Exhibit 5
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AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER is dated as of October 24, 2000, by
and between Harbourton Financial Corporation ("Harbourton") and Allstate
Financial Corporation ("Allstate").
WHEREAS, Harbourton and Allstate desire to combine their respective
companies through a merger so that the respective shareholders of Harbourton
and Allstate will have an equity ownership in the combined company;
WHEREAS, it is intended that to accomplish this result, Harbourton will
be merged with and into Allstate, with Allstate being the Surviving
Corporation;
WHEREAS, it is intended that for federal income tax purposes the Merger
shall qualify as a reorganization within the meaning of Section 368 of the
Code and this Agreement shall constitute a plan of reorganization pursuant to
Section 368 of the Code;
WHEREAS, concurrently with the execution and delivery of this Agreement,
and as a condition and inducement to the Parties' willingness to enter into
this Agreement, Harbourton and each of the directors of Allstate, and Allstate
and each of the directors of Harbourton, are entering into voting agreements
in the forms attached hereto as Exhibits A and B, respectively; and
WHEREAS, concurrently with the execution and delivery of this Agreement,
and as a condition and inducement to Allstate's willingness to enter into this
Agreement, each of the affiliates of Harbourton for purposes of Rule 145 of
the Securities Act is entering into an affiliate agreement in the form
attached hereto as Exhibit C;
NOW, THEREFORE, in consideration of such inducements and of the mutual
promises and agreements contained herein, the Parties agree as follows:
ARTICLE 1. DEFINITIONS AND RULES OF INTERPRETATION
1.1. Definitions
----------------
The following meanings shall apply for purposes of this Agreement.
"Agreement" means this Agreement and Plan of Merger.
"Allstate" means Allstate Financial Corporation, a Delaware corporation.
"Allstate Dissenting Shares" means those shares of Allstate Common Stock
of which the holders thereof have exercised their Dissenters' Rights.
"Allstate Notes" means the 10% Convertible Subordinated Notes due
September 30, 2003 issued by Allstate.
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"Allstate Option Plans" means the Allstate 2000 Stock Option Plan and
all prior stock option plans.
"Alternative Proposal" means any bona fide written proposal, public
announcement or filing with the SEC or any other Government Entity by any
person other than a Party to engage in a merger, consolidation, purchase or
lease of substantially all assets, purchase of securities representing more
than 20% of the voting power, or any similar transaction, involving a Party or
any of its Subsidiaries.
"Board" means the Board of Directors of an entity, or any committee duly
authorized to act on behalf of the Board of Directors of such entity with
respect to the relevant matter.
"Cash Consideration" has the meaning set forth in Section 2.4(c) hereof.
"Cause" means termination because of the employee's personal dishonesty,
incompetence, willful misconduct, breach of fiduciary duty involving personal
profit, intentional failure to perform stated duties or willful violation of
any law, rule or regulation (other than traffic violations or similar
offenses).
"Certificate" means any certificate which prior to the Effective Time
represented shares of Harbourton Common Stock.
"Certificate of Merger" means the certificate of merger to be executed
and filed by the Parties with the Secretary of State of the State of Delaware
pursuant to the DGCL to make the Merger effective.
"Claim" has the meaning attributed to it in Section 6.9.
"Closing" means the closing of the transactions contemplated by this
Agreement.
"Closing Date" means the date on which the Closing occurs.
"Code" means the Internal Revenue Code of 1986, as amended.
"Conversion Date" shall be the date selected by Allstate, which shall
occur by November 6, 2000 or by such later date as Allstate and the holders of
the Allstate Notes may mutually agree in writing.
"Common Stock" means the common stock of any entity which has only one
authorized class of common stock.
"Delivered" means provided by a Party or any of its Subsidiaries to the
other Party.
"DGCL" means the Delaware General Corporation Law.
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"Dissenters' Rights" means the appraisal rights that holders of
Harbourton Common Stock and Allstate Common Stock have as a result of the
Merger pursuant to Section 262 of the DGCL.
"Effective Time" means the time that the Merger becomes effective under
the DGCL.
"Employee Plans" means all stock option, restricted stock, employee
stock purchase and stock bonus plans, pension, profit sharing and retirement
plans, deferred compensation, consultant, bonus and group insurance agreements
and all other incentive, health, welfare and benefit plans and arrangements
maintained for the benefit of any present or former directors or employees of
a Party or any of its Subsidiaries, whether written or oral.
"Encumbrance" means any lien, claim, charge, restriction, security
interest, rights of third parties, or encumbrance.
"Environmental Claim" means any written notice from any Governmental
Entity or third party alleging potential liability (including potential
liability for investigatory costs, cleanup costs, governmental response costs,
natural resources damages, property damages, personal injuries or penalties)
arising out of, based on, or resulting from the presence, or release into the
environment, of any Materials of Environmental Concern.
"Environmental Laws" means any federal, state or local law, statute,
ordinance, rule, regulation, code, license, permit, authorization, approval,
consent, order, judgment, decree, injunction or agreement with any
Governmental Entity relating to (i) the protection, preservation or
restoration of the environment (including air, water vapor, surface water,
groundwater, drinking water supply, surface soil, subsurface soil, plant and
animal life or any other natural resource), and/or (ii) the use, storage,
recycling, treatment, generation, transportation, processing, handling,
labeling, production, release or disposal of Materials of Environmental
Concern. The term Environmental Law includes (x) the Comprehensive
Environmental Response, Compensation and Liability Act, as amended, 42 U.S.C.
Section 9601, et seq; the Resource Conservation and Recovery Act, as amended,
42 U.S.C. Section 6901, et seq; the Clean Air Act, as amended, 42 U.S.C.
Section 7401, et seq; the Federal Water Pollution Control Act, as amended, 33
U.S.C. Section 1251, et seq; the Toxic Substances Control Act, as amended, 15
U.S.C. Section 9601, et seq; the Emergency Planning and Community Right to
Know Act, 42 U.S.C. Section 1101, et seq; the Safe Drinking Water Act, 42 U.S.C.
Section 300f, et seq; and all comparable state and local laws, and (y) any
common law (including common law that may impose strict liability) that may
impose liability or obligations for injuries or damages due to, or threatened
as a result of, the presence of or exposure to any Materials of Environmental
Concern.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"ERISA Affiliate" has the meaning set forth in Section 4.20(f).
"ERISA Affiliate Plan" has the meaning set forth in Section 4.20(f).
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
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"Financial Statements" means both a Party's Annual Financial Statements
and its Interim Financial Statements.
(a) "Financial Reports" means consolidated balance sheets,
consolidated statements of income and statements of changes in
shareholders' equity and cash flows, including any related notes and
schedules.
(b) "Annual Financial Statements" means all the Financial Reports
covered by a Party's most recent year-end audit report.
(c) "Interim Financial Statements" means the Financial Reports
covering the period from January 1, 2000 through the latest available
date and the corresponding period in 1999.
"GAAP" means generally accepted accounting principles applied
consistently with prior practices.
"Governmental Entity" means any federal or state court, administrative
agency or commission or other governmental authority or instrumentality.
"Harbourton" means Harbourton Financial Corporation, a Delaware
corporation.
"Harbourton Options" means options to purchase shares of Harbourton
Common Stock.
"Harbourton-Owned Shares" means any shares of Harbourton's Common Stock
which are owned beneficially or of record by any Party or any Subsidiary of a
Party, other than shares held in a fiduciary capacity for the benefit of third
parties or as a result of debts previously contracted.
"Indemnified Liabilities" has the meaning attributed to it in Section
6.9.
"Indemnified Parties " has the meaning attributed to it in Section 6.9.
"Insider Loans" means loans from a Party or any of its Subsidiaries to
any officer, director or employee of that Party or any of its Subsidiaries or
any associate or related interest of any such person.
"IRS" means the Internal Revenue Service or any successor thereto.
"Knowledge Qualification" means to the best knowledge, after reasonable
investigation, of the Party receiving the benefit of the qualification.
"Material Adverse Effect" means, with respect to a Party, any effect
that is material and adverse to the condition (financial or otherwise),
results of operations or business of that Party and its Subsidiaries taken as
whole, or that materially impairs the ability of that Party to consummate the
Merger, provided, however, that Material Adverse Effect shall not be deemed to
include the impact of (a) changes in laws and regulations or interpretations
thereof that are generally applicable to financial services companies, (b)
changes in GAAP that are generally applicable to financial services
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companies, (c) expenses incurred in connection with this Agreement and the
Merger, (d) actions or omissions of a Party (or any of its Subsidiaries) taken
with the prior informed written consent of the other Party in contemplation of
the Merger or (e) changes attributable to or resulting from changes in general
economic conditions generally affecting financial services companies,
including changes in the prevailing level of interest rates.
"Materials of Environmental Concern" means pollutants, contaminants,
wastes, toxic substances, petroleum and petroleum products and any other
materials regulated under Environmental Laws.
"Merger" means the merger of Harbourton into Allstate, with Allstate
being the Surviving Corporation.
"Merger Consideration" has the meaning set forth in Section 2.4(a)
hereof.
"Party" means Harbourton or Allstate, whichever is applicable.
"PBGC" means the Pension Benefit Guaranty Corporation, or any successor
thereto.
"Pension Plan" has the meaning set forth in Section 4.20(c).
"Previously Disclosed" means disclosed in a written disclosure schedule
delivered on or prior to the date hereof by the disclosing Party to the other
Party specifically referring to the appropriate section of this Agreement and
describing in reasonable detail the matters contained therein.
"Recapitalization Plan" means the plan of arrangement filed by Allstate
on October 5, 2000 with the Delaware Court of Chancery, setting forth the
proposal conversion of the Allstate Notes and the agreements between Allstate
and the holders of the Allstate Notes, which was approved by the court on
October 6, 2000, with the approval order amended on October 11, 2000.
"Restricted Stock" means the issued and outstanding shares of Common
Stock of a Party that are subject to restriction as to their transfer under
the Securities Act.
"Rights" means all warrants, options, rights, convertible securities and
other arrangements or commitments which obligate an entity to issue or dispose
of any of its capital stock or other ownership interests, excluding the
Allstate Notes.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended.
"Securities Documents" means all reports, offering circulars, proxy
statements, registration statements and all similar documents filed, or
required to be filed, pursuant to the Securities Laws.
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"Securities Laws" means the Securities Act; the Exchange Act; the
Investment Company Act of 1940, as amended; the Investment Advisers Act of
1940, as amended; the Trust Indenture Act of 1939, as amended; and the rules
and regulations of the SEC promulgated thereunder.
"Stock Consideration" has the meaning set forth in Section 2.4(b)
hereof.
"Subsidiary" when used with respect to any Party means any entity,
whether incorporated or unincorporated, which is consolidated with such party
for financial reporting purposes.
"Surviving Corporation" means Allstate after the Merger.
1.2 Rules of Interpretation
----------------------------
The captions contained in this Agreement are for reference purposes only
and are not part of this Agreement. All provisions of this Agreement are
subject to applicable law and to the other terms and conditions of this
Agreement. No provision of this Agreement shall be construed to require a
party or its affiliate to take any action which would violate applicable law.
The word "accurate" includes the concept "true and complete."
The word "agreement" includes every sort of contract, commitment, or
understanding, whether written or oral.
The word "authority" includes the concept "all requisite power and
authority."
The word "authorized" includes the concepts "duly approved and
authorized," "adopted," "advised," and any other similar term which may be
required by law.
All forms of the verb "include" includes the concept "without
limitation."
With respect to any securities, "outstanding" means "issued and
outstanding."
ARTICLE 2. PLAN OF MERGER
2.1. The Merger
----------------
At the Effective Time, Harbourton shall be merged into Allstate. The
separate corporate existence of Harbourton shall cease, Allstate shall be the
Surviving Corporation, and Allstate shall continue its corporate existence
under the DGCL.
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2.2. Surviving Corporation
---------------------------
(a) The name of the Surviving Corporation shall be "Allstate Financial
Corporation." The headquarters of the Surviving Corporation shall be located
at ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
(b) The certificate of incorporation and the bylaws of the Surviving
Corporation as of the Effective Time shall be the certificate of incorporation
and bylaws of Allstate as currently in existence.
(c) The Board of Directors of the Surviving Corporation shall consist
of up to seven members, with up to three of the members to be designated by
Harbourton. Allstate shall designate a number of directors equal to the
number designated by Harbourton plus one additional director. All of the
directors shall serve until the next annual meeting of the Allstate
shareholders.
