EXHIBIT 2.1
[CONFORMED COPY]
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AGREEMENT AND PLAN OF MERGER
DATED AS OF FEBRUARY 17, 1998
AMONG
FLEETWOOD ENTERPRISES, INC.,
HUSA ACQUISITION COMPANY,
AND
HOMEUSA, INC.
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER (this "Agreement") dated as of February 17,
1998, among Fleetwood Enterprises, Inc., a Delaware corporation ("Parent"), HUSA
Acquisition Company, a Delaware corporation and a wholly owned subsidiary of
Parent ("Sub"), and HomeUSA, Inc., a Delaware corporation (the "Company").
RECITALS
WHEREAS, the respective Boards of Directors of Parent, Sub and the
Company, and Parent acting as the sole stockholder of Sub, have approved the
merger of the Company with and into Sub (the "Merger"), upon the terms and
subject to the conditions set forth in this Agreement, pursuant to which each
issued and outstanding share of the Company's Stock, par value $.0 I per share
and each issued and outstanding share of the Company's Restricted Voting Common
Stock, par value $.01 per share (collectively, the "Company Common Stock"),
other than shares owned directly or indirectly by Parent or the Company, will be
converted into the right to receive the Merger Consideration (as defined in
Section 2.01(a)); and
WHEREAS, Parent, Sub and the Company desire to make certain
representations, warranties, covenants and agreements in connection with the
Merger and also to prescribe various conditions to the Merger; and
WHEREAS, for Federal income tax purposes, it is intended that the Merger
shall qualify as a reorganization under the provisions of Section 368 of the
Internal Revenue Code of 1986, as amended, and the rules and regulations
promulgated thereunder (the "Code");
NOW, THEREFORE, in consideration of the representations, warranties,
covenants and agreements contained in this Agreement, the parties hereto agree
as follows:
ARTICLE I
THE MERGER
SECTION 1.01. THE MERGER.
(a) Upon the terms and subject to the conditions set forth in
this Agreement, and in accordance with the Delaware General Corporation Law (the
"DGCL"), the Company shall be merged with and into Sub at the Effective Time (as
defined in Section .03). Following the Effective Time, the separate corporate
existence of the Company shall cease and Sub shall continue as the surviving
corporation (the "Surviving Corporation") and shall succeed to and assume all
the rights and obligations of the Company in accordance with the DGCL.
(b) At the election of Parent, any direct wholly owned subsidiary
of Parent may be substituted for Sub as a constituent corporation in the Merger.
In such event, the parties agree to execute an appropriate amendment to this
Agreement in order to reflect such substitution.
SECTION 1.02. CLOSING. The closing of the Merger (the "Closing") will
take place at 10:00 a.m. on Friday May 29, 1998 or (subject to the prior
satisfaction or waiver of the conditions set forth in Sections 6.01, 6.02 and
6.03) thereafter no later than the second business day after the day on which
the conditions set forth in Section 6.01 have been satisfied or waived, at the
offices of ▇▇▇▇▇▇, ▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP, ▇ ▇▇▇▇ ▇▇▇▇▇, ,▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇,
unless another time, date or place is agreed to in writing by the parties
hereto. The date on which the Closing occurs is hereinafter referred to as the
"Closing Date."
SECTION 1.03. EFFECTIVE TIME. Subject to the provisions of this
Agreement, as soon as practicable on or after the Closing Date, the parties
shall file a certificate of merger or other appropriate documents (in any such
case, the "Certificate of Merger") executed in accordance with the relevant
provisions of the DGCL and shall make all other filings or recordings required
under the DGCL to effectuate fully the Merger. The Merger shall become effective
at such time as the Certificate of Merger is duly filed with the Delaware
Secretary of State, or at such other time as Sub and the Company shall agree
should be specified in the Certificate of Merger (the time the Merger becomes
effective being hereinafter referred to as the "Effective Time").
SECTION 1.04. EFFECTS OF THE MERGER. The Merger shall have the effects
set forth in Section 259 of the DGCL.
SECTION 1.05. CERTIFICATE OF INCORPORATION AND BY-LAWS.
(a) The certificate of incorporation of Sub as in effect at the
Effective Time shall be the certificate of incorporation of the Surviving
Corporation until thereafter changed or amended as provided therein or by
applicable law; PROVIDED that Article One of the certificate of incorporation of
the Surviving Corporation shall be amended in its entirety to read as follows:
"The name of the corporation is HomeUSA, Inc."
(b) The by-laws of Sub as in effect at the Effective Time shall
be the by-laws of the Surviving Corporation, until thereafter changed or amended
as provided therein or by applicable law.
SECTION 1.06. DIRECTORS. The directors of Sub, immediately prior to the
Effective Time shall become the directors of the Surviving Corporation, until
the earlier of their resignation or removal or until their respective successors
are duly appointed or elected, as the case may be, in accordance with the
certificate of incorporation of the Surviving Corporation and applicable law.
SECTION 1.07. OFFICERS. The officers of the Company immediately prior to
the Effective Time shall be the officers of the Surviving Corporation, until the
earlier of their resignation or removal or until their respective successors are
duly appointed or elected and qualified, as the case may be, in accordance with
the certificate of incorporation of the Surviving Corporation and applicable
law.
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ARTICLE II
EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE
CONSTITUENT CORPORATIONS EXCHANGE OF CERTIFICATES
SECTION 2.01. CONVERSION OF STOCK. At the Effective Time, by virtue of
the Merger and without any action on the part of Parent, Sub, the Company or the
holders of any of the following securities:
(a) Subject to the election and allocation provisions set forth
below, each share of Company Common Stock issued and outstanding immediately
prior to the Effective Time (excluding any treasury shares and shares held
directly or indirectly by Parent) shall be converted into:
(i) the right to receive a number of shares of Parent's
Common Stock, $1.00 par value, including associated Parent Rights (as defined in
Section 3.02(c)) ("Parent Common Stock"), equal to the quotient (calculated to
the nearest 0.0001) of $10.25 (the "Per Share Cash Amount") divided by the
Valuation Period Stock Price (the "Exchange Ratio"); or
(ii) the right to receive in cash, without interest, the Per
Share Cash Amount;
PROVIDED, HOWEVER, that, in any event, if between the date of this
Agreement and the Effective Time the outstanding shares of Parent Common Stock
or Company Common Stock shall have been changed into a different number of
shares or a different class, by reason of any stock dividend, subdivision,
reclassification, recapitalization, split, combination or exchange of shares,
the Exchange Ratio and the Per Share Cash Amount shall be correspondingly
adjusted to reflect such stock dividend, subdivision, reclassification,
recapitalization, split, combination or exchange of shares. The "Valuation
Period Stock Price" means the average of the NYSE (as defined in Section 6.0l)
closing sale prices for the Parent Common Stock (as reported in THE WALL STREET
JOURNAL or, in the absence thereof, by another authoritative source) for the ten
consecutive trading-day period ending on the tenth day immediately prior to the
anticipated Closing Date.
