
conclusion of the last day of Employee's employment.
9. CONTINUED EMPLOYMENT. Should TMS elect not to renew this Agreement and
Employee continues as an employee of TMS, Employee's employment status with TMS
shall revert to an at-will employment relationship.
10. ARBITRATION. Employee and TMS mutually consent to the resolution by
arbitration of all claims or causes of action (collectively "claims"), arising
out of this Agreement, the termination of Employee's employment or any claim of
discrimination or unlawful harassment of any type that TMS may have against
Employee or that Employee may have against TMS or against its officers,
directors, employees, or agents in their capacity or otherwise. The details of
the scope of this paragraph and the rules and procedures of the arbitration are
contained in the Mutual Agreement to Arbitrate Claims which is attached hereto
and incorporated herein by reference.
11. SERVICES TO OTHERS. While Employee is rendering services to TMS, Employee
agrees that he/she will not directly or indirectly render any services to any
other person, company, corporation or organization, or engage in, or participate
in a business, commercial or professional in nature, that is in competition with
TMS, whether for compensation or otherwise, except that Employee may invest
his/her personal funds in stock or other securities of such a company not to
exceed two percent (2%) of the total outstanding shares of such a company listed
on a recognized stock exchange or in the over the counter market.
12. ACKNOWLEDGMENTS. Employee acknowledges and agrees that TMS is engaged in the
business of mortgage lending, consumer finance, and the commercial lending
business. Employee acknowledges and agrees that: (1) TMS operates in a
specialized area; (2) the identity of TMS' customers and/or prospective
customers, contacts and the particular needs of TMS' customers are not generally
known in the industry; (3) TMS has a proprietary interest in the identity of its
customers, its customers' or prospective customers' contact persons, and its
customer lists; (4) documents and information regarding TMS's methods of sales,
pricing, costs, marketing, customer contacts and/or prospective customer
contacts, and the specialized requirements of TMS customers are highly
confidential and constitute trade secrets; (5) TMS has spent and/or will spend a
substantial amount of money in the training and development of Employee; and (6)
Employee, in performing services as required pursuant to the terms of this
Agreement, shall have frequent contact with customer or prospective customer
contacts identified and developed by TMS in the sales/marketing territory
assigned to Employee and shall become aware of their specialized requirements.
13. TRADE SECRETS AND CONFIDENTIAL INFORMATION. Employee will, in the course of
Employee's duties on behalf of TMS, be advised of certain business matters and
affairs of TMS regarding its clients and the management of its business. The
duties performed by Employee for TMS place Employee in a position of trust and
confidence with respect to certain trade secrets and other proprietary
information relating to the business of TMS and not generally known to the
public. These trade secrets include, but are not limited to, TMS's price lists,
advertising and promotional ideas and strategies, customer lists, and formulas,
patterns, devices, processes, compilations of information, records and
specifications which are owned by TMS and which are regularly used in the
operation of TMS (collectively and including the identities, needs, documents,
information and requirements referred to in Section 12, "confidential
information"). Employee will not, either during the term of Employee's
employment or any time in the future, directly or indirectly:
A. disclose or furnish, directly or indirectly, to any
other person, firm, agency, corporation, client,
business, or enterprise, any confidential information
acquired by Employee during the term of this
Agreement;
B. individually or in conjunction with any other person, firm,
agency, company, client, business, or corporation, employ or
cause to be employed any confidential information in any
manner whatsoever, except in furtherance of the business of
TMS;
C. without the written consent of TMS, publish, deliver,
or commit to being published or delivered, any
copies, abstracts, or summaries of any files, records,
documents, drawings, specifications, lists, equipment and
similar items relating to the business of TMS, whether
prepared by Employee or otherwise coming into
Employee's possession, except to the extent required
in the ordinary course of TMS's business;
D. attempt to encourage, induce, or otherwise solicit, directly
or indirectly, any other employee of TMS to breach an
employment agreement with TMS or to otherwise interfere with
the advantageous business relationship of TMS with its
employees.