(d) The executive officers of the Surviving Corporation as of the
Effective Time shall be the following persons:
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ Chairman of the Board
J. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ President
▇▇▇▇▇ ▇▇▇▇▇▇ Senior Vice President
C. ▇▇▇▇ ▇▇▇▇▇▇▇ Senior Vice President, Chief Financial
Officer, Secretary and Treasurer
2.3. Closing
-------------
Within 15 days following the satisfaction or waiver of all the
conditions set forth in Article VII (other than the delivery of certificates,
opinions and other instruments and documents to be furnished at Closing), the
Closing shall take place on a date and at a time and place mutually designated
in writing by the Parties. The Certificate of Merger shall be filed on the
Closing Date.
2.4. Treatment of Capital Stock
---------------------------------
(a) Subject to the provisions of this Agreement, at the Effective
Time, automatically by virtue of the Merger and without any action on the part
of any person or entity:
(1) Each share of Allstate Common Stock shall continue unchanged
as a share of Surviving Corporation Common Stock, except for any
Allstate Dissenting Shares.
(2) All HarbourtonOwned Shares shall be canceled and retired
without consideration or conversion.
(3) Each other outstanding share of Harbourton Common Stock
shall be converted into the right to receive the per share Merger
Consideration, which shall equal the
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sum of the per share Stock Consideration and the per share Cash
Consideration as such terms are defined in Sections 2.4(b) and 2.4(c)
below.
(4) Holders of Allstate Dissenting Shares who exercise and
perfect their Dissenters' Rights shall receive a cash payment for such
shares from the Surviving Corporation. Any holders of Allstate
Dissenting Shares shall be entitled to payment for such shares only to
the extent permitted by and in accordance with the provisions of the
DGCL; provided, however, that if, in accordance with the DGCL, any
holder of Dissenting Shares shall forfeit such right to payment of the
fair value of such shares then such shares shall continue as Allstate
Common Stock. Allstate Dissenting Shares shall not, after the Effective
Time, be entitled to vote for any purpose or receive any dividends or
other distributions and shall be entitled only to such rights as are
afforded in respect of dissenting shares pursuant to the DGCL.
(b)(1) The aggregate Stock Consideration shall be determined
pursuant to the following formula, subject to adjustment as set forth in
Section 2.4(b)(2) below:
x = .495 (y/.505), where
x = the number of shares of Allstate Common Stock to
be issued to the Harbourton shareholders, rounded down to
the nearest number of whole shares, and
y = the total number of shares of Allstate
Common Stock issued and outstanding on the Closing Date
following completion of the Recapitalization Plan and
immediately prior to the Effective Time.
(2) The total number of shares of Allstate Common Stock
represented by x as calculated pursuant to Section 2.4(b)(1) above shall
be reduced by the number of Allstate Dissenting Shares as to which
holders of Allstate Common Stock have demanded (and have not withdrawn
or lost) their appraisal rights under Section 262 of the DGCL as of the
Effective Time. If there are any Allstate Dissenting Shares as of the
Effective Time, then the stockholders of Harbourton shall be entitled to
receive an additional cash payment equal to (a) the number of shares of
Allstate Common Stock by which the Aggregate Stock Consideration set
forth in Section 2.4(b)(1) above is reduced, multiplied by (b) $0.95.
(3) The per share Stock Consideration shall equal x/z, where x
has the meaning set forth in Section 2.4(b)(1) above (as may be adjusted
pursuant to Section 2.4(b)(2) above) and z equals the total number of
shares of Harbourton Common Stock issued and outstanding immediately
prior to the Effective Time, excluding any Harbourton-Owned Shares.
(c)(1) The aggregate Cash Consideration to be paid by Allstate to
Harbourton's share-holders shall equal (1) the aggregate GAAP book value
of Harbourton as of the last day of the calendar month immediately
preceding the Effective Time, minus (2) $0.95 times x, where x has the
meaning set forth in clause (b) above, subject to adjustment as set
forth in Section 2.4(c)(2) below.
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The per share Cash Consideration shall equal the aggregate Cash
Consideration divided by the total number of shares of Harbourton Common
Stock issued and outstanding immediately prior to the Effective Time,
excluding any Harbourton-Owned Shares.
(2) In the event that Allstate's participation interest in the
Lakelands project loan originated by Harbourton is not repaid in full
prior to the Effective Time, then Allstate may elect to reduce the
aggregate Cash Consideration to be paid to Value Partners pursuant to
Section 2.4(c)(1) above by the dollar amount of the participation
interest and instead assign all of its rights in such participation
interest to Value Partners, provided that any accrued but unpaid
interest on the participation interest shall be paid by Harbourton to
Allstate at the Effective Time.
2.5 Shareholder Rights; Stock Transfers
----------------------------------------
At the Effective Time, holders of Certificates shall cease to be and
shall have no rights as shareholders of Harbourton. After the Effective Time,
there shall be no transfers on the stock transfer books of Harbourton. If
Certificates are presented for transfer after the Effective Time, they shall
be delivered to the Surviving Corporation or the Exchange Agent for
cancellation against delivery, without interest, of the Merger Consideration.
2.6 Fractional Shares
----------------------
No fractional shares of Surviving Corporation Common Stock will be
issued in the Merger; instead, the Surviving Corporation shall pay to each
Certificate holder who would otherwise be entitled to a fractional share an
amount in cash (without interest) determined by multiplying such fraction by
the average of the high bid and low asked prices of Allstate Common Stock, as
reported by the Nasdaq OTC Bulletin Board for the last trading day immediately
preceding the Closing Date. No dividend or distribution with respect to
Allstate Common Stock shall be payable on or with respect to any fractional
share interest, and no such fractional share interest shall entitle the owner
thereof to vote or to any other rights of a shareholder. For the purposes of
determining any such fractional share interests, all shares of Surviving
Corporation Common Stock to be issued to a Harbourton shareholder in the
Merger shall be combined so as to calculate the maximum number of whole shares
of Surviving Corporation Common Stock issuable to such Harbourton shareholder.
2.7 Options
------------
On or before the date hereof, each Harbourton Option shall be either
exercised or otherwise converted into shares of Harbourton Common Stock or
cancelled. Upon execution of this Agreement through the Effective Time, there
shall be no outstanding Harbourton Options.
2.8 Exchange Procedures
------------------------
(a) As promptly as practicable after the Effective Time, the Surviving
Corporation shall send transmittal materials to each holder of record of
Certificates, which transmittal materials shall specify that risk of loss and
title to Certificates shall pass only upon acceptance of such Certificates by
the Surviving Corporation. Upon acceptance of a Certificate (or indemnity
reasonably satisfactory
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to the Surviving Corporation, if any of such Certificates are lost, stolen or
destroyed), the Surviving Corporation shall deliver the Merger Consideration
payable with respect to such shares. The Surviving Corporation shall be
entitled to conclusively rely upon the stock transfer books of Harbourton to
establish the identity of the Certificate holders. In the event of a dispute
with respect to ownership of any Certificate, the Surviving Corporation shall
be entitled to deposit any consideration in respect thereof in escrow with an
independent third party and thereafter be relieved with respect to any claims
thereto.
(c) Neither the Surviving Corporation nor any Party shall be liable to
any Certificate holder for any amount properly delivered to a public official
pursuant to applicable abandoned property, escheat or similar laws.
(d) No holder of an unsurrendered Certificate shall be eligible to
receive dividends or distributions on Surviving Corporation Common Stock. Upon
exchange of a Certificate for Surviving Corporation Common Stock, the holder
thereof shall be entitled to receive any dividends or distributions, without
interest, declared and paid after the Effective Time.
2.9 Additional Actions
-----------------------
If, at any time after the Effective Time, the Surviving Corporation
shall consider that any further assignments or assurances in law or any other
acts are necessary or desirable to (i) vest, perfect or confirm, of record or
otherwise, in the Surviving Corporation its right, title or interest in, to or
under any of the rights, properties or assets of Harbourton acquired by the
Surviving Corporation in the Merger, or (ii) otherwise carry out the purposes
of this Agreement, Harbourton and its proper officers and directors shall be
deemed to have granted to the Surviving Corporation an irrevocable power of
attorney to execute and deliver all such proper deeds, assignments and
assurances in law and to do all acts necessary or proper to vest, perfect or
confirm title to and possession of such rights, properties or assets in the
Surviving Corporation and otherwise to carry out the purposes of this
Agreement; and the proper officers and directors of the Surviving Corporation
are fully authorized in the name of Harbourton or otherwise to take any and
all such action.
ARTICLE 3. MUTUAL REPRESENTATIONS AND WARRANTIES WITH RESPECT TO THE PARTIES
As of the date hereof, and except as Previously Disclosed, each Party
represents and warrants to the other Party as follows:
3.1 Capital Structure
----------------------
Its authorized and issued and outstanding capital stock is correctly set
forth in the table below. All issued and outstanding shares of its stock have
been duly authorized and validly issued, are fully paid and nonassessable, and
have not been issued in violation of the preemptive rights of any person.
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Stock Authorized Issued Treasury Outstanding
----- ---------- ------ -------- -----------
Harbourton
Common Stock 1,000,000 787,612 0 787,612
Harbourton
Preferred Stock 500,000 None None None
Allstate
Common Stock 20,000,000 3,280,828 781,212 2,499,616
Allstate
Preferred Stock 2,000,000 None None None
As of the date hereof, Allstate has $4,597,000 of Allstate Notes issued
and outstanding, plus accrued interest thereon. Certain holders of the
Allstate Notes have agreed to convert their notes into Allstate Common Stock
on the Conversion Date, and certain other holders have the option of either
converting their Allstate Notes on the Conversion Date or retaining their
Allstate Notes.
Its outstanding Rights and shares of Restricted Stock are correctly set
forth in the table below. It has Previously Disclosed a schedule of its Rights
and Restricted Stock that includes the name of each holder of Rights and of
Restricted Stock, the number of Rights held by each holder, the number of
shares of Restricted Stock held by each holder thereof, the exercise price of
each option and the vesting date of each option.
Outstanding Rights Restricted Stock
------------------ ----------------
Harbourton 0 0
Allstate 155,400 175,000
3.2 Subsidiaries
-----------------
It has Previously Disclosed a list of all its Subsidiaries. All
outstanding shares or ownership interests of its Subsidiaries are validly
issued, fully paid, nonassessable and owned beneficially and of record by it
or one of its Subsidiaries free and clear of any Encumbrance. There are no
Rights authorized, issued or outstanding with respect to any of its
Subsidiaries.
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3.3 This Agreement
-------------------
(a) It has authority to enter into this Agreement, and any other
documents and instruments that are executed by it on the date hereof that
relate to the Merger and, subject to any necessary approvals from Governmental
Entities, its shareholders and as Previously Disclosed other third parties, to
consummate the Merger.
(b) Its Board has authorized the execution, delivery and performance of
this Agreement and any other documents and instruments that are executed by it
on the date hereof that relate to the Merger and the consummation of the
Merger. It has properly executed and delivered this Agreement and any other
documents and instruments that are executed by it on the date hereof that
relate to the Merger, which are its valid and binding obligations, and neither
this Agreement nor any of such other documents or instruments executed by it
on the date hereof that relate to the Merger violates its certificate of
incorporation, bylaws, or any law, judgment or order of any Governmental
Entity applicable to it.
(c) No "business combination," "moratorium," "control share" or other
state antitakeover statute or regulation prohibits, restricts or subjects to
any material condition its ability to perform its obligations under this
Agreement or any of the other documents or instruments that are executed by it
on the date hereof that relate to the Merger.
3.4 Financial Statements; No Adverse Change
--------------------------------------------
It has Delivered Financial Statements which have been prepared in
accordance with GAAP, fairly present its consolidated financial position, and
contain adequate reserves for losses. Since the period covered by its most
recent Interim Financial Statements Delivered prior to the date hereof, it and
its Subsidiaries have conducted their businesses only in the ordinary course
and it has not suffered a Material Adverse Effect. Except as disclosed in such
Interim Financial Statements, no circumstances exist that could reasonably be
expected to result in a Material Adverse Effect. It and its Subsidiaries have
no liabilities, known or unknown, asserted or unasserted, absolute, contingent
or otherwise, that are required under GAAP to be reflected in audited
financial statements or the notes thereto which are not reflected in its
Annual Financial Statements other than liabilities incurred in the ordinary
course of business since such date.