Each share of Company Common Stock issued and outstanding immediately
prior to the Effective Time (excluding any treasury shares and shares held
directly or indirectly by Parent) shall at the Effective Time no longer be
outstanding and shall automatically be canceled and retired and shall cease to
exist, and each certificate previously evidencing any such shares
("Certificates") shall thereafter represent the right to receive only the Merger
Consideration. The holders of Certificates shall cease to have any rights with
respect to the shares of Company Common Stock previously represented thereby,
except as otherwise provided herein or by law. Such certificates previously
evidencing such shares of Company Common Stock shall be exchanged for (A)
certificates evidencing whole shares of Parent Common Stock issued in
consideration therefor or (B) the Per Share Cash Amount multiplied by the number
of shares previously evidenced by the canceled Certificate or (C) a combination
of such certificates and cash, in each case in accordance with the allocation
procedures of this Section 2.01 and upon the surrender of such Certificates in
accordance with the provisions of Section 2.02, without interest.
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No fractional shares of Parent Common Stock shall be issued and, in lieu
thereof, a cash payment shall be made pursuant to Section 2.02(e).
The consideration provided for in this Section 2.01(a) in exchange for
each share of Company Common Stock is referred to herein as the "Merger
Consideration" and the aggregate of such consideration provided in exchange for
all shares of Company Common Stock is referred to herein as the "Aggregate
Merger Consideration."
(b) Election forms in such form as Parent and the Company shall
mutually agree (each a "Form of Election") and a Letter of Transmittal (as
defined in Section 2.02(b)) shall be mailed 30 days prior to the anticipated
Effective Time, or such other date as Parent and the Company shall agree (the
"Mailing Date"), to each holder of record of Company Common Stock as of five
business days prior to the Mailing Date (the "Election Form Record Date"). Each
Election Form shall permit the holder (or the beneficial owner through
appropriate and customary documentation and instructions) to choose to receive
(subject to the allocation and proration procedures set forth below) one of the
following in exchange for such holder's shares of Company Common Stock: (i) only
cash (a "Cash Election"), (ii) only Parent Common Stock (a "Stock Election") or
(iii) the Mixed Consideration (a "Mixed Election"). Alternatively, each Election
Form will permit the holder to indicate that such holder has no preference as to
the receipt of cash or Parent Common Stock for such holder's shares of Company
Common Stock (a "Non-Election"). No Company director or former principal
stockholder of the Founding Companies (as defined in the Company S-1) shall be
entitled to elect to receive more than 25% of his Merger Consideration in cash.
Holders of record of shares of Company Common Stock who hold such shares as
nominees, trustees or in other representative capacities (a "Representative")
may submit multiple Forms of Election, provided that such Representative
certifies that each such Form of Election covers all the shares of Company
Common Stock held by each Representative for a particular beneficial owner.
Any Company Common Stock (excluding any treasury shares and
shares held directly or indirectly by Parent) with respect to which the holder
(or the beneficial owner, as the case may be) shall not have submitted to the
Exchange Agent an effective, properly completed Election Form on or before 5:00
p.m. (New York City time) on the 25th day following the Mailing Date (or such
other time and date as Parent and the Company may mutually agree) (the "Election
Deadline") shall be deemed to be shares of Company Common Stock with respect to
which a Non-Election has been made.
Parent shall make available (or shall cause the Exchange Agent to
make available) one or more separate Election Forms to all persons who become
holders (or beneficial owners) of Company Common Stock between the Election Form
Record Date and the close of business on the business day prior to the Election
Deadline upon such holder's request to the Exchange Agent, and the Company shall
provide to the Exchange Agent all information reasonably necessary for it to
perform as specified herein.
Any such election shall have been properly made only if the
Exchange Agent shall have actually received a properly completed Election Form
by the Election Deadline. An Election Form shall be deemed properly completed
only if accompanied by one or more Certificates (or
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affidavits and indemnification regarding the loss or destruction of such
Certificates reasonably acceptable to Parent or the guaranteed delivery of such
Certificates) representing all shares of Company Common Stock covered by such
Election Form, together with a duly executed Letter of Transmittal. Any Election
Form may be revoked or changed by the person submitting such Election Form at or
prior to the Election Deadline. In the event an Election Form is revoked prior
to the Election Deadline, the shares of Company Common Stock represented by such
Election Form shall be deemed to be shares covered by a Non-Election (unless
thereafter covered by a duly completed Election Form) and Parent shall cause the
Certificates to be promptly returned without charge to the person submitting the
Election Form upon written request to that effect from such person.
Parent will have the discretion, which it may delegate in whole
or in part to the Exchange Agent, to determine whether Forms of Election have
been properly completed, signed and submitted or revoked and to disregard
immaterial defects in Forms of Election. If Parent (or the Exchange Agent) shall
determine that any purported Cash Election or Stock Election was not properly
made, such purported Cash Election or Stock Election shall have no force and
effect and the holder making such purported Cash Election or Stock Election
shall for purposes hereof be deemed to have made a Non-Election. The decision of
Parent (or the Exchange Agent) in all such matters shall be conclusive and
binding. Neither Parent nor the Exchange Agent will be under any obligation to
notify any person of any defect in a Form of Election submitted to the Exchange
Agent. The Exchange Agent shall also make all computations contemplated by this
Section 2.01 and all such computations shall be conclusive and binding on the
holders of Company Common Stock.
(c) If the sum of the aggregate number of shares covered by Cash
Elections (the "Cash Election Shares") and the aggregate number of such shares
covered by Mixed Elections to be acquired for cash (the "Mixed Election Cash
Shares") times the Per Share Cash Amount exceeds 49% (or such lesser percentage
as may be permissible to permit the reorganization tax treatment provided for
herein) of the Aggregate Merger Consideration (the "Maximum Cash Merger
Consideration"), then:
(i) all shares of Company Common Stock covered by Stock
Elections (the "Stock Election Shares") and all shares of Company Common Stock
covered by Non-Elections (the "Non-Election Shares") shall be converted into the
right to ;receive Parent Common Stock; and
(ii) each Cash Election Share and each Mixed Election Cash
Share shall be converted into the right to receive (A) a pro-rated cash portion
of the Per Share Cash Amount such that the aggregate cash payments do not exceed
the Maximum Cash Merger Consideration and (B) the balance of the Per Share Cash
Amount in Parent Common Stock at the Exchange Ratio;
(d) Each share of Company Common Stock held in the treasury of
the Company and each share of Company Common Stock owned by Parent or any direct
or indirect wholly owned subsidiary of Parent or of the Company immediately
prior to the Effective Time
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shall be canceled and extinguished without any conversion thereof and no payment
shall be made with respect thereto.
(e) Each issued and outstanding share of capital stock of Sub
shall continue as a validly issued, fully paid and nonassessable share of common
stock, par value of $.0l per share, of the Surviving Corporation Each
certificate representing any such shares of Sub shall continue to represent the
same number of shares of common stock of the Surviving Corporation.
SECTION 2.02. EXCHANGE OF CERTIFICATES.
(a) EXCHANGE AGENT. As of the Effective Time, Parent shall
deposit with such bank or trust company as may be designated by Parent (the
"Exchange Agent"), for the benefit of the holders of shares of Company Common
Stock, for exchange in accordance with this Article II, through the Exchange
Agent, (i) certificates representing the shares of Parent Common Stock issuable
pursuant to Section 2.01 in exchange for outstanding shares of Company Common
Stock and (ii) cash in the amount sufficient to pay the cash portion of the
Aggregate Merger Consideration (such shares and cash consideration, together
with any dividends or distributions with respect thereto with a record date on
or after the day on which the Effective Time occurs and any cash payable in lieu
of any fractional shares of Parent Common Stock being hereinafter referred to as
the "Exchange Fund").
