Exhibit 2.1
APPENDIX A
AGREEMENT AND PLAN OF MERGER
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AMONG CWM MORTGAGE HOLDINGS, INC.,
COUNTRYWIDE ASSET MANAGEMENT CORPORATION AND
COUNTRYWIDE CREDIT INDUSTRIES, INC.
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This Agreement and Plan of Merger (this "Agreement") dated as of January 29,
1997, is by and among CWM Mortgage Holdings, Inc., a Delaware corporation ("CWM
REIT"), Countrywide Asset Management Corporation, a Delaware corporation ("CAMC
Advisor"), and Countrywide Credit Industries, Inc., a Delaware corporation
("CCR").
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WITNESSETH:
WHEREAS, the parties hereto wish to merge CAMC Advisor with and into
CWM REIT
pursuant to Delaware law, with CWM REIT being the surviving entity
(the "Merger"); and
WHEREAS, Section 251 of the General Corporation Law of the State of
Delaware, 8 Del.C. (S) 101, et seq. (the "DGCL"),
authorizes the merger of a Delaware
corporation with and into another Delaware corporation; and
WHEREAS, CWM REIT's Certificate of Incorporation and Bylaws permit, and
resolutions adopted by a majority of CWM REIT's independent directors and by the
CWM REIT Board of Directors authorize, this Agreement and the consummation of
the Merger, and as provided herein, this Agreement will be submitted to the
stockholders of CWM REIT for approval; and
WHEREAS, CAMC Advisor's Certificate of Incorporation and Bylaws permit, and
resolutions adopted by CAMC Advisor's Board of Directors and CCR (as the sole
shareholder of CAMC Advisor), respectively, authorize, this Agreement and the
consummation of the Merger; and
WHEREAS, for federal income tax purposes, it is intended that the Merger
qualify as a reorganization within the meaning of Section 368(a) of the Internal
Revenue Code of 1986, as amended (the "Code");
NOW, THEREFORE, for good and valuable consideration, the receipt of
which is
hereby acknowledged, the parties to this Agreement covenant and agree
as follows:
TABLE OF CONTENTS
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ARTICLE 1
DEFINITIONS
1.1 Terms Defined in this Section.................................... A-2
1.2 Terms Defined in Section 5.7.................................... A-5
ARTICLE 2
THE MERGER
2.1 The Merger, Surviving Corporation................................ A-5
2.2 Closing.......................................................... A-5
2.3 Effective Time................................................... A-5
2.4 Effect of the Merger............................................. A-5
ARTICLE 3
THE SURVIVING CORPORATION
3.1 Name............................................................. A-5
3.2 Certificate of Incorporation and Bylaws.......................... A-5
3.3 Officers and Directors........................................... A-6
ARTICLE 4
MERGER CONSIDERATION; CONVERSION OR CANCELLATION
OF
CAMC ADVISOR COMMON STOCK; ADJUSTMENTS
4.1 Share Consideration; Conversion or Cancellation of CAMC Shares... A-6
4.2 Payment for CAMC Shares in the Merger............................ A-6
4.3 Fractional CAMC Shares........................................... A-7
4.4 Transfer of CAMC Shares.......................................... A-7
4.5 Lost, Stolen or Destroyed Certificates........................... A-7
4.6 Indemnification.................................................. A-7
4.7 Further Assurances............................................... A-9
ARTICLE 5
REPRESENTATIONS AND WARRANTIES REGARDING CAMC ADVISOR
5.1 Organization, Etc. of CAMC Advisor............................... A-9
5.2 Partnerships; Subsidiaries....................................... A-9
5.3 Agreement........................................................ A-9
5.4 Capital Stock.................................................... A-9
5.5 Litigation....................................................... A-9
5.6 Compensation and Employee Matters................................ A-9
5.7 Employee Benefit Plans........................................... A-9
5.8 Taxes............................................................ A-13
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5.9 Intellectual Property.......................................... A-13
5.10 No Material Adverse Change..................................... A-14
5.11 Financial Statements........................................... A-14
5.12 Books and Records.............................................. A-14
5.13 Proxy Statement................................................ A-14
5.14 Contracts and Leases........................................... A-14
5.15 Real Property.................................................. A-14
ARTICLE 6
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REPRESENTATIONS AND WARRANTIES
REGARDING CCR
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6.1 Power and Authority.................................... A-15
6.2 Agreement.............................................. A-15
6.3 Foreign Person......................................... A-15
6.4 No Withholding......................................... A-15
6.6 Brokers and Finders.................................... A-15
6.7 Securities Act Representations......................... A-15
ARTICLE 7
REPRESENTATIONS AND WARRANTIES OF CWM REIT
7.1 Organization, Etc. of CWM REIT......................... A-16
7.2 Capital Stock.......................................... A-16
7.3 Authorization for CWM Common Stock..................... A-17
7.4 Brokers and Finders.................................... A-17
7.5 SEC Reports and Financial Statements................... A-17
7.6 Information............................................ A-18
7.7 Books and Records...................................... A-18
7.8 Litigation............................................. A-18
7.9 General................................................ A-18
7.10
ARTICLE 8
COVENANTS OF THE PARTIES
8.1 Maintenance of Business, Prohibited Acts............... A-19
8.2 Officers and Employees................................. A-20
8.3 Significant Business Line.............................. A-20
8.4 Meeting of Stockholders................................ A-20
8.5 Proxy Materials........................................ A-20
8.6 Fillings, Other Action................................. A-21
8.7 Access to Information.................................. A-21
8.8 Management Fee Adjustment.............................. A-21
8.9 Intellectual Property Rights........................... A-22
8.10 Tax Matters............................................ A-22
8.11 Covenant Not to Compete, Continuing Arrangements Etc... A-24
8.12 Reorganization......................................... A-24
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8.13 Public Statements..................................................... A-25
8.14 Letter of CAMC Advisor's Accountants.................................. A-25
8.15 Employee Matters...................................................... A-25
8.16 Notice of Certain Events.............................................. A-27
8.17 Director and Officer Indemnification.................................. A-27
8.18 Further Action........................................................ A-28
8.19 Books and Records..................................................... A-28
8.20 Restrictions on Resale of Share Consideration......................... A-28
8.21 CAMC Advisor Shareholder Approval..................................... A-28
8.22 Waiver of Limitations on Percentage Ownership......................... A-28
8.23 Delivery of Certain Financial Statements.............................. A-28
8.24 Distributions......................................................... A-28
8.25 Sales and Use Taxes, Etc.............................................. A-29
ARTICLE 9
CONDITIONS TO THE MERGER
9.1 Conditions to Each Party's
Obligations.............................................................. A-29
(a) CWM REIT Stockholder Approval........................................ A-29
(b) HSR Act.............................................................. A-29
(c) No Injunction or Proceedings......................................... A-29
(d) No Suspension of Trading, Etc........................................ A-29
(e) Registration Rights Agreement........................................ A-29
(f) Cooperation Agreement................................................ A-29
(g) Employment Contract.................................................. A-30
(h) Physical Facility.................................................... A-30
9.2 Conditions to Obligations of CCR and CAMC
Advisor to Effect the Merger............................................. A-30
9.3 Conditions to Obligation of CWM REIT to Effect the Merger........... A-30
ARTICLE 10
TERMINATION; AMENDMENT; WAIVER
10.1 Termination by Mutual Consent....................................... A-31
10.2 Termination by Either CWM REIT or CAMC Advisor...................... A-31
10.3 Effect of Termination and Abandonment............................... A-32
10.4 Amendment........................................................... A-32
10.5 Waiver.............................................................. A-32
ARTICLE 11
MISCELLANEOUS
11.1 Expenses............................................................ A-32
11.2 Notices, Etc........................................................ A-32
11.3 Survival............................................................ A-33
11.4 No Assignment....................................................... A-34
11.5 Entire Agreement.................................................... A-34
11.6 Specific Performance................................................ A-34
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11.7 Remedies Cumulative............ A-34
11.8 No Waiver...................... A-34
11.9 No Third-Party Beneficiaries... A-34
11.10 Jurisdiction and Venue......... A-34
11.11 Governing Law.................. A-34
11.12 Name, Captions, Etc............ A-34
11.13 Severability................... A-34
11.14 Counterparts................... A-35
11.15 Gender; Number................. A-35
11.16 Ambiguities.................... X-00
X-xx
ARTICLE 1
DEFINITIONS
1.1 Terms Defined in this Section. As used in this Agreement, the
following
terms shall have the respective meanings set forth below:
"Affiliate": As defined in Rule 12b-2 under the Exchange Act.
"Agreement": As defined in the preamble.
"Authorization": Any consent, approval or authorization of,
expiration or termination of any waiting period requirement (including pursuant
to the HSR Act) by, or filing, registration, qualification, declaration or
designation with, any Governmental Body.
"Business Combination": As defined in Section 4.1(a).
"Business Day": means any day, other than a Saturday or Sunday,
that is neither a legal holiday nor a day on which banking institutions are
authorized or required by law, regulation or executive order to close in The
City of New York or in Los Angeles, California.
"CAMC Advisor": As defined in the preamble.
"CAMC Advisor Common Stock": CAMC Advisor's common stock, $0.10 par
value.
"CAMC Advisor Disclosure Schedule": As defined in Article 5.
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"CAMC Advisor Financial Statements": As defined in Section 5.11.
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"CAMC Shares": As defined in Section 4.1(a).
"CCR": As defined in the preamble.
"CCR DB Plan": As defined in Section 8.15(a).
"CWM Common Stock": CWM REIT's common stock, par value $.01 per share.
"CWM REIT": As defined in the preamble.
"CWM REIT DB Plan": As defined in Section 8.15(a).
"CWM REIT E&P Committee": A Committee consisting of no more than six
employees of, or advisors to, CWM REIT to be designated by the chief operating
officer of CWM REIT.
"CWM REIT 401(k) Plan": As defined in Section 8.15(b).
"CWM REIT Stockholders Meeting": As defined in Section 8.4.
"Certificate of Merger": The certificate of merger with respect to the
Merger containing the provisions required by, and executed in accordance with,
DGCL Section 251.
"Certificates": As defined in Section 4.l(b).
"Change of Control": As defined in the CCR 1993 Stock Option Plan, as
amended and restated as of March 27, 1996, without reference to any subsequent
amendments, modifications or alterations thereof.
"Closing": The closing of the Merger.
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"Closing Date": The date on which the Closing occurs.
"Code": As defined in the Recitals.
"Cooperation Agreement": As defined in Section 9.1(f).
"DGCL": As defined in the Recitals.
"Damages": Any loss, liability, damage, Tax, demand, claim, action, judgment
or cause of action, assessment, cost, obligation or expense (including, without
limitation, interest, penalties, reasonable costs of investigation, defense and
prosecution of litigation and reasonable attorneys' and accountants' fees)
incurred by CWM REIT or CCR, as the case may be, subject in all events to
Section 4.6(f).
"Xxxx Xxxxxx": Xxxx Xxxxxx Xxxxxxxx Inc.
"Effective Time": As defined in Section 2.3.
"Estimated Transfer Amount": As defined in Section 8.15(b).
"Exchange": Each national securities exchange (as defined in Section 12(b)
of the Exchange Act) upon which the CWM Common Stock is then listed for trading
and/or quotation system on which the CWM Common Stock is then quoted, which on
the date of this Agreement is the New York Stock Exchange.
"Exchange Act": The Securities Exchange Act of 1934, as amended.
"February 29 Balance Sheet": The audited balance sheet of CAMC Advisor
dated February 29, 1996.
"Governmental Body": Any federal, state, municipal, political subdivision
or other governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign.
"HSR Act": The Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as
amended. "Indemnified Party": As defined in Section 4.6(c).
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"Indemnifying Party": As defined in Section 4.6(c).
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"Indy Mac": Independent National Mortgage Corporation.
"Indy Mac Charter Amendment": As defined in Section 8.11(e).
"Intellectual Property Rights": All intellectual property rights referred to
in the letter, dated the date hereof, from CWM REIT to CCR and CAMC Advisor,
including patents, patent applications, trademarks, trademark applications and
registrations, service marks, service xxxx applications and registrations,
tradenames, tradename applications and registrations, copyrights, copyright
applications and registrations, licenses, logos, corporate and partnership
names, and customer lists, proprietary processes, formulae, inventions, trade
secrets, know-how, development tools and other proprietary rights, and all
documentation and media constituting, describing or relating to the above,
including, but not limited to, manuals, memoranda, know-how, notebooks,
software, records and disclosures.
"Knowledge": The terms "knowledge" and "aware" and any derivatives thereof
when applied to any party to this Agreement shall refer to the knowledge or
awareness, as the case may be, which such party or, if applicable, any director
or executive officer thereof has, or reasonably should have had, after due
inquiry of the other officers and employees of such party; provided, however,
for the purposes of determining whether CCR or CAMC Advisor is in breach of any
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awareness of CCR or CAMC Advisor, no such breach shall exist if a director or
senior officer of CWM REIT
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(other than Xxxxx X. Xxxx or Xxxxxx X. Xxxxxx) has knowledge or awareness of the
facts or circumstances which would otherwise constitute such breach; and
provided, further for the purposes of determining whether CWM REIT is in breach
of any representation or warranty hereunder which is based on the knowledge or
awareness of CWM REIT, no such breach shall exist if a director or senior
officer of CCR has knowledge or awareness of the facts or circumstances which
would otherwise constitute such breach.
"Management Agreement": The Amended and Extended Management Agreement dated
as of June 1, 1996 by and between CWM REIT and CAMC Advisor, as amended by the
First Amendment to 1996 Amended and Extended Management Agreement dated as of
July 25, 1996, by and between such parties.
"Material Adverse Effect": As to any Person, a material adverse effect on
the business, properties, operations or condition (financial or other) of such
Person.
"Merger": As defined in the Recitals.
"Xxxxxxx Xxxxx": Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx Incorporated
"Person": Any individual or corporation, company, partnership, trust,
incorporated or unincorporated association, joint venture or other entity of any
kind.
"Pre-Closing Market Value": The per-share value of the CWM Common Stock
based on the average sale price thereof for the 10 Business Days next preceding
the Closing Date, using for each such Business Day the last reported sale price
on the New York Stock Exchange.
"Proxy Statement": As defined in Section 8.5.
"Quarterly Financial Statements": As defined in Section 7.6(c).
"Registration Rights Agreement": That certain agreement between CCR and CWM
REIT to be entered pursuant to and in accordance with Section 9.1(e)
hereof. "Savings Participants": As defined in Section 8.15(b).
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"SEC": The Securities and Exchange Commission.
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"SEC Reports": As defined in Section 7.6.
"Securities Act": The Securities Act of 1933, as amended. "Share
Consideration": As defined in Section 4.1(a).
"Special Committee": The Special Committee of the three independent members
of the Board of Directors of CWM REIT, appointed specifically for the
purpose of negotiating the terms of any proposed merger with CAMC Advisor and
any alternatives to such transaction and to make recommendations to the CWM REIT
Board of Directors and stockholders with respect to same.
"Special Purchase Rights": As defined in the Registration Rights Agreement.
"Stock": As defined in Section 8.15(b).
"Subsidiary": As to any Person, any other Person of which at the time of
determination the first Person owns or controls directly or indirectly more than
50% of the outstanding common stock; provided, however, that for purposes of
this term whenever used in this Agreement, Indy Mac shall be deemed to be a
Subsidiary of CWM REIT and not a Subsidiary of CCR.
"Tax" or "Taxes": All federal, state, local, non-U.S. and other taxes
imposed by or on behalf of any Governmental Body, including, without limitation:
(i)
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net income, gross income, gross receipts, sales, use, ad A-4
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valorem, transfer, franchise, profits, license, lease, service, service use,
withholding, payroll, employment, unemployment, excise, severance, stamp,
occupation, premium, real and personal property, gift or windfall profits taxes,
(ii) customs or duties and (iii) all other taxes, fees, assessments or charges
of any kind whatever, together with any interest and any penalties, additions to
tax, supplemental or retroactive assessments or additional amounts with respect
thereto.
"Tax Matter": As defined in Section 8.10(c).
"Tax Return": Any return, declaration of estimated tax, tax report, customs
declaration, claim for refund or information return or statement relating to
Taxes, including any amendment thereto.
"Transfer Amount": As defined in Section 8.15(b).
"Transferring Employees": As defined in Section 8.15(a).
1.2 Terms Defined in Section 5.7. Capitalized terms defined in Section 5.7
shall have the respective meanings set forth therein whenever such capitalized
terms appear in this Agreement.
ARTICLE 2
THE MERGER
2.1 The Merger, Surviving Corporation. Subject to the terms and conditions
set forth in this Agreement, at the Effective Time CAMC Advisor shall be merged
with and into CWM REIT pursuant to Section 251 of the DGCL, and the separate
existence of CAMC Advisor shall cease. CWM REIT shall be the surviving
corporation in the Merger and shall continue to be governed by the DGCL.
2.2 Closing. Subject to Article 10 hereof and the fulfillment or waiver of
the conditions set forth in Article 9, the Closing shall take place at (i) the
offices of Xxxxx & Xxxx LLP, One World Trade Center, New York, New York, at
10:00 a.m. New York City time, on the second business day following the
fulfillment or waiver of the conditions set forth in Article 9 (other than
conditions which by their nature are intended to be fulfilled at the Closing) or
(ii) such other place or time or on such other date as CWM REIT and CCR may
agree or as may be necessary to permit the fulfillment or waiver of the
conditions set forth in Article 9.
2.3 Effective Time. In accordance with Sections 251 and 103 of the DGCL,
the Merger shall become effective (the "Effective Time") upon the filing of a
Certificate of Merger with the Secretary of State of the State of Delaware, or
at such later time, not later than five business days thereafter, as may be
specified in the Certificate of Merger. For Tax purposes, the parties agree that
the Effective Time shall be deemed to occur after the close of business on the
date on which the Effective Time occurs, and neither party shall take a position
inconsistent therewith, except as may be required by law. All other filings or
recordings required by Delaware law in connection with the Merger shall also be
made.
ARTICLE 3
THE SURVIVING CORPORATION
3.1 Name. The name of the surviving corporation shall be CWM Mortgage
Holdings, Inc. or such other name as may be approved by the stockholders of CWM
REIT.
3.2 Certificate of Incorporation and Bylaws. The Certificate of
Incorporation
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and Bylaws of CWM REIT as in effect immediately prior to the Effective Time
shall be the Certificate of Incorporation and Bylaws of CWM REIT unless and
until amended in accordance with their terms and applicable law.
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3.3 Officers and Directors. Except as otherwise contemplated by this
Agreement, the officers of CWM REIT immediately prior to the Effective Time
shall continue as officers of CWM REIT and remain officers until their
successors are duly appointed or their prior resignation, removal or death. The
directors of CWM REIT immediately prior to the Effective Time shall continue as
directors of CWM REIT and shall remain directors until their successors are duly
elected and qualified or their prior resignation, removal or death.
ARTICLE 4
MERGER CONSIDERATION; CONVERSION OR CANCELLATION OF
CAMC ADVISOR COMMON STOCK; ADJUSTMENTS
4.1 Share Consideration; Conversion or Cancellation of CAMC Shares.
(a) Subject to the provisions of this Article 4, at the Effective Time, by
virtue of the Merger and without any action by holders thereof, all of the
shares of CAMC Advisor Common Stock issued and outstanding immediately prior to
the Effective Time (collectively, the "CAMC Shares") shall be converted into an
aggregate of 3,597,122 shares of CWM Common Stock, subject to adjustment in
accordance with Section 4.1(c) (the "Share Consideration"). Prior to the
Effective Time, CWM REIT will not split or combine the CWM Common Stock, or pay
a stock dividend or other stock distribution in shares of CWM Common Stock, or
in rights or securities exchangeable or convertible into or exercisable for CWM
Common Stock, or otherwise change the CWM Common Stock into, or exchange the CWM
Common Stock for, any other securities (whether pursuant to or as part of a
merger, consolidation, acquisition of property or stock, separation,
reorganization or liquidation of CWM REIT as a result of which CWM REIT
stockholders receive cash, stock or other property in exchange for, or in
connection with, their CWM Common Stock (a "Business Combination") or
otherwise), or make any other dividend or distribution on or of CWM Common Stock
(other than regular monthly or quarterly cash dividends paid on the CWM Common
Stock or any distribution pursuant to CWM REIT's dividend reinvestment plan),
without the parties hereto having first entered into an amendment to this
Agreement pursuant to which the Share Consideration will be adjusted to reflect
such split, combination, dividend, distribution, Business Combination or change.
(b) All CAMC Shares to be converted into CWM Common Stock pursuant to this
Section 4.1 shall cease to be outstanding, shall be canceled and retired and
shall cease to exist, and CCR, as the holder of a certificate or certificates
representing such CAMC Shares (a "Certificate" or the "Certificates") shall
thereafter cease to have any rights with respect to such CAMC Shares, except the
right to receive for all of the CAMC Shares, upon the surrender of such
Certificates in accordance with Section 4.2, the CWM Common Stock specified
above and cash in lieu of fractional shares of CWM Common Stock as contemplated
by Section 4.3.
(c) The Share Consideration shall be calculated and adjusted as follows:
(i) In the event that the Pre-Closing Market Value is less than $19.46, the
Share Consideration shall be adjusted and increased to that number of shares of
CWM Common Stock that is determined by dividing $70,000,000 by the Pre-Closing
Market Value, subject to the termination provisions of Section 10.2(c)(i)
hereof.