All files, records, documents, drawings, specifications, lists, equipment, and
similar items relating to the business of TMS, whether prepared by Employee or
otherwise coming into Employee's possession shall remain the exclusive property
of TMS and shall not be removed from the premises of TMS under any circumstances
whatsoever without the prior written consent of an officer of TMS.
Upon termination of Employee's employment, Employee agrees to immediately return
to TMS all property of TMS in as good condition as when received by Employee
(normal wear and tear excepted) including, but not limited to, all files,
records, documents, drawings, specifications, lists, equipment and supplies,
promotional materials, and similar items relating to the business of TMS.
14. NOTICE. All notices, requests, demands and other communications provided for
by this Agreement shall be in writing (including telecopier or similar writing)
and shall be deemed to have been given at the time when mailed in any general or
branch office of the United States Postal Service, enclosed in a registered or
certified postpaid envelope, or sent by Federal Express or other similar
overnight courier service, addressed to the last known address of the other
party or to such changed address as such party may have fixed by notice or, if
given by telecopier, when such telecopy is transmitted and the appropriate
answerback is received.
15. PARTIAL INVALIDITY. The invalidity or unenforceability of any provision of
this Agreement shall in no way affect the validity or enforceability of any
other provision of this Agreement.
16. WAIVER. Failure to insist upon strict compliance with any provision of this
Agreement shall not be deemed to be a waiver of such provision or any other
provision, and waiver of breach of any provision of this Agreement shall not be
deemed to be a waiver of any other provision or of any subsequent breach of such
provision.
17. REVISION; SUCCESSORS. This Agreement shall be revised only by a writing
signed by both parties. This Agreement shall inure to the benefit of and be
binding upon TMS, its successors and assigns, including, without limitation, any
corporation which may acquire all or substantially all of TMS's assets and
business or with or into which TMS may be consolidated or merged, and the
Employee, his heirs, executors, administrators and legal representatives,
provided that the obligations of the Employee hereunder may not be delegated.
18. HEADINGS. The titles and headings of the various paragraphs of this
Agreement are intended solely for convenience of reference and are not intended
to explain, modify or place any interpretation upon any of the provisions of
this Agreement.
19. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of New Jersey governing contracts to be
made and performed therein without giving effect to principles of conflicts of
law.
20. EXCLUSIVE REMEDY. The Employee agrees that the amounts payable under
Sections 7 and/or 8 (as the case may be) by TMS upon termination of the
Employee's employment hereunder are in lieu of any other claims the Employee may
have with regard to the separation of employment and will be the Employee's sole
and exclusive remedy for or associated with a separation of employment.
Notwithstanding the foregoing, TMS acknowledges that the Employee's rights under
any "employee benefit plan" (as defined in Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended), but excluding any severance
plan or policy or any stock option, stock incentive or similar plan sponsored or
maintained by TMS or any affiliate to any benefits or payments of any kind upon
or following his termination of employment for any reason shall not be reduced
or diminished by any provision of this Agreement, including but not limited to
this paragraph 20.
21. ACQUIROR BENEFIT PLANS. Employee acknowledges that Acquiror may make
available, from time to time, benefit plans or arrangements to employees of TMS,
and notwithstanding any other provision of this Agreement, such Acquiror plans
or arrangements may replace plans or arrangements previously provided by TMS
and, to such extent, shall be substituted (for all purposes) for any plan or
arrangement of TMS referred to in this Agreement.
NOTICE: THIS AGREEMENT CONTAINS A WAIVER OF YOUR RIGHT TO A TRIAL BY COURT OR
JURY IN A DISPUTED TERMINATION AND/OR FOR CLAIMS FOR UNLAWFUL HARASSMENT OR
DISCRIMINATION ALLEGEDLY OCCURRING DURING THE COURSE OF EMPLOYMENT, AS WELL AS
FOR CLAIMS OF BREACH OF THIS AGREEMENT.