(b) EXCHANGE PROCEDURES. No later than the business day after the
Effective Time, the Exchange Agent shall mail or, if requested, deliver to each
holder of record of a Certificate or Certificates immediately prior to the
Effective Time, whose shares were converted into the right to receive the Merger
Consideration pursuant to Section 2 01, (i) a letter of transmittal (which shall
specify that delivery shall be effected, and risk of loss and title to the
Certificates shall pass, only upon delivery of the Certificates to the Exchange
Agent and shall be in such form and have such other provisions as Parent may
reasonably specify) and (ii) instructions for use in effecting the surrender of
the Certificates in exchange for the Merger Consideration (collectively, the
"Letter of Transmittal"), unless such record holder shall have submitted a
Letter of transmittal together with the Form of Election pursuant to Section
2.01(c). Upon the later of the Effective Time and the surrender of a Certificate
for cancellation to the Exchange Agent or to such other agent or agents as may
be appointed by Parent, together with such letter of transmittal, duly executed,
and such other documents as may reasonably be required by the Exchange Agent,
the holder of such Certificate shall be entitled to receive in exchange therefor
(x) a certificate representing that number of whole shares of Parent Common
Stock and (y) a certified or bank cashier's check in the amount equal to the
cash, which such holder has the right to receive pursuant to the provisions of
this Article II (in each case, less the amount of any withholding taxes required
under applicable law), and the Certificate so surrendered shall forthwith be
canceled. In the event of a transfer of ownership of Company Common Stock which
is not registered in the transfer records of the Company, a certificate
representing the proper number of shares of Parent Common Stock may be issued to
a person (as defined in Section 8.03) other than the person in whose name the
Certificate so surrendered is registered, if such Certificate shall be properly
endorsed or otherwise be in proper form for transfer and the person requesting
such payment shall pay any transfer or other taxes required by reason of the
issuance of shares of Parent Common Stock to a person other than the registered
holder of such Certificate or establish to the
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satisfaction of Parent that such tax has been paid or is not applicable. Until
surrendered as contemplated by this Section 2.02(b), each Certificate shall be
deemed at any time after the Effective Time to represent only the right to
receive upon such surrender the Merger Consideration and any cash in lieu of a
fractional share of Parent Common Stock which the holder thereof has the right
to receive in respect of such Certificate pursuant to this Article II. No
interest will be paid or will accrue on any cash payable to holders of
Certificates pursuant to this Article II.
(c) DISTRIBUTIONS WITH RESPECT TO UNEXCHANGED SHARES.
Notwithstanding any other provisions of this Agreement, no dividends or other
distributions with respect to shares of Parent Common Stock with a record date
on or after the day on which the Effective Time occurs shall be paid to the
holder of any unsurrendered Certificate with respect to the shares of Parent
Common Stock represented thereby, and no cash in lieu of a fractional share of
Parent Common Stock shall be paid to any such holder pursuant to this Article
II, and all such dividends, other distributions and cash in lieu of any
fractional share of Parent Common Stock shall be paid by Parent to the Exchange
Agent (less the amount of any required withholding taxes) and shall be included
in the Exchange Fund, in each case until the surrender of such Certificate in
accordance with this Article II. Following surrender of any such Certificate,
there shall be issued or paid, as applicable, to the holder thereof (i) at the
time of such surrender, (x) a certificate representing whole shares of Parent
Common Stock issued in exchange therefor, (y) the cash portion of the Merger
Consideration and any cash payable in lieu of a fractional share of Parent
Common Stock to which such holder is entitled pursuant to this Article II and
(z) the amount of dividends or other distributions with a record date after the
Effective Time theretofore paid with respect to such whole shares of Parent
Common Stock (in each case, without interest and less the amount of any required
withholding taxes); and (ii)) at the appropriate payment date, the amount of any
dividends or other distributions with a record date after the Effective Time but
prior to such surrender and with a payment date subsequent to such surrender
payable with respect to such whole shares of Parent Common Stock.
(d) NO FURTHER OWNERSHIP RIGHTS IN COMPANY COMMON STOCK. All
shares of Parent Common Stock issued and cash paid upon the surrender for
exchange of Certificates in accordance with this Article II shall be deemed to
have been issued (and paid) in full satisfaction of all rights pertaining to the
shares of Company Common Stock theretofore represented by such Certificates,
SUBJECT, HOWEVER, to the Surviving Corporation's obligation to pay any dividends
or make any other distributions with a record date prior to the Effective Time
which may have been declared or made by the Company on such shares of Company
Common Stock in accordance with the terms of this Agreement or prior to the date
of this Agreement and which remain unpaid at the Effective Time, and there shall
be no further registration of transfers on the stock transfer books of the
Surviving Corporation of the shares of Company Common Stock which were
outstanding immediately prior to the Effective Time. Subject to applicable law,
Certificates presented after the Effective Time to the Surviving Corporation or
the Exchange Agent for any reason shall be canceled and exchanged as provided in
this Article II.
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(e) NO FRACTIONAL SHARES.
(i) No certificates or scrip representing fractional shares
of Parent Common Stock shall be issued upon the surrender for exchange of
Certificates, no dividend or distribution of Parent shall relate to such
fractional share interests and such fractional share interests will not entitle
the owner thereof to vote or to any rights of a stockholder of Parent
(ii) Notwithstanding any other provision of this Agreement,
each holder of record of shares of Company Common Stock exchanged pursuant to
the Merger who would otherwise have been entitled to receive a fraction of a
share of Parent Common Stock (after taking into account all Certificates
delivered by such holder of record) shall receive, in lieu thereof, cash
(without interest) in an amount equal to such fractional part of a share of
Parent Common Stock multiplied by the closing sales price of one share of Parent
Common Stock on the NYSE Composite Transactions List (as reported by THE WALL
STREET JOURNAL or, if not reported thereby, any other authoritative source) on
the trading day immediately preceding the Closing Date.
(f) TERMINATION OF EXCHANGE FUND. Any portion of the Exchange
Fund which remains undistributed to the holders of Certificates for six months
after the Effective Time shall be delivered to Parent, upon demand, and any
holders of Certificates who have not theretofore complied with this Article II
shall thereafter look only to Parent for payment of their claim for the Merger
Consideration and any cash in lieu of fractional shares or other dividends or
distributions payable to such holders pursuant to this Article II, in each case
without interest thereon.
(g) NO LIABILITY. None of Parent, Sub, the Company and the
Exchange Agent shall be liable to any person in respect of any shares of Parent
Common Stock (or any dividends or distributions with respect thereto or with
respect to any shares of Company Common Stock theretofore represented by any
Certificate) or any cash from the Exchange Fund delivered to a public official
pursuant to any applicable abandoned property, escheat or similar law. If any
Certificate shall not have been surrendered prior to the date on which any
Merger Consideration or any cash in lieu of a fractional share of Parent Common
Stock or other dividends or distributions payable to the holder of such
Certificate pursuant to this Article II would otherwise escheat to or become the
property of any Governmental Entity (as defined in Section 3.01(e)), any such
Merger Consideration or cash or other dividends or distributions shall, to the
extent permitted by applicable law, become the property of the Surviving
Corporation, free and clear of all claims or interests of any person previously
entitled thereto.