(ii) In the event that the Pre-Closing Market Value is more than $22.24, the
Share Consideration shall be adjusted and decreased to that number of shares of
CWM Common Stock that is determined by dividing $80,000,000 by the Pre-Closing
Market Value, subject to the termination provisions of Section 10.2(c)(i)
hereof.
(d) At the Effective Time, by virtue of the Merger and without any action
by holders thereof, all of the shares of CWM REIT Common Stock issued and
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outstanding immediately prior to the Effective Time shall remain issued and
outstanding.
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4.2 Payment for CAMC Shares in the Merger. At or after the Effective Time,
upon surrender by CCR of its Certificates for cancellation to CWM REIT, together
with any other required documents, CCR shall receive A-6
for the CAMC Shares represented by such Certificates (i) the Share Consideration
and (ii) cash in lieu of fractional shares of CWM Common Stock as contemplated
by Section 4.3, and the Certificates so surrendered shall forthwith be canceled.
Until surrendered, the outstanding Certificates shall, upon and after the
Effective Time, be deemed for all purposes (other than to the extent provided in
the following sentence) to evidence ownership of the number of shares of CWM
Common Stock into which such CAMC Shares have been converted pursuant to Section
4.1 hereof and the other rights contemplated in the preceding sentence.
4.3 Fractional CAMC Shares. No fractional shares of CWM Common Stock shall
be issued in the Merger. In lieu of any such fractional securities, CCR will be
paid an amount in cash (without interest) equal to the Pre-Closing Market Value
of one share of CWM Common Stock, multiplied by such fraction.
4.4 Transfer of CAMC Shares. (a) No transfers of CAMC Shares shall be made
on the stock transfer books of CAMC Advisor after the date of this Agreement,
and (b) CCR agrees not to transfer any CAMC Shares after the date of this
Agreement and before the Closing Date.
4.5 Lost, Stolen or Destroyed Certificates. In the event any Certificate
shall have been lost, stolen or destroyed, upon receipt of an affidavit of that
fact from CCR and if reasonably satisfied that adequate provision for
indemnification has been made, CWM REIT will issue in exchange for such lost,
stolen or destroyed Certificate shares of CWM Common Stock, cash in lieu of
fractional shares, and unpaid dividends and distributions on shares of CWM
Common Stock as provided in Section 4.2, deliverable in respect thereof pursuant
to this Agreement.
4.6 Indemnification.
(a) Subject to Section 11.3, CCR agrees to indemnify and hold harmless CWM
REIT and its directors, officers, employees, affiliates, agents and permitted
assigns, without duplication, from and against: (i) any and all Damages
(excluding those items referred to in subsection (ii) of this Section 4.6(a))
asserted against, imposed upon or incurred or suffered by any of them, directly
or indirectly, as a result of, or based upon or arising from any inaccuracy in
or breach or non-fulfillment of any of the representations, warranties or
covenants or agreements made by CAMC Advisor or CCR in this Agreement; (ii) (A)
any Taxes payable by or on behalf of CAMC Advisor for any taxable period ending
on or prior to the Effective Time, including Taxes of any member of a
consolidated or combined tax group of which CAMC Advisor is, or was at any time,
part, for which CAMC Advisor is jointly or severally liable as a result of its
inclusion in such group prior to the Effective Time, (B) any claim or demand for
reimbursement or indemnification resulting from any transfer of tax benefits or
credits by CAMC Advisor to any other person, and (C) any Taxes payable by CWM
REIT as a result of any breach of any representation or warranty contained in
Section 5.8; and (iii)(A) except for liabilities (including liabilities arising
under Title IV of ERISA or Section 412 of the Code) assumed by CWM REIT pursuant
to Section 8.15, any Damages arising out of or relating to any Employee Plan
maintained or sponsored by CCR or any ERISA Affiliate and (B) any Damages
(including liabilities arising under Title IV of ERISA or Section 412 of the
Code) relating to or arising out of any employee benefit plan maintained by CCR
or any ERISA Affiliate which is not an Employee Plan.
(b) Subject to Section 11.3, CWM REIT agrees to indemnify and hold harmless
CCR and its directors, officers, employees, affiliates, agents and permitted
assigns, without duplication, from and against any and all Damages asserted
against, imposed upon or incurred or suffered by any of them, directly or
indirectly, as a result of, or based upon or arising from (i) any inaccuracy in
or breach or non-fulfillment of any of the representations, warranties or
covenants or agreements made by CWM REIT in this Agreement or (ii) termination
or any change in employment status, compensation or benefits by CWM REIT of any
employees employed by CAMC Advisor at the time of Closing.
(c) Except with respect to matters addressed in Section 8.10(c), which
matters shall be governed solely by such Section, if any action or proceeding
(including any governmental investigation) shall be brought or asserted against
a party hereto (or its officers, directors, trustees or agents) or any person
controlling such party in respect of which indemnity is required from the other
party hereunder (such party to whom indemnification is required
A-7
is referred to herein as the "Indemnified Party;" the party from whom such
indemnification is required is referred to herein as the "Indemnifying Party"),
the Indemnifying Party shall assume the defense thereof, including the
employment of counsel reasonably satisfactory to the Indemnified Party, and
shall assume the payment of all expenses. The Indemnified Party or any such
officer, director, trustee, agent or controlling person shall have the right to
employ separate counsel (approved by the Indemnified Party) in any such action
and to participate in the defense thereof, but the fees and expenses of such
counsel shall be at the expense of the Indemnified Party or such officer,
director, trustee, agent or controlling person unless (i) the Indemnifying Party
shall have failed to assume the defense of such action or proceeding and employ
counsel reasonably satisfactory to the Indemnified Party in any such action or
proceeding or (ii) the named parties to any such action or proceeding (including
any impleaded parties) include both the Indemnified Party or such officer,
director, trustee, agent or controlling person and the Indemnifying Party, and
the Indemnified Party or such officer, director, trustee, agent or controlling
person shall have been advised by counsel that there may be one or more legal
defenses available to it which are different from or additional to those
available to the Indemnifying Party (in which case, if the Indemnified Party or
such officer, director, trustee, agent or controlling person notifies the
Indemnifying Party in writing that it elects to employ separate counsel at the
expense of the Indemnifying Party, the Indemnifying Party shall not have the
right to assume the defense of such action or proceeding on behalf of the
Indemnified Party or such officer, director, trustee, agent or controlling
person, it being understood, however, that the Indemnifying Party shall not, in
connection with any one such action or proceeding or separate but substantially
similar or related actions or proceedings in the same jurisdiction arising out
of the same general allegations or circumstances, be liable for the fees and
expenses of more than one separate firm of attorneys (together with local
counsel) at any time for the Indemnified Party and its officers, directors,
trustees, agents and controlling persons, which firm shall be designated in
writing by the Indemnified Party). The Indemnifying Party shall not be liable
for any settlement of any such action or proceeding effected without the
Indemnifying Party's written consent, but if settled with its written consent,
or if there be a final judgment for the plaintiff in any such action or
proceeding, the Indemnifying Party agrees to indemnify and hold harmless the
Indemnified Party and its officers, directors, trustees, agents and controlling
person from and against any loss or liability (to the extent stated above) by
reason of such settlement or judgment.
(d) (i) The obligations of CCR pursuant to Section 4.6 (a)(i) shall survive
the Closing if and to the extent that the related representation, warranty,
covenant or agreement survives the Closing as provided in Section 11.3. The
obligations of CCR pursuant to Section 4.6 (a)(ii) and (iii) shall survive the
Closing, but shall terminate upon the expiration of the applicable statute of
limitations with respect to the matters covered thereby.
(ii) The obligations of CWM REIT pursuant to Section 4.6(b)(i) shall
survive the Closing if and to the extent that the related representation,
warranty, covenant or agreement survives the Closing as provided in Section
11.3. The obligations of CWM REIT pursuant to Section 4.6(b)(ii) shall survive
the Closing, but shall terminate upon the expiration of the applicable statute
of limitations with respect to the matters covered thereby.
(e) (i) Notwithstanding anything in this Section 4.6 to the contrary, to the
extent indemnification for any inaccuracy in or breach of any representation or
warranty in Section 5, 6 or 7, as the case may be, is sought under Section
4.6(a)(i) or Section 4.6(b) hereof, CCR or CWM REIT, as the case may be, shall
be required to provide indemnification only to the extent the aggregate amount
of Damages arising under Section 4.6(a)(i) or 4.6(b), as the case may be,
exceeds $500,000.
(ii) Notwithstanding anything in Section 4.6(a)(i) to the contrary, the
aggregate amount payable by CCR with respect to any Damages under Section
4.6(a)(i) for any inaccuracy in or breach of any representation or warranty in
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Section 5 or 6 shall not exceed $15,000,000 (excluding for such purposes,
however, any Damages arising out of the breach of any of the representations and
warranties contained in Sections 5.7, 5.8 and 5.13).
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(iii) Notwithstanding anything in Section 4.6(b) to the contrary, the
aggregate amount of Damages payable by CWM REIT with respect to Damages under
Section 4.6(b) for any inaccuracy in or breach of any representation or warranty
in Section 7 shall not exceed $15,000,000 (excluding for such purposes, however,
any Damages with respect to the representations and warranties contained in
Sections 7.7 and 7.10).
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(f) In case any event shall occur which would otherwise entitle any party to
assert any claim for indemnification hereunder, no Damages shall be deemed to
have been sustained by such party to the extent of (i) the value of any tax
savings actually realized or to be realized (including savings attributable to
an increase in the tax basis of an asset held by such party) by such party with
respect thereto or (ii) any proceeds received by such party from any insurance
policies with respect thereto, net of any increase in premiums or other costs
associated with such insurance recovery.
(g) The indemnification provisions of this Section 4.6 shall be the sole and
exclusive remedy of the parties against one another with respect to any money
damages under this Agreement.
(h) Anything to the contrary contained in this Agreement notwithstanding,
(i) CCR shall have no obligation to indemnify CWM REIT for any Damages as a
result of CWM REIT failing to be treated as a real estate investment trust under
the Code, unless such failure was solely a result of the breach by CCR of any of
its obligations under Section 8.10(c) of this Agreement and the remedy of
specific performance with respect thereto would not provide adequate relief to
CWM REIT, and (ii) CWM REIT shall have no obligation to indemnify CCR for any
Damages as a result of the Merger failing to qualify as a reorganization under
Code Section 368(a), unless such failure was solely a result of the breach by
CWM REIT of any of its obligations under Sections 7.10 and 8.3 of this
Agreement.
4.7 Further Assurances. If at any time CWM REIT shall consider or be advised
that any further assignment, conveyance or assurance is necessary or advisable
to vest, perfect or confirm of record in CWM REIT the title to any property or
right of CAMC Advisor, or otherwise to carry out the provisions hereof, the
proper representatives of CCR or CAMC Advisor as of the Effective Time shall
execute and deliver any and all proper deeds, assignments and assurances, and do
all things necessary and proper to vest, perfect or convey title to such
property or right in CWM REIT and otherwise to carry out the provisions hereof.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES REGARDING CAMC ADVISOR
CAMC Advisor and CCR hereby jointly and severally represent and warrant to
CWM REIT that, except as set forth in the disclosure schedule delivered by CAMC
Advisor and CCR to CWM REIT on the date hereof (the "CAMC Advisor Disclosure
Schedule") as of the date hereof:
5.1 Organization, Etc. of CAMC Advisor. CAMC Advisor is a corporation duly
incorporated, validly existing and in good standing under the laws of the State
of Delaware and has all requisite corporate power and authority to own, lease
and operate its properties, to carry on its business as now conducted by CAMC
Advisor, to enter into this Agreement and to carry out the provisions of this
Agreement and consummate the transactions contemplated hereby. CAMC Advisor is
duly qualified 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 necessary, except where the failure to so qualify or to
be in good standing has not had or would not have a Material Adverse Effect on
CAMC Advisor. True and correct copies of CAMC Advisor's Certificate of
Incorporation and Bylaws have been made available to CWM REIT.
5.2 Partnerships; Subsidiaries. CAMC Advisor is not, directly or
indirectly, a partner in any partnership. CAMC Advisor does not have, directly
or indirectly, any Subsidiaries.
5.3 Agreement. This Agreement and the consummation of the transactions
contemplated hereby have been approved by the Board of Directors of CAMC Advisor
and have been duly authorized by all other necessary corporate action on the
part of CAMC Advisor including the written consent of CCR, as sole
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stockholder. This Agreement has been duly executed and delivered by a duly
authorized officer of CAMC Advisor and constitutes a valid and binding agreement
of CAMC Advisor, enforceable against CAMC Advisor in accordance with its terms,
except as may be limited by applicable bankruptcy, insolvency, reorganization,
moratorium and other similar laws of general application that may affect the
enforcement of creditors' rights generally and by general
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equitable principles and except to the extent that public policy considerations
may limit the enforcement of indemnification of obligations. CAMC Advisor has
delivered to CWM REIT true and correct copies of resolutions adopted by the
Board of Directors of CAMC Advisor and CCR, respectively, approving this
Agreement and the transactions contemplated hereby.
5.4 Capital Stock. The authorized capital stock of CAMC Advisor consists of
10,000 shares of common stock, of which 10,000 shares are outstanding as of the
date hereof. All outstanding shares of such common stock are duly authorized,
validly issued, fully paid and nonassessable, and no class of capital stock of
CAMC Advisor is entitled to preemptive or similar rights. There are outstanding
on the date hereof no options, warrants, calls, rights, commitments or any other
agreements of any character to which CAMC Advisor is a party or by which it may
be bound, requiring it to issue, transfer, sell, purchase, redeem or acquire any
shares of capital stock or any securities or rights convertible into,
exchangeable for or evidencing the right to subscribe for or acquire any shares
of its capital stock.
5.5 Litigation. Except as set forth in Section 5.5 of the CAMC Advisor
Disclosure Schedule, there are no actions, suits, investigations or legal
proceedings pending or, to the knowledge of CAMC Advisor and CCR, threatened
against CAMC Advisor or any property of CAMC Advisor (including the Intellectual
Property Rights) in any court or before any arbitrator of any kind or before or
by any Governmental Body or before any arbitrator of any kind except for such
actions, suits, investigations or legal proceedings that would not have a
Material Adverse Effect on CAMC Advisor. Except as set forth in Section 5.5 of
the CAMC Advisor Disclosure Schedule, CAMC Advisor is not in default with
respect to any judgment, order, writ, injunction or decree of any arbitrator,
court or Governmental Body, and there are no unsatisfied judgments against CAMC
Advisor except for such defaults or unsatisfied judgments as would not have a
Material Adverse Effect on CAMC Advisor.
5.6 Compensation and Employee Matters. A true, correct and complete list of
all directors, officers and personnel of CAMC Advisor, and the annual salary,
bonuses paid or accrued for the year ending February 29, 1996, and for the
period from March 1, 1996 through November 30, 1996, and any commitments by CAMC
Advisor entered into on or prior to the date hereof to pay any further bonuses
for or increase the salary of each such person is set forth in Section 5.6 of
the CAMC Advisor Disclosure Schedule.
5.7 Employee Benefit Plans.
(a) Definitions. The following terms, when used in this Section 5.7 or
elsewhere in this Agreement, shall have the following meanings. Any of these
terms may, unless the context otherwise requires, be used in the singular or the
plural depending on the reference.
(i) Benefit Arrangement. Any employment, consulting, severance or other
similar contract, arrangement (written or oral), program, policy, plan,
agreement or commitment providing for insurance coverage (including any
self-insured arrangements), workers' compensation, disability benefits,
supplemental unemployment benefits, vacation benefits, retirement benefits,
life, health, disability or accident benefits (including, without limitation,
any "voluntary employees' beneficiary association" as defined in Section
501(c)(9) of the Code, providing for the same or other benefits) or for deferred
compensation, profit sharing bonuses, stock options, stock appreciation rights,
stock purchases or other forms of incentive compensation or post-retirement
insurance, compensation or benefit which (A) is not a Welfare Plan, Pension Plan
or Multiemployer Plan, (B) is entered into, maintained, contributed to or
required to be contributed to, as the case may be, by CAMC Advisor or under
which CAMC Advisor may incur any liability, and (C) covers any CAMC Employee
(with respect to his or her relationship with CAMC Advisor).
(ii) CAMC Employee. Any employee or former employee of CAMC Advisor.
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(iii) Employee Plans. All Benefit Arrangements, Multiemployer Plans,
Pension Plans and Welfare Plans.
(iv) ERISA. The Employee Retirement Income Security Act of 1974, as amended.
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(v) ERISA Affiliate. "ERISA Affiliate" shall mean any entity which is (or at
any relevant time was) a member of a "controlled group of corporations" with,
under "common control" with or a member of an affiliated service group with CAMC
Advisor as defined in Section 414(b), (c) or (m) of the Code.
(vi) IRS. The Internal Revenue Service.
(vii) Multiemployer Plan. Any "multiemployer plan," as defined in Section
4001(a)(3) of ERISA, (A) which CAMC Advisor or any ERISA Affiliate maintains,
administers, contributes to or is required to contribute to, or, after September
25, 1980, maintained, administered, contributed to or was required to contribute
to, or under which CAMC Advisor or any ERISA Affiliate may incur any liability
and (B) which covers any CAMC Employee (with respect to his or her relationship
with CAMC Advisor).
(viii) PBGC. The Pension Benefit Guaranty Corporation.
(ix) Pension Plan. Any "employee pension benefit plan" as defined in Section
3(2) of ERISA (other than a Multiemployer Plan) (A) which CAMC Advisor or any
ERISA Affiliate maintains, administers, contributes to or is required to
contribute to, or, within the five years prior to the date hereof, maintained,
administered, contributed to or was required to contribute to, or under which
CAMC Advisor or any ERISA Affiliate may incur any liability and (B) which covers
any CAMC Employee (with respect to his or her relationship with CAMC Advisor).
(x) Welfare Plan. Any "employee welfare benefit plan" as defined in Section
3(1) of ERISA, (A) which CAMC Advisor or any ERISA Affiliate maintains,
administers, contributes to or is required to contribute to, or under which CAMC
Advisor or any ERISA Affiliate may incur any liability and (B) which covers any
CAMC Employee (with respect to his or her relationship with CAMC Advisor).
(b) Disclosure; Delivery of Copies of Relevant Documents and Other
Information. Section 5.7(b) of the CAMC Advisor Disclosure Schedule contains a
complete list of Employee Plans which cover or have covered CAMC Employees (with
respect to their relationship with CAMC Advisor). True and complete copies of
each of the following documents have been delivered to CWM REIT: (i) each
Welfare Plan, Pension Plan and Multiemployer Plan (and, if applicable, related
trust agreements, annuity contracts or other funding instruments) which covers
or has covered CAMC Employees (with respect to their relationship with CAMC
Advisor) and all amendments thereto, and all annuity contracts or other funding
instruments, (ii) each Benefit Arrangement which covers or has covered CAMC
Employees (with respect to their relationship with CAMC Advisor), (iii) the most
recent determination letter issued by the IRS, with respect to each Pension Plan
which covers or has covered CAMC Employees (with respect to their relationship
with CAMC Advisor) and any outstanding request for a determination letter, (iv)
any ruling letter or interpretive letter issued by the Department of Labor, the
IRS, or any other governmental agency with respect to each Employee Plan which
covers or has covered CAMC Employees (with respect to their relationship with
CAMC Advisor), (v) for the most recent plan year (or, in the case of a defined
benefit pension plan the two most recent plan years) annual reports on Form 5500
Series required to be filed with any governmental agency for each Pension Plan
which covers or has covered CAMC Employees (with respect to their relationship
with CAMC Advisor), (vi) all actuarial reports prepared for the last two plan
years for each Pension Plan which covers or has covered CAMC Employees (with
respect to their relationship with CAMC Advisor), (vii) a description of
complete age, salary, service and related data as of the last day of the last
plan year for CAMC Employees, and (viii) a description setting forth the amount
of any liability of CAMC Advisor as of the date of this Agreement for payments
more than thirty days past due with respect to each Welfare Plan which covers or
has covered CAMC Employees.
(c) Representations.
(i) All material Employee Plans are maintained and sponsored by CCR. CAMC
Advisor is not the sponsor of and does not maintain any material Employee Plan.
(ii) Pension Plans
(A) The funding method used in connection with each Pension Plan which is
subject to the minimum funding requirements of ERISA complies in all material
respects with applicable law and the actuarial
A-11
assumptions used in connection with funding each such plan are reasonable. No
"accumulated funding deficiency" (for which an excise tax is due or would be due
in the absence of a waiver) as defined in Section 412 of the Code or as defined
in Section 302(a)(2) of ERISA, whichever may apply, has been incurred with
respect to any Pension Plan with respect to any plan year, whether or not
waived. CAMC Advisor does not have any liability for past due contributions with
respect to any Pension Plan that has not been accrued for on the February 29
Balance Sheet and as of the date hereof.
(B) The CCR DB Plan (as defined in Section 8.15(a)) and the CCR 401(k) Plan
are each the subject of a favorable determination letter received from the IRS
with respect to their qualified status under the provisions of Code Section
401(a), and CCR is not aware of any circumstance that would adversely affect
that determination and which could not be corrected without material liability
to CAMC Advisor.