3.5 Interim Events
-------------------
Since its most recent Interim Financial Statements it has not paid or
declared any dividend or made any other distribution to shareholders or taken
any action (other than loan originations) which if taken after the date hereof
would require the prior written consent of the other Party hereunder.
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ARTICLE 4. MUTUAL REPRESENTATIONS AND WARRANTIES WITH RESPECT TO THE
PARTIES AND THEIR SUBSIDIARIES
As of the date hereof, except as Previously Disclosed and subject to the
standard set forth in Section 9.8, each Party as to itself and separately as
to each of its Subsidiaries, represents and warrants to the other Party as
follows:
4.1 Organization and Good Standing
-----------------------------------
It is duly organized, validly existing and in good standing under the
laws of its jurisdiction of organization and has authority to own, operate and
lease its assets and properties and to carry on its business. It is qualified
to do business and is in good standing in each jurisdiction where the
character of its assets or the nature of its business requires it to be
qualified. It has Delivered accurate copies of its certificate of
incorporation and bylaws as currently in effect. Its minute books contain
complete and accurate records of all meetings and other corporate actions
taken by its shareholders and Board. Its stock ledgers reflect all
transactions in its capital stock, since its inception.
4.2 Compliance with Law
------------------------
(a) It is in compliance with all laws, regulations, ordinances, rules,
judgments, orders or decrees applicable to its operations and business.
(b) It has all permits, licenses, certificates of authority, orders and
approvals of, and has made all filings, applications and registrations with,
all Governmental Entities that are required in order to permit it to carry on
its business as it is presently being conducted.
(c) It has not received in the last three years any notification or
communication from any Governmental Entity or the staff thereof asserting that
it was not in compliance with any statutes, regulations or ordinances,
threatening to revoke any license, franchise, permit or authorization; or
threatening or contemplating any enforcement action.
4.3 Governmental Approvals
---------------------------
No approval of, or filing with, any Governmental Entity is required by
it for the consummation of the Merger except for:
(a) The filing of the Certificate of Merger.
(b) Any state securities filings.
(c) Any antitrust filings or approvals.
It is not aware of any reasons relating to it why such consents and
approvals should not be granted, free of any conditions or requirements which
would materially reduce the value of the Merger.
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4.4 No Violations
------------------
Neither the execution of this Agreement nor the consummation of the
Merger will result in any violation, breach, termination, default or loss of a
material benefit under, or permit the acceleration of any obligation under, or
require the consent of a third party under, or result in the creation of any
Encumbrance on any of the property or assets under, any of its agreements or
other instruments.
4.5 No Broker's or Finder's Fees
---------------------------------
No agent, broker, investment banker, person or firm acting on its behalf
or under its authority will be entitled to any fee or commission in connection
with the Merger.
4.6 Litigation and Other Proceedings
-------------------------------------
It is not a defendant in nor is any of its property subject to any
pending (or, subject to the Knowledge Qualification, threatened), claim,
action, suit, investigation or proceeding or subject to any judicial order,
judgment or decree.
4.7 Environmental Matters
--------------------------
(a) It is in compliance with all Environmental Laws. It has not received
any communication alleging that it is not in such compliance and, subject to
the Knowledge Qualification, there are no present circumstances that would
prevent or interfere with the continuation of such compliance.
(b) Subject to the Knowledge Qualification, none of the properties
owned, leased or operated by it has been or is in violation of or liable under
any Environmental Law.
(c) Subject to the Knowledge Qualification, there are no past or present
actions, activities, circumstances, conditions, events or incidents that could
reasonably form the basis of any Environmental Claim or other claim or action
or governmental investigation that could result in the imposition of any
liability against or obligation on the part of it or any person or entity
whose liability or obligation for any Environmental Claim it has or may have
retained or assumed either contractually or by operation of law.
(d) It has not conducted (i) any phase one environmental investigations
during the past three years (other than in connection with loan originations
or purchases) or (ii) any phase two environmental investigations during the
past three years, in each case, with respect to any properties owned by it,
leased by it or securing loans held by it.
4.8 Tax Matters
----------------
(a) It has timely filed all federal, state and local (and, if
applicable, foreign) income, franchise, excise, real property, personal
property and other tax returns required by applicable law to be filed by it
(including estimated tax returns, income tax returns, information returns and
withholding and employment tax returns) and has paid, or where payment is not
required to have
14
Page 23 of 58 Pages
been made, has set up an adequate reserve or accrual for the payment of, all
taxes in respect of the periods covered by such returns and, as of the
Effective Time, will have paid, or where payment is not required to have been
made will have set up an adequate reserve or accrual for the payment of, all
taxes for any subsequent periods ending on or prior to the Effective
Time. It will not have any liability for any such taxes in excess of the
amounts so paid or reserves or accruals so established.
(b) All federal, state and local (and, if applicable, foreign) income,
franchise, excise, real property, personal property and other tax returns
filed by it are accurate. It either is not delinquent in the payment of any
tax, assessment or governmental charge or has requested an extension of time
without penalty within which to file any tax returns in respect of any fiscal
year or portion thereof. Its federal, state and local income tax returns that
are open to audit have not been audited by the applicable tax authorities and
no deficiencies for any tax, assessment or governmental charge have been
proposed, asserted or assessed (tentatively or otherwise) against it which
have not been settled and paid. There are currently no agreements in effect
with respect to it to extend the period of limitations for the assessment or
collection of any tax. No audit, examination or deficiency or refund
litigation with respect to any such return is pending or, subject to the
Knowledge Qualification, threatened.
(c) It (i) is not a party to any agreement providing for the allocation
or sharing of taxes, (ii) is not required to include in income any adjustment
pursuant to Section 481(a) of the Code or by reason of any change in
accounting method (nor does it have any knowledge that the IRS has proposed
any such adjustment or change of accounting method) and (iii) has not filed a
consent pursuant to Section 341(f) of the Code or agreed to have Section
341(f)(2) of the Code apply.
(d) It has withheld amounts from its employees and shareholders in
compliance with the tax withholding provisions of applicable federal, state
and local laws, has filed all federal, state and local returns and reports for
all periods for which such returns or reports would be due with respect to
income tax withholding, social security, unemployment taxes, income and other
taxes and all payments or deposits with respect to such taxes have been timely
made.
4.9 Insurance
--------------
It is insured for reasonable amounts with financially sound and
reputable insurance companies against such risks as companies or institutions
engaged in a similar business would, in accordance with good business
practice, customarily be insured and has maintained all insurance required by
its agreements. It has not, during the past five years, had an insurance
policy canceled or nonrenewed or been denied any insurance coverage for which
it has applied.
4.10 Labor
----------
No work stoppage involving it is pending or, subject to the Knowledge
Qualification, threatened. It is not involved in or, subject to the Knowledge
Qualification, threatened with or affected by, any labor dispute,
discrimination or sexual harassment claims, arbitration, lawsuit or
administrative proceeding involving any of its employees. It is not a party
to any collective bargaining agreement.
15
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4.11 Indemnification
--------------------
Subject to the Knowledge Qualification, no action or failure to take
action by any present or former director, advisory director, officer, employee
or agent of it has occurred which would give rise to a claim or a potential
claim by any such person for indemnification from it.
4.12 Loan Portfolio
-------------------
Each loan reflected as an asset on its Annual Financial Statements and
each loan originated or acquired thereafter is evidenced by appropriate and
sufficient documentation and constitutes a legal, valid and binding obligation
of the obligor named therein, enforceable in accordance with its terms, except
to the extent that the enforceability thereof may be limited by bankruptcy,
insolvency, reorganization, moratorium or similar laws or equitable principles
or doctrines. All such loans are free and clear of any Encumbrance It has
Previously Disclosed a complete list of the real estate acquired by it through
foreclosure, repossession or deed in lieu thereof which are currently held by
it.
4.13 Investment Portfolio
-------------------------
All investment securities held by it are carried on its financial books
and records in accordance with GAAP. None of its investment securities are
subject to any restriction, whether contractual or statutory, which materially
impairs its ability to freely dispose of such investment securities at any
time, other than those restrictions imposed on securities held to maturity
under GAAP.
4.14 Defaults
-------------
There has not been any default in any obligation to be performed by it
under any agreement and it has not waived any material right under any
agreement. Subject to the Knowledge Qualification, no other party to any
agreement is in default in any obligation to be performed by such party.
4.15 Real Estate Loans and Investments
--------------------------------------
Except for properties acquired by it in settlement of loans, there are
no facts, circumstances or contingencies known to it which exist and would
require a reduction under GAAP in the present carrying value of any of its
real estate investments, joint ventures, other investments or other loans
(either individually or in the aggregate with its other loans and
investments).
4.16 Derivatives Contracts
--------------------------
It is not a party to and has not agreed to enter into an exchangetraded
or overthecounter swap, forward, future, option, cap, floor or collar
financial contract or any other contract not included in its Annual Financial
Statement which is a derivatives contract (including various combinations
thereof) and it does not own any securities that are referred to as structured
notes.
16
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4.17 Employee Benefit Plans
---------------------------
(a) It has Previously Disclosed all Employee Plans (other than those
that relate to benefits which previously have been fully accrued as a
liability or expensed and for which there is no future financial reporting
obligation) and has heretofore delivered accurate copies of each (including
amendments and agreements relating thereto) together with, in the case of
qualified plans, (i) the most recent financial reports and actuarial reports
prepared with respect thereto, (ii) the most recent annual reports filed with
any Governmental Entity with respect thereto, and (iii) all rulings and
determination letters and any open requests for rulings or letters that
pertain thereto.
(b) Each Employee Plan has been operated and administered in
accordance with its terms and with applicable law, including, to the extent
applicable, ERISA, the Code, the Age Discrimination in Employment Act, and the
regulations or rules promulgated thereunder; and all filings, disclosures and
notices required by ERISA, the Code, the Securities Act, the Exchange Act, the
Age Discrimination in Employment Act and any other applicable law have been
timely made.
(c) Each Employee Plan which is an "employee pension benefit plan"
within the meaning of Section 3(2) of ERISA (a "Pension Plan") and which is
intended to be qualified under Section 401(a) of the Code has received a
favorable determination letter (including a determination that the related
trust under such Pension Plan is exempt from tax under Section 501(a) of the
Code) from the IRS, and it is not aware of any circumstances likely to result
in revocation of any such favorable determination letter.
(d) There is no pending or, subject to the Knowledge Qualification,
threatened legal action, suit or claim relating to any Employee Plan (other
than routine claims for benefits) or against any related trust thereto or
fiduciary thereof.
(e) It has not engaged in a transaction, or omitted to take any
action, with respect to any Employee Plan that has or would reasonably be
expected to subject it to a tax or penalty imposed by either Section 4975 of
the Code or Section 502 of ERISA, assuming for purposes of Section 4975 of the
Code that the taxable period of any such transaction expired as of the date
hereof.
(f) No liability (other than for payment of premiums to the PBGC which
have been made or will be made on a timely basis) under Title IV of ERISA has
been or is expected to be incurred by it with respect to any ongoing, frozen
or terminated "single-employer plan", within the meaning of Section
4001(a)(15) of ERISA, currently or formerly maintained by it, or any single-
employer plan of any entity (an "ERISA Affiliate") which is considered one
employer with it under Section 4001(a)(14) of ERISA or Section 414(b) or (c)
of the Code (an "ERISA Affiliate Plan").
(g) Neither it nor any ERISA Affiliate has contributed, or has been
obligated to contribute, to a multiemployer plan under Subtitle E of Title IV
of ERISA at any time since September 26, 1980.
(h) No notice of a "reportable event", within the meaning of Section
4043 of ERISA for which the 30-day reporting requirement has not been waived,
has been required to be filed for any
17
Page 26 of 58 Pages
Employee Plan or by any ERISA Affiliate Plan within the 12-month period ending
on the date hereof. The PBGC has not instituted proceedings to terminate any
Pension Plan or ERISA Affiliate Plan and, subject to the Knowledge
Qualification, no condition exists that presents a risk that such proceedings
will be instituted by the PBGC.
(i) There is no pending investigation or enforcement action by the
PBGC, DOL or IRS or any other Governmental Entity with respect to any Employee
Plan.