(h) LOST, STOLEN AND DESTROYED CERTIFICATES. If any Certificate
shall have been lost, stolen or destroyed, upon the making of an affidavit of
that fact by the person claiming such Certificate to be lost, stolen or
destroyed and, if required by Parent, the posting by such person of a bond in
such reasonable amount as Parent may direct as indemnity against any claim that
may be made against it with respect to such Certificate, the Exchange Agent will
issue in exchange for such lost, stolen or destroyed Certificate the Merger
Consideration, cash in lieu of a fractional share of Parent Common Stock, and
unpaid dividends and distributions on shares of Parent Common Stock as provided
in this Article [I, deliverable in respect thereof pursuant to this Agreement
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(i) INVESTMENT OF EXCHANGE FUND. The Exchange Agent shall
invest any cash included in the Exchange Fund in U. S. government securities, as
directed by Parent, on a daily basis. Any interest and other income resulting
from such investments shall be paid to Parent.
SECTION 2.03. NO APPRAISAL RIGHTS. The holders of Company Common Stock
shall not be entitled to appraisal rights in connection with the Merger.
SECTION 2.04. STOCK OPTIONS. At the Effective Time and subject to
Section 5.12, each option granted by the Company to purchase shares of the
Company's stock (each, a "Company Option") which is outstanding immediately
prior thereto shall cease to represent a right to acquire shares of Company
Common Stock and shall be converted automatically ally into an option (the
"Exchanged Option") to purchase shares of Parent Common Stock exercisable until
the current termination of the Company Option in an amount and at an exercise
price determined as provided below (and subject to the terms of the Company's
997 Long-Term Incentive Plan and 1997 Non-Employee Directors' Stock Plan (the
"Company Stock Plans") and the agreements evidencing such grants, in the case of
the directors and executive officers of the Company other than accelerated
vesting of any such options which otherwise would occur by virtue of the
consummation of the Merger under such plans and agreements):
(a) The number of shares of Parent Common Stock to be subject to
the converted options shall be equal to the product of the number of shares of
Company Common Stock subject to the original options and the Exchange Ratio,
provided that any fractional shares of Parent Common Stock resulting from such
multiplication shall be rounded down to the nearest share; and
(b) The exercise price per share of Parent Common Stock under the
converted option shall be equal to the exercise price per share of Company
Common Stock under the original option divided by the Exchange Ratio, provided
that such exercise price shall be rounded out to the nearest cent.
(c) Parent shall (i) reserve for issuance the number of shares of
Parent Common Stock that will become issuable upon the exercise of the Exchanged
Options and (ii) promptly after the Effective Time, issue to each holder of an
Exchanged Option a document evidencing Parent's assumption of the Company's
obligations under the Company Options. The Exchanged Options shall have the same
terms and conditions as the Company Options.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
SECTION 3.01. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. Except as
set forth on the Disclosure Schedule delivered by the Company to Parent at or
prior to the execution and delivery of this Agreement (the "Company Disclosure
Schedule") or as disclosed in the Company SEC Documents (as defined in Section
3.01(f)) filed and publicly available prior to the date of this
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Agreement (the "Filed Company SEC Documents"), the Company represents and
warrants to Parent and Sub as follows:
(a) ORGANIZATION, STANDING AND CORPORATE POWER. Each of the
Company and its Significant Subsidiaries (as defined in Section 8.03) is a
corporation duly incorporated, validly existing and in good standing under the
laws of the jurisdiction in which it is incorporated and has the requisite
corporate power and authority to carry on its business as now being conducted.
Each of the Company and its Significant Subsidiaries is duly qualified or
licensed to do business and is in good standing in each jurisdiction in which
the nature of its business or the ownership or leasing of its properties makes
such qualification or licensing necessary, except jurisdictions where the
failure to be so qualified or licensed or to be in good standing individually or
in the aggregate would not have a material adverse effect (as defined in Section
8.03) on the Company. The Company has delivered to Parent prior to the execution
and delivery of this Agreement complete and correct copies of its certificate of
incorporation and by-laws.
(b) SUBSIDIARIES. Paragraph (b) of the Company Disclosure
Schedule sets forth a true and complete list of each equity investment made by
the Company or any of its subsidiaries in any other person other than the
Company's Significant Subsidiaries ("Other Interests"). All the outstanding
shares of capital stock of each subsidiary of the Company have been validly
issued and are fully paid and nonassessable and are owned by the Company, by
another subsidiary of the Company or by the Company and another such subsidiary,
free and clear of all pledges, claims, liens, charges, encumbrances and security
interests of any kind or nature whatsoever (collectively, "Liens"). Any Other
Interests are owned by the Company, by one or more of the Company's subsidiaries
or by the Company and one or more of its subsidiaries, in each case free and
clear of all Liens, except for Liens created by any partnership agreements for
Other Interests.
(c) CAPITAL STRUCTURE.
(i) The authorized capital stock of the Company consists of
5,000,000 shares of Company preferred stock, $0.01 par value (the "Company
Preferred Stock"), 100,000,000 shares of Company Common Stock and 5,000,000
shares of restricted common stock, $0.01 par value (the "Restricted Company
Common Stock"). At the close of business on February 13,1998, (i) no shares of
Company Preferred Stock were issued and outstanding, (ii) l3,723,064 shares of
Company Common Stock were issued and outstanding, (iii) 1,718,823 shares of
Restricted Company Common Stock were issued and outstanding, (iv) no shares of
Company Preferred Stock, Company Common Stock or Restricted Company Common Stock
were held by the Company in its treasury or by subsidiaries of the Company, and
(v) 1,642,483 shares of Company Common Stock were reserved for issuance pursuant
to the Company Stock plans (as defined in Section 2.04). Except as set forth
above, at the close of business on February 13, 1998, no shares of capital stock
or other voting securities of the Company were issued, reserved for issuance or
outstanding. From February 13, 1998 to the date of this Agreement, no shares of
capital stock or other voting securities of the Company have been issued except
shares of Company Common Stock pursuant to the Company Stock Plans. There are no
outstanding stock appreciation rights or rights (other than the Company Options
(as defined in Section 2.04)) to receive shares of Company Common Stock on a
deferred basis granted under the Company Stock Plans or otherwise. The aggregate
number of shares of Company Common Stock subject
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to issuance upon exercise of all Company Options does not exceed the aggregate
number of shares specified for issuance upon exercise of all Company Options in
paragraph 3.01(c) of the Company Disclosure Schedule. Except as set forth
herein, there are no outstanding securities, options, warrants, calls, rights,
commitments, agreements, arrangements or undertakings of any kind, to which the
Company is a party or by which it is bound, obligating the Company to issue,
deliver or sell, or cause to be issued, delivered or sold, additional shares of
capital stock or other voting securities of the Company, or obligating the
Company to issue, grant, extend or enter into any such security, option,
warrant, call, right, commitment, agreement, arrangement or undertaking.
(ii) All outstanding shares of capital stock of the Company
are, and all shares which may be issued pursuant to the Company Stock Plans will
be when issued, duly authorized, validly issued, frilly paid and nonassessable
and not subject to preemptive rights. There are no bonds, debentures, notes or
other indebtedness of the Company having the right to vote (or convertible into,
or exchangeable for, securities having the right to vote) on any matters on
which stockholders of the Company may vote. Paragraph 3.01(c) of the Company
Disclosure Schedule sets forth a complete and correct list, as of the date
hereof, of all holders of Company Options and the exercise prices thereof.