(C) Each of the plans described in paragraph (c) (ii) (B) above or Section
8.15(d) presently complies and has been maintained in all material respects in
compliance with its terms during the period from its adoption to date and, both
as to form and in operation, in all material respects with the requirements
prescribed by any and all statutes, orders, rules and regulations which are
applicable to such plans, including but not limited to ERISA and the Code.
(D) CAMC Advisor has paid all premiums (and interest charges and penalties
for late payment, if applicable) due the PBGC with respect to each Pension Plan
for each plan year thereof for which such premiums are required. There has been
no "reportable event" (as defined in Section 4043(b) of ERISA and the PBGC
regulations under such Section) with respect to any Pension Plan (other than
reportable events with respect to which the PBGC has waived the reporting
requirement). No proceeding has been commenced by the PBGC to terminate any
Pension Plan. No material liability to the PBGC has been incurred by CAMC
Advisor or any ERISA Affiliate on account of the termination of any Pension
Plan. Neither CAMC Advisor nor any ERISA Affiliate has, at any time, (x) ceased
operations at a facility so as to become subject to the provisions of Section
4068(f) of ERISA, (y) withdrawn as a substantial employer so as to become
subject to the provisions of Section 4063 of ERISA, or (z) ceased making
contributions on or before the Closing Date to any Pension Plan subject to
Section 4064(a) of ERISA to which CAMC Advisor or any ERISA Affiliate made
contributions during the five years prior to the Closing Date.
(iii) Multiemployer Plans. There are no Multiemployer Plans covering any
CAMC Employees. Neither CAMC Advisor nor any ERISA Affiliate has engaged in, or
is a successor or parent corporation to an entity that has engaged in, a
transaction described in Section 4212(c) of ERISA.
(iv) Welfare Plans.
(A) Each Welfare Plan which is maintained or sponsored by CAMC Advisor and
which covers or has covered CAMC Employees (with respect to their relationship
with CAMC Advisor) has been maintained in all material respects in compliance
with its terms and, both as to form and operation in all material respects, with
the requirements prescribed by any and all statutes, orders, rules and
regulations which are applicable to such Welfare Plan, including but not limited
to ERISA and the Code.
(B) Except as may be required by applicable law, CAMC Advisor has no
obligation to make any payment to or with respect to any CAMC Employee pursuant
to any retiree medical benefit plan, or other retiree Welfare Plan.
(C) Each Welfare Plan which covers or has covered CAMC Employees and which
is a "group health plan," as defined in Section 607(1) of ERISA, has been
operated in all material respects in compliance with provisions of Part 6 of
Title I of ERISA and Section 4980B of the Code at all times except where any
failure to comply would not result in material liability to CAMC Advisor.
(v) Benefit Arrangements. Each Benefit Arrangement which is sponsored or
maintained by CAMC Advisor and which covers or has covered CAMC Employees has
been maintained in compliance in all material respects with its terms and with
the requirements prescribed by any and all statutes, orders, rules and
regulations which are applicable to such Benefit Arrangement, including but not
limited to the Code.
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(vi) Payments. CAMC Advisor has made all contributions, paid all premiums
and satisfied all liabilities with respect to each Employee Plan which have
accrued and become due and payable.
(vii) Litigation. There is no action, order, writ, injunction, judgment or
decree outstanding or claim, suit, litigation, proceeding, arbitral action,
governmental audit or governmental investigation relating to or seeking benefits
under any Employee Plan that is pending or, to the knowledge of CAMC Advisor,
threatened or anticipated, against CAMC Advisor, CCR or, to the knowledge of
CAMC Advisor or CCR, any ERISA Affiliate or any Employee Plan that would result
in material liability to CAMC Advisor.
(viii) No Amendments. Except as may be required by law, neither CCR nor CAMC
Advisor has any announced plan or legally binding commitment to create any
additional Employee Plans which are intended to cover CAMC Employees (with
respect to their relationship with CAMC Advisor) or to amend or modify any
existing Employee Plan which covers or has covered CAMC Employees (with respect
to their relationship with CAMC Advisor), in either case in a manner that would
result in material liability to CAMC Advisor.
(ix) No Acceleration or Creation of Rights. Except as the parties may
otherwise provide pursuant to Section 8.15, neither the execution and delivery
of this Agreement by CAMC Advisor nor the consummation of the transactions
contemplated hereby will result in the acceleration or creation of any rights of
any person to benefits under any Pension Plan or Welfare Plan (including,
without limitation, the acceleration of the accrual or vesting of any benefits
under any Pension Plan or the acceleration or creation of any rights under any
severance, parachute or change in control agreement).
5.8 Taxes.
(a) Neither CAMC Advisor nor any consolidated or combined group of which it
is a member or required to be included as a member has filed a consent, binding
on CAMC Advisor, under Section 341(f) of the Code concerning collapsible
corporations.
(b) CAMC Advisor operates at least one significant historic business line,
or owns at least a significant portion of its historic business assets, in each
case within the meaning of Treasury Regulation Section 1.368-1(d).
(c) CAMC Advisor will not own as of the Effective Time any equity interest
or other security in another partnership, corporation or other entity or a fee
interest in less than 100% of any property (for example as a tenant-in-common),
unless such equity interest or other security (i) would be classified as cash or
a cash item within the meaning of Section 856(c)(5)(A) of the Code and does not
represent more than 10% of the voting securities of any issuer or (ii) is CWM
Common Stock.
(d) CAMC Advisor is not an "investment company" as defined in Section
368(a)(2)(F) of the Code and the regulations thereunder.
(e) The liabilities of CAMC Advisor to be assumed by CWM REIT in the
Merger, and the liabilities to which the assets of CAMC Advisor to be
transferred to CWM REIT in the Merger are subject, were incurred by CAMC Advisor
in the ordinary course of its business.
(f) CAMC Advisor is not under the jurisdiction of a court in a Title 11 or
similar case within the meaning of Section 368(a)(3)(A) of the Code.
(g) The fair market value of the assets of CAMC Advisor to be transferred
to CWM REIT in the Merger will equal or exceed the sum of the liabilities to be
assumed by CWM REIT plus the amount of liabilities, if any, to which the
transferred assets are subject.
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5.9 Intellectual Property. To the knowledge of CCR and CAMC Advisor, none
of
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the Intellectual Property Rights is subject to any lien, encumbrance or claim of
infringement (except liens and encumbrances in favor of the licensor,
sublicensor or other owner of such Intellectual Property Rights), nor requires
any consent, approval or waiver to be transferred to CWM REIT by way of the
Merger.
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5.10 No Material Adverse Change. Since August 31, 1996, there have not been
any changes in the business, operations, properties, assets or condition,
financial or otherwise, of CAMC Advisor that would, individually or in the
aggregate, have a Material Adverse Effect except for changes resulting from (i)
fees or other amounts earned by CAMC Advisor under the Management Agreement or
(ii) any transactions contemplated by this Agreement, including Section 8.8.
5.11 Financial Statements. CAMC Advisor has provided to CWM REIT true and
correct copies of its audited balance sheet as of February 29, 1996 and
unaudited balance sheets as of February 28, 1995 and November 30, 1996, and
related audited statements of income and cash flows for the year ended February
29, 1996 and unaudited statements of income and cash flows for the fiscal years
ended February 28, 1994 and February 28, 1995 and the nine-month period ended
November 30, 1996 (collectively, the "CAMC Advisor Financial Statements"). Each
of such balance sheets (including the related notes) presents fairly, in all
material respects, the financial position of CAMC Advisor as of the respective
dates thereof, and such related statements (including the related notes) present
fairly, in all material respects, the results of its operations and cash flows
for the respective periods or as of the respective dates set forth therein, all
in conformity with generally accepted accounting principles consistently applied
during the periods involved, except as otherwise noted in the auditors' report
or in the notes thereto, subject, in the case of interim financial statements,
to normal year-end adjustments.
5.12 Books and Records. (a) The books of account and other financial
records of CAMC Advisor are in all material respects true and correct.
(b) The minute books and other similar records of CAMC Advisor have been
made available to CWM REIT and contain in all material respects accurate records
of the minutes of all meetings and all corporate action taken by written consent
of the stockholders and Board of Directors of CAMC Advisor, in each case prior
to April 6, 1994.
5.13 Proxy Statement. None of the information supplied or to be supplied in
writing by CCR or CAMC Advisor for inclusion in the Proxy Statement will, at the
time of filing the Proxy Statement with the SEC, at the time of mailing the
Proxy Statement to the Stockholders of CWM REIT, at the time of the CWM REIT
Stockholders Meeting or at the Effective Time, contain any untrue statement of a
material fact or omit to state any material fact necessary in order to make the
statements therein, in light of the circumstances under which they are made, not
misleading.
5.14 Contracts and Leases. To the knowledge of CAMC Advisor, the letter
dated the date hereof from CWM REIT to CCR and CAMC Advisor contains an accurate
and complete listing of all material contracts, leases, agreements or
understandings, whether written or oral, of CAMC Advisor (the "Material
Agreements"). A contract, lease, agreement or understanding is "material" if it
involves (i) obligations (contingent or otherwise) of, or payments to, CAMC
Advisor in excess of $25,000 per annum, (ii) management or advisory agreements
providing for payments to or by CAMC Advisor in excess of $25,000 per annum, or
(iii) the license of any patent, copyright, trade secret or other proprietary
right (A) to CAMC Advisor which is necessary to carry on its business, other
than any software license or similar agreement which is generally available to
the public or businesses or (B) from CAMC Advisor which materially limits the
ability of CAMC Advisor to carry on its business. Neither CAMC Advisor nor, to
the knowledge of CAMC Advisor and CCR, any other party thereto has materially
breached any Material Agreement or is in material default thereunder, no event
has occurred which, with the passage of time or the giving of notice, or both,
would constitute such a material breach or material default by CAMC Advisor, or
to the knowledge of CAMC Advisor and CCR, any other party thereto, no claim of
material default thereunder has been asserted or threatened by CAMC Advisor
against any such party thereto or, to the knowledge of CAMC Advisor and CCR,
asserted or threatened against CAMC Advisor by any other party thereto, and
neither CAMC Advisor nor, to the knowledge of CAMC Advisor and CCR, any other
--------------------------------------------------------------------------------
party thereto is seeking the renegotiation thereof or substitute
performance thereunder.
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5.15 Real Property. CAMC Advisor does not own or lease (as lessee) and has
not at any time owned or leased, in whole or in part, any real property. A-14
ARTICLE 6
REPRESENTATIONS AND WARRANTIES REGARDING CCR
CCR hereby represents and warrants to CWM REIT that as of the date hereof:
6.1 Power and Authority. CCR has all requisite corporate power and authority,
as applicable, to enter into this Agreement, the Cooperation Agreement, and the
Registration Rights Agreement and to carry out the provisions hereof and thereof
and consummate the transactions contemplated hereby and thereby.
6.2 Agreement. CCR has taken all corporate action necessary to authorize
this Agreement, the Cooperation Agreement and the Registration Rights Agreement
and the consummation of the transactions contemplated hereby and thereby. This
Agreement has been duly executed and delivered by CCR and constitutes, and each
of the Registration Rights Agreement and Cooperation Agreement when duly
executed and delivered by a duly authorized officer of CCR will constitute, a
valid and binding agreement of CCR, enforceable against CCR in accordance with
its terms, except as may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium and other similar laws of general application that
may affect the enforcement of creditors' rights generally and by general
equitable principles and except to the extent that public policy considerations
may limit the enforcement of indemnification of obligations.
6.3 Foreign Person. CCR is a United States person within the meaning of
Section 7701(a) of the Code.
6.4 No Withholding. The transaction contemplated hereby is not, insofar as
concerns CCR, subject to the tax withholding provisions of Section 3406 of the
Code, or of Subchapter A of Chapter 3 of the Code or of any other provision of
law.
6.5 No Intention to Dispose. There is not, and as of the date of the Merger
will not be, any plan or intention by CCR to sell, exchange, or otherwise
dispose of the shares of CWM REIT that CCR receives in the Merger such that the
value of its stock interest in CWM REIT would be reduced to an amount less than
50% of CAMC Advisor's value as of the date of the Merger.
6.6 Brokers and Finders. Neither CCR nor CAMC Advisor has entered into any
contract, arrangement or understanding with any person or firm which may result
in the obligation of CAMC Advisor or CWM REIT to pay any investment banking
fees, finder's fees, brokerage or agent's commissions or other like payments in
connection with the negotiations leading to this Agreement or the consummation
of the transactions contemplated hereby. The fees and expenses paid or payable
to Xxxxxxx Xxxxx and any claims by Xxxxxxx Xxxxx arising in connection therewith
are the sole obligation of CCR.
6.7 Securities Act Representations.
(a) CCR represents that it understands that the CWM Common Stock to be
issued and delivered to it at Closing pursuant to this Agreement will not have
been registered pursuant to the registration requirements of the Securities Act
and that the resale of all shares of CWM Common Stock is subject to Rule 144 of
the rules and regulations thereunder or registration under the Securities Act.
CCR represents that it is acquiring the CWM Common Stock for its own account,
not as a nominee or agent, and not with a view to the distribution thereof in
violation of applicable securities laws. CCR further represents that it has been
advised and understands that since the CWM Common Stock has not been registered
under the Securities Act, the CWM Common Stock must be held indefinitely unless
(A) the distribution of the CWM Common Stock has been registered under the
Securities Act, (B) a sale of the CWM Common Stock is made in conformity with
the holding period, volume and other limitations of Rule 144 promulgated by the
SEC under the Securities Act, or (C) in the opinion of counsel reasonably
acceptable to CWM REIT, some other exemption from
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registration is available with respect to any proposed sale, transfer or other
disposition of the CWM Common Stock.
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(b) CCR represents that it has been advised and understands that, subject
to applicable securities laws, stop transfer instructions will be given to CWM
REIT's transfer agents with respect to the CWM Common Stock
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constituting the Share Consideration and that a legend setting forth the
following restrictions on transfer will be set forth on the certificates for the
CWM Common Stock issuable under Article 4, or any substitutions therefor:
"THE SHARES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933 (THE 'ACT'), AS AMENDED, OR UNDER THE SECURITIES LAWS OF
ANY STATE. NEITHER THE SHARES EVIDENCED BY THIS CERTIFICATE NOR ANY INTEREST
THEREIN MAY BE SOLD OR OTHERWISE PLEDGED, HYPOTHECATED OR TRANSFERRED IN THE
ABSENCE OF (i) REGISTRATION UNDER THE ACT AND ANY APPLICABLE STATE SECURITIES OR
BLUE SKY LAWS OR (ii) A VALID EXEMPTION THEREFROM."
(c) CCR represents that it has such knowledge and experience in financial
and business affairs that it is capable of evaluating, alone, the merits and
risks of an investment in CWM REIT. CCR represents that it has received and
reviewed copies of (i) the most recent annual report on Form 10-K, (ii) the
three most recent quarterly reports on Form 10-Q, (iii) any current reports on
Form 8-K since December 31, 1995, in each case as filed by CWM REIT under the
Exchange Act, and (iv) the most recent annual report to stockholders of CWM
REIT. CCR represents that it has had an opportunity to ask questions and receive
answers concerning the terms of this Agreement, the Cooperation Agreement and
the Registration Rights Agreement and the foregoing information provided by CWM
REIT and to obtain any other information from CWM REIT as CCR deems necessary or
appropriate in connection with evaluating the merits of an investment in CWM
REIT.
ARTICLE 7
REPRESENTATIONS AND WARRANTIES OF
CWM REIT CWM REIT herein represents and warrants
to CAMC Advisor and CCR that as of
the date hereof:
7.1 Organization, Etc. of CWM REIT. CWM REIT is a corporation duly
incorporated, validly existing and in good standing under the laws of the State
of Delaware and has all requisite corporate power and authority to own, lease
and operate its properties, to carry on its business as now conducted and
proposed by CWM REIT to be conducted, to enter into this Agreement, the
Cooperation Agreement and the Registration Rights Agreement and to carry out the
provisions thereof and consummate the transactions contemplated hereby and
thereby. CWM REIT is duly qualified 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 necessary, except where the failure to
be so qualified or in good standing has not had or would not have a Material
Adverse Effect on CWM REIT and its Subsidiaries taken as a whole. True and
correct copies of CWM REIT's Certificate of Incorporation and Bylaws have been
made available to CAMC Advisor.
7.2 Capital Stock. The authorized capital stock of CWM REIT consists of
100,000,000 shares of CWM Common Stock, of which 50,200,176 shares are
outstanding as of December 31, 1996. Since December 31, 1996, CWM REIT has not
issued any shares of capital stock except pursuant to the exercise of options to
purchase shares of CWM Common Stock outstanding on such date or pursuant to CWM
REIT's dividend reinvestment plan. All outstanding shares of CWM Common Stock
are, and all shares of CWM Common Stock issuable under stock option plans of CWM
REIT, pursuant to CWM REIT's dividend reinvestment plan or pursuant to the
Special Purchase Rights will be when issued in accordance with the terms
thereof, duly authorized, validly issued, fully paid and nonassessable. Except
for the 3,869,353 shares of CWM Common Stock reserved for issuance pursuant to
stock option plans of CWM REIT, CWM REIT's dividend reinvestment plan or for
purposes of the Special Purchase Rights, there are outstanding on the date
hereof no options, warrants, calls, rights, commitments or any other agreements
of any character to which CWM REIT is a party or by which it may be bound,
requiring it to issue, transfer, sell, purchase, register, redeem or acquire any
shares of capital stock or any securities or rights convertible into,
exchangeable for or evidencing the right to subscribe for or acquire any shares
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of its capital stock.
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7.3 Agreement. This Agreement, the Cooperation Agreement and the
Registration Rights Agreement and the consummation of the transactions
contemplated hereby and thereby have been approved by the Board of Directors of
CWM REIT and have been duly authorized by all other necessary corporate action
on the part of CWM REIT (except for the approval of CWM REIT's stockholders
contemplated by Section 8.4), including without limitation, the approval of the
Special Committee. This Agreement has been duly executed and delivered by a duly
authorized officer of CWM REIT and, subject to CWM REIT stockholder approval,
constitutes, and each of the Cooperation Agreement and the Registration Rights
Agreement when duly executed and delivered by a duly authorized officer of CWM
REIT will constitute, valid and binding agreements of CWM REIT, enforceable
against CWM REIT in accordance with their terms, except as may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium and other similar
laws of general application that may affect the enforcement of creditors' rights
generally and by general equitable principles and except to the extent that
public policy considerations may limit the enforcement of indemnification of
obligations. CWM REIT has delivered to CAMC Advisor true and correct copies of
resolutions adopted by the Board of Directors of CWM REIT approving this
Agreement and the transactions contemplated hereby and, prior to the Closing
Date, will deliver to CAMC Advisor true and correct copies of resolutions
adopted by the stockholders of CWM REIT approving this Agreement and the
transactions contemplated hereby.
7.4 Authorization for CWM Common Stock. The Share Consideration will, when
issued, be duly authorized, validly issued, fully paid and nonassessable, and no
stockholder of CWM REIT will have any preemptive right or similar rights of
subscription or purchase in respect thereof. The Share Consideration will,
subject to the accuracy of CCR's representations in Section 6.7 hereof, be
exempt from registration under the Securities Act and will be registered or
exempt from registration under all applicable state securities laws.
7.5 Brokers and Finders. Except for the fees and expenses paid to Xxxx
Xxxxxx with respect to the delivery of a fairness opinion to the Special
Committee and as financial advisor to the Special Committee, which fees are
reflected in its agreement with the Special Committee and CWM REIT (a copy of
which has been delivered to CAMC Advisor), CWM REIT has not entered into any
contract, arrangement or understanding with any person or firm that may result
in the obligation of CCR or CAMC Advisor to pay any finder's fees, brokerage or
agent's commissions or other like payments in connection with the negotiations
leading to this Agreement or the consummation of the transactions contemplated
hereby. Except for the fees and expenses paid to Xxxx Xxxxxx by CWM REIT, there
is no claim for payment by CWM REIT of any investment banking fees, finder's
fees, brokerage or agent's commissions or other like payments in connection with
the negotiations leading to this Agreement or the consummation of the
transactions contemplated hereby. The fees and expenses paid or payable to Xxxx
Xxxxxx and any claims by Xxxx Xxxxxx arising in connection therewith are the
sole obligation of CWM REIT.
7.6 SEC Reports and Financial Statements.
(a) CWM REIT has timely filed with the SEC all reports, definitive proxy
statements or other documents required to be filed by CWM REIT with the SEC
under Section 13(a), 14 or 15(d) of the Exchange Act since January 1, 1996
(collectively, and in each case including all exhibits and schedules thereto and
all documents incorporated by reference therein, the "SEC Reports"). As of their
respective dates, the SEC Reports complied in all material respects with the
requirements of the Exchange Act and the rules and regulations of the SEC
promulgated thereunder applicable, as the case may be, to such SEC Reports, and
none of the SEC Reports contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary to
make the statements made therein, in light of the circumstances under which they
were made, not misleading.