(j) Under each Pension Plan and ERISA Affiliate Plan that is a defined
benefit plan, as of the date of the most recent actuarial valuation performed
prior to the date hereof, the actuarially determined present value of all
"benefit liabilities", within the meaning of Section 4001(a)(16) of ERISA (as
determined on the basis of the actuarial assumptions contained in such
actuarial valuation of such Pension Plan or ERISA Affiliate Plan), did not
exceed the then current value of the assets of such Pension Plan or ERISA
Affiliate Plan and since such date there has been neither a material adverse
change in the financial condition of such Pension Plan or ERISA Affiliate Plan
nor any amendment or other change to such Pension Plan or ERISA Affiliate Plan
that would increase the amount of benefits thereunder which reasonably could
be expected to change such result.
(k) All contributions required to be made under the terms of any
Employee Plan or ERISA Affiliate Plan have been timely made.
(l) Neither any Pension Plan nor any ERISA Affiliate Plan has an
"accumulated funding deficiency" (whether or not waived) within the meaning of
Section 412 of the Code or Section 302 of ERISA and all required payments to
the PBGC with respect to each Pension Plan or ERISA Affiliate Plan have been
made on or before their due dates.
(m) Neither it nor any ERISA Affiliate (i) has provided, or would
reasonably be expected to be required to provide, security to any Pension Plan
or to any ERISA Affiliate Plan pursuant to Section 401(a)(29) of the Code, or
(ii) has taken any action, or omitted to take any action, that has resulted,
or would reasonably be expected to result, in the imposition of an Encumbrance
under Section 412(n) of the Code or pursuant to ERISA.
(n) It has no obligation to provide retiree health and life insurance
or other retiree death benefits under any Employee Plan, other than benefits
mandated by Section 4980B of the Code. There has been no communication to its
employees that would reasonably be expected to promise or guarantee such
employees retiree health or life insurance or other retiree death benefits.
(o) It has neither made any payments, nor is obligated to make any
payments by virtue of the consummation of the Merger or otherwise, nor a party
to any agreement or any Employee Plan, that under any circumstances could
obligate it or its successor to make payments or deemed payments that (i) are
not or will not be deductible because of Sections 162(m) or 280G of the Code
or (ii) require the Surviving Corporation or any of its Subsidiaries to record
any charge or expense therefor (or any tax grossup payments) for financial
reporting purposes on a postacquisition basis. Neither the execution of this
Agreement nor the consummation of the Merger will constitute a change in
control for purposes of any of its Employee Plans or any of the employment
agreements, change in
18
Page 27 of 58 Pages
control severance agreements, severance compensation plan or benefit
restoration plan to which it or any of its Subsidiaries is a party.
4.18 Properties
---------------
(a) All real and personal property owned by it or presently used in
its business is in good condition (ordinary wear and tear excepted) and is
sufficient to carry on its business in the ordinary course of business
consistent with its past practices. It has good and marketable title free and
clear of all Encumbrances (other than equitable rights of redemption laws
relating to property acquired by it in foreclosure) to all of its properties
and assets, real and personal, except
(i) liens for current taxes not yet due or payable,
(ii) pledges to secure deposits,
(iii) such imperfections of title, easements and nonmonetary
Encumbrances affecting real property, if any, which do not adversely
affect the value or use of such real property, and
(iv) any monetary Encumbrances, reflected in its Annual Financial
Statements.
(b) All real and personal property that is leased or licensed by it is
held pursuant to leases or licenses which are valid and enforceable in
accordance with their respective terms and such leases and licenses will not
terminate or lapse prior to the Effective Time or thereafter by reason of
completion of the Merger. All improved real property owned or leased by it is
in compliance with all applicable laws including zoning laws.
4.19 Certain Agreements
-----------------------
It is not a party to, is not bound or affected by, and does not receive
and is not obligated to pay benefits (other than those that relate to benefits
which previously have been fully accrued as a liability or expensed and for
which there is no future financial reporting obligation) under:
(a) any agreement, arrangement or commitment, including any agreement,
indenture or other instrument, relating to the borrowing of money by it or
the guarantee by it of any obligation;
(b) any agreement, arrangement or commitment relating to the employment
of a consultant or the employment, election or retention in office of any
present or former director, advisory director, officer or employee;
(c) any agreement, arrangement or understanding pursuant to which any
payment (whether of severance pay or otherwise) is or may become due to any
present or former director, advisory director, officer or employee;
(d) any agreement, arrangement or understanding pursuant to which it is
obligated to indemnify any present or former director, advisory director,
officer, employee or agent;
19
Page 28 of 58 Pages
(e) any agreement, arrangement or understanding which limits its freedom
to compete in any line of business or with any person;
(g) any agreement pursuant to which loans have been sold by it, which
impose any potential recourse obligations (by representation, warranty,
covenant or other contractual terms) upon it; or
(h) any subservicing agreement.
4.20 Material Interests of Certain Persons
------------------------------------------
(a) No officer, director or employee of it or any "associate" (as such
term is defined in Rule 14a1 under the Exchange Act) or related interest of
any such person has any material interest in any material agreement or
property (real or personal, tangible or intangible), used in, or pertaining
to, its business.
(b) Except as set forth in its proxy statement for its most recent
annual meeting of shareholders there are no outstanding Insider Loans. All
outstanding Insider Loans were made in the ordinary course of business and on
substantially the same terms as those prevailing at the time for comparable
transactions with third parties and were, with respect to executive officers
and directors, approved by its Board in accordance with applicable law and
regulations.
4.21 No Impediments
-------------------
It has not taken or agreed to take any action, nor does it have
knowledge of any fact or circumstance, that would (i) materially impede or
delay the consummation of the Merger or the ability of the Parties to obtain
any approval of any Governmental Entity required for consummation of the
Merger or to perform their covenants and agreements under this Agreement or
(ii) prevent the Merger from qualifying as a reorganization within the meaning
of Section 368(a) of the Code.
4.22 Disclosures
----------------
None of the representations and warranties by a Party as to itself or
its Subsidiaries pursuant to Articles III, IV or V hereof or any of the
information Previously Disclosed or Delivered by a Party or on its behalf,
contains any untrue statement of a material fact, or omits to state any
material fact required to be stated or necessary to make any such information,
in light of the circumstances, not misleading.
ARTICLE 5. ADDITIONAL REPRESENTATIONS AND WARRANTIES OF HARBOURTON
As of the date hereof, and except as Previously Disclosed, Harbourton
represents and warrants to Allstate as follows:
20
Page 29 of 58 Pages
5.1 Registration Obligations
-----------------------------
Harbourton is not under any obligation, contingent or otherwise, which
will survive the Effective Time by reason of any agreement to register any of
its securities under the Securities Act or other federal or state securities
laws or regulations.
ARTICLE 6. COVENANTS
6.1 Reasonable Best Efforts
----------------------------
Subject to the terms and conditions of this Agreement, each Party shall
use its reasonable best efforts in good faith to take, or cause to be taken,
all actions, and to do, or cause to be done, all things necessary or advisable
under applicable laws and regulations so as to permit and otherwise enable
completion of the Merger by November 30, 2000 or as soon thereafter as
reasonably practicable, and shall cooperate fully with the other to that end.
6.2 Action by Shareholders; Dissenters' Rights
-----------------------------------------------
(a) The shareholders of Allstate shall approve the Merger by written
consent in lieu of a meeting pursuant to Section 228 of the DGCL. The
shareholders of Harbourton shall approve the Merger at a special meeting of
shareholders to be called and held as soon as practicable, and in any event no
later than November 30, 2000. The Merger must be approved by holders of a
majority of the outstanding Allstate Common Stock entitled to vote thereon and
by holders of a majority of the outstanding Harbourton Common Stock entitled
to vote thereon.
(b) Allstate shall notify the holders of Allstate Common Stock of
their Dissenters' Rights in the manner and within the time required by Section
262(d)(2) of the DGCL.
6.3 Regulatory Matters
-----------------------
(a) The Parties shall cooperate with each other and use their reasonable
best efforts to promptly prepare and file all necessary documentation, to
effect all applications, notices, petitions and filings, and to obtain as
promptly as practicable all permits, consents, approvals and authorizations of
all Governmental Entities and third parties which are necessary or advisable
to consummate the Merger. Each Party shall have the right to review in
advance, and to the extent practicable each will consult with the other on, in
each case subject to applicable laws relating to the exchange of information,
all the information which appears in any filing made by the other Party or
written materials submitted by the other Party to any third party or any
Governmental Entity in connection with the Merger. In exercising the foregoing
right, each of the Parties shall act reasonably and as promptly as
practicable. The Parties agree that they will consult with each other with
respect to the obtaining of all permits, consents, approvals and
authorizations of all third parties and Governmental Entities necessary or
advisable to consummate the Merger and each Party will keep the other
appraised of the status of matters relating to completion of the Merger.
21
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(b) Each Party shall promptly furnish the other Party with copies of
written communications received from, or delivered to, any Governmental Entity
in respect of the Merger.
6.4 Investigation and Confidentiality
--------------------------------------
(a) Each Party shall permit the other Party and its representatives
reasonable access to its and its Subsidiaries properties and personnel, and
shall disclose and make available upon reasonable request to the extent such
disclosure is permitted by law and will not result in the loss or potential
loss of any attorney-client privilege, all books, papers and records relating
to its and its Subsidiaries assets, stock ownership, properties, operations,
obligations and liabilities, including all books of account (including the
general ledger), tax records, minute books of meetings of boards of directors
(and any committees thereof) and shareholders, certificate of incorporation,
bylaws, material agreements, filings with any Governmental Entity,
accountants' work papers, litigation files, loan files, plans affecting
employees, and any other business activities or prospects in which the
examining Party may have a reasonable interest, provided that such access and
any such reasonable request shall be reasonably related to the Merger and
shall not unduly interfere with normal operations of the other Party and its
Subsidiaries. Each Party shall make its directors, officers, employees and
agents and authorized representatives (including counsel and independent
public accountants) and those of its Subsidiaries available to confer with the
other Party and its representatives, provided that such access shall be
reasonably related to the Merger and shall not unduly interfere with the
normal operations of such Party and its Subsidiaries.
(b) All information furnished previously in connection with the Merger
or pursuant hereto shall be treated as the sole property of the Party
furnishing the information until completion of the Merger and, if the Merger
shall not occur, the Party receiving the information shall either destroy or
return to the furnishing Party all documents or other materials containing,
reflecting or referring to such information, shall use its best efforts to
keep confidential all such information, and shall not directly or indirectly
use such information for any competitive or other commercial purposes. The
obligation to keep such information confidential shall continue for five years
from the date of this Agreement but shall not apply to (i) any information
which (x) the Party receiving the information can establish was already in its
possession prior to the disclosure thereof by the other Party; (y) was then
generally known to the public; or (z) became known to the public through no
fault of the Party receiving the information; or (ii) disclosures pursuant to
a legal requirement or in accordance with an order of a court of competent
jurisdiction, provided that the Party which is the subject of any such legal
requirement or order shall use its best efforts to give the other Party at
least ten business days' prior notice thereof.
6.5 Press Releases
-------------------
The Parties shall mutually agree as to the form and substance of any
press release related to this Agreement or the Merger, and consult with each
other as to the form and substance of other public disclosures which may
relate to the Merger, provided, however, that nothing contained herein shall
prohibit either Party, following notification to the other Party, from making
any disclosure which such Party believes is required by law or regulation.