DATED: ___________________ __________________________________
EMPLOYEE
DATED: ___________________ __________________________________
PREMIER CORPORATION
EXHIBIT D
FORM OF SPECIAL EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT, made and entered into as of this ___ day of
March, 1998, by and between PREMIER CORPORATION, a New Jersey corporation having
its principal place of business at [Address] (the "Corporation"), and
____________________, an individual having an address at _______________________
(the "Executive").
W I T N E S S E T H :
WHEREAS, pursuant to that certain Agreement and Plan of Merger, dated
as of March __, 1998 (as it may be amended, supplemented or extended from time
to time, the "Merger Agreement"), among [Red], a North Carolina corporation (the
"Acquiror"), [Red Bank], a corporation organized under the laws of the United
States, and the Corporation, Acquiror will acquire the Corporation by means of a
merger or other business combination (the "Merger"); and
WHEREAS, the Acquiror and the Corporation desire that the Executive,
who has previously served the Corporation as its ___________, continue his
employment with the Corporation for a period commencing on the date the Merger
becomes effective (the "Effective Date") and the Executive is agreeable to
accepting such continued employment, in each case subject to the terms of this
Agreement;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained, the parties agree as follows:
1. Subject to the consummation of the Merger and the other terms and
conditions of this Agreement, the Corporation hereby agrees to continue to
employ the Executive and the Executive hereby agrees to continue to accept
employment as ____________________ of the Corporation. The Executive's
employment by the Corporation pursuant to the terms of this Agreement shall
commence as of January 1, 1998 (from time to time also referred to herein as the
"Commencement Date") and shall continue in full force and effect until the
earlier to occur December 31, 2000 (the "Termination Date") or the date on which
the Executive is terminated or resigns from the Corporation pursuant to Section
4, 5 or 6 hereof; provided, that if the Corporation has given ninety (90) days'
notice to the Executive before the Termination Date (or any previously extended
Termination Date) that the Corporation wishes to extend this Agreement, then the
term of the Agreement shall be extended for one year and the last day of the
extended period shall be the new Termination Date hereunder. The term of this
Agreement shall equal the period of time from the Commencement Date to the last
Termination Date.
2. (a) During the period of employment hereunder, the Executive,
except as hereinafter provided, shall devote his full business time and efforts
to the business and affairs of the Corporation, use his best efforts to promote
the business of the Corporation, hold the offices in the Corporation or any
subsidiary or affiliate thereof to which from time to time he may be elected or
appointed (provided, however, that Executive shall not be entitled to additional
compensation for serving as a Director of the Corporation or any subsidiary or
affiliate thereof if so elected), and perform such duties as shall be assigned
to him by the Board of Directors of the Corporation or any other executive of
the Corporation or its affiliates to whom Executive reports. The Executive shall
be reimbursed for all reasonable travel and other business expenses incidental
to the performance of services hereunder in accordance with the usual practices
of the Corporation. The Executive shall be entitled to vacations in accordance
with the Corporation's existing vacation policy, and the Corporation shall
provide the Executive with perquisites in accordance with Acquiror's policies
and practices. The Corporation agrees that, to the extent not inconsistent with
the foregoing, the Executive may devote such time and attention as is reasonably
necessary to his personal and financial affairs.
(b) During the term of this Agreement, it shall not be a violation of
this Agreement for the Executive to (A) serve on corporate, civic or charitable
boards or committees, and (B) deliver lectures, fulfill speaking engagements or
teach at educational institutions, so long as such activities do not interfere
with the performance of the Executive's responsibilities as an employee of the
Corporation in accordance with this Agreement and are consistent with the
Corporation's policies. It is expressly understood and agreed that to the extent
that any such activities have been conducted by the Executive prior to the date
of the Merger Agreement, the continued conduct of such activities (or the
conduct of activities similar in nature and scope thereto) subsequent to such
date shall not thereafter be deemed to interfere with the performance of the
Executive's responsibilities to the Corporation.