(b) The consolidated balance sheets as of December 31, 1995 and December 31,
1994 and the related consolidated statements of earnings, shareholders' equity
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and cash flows for each of the three years in the period ended December 31, 1995
(including the related notes and schedules thereto) of CWM REIT contained in its
Form 10-K for the year ended December 31, 1995 included in the SEC Reports
complied in all material respects with applicable accounting requirements and
the published rules and regulations of the SEC with respect thereto
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and present fairly, in all material respects, the consolidated financial
position, results of operations and cash flows of CWM REIT, its consolidated
subsidiaries and Indy Mac as of the dates or for the periods presented therein
in conformity with generally accepted accounting principles consistently applied
during the periods involved, except as otherwise noted in the auditors' report
or in the notes thereto.
(c) The consolidated balance sheets and the related statements of earnings
and cash flows (including the related notes thereto) of CWM REIT contained in
its Forms 10-Q for the periods ended September 30, 1996, June 30, 1996 and March
31, 1996 included in the SEC Reports (collectively, the "Quarterly Financial
Statements") have been prepared in accordance with the requirements for interim
financial statements contained in Regulation S-X. The Quarterly Financial
Statements present fairly, in all material respects, the consolidated financial
position, results of operations and cash flows of CWM REIT, its consolidated
subsidiaries and Indy Mac as of the dates or for the periods presented therein
in conformity with GAAP consistently applied during the periods involved except
as otherwise noted in the notes thereto, and reflect all adjustments, which
include only normal recurring adjustments, necessary to such fair presentation.
(d) Since September 30, 1996, there have not been any changes in the
business, operations, properties, assets or conditions, financial or otherwise,
of CWM REIT that would, individually or in the aggregate, have a Material
Adverse Effect on CWM REIT.
7.7 Information. The Proxy Statement will not at the time filed with the
SEC, at the time of mailing the Proxy Statement to the stockholders of CWM REIT,
at the time of the CWM REIT Stockholders Meeting or at the Effective Time
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
made therein, in light of the circumstances under which they were made, not
misleading, except that no representation is made by CWM with respect to
statements made therein based on information supplied by CCR or CAMC Advisor in
writing for inclusion in the Proxy Statement. The Proxy Statement will comply as
to form in all material respects with the provisions of the Exchange Act and the
rules and regulations promulgated thereunder.
7.8 Books and Records.
(a) The books of account and the financial records of CWM REIT are in all
material respects true and correct.
(b) The minute books and other similar records of CWM REIT have been made
available to CCR and CAMC Advisor and contain in all material respects accurate
records of the minutes of all meetings and all corporate action taken by written
consent of the stockholders and Board of Directors of CWM REIT, in each case on
and after April 6, 1994.
7.9 Litigation. There are no actions, suits, investigations or legal
proceedings, pending or, to the knowledge of CWM REIT, threatened against CWM
REIT or any property of CWM REIT in any court or before any arbitrator of any
kind or before or by any Governmental Body or before any arbitrator of any kind
except for such actions, suits, investigations or legal proceedings that would
not have a Material Adverse Effect on CWM REIT. CWM REIT is not in default with
respect to any judgment, order, writ, injunction or decree of any arbitrator,
court or Governmental Body, and there are no unsatisfied judgments against CWM
REIT except for such defaults or unsatisfied judgments as would not have a
Material Adverse Effect on CWM REIT.
7.10 General.
(a) CWM REIT has no plan or intention to reacquire any of its stock issued
in the Merger.
(b) CWM REIT has no plan or intention to sell or otherwise dispose of any of
the assets of CAMC Advisor acquired in the Merger, except for dispositions made
in the ordinary course of business.
(c) CWM REIT has made or will make a valid and effective election under
Notice 88-19, 1988-1 C.B. 486, to be subject to rules similar to those set forth
in Section 1374 of the Code with respect to assets acquired from CAMC Advisor in
connection with the Merger.
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ARTICLE 8
COVENANTS OF THE PARTIES
8.1 Maintenance of Business, Prohibited Acts. During the period from the
date of this Agreement to the Effective Time, CCR will not, and will not cause
CAMC Advisor to, take any action that adversely affects the ability of CAMC
Advisor (i) to pursue its business in the ordinary course, (ii) to seek to
preserve intact its current business organization, (iii) to keep available the
service of its current officers and employees and (iv) preserve its
relationships with customers, suppliers and others having business dealings with
it; and CCR will not allow CAMC Advisor to, without CWM REIT's prior written
consent:
(a) issue, deliver, sell, dispose of, pledge or otherwise encumber, or
authorize or propose the issuance, delivery, sale, disposition or pledge or
other encumbrances of (i) any additional shares of its capital stock of any
class (including the CAMC Shares), or any securities or rights convertible into,
exchangeable for or evidencing the right to subscribe for any shares of its
capital stock, or any rights, warrants, options, calls, commitments or any other
agreements of any character to purchase or acquire any shares of its capital
stock or any securities or rights convertible into, exchangeable for or
evidencing the right to subscribe for any shares of its capital stock, or (ii)
any other securities in respect of, in lieu of or in substitution for CAMC
Shares outstanding on the date hereof;
(b) redeem, purchase or otherwise acquire, or propose to redeem, purchase
or otherwise acquire, any of its outstanding securities (including the CAMC
Shares);
(c) split, combine, subdivide or reclassify any shares of its capital stock
or otherwise make any payments to CCR in its capacity as sole stockholder;
provided, however, that nothing shall prohibit: (i) the payment of any ordinary
distribution or dividend in respect of its capital stock at such times and in
such manner and amount as may be consistent with CAMC Advisor's past practice
(which in any event shall include any and all compensation paid or payable or
expenses reimbursed or reimbursable for the period from January 1, 1996 through
the Effective Time, to the extent not otherwise paid or distributed to CCR),
(ii) the payment of any dividend as shall be required to be paid by CAMC Advisor
in order to permit Price Waterhouse LLP to issue the letter required by Section
9.3(e), (iii) any distribution of property necessary for the representation and
warranty set forth in Section 5.8(c) to be true and correct or (iv) the
distributions referred to in Section 8.24.
(d) (i) grant any increases in the compensation of any of its directors,
officers or employees, except in the ordinary course of business consistent with
past practice (except within the parameters noted in Section 5.6 of the CAMC
Advisor Disclosure Schedule or as approved by the Special Committee), (ii) pay
or agree to pay any pension retirement allowance or other employee benefit not
required or contemplated by any Employee Plan or Benefit Arrangement as in
effect on the date hereof to any such director, officer or employee, whether
past or present, (iii) enter into any new or amend any existing employment or
severance agreement with any such director, officer or employee, except as
approved by CWM REIT in its sole discretion, (iv) pay or agree to pay any bonus
to any director, officer or employee (whether in the form of cash, capital stock
or otherwise) except as approved by the Special Committee, or (v) except as may
be required to comply with applicable law, amend any existing, or become
obligated under any new Employee Plan or Benefit Arrangement, except in the case
of (i) through (v), inclusive, under and pursuant to the employment agreement
referred to in Section 9.1(g);
(e) adopt a plan of complete or partial liquidation, dissolution, merger,
consolidation, restructuring, recapitalization or other reorganization (other
than the Merger);
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(f) make any acquisition, by means of merger, consolidation or otherwise, of
any direct or indirect ownership interest in or assets comprising any business
enterprise or operation;
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(g) adopt any amendments to its Certificate of Incorporation or Bylaws;
(h) incur any indebtedness for borrowed money or guarantee such
indebtedness or agree to become contingently liable, by guaranty or otherwise,
for the obligations or indebtedness of any other person or
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make any loans, advances or capital contributions to, or investments in, any
other corporation, any partnership or other legal entity or to any other
persons, except for bank deposits and other investments in marketable securities
and cash equivalents made in the ordinary course of its business;
(i) engage in the conduct of any business the nature of which is materially
different from the business in which CAMC Advisor is currently engaged;
(j) enter into any agreement providing for acceleration of payment or
performance or other consequence as a result of a change of control of CAMC
Advisor except under the employment agreement referred to in Section 9.1(g);
(k) enter into any contract, arrangement or understanding requiring the
purchase of equipment, materials, supplies or services over a period greater
than 12 months which is not cancelable without penalty on 30 or fewer days'
notice, except in the ordinary course of business;
(l) forgive any indebtedness owed to CAMC Advisor or convert or contribute
by way of capital contribution any such indebtedness owed;
(m) authorize or enter into any agreement providing for management services
to be provided by CAMC Advisor to any third-party or an increase in management
fees paid by any third-party under existing management agreements;
(n) mortgage, pledge, encumber, sell, lease or transfer any material assets
of CAMC Advisor except with the prior written consent of CWM REIT or as
contemplated by this Agreement;
(o) authorize or announce an intention to do any of the foregoing, or
entering any contract, agreement, commitment or arrangement to do any of the
foregoing; or
(p) perform any act or omit to take any action that would make any of the
representations made above inaccurate or materially misleading as of the
Effective Time.
8.2 Officers and Employees. Each of CAMC Advisor and CCR severally agree
that prior to the Effective Time it will use its reasonable efforts to encourage
the officers and employees of CAMC Advisor, to the extent they are in good
standing, to become employees of CWM REIT or Indy Mac, as determined by CWM REIT
in its sole discretion.
8.3 Significant Business Line. Except for the management of Indy Mac's
business, for a period of at least one year following the Effective Time, CWM
REIT shall continue the historic business that was managed by CAMC Advisor prior
to the Merger and shall use a significant portion of the business assets of CAMC
Advisor that are received by CWM REIT in the Merger in CWM REIT's historic
business.
8.4 Meeting of Stockholders. CWM REIT will take all action necessary in
accordance with applicable law and CWM REIT's Certificate of Incorporation and
Bylaws to arrange for its stockholders to consider and vote upon the approval of
the Merger and the issuance of shares of CWM Common Stock in the Merger at the
annual or special stockholders' meeting (the "CWM REIT Stockholders Meeting") to
be held in connection with the transactions contemplated by this Agreement.
Subject to the fiduciary duties of CWM REIT's Board of Directors under
applicable law as advised by counsel, the Board of Directors of CWM REIT shall
recommend and declare advisable such approval and CWM REIT shall take all lawful
action to solicit, and use all reasonable efforts to obtain, such approval,
including, without limitation, the inclusion of the recommendation of the CWM
REIT Board of Directors and of the Special Committee in the Proxy Statement that
the stockholders of CWM REIT vote in favor of the approval of the Merger and the
adoption of this Agreement.
8.5 Proxy Materials. After the date hereof, CWM REIT shall promptly
prepare,
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and CAMC Advisor and CCR shall cooperate in the preparation of, and CWM
REIT shall file with the SEC as soon as practicable a proxy statement and a form
of proxy, in connection with the vote of CWM REIT's stockholders with respect to
the Merger (such proxy statement, together with any amendments thereof or
supplements thereto, in each case in the form or forms mailed to CWM REIT's
stockholders, is herein called the "Proxy Statement"). CWM REIT will
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use all reasonable efforts to cause the Proxy Statement to be mailed to
stockholders of CWM REIT at the earliest practicable date as permitted by the
SEC and will take all such action as may be necessary to qualify the Share
Consideration for offering and sale under state securities or blue sky laws. If
at any time prior to the Effective Time any event relating to or affecting CAMC
Advisor, CCR or CWM REIT shall occur as a result of which it is necessary, in
the opinion of counsel for CAMC Advisor and CCR or of counsel for CWM REIT, to
supplement or amend the Proxy Statement in order to make such document not
misleading in light of the circumstances existing at the time approval of the
stockholders of CWM REIT is sought, CAMC Advisor, CCR and CWM REIT,
respectively, will notify the others thereof and, in the case of CAMC Advisor or
CCR, it will cooperate with CWM REIT in preparing, and, in the case of CWM REIT,
it will prepare and file, an amendment or supplement with the SEC and, if
required by law or Exchange rule, applicable state securities authorities and
each Exchange such that such document, as so supplemented or amended, will not
contain any untrue statement of a material fact or omit to state any material
fact necessary in order to make the statements therein, in light of the
circumstances existing at such time, not misleading, and CWM REIT will, as
required by law, disseminate to its stockholders such amendment or supplement.
8.6 Filings, Other Action. CAMC Advisor, CCR and CWM REIT shall: (a) to the
extent required, promptly make all filings and thereafter make any other
required submissions under the HSR Act with respect to the Merger; (b) use all
reasonable efforts to cooperate with one another to (i) determine which
Authorizations are required to be made or obtained prior to the Effective Time
in connection with the execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby and (ii) timely make and
seek all such Authorizations; (c) use all reasonable efforts to obtain in
writing any consents required from third parties in form reasonably satisfactory
to CWM REIT and CCR necessary to effectuate the Merger; (d) use all reasonable
efforts to promptly take, or cause to be taken, all other actions and do, or
cause to be done, all other things necessary, proper or appropriate to satisfy
the conditions set forth in Article 9 and to consummate and make effective the
transactions contemplated by this Agreement on the terms and conditions set
forth herein as soon as practicable (including seeking to remove promptly any
injunction or other legal barrier that may prevent such consummation); and (e)
not take any action which might reasonably be expected to impair the ability of
the parties to consummate the Merger at the earliest possible time.
8.7 Access to Information. (a) From the date hereof until the Effective
Time, CAMC Advisor and CCR (i) will give CWM REIT, its counsel, financial
advisors, auditors and other authorized representatives full access to the
offices, properties, books and records of CAMC Advisor during reasonable
business hours, (ii) will furnish copies to CWM REIT, its counsel, financial
advisors, auditors and other authorized representatives such financial and
operating data and other information as such persons may reasonably request, and
which is in the possession of or can be obtained by CAMC Advisor or CCR without
undue expense and (iii) will instruct CAMC Advisor's or CCR'S, as the case may
be, employees, counsel and financial advisors to cooperate with CWM REIT in its
investigation of the business of CAMC Advisor.
(b) From the date hereof until the Effective Time, CWM REIT (i) will give
CCR, its counsel, financial advisors, auditors and other authorized
representatives full access to the offices, properties, books and records of CWM
REIT during reasonable business hours, (ii) will furnish copies to CCR, its
counsel, financial advisors, auditors and other authorized representatives such
financial and operating data and other information as such persons may
reasonably request, and which is in the possession of or can be obtained by CWM
REIT without undue expense, and (iii) will instruct CWM REIT's employees,
counsel and financial advisors to cooperate with CCR in its investigation of the
business of CWM REIT.
8.8 Management Fee Adjustment. CWM REIT shall pay to CAMC Advisor all fees
accrued and unpaid and reimbursable expenses payable to CAMC Advisor under the
Management Agreement in respect of periods up to the Effective Time (as if the
Management Agreement had been terminated as of the Effective Time and payment
was to be made under Section 17 thereof, without giving effect for such purposes
to Section 10(d) of the Management Agreement); provided that, in the event that
the Effective Time occurs prior to the record date for the regular quarterly
dividend of CWM REIT in respect of the quarter in which the Effective Time
occurs, CAMC Advisor hereby irrevocably waives that portion of CAMC Advisor's
compensation attributable to the
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incentive fee under Section 10(c) of the Management Agreement for the quarterly
period during which the Effective Time occurs.
8.9 Intellectual Property Rights. Prior to the Closing, CAMC Advisor shall
use all reasonable efforts to cooperate with CWM REIT in obtaining all
assignments or other consents necessary with respect to the Intellectual
Property Rights, to the extent not already owned by CAMC Advisor, including all
interests that may hereafter become Intellectual Property Rights prior to
Closing. CCR acknowledges that upon Closing, it will have no right, title or
interest in or to the names "Indy Mac" and "Independent National Mortgage
Corporation" (including derivations and abbreviations thereof).
8.10 Tax Matters.
(a) Each of CCR, CAMC Advisor and CWM REIT agrees to report the Merger on
all Tax Returns and, if applicable, other filings as a reorganization under
Section 368(a) of the Code to the extent permitted by law.
(b) CCR shall prepare or cause to be prepared and filed on behalf of CAMC
Advisor, at its sole cost and expense, any federal, state, and local Tax Returns
required to be filed with respect to any short taxable year of CAMC Advisor
ending as of the Closing Date.
(c) If the U.S. Internal Revenue Service (the "IRS") or any other taxing
authority initiates an audit or examination of any Tax Return of CAMC Advisor or
any consolidated or combined group of which it was a member or required to be
included as a member (a "Tax Matter"), CCR shall-
(i) promptly, but not less frequently than quarterly, provide CWM REIT with
a summary of each issue raised in each unresolved Tax Matter, and if in the
course of reviewing such Tax Matters CCR becomes aware that such Tax Matters
could affect the amount of the current or accumulated earnings and profits of
CAMC Advisor as of the close of business on the date of the Effective Time, CCR
shall so advise CWM
(ii) as requested by CWM REIT, provide additional information sufficient (A)
to inform CWM REIT as to the nature of each such issue, and (B) to permit CWM
REIT to exercise its rights described in this Section 8.10(c);
(iii) keep CWM REIT regularly and promptly advised of the course of each
such issue which has been reasonably determined by CWM REIT to be a CAMC Tax
Issue (as defined below in this Section) pursuant to the procedure described in
this Section 8.10(c);
(iv) provide CWM REIT (not later than 10 Business Days prior to the
anticipated date of delivery or filing, or promptly after receipt as applicable)
with a copy of all pleadings or other documents to be delivered to, received
from, or filed with, any court or other tribunal, the IRS or other taxing
authority with respect to (A) any CAMC Tax Issue (which may be redacted to
eliminate all information not germane to any CAMC Tax Issue), and (B) any Tax
Matter which had not previously been summarized for CWM REIT or with respect to
which CWM REIT had requested and not received additional information (excluding
from clause (B) documents or pleadings not filed by or on behalf of CCR or any
consolidated or combined group of which it is a member);
(v) cooperate with CWM REIT and its counsel, accountants and other advisors
in connection with each such CAMC Tax Issue;
(vi) in connection with each such CAMC Tax Issue, not submit to the IRS, any
taxing authority or any court or other tribunal any pleading or other document
without the written consent of CWM REIT (provided, however, that CWM REIT (A)
shall be deemed to so consent if it has not communicated written notice of its
non-consent to CCR before the close of business on the 10th business day
following its receipt of such pleading or other document and (B) shall so
consent unless it reasonably determines that any position taken in such
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pleading or other document, if accepted, could jeopardize CWM REIT's status as a
real estate investment trust under the Code. The determination of CWM REIT that
a position taken in a pleading or other document could jeopardize its status as
a real estate investment trust shall be deemed
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reasonable for this purpose if such determination is based on the advice of its
counsel or accountants, which advice shall be presented to CCR in writing within
five Business Days after CWM REIT communicates its notice of non-consent to CCR
(or such earlier time not sooner than the second Business Day thereafter as CCR
shall reasonably determine to be necessary) unless CCR agrees to waive its right
to see such advice in writing, to the effect that the position taken, if
accepted, would give the IRS a reasonable basis for asserting that CWM REIT
failed to continue to qualify as a real estate investment trust under the Code
as a consequence of its acquisition of CAMC Advisor; and
(vii) not settle, compromise or consent to the entry of any order, decree
or judgment with respect to any CAMC Tax Issue or fail to pursue an available
appeal of any such CAMC Tax Issue (a "Resolution") without the written consent
of CWM REIT (provided, however, that CWM REIT (A) shall be deemed to so consent
if it has not communicated written notice of its non-consent to CCR before the
close of business on the 10th business day following its receipt of notice of
such proposed settlement, compromise or consent and (B) shall so consent unless
it reasonably determines that such Resolution would jeopardize CWM REIT's status
as a real estate investment trust under the Code. The determination of CWM REIT
that a Resolution would jeopardize its status as a real estate investment trust
shall be deemed reasonable for this purpose if such determination is based on
the advice of its counsel or accountants, which advice shall be delivered to CCR
in writing within five Business Days after CWM REIT communicates its notice of
non-consent to CCR (or such earlier time not sooner than the second Business Day
thereafter as CCR shall reasonably determine to be necessary) unless CCR agrees
to waive its right to see such advice in writing, to the effect that the
Resolution would give the IRS a reasonable basis for asserting that CWM REIT
failed to continue to qualify as a real estate investment trust under the Code
as a consequence of its acquisition of CAMC Advisor.
An issue raised in a Tax Matter shall be identified as a "CAMC Tax Issue" if CWM
REIT communicates written notice to CCR that it has determined, with respect to
a particular issue, that it is possible that the resolution of such issue could
jeopardize its status as a real estate investment trust under the Code. The
determination of CWM REIT that a possible resolution of a Tax Matter could
jeopardize its status as a real estate investment trust shall be deemed
reasonable for this purpose if such determination is based on the advice of its
counsel or accountants, which advice shall be delivered to CCR in writing within
five Business Days after CWM REIT communicates its determination to CCR (or such
earlier time not sooner than the second Business Day thereafter as CCR shall
reasonably determine to be necessary) unless CCR agrees to waive its right to
see such advice in writing, to the effect that a possible resolution, would give
the IRS a reasonable basis for asserting that CWM REIT failed to continue to
qualify as a real estate investment trust under the Code as a consequence of its
acquisition of CAMC Advisor. In any such CAMC Tax Issue, CWM REIT may at its
expense engage counsel, accountants, or other advisors. Any CCR tax or financial
information revealed to CWM REIT, its employees or any of its advisors in
connection with matters described in this Section 8.10(c) shall be treated as
strictly confidential by CWM REIT, its employees and such advisors.