(iii) There are no outstanding securities, options, warrants,
calls, rights, commitments, agreements, arrangements or undertakings of any
kind, to which any Significant Subsidiary of the Company is bound, obligating
such Significant Subsidiary to issue, deliver, sell, or cause to be issued
delivered or sold, additional shares of capital stock or other voting securities
of such Significant Subsidiary, or obligating such Significant Subsidiary to
issue, grant, extend or enter into any such security, option, warrant, call,
right commitment, agreement, arrangement or undertaking.
(iv) There are no outstanding contractual obligations of the
Company or any of its Significant Subsidiaries to repurchase, redeem or
otherwise acquire any shares of capital stock of the Company or any of its
Significant Subsidiaries. There are no outstanding contractual obligations of
the Company to vote or to dispose of any shares of the capital stock of any of
its Significant Subsidiaries.
(d) CORPORATE AUTHORITY RECOMMENDATION NONCONTRAVENTION. The
Company has all requisite corporate power and authority to enter into this
Agreement and, subject to the Company Stockholder Approval (as defined in
Section 3 .01(k)) with respect to the Merger, to consummate the transactions
contemplated by this Agreement. The execution and delivery of this Agreement by
the Company and the consummation by the Company of the transactions contemplated
by this Agreement have been duly authorized by all necessary corporate action on
the part of the Company subject, in the case of the Merger, to the Company
Stockholder Approval. The Board of Directors of the Company has resolved to
recommend that the stockholders of the Company approve and adopt this Agreement
and the Merger. This Agreement has been duly executed and delivered by the
.Company and, assuming the due authorization, execution and delivery thereof by
Parent and Sub, constitutes a valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms, except as such
enforceability may be limited by general principles of equity or principles
applicable to
12
creditors' rights generally. The execution and delivery of this Agreement do
not, and the consummation of the transactions contemplated by this Agreement and
compliance with the provisions of this Agreement will not, conflict with, or
result in any violation of, or default (after notice or lapse of time or both)
under, or give rise to a right of termination, cancellation or acceleration of
any obligation or to loss of a material benefit under, or result in the creation
of any Lien upon any of the properties or assets of the Company or any of its
subsidiaries under, (i) the certificate of incorporation or by-laws of the
Company or the comparable charter or organizational documents of any of its
Significant Subsidiaries, (ii) any loan or credit agreement, note, bond,
mortgage, indenture, lease or other agreement, instrument, permit, concession,
franchise or license applicable to the Company or any of its subsidiaries or any
of their respective properties or assets or (iii) subject to the governmental
filings and other consents and matters referred to in Section 3.01(e), any
judgment, order, decree, statute, law, ordinance, rule or regulation applicable
to the Company or any of its subsidiaries or any of their respective properties
or assets, other than, in the case of clauses (ii) and (iii), any such
conflicts, violations, defaults, rights, losses or Liens that, individually or
in the aggregate, would not (x) have a material adverse effect on the Company or
(y) prevent the consummation of any of the transactions contemplated by this
Agreement.
(e) GOVERNMENTAL AUTHORIZATION. No consent, approval, order or
authorization of, or registration, declaration or filing with, any Federal,
state or local government or any court, administrative or regulatory agency or
commission or other governmental authority or agency (each a "Governmental
Entity") is required by or with respect to the Company or any of its
subsidiaries in connection with the execution and delivery of this Agreement by
the Company or the consummation of the transactions contemplated by this
Agreement, except for (i) the filing of a premerger notification and report form
by the Company under the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976,
as amended, and the rules and regulations promulgated thereunder (the "HSR
Act"); (ii) the filing with the Securities and Exchange Commission (the "SEC")
of (x) a proxy statement (such proxy statement, as amended or supplemented from
time to time, the "Proxy Statement") relating to the Company Stockholders
Meeting (as defined in Section 5.01(b)) which shall also constitute a prospectus
of Parent relating to the shares of Parent Common Stock to be issued in the
Merger, and (y) such reports under Section 13(a) and Section 16 of the
Securities Exchange Act of 1934, as amended, and the rules and regulations
promulgated thereunder (the "Exchange Act"), as may be required in connection
with this Agreement and the transactions contemplated by this Agreement; (iii)
the filing of the Certificate of Merger with the Delaware Secretary of State and
appropriate documents with the relevant authorities of other states in which the
Company is qualified to do business; (iv) such filings with Governmental
Entities as may be required to satisfy the applicable requirements of state
securities or "blue sky" laws in connection with the transactions contemplated
by this Agreement; and (v) such other consents, approvals, orders,
authorizations, regulations, declarations or filings, the failure of which to
obtain or make would not have a material adverse effect on the Company.
(f) SEC DOCUMENTS: UNDISCLOSED LIABILITIES. The Company has filed
with the SEC the Company's registration statement on Form S-1 (the "Company
S-1"), which became effective on November 20, 1997 (the "S-1 Effective Date"),
and all required reports, schedules, forms, statements and other documents since
the S-1 Effective Date (together with such Form S-1 registration statement, the
"Company SEC Documents"). None of the Company's subsidiaries is
13
required to file with the SEC any report, form or other document. As of their
respective dates, the Company SEC Documents complied as to form in all material
respects with the requirements of the Securities Act of 1933, as amended, and
the rules and regulations promulgated thereunder (the "Securities Act"), or the
Exchange Act, as the case may be, and none of the Company SEC Documents when
filed contained any untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading. The financial statements of the Company included in the Company
SEC Documents comply as to form in all material respects with applicable
accounting requirements and the published rules and regulations of the SEC with
respect thereto, have been prepared in accordance with generally accepted
accounting principles (except, in the case of unaudited statements, as permitted
by the rules and regulations of the SEC) applied on a consistent basis during
the periods involved (except as may be indicated in the notes thereto) and
fairly present, in all material respects, the consolidated financial position of
the Company and its consolidated subsidiaries as of the dates thereof and the
consolidated results of their operations and cash flows for the periods then
ended (subject, in the case of unaudited statements, to normal year-end audit
adjustments). Except as set forth in the Filed Company SEC Documents, and except
for liabilities and obligations incurred since the Balance Sheet Date in the
ordinary course of business consistent with past practice, as of the date of
this Agreement, neither the Company nor any of its subsidiaries has any
liabilities or obligations of any nature (whether accrued, absolute, contingent
or otherwise) required by generally accepted accounting principles to be
recognized or disclosed on a consolidated balance sheet of the Company and its
consolidated subsidiaries or in the notes thereto and which, individually or in
the aggregate, would have a material adverse effect on the Company.
(g) INFORMATION SUPPLIED. None of the information to be supplied
by the Company specifically for inclusion or incorporation by reference in (i)
the registration statement on Form S-4 to be filed with the SEC by Parent in
connection with the issuance of shares of Parent Common Stock in the Merger (the
"Form S-4") will, at the time the Form S-4 is filed with the SEC, at any time it
is amended or supplemented or at the time it becomes effective under the
Securities Act, contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary to make the
statements therein not misleading or (ii) the Proxy Statement will, at the date
it is first mailed to the Company's stockholders or at the time of the Company
Stockholders Meeting, contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary in order to
make the statements therein in light of the circumstances under which they are
made, not misleading. The Proxy Statement will comply as to form in all material
respects with the requirements of the Exchange Act and the rules and regulations
thereunder, except that no representation or warranty is made by the Company
with respect to statements made or incorporated by reference therein based on
information supplied by Parent or Sub specifically for inclusion or
incorporation by reference in the Proxy Statement.