3. The Corporation shall compensate the Executive for the services to
be rendered by him hereunder, including all services to be rendered as an
officer or director of the Corporation, by paying the Executive a base salary at
the rate of $__________ per annum. Such salary shall be payable in accordance
with the usual salary payment practices of the Corporation or as otherwise
determined by the Corporation. In addition to the Executive's salary as
described above, for each calendar year which ends during the term of this
Agreement and prior to the termination of the Executive's employment with the
Corporation, the Executive shall have the right to participate in the Executive
Bonus Plan of the Corporation or in any successor thereto (as it may be amended,
supplemented or replaced from time to time, the "Bonus Plan"). Furthermore, the
Executive shall be entitled to such raises in his base salary and to such
additional bonuses as may be determined from time to time in the discretion of
the Board of Directors.
4. (a) In the event the Executive dies or becomes Disabled (as defined
below) during the term hereof, the period of employment hereunder shall
terminate on the date the Executive dies or becomes Disabled; provided, however,
that the Executive or his estate, personal representatives, heirs or legatees,
as the case may be, shall be entitled to any compensation payable to the
Executive pursuant to Section 3 hereof up until the time the Executive dies or
becomes Disabled. For purposes of this Agreement, the term "Disabled" shall mean
that the Executive has suffered a physical or mental disability such that he no
longer is able to substantially perform, for a period of at least 90 consecutive
days, or 180 days in any one-year period, the business functions he was
performing immediately prior to such disability.
(b) This Agreement may be terminated by the Corporation at any time
for Cause (as defined below), such termination to be effective on the date on
which written notice is given, or as of such later date as is otherwise
specified in the notice. If this Agreement is terminated for Cause, the
Executive shall be entitled only to any compensation payable to the Executive
pursuant to Section 3 hereof up until the time of such termination. For purposes
of this Agreement, the term "Cause" shall mean only that the Executive (i) has
been grossly negligent in the performance of his duties hereunder, (ii) has
willfully disregarded his duties hereunder, (iii) has been convicted of a
criminal offense (other than minor infractions such as traffic violations or
similar offenses) or (iv) has committed a material violation of any of the
restrictions or prohibitions set forth in Section 7 or 8 of this Agreement.
5. (a) If the Executive's employment is terminated by the Corporation
without Cause, other than due to the Executive's death or becoming Disabled, the
period of employment hereunder shall terminate on the date of such termination
and the Executive shall be entitled to the following:
(1) base salary earned but not paid prior to the date
of the termination of his employment;
(2) all bonuses with respect to any calendar year
prior to the calendar year of the termination of
the Executive's employment which have been earned
but not paid;
(3) an amount equal to the aggregate base salary with
respect to a period equal to the remainder of the
term of this Agreement which would have applied in
the absence of any termination pursuant to Section
4 or 6, or this Section 5, (based on the base
salary in effect on the date of termination of
this Agreement) (the "Salary Continuation Period")
which amount shall be payable in a lump sum
without discount;
(4) a bonus (at an annual rate equal to the entire
amount of all bonuses paid or payable (excluding
any bonus paid or payable under the Corporation's
Performance Bonus Plan) to the Executive with
respect to the calendar year which ends on or
prior to the date of termination of the
Executive's employment, including any minimum
bonus payable pursuant to the last sentence of
Section 3) for each year or fraction of a year
remaining in the Salary Continuation Period, but
taking into account any bonus previously paid with
respect to such year or fraction thereof, which
amount shall be payable in a lump sum without
discount;
(5) any amounts earned, accrued or owing to the
Executive but not yet paid under Section 2 above;
(6) for the Salary Continuation Period, life,
disability, accident and group health insurance
benefits substantially similar to those which the
Executive was receiving immediately prior to the
termination; provided, however, that benefits
otherwise receivable by the Executive pursuant to
this Section 5(a)(7) shall be reduced to the
extent comparable benefits are actually received
by the Executive during the Salary Continuation
Period, and Executive shall report to the
Corporation any such benefits actually received by
the Executive; and
(7) other or additional benefits in accordance with
applicable plans, programs and/or arrangements of
the Corporation;
provided further, that, in all cases and without limiting any other remedies the
Corporation may have, the Corporation shall have no further obligation to make
any payments or provide any benefits under this Section 5(a) on and after any
material violation by Executive of Section 7 or 8 (without regard to whether
such payment or benefit shall have been accrued or owed prior to the date of
such violation). The payments due under Subsections (1), (2), (3), (4), and (5)
shall be paid to the Executive within thirty (30) days of the date of a
termination of employment described in this Section 5(a).