(d) Any refunds or credits of Taxes (including any interest thereon) due to
or on behalf of CAMC Advisor received by or credited to CWM REIT shall be for
the benefit of CCR, and CWM REIT shall use its best efforts to obtain any such
refunds and shall pay over to CCR any such refunds immediately upon receipt
thereof.
(e) After the Effective Time, CWM REIT shall make available to CCR, as
reasonably requested, all information, records or documents relating to tax
liabilities or potential tax liabilities of CAMC Advisor and shall preserve all
such information, records and documents until the expiration of any applicable
statute of limitations or extensions thereof. CWM REIT shall prepare and provide
to CCR such federal, state, local and foreign tax information packages as CCR
shall request for the use of CCR in preparing any Tax Return that relates to
CAMC Advisor. Such tax information packages shall be completed by
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CWM REIT and provided to CCR within 45 days after CCR's request therefor.
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(f) Other than pursuant to this Agreement, CWM REIT shall have no rights or
obligations under any tax sharing agreement among CAMC Advisor and CCR and/or
any of its affiliates.
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(g) CAMC Advisor and CCR shall make available, or shall cause to be made
available to Price Waterhouse LLP or the CWM REIT E&P Committee, on a strictly
confidential basis, as reasonably requested by Price Waterhouse LLP or the CWM
REIT E&P Committee, all information, records or documents of CAMC Advisor, or of
any consolidated or combined group of which CAMC Advisor was a member, which (i)
is reasonably available to CCR, and (ii) Price Waterhouse LLP or the CWM REIT
E&P Committee reasonably deems relevant to the preparation and delivery (by
Price Waterhouse LLP) or review (by the CWM REIT E&P Committee) of the written
comfort described in Section 9.3(e).
8.11 Covenant Not to Compete, Continuing Arrangements Etc.
(a) During the two-year period commencing on the Closing Date, CCR will not,
without the written prior consent of CWM REIT, form, manage, sponsor or own any
interest in, or in any other manner directly or indirectly including through any
other Person participate in, a real estate investment trust (the parties hereto
acknowledge and agree that the foregoing covenant is provided in connection with
the Merger and the issuance of the CWM Common Stock and is intended to preserve
the value of the goodwill and other intangible assets being acquired by CWM REIT
in the Merger).
(b) During the four-year period commencing on the Closing Date, (i) CCR will
not employ, seek to employ, recruit, hire, or otherwise retain the services of
any employee of CWM REIT without having obtained prior approval of CWM's Board
of Directors, and (ii) CWM REIT will not employ, seek to employ, recruit, hire
or otherwise retain the services of any employee of CCR without prior approval
of the Chairman, Vice Chairman or a Senior Managing Director of
(c) As long as CCR beneficially owns more than 5.0% of the issued and
outstanding Common Stock of CWM REIT, or any director, officer or other employee
or designee of CCR is also a member of the Board of Directors of CWM REIT, CCR
will continue to make available to Indy Mac the CWMBS, Inc. REMIC shelf
registration statement on a basis, and at a cost, substantially consistent with
past practices.
(d) As long as CCR beneficially owns more than 5.0% of the issued and
outstanding Common Stock of CWM REIT, (i) if either of Messrs. Xxxxx X. Xxxx or
Xxxxxx X. Xxxxxx shall not be serving as a director of CWM REIT, CWM REIT shall
cause one other person designated by CCR to be nominated to serve as a member of
CWM REIT's Board of Directors in lieu of Xx. Xxxx or Mr. Mozilo, as the case may
be, and (ii) if neither Xx. Xxxx nor Xx. Xxxxxx is serving as a director of CWM
REIT, CWM REIT shall cause one person designated by CCR to be nominated to serve
as a member of CWM REIT's Board of Directors; provided, however, that no person
shall be nominated to serve as a director of CWM REIT pursuant to this Section
8.11(d) whose nomination to or service on CWM REIT's Board of Directors would
require disclosure pursuant to Item 401(f) of Regulation S-K under the
Securities Act.
(e) At the Effective Time, CCR shall cause the Certificate of Indy Mac to be
amended (the "Indy Mac Charter Amendment") to the effect that if (i) CCR shall
cease to beneficially own more than 5.0% of the issued and outstanding Common
Stock of CWM REIT, (ii) neither Xx. Xxxx nor Xx. Xxxxxx is a director of CWM
REIT, or (iii) there shall occur a Change of Control, CWM REIT shall be
entitled, in its sole discretion, to compel the dissolution of Indy Mac and to
receive in the related distribution all assets thereof other than an amount of
cash, which shall be payable to CCR or its assignee, equal to three percent (3%)
of the book value of Indy Mac (with each share of capital stock of Indy Mac,
whether common, preferred or other, representing an equal economic interest
without regard to any control premium) unless CCR, in its sole discretion, shall
request an independent appraisal thereof and an appraiser mutually acceptable to
CWM REIT and CCR determines that one percent (1%) of the fair market value of
Indy Mac's assets either exceeds or is less than three percent (3%) of Indy
Mac's book value, in which event CCR or its assignee shall receive such higher
or lower value, as the case may be. The cost of such appraisal shall be borne by
CCR. Additionally, the Indy Mac Charter Amendment
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shall prohibit the holder or holders of Indy Mac common stock, or any
security into which it may be converted or for which it may be exchanged, from
causing any assets, whether tangible or intangible, of Indy Mac to be used for
any purpose other than in furtherance of Indy Mac's business.
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(f) In the event CWM REIT (i) establishes or acquires a majority ownership
interest in an entity the business activities of which are substantially the
same as all of the business activities then being conducted by Indy Mac or (ii)
transfers to such other entity substantially all of the assets of Indy Mac, then
CWM REIT shall be required, at CCR's option, to purchase CCR's interest in Indy
Mac at a purchase price equal to the amount required to be paid to CCR or its
assignee in the event of a liquidation of Indy Mac pursuant to paragraph (e)
above.
8.12 Reorganization. From and after the date hereof and prior to the
Effective Time, except for the transactions contemplated or permitted herein,
none of CAMC Advisor, CCR or CWM REIT shall knowingly take any action that would
be inconsistent with the representations and warranties made by it herein,
including, but not limited to, knowingly taking any action, or knowingly failing
to take any action, that is known to cause disqualification of the Merger as a
reorganization within the meaning of Section 368(a) of the Code. Furthermore,
from and after the date hereof and prior to the Effective Time, except for the
transactions contemplated or permitted herein, each of CWM REIT, CCR and CAMC
Advisor shall use reasonable efforts to conduct its business and file Tax
Returns in a manner that would not jeopardize the qualification of CWM REIT
after the Effective Time as a real estate investment trust as defined within
Section 856 of the Code.
8.13 Public Statements. The parties shall consult with each other prior to
issuing any public announcement or statement with respect to this Agreement or
the transactions contemplated hereby and shall not issue any such public
announcement or statement prior to such consultation, except as may be required
by law or by the rules of the Exchange.
8.14 Letter of CAMC Advisor's Accountants. CAMC Advisor shall use reasonable
efforts to cause to be delivered to CWM REIT an "agreed-upon procedures" report
of Xxxxx Xxxxxxxx LLP covering the financial statements and other financial and
statistical information of CAMC Advisor set forth in the Proxy Statement and
dated a date within five business days before the date on which the Proxy
Statement shall be mailed to the stockholders of CWM REIT and addressed to CWM
REIT, in form and substance reasonably satisfactory to CWM REIT and customary in
scope and substance for reports delivered by independent public accountants in
connection with proxy statements relating to mergers where the consideration
paid is registered on Form S-4 under the Securities Act.
8.15 Employee Matters.
(a) As of the Closing Date or as soon as practicable thereafter but
effective as of the Closing Date, CWM REIT shall establish a defined benefit
pension plan (the "CWM REIT DB Plan") providing comparable benefits to the
employees currently employed by CAMC Advisor who become employees of CWM REIT
("Transferring Employees") and who were as of the Closing Date covered by CCR's
defined benefit pension plan (the "CCR DB Plan"). Following the date hereof, the
parties shall negotiate in good faith the terms of a transfer of assets and
liabilities from the CCR DB Plan to the CWM REIT DB Plan in respect of the CAMC
Employees and CCR will provide the information required by one or more actuarial
firms acceptable to the parties to make the actuarial determinations concerning
such a transfer. If such an agreement cannot be reached, there will be no
transfer of assets and liabilities from the CCR DB Plan, the CCR DB Plan shall
retain the liability for all benefits accrued under such plan through the
Closing Date in respect of the CAMC Employees and CCR will amend the CCR DB
Plan, effective as of the Closing Date, to provide that the service of
Transferring Employees for CWM REIT and its affiliates will be counted solely
for vesting purposes under the CCR DB Plan with respect to benefits accrued as
of the Closing Date by the Transferring Employees. CCR acknowledges that if
assets are transferred (representing the cost of the accrued benefits) from the
CCR DB Plan to the CWM REIT DB Plan, they shall be considered to have been
attributable to amounts paid by CWM REIT pursuant to the provisions of the
Management Agreement. All reasonable expenses of any actuaries, consultants and
mechanics of the Transferring Employees and the accrued benefits (except the
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direct costs thereof referred to above) shall be borne by CWM REIT.
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(b) (1) Effective as of the Closing Date, all CAMC Employees who
participated in the CCR 401(k) Plan immediately prior to the Closing Date and
who are Transferring Employees (the "Savings Participants") shall become
participants under a defined contribution plan meeting the requirements of
Section 401(k) of the Code established by CWM REIT or maintained by CWM REIT or
an Affiliate of the CWM REIT (the "CWM REIT 401(k) Plan"). The CWM REIT 401(k)
Plan shall (i) provide for the transfer to the trust under the CWM REIT 401(k)
Plan of the assets attributable to the accounts of the Savings Participants
under the CCR 401(k) Plan and the crediting and maintenance of such accounts
under the CWM REIT 401(k) Plan, (ii) preserve for the Savings Participants all
benefits required to be preserved under Section 411(d)(6) of the Code with
respect to their accounts transferred to CWM REIT 401(k) Plan, and (iii) provide
that periods of employment with CAMC Advisor, its Affiliates or other
predecessor employers, to the extent recognized under the CCR 401(k) Plan
immediately prior to the Closing Date, shall be taken into account for purposes
of determining, as applicable, eligibility for participation, distributions,
vesting and amount of employer contributions of any Savings Participant under
the CWM REIT 401(k) Plan. Without limiting the foregoing, the CWM REIT 401(k)
Plan shall (i) accept the transfer of participant loans from the CCR 401(k) Plan
and shall provide for the continued administration of such transferred
participant loans for the remainder of their terms in accordance with the
provisions thereof and (ii) accept the transfer of shares of CCR common stock
("Stock") in respect of Savings Participants' interest in the CCR Stock Fund
maintained under the CCR 401(k) Plan.
(2) As promptly as practicable after the Closing, CWM REIT shall provide to
CCR documentation satisfactory to CCR regarding the qualified status of the CWM
REIT 401(k) Plan under Section 401(a) of the Code either in the form of a
favorable determination letter issued by the IRS or an opinion of outside
counsel to CWM REIT. CWM REIT covenants and agrees to take all such action as
may be necessary to establish and maintain the qualified status of the CWM REIT
401(k) Plan through the asset transfer date referred to in paragraph (b)(1)
above.
(3) Provided that CWM REIT has complied with the foregoing requirements of
this Section 8.15, CCR shall cause the trustee of the CCR 401(k) Plan to
transfer to the trustee of CWM REIT 401(k) Plan, and CWM REIT shall cause the
trustee of CWM REIT 401(k) Plan to accept such transfer, an amount equal to the
fair market value of the aggregate account balances of the Savings Participants
determined as of the Valuation Date (the "Transfer Amount"); provided, however,
that such transfer shall be made in two tranches as follows: the first tranche
shall be transferred on the Valuation Date and shall be an amount equal to not
less than 90% of the amount which CCR in good faith reasonably estimates to be
the Transfer Amount (the "Estimated Transfer Amount") and the second tranche
shall be transferred not more than 30 days after the Valuation Date and shall be
an amount equal to the difference between the Transfer Amount and the Estimated
Transfer Amount; and provided, further, however, that such transfer shall
consist only of cash, participant loans (including any promissory notes or other
documents evidencing such participant loans) and shares of Stock.
(c) Effective as of the Closing Date, CWM REIT shall offer to cover all
salaried CAMC Employees who are Transferring Employees under replacement
vacation, health, dental, prescription drug, life insurance, disability and
other health and welfare benefit plans as it may determine in its sole
discretion to be appropriate; provided, however, that in any event CWM REIT
shall (1) waive any limitation of coverage of such CAMC Employees (and their
eligible dependents) due to pre-existing conditions which were covered under
CCR's Welfare Benefit Plans, (2) credit each such CAMC Employee with all
deductible payments and co-payments paid by such CAMC Employee under CCR's
Welfare Benefit Plans during the year in which the Closing occurs for the
purpose of determining the extent to which any such CAMC Employee has satisfied
his or her deductible and whether he or she has reached the out-of-pocket
maximum under CWM REIT's health and welfare benefit plans for such year and (3)
credit each such CAMC Employee for all service with CCR and its Affiliates with
their respective predecessors prior to the closing for all purposes for which
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such service was recognized by CCR. Except with respect to liabilities arising
under plans described in Sections 8.15(a), (b) and (d) (the treatment of which
is provided for in those Sections), (i) CWM REIT shall be liable for all
benefits accrued and claims incurred on and after the Closing Date by or in
respect of Transferring Employees (including in the case of claims for medical
or dental benefits, all medical and dental expenses incurred on and after the
Closing Date) and (ii)
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CCR shall have no liability with respect thereto; and CCR shall be liable for
all benefits accrued and claims incurred prior to the Closing Date (including in
the case of medical or dental benefits, all medical and dental expenses incurred
prior to the Closing Date) and CWM REIT shall have no liability with respect
thereto (other than its obligations relating thereto pursuant to the Management
Agreement for periods through the Closing Date).
(d) Following the date hereof, the parties shall negotiate in good faith the
terms of a transfer of assets and liabilities from CCR's deferred compensation
plan and supplemental executive retirement plan to such plans of CWM REIT as CWM
REIT may reasonably establish in respect of the CAMC Employees and CCR will
provide the information required by one or more actuarial firms acceptable to
the parties to make the actuarial determinations concerning such a transfer. If
such an agreement cannot be reached, there will be no transfer of assets and
liabilities from its deferred compensation plan and supplemental executive
retirement plan, CCR's deferred compensation plan and supplemental executive
retirement plan shall retain the liability for all benefits accrued under such
plan through the Closing Date in respect of the CAMC Employees and CCR will
amend CCR's deferred compensation plan and supplemental executive retirement
plan, effective as of the Closing Date, to provide that the service of
Transferring Employees for CWM REIT and its affiliates will be counted solely
for vesting purposes under such plans with respect to benefits accrued as of the
Closing Date by the Transferring Employees. CCR acknowledges that if assets are
transferred (representing the cost of the accrued benefits) from CCR's deferred
compensation plan and supplemental executive retirement plan to such plans of
CWM REIT, they shall be considered to have been attributable to amounts paid by
CWM REIT pursuant to the provisions of the Management Agreement. All reasonable
expenses of any actuaries, consultants and mechanics of the Transferring
Employees and the accrued benefits (except the direct costs thereof referred to
above) shall be borne by CWM REIT.
8.16 Notice of Certain Events. Each party hereto shall promptly notify the
other party of (i) any notice or other communication from any Person alleging
that the consent of such Person is or may be required in connection with the
transactions contemplated by this Agreement; (ii) any notice or other
communication from any Governmental Body in connection with the transactions
contemplated by this Agreement; and (iii) any actions, suits, claims,
investigations or proceedings commenced or, to its knowledge, threatened
against, relating to or involving or otherwise affecting either such party or
any of its Subsidiaries which, if pending on the date of this Agreement, would
have been required to have been disclosed on Section 5.5 of the CAMC Advisor
Disclosure Schedule or which relate to the consummation of the transactions
contemplated by this Agreement.
8.17 Director and Officer Indemnification. From and after the Effective
Date, CCR shall not amend, repeal or otherwise modify the current provisions in
its Certificate of Incorporation or Bylaws providing for limitation of director
liability and indemnification of directors, officers, employees and agents in
any manner that would adversely affect the rights thereunder of individuals who
at any time prior to the Effective Time were directors, officers, employees or
agents of CAMC Advisor in respect of actions or omissions occurring at or prior
to the Effective Time (including, without limitation, the transactions
contemplated by this Agreement), unless such modification is required by law.
CCR shall also cause to be maintained in effect for not fewer than 60 months
from the Effective Time policies of directors' and officers' liability insurance
currently in force for its own officers and directors to cover those persons who
are or were directors and/or officers of CAMC Advisor (provided that CCR may
substitute therefor policies providing coverage in an aggregate amount of $20
million, the other terms and conditions of which are no less advantageous than
those contained in the policies currently in force) with respect to matters
occurring prior to the Effective Time, unless it can be shown that such policies
cannot be obtained or maintained, as the case may be, by CCR on terms that are
commercially reasonable at such time; provided, that, in the event any claim or
claims are asserted or made within such 60 months, such coverage in respect
thereof shall not be terminated until final
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disposition of all such claims. CWM REIT shall reimburse CCR for the cost
of obtaining or maintaining, as the case may be, such policies to the extent
that such cost is reasonably allocable to $20 million of coverage in respect of
actions or omissions of directors, officers, employees or agents of CAMC Advisor
prior to the Effective Time, provided that the amount of such reimbursement
shall not exceed $50,000 in the aggregate. This Section 8.17 which shall survive
the
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consummation of the Merger and the Effective Time, and except as set forth
herein, shall continue without limit, is intended to benefit each present and
former director and officer of CAMC Advisor and their heirs and legal
representatives (who shall be entitled to enforce the provisions hereof) and
shall be binding on all successors and assigns of CAMC Advisor and CCR. In the
event that CCR or any of its successors or assigns (i) consolidates with or
merges into any other Person and shall not be the continuing or surviving
corporation or entity of such consolidation or merger or (ii) transfers all or
substantially all of its properties and assets to any person, then and in such
case, proper provisions shall be made so that the successors and assigns of CCR
assume the obligations set forth in this Section 8.17.
8.18 Further Action. Each party hereto shall, subject to the fulfillment or
waiver at or before the Effective Time of each of the conditions of performance
set forth herein, perform such further acts and execute such documents as may
reasonably be required to effect the Merger.
8.19 Books and Records. Unless otherwise consented to in writing by CCR,
CWM REIT will not, and will not cause or permit any of its Affiliates or
Subsidiaries to, destroy or otherwise dispose of any of the books and records of
CAMC Advisor prior to the tenth anniversary of the Closing Date, and CWM REIT
will, and will cause its Affiliates and Subsidiaries to, grant CCR and its
representatives reasonable access thereto during normal business hours and
permit them to make copies thereof and, prior to destroying or discarding any of
such party's books and records, shall provide the other party hereto the
opportunity to retain copies of such records.
8.20 Restrictions on Resale of Share Consideration. Without the prior
written consent of CWM REIT or except pursuant to Section 2.2 of the
Registration Rights Agreement (a) CCR will neither sell, pledge nor otherwise
transfer any of the CAMC Share Consideration or shares of the CWM Common Stock
acquired in the exercise of its Special Purchase Rights for a two-year period
commencing upon the Closing Date and (b) during the 12 month period following
such two-year period, CCR may transfer up to 50% of all of such shares.
Thereafter, CCR may transfer up to 100% of any of such shares not previously so
transferred.
8.21 CAMC Advisor Shareholder Approval. CCR hereby agrees to vote the shares
of CWM Common Stock owned by CCR, and CAMC Advisor hereby agrees to vote the
shares of CWM Common Stock owned by CAMC Advisor, in favor of the Agreement and
the transactions contemplated hereby.
8.22 Waiver of Limitations on Percentage Ownership. In the event that CWM REIT
shall waive the application of the limitation on percentage ownership of shares
of CWM Common Stock set forth in Section 3 of CWM REIT's Certificate of
Incorporation with respect to any Person, CWM REIT shall waive the application
of such limitation in the same manner and to the same extent with respect to
8.23 Delivery of Certain Financial Statements. Promptly after they are
available, and in any event not later than the tenth business day prior to the
Closing Date, CAMC Advisor shall provide to CWM REIT (i) true and correct copies
of its unaudited consolidated balance sheet as of February 28, 1997, and related
unaudited statements of income and cash flows for the fiscal year ended on
February 28, 1996 and 1997 and (ii) true and correct copies of its unaudited
balance sheet as of the last day of each month occurring after the date hereof
and prior to the Closing Date and the related unaudited statements of income and
cash flows for the year to date ending on the last day of each such month.
Delivery of such financial statements shall be deemed to be a representation by
CAMC Advisor that to its knowledge such balance sheet (including the related
notes, if any) presents fairly, in all material respects, the financial position
of CAMC Advisor as of the specified date, and the other related statements
(including the related notes, if any) included therein present fairly, in all
material respects, the results of its operations and cash flows for the
respective periods or as of the respective dates set forth therein, all in
conformity with generally accepted accounting principles consistently
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applied during the periods involved, except as otherwise stated in the notes
thereto, subject to normal year-end audit adjustments.