22
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6.6 Business of the Parties
----------------------------
(a) During the period from the date of this Agreement and continuing
until the Effective Time, except as expressly contemplated or permitted by
this Agreement or with the prior written consent of the other Party, each
Party shall carry on its business and cause its Subsidiaries to carry on their
businesses only in the ordinary course consistent with past practice. During
such period, each Party also will use, and will cause each of its Subsidiaries
to use, all reasonable efforts to (x) preserve its business organization
intact, (y) keep available the present services of its employees and (z)
preserve the goodwill of its customers and others with whom business
relationships exist. Without limiting the generality of the foregoing, except
with the prior written consent of the other Party or as expressly contemplated
hereby, between the date hereof and the Effective Time, neither Party nor any
of its Subsidiaries shall:
(i) declare, set aside, make or pay any dividend or other
distribution (whether in cash, stock or property or any combination
thereof) in respect of its capital stock, except for dividends or
distributions by a wholly owned Subsidiary of a Party to such Party;
(ii) issue any shares of its capital stock, other than pursuant to
the Recapitalization Plan or upon the exercise of options outstanding on
the date hereof to acquire a Party's Common Stock; issue, grant, modify
or authorize any Rights; purchase any shares of its Common Stock; or
effect any recapitalization, reclassification, stock dividend, stock
split or like change in capitalization, other than pursuant to the
Recaptialization Plan;
(iii) amend its certificate of incorporation or bylaws; or waive
or release any material right or cancel or compromise any material debt
or claim;
(iv) increase the rate of compensation of any of its directors,
officers or employees, or pay or agree to pay any bonus or severance to,
or provide any other new benefit or incentive to, any of its directors,
officers or employees, except (A) as may be required pursuant to
Previously Disclosed commitments existing on the date hereof; and (B) as
may be required by law;
(v) enter into or, except as may be required by law, modify any
Employee Plan or other benefit, incentive or welfare contract, plan or
arrangement, or any trust agreement related thereto, in respect of any
of its directors, officers or employees;
(vi) originate or purchase any loan in excess of $500,000 without
prior notification to the other Party;
(vii) except for the sale of loan participation interests in the
ordinary course of business and except as otherwise permitted hereunder,
enter into (v) any agreement for the purchase, sale, transfer or other
disposition of any material properties or material assets (other than
real estate acquired in foreclosure (or by deed in lieu thereof) or
repossessed assets, in each case, with a carrying value on a Party's
Financial Reports of less than $500,000 individually) or the placing of
any Encumbrance thereon or (w) any other
23
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transaction, agreement, arrangement or commitment not made in the
ordinary course of business, (x) any agreement, indenture or other
instrument relating to its borrowing of money or its guarantee of any
such obligation, except in the ordinary course of business consistent
with past practice, (y) any agreement, arrangement or commitment relating
to the employment of an employee or consultant, or amend any such existing
agreement, arrangement or commitment; provided that a Party or its
Subsidiaries may employ an employee or consultant in the ordinary course
if the employment of such employee or consultant is terminable by such
Party or its Subsidiary, as the case may be, at will without liability,
other than as required by law; or (z) any agreement with a labor union;
(viii) change its method of accounting in effect for its Annual
Financial Statements, except as required by changes in laws or
regulations or GAAP, or change any of its methods of reporting income
and deductions for federal income tax purposes from those employed in
the preparation of its federal income tax return for such year, except
as required by changes in laws or regulations;
(ix) enter into or renew any lease of real or personal property or
any service agreement provided the consent of the other Party shall not
be unreasonably withheld or delayed, or fail to give any required notice
to prevent a lease or service agreement from being renewed; or make any
capital expenditures in excess of $50,000 individually or $100,000 in
the aggregate (provided the consent of the other Party shall not be
unreasonably withheld or delayed), other than pursuant to binding
commitments Previously Disclosed and existing on the date hereof,
proposed expenditures Previously Disclosed and expenditures necessary to
maintain existing assets in good repair;
(x) file any applications or make any contract with respect to
branching or site location or relocation;
(xi) purchase any security or acquire in any manner whatsoever
(other than to realize upon collateral for a defaulted loan) control
over or any equity interest in any business or entity, other than
marketable securities (which do not exceed 1% of the securities
outstanding within such class) in the ordinary course of business;
(xii) except with respect to real estate acquired in foreclosure
(or by deed in lieu thereof) or repossessed assets, enter or agree to
enter into any agreement or arrangement granting any preferential right
to purchase any of its assets or rights or requiring the consent of any
party to the transfer and assignment of any such assets or rights;
(xiii) except as necessitated in its reasonable opinion due to
changes in interest rates, and in accordance with safe and sound banking
practices, change or modify in any material respect any of its lending
or investment policies, except to the extent required by law;
(xiv) enter into any futures contract, option contract, interest
rate caps, interest rate floors, interest rate exchange agreement or
other agreement for purposes of hedging the
24
Page 33 of 58 Pages
exposure of its interestearning assets and interestbearing liabilities
to changes in market rates of interest;
(xv) take any action that would cause any of the representations
and warranties contained herein not to be true and correct in any
material respect at Closing or that would cause any of the conditions of
Article VII hereof not to be satisfied;
(xvi) take any action that would materially impede or delay the
completion of the Merger or the ability of either Party to perform its
covenants and agreements under this Agreement; or
(xviii) agree to do any of the foregoing.
(b) Each Party shall promptly notify the other Party in writing of the
occurrence of any matter or event known to and directly involving it or any of
its Subsidiaries, other than any changes in conditions that affect financial
services companies generally, that would have, either individually or in the
aggregate, a Material Adverse Effect on it.
6.7 Certain Actions
--------------------
Neither Party nor any of its Subsidiaries or any of their respective
directors, officers, employees, representatives or agents shall solicit or
encourage inquiries or proposals with respect to, furnish any information
relating to, or participate in any negotiations or discussions concerning, any
Alternative Proposal, provided, however, that the Board of a Party may furnish
such information (but limited to the information provided to the other Party
in connection with or relating to this Agreement and the Merger) or
participate in such negotiations or discussions if such Board, after having
consulted with and considered the advice of outside counsel, has determined
that the failure to do the same would, in the good faith opinion of such
Board, result in a breach of the fiduciary duty of the Board under applicable
law. Each Party will promptly inform the other Party orally and in writing of
any such request for information or of any negotiations or discussions, as
well as instruct its directors, officers, employees, representatives and
agents and those of its Subsidiaries to refrain from taking any action
prohibited by this section.
6.8 Current Information
------------------------
During the period from the date hereof to the Closing Date, each Party
shall, upon request of the other Party, cause one or more of its designated
representatives to confer on a monthly or more frequent basis with
representatives of the requesting Party regarding its and its Subsidiaries
financial condition, operations and businesses and matters relating to the
completion of the Merger.
6.9 Indemnification
--------------------
(a) After the Effective Time, the Surviving Corporation shall indemnify,
defend and hold harmless each person who is now, or who has been at any time
before the date hereof or who becomes before the Effective Time, an officer,
director or employee of either Party or any of its
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Page 34 of 58 Pages
respective Subsidiaries (the "Indemnified Parties") against all losses, claims,
damages, costs, expenses (including attorney's fees), liabilities or judgments
or amounts that are paid in settlement (which settlement shall require the
prior written consent of the Surviving Corporation, which consent shall not be
unreasonably withheld) of or in connection with any claim, action, suit,
proceeding or investigation, whether civil, criminal, or administrative (each a
"Claim"), in which an Indemnified Party is, or is threatened to be made, a party
or a witness based in whole or in part on or arising in whole or in part out of
the fact that such person is or was a director, officer or employee of either
Party or any of its respective Subsidiaries if such Claim pertains to any
matter or fact arising, existing or occurring before the Effective Time
(including, without limitation, the Merger, regardless of whether such Claim
is asserted or claimed before, or at or after, the Effective Time (the
"Indemnified Liabilities"), to the fullest extent permitted under applicable
state law in effect as of the date hereof or as amended applicable to a time
before the Effective Time and under such Party's certificate of incorporation
or bylaws as in effect on the date hereof (as the case may be). The Surviving
Corporation shall pay expenses in advance of the final disposition of any such
action or proceeding to each Indemnified Party to the full extent permitted by
applicable state law in effect as of the date hereof or as amended applicable
to a time before the Effective Time upon receipt of any undertaking required
by applicable law. Any Indemnified Party wishing to claim indemnification
under this Section 6.9(a), upon learning of any Claim, shall notify the
Surviving Corporation (but the failure so to notify the Surviving Corporation
shall not relieve it from any liability which it may have under this Section
6.9(a) except to the extent such failure materially prejudices the Surviving
Corporation) and shall deliver to the Surviving Corporation any undertaking
required by applicable law. The Surviving Corporation shall ensure, to the
extent permitted under applicable law, that all limitations of liability
existing in favor of the Indemnified Parties as provided in a Party's
certificate of incorporation or bylaws (as the case may be), as in effect as
of the date hereof, or allowed under applicable state law as in effect as of
the date hereof or as such law may be amended applicable to a time before the
Effective Time, with respect to Indemnified Liabilities shall survive the
consummation of the Merger.
(b) From and after the Effective Time, the directors, officers and
employees of each Party hereto or any of its Subsidiaries who become
directors, officers or employees of the Surviving Corporation or any of its
Subsidiaries, shall have indemnification rights having prospective application
with respect to acts or omissions occurring after the Effective Time. The
prospective indemnification rights shall consist of such rights to which
directors, officers and employees of the Surviving Corporation and its
Subsidiaries are entitled under the provisions of the certificate of
incorporation and bylaws of the Surviving Corporation and its Subsidiaries, as
in effect from time to time after the Effective Time, as applicable, and
provisions of applicable state law as in effect from time to time after the
Effective Time.
(c) The obligations of the Surviving Corporation provided under
paragraphs (a) and (b) of this Section 6.9 are intended to be enforceable
against the Surviving Corporation directly by the Indemnified Parties and
shall be binding on all respective successors and permitted assigns of the
Surviving Corporation.
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6.10 Employees and Employee Benefit Plans
-----------------------------------------
(a) Full time employees of Harbourton and its Subsidiaries who remain
employed after the Effective Time will be eligible to participate in benefit
plans of the Surviving Corporation and its Subsidiaries that are generally
available to their fulltime employees on a uniform and nondiscriminatory basis
with credit for years of service with Harbourton and its Subsidiaries for the
purpose of determining eligibility for participation, vesting and entitlement
to vacation time and sick pay (but not for the purpose of accrual or
restoration of benefits under any Allstate Employee Plan or any future benefit
plan of the Surviving Corporation or any of its Subsidiaries where benefits
are calculated on an actuarial basis, including any qualified or non-qualified
defined benefit plan or restoration plan). Contributions to (and accrual of
benefits, to the extent applicable, if any, under) benefit plans of the
Surviving Corporation and its Subsidiaries on behalf of continuing full-time
employees of Harbourton and its Subsidiaries shall only relate to qualifying
compensation earned by such employees after the Effective Time. The Surviving
Corporation shall use its best efforts to cause any and all preexisting
condition limitations (to the extent such limitations did not apply to a
preexisting condition under the corresponding Harbourton group health plan)
and eligibility waiting periods under its group health plans to be waived with
respect to such participants and their eligible dependents.
(b) The Surviving Corporation agrees to honor the terms of all
Previously Disclosed employment, consulting, severance and termination
agreements, severance plans, benefit restoration plans, stock option plans,
and restricted stock plans to which Harbourton or Allstate or any of their
respective Subsidiaries is a party, other than those that are being terminated
and/or replaced at the Effective Time. Nothing herein is intended to limit
the right of the Surviving Corporation to amend or terminate any of the
foregoing in accordance with their terms. The Surviving Corporation hereby
expressly assumes at the Effective Time every such agreement which by its
terms requires express assumption by a successor. Such express assumption
shall occur by virtue of Allstate's execution of this Agreement without any
further action required by the Surviving Corporation upon the completion of
the Merger.
(c) The Surviving Corporation agrees to honor the employment agreements
with Messrs. ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ attached hereto as Exhibits D and E,
respectively.
6.11 Litigation Matters
------------------------
Each Party will consult with the other about any proposed settlement, or
any disposition of, any litigation.
6.12 Conforming Entries
-----------------------
(a) Harbourton recognizes that Allstate and its Subsidiaries may have
adopted different loan, accrual and reserve policies (including loan
classifications and levels of reserves for possible loan losses). Subject to
applicable law, from and after the date hereof to the Closing, Harbourton and
Allstate shall consult and cooperate with each other with respect to
conforming the loan, accrual and reserve policies of Harbourton and its
Subsidiaries to those policies of Allstate and its Subsidiaries,
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Page 36 of 58 Pages
as specified in each case in writing from Allstate to Harbourton, based upon
such consultation and subject to the conditions in Section 6.12(c) below.
(b) Subject to applicable law, Harbourton and Allstate shall consult and
cooperate with each other with respect to determining, as specified in a
written notice from Allstate to Harbourton, based upon such consultation and
subject to the conditions in Section 6.12(c) below, the amount and the timing
for recognizing for financial accounting purposes Harbourton's expenses of the
Merger and any restructuring charges relating to or to be incurred in
connection with the Merger.
(c) Subject to applicable law, Harbourton and its Subsidiaries shall (i)
establish and take such reserves and accruals at such time as Allstate shall
reasonably request to conform the loan, accrual and reserve policies of
Harbourton and its Subsidiaries to the policies of Allstate and its
Subsidiaries, and (ii) establish and take such accruals, reserves and charges
in order to implement such policies and to recognize for financial accounting
purposes such expenses of the Merger and any restructuring charges related to
or to be incurred in connection with the Merger, in each case at such times as
are reasonably requested by Allstate, but in no event prior to five days
before the Closing Date; provided, however, that on the date such reserves,
accruals and charges are to be taken, Allstate shall certify to Harbourton
that all conditions to Allstate's obligation to consummate the Merger set
forth in Sections 7.1 and 7.3 hereof (other than the delivery of certificates,
opinions and other instruments and documents to be delivered at the Closing by
Harbourton, the delivery of which shall continue to be conditions to
Allstate's obligation to consummate the Merger) have been satisfied or waived;
and provided, further, that Harbourton and its Subsidiaries shall not be
required to take any such action that is not consistent with GAAP.