(b) The Executive may terminate his employment hereunder for Good
Reason (as defined below), but only if:
(1) the Executive notifies the Corporation in writing
during the 45-day period following the date of the
first occurrence of an event which constitutes
Good Reason of his intention to terminate his
employment for Good Reason;
(2) the Corporation fails to correct or cure the event
which constitutes Good Reason within 45 days of
receipt of the Executive's written notice (the
"Correction Period"); and
(3) the Executive terminates his employment for Good
Reason during the 270-day period following the
expiration of the Correction Period.
Upon a termination by the Executive of his employment for Good Reason, the
Executive shall be entitled to the same payments and benefits as provided in
Section 5(a) above; provided, however, that if the Executive terminates his
employment for Good Reason based on a reduction in base salary or bonus under
Section 3 above, then the base salary or bonus, as the case may be, to be used
in determining the payments to the Executive in accordance with Sections
5(a)(1), 5(a)(2), 5(a)(3) and 5(a)(4) above shall be the base salary or bonus,
respectively, in effect immediately prior to such reduction. For purposes of
this Agreement, the term "Good Reason" shall mean the occurrence of any of the
following events:
(1) a reduction in the Executive's base salary;
(2) a material reduction in the Executive's position,
duties or responsibilities with respect to his
employment by the Corporation under this Agreement
without the Executive's prior written consent;
(3) a reduction in the Executive's annual bonus amount
(excluding any bonus paid or payable under the
Corporation's Performance Bonus Plan), other than
a reduction in annual bonus from the prior year
(but not below the minimum bonus amount set forth
in Section 3) which is solely attributable to
lower earnings of the Corporation and its
affiliates and which reduces bonuses of similarly
situated employees generally;
(4) an actual change in the Executive's place of
employment more than 25 miles from Union, New
Jersey without the Executive's prior written
consent; or
(5) any breach of this Agreement by the Corporation,
unless such breach is immaterial.
6. The Executive may resign from his duties hereunder for any reason,
including retirement, by giving 180 days prior written notice to the
Corporation. Upon any such resignation, the Executive shall be entitled only to
any compensation payable to the Executive pursuant to Section 3 up until the
effective date of such resignation.
7. Except as approved in writing by the Board of Directors of the
Corporation, during the term of the Executive's actual employment hereunder and
(i) for a further period of one year thereafter, or (ii) for a further period of
two years thereafter if, prior to the third anniversary of the Commencement
Date, the Executive resigns other than for Good Reason or is terminated by the
Corporation for Cause, the Executive shall not:
(a) Engage in or carry on, directly or indirectly, either for himself
or as a member, stockholder, investor, lender, officer, director, employee or
agent of, or consultant or advisor to, any person, partnership, corporation,
joint venture or enterprise (other than the Corporation), or in any capacity on
behalf of any trust or other organization or entity, any business in competition
with (as defined below) any business then carried on by the Corporation as long
as any like business is carried on by the Corporation or by any person,
corporation, partnership, trust or other organization or entity deriving title
to the good will of such business, directly or indirectly, from the Corporation;
provided, however, that nothing herein contained shall prevent the Executive
from purchasing securities of any publicly owned company, the securities of
which are listed on a national securities exchange or registered pursuant to
Section 12(g) of the Securities Exchange Act of 1934 (the "Exchange Act"), but
the total holding of any such security so listed or registered shall be limited
to 1% of the amount of any such security outstanding. For the purposes of this
Section 7(a), the term "any business in competition with" shall mean any
business engaged principally or in part in the business of the Corporation as
described in its Registration Statement on Form S-1 (Registration No. 33-41172)
relating to the registration of shares of common stock of the Corporation (the
"Registration Statement") and in any other filing hereafter made by the
Corporation with the Securities and Exchange Commission pursuant to the
Securities Act of 1933, as amended, or the Exchange Act ("Subsequent Filings");
or
(b) Solicit, raid, entice, induce or attempt to persuade, directly or
indirectly, any person that presently is or at any time during the term of
employment hereunder shall be (or, in the case of termination, is at the time of
termination) an employee of the Corporation to become employed by any person,
firm, partnership, corporation or other enterprise or entity, and the Executive
shall not approach any such employee for such purpose or authorize the taking of
such actions by any other person, firm, partnership, corporation or other
enterprise or entity.