(h) ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as contemplated
by this Agreement, since September 30, 1997 (the "Balance Sheet Date"), the
Company has conducted its business only in the ordinary course, and there has
not been (i) any material adverse change (as defined in Section 8.03) in the
Company, other than changes relating to or arising from legislative or
regulatory changes or developments generally affecting the retailing of
manufactured housing
14
or general economic conditions, (ii) any declaration, setting aside or payment
of any dividend or other distribution (whether in cash, stock or property) with
respect to any of the Company's capital stock, (iii) any split, combination or
reclassification of any of its capital stock or any issuance or the
authorization of any issuance of any other securities in respect of, in lieu of
or in substitution for shares of its capital stock, (iv) (x) any granting by the
Company or any of its subsidiaries to any executive officer or other key
employee of the Company or any of its Significant Subsidiaries of any increase
in compensation (except for normal increases in the ordinary course of business
consistent with past practice or as required under any employment agreement in
effect as of December 31, 1997) or (y) any granting by the Company or any of its
subsidiaries to any such executive officer or key employee of any increase in
severance or termination pay (except as was required under any employment,
severance or termination agreement in effect as of December 31, 1997), (v) any
damage, destruction or loss, whether or not covered by insurance, that has had
or would have a material adverse effect on the Company, or (vi) except as
required by a change in generally accepted accounting principles, any change in
accounting methods, principles or practices by the Company materially affecting
the basis of presenting or method of determining its results of operations,
assets, liabilities or businesses.
(i) LITIGATION. There is no suit, action or proceeding pending,
and the Company has not received written notification threatening any suit,
action or proceeding, against or affecting the Company or any of its
subsidiaries that individually or in the aggregate would (i) have a material
adverse effect on the Company or (ii) prevent the consummation of any of the
transactions contemplated by this Agreement, nor is there any judgment, decree,
injunction, rule or order of any Governmental Entity or arbitrator outstanding
against the Company or any of its subsidiaries having any effect referred to in
.clause (i) or (ii) of this sentence.
(j) ERISA AND OTHER COMPENSATION MATTERS.
(i) Except as will not have a material adverse effect on the
Company, all employee benefit plans ("Plans") covering employees or former
employees of the Company or any of its subsidiaries ("Company Employees") have
been administered according to their terms and, to the extent subject to the
Employee Retirement Income Security Act of 1974, as amended, and the rules and
regulations promulgated thereunder ("ERISA"), are in compliance with ERISA.
Except as will not have a material adverse effect on the Company, each Plan
which is an "employee pension benefit plan" within the meaning of Section 3(2)
of ERISA ("Company Pension Plan") and which is intended to be qualified under
Section 401(a) of the Code, has received a favorable determination letter from
the Internal Revenue Service (the "Service"), and the Company is not aware of
any circumstances likely to result in revocation of any such favorable
determination letter. Neither the Company nor any of its subsidiaries or Company
ERISA Affiliates (as defined below) has engaged in a transaction with respect to
any Company Plan that, assuming the taxable period of such transaction expired
as of the date hereof, could subject the Company or any of its subsidiaries or
Company ERISA Affiliates to a tax or penalty imposed by either Section 4975 of
the Code or Section 502(i) of ERISA which would have a material adverse effect
on the Company. Neither the Company nor any of its subsidiaries or any Company
ERISA Affiliates has contributed or been required to contribute to any
multi-employer plan.
15
(ii) No liability under Subtitles C or D of Title IV of ERISA
has been or is expected to be incurred by the Company or any of its subsidiaries
or Company ERISA Affiliates with respect to any ongoing, frozen or terminated
Plan, currently or formerly maintained by any of them, or the Plan of any person
which is considered one employer with the Company under Section 4001 of ERISA or
Section 414 of the Code (a "Company ERISA Affiliate") which would have a
material adverse effect on the Company.
(iii) All contributions required to be made and all
contributions accrued as of the Balance Sheet Date under the terms of any Plan
for which the Company or any of its subsidiaries or ERISA Affiliates may have
liability have been timely made or have been reflected on the most recent
audited balance sheet included in the Filed Company SEC Documents. Neither any
Company Pension Plan nor any single-employer plan of the Company or any of its
subsidiaries or Company ERISA Affiliates has incurred an "accumulated funding
deficiency" (whether or not waived) within the meaning of Section 412 of the
Code or Section 302 of ERISA which would have a material adverse effect on the
Company. Neither the Company nor any of its subsidiaries has provided, or is
required to provide, security to any Company Pension Plan or to any Plan of a
Company ERISA Affiliate pursuant to Section 401(a)(29) of the Code.
(iv) Neither the Company nor any of its subsidiaries has any
obligations for retiree health and life benefits under any Plan, except as set
forth in the Company Disclosure Schedule, which would have a material adverse
effect on the Company.
(v) The execution and delivery of this Agreement do not, and
the performance of the transactions contemplated by this Agreement will not
(either alone or upon the occurrence of any additional or subsequent events)
constitute an event under any of the Company's Compensation and Benefit Plans
that will or may result in any payment (whether of severance or otherwise),
acceleration, forgiveness of indebtedness, vesting, distribution, increase in
benefits or obligation to fund benefits with respect to any employee of the
Company or any of its subsidiaries or Company ERISA Affiliates which would have
a material adverse effect on the Company.
(vi) There is no contract, agreement, plan or arrangement
covering any employee or former employee of the Company or any of its
subsidiaries or Company ERISA Affiliates that, individually or collectively,
could give rise as a result of the transactions contemplated by this Agreement
to the payment of any amount that would not be deductible pursuant to the terms
of Section 162(a)(l) or 280G of the Code.
(vii) There has been no amendment to, written interpretation
or announcement (whether or not written) by the Company or any of its
subsidiaries or Company ERISA Affiliates relating to, or change in employee
participation or coverage under, any of the Company's Compensation and Benefit
Plans which would increase materially above the level of the expense incurred in
respect thereof for the fiscal year ended on the Balance Sheet Date.
(k) VOTING REQUIREMENTS. The affirmative vote at the Company
Stockholders Meeting of the holders of a majority of the votes represented by
the outstanding Company Common Stock (the "Company Stockholder Approval") is the
only vote of the holders of any
16
class or series of the Company's capital stock necessary to approve and adopt
this Agreement and the transactions contemplated by this Agreement.
(l) STATE TAKEOVER STATUTES. The Board of Directors of the
Company has approved the terms of this Agreement and the consummation of the
Merger and the other transactions contemplated by this Agreement, and such
approval is sufficient to render inapplicable to the Merger and the other
transactions contemplated by this Agreement and the Company Stockholder
Agreement the provisions of Section 203 of the DGCL. To the knowledge of the
Company, no other state takeover statute or similar statute or regulation
applies or purports to apply to the Merger, this Agreement, the Company
Stockholder Agreement or any of the transactions contemplated by this Agreement
and no provision of the certificate of incorporation, by-laws or other governing
documents of the Company or any of its Significant Subsidiaries would, directly
or indirectly, restrict or impair the ability of Parent or any of its
Significant Subsidiaries to vote, or otherwise to exercise the rights of a
stockholder with respect to, shares of the Company Common Stock and the shares
of capital stock of its Significant Subsidiaries that may be acquired or
controlled directly or indirectly by Parent.