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8.24 Distributions. CAMC Advisor shall declare and pay a dividend payable to
CCR immediately prior to the Effective Time in an amount equal to the amount (i)
determined by Price Waterhouse LLP to enable it to express the written comfort
required by Section 9.3(e) and (ii) timely communicated to CCR. CAMC Advisor
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shall also declare a dividend payable to CCR and payable immediately prior to
the Effective Time of any property, known or unknown, owned by CAMC Advisor
that, in the absence of such distribution, would result in the breach of the
representation and warranty contained in Section 5.8(c).
8.25 Sales and Use Taxes, Etc. All sales, use, transfer, recording and
similar Taxes imposed on and payable by CWM REIT, CCR, or CAMC Advisor arising
out of or in connection with the transactions effected pursuant to this
Agreement shall be borne equally by CCR and CWM REIT.
ARTICLE 9
CONDITIONS TO THE MERGER
9.1 Conditions to Each Party's Obligations. The respective obligations of
CWM REIT, CAMC Advisor and CCR to consummate the transactions contemplated by
this Agreement are subject to the fulfillment at or prior to the Closing Date of
each of the following conditions, which conditions may be waived only with the
consent of CCR and CWM REIT:
(a) CWM REIT Stockholder Approval. The Agreement, the transactions
contemplated hereby and any proposed amendments to or waivers in respect of CWM
REIT's Certificate of Incorporation and Bylaws necessary to carry out the
transactions contemplated hereby as to which stockholder approval is being
sought in the Proxy Statement shall have been duly approved, in each case by the
requisite holders of CWM Common Stock in accordance with applicable provisions
of the Exchange, the DGCL, and CWM REIT's Certificate of Incorporation and
Bylaws.
(b) HSR Act. The waiting period applicable to the consummation of the
Merger under the HSR Act, if applicable, shall have expired or been terminated.
(c) No Injunction or Proceedings. There shall not be in effect any
judgment, writ, order, injunction or decree of any court or Governmental Body of
competent jurisdiction restraining, enjoining or otherwise preventing
consummation of the transactions contemplated by this Agreement or permitting
such consummation only subject to any condition or restriction unacceptable to
either of CWM REIT or CAMC Advisor, each in its reasonable judgment, nor shall
there be pending or threatened by any Governmental Body any suit, action or
proceeding seeking to restrain or restrict the consummation of the transactions
contemplated hereby or seeking damages in connection therewith, which, in the
reasonable judgment of either CWM REIT or CAMC Advisor could have (i) a Material
Adverse Effect on CWM REIT or CAMC Advisor, or (ii) a material adverse effect on
the ability, of CWM REIT, CCR or CAMC Advisor to perform its respective
obligations under this Agreement, the Cooperation Agreement or the Registration
Rights Agreement.
(d) No Suspension of Trading, Etc. At the Effective Time, there shall be no
suspension of trading in, or limitation on prices for, securities generally on
the Exchange, declaration of a banking moratorium by federal or state
authorities or any suspension of payments by banks in the United States (whether
mandatory or not) or of the extension of credit by lending institutions in the
United States, or commencement of war, armed hostility, or other international
or national calamity directly or indirectly involving the United States, which
war, hostility or calamity (or any material acceleration or worsening thereof),
in the sole judgment of CWM REIT, would have a Material Adverse Effect on CAMC
Advisor or, in the sole judgment of CCR, would have a Material Adverse Effect on
CWM REIT.
(e) Registration Rights Agreement. The Registration Rights Agreement, in
substantially the form of Exhibit A attached hereto, except for such changes
therein as may be agreed upon by CCR and CWM REIT, shall have been executed and
delivered by the parties thereto.
(f) Cooperation Agreement. An agreement between CCR and CWM REIT relating
to certain interim sharing and service arrangements (the "Cooperation
Agreement"), in form and substance reasonably satisfactory to the parties
thereto, shall have been executed and delivered by each such party.
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(g) Employment Contract. Xxxxxxx X. Xxxxx, the Executive Vice President and
Chief Operating Officer of CAMC Advisor, shall have entered into a long-term
employment contract with CAMC Advisor, and CWM REIT shall have assumed such
contract.
(h) Physical Facility. A new long-term lease or sublease agreement (or
other satisfactory arrangement) relating to space at 00 Xxxxx Xxxx Xxxxxx or 000
Xxxxx Xxxx Xxxxxx, in form and substance reasonably satisfactory to each party
to the lease or sublease agreement, shall have been executed and delivered by
each such party.
9.2 Conditions to Obligations of CCR and CAMC Advisor to Effect the Merger.
The obligations of CCR and CAMC Advisor to effect the Merger shall be subject to
the fulfillment at or prior to the Closing Date of the following conditions,
unless waived in writing by CCR and CAMC Advisor:
(a) CWM REIT shall have performed in all material respects its obligations
and agreements contained in this Agreement required to be performed on or prior
to the Closing Date and the representations and warranties of CWM REIT contained
in this Agreement shall be true and correct in all material respects as of the
Closing Date as if made on the Closing Date (except for changes therein
contemplated or permitted by this Agreement), and CAMC Advisor shall have
received a certificate of the Executive Vice President and Chief Operating
Officer of CWM REIT, dated the Closing Date, certifying to such effect.
(b) Since September 30, 1996, there shall not have occurred or been
threatened any material adverse changes in the business, properties, operations
or condition (financial or other) of CWM REIT.
(c) The limitation on percentage ownership of shares of CWM Common Stock set
forth in Section 3 of CWM REIT's Certificate of Incorporation, if applicable,
shall have been duly waived for CCR for the purposes of the Merger and such
waiver shall be valid and in full force and effect. Such waiver shall also apply
to the exercise of the Special Purchase Rights of CCR.
(d) CAMC Advisor and CCR shall have received the favorable opinion of Xxxxx
& Wood LLP, in form and substance satisfactory to CCR, as to (i) the corporate
existence and authority of CWM REIT, (ii) the due authorization, execution and
delivery of this Agreement and the Registration Rights Agreement by CWM REIT,
(iii) the enforceability of each of this Agreement and the Registration Rights
Agreement and (iv) the due authorization, issuance, delivery, validity and
nonassessability of the Share Consideration.
(e) CCR shall have received an opinion of Fried, Frank, Harris, Xxxxxxx &
Xxxxxxxx, to the effect that the Merger will be treated for federal income tax
purposes as a reorganization within the meaning of Section 368(a) of the Code.
9.3 Conditions to Obligation of CWM REIT to Effect the Merger. The
obligations of CWM REIT to effect the Merger shall be subject to the fulfillment
at or prior to the Closing Date of the following conditions, unless waived in
writing by CWM REIT:
(a) CAMC Advisor and CCR shall have performed in all material respects their
respective obligations and agreements contained in this Agreement required to be
performed on or prior to the Closing Date and the representations and warranties
of CAMC Advisor and CCR contained in this Agreement shall be true and correct in
all material respects as of the Closing Date as if made on the Closing Date
(except for changes therein contemplated or permitted by this Agreement), and
CWM REIT shall have received a certificate of the Chairman, Vice Chairman, or a
Senior Managing Director of CCR and of the President of CAMC Advisor,
respectively, dated the Closing Date, certifying to such effect.
(b) Since August 31, 1996, there shall not have occurred or been threatened
any material adverse changes in the business, properties, operations or
condition (financial or other) of CAMC Advisor, except for changes resulting
--------------------------------------------------------------------------------
from (i) fees or other amounts earned by CAMC Advisor under the Management
Agreement or (ii) any transactions contemplated by this Agreement, including
Section 8.8.
--------------------------------------------------------------------------------
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(c) If required by the Special Committee, Xxxx Xxxxxx shall have delivered
to the Special Committee prior to the date that the Proxy Statement is mailed to
the Stockholders of CWM REIT its opinion that the consideration to be paid to
CCR is fair, from a financial point of view.
(d) CWM REIT shall have received an appropriate affidavit from CCR stating
CCR's United States taxpayer identification number and that the CCR is not a
foreign person within the meaning of Section 1445(b)(2) of the Code.
(e) CWM REIT shall have received written comfort in form and substance
reasonably satisfactory to it from Price Waterhouse LLP that CAMC Advisor will
not have any accumulated or current earnings and profits within the meaning of
Section 312 of the Code as of the Effective Time. CCR shall provide to the CWM
REIT E&P Committee and Price Waterhouse LLP all information reasonably available
to CCR that is necessary to calculate the accumulated and current earnings and
profits of CAMC Advisor as of the Effective Time, including but not limited to
all federal income Tax Returns of CAMC Advisor and any consolidated group of
which CAMC Advisor and CCR are or have been members, working papers created with
respect to such Tax Returns, and information with respect to any federal income
Tax controversy, either pending or resolved, with respect to such returns. Any
such information shall be treated as strictly confidential by the CWM REIT E&P
Committee, Price Waterhouse LLP and every employee of, and advisor to, CWM REIT
and Price Waterhouse LLP.
(f) CWM REIT shall have received the favorable opinion of (i) Fried, Frank,
Harris, Xxxxxxx & Xxxxxxxx, in form and substance satisfactory to CWM REIT, as
to (A) the corporate existence and authority of each of CCR and CAMC Advisor,
(B) the due authorization, execution and delivery of this Agreement by each of
CCR and CAMC Advisor, (C) the due authorization, execution and delivery of the
Registration Rights Agreement by CCR, and (D) the enforceability of each of this
Agreement and the Registration Rights Agreement and (ii) Xxxxxx X. Xxxxxxx,
General Counsel to CCR, in form and substance satisfactory to CWM REIT, as to
the due authorization, issuance, validity, nonassessability and ownership of the
CAMC Shares.
(g) CWM REIT shall have received from each of Messrs. Xxxxx X. Xxxx and
Xxxxxx X. Xxxxxx an expression of his current intention to continue to serve as
Chairman and Vice Chairman, respectively, of the Board of Directors of CWM REIT,
subject to (i) CCR's maintaining beneficial ownership of in excess of 5.0% of
the issued and outstanding CWM Common Stock, (ii) his death or disability, and
(iii) the wishes of CWM REIT's Board of Directors and stockholders.
(h) CWM REIT shall have received from Xx. Xxxxxx X. Xxxxxx an expression of
his current intention to continue to serve as of Chief Executive Officer of CWM
REIT for at least two years following the Closing Date, subject to (i) CCR's
maintaining beneficial ownership of in excess of 5.0% of the issued and
outstanding CWM Common Stock, (ii) his death or disability, and (iii) the wishes
of CWM REIT's Board of Directors and stockholders.
(i) The Indy Mac Charter Amendment, in form and substance satisfactory to
CWM REIT, shall have been filed with the Secretary of State of the State of
Delaware and shall be in effect.
ARTICLE 10
TERMINATION; AMENDMENT; WAIVER
10.1 Termination by Mutual Consent. This Agreement may be terminated and
the Merger may be abandoned at any time prior to the Effective Time, before or
after the approval by CCR or the stockholders of CWM REIT, respectively, either
by the mutual written consent of CWM REIT and CCR or by mutual action of the
Board of Directors of CCR and the Special Committee of CWM REIT.
--------------------------------------------------------------------------------
10.2 Termination by Either CWM REIT or CAMC Advisor. This Agreement may be
--------------------------------------------------------------------------------
terminated and the Merger may be abandoned (a) by action of the Special
Committee in the event of a failure of a condition to the
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obligations of CWM REIT set forth in Article 9 of this Agreement; (b) by action
of the Board of Directors of CCR in the event of a failure of a condition to the
obligations of CCR or CAMC Advisor set forth in Article 9 of this Agreement; or
(c) by action of the Board of Directors of CCR or the Special Committee if (i)
the Pre-Closing Market Value is greater than $26.16 or less than $16.92 or (ii)
a United States federal or state court of competent jurisdiction or United
States federal or state Governmental Body shall have issued an order, decree or
ruling or taken any other action permanently restraining, enjoining or otherwise
prohibiting the transactions contemplated by this Agreement and such order,
decree, ruling or other action shall have become final and non-appealable,
provided, that the party seeking to terminate this Agreement pursuant to this
clause (c)(ii) shall have used all reasonable efforts to remove such order,
decree, ruling or injunction; and provided, in the case of a termination
pursuant to clause (a) or (b) above, that the terminating party shall not have
breached in any material respect its obligations under this Agreement in any
manner that shall have approximately contributed to the occurrence of the
failure referred to in said clause.
10.3 Effect of Termination and Abandonment. In the event of termination of
this Agreement and abandonment of the Merger pursuant to this Article 10, no
party hereto (or any of its directors or officers) shall have any liability or
further obligation to any other party to this Agreement, except that nothing
herein will relieve any party from liability for any breach of this Agreement.
10.4 Amendment. This Agreement, the Cooperation Agreement and the Registration
Rights Agreement may be amended at any time by written agreement signed by CWM
REIT, CAMC Advisor (provided that the signature of CAMC Advisor signed by CWM
REIT, CAMC Advisor (provided that the signature of CAMC Advisor shall only be
required for amendments prior to the Effective Time) and CCR; provided, however,
that an amendment to this Agreement made subsequent to the adoption by the
stockholders of CWM REIT of this Agreement shall not alter or change (i) the
amount or kind of consideration to be received in exchange for or on conversion
of all or any of the shares of CAMC Advisor, (ii) any term of the Certificate of
Incorporation of CWM REIT, or (iii) any of the terms and conditions of this
Agreement if such alteration or change would adversely affect the stockholders
of CWM REIT.
10.5 Waiver. Any party to this Agreement, the Cooperation Agreement or the
Registration Rights Agreement may extend the time for the performance of any of
the obligations or other acts of any other party hereto, or waive compliance
with any of the agreements of any other party or with any condition to the
obligations hereunder, in any case only to the extent that such obligations,
agreements and conditions are intended for its benefit.
ARTICLE 11
MISCELLANEOUS
11.1 Expenses. Except as otherwise expressly provided herein, each party shall
bear its own expenses, including the fees and expenses of any attorneys,
accountants, investment bankers, brokers, finders or other intermediaries or
other Persons engaged by it, incurred in connection with this Agreement and the
transactions contemplated hereby; provided, however, that in the event that the
Merger occurs, CWM REIT shall bear all out-of-pocket fees and expenses of CAMC
Advisor and CCR arising out of or incurred in connection with (a) the transfer
of the CAMC Employees to CWM REIT and compliance by CAMC Advisor and CCR with
the provisions of Sections 8.15 and 8.17 hereof, including, without limitation,
all actuarial, consulting and other fees and expenses, (b) the audit of the CAMC
financial statements referred to in Section 5.11, (c) the letter of Xxxxx
Xxxxxxxx LLP referred to in Section 8.14 (including the fees and expenses of
Xxxxx Xxxxxxxx LLP related thereto), (d) any of the matters described in Section
8.17 and (e) the Proxy Statement and the CWM REIT Stockholders Meeting,
including all printing, mailing, solicitation, legal, accounting and other fees
and expenses.
11.2 Notices, Etc. All notices, requests, demands or other communications
required by or otherwise with respect to this Agreement shall be in writing and
shall be deemed to have been duly given to any party when delivered personally
(by courier service or otherwise), when delivered by facsimile and confirmed by
return
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facsimile, or seven days after being mailed by first-class mail, postage prepaid
and return receipt requested in each case to the applicable addresses set forth
below:
If to CAMC Advisor or to CCR:
c/o Countrywide Credit Industries, Inc.
000 Xxxxx Xxxx Xxxxxx
-----------------------------------------
Xxxxxxxx, XX 00000 Attention: General
Counsel Facsimile: (000) 000-0000
-----------------------------------------
with a copy to:
------------------------------------------------
Fried, Frank, Harris, Xxxxxxx & Xxxxxxxx Xxx
Xxx Xxxx Xxxxx
------------------------------------------------
Xxx Xxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxxxx Facsimile:
(000) 000-0000
If to CWM REIT:
CWM Mortgage Holdings, Inc.
00 Xxxxx Xxxx Xxxxxx
-----------------------------------------
Xxxxxxxx, XX 00000 Attention: General
Counsel Facsimile: (000) 000-0000
-----------------------------------------
with a copy to:
Xxxxx & Xxxx LLP
One World Trade Center
--------------------------------------------------------------------------------
Xxx Xxxx, XX 00000-0000 Attention: Xxxxxx X. Fine Facsimile: (000) 000-0000
--------------------------------------------------------------------------------
or to such other address as such party shall have designated by notice so given
to each other party.
11.3 Survival. The representations and warranties of the parties hereto
contained in this Agreement or in any certificate delivered pursuant hereto or
in connection herewith shall survive the Closing, but shall terminate on the
first anniversary of the Closing Date, except that those contained in Sections
5.7, 5.8 and 5.13 shall terminate upon expiration of the applicable statute of
limitations with respect to the matters covered thereby. The covenants and
agreements set forth in this Agreement shall not survive the Closing except in
such cases where such covenants and agreements by their terms contemplate
performance after the Closing Date. Notwithstanding the preceding sentences, any
covenant, agreement, representation or warranty in respect of which indemnity
may be sought pursuant to Section 4.6 shall survive the time at which it would
otherwise terminate pursuant to the preceding provisions of this Section 11.3,
if written notice of the inaccuracy or breach thereof, specifying Damages
(including the amount thereof) giving rise to such right to indemnity shall have
been given to the party against whom such indemnity may be sought. If any
governmental taxing authority asserts a deficiency with respect to a tax matter
which, if conceded, could result in a claim for which indemnity could be sought
pursuant to Section 4.6, CWM REIT shall be permitted to give notice of the
breach of a representation, warranty, covenant, or agreement and specify Damages
in the amount so asserted (including applicable interest and penalties),
notwithstanding CWM REIT's intent to dispute such claims. The amount of the
claim shall be deemed to be the amount of the settlement or adjudicated damages.
A-33
11.4 No Assignment. This Agreement shall be binding upon and shall inure to
the benefit of and be enforceable by the parties and their respective successors
and assigns; provided that, except as otherwise expressly set forth in this
Agreement, neither the rights nor the obligations of any party may be assigned
or delegated without the prior written consent of the other party.
11.5 Entire Agreement. Except as otherwise provided herein, this Agreement
,the Cooperation Agreement and the Registration Rights Agreement embody the
entire agreement and understanding among the parties relating to the subject
matter hereof and supersede all prior agreements and understandings relating to
such subject matter, and there are no representations, warranties or covenants
by the parties hereto relating to such matter other than those expressly set
forth herein (including the CAMC Advisor Disclosure Schedule) or therein and any
writings expressly required hereby or thereby.
11.6 Specific Performance. The parties acknowledge that, except for
breaches of Sections 4.6 and 8.20 as to which the sole remedy shall be
money damages, money damages are not an adequate remedy for violations of this
Agreement and that any party may, in its sole discretion, apply to a court of
competent jurisdiction for specific performance or injunctive or such other
relief as such court may deem just and proper to enforce this Agreement or to
prevent any violation hereof.
11.7 Remedies Cumulative. All rights, powers and remedies provided under
this Agreement or otherwise available in respect hereof at law or in equity
shall be cumulative and not alternative, and the exercise or beginning of the
exercise of any thereof by any party shall not preclude the simultaneous or
later exercise of any other such right, power or remedy by such party.
11.8 No Waiver. The failure of any party hereto to exercise any right,
power or remedy provided under this Agreement or otherwise available in respect
hereof at law or in equity or to insist upon compliance by any other party
hereto with its obligations hereunder, and any custom or practice of the parties
at variance with the terms hereof, shall not constitute a waiver by such party
of its right to exercise any such or other right, power or remedy or to demand
such compliance.
11.9 No Third-Party Beneficiaries. Except for the successors and assigns
referred to in Section 11.4 and the directors, officers, employees, affiliates,
agents and assigns referred to in Section 4.6, and in each such section, only to
the extent of the rights and benefits set forth therein, this Agreement is not
intended to be for the benefit of and shall not be enforceable by any Person or
entity who or which is not a party hereto.
11.10 Jurisdiction and Venue. Each party hereby irrevocably submits to the
exclusive jurisdiction of the United States District Court for the Central
District of California or any court of the State of California located in the
City of Los Angeles in any action suit or proceeding arising in connection with
this Agreement, and agrees that any such action, suit or proceeding shall be
brought only in such court (and waives any objection based on forum non
conveniens or any other objection to venue therein); provided, however, that
such consent to jurisdiction is solely for the purpose referred to in this
Section 11.10 and shall not be deemed to be a general submission to the
jurisdiction of said courts or in the State of California other than for such
purpose.
11.11 Governing Law. This Agreement and all disputes hereunder shall be
governed by and construed and enforced in accordance with the internal laws of
the State of Delaware, without regard to principles of conflict of laws.
11.12 Name, Captions, Etc. The name assigned to this Agreement and the
section captions used herein are for convenience of reference only and shall not
affect the interpretation or construction hereof. Unless otherwise specified (a)
the terms "hereof," "herein" and similar terms refer to this Agreement as a
whole and (b) references herein to Articles or Sections refer to
-------------------------------------------------------------------------------
articles or sections of this Agreement.