8. The Executive agrees that, during the term, or at any time after
the termination of this Agreement, the Executive shall not divulge, furnish or
make accessible to any person, corporation, partnership, trust or other
organization or entity, any information, trade secrets, technical data or
know-how relating to the business, business practices, methods, attorney-client
communications, pending or contemplated acquisitions or other transactions,
products, processes, equipment or any confidential or secret aspect of the
business of the Corporation or its affiliates without the prior written consent
of the Corporation, unless such information shall have become public knowledge
or shall have become known generally to competitors of the Corporation through
sources other than the Executive.
9. The following provisions shall apply to the covenants contained in
Sections 7 and 8 hereof:
(a) The covenants contained in Section 7 shall apply within the
territories in which the Corporation is actively engaged in the conduct of
business during the term of employment hereunder including, without limitation,
the territories in which customers are then being solicited.
(b) Without limiting the right of the Corporation to pursue all other
legal and equitable remedies, including recovery of damages, available for
violation by the Executive of the covenants contained in Sections 7 and 8
hereof, the Corporation will be entitled to specific performance of its rights
under such Sections. The Executive agrees that monetary damages would not be
adequate compensation for any loss incurred by the Corporation by reason of a
breach by him of the provisions of Sections 7 and 8 hereof, and that the
Corporation would sustain irreparable harm and, therefore, further agrees that
the Corporation shall be entitled to injunctive relief to prevent any such
breach or any continuing breach thereof.
(c) Each party intends and agrees that if, in any action before any
court or agency legally empowered to enforce the covenants contained in Sections
7 and 8 hereof, any term, restriction, covenant or promise contained therein is
found to be unreasonable and accordingly unenforceable, then such term,
restriction, covenant or promise shall be deemed modified to the extent
necessary to make it enforceable by such court or agency.
10. The Executive shall be entitled to participate in the life
insurance, major medical group plan and pension or retirement plan of the
Corporation, and in any other plan that the Corporation has or may establish and
maintain for the benefit of the senior executive employees of the Corporation,
in each case subject to and in accordance with the terms thereof. The Executive
shall be entitled to participate in any stock option, stock incentive, phantom
stock or similar equity based plan or arrangement which the Acquiror has or may
establish for the benefit of the senior executives of the Acquiror, subject to
and in accordance with the terms thereof and Acquiror's policies and practices.
11. The Executive agrees that the Corporation may procure insurance on
the life of the Executive, in such amounts as the Corporation may in its
discretion determine, and with the Corporation named as the beneficiary under
the policies. The Executive agrees that upon request from the Corporation he
will submit to a physical examination and will execute such applications and
other documents as may be required for the procurement of such insurance.
12. The provisions of this Agreement shall survive the conclusion of
the period of employment hereunder.
13. This Agreement sets forth the entire agreement and understanding
between the parties and supersedes all proposals, commitments, writings,
negotiations, discussions, agreements and understandings, oral or written, of
every kind and nature between them concerning the subject matter hereof,
including any prior employment agreement between (a) the Executive and (b) the
Corporation or its affiliates (which agreements will terminate and be of no
further force and effect on the Commencement Date). This Agreement may not be
amended or otherwise modified except in a writing signed by both parties hereto.