(m) BROKERS. No broker, investment banker, financial advisor or
other person, other than BT Alex. ▇▇▇▇▇, the fees and expenses of which will be
paid by the Company, is entitled to any broker's, finder's, financial advisor's
or other similar fee or commission in connection with the transactions
contemplated by this Agreement based upon arrangements made by or on behalf of
the Company or any of its subsidiaries. The Company has furnished to Parent true
and complete copies of all agreements with BT Alex. ▇▇▇▇▇ under which any such
fees or expenses may be payable, including all indemnification agreements.
(n) OPINION OF FINANCIAL ADVISOR. The Company has received the
opinion of BT Alex. ▇▇▇▇▇, dated the date of this Agreement, to the effect that,
as of such date, the Aggregate Merger Consideration is fair to the Company's
stockholders from a financial point of view, a signed copy of which opinion has
been delivered to Parent.
(o) COMPLIANCE WITH APPLICABLE LAWS. Each of the Company and its
subsidiaries is in compliance with all applicable statutes, laws, ordinances,
rules, regulations, judgments, decrees and orders of any Governmental Entity
applicable to its business and operations, except for possible noncompliance
that would not, individually or in the aggregate, have a material adverse effect
on the Company.
(p) TAXES. Each of the Company and its subsidiaries has timely
filed (or has had timely filed on its behalf) or will file or cause to be timely
filed, all material Tax Returns (as defined in Section 8.03) required by
applicable law to be filed by it prior to or as of the Effective Time. All such
Tax Returns are, or will be at the time of filing, true, complete and correct in
all material respects. Each of the Company and its subsidiaries has paid (or has
had paid on its behalf), or where payment is not yet due, has established (or
has had established on its behalf and for its sole benefit and recourse), or
will establish or cause to be established on or before the Effective Time, an
adequate accrual for the payment of, all Taxes (as defined in Section 8.03) due
with respect to any period ending prior to or as of the Effective Time, except
for Taxes which would not, individually or in the aggregate, have a material
adverse effect on the Company.
17
(q) LABOR. Since the Balance Sheet Date, as of the date of this
Agreement, there has not been any amendment in any material respect by the
Company or any of its subsidiaries of any collective bargaining agreement or
contract with a labor union or labor organization (each a "Collective Bargaining
Agreement") to which it is a party or otherwise bound. There is no labor strike,
labor dispute, work slowdown, labor stoppage or lockout actually pending, and
the Company has received no written notice of any threatened labor strike, labor
dispute, work slowdown, labor stoppage or lockout, against the Company or any of
its subsidiaries, nor are there, to the knowledge of the Company, any
organizational efforts presently being made involving any of the unorganized
employees of the Company or any of its subsidiaries which in any such case or
all such cases together would have a material adverse effect on the Company.
(r) ENVIRONMENTAL MATTERS.
(i) Except as disclosed in the Company Disclosure Schedule
and except for such matters that, alone or in the aggregate, would not have a
material adverse effect on the Company:
(1) the Company and its subsidiaries have complied with
all applicable Environmental Laws; (2) the properties currently
owned or operated by the Company and its subsidiaries (including
soils, groundwater, surface water, buildings or other
structures) are not contaminated with any Hazardous Substances;
(3) the properties formerly owned or operated by the Company or
its subsidiaries were not contaminated with Hazardous Substances
during the period of ownership or operation by the Company or
any of its subsidiaries; (4) neither the Company nor any of its
subsidiaries is subject to liability for any Hazardous Substance
disposal or contamination on any third party property; (5)
neither the Company nor any of its subsidiaries has been
associated with any release or threat of release of any
Hazardous Substance; (6) neither the Company nor any of its
subsidiaries has received any notice, demand, letter, claim or
request for information alleging that the Company or any of its
subsidiaries may be in violation of or liable under any
Environmental Law; (7) neither the Company nor any of its
subsidiaries is subject to any orders, decrees, injunctions or
other arrangements with any Governmental Entity or is subject to
any orders, decrees, injunctions or other arrangements with any
Governmental Entity or is subject to any indemnity or other
agreement with any third party relating to liability under any
Environmental Law or relating to Hazardous Substances; (8) there
are no circumstances or conditions involving the Company or any
of its subsidiaries that could reasonably be expected to result
in any claims, liability, investigations, costs or restrictions
on the ownership, use or transfer of any property of the Company
or its subsidiaries pursuant to any Environmental Law; (9) none
of the properties of the Company or its subsidiaries contains
any underground storage tanks, asbestos-containing material,
lead-based products, or polychlorinated biphenyls; and (10)
neither the Company nor any of its subsidiaries has engaged in
any activities involving the generation, use, handling or
disposal of any Hazardous Substances.
18
(ii) As used herein:
(1) "Environmental Law" means any federal, state, local
or foreign law, regulation, treaty, order, decree, permit,
authorization, policy, opinion, common law or agency requirement
relating to: (A) the protection, investigation or restoration of
the environment, health and safety, or natural resources; (B)
the handling, use, presence, disposal, release or threatened
release of any chemical substance or waste; or (C) noise, odor,
wetlands, pollution, contamination or any injury or threat of
injury to persons or property.
(2) "Hazardous Substance" means any substance that is:
(A) listed, classified or regulated in any concentration
pursuant to any Environmental Law; (B) any petroleum product or
by-product, asbestos-containing material, lead-containing paint
or plumbing, polychlorinated biphenyls, radioactive materials or
radon; or (C) any other substance which may be the subject of
regulatory action by any Governmental Entity pursuant to any
Environmental Law.
(s) LICENSES. Each of the Company and its subsidiaries has all
permits, licenses, waivers and authorizations which are necessary for it to
conduct its business in the manner in which it is presently being conducted
(collectively, "Company Licenses"), other than any Company Licenses the failure
of which to have would not, individually or in the aggregate, have a material
adverse effect on the Company. Each of the Company and its subsidiaries is in
compliance with the terms of all Company Licenses, except for such failures so
to comply which would not have a material adverse effect on the Company. The
Company and its subsidiaries have duly performed their respective obligations
under such Company Licenses, except for such non-performance as would not have a
material adverse effect on the Company. There is no pending or, to the knowledge
of the Company, threatened application, petition, objection or other pleading
with any Governmental Entity which challenges or questions the validity of, or
any rights of the holder under, any Company License, except for such
applications, petitions, objections or other pleadings, that would not,
individually or in the aggregate, have a material adverse effect on the Company.
(t) INTELLECTUAL PROPERTY. The Company and its subsidiaries own
or have rights to use (i) all material computer software utilized in the conduct
of their respective businesses and (ii) all names and service marks used by the
Company or any such subsidiary and, to the knowledge of the Company, such use
does not conflict with any rights of others with respect thereto, except for
such failures to own or have rights to use and such conflicts that have not had
and would not have a material adverse effect on the Company.
(u) MATERIAL AGREEMENTS. Neither the Company nor any of its
subsidiaries is in breach of any material agreement, except for breaches which
would not, individually or in the aggregate, have a material adverse effect on
the Company and the Company has no material agreements other than those
specified in the Company SEC Documents. All employment agreements of the Company
are listed on the Company Disclosure Schedule and are filed with the Company SEC
Documents.