(d) No reserves, accruals or charges taken in accordance with this
section may be a basis to assert a violation of a breach of a representation,
warranty or covenant of Harbourton herein.
6.13 Disclosure Supplements
---------------------------
From time to time prior to the Closing, each Party shall promptly
supplement or amend any materials Previously Disclosed or Delivered pursuant
hereto with respect to any matter hereafter arising which, if existing,
occurring or known at the date of this Agreement, would have been required to
be set forth or described in materials Previously Disclosed or Delivered or
which is necessary to correct any information in such materials which has been
rendered materially inaccurate thereby. No such supplement or amendment to
such materials shall be deemed to have modified the representations,
warranties and covenants of the disclosing Party for the purpose of
determining whether the conditions set forth in Article VII hereof have been
satisfied.
6.14 Failure to Fulfill Conditions
----------------------------------
If a Party determines that a condition to its obligations to consummate
the Merger may not be fulfilled, it will promptly notify the other Party. Each
Party will promptly inform the other Party of any facts applicable to it that
would be likely to prevent or materially delay approval of the Merger by any
Governmental Entity or third party or which would otherwise prevent or
materially delay completion of the Merger.
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6.15 Surviving Corporation Common Stock
---------------------------------------
Allstate shall reserve for issuance a sufficient number of shares of its
Common Stock for the purpose of issuing the Merger Consideration to
Harbourton's shareholders. Allstate covenants that the Surviving Corporation
Common Stock to be issued in the Merger will be duly authorized, validly
issued, fully paid and nonassessable and not subject to any preemptive rights
or other Encumbrance.
6.16 Tax Opinion
----------------
Each Party agrees to use reasonable efforts to obtain a written tax
opinion of counsel, dated as of the Closing, in order to satisfy the condition
set forth in Section 7.1(e).
6.17 New Affiliates
-------------------
Harbourton shall use its best efforts to cause any person becoming an
affiliate of Harbourton for purposes of Rule 145 of the Securities Act after
the date hereof to enter into an affiliate agreement in the form attached
hereto as Exhibit C.
ARTICLE 7. CONDITIONS PRECEDENT
7.1 Conditions Precedent - the Parties
--------------------------------------
The respective obligations of both Parties to effect the Merger shall be
subject to the satisfaction of the following conditions at or prior to the
Closing unless waived by the Parties to the extent permitted by Section 8.4.
(a) The shareholders of each Party shall have approved the Merger by the
requisite vote required by law.
(b) All approvals and consents from any Governmental Entity, the
approval or consent of which is required for the completion of the Merger,
shall have been received and all statutory waiting periods in respect thereof
shall have expired; and the Parties shall have procured all other approvals,
consents and waivers of each person (other than the Governmental Entities
referred to above) whose approval, consent or waiver is necessary to the
completion of the Merger; provided, however, that no approval or consent
referred to in this Section 7.1(b) shall be deemed to have been received if it
shall include any condition or requirement that, in the aggregate, would
materially reduce the economic or business benefits of the Merger to the
Surviving Corporation as the Parties shall reasonably and in good faith agree.
(c) Neither Party shall be subject to any statute, rule, regulation,
injunction or other order or decree which shall have been enacted, entered,
promulgated or enforced by any Governmental Entity which prohibits, restricts
or makes illegal completion of the Merger.
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(d) No proceeding initiated by any Government Entity seeking an order,
injunction or decree issued by any court or agency of competent jurisdiction
or other legal restraint or prohibition preventing the completion of the
Merger shall be pending or threatened.
(e) Allstate shall have received an opinion of Elias, Matz, ▇▇▇▇▇▇▇ &
▇▇▇▇▇▇▇ L.L.P., dated as of the Closing, to the effect that for federal income
tax purposes:
(i) The Merger will qualify as a "reorganization" under Section
368(a) of the Code.
(ii) No gain or loss will be recognized by any Party by reason of
the consummation of the Merger.
(iii) The gain, if any, to be realized by any shareholder of
Harbourton who receives Surviving Corporation Common Stock and cash in
exchange for Harbourton Common Stock should be recognized, but not in
excess of the amount of cash received. If the exchange has the effect
of the distribution of a dividend (determined with application of
Section 318(a) of the Code), then the amount of gain recognized that is
not in excess of such shareholder's ratable share of undistributed
earnings and profits should be treated as a dividend. The determination
of whether the exchange has the effect of the distribution of a dividend
should be made on a shareholder-by-shareholder basis. No loss should be
recognized on the exchange.
(iv) The basis of the Surviving Corporation Common Stock received
by each shareholder of Harbourton who exchanges Harbourton Common Stock
for cash and Surviving Corporation Common Stock in the Merger will be
the same as the basis of the Harbourton Common Stock surrendered in the
Merger, decreased by the amount of cash received, and increased by the
amount that is treated as a dividend (if any), and by the amount of gain
recognized on the exchange (not including any portion of that gain that
was treated as a dividend).
(v) The holding period of the Surviving Corporation Common Stock
received by a shareholder of Harbourton in the Merger will include the
holding period of the Harbourton Common Stock surrendered in exchange
therefor, provided that such shares of Harbourton Common Stock were held
as a capital asset by such shareholder at the Effective Time.
(vi) Cash received by a Harbourton shareholder in lieu of a
fractional share interest of Surviving Corporation Common Stock which
such shareholder would otherwise be entitled to receive (or the deemed
issuance of a fractional share interest by the Surviving Corporation and
deemed redemption thereof by it) will qualify as capital gain or loss
(assuming the
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Harbourton Common Stock was a capital asset in such shareholder's hands
at the Effective Time).
In rendering such opinion, Elias, Matz, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, L.L.P. may
require and rely upon representations and covenants, including those contained
in certificates of officers of Harbourton, Allstate and others, reasonably
satisfactory in form and substance to such counsel.
(f) Allstate shall receive a tax opinion from PricewaterhouseCoopers
LLP, dated as of the Closing, to the effect that for federal income tax
purposes the net operating loss carryforwards of Allstate will not be impaired
for purposes of offsetting future operating income due to the completion of
the Recapitalization Plan and of the Merger.
(g) The Conversion Date shall have occurred.
7.2 Conditions Precedent Harbourton
-------------------------------------
The obligations of Harbourton to effect the Merger shall be subject to
satisfaction of the following conditions at or prior to the Closing unless
waived by Harbourton to the extent permitted by Section 8.4.
(a) Between the date hereof and the Closing, Allstate and/or its
Subsidiaries shall not have been affected by any event or change which has had
or caused a Material Adverse Effect on Allstate.
(b) The representations and warranties of Allstate made herein shall be
true and correct as of the date hereof and (other than the representations and
warranties in Section 3.1 with respect to the effects of the Recapitalization
Plan, the conversion of Allstate Notes and any exercise of Rights) as of the
Closing as though made anew at the Closing (as if the Closing Date was the
date hereof for such purpose), in each case as to the representations and
warranties of Allstate under Article IV subject to the standard set forth in
Section 9.8.
(c) Allstate shall have performed in all material respects all
obligations and complied in all material respects with all covenants and
agreements required to be performed and complied with by it pursuant to this
Agreement on or prior to the Closing.
(d) Allstate shall have delivered to Harbourton a certificate, dated the
Closing Date and signed by its Chief Executive Officer and by its Chief
Financial Officer, to the effect that the conditions set forth in Sections
7.2(a) through 7.2(c) have been satisfied.
(e) Allstate shall have furnished Harbourton with such certificates of
its officers or others and such other documents to evidence fulfillment of the
conditions set forth in Sections 7.1 and 7.2 as such conditions relate to
Allstate and its Subsidiaries as Harbourton may reasonably request.
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7.3 Conditions Precedent - Allstate
------------------------------------
The obligations of Allstate to effect the Merger shall be subject to
satisfaction of the following conditions at or prior to the Closing unless
waived by Allstate to the extent permitted by Section 8.4.
(a) Between the date hereof and the Closing, Harbourton and/or its
Subsidiaries shall not have been affected by any event or change which has had
or caused a Material Adverse Effect on Harbourton.
(b) The representations and warranties of Harbourton set forth herein
shall be true and correct as of the date hereof and (other than the
representations and warranties in Section 3.1 with respect to the effects of
any exercise of Rights) as of the Closing as though made anew at the Closing
(as if the Closing Date was the date hereof for such purpose), in each case as
to the representations and warranties of Harbourton under Article IV subject
to the standard set forth in Section 9.8.
(c) Harbourton shall have performed in all material respects all
obligations and complied in all material respects with all covenants and
agreements required to be performed and complied with by it pursuant to this
Agreement on or prior to the Closing.
(d) Harbourton shall have delivered to Allstate a certificate, dated the
Closing Date and signed by its Chief Executive Officer and by its Chief
Financial Officer, to the effect that the conditions set forth in Sections
7.3(a) through 7.3(c) have been satisfied.
(e) Harbourton shall have furnished Allstate with such certificates of
its officers or others and such other documents to evidence fulfillment of the
conditions set forth in Sections 7.1 and 7.3 as such conditions relate to
Harbourton and its Subsidiaries as Allstate may reasonably request.
(f) Each affiliate of Harbourton for purposes of Rule 145 of the
Securities Act shall have entered into an affiliate agreement in the form
attached hereto as Exhibit C.
ARTICLE 8. TERMINATION, WAIVER, AMENDMENT AND SPECIFIC PERFORMANCE
8.1 Termination
----------------
This Agreement may be terminated by a written instrument prior to the
Effective Time:
(a) by the mutual consent of the Parties;
(b) by the non-breaching Party if the other Party has breached in any
material respect any of its covenants, agreements or representations and
warranties (but in the case of representations and warranties under Article IV
subject to the standard set forth in Section 9.8) herein, and such breach has
not been cured within 30 days after written notice;
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(c) by either Party, (i) if any Governmental Entity of competent
jurisdiction shall have issued a final nonappealable order prohibiting the
completion of the Merger; or (ii) if application for any necessary prior
approval of a Governmental Entity is denied or withdrawn at the request or
recommendation of the Governmental Entity, provided that such denial or
request or recommendation for withdrawal is not due to the terminating Party's
breach of any provision of this Agreement;
(d) by either Party if the shareholders of the other Party do not
approve the Merger; and
(e) by either Party if the Effective Time has not occurred by the close
of business on February 28, 2001, provided that the terminating Party is not
then in breach of any of its covenants, agreements or representations and
warranties (but in the case of representations and warranties under Article IV
subject to the standard set forth in Section 9.8 herein).
8.2 Effect of Termination
--------------------------
In the event that this Agreement is terminated it shall become void and
have no effect, except for:
(a) the provisions relating to confidentiality set forth in Section 6.4,
(b) the provision relating to press releases set forth in Section 6.5,
(c) the provision relating to expenses set forth in Section 9.1, and
(d) a termination pursuant to Section 8.1(b) or 8.1(d) shall not relieve
the breaching Party from any liability or damages if such termination arises
out of its willful breach of any provision of this Agreement; in such event
the non-breaching Party shall be entitled to such monetary remedies and relief
against the breaching Party as are available at law.
8.3 Survival of Representations, Warranties and Covenants
----------------------------------------------------------
All representations, warranties, agreements and covenants in this
Agreement or in any other document or instrument delivered pursuant hereto or
in connection herewith shall expire on, and be terminated and extinguished at,
the Effective Time other than agreements or covenants contained herein or
therein that by their terms are to be performed after the Effective Time. No
such representations, warranties, agreements or covenants shall be deemed to
be terminated or extinguished so as to deprive the Surviving Corporation or
any affiliate of a Party of any defense at law or in equity which otherwise
would be available against the claims of any person, including any shareholder
or former shareholder.