No discharge of the terms hereof shall be deemed valid unless by full
performance by the parties or by a writing signed by the parties. A waiver by
any party of any breach or violation of any part of this Agreement shall not be
deemed or construed as a waiver of any other breach or violation hereof.
14. All notices, requests, demands and other communications provided
for by this Agreement shall be in writing (including telecopier or similar
writing) and shall be deemed to have been given at the time when mailed in any
general or branch office of the United States Postal Service, enclosed in a
registered or certified postpaid envelope, or sent by Federal Express or other
similar overnight courier service, addressed to the address of the parties
stated above or to such changed address as such party may have fixed by notice
or, if given by telecopier, when such telecopy is transmitted and the
appropriate answerback is received.
15. This Agreement shall inure to the benefit of and be binding upon
the Corporation, its successors and assigns, including, without limitation, any
corporation which may acquire all or substantially all of the Corporation's
assets and business or with or into which the Corporation may be consolidated or
merged, and the Executive, his heirs, executors, administrators and legal
representatives, provided that the obligations of the Executive hereunder may
not be delegated.
16. This Agreement shall be governed by and construed in accordance
with the laws of the State of New Jersey governing contracts to be made and
performed therein without giving effect to principles of conflicts of law, and,
with respect to any dispute arising out of this Agreement, each party hereby
consents to the exclusive jurisdiction of the courts sitting in such State.
17. In the event that any action or dispute is brought by the
Executive to contest whether or not a termination of employment by the
Corporation was for Cause, the Executive shall be entitled to recover his
reasonable legal expenses with respect thereto from the Corporation, unless the
Corporation is the prevailing party in any such action or dispute as determined
by a final and nonappealable decision or order. Except as provided in the
preceding sentence, the parties shall bear their own legal expenses and costs
incurred in any action or dispute concerning their rights under this Agreement.
18. Should any part, term, condition or provision hereof or the
application thereof be declared illegal, invalid or otherwise unenforceable or
in conflict with any other law by a court of competent jurisdiction, the
validity of the remaining parts, terms, conditions or provisions of this
Agreement shall not be affected thereby, and the illegal, invalid or
unenforceable portions of this Agreement shall be and hereby are redrafted to
conform with applicable law, while leaving the remaining portion of this
Agreement intact, except to the extent necessary to conform to the redrafted
portions hereof.
19. This Agreement may be executed in several counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same document.
20. The Executive agrees that the amounts payable under Sections 4, 5,
or 6 (as the case may be) by the Corporation upon termination of the Executive's
employment hereunder are in lieu of any other claims the Executive may have with
regard to his separation of employment and will be the Executive's sole and
exclusive remedy for or associated with a separation of employment.
Notwithstanding the foregoing, the Corporation acknowledges that the Executive's
rights under any "employee benefit plan" (as defined in Section 3(3) of the
Employee Retirement Income Security Act of 1974, as amended), but excluding any
severance plan or policy, or under any stock option, stock incentive or similar
plan, sponsored or maintained by the Corporation or any affiliate, to any
benefits or payments of any kind upon or following his termination of employment
for any reason shall not be reduced or diminished by any provision of this
Agreement, including but not limited to this Section 20.
21. The Executive acknowledges that Acquiror may, from time to time,
make available benefit plans or arrangements to employees of the Corporation,
and, notwithstanding any other provision of this Agreement, such Acquiror plans
or arrangements may replace plans or arrangements previously provided by the
Corporation and, to such extent, shall be substituted (for all purposes) for any
plan or arrangement of the Corporation referred to in this Agreement.
IN WITNESS WHEREOF, each of the parties hereto has executed this
Agreement as of the date first above written.
PREMIER CORPORATION
By:_____________________________
--------------------------------
[NAME OF EXECUTIVE]