-------------------------------------------------------------------------------
11.13 Severability. If any term of this Agreement or the application
thereof to any party or circumstance shall be held invalid or unenforceable to
any extent, the remainder of this Agreement and the application of such
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term to the other parties or circumstances shall not be affected thereby and
shall be enforced to the fullest extent permitted by applicable law, provided
that in such event the parties shall negotiate in good faith in an attempt to
agree to another provision (in lieu of the term or application held to be
invalid or unenforceable) that will be valid and enforceable and will carry out
the parties' intentions hereunder.
11.14 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one instrument. Each counterpart may consist of a
number of copies, each signed by less than all, but together signed by all, the
parties hereto.
11.15 Gender; Number. All references to gender or number in this Agreement
shall be deemed interchangeably to have a masculine, feminine, neuter, singular
or plural meaning, as the context requires.
11.16 Ambiguities. Notwithstanding any rules or canons of construction to
the contrary, the parties hereto agree that the terms and provisions contained
herein shall be construed as if each party hereto participated equally in the
drafting and preparation of this Agreement.
IN WITNESS WHEREOF, the undersigned have caused this Agreement to be
executed by an officer duly authorized to do so, all as of the day and year
first above written.
CWM MORTGAGE HOLDINGS, INC., a Delaware
corporation
By: /s/ Xxxxxxx X. Xxxxx
--------------------------------------------------------------
------------------------
--------------------------------------------------------------
COUNTRYWIDE ASSET MANAGEMENT
CORPORATION, a Delaware corporation
By: /s/ Xxxxx X. Xxxxx ------------------------
COUNTRYWIDE CREDIT INDUSTRIES, INC., a
Delaware corporation
By: /s/ Xxxxxxxx X. Xxxxxxx ------------------------
--------------------------------------------------------------------------------
A-35
--------------------------------------------------------------------------------
EXHIBIT A
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement dated as of , 1997, is made and entered
into by and between CWM Mortgage Holdings, Inc., a Delaware corporation ("CWM
REIT" or the "Company"), and Countrywide Credit Industries, Inc. ("CCR") in
connection with the issuance by CWM REIT of shares of common stock, par value
$0.01 per share ("Common Stock"), pursuant to the Agreement and Plan of Merger,
dated as of January 29, 1997 (the "Merger Agreement"), among CWM REIT,
Countrywide Asset Management Corporation, a Delaware corporation ("CAMC
Advisor"), and CCR, as sole stockholder of CAMC Advisor. Capitalized terms used
herein without definition shall have the meanings ascribed to them in the Merger
Agreement.
WHEREAS, the execution and delivery of this Registration Rights Agreement
is a condition to the closing of the transactions contemplated by the Merger
Agreement; and
WHEREAS, to induce CWM REIT to provide certain registration rights to CCR
and to perform its obligations hereunder and under the Merger Agreement, on the
one hand, and in order to induce CCR to enter into the Merger Agreement and to
perform its obligations hereunder and under the Merger Agreement, on the other
hand, and for other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, CWM REIT and CCR hereby agree as follows:
Section 1.1 Definitions
"Act" means the Securities Act of 1933, as amended, and the rules and
regulations of the Commission promulgated thereunder.
"Commission" means the Securities and Exchange Commission.
"Exchange Act" means the Securities Exchange Act of 1934, and the rules and
regulations of the Commission promulgated thereunder.
"Registrable Security" means each of the shares of Common Stock acquired by
CCR pursuant to the Merger Agreement upon original issue thereof and at all
times subsequent thereto (including through the exercise of the Special Purchase
Rights granted pursuant to Section 2.4 of this Agreement), until (i) it has been
disposed of pursuant to an effective registration statement under the Act
covering it, (ii) it is distributed to the public pursuant to Rule 144 under the
Act, as such Rule may be amended from time to time (or any similar provision
then in effect) ("Rule 144"), or (iii) it is sold, assigned or otherwise
transferred in any other transaction not requiring registration under the Act.
"Special Purchase Rights" as defined in Section 2.4.
"Triggering Date" means the second anniversary of the Effective Time.
Section 2.1 Demand Registration
(a) Request for Registration. At any time and from time to time on and
after the Triggering Date and subject to the terms and conditions hereof, CCR
may make a written request to CWM REIT to file with the Commission a
registration statement ("Demand Registration Statement") and such other
documents, including a prospectus, as may be necessary in order to comply with
the provisions of the Act so as to permit a public offering and sale of up to
all of the Registrable Securities (subject to the limitations set forth in
Section 8.20 of the Merger Agreement). Any registration effected under this
paragraph (a) is hereinafter referred to as a "Demand Registration." CCR may
make, in the aggregate, not more than two (2) requests for a Demand
Registration. CCR shall have the right to withdraw any such request by giving
written notice to CWM REIT of its
--------------------------------------------------------------------------------
request to withdraw at any time prior to effectiveness of the registration
statement therefor; provided that in
--------------------------------------------------------------------------------
1
the event of such withdrawal, CCR shall be responsible for all fees and expenses
(including fees and expenses of counsel) incurred by CWM REIT prior to such
withdrawal and provided further that such requested registration shall not count
toward the two Demand Registration requests permitted pursuant to this Section
2.1(a). Any request to effect a Demand Registration shall specify the number of
shares of Registrable Securities proposed to be sold and shall also specify the
intended method of disposition thereof. There shall be permitted hereunder only
one Demand Registration during any nine (9) month period, measured in each case
from the effective date of the most recent Demand Registration. The minimum
aggregate number of Registrable Securities that must be covered by any Demand
Registration Statement request shall be the lesser of (i) 1,250,000 shares of
Common Stock and (ii) Registrable Securities having a market value of
$20,000,000.
(b) Effective Registration. A registration will not be deemed to have been
effected as a Demand Registration unless and until it has been declared
effective by the Commission and CWM REIT has complied in all material respects
with its obligations under this Registration Rights Agreement with respect
thereto; provided that if, after it has become effective, the offering of
securities pursuant to such registration is or becomes the subject of any stop
order, injunction or other order or requirement of the Commission or any other
governmental or administrative agency, or if any court prevents or otherwise
limits the sale of such securities pursuant to the registration, such
registration will be deemed not to have been effected as to the shares subject
to such stop order, injunction, other order, requirement or limitation unless
such stop order, injunction, other order, requirement or limitation is rescinded
or the issuance of such stop order, injunction, other order, requirement or
limitation is imposed in response to an act or omission on the part of CCR. If a
registration requested pursuant to this Section 2.1 is deemed not to have been
effected and such failure to have been effected is not the result of any act or
omission of CCR (other than a withdrawal of such request by CCR prior to the
effectiveness of the registration statement therefor), then CWM REIT shall
continue to be obligated to effect such registration pursuant to this Section
2.1 (and such registration shall not count toward the two Demand Registration
requests permitted pursuant to Section 2.1(a)).
(c) Selection of Underwriters. If CCR so elects, the offering of
Registrable Securities pursuant to a Demand Registration shall be in the form of
an underwritten offering, in which case CWM REIT and CCR shall jointly select
one or more nationally recognized firms of investment bankers to act as the
managing underwriters (the "Underwriters") in connection with such offering.
(d) Deferral. Notwithstanding the foregoing, if CWM REIT shall furnish to
CCR a certificate signed by a duly authorized officer of CWM REIT stating that
the Board of Directors of CWM REIT has, by duly authorized resolution,
determined in good faith that, in light of the pendency of a Material
Transaction (as defined below), it would be materially detrimental to CWM REIT
and its shareholders for such registration statement to be filed and it is
therefore in the best interest of CWM REIT to defer the filing of such
registration statement, CWM REIT shall have the right to defer such filing for a
period of not more than ninety (90) days after receipt of the request for a
Demand Registration. CCR acknowledges that it would be materially detrimental to
CWM REIT and its shareholders for such registration statement to be filed and
therefore in the best interest of CWM REIT to defer such filing if such filing
would impose an undue burden upon the ability of CWM REIT to proceed with any
reorganization, merger, consolidation or acquisition of the securities or assets
of another firm or corporation or disposition of the securities or assets of CWM
REIT or a public offering by CWM REIT of common stock or other securities of CWM
REIT registered under the Act which, in each case, is material to CWM REIT (a
"Material Transaction"). If CWM REIT shall have delivered the certificate
referred to above and thereafter (if applicable) shall have entered into a
definitive agreement or filed a registration statement or a proxy statement in
connection with a Material Transaction, CWM REIT shall, upon written notice to
CCR, have the right to defer the filing of the registration statement requested
to be filed by CCR but in no event for longer than sixty (60) days from the
expiration of the initial ninety (90) day extension period referred to above as
is reasonably necessary to enable CWM REIT to satisfy its disclosure obligations
under the Act in such registration statement with respect to the Material
Transaction.
(e) Reduction of Offering. CWM REIT may include in a Demand Registration
pursuant to this Section 2.1 shares of Common Stock for the account of CWM REIT
and for the account of any other person or entity
2
who holds shares of Common Stock; provided, however, that if the lead managing
Underwriter of any underwritten offering described in this Section 2.1 shall
have informed CWM REIT in writing that in its opinion the total number of shares
of Common Stock that CCR, CWM REIT and any other persons or entities desiring to
participate in such registration intend to include in such offering is such as
to materially and adversely affect the success of such offering, then CWM REIT
shall include in such Demand Registration all Registrable Securities requested
to be included in such registration by CCR up to such number of shares of Common
Stock that the lead managing Underwriter has informed CWM REIT may be included
in such registration without adversely affecting the success of such offering;
provided that, if the number of such Registrable Securities requested to be
included by CCR is less than the number of shares that the lead managing
Underwriter has informed CWM REIT may be included in such registration without
adversely affecting the success of such offering, then CWM REIT shall include in
such Demand Registration the shares of Common Stock that CWM REIT and any other
persons or entities desiring to participate in such registration desire to
include in such registration; provided further that the number of shares of
Common Stock to be offered for the account of CWM REIT and all such other
persons and entities participating in such registration shall be reduced or
limited pro rata in proportion to the respective number of shares of Common
Stock requested to be registered by such persons and entities to the extent
necessary to reduce the respective total number of shares of Common Stock
requested to be included in such offering to the number of shares of Common
Stock recommended by such lead managing Underwriter.
(f) Filings. Whenever CWM REIT is required to effect or cause the
registration of Registrable Securities pursuant to this Section 2.1, CWM REIT
will use its reasonable efforts to effect the registration of such Registrable
Securities in accordance with the intended method of disposition thereof as
promptly as practicable, and in connection with any such request CWM REIT will
as expeditiously as possible (and in no event more than forty-five (45) days
from the date of receipt of written request from CCR pursuant to Section 2.1(a)
to register Registrable Securities) prepare and file with the Commission a
registration statement as described in Section 4.1 hereof.
(g) Registration Rights of Other Parties. CWM REIT will not grant
registration rights superior to or inconsistent with the registration rights
granted to CCR under this Registration Rights Agreement.
Section 2.2 Incidental Offerings
If CWM REIT at any time proposes to file a registration statement covering
any of its Common Stock under the Act (other than any registration by CWM REIT
(A) on Form S-8 or a successor or substantially similar form of an employee
share option, share purchase or compensation plan or of Common Stock issued or
issuable pursuant to any such plan, (B) of a dividend reinvestment plan or (C)
on Form S-4 or a successor or substantially similar form of shares issuable in
connection with any acquisition, merger, exchange or similar transaction), CWM
REIT will give prompt notice to CCR of its intention to do so. Upon the written
request of CCR made within fifteen (15) days after the receipt of any such
notice (which request shall specify the number of Registrable Securities
intended to be disposed of by CCR), CWM REIT will use its best efforts to
arrange to include all the Registrable Securities as to which it has received
such requests, provided that if the registration statement relates to an
underwritten offering of Common Stock and if the lead managing Underwriter of
such underwritten offering shall by letter inform CWM REIT that in its opinion
the inclusion in such underwritten distribution of all or a specified number of
such Registrable Securities or of any other shares of Common Stock requested to
be included would interfere with the successful marketing of the Common Stock in
such distribution by the Underwriters, then CWM REIT may, upon written notice to
CCR, exclude from such underwritten offering (i) in the event the registration
statement relates to an offering for the account of CWM REIT, shares of Common
Stock requested to be included by any persons or entities other than CWM REIT,
pro rata in proportion to the respective number of shares
--------------------------------------------------------------------------------
of Common Stock requested to be included by such persons and entities, to the
extent necessary to reduce the respective total number of shares of Common Stock
requested to be included in such offering to the number of shares of Common
Stock recommended by such Underwriter and (ii) in the event
--------------------------------------------------------------------------------
3
the registration statements relates to an offering for the account of any person
or entity other than CWM REIT, (A) first, shares of Common Stock requested to be
registered by CWM REIT, (B) second, to the extent reduction as a result of
clause (A) is insufficient, shares of Common Stock requested to be registered
for the account of any persons or entities other than the person or entity
making the initial request for such registration (the "Requesting Party"), pro
rata in proportion to the respective number of shares of Common Stock requested
to be registered by such other persons and entities to the extent necessary to
reduce the respective total number of shares of Common Stock requested to be
included in such offering to the number of shares of Common Stock recommended by
such Underwriter and (C) third, to the extent reduction as a result of clauses
(A) and (B) is insufficient, shares of Common Stock requested to be registered
for the account of the Requesting Party.
The Company may decline to file a registration statement referred to in
this Section 2.2 after giving notice to CCR, or withdraw such a registration
statement after filing, or otherwise abandon any such proposed underwritten
offering, provided that the Company shall promptly notify CCR in writing of any
such action.
Section 2.3 CCR's Rights and Obligations
CCR may not participate in any underwritten offering under Section 2.1 or
Section 2.2 hereof unless it completes and executes all customary
questionnaires, powers of attorney, custody agreements, underwriting agreements,
and other customary documents required under the terms of such underwriting
arrangements. In connection with any underwritten offering under Section 2.1 or
2.2, each of CCR and CWM REIT shall be a party to the underwriting agreement
with the Underwriters and may be required to make certain customary
representations and warranties (in the case of CCR as to the Registrable
Securities being sold by CCR in such underwritten offering) and provide certain
customary indemnifications for the benefit of the Underwriters.
Section 2.4 Special Purchase Rights
(a) Prior to the offering of any voting capital stock of CWM REIT (or
security convertible or exchangeable into or exercisable for voting capital
stock), other than shares of Common Stock (or securities convertible or
exchangeable into or exercisable for Common Stock) issued (i) pursuant to any
employee stock option plan or employee stock purchase plan, (ii) as
consideration in making acquisitions or (iii) pursuant to the existing CWM REIT
dividend reinvestment plan or any successor thereto (the "DRIP"), (an
"Offering") CCR may offer and shall have the right (the "Right of First Offer")
to purchase from CWM REIT such number of shares of such capital stock or
securities as may be required to maintain its proportional voting interest
(based on the total voting interest of the Company's capital stock outstanding
immediately prior to such Offering). CWM REIT shall provide CCR notice of any
Offering within 30 days prior to the commencement thereof, and within 10
Business Days following receipt of such notice, CCR shall advise CWM REIT in
writing that it intends to purchase all or a portion of its proportional
percentage of the shares proposed to be issued in the Offering. Any purchase by
CCR pursuant hereto shall be made on the terms and be subject to the conditions
applicable to other purchasers in the Offering. Subject to Section 2.4(e), this
Right of First Offer shall expire on the earlier of (i) the 20th anniversary of
the Effective Time, (ii) the date on which CCR ceases to beneficially own 5% or
more of the outstanding shares of Common Stock (excluding from the number of
shares of Common Stock outstanding for purposes of such calculation all
outstanding shares of Common Stock issued after the effective time pursuant to
any employee stock option, employee stock purchase or compensation plan and all
shares of Common Stock issued after the effective time as consideration in
making acquisitions), (iii) the date on which CCR ceases to beneficially own 2%
or more of the outstanding shares of Common Stock, and (iv) the date of a Change
of Control.
(b) CCR shall be entitled to participate (the "Right to Participate" and
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together with the Right of First Offer, the "Special Purchase Rights") in the
DRIP on the same terms and subject to the same conditions and procedures
applicable to other participants, subject to and in accordance with the
following additional provisions:
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(i) With respect to Common Stock to be issued pursuant to the optional cash
payment feature of the DRIP, CWM REIT shall notify CCR, at least four (4)
Business Days prior to the applicable "Threshold 4
Price and Waiver Discount Set Date" (as defined in the existing DRIP), of (x)
the dollar amount of shares of Common Stock (expressed as an aggregate cash
price) which CWM REIT desires to accept from its shareholders on the next
occurring "Investment Date" (as defined in the DRIP or the comparable date under
any successor plan) (such aggregate desired dollar amount being referred to
herein as the "Maximum Investment Amount") and (y) the aggregate number of
shares of Common Stock of CWM REIT outstanding as of the last day of the
immediately preceding month. For any Investment Date under the optional cash
payment feature of the DRIP, the maximum dollar amount permitted to be invested
by CCR pursuant to the Right to Participate shall be calculated as (x) CCR's
"Participation Percentage" (as defined below), multiplied by (y) the Maximum
Investment Amount (such product being referred to herein as the "Maximum CCR
Investment"). No later than two (2) Business Days following receipt of such
notice from CWM REIT, CCR shall specify in writing to CWM REIT (1) the number of
shares of Common Stock beneficially owned by CCR on such date, and (2) whether,
with respect to the Common Stock to be issued on the next occurring Investment
Date, CCR wishes to make any optional cash payment and the actual dollar amount
thereof, which may be any dollar amount up to and including the Maximum CCR
Investment for such month (such actual dollar amount being referred to herein as
the "Requested CCR Investment"). Any election by CCR to participate in the
optional cash payment feature of the DRIP hereunder (and the related election of
the Requested CCR Investment) shall be irrevocable for the applicable Investment
Date, and any failure by CCR to make such election shall be deemed to be an
election not to participate for the applicable Investment Date. In the event CWM
REIT elects to increase the Maximum Investment Amount for the applicable
Investment Date, CCR shall be provided with notice of such increase and an
opportunity to increase the Requested CCR Investment on a pro rata basis. In the
event CWM REIT elects to reduce the Maximum Investment Amount for the applicable
Investment Date, and/or the Maximum Investment Amount is subject to reduction
under the terms of the DRIP (such reduced amount, in either case, being referred
to herein as the "Actual Investment Amount"), CWM REIT shall so notify CCR, and
the Requested CCR Investment shall in such event be reduced on a pro rata basis.
In administering the optional cash investment feature of the DRIP, CWM REIT
shall include the Requested CCR Investment as a portion of the Maximum
Investment Amount proposed to be raised, and in the event that for any
Investment Date, the Maximum Investment Amount is reduced to the Actual
Investment Amount, the Requested CCR Investment (as reduced pro rata) shall be
included as a portion of said Actual Investment Amount. Subject to the
limitations and adjustments applicable to the Requested CCR Investment provided
herein, CCR shall be entitled to make such Requested CCR Investment. For
purposes of this Section 2.4(b), CCR's Participation Percentage shall be defined
as a percentage (expressed as a decimal) calculated as (x) the outstanding
shares of the Common Stock beneficially owned by CCR at any date of
determination, divided by (y) the aggregate shares of Common Stock of CWM REIT
outstanding at such date of determination.
(ii) With respect to the dividend reinvestment feature of the DRIP, CWM REIT
shall notify CCR, within ten (10) days after the "Record Date" (as defined in
the DRIP) for the payment of the applicable dividend for the applicable fiscal
quarter of CWM REIT, of the percentage of the outstanding shares of Common Stock
(expressed as a decimal and without giving effect to any shares of Common Stock
beneficially owned by CCR) which have theretofore validly elected to participate
in the DRIP with respect to the next occurring dividend payment (the "Maximum
Reinvestment Percentage"). No later than two (2) Business Days following receipt
of such notice from CWM REIT, CCR shall pursuant to the Right to Participate
specify in writing to CWM REIT whether (x) CCR wishes to elect for its
outstanding beneficially owned shares of Common Stock to participate in the
dividend reinvestment feature of the DRIP for the next occurring Investment
Date, and (y) the actual percentage (expressed as a decimal) of CCR's
outstanding beneficially owned Common Stock which CCR elects to participate on
such Investment Date, which may be any percentage up to and including the
Maximum Reinvestment Percentage for such Investment Date (such actual percentage
being referred to herein as the "CCR Reinvestment Percentage"). Any election by
CCR to participate in the dividend reinvestment feature of the DRIP hereunder
(and the related election of the CCR Reinvestment Percentage) shall be
irrevocable for the applicable Investment Date, and any failure by CCR to make
such election shall be deemed to be an election not to participate for the
applicable Investment Date.
5
(iii) The Right to Participate shall expire on the earlier of (A) the 20th
anniversary of the Effective Time, (B) the date on which CCR ceases to
beneficially own 5% or more of the outstanding shares of Common Stock (excluding
from the number of shares of Common Stock outstanding for purposes of such
calculation all outstanding shares of Common Stock issued after the effective
time pursuant to any employee stock option, employee stock purchase or
compensation plan and all shares of Common Stock issued after the Effective Time
as consideration in making acquisitions), (C) the date on which CCR ceases to
beneficially own 2% or more of the outstanding shares of Common Stock and (D)
the date of a Change of Control.