8.4 Waiver
-----------
Each Party hereto by written instrument approved by its Board and signed
by an executive officer of such Party, may at any time (whether before or
after approval of this Agreement by the Parties' shareholders) extend the time
for the performance of any of the obligations or other acts of
33
Page 42 of 58 Pages
the other Party hereto and may waive (i) any inaccuracies of the other Party in
the representations or warranties contained in this Agreement or any document
delivered pursuant hereto, (ii) compliance with any of the covenants,
undertakings or agreements of the other Party, (iii) to the extent permitted
by law, satisfaction of any of the conditions precedent to its obligations
contained herein or (iv) the performance by the other Party of any of its
obligations set forth herein.
8.5 Amendment or Supplement
----------------------------
This Agreement may be amended at any time by mutual written agreement of
the Parties approved by their Boards and signed by an executive officer of
each Party, provided that any such amendment after the shareholders of the
Parties have approved this Agreement shall not modify either the amount or
form of the Merger Consideration or otherwise materially adversely affect such
shareholders without the approval of the shareholders to the extent required
by applicable law.
8.6 Specific Performance
-------------------------
The Parties acknowledge and agree that the Merger contemplated herein is
unique and that any remedy at law for breach is inadequate to compensate the
aggrieved Party. Accordingly, each Party shall have the right to seek
specific performance of this Agreement and the other Party's duties,
obligations, covenants and agreements herein in order to cause the Merger to
be consummated. To this end, each Party, to the extent permitted by law,
irrevocably waives any defense it might have based on the adequacy of a remedy
at law which might be asserted as a bar to specific performance or any other
equitable relief.
ARTICLE 9. MISCELLANEOUS
9.1 Expenses
-------------
Except as otherwise provided below, each Party hereto shall bear and pay
all costs and expenses incurred by it in connection with this Agreement and
the Merger, including fees and expenses of its own financial consultants,
investment bankers, accountants and counsel.
9.2 Entire Agreement
---------------------
This Agreement together with any other documents or instruments executed
by the Parties relating to the subject matter hereto concurrently with or on
the same day as the execution of this Agreement contains the entire agreement
among the Parties with respect to the Merger and supersedes all prior
arrangements or understandings with respect thereto, written or oral, other
than documents referred to herein which are to be executed after the date
hereof. The terms and conditions of this Agreement shall inure to the benefit
of and be binding upon the Parties hereto and their respective successors.
Nothing in this Agreement, expressed or implied, is intended to confer upon
any person, other than the Parties, and their respective successors, any
rights, remedies, obligations or liabilities other than as set forth in
Article II and in Sections 6.9 and 6.10 hereof.
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9.3 No Assignment
------------------
None of the Parties hereto may assign any of its rights or obligations
under this Agreement to any other person.
9.4 Notices
------------
All notices or other communications which are required or permitted
hereunder shall be in writing and sufficient if delivered personally,
telecopied (with confirmation) or sent by overnight mail service or by
registered or certified mail (return receipt requested), postage prepaid,
addressed as follows:
If to Harbourton:
J. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, President
Harbourton Financial Corporation
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
(▇▇▇) ▇▇▇-▇▇▇▇
(▇▇▇) ▇▇▇-▇▇▇▇ (fax)
With a required copy to:
▇▇▇▇ ▇. ▇▇▇▇, Esq.
▇▇▇▇▇▇▇, ▇▇▇▇▇ & Bird, L.L.P.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
(▇▇▇) ▇▇▇-▇▇▇▇
(▇▇▇) ▇▇▇-▇▇▇▇ (fax)
If to Allstate:
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Chairman
Allstate Financial Corporation
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
(▇▇▇) ▇▇▇-▇▇▇▇
(▇▇▇) ▇▇▇-▇▇▇▇ (fax)
35
Page 44 of 58 Pages
With a required copy to:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇., Esq.
Elias, Matz, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ L.L.P.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
(▇▇▇) ▇▇▇-▇▇▇▇
(▇▇▇) ▇▇▇-▇▇▇▇ (fax)
9.5 Counterparts
-----------------
This Agreement may be executed in any number of counterparts, and each
such counterpart shall be deemed to be an original instrument, but all such
counterparts together shall constitute but one agreement.
9.6 Governing Law
------------------
This Agreement shall be governed by and construed in accordance with the
laws of the State of Delaware applicable to agreements made and entirely to be
performed within such jurisdiction. The Parties hereby designate Wilmington,
Delaware to be the proper jurisdiction and venue for any suit or action
arising out of this Agreement.
9.7 Severability
-----------------
Any term, provision, covenant or restriction contained in this Agreement
held to be invalid, void or unenforceable shall be ineffective to the extent
of such invalidity, voidness or unenforceability, but neither the remaining
terms, provisions, covenants or restrictions contained in this Agreement nor
the validity or enforceability thereof in any other jurisdiction shall be
affected or impaired thereby. Any term, provision, covenant or restriction
contained in this Agreement that is so found to be so broad as to be
unenforceable shall be interpreted to be as broad as is enforceable.
9.8 Standard of Breach
-----------------------
None of the representations or warranties contained in Article IV shall
be deemed untrue or incorrect, and no Party shall be deemed to have breached
its representations or warranties therein as a consequence of the existence of
any fact, circumstance or event, which would not, either individually or taken
together with all other facts, circumstances or events, have a Material
Adverse Effect on any Party.
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IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be
executed by their duly authorized officers and attested by their officers
thereunto duly authorized, all as of the day and year first above written.
Attest ALLSTATE FINANCIAL CORPORATION
/s/ C. ▇▇▇▇ ▇▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-------------------------- ---------------------------
C. ▇▇▇▇ ▇▇▇▇▇▇▇, Secretary ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Chairman
Attest HARBOURTON FINANCIAL CORPORATION
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ By: /s/ J. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
-------------------------- --------------------------------
J. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, President
37
Page 46 of 58 Pages
Exhibit A
October 24, 2000
Allstate Financial Corporation
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Re: Voting Agreement
Dear Sirs:
The undersigned understands that Allstate Financial Corporation
("Allstate") and Harbourton Financial Corporation ("Harbourton") are entering
into an Agreement and Plan of Merger (the "Merger Agreement") providing for
the merger of Harbourton into Allstate (the "Merger") and the exchange of the
outstanding shares of common stock of Harbourton for a combination of shares
of common stock of Allstate and cash.
The undersigned is a shareholder of Harbourton and is entering into this
agreement to induce Allstate to enter into the Merger Agreement and to
consummate the transactions contemplated thereby.
The undersigned confirms its agreement with Allstate as follows:
1. The undersigned represents, warrants and agrees that Schedule I
annexed hereto sets forth the shares of the capital stock of Harbourton of
which the undersigned is the record or beneficial owner or over which he has
voting control (the "Shares"), and that the undersigned is on the date hereof
the lawful owner of the Shares, free and clear of all liens, charges,
encumbrances, voting agreements and commitments of every kind, except as
disclosed in Schedule I. Except as Previously Disclosed or Delivered (as such
terms are defined in the Merger Agreement) by Harbourton or on behalf of
Harbourton or in Schedule I, the undersigned does not own or hold any rights
to acquire any additional shares of the capital stock of Harbourton (by
exercise of stock options or otherwise) or any interest therein or any voting
rights with respect to any additional shares.
2. Except as required by law, the undersigned agrees that the
undersigned will not, and will not permit any company, trust or other entity
controlled by the undersigned, or any other person to, contract to sell, sell
or otherwise transfer or dispose of any of the Shares or any interest therein
or securities convertible thereunto or any voting rights with respect thereto,
other than pursuant to
Page 47 of 58 Pages
Allstate Financial Corporation
October 24, 2000
Page 2
the Merger and other than by means of a gift where the donee has agreed in
writing to abide by the terms of this Agreement in a form reasonably
satisfactory to Allstate.
3. The undersigned agrees that all of the Shares, together with any
additional shares of capital stock of Harbourton of which the undersigned is
the record or beneficial owner, or over which he has voting control, at the
record date for any meeting of shareholders of Harbourton called to consider
and vote to adopt the Merger Agreement and/or the transactions contemplated
thereby, will be voted by the undersigned in favor thereof. The undersigned
agrees not to elect appraisal rights under Section 262 of the Delaware General
Corporation Law with respect to the Merger.
4. The undersigned agrees to, and will cause any company, trust or
other entity controlled by the undersigned to, cooperate fully with Allstate
in connection with the Merger Agreement and the transactions contemplated
thereby (provided, however, nothing in this Section shall be deemed to affect
the ability of the undersigned to fulfill his fiduciary duties as a director
of Harbourton). The undersigned agrees that the undersigned will not, and
will not permit any such company, trust or other entity to, directly or
indirectly (including through its officers, directors, employees or other
representatives) initiate, solicit or encourage any discussions, inquiries or
proposals with any third party relating to any acquisition, purchase of all or
a substantial portion of the assets of, or any equity interest in, Harbourton
or a Harbourton Subsidiary (an "Acquisition Proposal"), or provide any such
person with information or assistance or negotiate with any such person with
respect to an Acquisition Proposal or agree to or otherwise assist in the
effectuation of any Acquisition Proposal except as permitted by the Merger
Agreement (provided, however, that nothing in this Section shall be deemed to
affect the ability of the undersigned to fulfill his fiduciary duties as a
director of Harbourton).
5. The undersigned represents and warrants to Allstate that (i) the
undersigned has all necessary power and authority to enter into this agreement
and (ii) this agreement is a legal, valid and binding agreement of the
undersigned, and is enforceable against the undersigned in accordance with its
terms.
6. This agreement shall automatically terminate (i) upon termination
of the Merger Agreement in accordance with its terms; (ii) at the Effective
Time (as defined in the Merger Agreement); or (iii) by mutual consent of the
parties hereto.
7. This agreement may be amended, modified or supplemented at any
time by the written approval of such amendment, modification or supplement by
the undersigned and Allstate.
8. This agreement evidences the entire agreement between the parties
hereto with respect to the matters provided for herein and there are no
agreements, representations or warranties with respect to the matters provided
for herein other than those set forth herein.
Page 48 of 58 Pages
Allstate Financial Corporation
October 24, 2000
Page 3
9. The parties agree that if any provision of this agreement shall
under any circumstances be deemed invalid or inoperative, this agreement shall
be construed with the invalid or inoperative provisions deleted and the rights
and obligations of the parties shall be construed and enforced accordingly.
10. This agreement may be executed in two counterparts, each of which
shall be deemed an original, but all of which together shall constitute one
and the same agreement.
11. The validity, construction, enforcement and effect of this
agreement shall be governed by the laws of the State of Delaware.
12. This agreement shall inure to the benefit of Allstate, and shall
be binding upon and inure to the benefit of the undersigned and its successors
(if the undersigned is not an individual), or his or her executors, personal
representatives, administrators, heirs, legatees, guardians and other legal
representatives. This agreement shall survive the death or incapacity of the
undersigned.
13. Nothing in this Agreement shall be construed to give Allstate any
rights to exercise or direct the exercise of voting power as owner of the
Shares, either beneficially or otherwise, for any purpose.
14. The parties agree that in the event of any breach of this
Agreement by the undersigned, Allstate shall be entitled to such remedies and
relief against the undersigned as are available at law or in equity. The
undersigned acknowledges that there is not an adequate remedy at law to
compensate Allstate for a violation of this Agreement, and irrevocably waives,
to the extent permitted by law, any defense that the undersigned might have
based on the adequacy of a remedy at law which might be asserted as a bar to
specific performance, injunctive relief, or other equitable relief. The
undersigned agrees to the granting of injunctive relief without the posting of
any bond and further agrees that if any bond shall be required, such bond
shall be in a nominal amount.
Page 49 of 58 Pages
Allstate Financial Corporation
October 24, 2000
Page 4
Please confirm that the foregoing correctly states the understanding
between the undersigned and Allstate by signing and returning to Allstate a
counterpart hereof.
Very truly yours,
--------------------------------
Name:
Accepted as of the ___ day
of October, 2000
ALLSTATE FINANCIAL CORPORATION
By:
---------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Chairman
Page 50 of 58 Pages
Schedule I
----------
Number of shares of Harbourton common
stock beneficially owned . . . . . . . . . . . . . . . . . . . .
Number of shares of Harbourton
common stock not beneficially
owned but for which voting control is
possessed. . . . . . . . . . . . . . . . . . . . . . . . . . . .
Number of shares of Harbourton common
stock owned of record but not
beneficially . . . . . . . . . . . . . . . . . . . . . . . . . .
Total shares. . . . . . . . . . . . . . . . . . . . . . . .
Page 51 of 58 Pages
Exhibit B
October 24, 2000
Harbourton Financial Corporation
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Dear Sirs:
The undersigned understands that Harbourton Financial Corporation
("Harbourton") and Allstate Financial Corporation ("Allstate") are entering
into an Agreement and Plan of Merger (the "Merger Agreement") providing for
the merger of Harbourton into Allstate (the "Merger") and the exchange of the
outstanding shares of common stock of Harbourton for a combination of shares
of common stock of Allstate and cash.
The undersigned is a shareholder and a director of Allstate and is
entering into this agreement to induce Harbourton to enter into the Merger
Agreement and to consummate the transactions contemplated thereby.
The undersigned confirms its agreement with Allstate as follows:
1. The undersigned represents, warrants and agrees that Schedule I
annexed hereto sets forth the shares of the capital stock of Allstate of which
the undersigned is the record or beneficial owner or over which he has voting
control (the "Shares"), and that the undersigned is on the date hereof the
lawful owner of the Shares, free and clear of all liens, charges,
encumbrances, voting agreements and commitments of every kind, except as
disclosed in Schedule I. Except as Previously Disclosed or Delivered (as such
terms are defined in the Merger Agreement) by Allstate or on behalf of
Allstate or in Schedule I, the undersigned does not own or hold any rights to
acquire any additional shares of the capital stock of Allstate (by exercise of
stock options or otherwise) or any interest therein or any voting rights with
respect to any additional shares.
2. Except as required by law, the undersigned agrees that the
undersigned will not, and will not permit any company, trust or other entity
controlled by the undersigned, or any other person to, contract to sell, sell
or otherwise transfer or dispose of any of the Shares or any interest therein
or securities convertible thereunto or any voting rights with respect thereto,
other than pursuant to the Merger and other than by means of a gift where the
donee has agreed in writing to abide by the terms of this Agreement in a form
reasonably satisfactory to Harbourton.
Page 52 of 58 Pages
Allstate Financial Corporation
October 24, 2000
Page 2
3. The undersigned agrees that all of the Shares, together with any
additional shares of capital stock of Allstate of which the undersigned is the
record or beneficial owner, or over which he has voting control, at the record
date for any meeting of shareholders of Allstate called to consider and vote
to adopt the Merger Agreement and/or the transactions contemplated thereby
(including the record date for determining the shareholders of Allstate
eligible to take action by written consent in lieu of a meeting), will be
voted by the undersigned in favor thereof. The undersigned agrees not to
elect appraisal rights under Section 262 of the Delaware General Corporation
Law with respect to the Merger.
4. The undersigned agrees to, and will cause any company, trust or
other entity controlled by the undersigned to, cooperate fully with Harbourton
in connection with the Merger Agreement and the transactions contemplated
thereby (provided, however, nothing in this Section shall be deemed to affect
the ability of the undersigned to fulfill his fiduciary duties as a director
of Allstate). The undersigned agrees that the undersigned will not, and will
not permit any such company, trust or other entity to, directly or indirectly
(including through its officers, directors, employees or other
representatives) initiate, solicit or encourage any discussions, inquiries or
proposals with any third party relating to any acquisition, purchase of all or
a substantial portion of the assets of, or any equity interest in, Allstate or
a Allstate Subsidiary (an "Acquisition Proposal"), or provide any such person
with information or assistance or negotiate with any such person with respect
to an Acquisition Proposal or agree to or otherwise assist in the effectuation
of any Acquisition Proposal except as permitted by the Merger Agreement
(provided, however, that nothing in this Section shall be deemed to affect the
ability of the undersigned to fulfill his fiduciary duties as a director of
Allstate).
5. The undersigned represents and warrants to Harbourton that (i) the
undersigned has all necessary power and authority to enter into this agreement
and (ii) this agreement is a legal, valid and binding agreement of the
undersigned, and is enforceable against the undersigned in accordance with its
terms.
6. This agreement shall automatically terminate (i) upon termination
of the Merger Agreement in accordance with its terms; (ii) at the Effective
Time (as defined in the Merger Agreement); or (iii) by mutual consent of the
parties hereto.
7. This agreement may be amended, modified or supplemented at any
time by the written approval of such amendment, modification or supplement by
the undersigned and Harbourton.
8. This agreement evidences the entire agreement between the parties
hereto with respect to the matters provided for herein and there are no
agreements, representations or warranties with respect to the matters provided
for herein other than those set forth herein.
Page 53 of 58 Pages
Allstate Financial Corporation
October 24, 2000
Page 3
9. The parties agree that if any provision of this agreement shall
under any circumstances be deemed invalid or inoperative, this agreement shall
be construed with the invalid or inoperative provisions deleted and the rights
and obligations of the parties shall be construed and enforced accordingly.
10. This agreement may be executed in two counterparts, each of which
shall be deemed an original, but all of which together shall constitute one
and the same agreement.
11. The validity, construction, enforcement and effect of this
agreement shall be governed by the laws of the State of Delaware.
12. This agreement shall inure to the benefit of Harbourton, and shall
be binding upon and inure to the benefit of the undersigned and its successors
(if the undersigned is not an individual), or his or her executors, personal
representatives, administrators, heirs, legatees, guardians and other legal
representatives. This agreement shall survive the death or incapacity of the
undersigned.
13. Nothing in this Agreement shall be construed to give Harbourton
any rights to exercise or direct the exercise of voting power as owner of the
Shares, either beneficially or otherwise, for any purpose.
14. The parties agree that in the event of any breach of this
Agreement by the undersigned, Harbourton shall be entitled to such remedies
and relief against the undersigned as are available at law or in equity. The
undersigned acknowledges that there is not an adequate remedy at law to
compensate Harbourton for a violation of this Agreement, and irrevocably
waives, to the extent permitted by law, any defense that the undersigned might
have based on the adequacy of a remedy at law which might be asserted as a bar
to specific performance, injunctive relief, or other equitable relief. The
undersigned agrees to the granting of injunctive relief without the posting of
any bond and further agrees that if any bond shall be required, such bond
shall be in a nominal amount.
Page 54 of 58 Pages
Please confirm that the foregoing correctly states the understanding
between the undersigned and Harbourton by signing and returning to Harbourton
a counterpart hereof.
Very truly yours,
-------------------------------
Name:
Accepted as of the ___ day
of October, 2000
HARBOURTON FINANCIAL CORPORATION
By: ------------------------------
J. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, President
Page 55 of 58 Pages
Schedule I
----------
Number of shares of Allstate common
stock beneficially owned . . . . . . . . . . . . . . . . . . . .
Number of shares of Allstate
common stock not beneficially
owned but for which voting control is
possessed. . . . . . . . . . . . . . . . . . . . . . . . . . . .
Number of shares of Allstate common
stock owned of record but not
beneficially . . . . . . . . . . . . . . . . . . . . . . . . . .
Total shares. . . . . . . . . . . . . . . . . . . . . . . .
Page 56 of 58 Pages
Exhibit C
October 24, 2000
Allstate Financial Corporation
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Re: Affiliate Agreement
Dear Sirs:
The undersigned has been advised that as of the date hereof the
undersigned may be deemed an "affiliate" ("Affiliate") of Harbourton Financial
Corporation, a Delaware corporation ("Harbourton"), as that term is defined
for purposes of paragraphs (c) and (d) of Rule 145 of the rules and
regulations (the "Rules and Regulations") of the Securities and Exchange
Commission (the "SEC") under the Securities Act of 1933, as amended (the
"Act").
Pursuant to the terms of the Agreement and Plan of Merger (the "Merger
Agreement") dated October 24, 2000 by and between Allstate Financial
Corporation, a Delaware corporation ("Allstate"), and Harbourton, the
undersigned will receive shares of common stock of Allstate, ("Allstate Common
Stock") upon the consummation of the merger of Harbourton with and into
Allstate (the "Merger"). Accordingly, the shares of Allstate Common Stock
that the undersigned may acquire in the Merger may only be disposed of in
conformity with the provisions hereof.
In connection with the above transactions, the undersigned represents
and warrants to Allstate and agrees that:
A. The undersigned will not make any sale, transfer or other
disposition of shares of Allstate Common Stock acquired by the undersigned in
the Merger in violation of the Act or the Rules and Regulations.
B. The undersigned has been advised that the shares of Allstate
Common Stock to be issued to the undersigned pursuant to the Merger will not
be registered with the SEC under the Act. The undersigned has also been
advised that, because (i) the undersigned may be deemed to be an Affiliate of
Harbourton at the time the Merger Agreement is submitted for a vote of the
shareholders of Harbourton, and (ii) the distribution by the undersigned of
any Allstate Common Stock acquired by the undersigned in the Merger will not
be registered under the Act, such shares of Allstate Common Stock may be sold,
transferred or otherwise disposed of by the undersigned only if (i) such
shares of Allstate Common Stock have been registered for distribution under
the Act, (ii) a sale of
Page 57 of 58 Pages
Allstate Financial Corporation
October 24, 2000
Page 2
the shares of Allstate Common Stock is made in conformity with the volume and
other limitations of Rules 144 and 145 or (iii) in the opinion of counsel
reasonably acceptable to Allstate, another exemption from registration under
the Act is available with respect to any such proposed sale, transfer or other
disposition of such shares of Allstate Common Stock.
C. The undersigned has carefully read this letter and the Merger
Agreement and has discussed their requirements and other applicable
limitations upon the undersigned's ability to sell, transfer or otherwise
dispose of shares of Allstate Common Stock, to the extent the undersigned felt
necessary, with the undersigned's counsel or counsel for Harbourton.
D. The undersigned understands that Allstate is under no obligation
to register under the Act the sale, transfer or other disposition, by the
undersigned or on the undersigned's behalf, of the shares of Allstate Common
Stock acquired by the undersigned in the Merger or to take any other action
necessary in order to make an exemption from registration available.
E. The undersigned also understands that stop transfer instructions
will be given to the registrar of the certificates for the shares of Allstate
Common Stock and that there will be placed on the certificates for the shares
of Allstate Common Stock acquired by the undersigned in the Merger, or any
substitutions therefore, a legend stating in substance:
"The shares represented by this certificate were
issued in a transaction to which Rule 145 promulgated
under the Securities Act of 1933, as amended, applies.
The shares of common stock evidenced by this
certificate have not been registered under the
Securities Act of 1933, as amended, or any state
securities act, and may not be sold, pledged or
otherwise transferred without registration under such
acts or an opinion of counsel satisfactory to the
Issuer that such registration is not required."
F. The undersigned also understands that unless the transfer by the
undersigned of the undersigned's shares of Allstate Common Stock has been
registered under the Act or is a sale made in conformity with the provisions
of Rules 144 and 145, Allstate reserves the right to put the following legend
on the certificates issued to any transferee of such securities from the
undersigned:
"The shares represented by this certificate have not
been registered under the Securities Act of 1933, as
amended, or any state securities act, and were
acquired from a person who received such shares in a
transaction to which Rule 145 promulgated under the
Securities Act of 1933, as amended, applies. The
shares may not be sold, pledged or otherwise
transferred without registration under such acts or an
Page 58 of 58 Pages
Allstate Financial Corporation
October 24, 2000
Page 3
opinion of counsel satisfactory to the Issuer that
such registration is not required."
It is understood and agreed that the legends set forth in paragraph E
and F above shall be removed by delivery of substitute certificates without
such legends and/or the issuance of a letter to Allstate's transfer agent
removing such stop transfer instructions if the undersigned shall have
delivered to Allstate (i) a copy of a letter from the staff of the SEC, or an
opinion of Allstate's securities counsel in form and substance reasonably
satisfactory to Allstate, or other evidence reasonably satisfactory to
Allstate, to the effect that such legend and/or stop transfer instructions are
not required for purposes of the Act or (ii) reasonably satisfactory evidence
or representations that the securities represented by such certificates are
being or have been transferred in a transaction made in conformity with the
provisions of Rules 144 and 145. Allstate shall use its best efforts to
cooperate with the undersigned in accordance with the foregoing, including to
procure such evidence at its cost upon the undersigned's reasonable request.
The undersigned also acknowledges that the certificates representing
shares of Allstate Common Stock will include the legend required by Article
9.F of Allstate's Certificate of Incorporation.
This Agreement shall terminate and be of no further force and effect if
the Merger Agreement is terminated pursuant to the terms thereof.
This Agreement shall be binding on the undersigned's heirs, legal
representatives and successors.
Very truly yours,
-----------------------------
Name:
Accepted as of the ___ day
of October __, 2000.
ALLSTATE FINANCIAL CORPORATION
By:
---------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Chairman