(iv) Under the Right to Participate, CCR may elect, in respect of the Common
Stock, to participate in the optional cash payment feature of the DRIP, and/or
to participate in the dividend reinvestment feature of the DRIP, only to the
extent that such optional cash payment and/or such dividend reinvestment,
together with all other shares of Common Stock beneficially owned by CCR, would
not cause the percentage of shares of Common Stock beneficially owned by CCR in
the aggregate to exceed the then-current Participation Percentage.
(v) Except as otherwise specified in this Section 2.4(b) the Right to
Participate may be exercised only in accordance with and subject to the terms of
the DRIP in effect for CWM REIT at the time of any such exercise. Nothing in
this Section 2.4 or in this Agreement shall be deemed or construed to require
CWM REIT to create, maintain or renew any DRIP or similar plan or program;
provided, however, that CWM REIT may amend or modify the DRIP so long as such
amendments or modifications would not have a material adverse effect on CCR's
Right to Participate in the manner, and subject to the limitations, set forth in
Section 2.4(b).
(c) Neither the Right of First Offer nor the Right to Participate may be
assigned or otherwise transferred, but nothing herein shall preclude any
transferee of Common Stock owned by CCR from participating in the DRIP.
(d) Neither the Right of First Offer nor the Right to Participate may be
exercised in connection with any issuance of Common Stock pursuant to any
employee stock option, employee stock purchase or compensation plan of CWM REIT
or as consideration in making acquisitions.
(e) Notwithstanding any other provision of this Section 2.4 (i) the Special
Purchase Rights shall be subject to, and become effective only upon, the
approval of the holders of at least a majority of the shares of Common Stock CWM
REIT present and entitled to vote on the matter (the "Approval") and (ii) the
Special Purchase Rights shall be subject to the subsequent re-approval of the
holders of at least a majority of the shares of the Common Stock present and
entitled to vote on the matter upon each of the fifth, tenth and fifteenth
anniversary of the date immediately succeeding the fifth, tenth or fifteenth
anniversary of the date of the Approval. In the event that any subsequent
re-approval of the holders of Common Stock shall not be obtained, the Special
Purchase Rights shall terminate upon the date immediately succeeding the fifth,
tenth or fifteenth anniversary of the Approval, as the case may be. In
furtherance of the foregoing, in connection with the annual meetings of
stockholders of CWM REIT corresponding with the fifth, tenth and fifteenth
anniversary of the date of the Approval, subject to the fiduciary duties of CWM
REIT's Board of Directors under applicable law as advised by counsel, the Board
of Directors of CWM REIT shall recommend and declare advisable the re-approval
of the Special Purchase Rights and CWM REIT shall take all lawful action to
solicit, and use all reasonable efforts to obtain, such re-approvals, including
in each case, the inclusion of the recommendation of the CWM REIT Board of
Directors in the related proxy statement that the stockholders of CWM REIT vote
in favor of the re-approval of the Special Purchase Rights.
Section 3.1 Holdback Agreement
In the case of the registration of any underwritten primary offering of
Common Stock or Convertible Securities by CWM REIT and in which CCR will not be
participating in accordance with Section 2.2 hereof, CCR agrees, if requested in
writing by the lead managing Underwriter administering such offering, not to
effect
6
any offer, sale or distribution of Registrable Securities (or any option or
right to acquire Registrable Securities) during the period (not to exceed forty
(40) days) commencing on the tenth day prior to the effective date of the
registration statement covering such underwritten primary equity offering and
ending on the date specified by such managing Underwriter or Underwriters in
such written request to CCR.
Section 4.1 Registration Procedures
In connection with CWM REIT's obligations under this Registration Rights
Agreement, CWM REIT shall:
(a) Prepare and file a Demand Registration Statement pursuant to Section 2.1
on the appropriate form available for the sale of the Registrable Securities in
accordance with the intended method or methods of distribution thereof, and use
its reasonable efforts to cause such Demand Registration Statement to become
effective and remain effective; and no fewer than five days prior to the filing
of any Registration Statement (as defined below) or any amendment thereto
(including, without limitation, any document incorporated or deemed to be
incorporated by reference therein and any post-effective amendment), and not
fewer than five days prior to the filing or (if not filed) the first day of
public availability of any related preliminary prospectus or prospectus or any
amendments or supplements thereto (including any document incorporated or deemed
to be incorporated therein by reference), CWM REIT shall furnish to CCR copies
of all such documents, and shall cause the officers and directors of CWM REIT,
counsel to CWM REIT, and independent certified public accountants to CWM REIT to
respond to such inquiries as shall be necessary, in the opinion of CCR's
counsel, to conduct a reasonable investigation within the meaning of the Act.
CWM REIT shall not file the Demand Registration Statement or any related
prospectus or any amendments or supplements thereto to which CCR shall
reasonably object on a timely basis;
(b) Prepare and file with the Commission such amendments, including
post-effective amendments, to any Demand Registration Statement and any
registration statement filed with the Commission in connection with an offering
in which CCR is or will be offering or selling Registrable Securities pursuant
to Section 2.2 (an "Incidental Registration Statement"; the Demand Registration
Statement and Incidental Registration Statement are hereinafter called,
collectively, "Registration Statements" and, individually, a "Registration
Statement" (including documents incorporated or deemed to be incorporated by
reference therein)) as may be required by law; cause the related prospectus to
be supplemented by any required prospectus supplement, and as so supplemented to
be filed if, as and when required pursuant to Rule 424 (or any similar
provisions then in effect) under the Act; and comply with the provisions of the
Act and the Exchange Act with respect to the disposition of all Registrable
Securities covered by such Registration Statement;
(c) Notify CCR promptly (i) with respect to any Registration Statement or
any post-effective amendment thereto, when the same has become effective; (ii)
of any request by the Commission or any other federal or state governmental
authority for amendments or supplements to any Registration Statement
(including, without limitation, any documents incorporated or deemed to be
incorporated by reference therein) or a related prospectus or for additional
information, or of the receipt from the Commission or any other federal or state
governmental authority of any comment letter with respect to any of the
foregoing; (iii) of the issuance by the Commission of any stop order suspending
the effectiveness of any Registration Statement or the initiation of any
proceedings for that purpose; (iv) of the receipt by CWM REIT of any
notification with respect to the suspension of the qualification of any of the
Registrable Securities for offer or sale in any jurisdiction within the United
States, or the initiation or threatening of any proceeding for such purpose; and
(v) upon the occurrence of any event which makes any statement in (or
incorporated or deemed to be incorporated in) any Registration Statement or any
related prospectus or any amendments or supplements thereto untrue in any
material respect;
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(d) Furnish to CCR without charge, such number of conformed copies as it
may reasonably request, of each Registration Statement and each amendment or
supplement thereto, including exhibits, financial statements and schedules;
7
(e) Deliver to CCR without charge, as many copies of the preliminary
prospectus or prospectuses and the prospectus or prospectuses related to each
Registration Statement and each amendment or supplement thereto as it may
reasonably request;
(f) Prior to any public offering of Registrable Securities, use its best
efforts to register or qualify (or to obtain an exemption from registration or
qualification) of such Registrable Securities for offer and sale under the
securities or Blue Sky laws of all jurisdictions within the United States; keep
each such registration or qualification (or exemption therefrom) effective until
such time as such distribution has been completed, and do any and all other acts
or things necessary or advisable to enable the disposition in such jurisdictions
of the Registrable Securities; provided, however, that CWM REIT shall not be
required to qualify generally to do business in any jurisdiction where it is not
then so qualified or to take any action that would subject it to general service
of process in any such jurisdiction where it is not then so subject or subject
CWM REIT to any tax in any such jurisdiction where it is not then so subject;
(g) Promptly file all documents required to be filed under Sections 13(a),
13(c), 14 or 15(d) of the Exchange Act during any period when the prospectus
related to a Registration Statement is required to be delivered under the Act:
(h) If any prospectus relating to Registrable Securities contains an untrue
statement of a material fact or omits to state a material fact required to be
stated therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading, prepare and, if
required, file with the Commission, a supplement or amendment to such prospectus
or any document incorporated or deemed to be incorporated therein by reference,
and file any other required document so that, as thereafter delivered, such
prospectus will not contain an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading;
(i) Use its best efforts to cause all Registrable Securities to be listed on
each Exchange on which the shares of Common Stock are then listed and make all
other necessary or appropriate filings with each such Exchange;
(j) In connection with any underwritten offering in which CCR shall
participate, (i) cause each opinion delivered to CWM REIT (and any updates
thereof) also to be addressed to CCR (or expressly to provide therein or in a
separate letter that CCR may rely thereon); and (ii) (to the extent that the
independent public accountants are entitled to do so under Statement on Auditing
Standards No. 72 or any other applicable accounting standards) cause each
comfort letter from any independent certified public accountants that is
delivered to the Underwriters (and any update thereof) also to be addressed to
CCR (or expressly to provide therein or in a separate letter that CCR may rely
thereon); and
(k) Make reasonably available to CCR and its counsel and any accountant,
auditor or investment advisor retained by CCR, that information which such
parties would customarily require to satisfy their due diligence obligations
with respect to the offering and sale of the Registrable Securities and cause
CWM REIT's officers, directors and employees to supply all information
reasonably requested by any such person in connection with such due diligence
investigation; provided, however, that any information that is designated by CWM
REIT in writing as confidential at the time of delivery of such information
shall be kept confidential by such persons, unless (i) disclosure of such
information is required by court or administrative order or is necessary to
respond to inquiries of regulatory authorities or self-regulatory organizations,
or is necessary or advisable in connection with any litigation (commenced or
threatened), or any investigation or proceeding (commenced or threatened) by any
governmental agency or body, relating to the offer or sale of Registrable
Securities, or (ii) disclosure of such information, in the
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opinion of counsel to such person, is required by law or pursuant to this
Registration Rights Agreement.
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CWM REIT may require CCR to furnish to CWM REIT such information regarding
CCR and the distribution of such Registrable Securities as is required by law to
be disclosed in the relevant Registration
8
Statement, and CWM REIT may exclude from such registration or offering the
Registrable Securities if CCR unreasonably fails to furnish such information
within a reasonable time after receiving such request.
Section 5.1 Registration Expenses
Except as provided in Section 2.1(a) hereof, all expenses incident to CWM
REIT's performance of or compliance with this Registration Rights Agreement,
including, without limitation, all registration and filing fees, fees and
expenses of compliance with securities or Blue Sky laws (including reasonable
fees and disbursements of counsel in connection with Blue Sky qualifications of
the Registrable Securities), printing expenses, messenger and delivery expenses,
fees and expenses incurred in connection with the listing of the securities to
be registered on each Exchange, and fees and disbursements of counsel for CWM
REIT and its independent certified public accountants (including the expenses of
any special audit or comfort letters required by or incident to such
performance), the reasonable fees and expenses of any special experts retained
by CWM REIT in connection with such registration, and fees and expenses of other
Persons retained by CWM REIT (but not including any underwriting or brokerage
discounts or commissions attributable to the sale of Registrable Securities)
(all such included expenses being herein referred to as the "Registration
Expenses"), shall be borne by CWM REIT.
Section 6.1 Indemnification; Contribution
(a) Indemnification by CWM REIT. CWM REIT agrees to indemnify and hold
harmless CCR, its officers, directors, trustees and agents and each person, if
any, who controls CCR within the meaning of either Section 15 of the Act or
Section 20 of the Exchange Act, from and against any and all losses, claims,
damages, liabilities and expenses (including reasonable costs of investigation),
as incurred, arising out of or based upon any untrue statement or alleged untrue
statement of a material fact contained in (or incorporated or deemed to be
incorporated in) any Registration Statement or any related prospectus or
preliminary prospectus or in (or incorporated in or deemed to be incorporated
in) any amendment or supplement to any of the foregoing, or arising out of or
based upon any omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, except insofar as such losses, claims, damages, liabilities or
expenses arise out of, or are based upon, any such untrue statement or omission
or allegation thereof based upon and in conformity with information furnished in
writing to CWM REIT by CCR expressly for use therein.
(b) Conduct of Indemnification Proceedings. If any action or proceeding
(including any governmental investigation) shall be brought or asserted against
CCR (or its officers, directors, trustees or agents) or any person controlling
CCR in respect of which indemnity is required from CWM REIT hereunder, CWM REIT
shall assume the defense thereof, including the employment of counsel reasonably
satisfactory to CCR, and shall assume the payment of all expenses. CCR or any
such officer, director, trustee, agent or controlling person shall have the
right to employ separate counsel (approved by CCR) in any such action and to
participate in the defense thereof, but the fees and expenses of such counsel
shall be at the expense of CCR or such officer, director, trustee, agent or
controlling person unless (i) CWM REIT shall have failed to assume the defense
of such action or proceeding and employ counsel reasonably satisfactory to CCR
in any such action or proceeding or (ii) the named parties to any such action or
proceeding (including any impleaded parties) include both CCR or such officer,
director, trustee, agent or controlling person and CWM REIT, and CCR or such
officer, director, trustee, agent or controlling person shall have been advised
by counsel that there is an actual conflict of interest that would prevent one
law firm from representing all such persons in the same action (in which case,
if CCR or such officer, director, trustee, agent or controlling person notifies
CWM REIT in writing that it elects to employ separate counsel at the expense of
CWM REIT, CWM REIT shall not have the right to assume the defense of such action
or proceeding on behalf of CCR or such officer, director, trustee, agent or
controlling person, it being understood, however, that CWM REIT shall not, in
connection with any one such action or proceeding or separate but substantially
similar or related actions or proceedings in the same jurisdiction arising out
of the same general allegations or circumstances, be liable for the fees and
expenses of more than one separate firm of attorneys (together with local
counsel) at any time for CCR and its officers, directors, trustees, agents and
controlling persons, which firm shall be designated in writing by CCR). CWM REIT
shall not be liable for any
9
settlement of any such action or proceeding effected without CWM REIT's written
consent, but if settled with its written consent, or if there be a final
judgment for the plaintiff in any such action or proceeding, CWM REIT agrees to
indemnify and hold harmless CCR and its officers, directors, trustees, agents
and controlling person from and against any loss or liability (to the extent
stated above) by reason of such settlement or judgment.
(c) Indemnification by CCR of Registrable Securities. CCR agrees to
indemnify and hold harmless CWM REIT, its directors, each officer of CWM REIT
who signed a Registration Statement and each person, if any, who controls CWM
REIT within the meaning of either Section 15 of the Act or Section 20 of the
Exchange Act, to the same extent as the foregoing indemnity from CWM REIT to
CCR, but only with respect to untrue statements or omissions or alleged untrue
statements or omissions made in the Registration Statement pursuant to which
Registrable Securities of CCR have been registered under the Act, or in any
related prospectus or amendment or supplement thereto or any related preliminary
prospectus, in each case based upon and in conformity with information furnished
in writing by CCR for use therein. In case any action or proceeding shall be
brought against CWM REIT or its directors or any such officers or controlling
person, in respect of which indemnity may be sought against CCR, CCR shall have
the rights and duties given to CWM REIT, and CWM REIT or its directors or such
officers or controlling person shall have the rights and duties given to CCR, by
the preceding paragraph.
(d) Contribution. If the indemnification provided for in this Section 6.1
is unavailable or insufficient to hold an indemnified party for any reason
harmless in respect of any losses, claims, damages, liabilities or judgments
referred to herein, then the indemnifying party, in lieu of indemnifying such
indemnified party, shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages, liabilities and
judgments, as incurred, in such proportion as is appropriate to reflect the
relative fault of such indemnifying party, on the one hand, and such indemnified
party on the other, in connection with the statements or omissions which
resulted in such losses, claims, damages, liabilities or judgments, as well as
any other relevant equitable considerations. The relative fault of CWM REIT on
the one hand and of CCR and its officers, directors, agents, trustees and
controlling persons on the other shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material fact
or the omission or alleged omission to state a material fact relates to
information supplied by such party, and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such statement or
omission; provided, however, that CCR shall not be liable for contribution under
this Section 6.1(d) in an aggregate amount which exceeds the total net proceeds
received by CCR from the sale of its Registrable Securities under the relevant
Registration Statement.
CWM REIT and CCR agree that it would not be just and equitable if
contribution pursuant to this Section 6.1(d) were determined by pro rata
allocation or by any other method of allocation which does not take into account
of the equitable considerations referred to in the immediately preceding
paragraph. The amount paid or payable by an indemnified party as a result of the
losses, claims, damages, liabilities, or judgments referred to in the
immediately preceding paragraph shall be deemed to include, subject to the
limitations set forth above, any legal or other expenses reasonably incurred by
such indemnified party in connection with investigating or defending any such
action or claim. No person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Act) shall be entitled to contribution from any
person who was not guilty of such fraudulent misrepresentation.
Section 7.1 Rule 144 CWM REIT shall timely file the reports required to be
filed by it under the Act and the Exchange Act and shall take such further
action as CCR may reasonably request, all to the extent required from time to
time to enable CCR to sell Registrable Securities without registration under the
Act within the applicable limitations of Rule 144 (or any successor thereto).
Section 8.1 Termination
The parties hereto agree that this Registration Rights Agreement shall
terminate and the obligations of the parties hereto contained herein shall be
released without further action by any party if all of the Registrable
Securities have been (A) disposed of pursuant to an effective Registration
Statement or Registration Statements under the Act covering them, (B)
distributed to the public pursuant to Rule 144 under the Act, or (C) sold,
assigned or otherwise transferred in any other transaction not requiring
registration under the Act.
Section 9.1 Miscellaneous
(a) Amendments and Waivers. The provisions of this Registration Rights
Agreement may be amended, modified or supplemented by written instrument
executed by CWM REIT and CCR. Any party to this Registration Rights Agreement
may extend the time for the performance of any of the obligations or other acts
of any other party hereto, or waive compliance with any of the agreements or
obligations of any other party or with any condition, in each case to the extent
that such obligations, agreements and conditions are intended for its benefit;
provided that each such extension or waiver shall be in writing.
(b) Notices. All notices and other communications provided for or permitted
hereunder shall be made by hand-delivery or registered first-class mail:
(i) if to CCR, at Countrywide Credit Industries, Inc., 000 Xxxxx Xxxx
Xxxxxx, Xxxxxxxx, Xxxxxxxxxx 00000-0000, Attention: General Counsel;
(ii) if to CWM REIT, at CWM Mortgage Holdings, Inc., 00 Xxxxx Xxxx Xxxxxx,
Xxxxxxxx, Xxxxxxxxxx 00000-0000, Attention: General Counsel.
All such notices and communications shall be deemed to have been duly given
when delivered by hand or air or similar courier or, if sent by mail, seven days
after being deposited in the mail, postage prepaid.
(c) Counterparts. This Registration Rights Agreement may be executed in any
number of counterparts and by the parties hereto in separate counterparts, each
of which when so executed shall be deemed to be an original, and all of which
taken together shall constitute one and the same agreement.
(d) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE AS APPLIED TO CONTRACTS MADE
AND PERFORMED WITHIN THE STATE OF DELAWARE, WITHOUT REGARD TO PRINCIPLES OF
CONFLICTS OF LAW.
(e) Severability. The remedies provided herein are cumulative and not
exclusive of any remedies provided by law. If any term, provision, covenant or
restriction of this Registration Rights Agreement is held by a court of
competent jurisdiction to be invalid, illegal, void or unenforceable, the
remainder of the terms, provisions, covenants and restrictions set forth herein
shall remain in full force and effect and shall in no way be affected, impaired
or invalidated, and the parties hereto shall use their reasonable efforts to
find and employ an alternative means to achieve the same or substantially the
same result as that contemplated by such term, provision, covenant or
restriction. It is hereby stipulated and declared to be the intention of the
parties that they would have executed the remaining terms, provisions, covenants
and restrictions without including any of such that may be hereafter declared
invalid, illegal, void or unenforceable.
(f) Headings. The headings in this Registration Rights Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.
(g) Further Assurances. From and after the date hereof, CWM REIT and CCR
each covenants and agrees to execute and deliver all such agreements,
instruments and documents and to take all such further actions as any such
respective party may reasonably deem necessary from time to time (at the
requesting party's expense) to carry out the intent and purposes of this
Registration Rights Agreement and to consummate and fully effect the
transactions contemplated hereby.
(h) Entire Agreement; Integration. This Registration Rights Agreement
contains the entire agreement of the parties hereto with respect to its subject
matter and there are no promises or undertakings with respect thereto relative
to the subject matter hereof not expressly set forth or referred to herein.
(i) Successor Entity. In the event of any merger or consolidation of CWM
REIT with or into any other entity in which CWM REIT is not the surviving
entity, or in the event of any sale, lease or other disposition of all or
substantially all of the assets of CWM REIT to any other entity in a transaction
in which Registrable Securities are converted into securities of such other
entity, appropriate provision shall be made so that the successor or transferee
entity, as the case may be, shall assume the obligations of CWM REIT set forth
in this Agreement.
(j) Ambiguities. Notwithstanding any rules or canons of construction to the
contrary, the parties hereto agree that the terms and provisions contained
herein shall be construed as if each party hereto participated equally in the
drafting and preparation of this Agreement.
IN WITNESS WHEREOF, each of the parties hereto has executed this
Registration Rights Agreement on the day of , 1997.
CWM MORTGAGE HOLDINGS, INC.
By:
Xxxxxxx X. Xxxxx
Executive Vice President and
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COUNTRYWIDE CREDIT INDUSTRIES, INC.
By:
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