19
SECTION 3.02. REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB. Except
as set forth on the Disclosure Schedule delivered by Parent to the Company at or
prior to the execution and delivery of this Agreement (the "Parent Disclosure
Schedule") or as disclosed in the Parent SEC Documents (as defined in Section
3.02(f)) filed and publicly available prior to the date of this Agreement (the
"Filed Parent SEC Documents") or the Parent's Offering Memorandum dated February
4, 1998 (collectively with the Filed Parent SEC Documents the "Parent Disclosure
Documents"), Parent and Sub represent and warrant to the Company as follows:
(a) ORGANIZATION STANDING AND CORPORATE POWER. Each of Parent and
Sub and each of Parent's Significant Subsidiaries is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction in which it is incorporated and has the requisite corporate power
and authority to carry on its business as now being conducted. Each of Parent
and its Significant Subsidiaries is duly qualified or licensed to do business
and is in good standing in each jurisdiction in which the nature of its business
or the ownership or leasing of its properties makes such qualification or
licensing necessary, except jurisdictions where the failure to be so qualified
or licensed or to be in good standing individually or in the aggregate would not
have a material adverse effect on Parent. Parent has delivered to the Company
prior to the execution and delivery of this Agreement complete and correct
copies of its certificate of incorporation and by-laws.
(b) SUBSIDIARIES. All the outstanding shares of capital stock of
each subsidiary of Parent have been validly issued and are frilly paid and
nonassessable and are owned by Parent, free and clear of all Liens, and
excluding the outstanding shares of Expression Homes Corporation which is 49%
owned by the Company.
(c) CAPITAL STRUCTURE.
(i) As of the date of this Agreement, the authorized capital
stock of Parent consists of 75,000,000 shares of Common Stock, par value $1.00
per share (the "Parent Common Stock"), and 10,000,000 shares of Preferred Stock,
par value $1.00 per share ("Parent Preferred Stock") of which 50,000 shares are
designated as Series A Junior Participating Preferred Stock. At the close of
business on February 10, 1998, (i) 30,858,719 shares of Parent Common Stock were
issued and outstanding, (ii) no shares of Parent Preferred Stock were issued and
outstanding, (iii) no shares of Parent Common Stock were held by Parent in its
treasury, (iv) 2,167,224 shares of Parent Common Stock were reserved for
issuance upon exercise of outstanding options under Parent's stock option plans
(the "Parent Stock Plans"), (v) 5,131,363 shares of Parent Common Stock have
been reserved for issuance upon conversion of the Trust Preferred Securities
issued by a subsidiary, and (vi) 24,070,402 shares of Parent's Series A Junior
Participating Preferred Stock were reserved for issuance pursuant to that
certain Rights Agreement, dated as of November 10, 1988 (the "Parent Rights
Agreement"), between Parent and The First National Bank of Boston, as Rights
Agent (the "Parent Rights Agent"). Except as set forth above, at the close of
business on February 10, 1998, no shares of capital stock or other voting
securities of Parent were issued, reserved for issuance or outstanding. Except
as set forth above or as otherwise contemplated by this Agreement, as of the
date of this Agreement, there are no outstanding securities, options, warrants,
calls, rights, commitments, agreements, arrangements or undertakings of any
kind, to which Parent is a party or by which it is bound, obligating Parent
20
to issue, deliver or sell, or cause to be issued, delivered or sold, additional
shares of capital stock or other voting securities of Parent, or obligating
Parent to issue, grant, extend or enter into any such security, option, warrant,
call, right, commitment, agreement, arrangement or undertaking.
(ii) All outstanding shares of capital stock of Parent are,
and all shares which may be issued pursuant to this Agreement will be when
issued, duly authorized, validly issued, frilly paid and nonassessable and not
subject to preemptive rights. As of the date of this Agreement, except for the
Parent's 6% Convertible Subordinated Debentures due February 15, 2028, there are
no bonds, debentures, notes or other indebtedness of Parent having the right to
vote (or convertible into, or exchangeable for, securities having the right to
vote) on any matters on which stockholders of Parent may vote.
(iii) There are no outstanding securities, options, warrants,
calls, rights, commitments, agreements, arrangements or undertakings of any
kind, to which any Significant Subsidiary of Parent is bound, obligating such
Significant Subsidiary to issue, deliver, sell, or cause to be issued delivered
or sold, additional shares of capital stock or other voting securities of such
Significant Subsidiary, or obligating such Significant Subsidiary to issue,
grant, extend or enter into any such security, option, warrant, call, right
commitment, agreement, arrangement or undertaking.
(iv) As of the date of this Agreement, there are no
outstanding contractual obligations of Parent or any of its Significant
Subsidiaries to repurchase, redeem or otherwise acquire any shares of capital
stock of Parent or any of its Significant Subsidiaries. As of the date of this
Agreement, the authorized capital stock of Sub consists of 1,000 shares of
common stock, par value $.0l per share, 100 of which have been validly issued,
are frilly paid and nonassessable and are owned by Parent free and clear of any
Lien.
(d) CORPORATE AUTHORITY, NONCONTRAVENTION. Parent and Sub have
all requisite corporate power and authority to enter into this Agreement and to
consummate the transactions contemplated by this Agreement. The execution and
delivery of this Agreement and the consummation of the transactions contemplated
by this Agreement have been duly authorized by all necessary corporate action on
the part of Parent and Sub. This Agreement has been duly executed and delivered
by Parent and Sub and, assuming the due authorization, execution and delivery
thereof by the Company, constitutes a valid and binding obligation of each such
party, enforceable against such party in accordance with its terms, except as
such enforceability may be limited by general principles of equity or principles
applicable to creditors' rights generally. The execution and delivery of this
Agreement do not, and the consummation of the transactions contemplated by this
Agreement and compliance with the provisions of this Agreement will not,
conflict with, or result in any violation of, or default (after notice or lapse
of time or both) under, or give rise to a right of termination, cancellation or
acceleration of any obligation or to loss of a material benefit under, or result
in the creation of any Lien upon any of the properties or assets of Parent, Sub
or any of Parent's other subsidiaries under, (i) the certificate of
incorporation or by-laws of Parent or Sub or the comparable charter or
organizational documents of any of Parent's Significant Subsidiaries, (ii) any
loan or credit agreement, note, bond, mortgage, indenture, lease or other
agreement, instrument, permit, concession, franchise or license applicable to
Parent, Sub or such other subsidiary or any of their respective properties or
assets or (iii) subject to the
21
governmental filings and other consents and matters referred to in Section
3.02(e), any judgment, order, decree, statute, law, ordinance, rule or
regulation applicable to Parent, Sub or such other subsidiary or any of their
respective properties or assets, other than, in the case of clauses (ii) and
(iii), any such conflicts, violations, defaults, rights, losses or Liens that,
individually or in the aggregate, would not (x) have a material adverse effect
on Parent or (y) prevent the consummation of any of the transactions
contemplated by this Agreement.
(e) GOVERNMENTAL AUTHORIZATION. No consent, approval, order or
authorization of, or registration, declaration or filing with, any Governmental
Entity is required by or with respect to Parent or Sub in connection with the
execution and delivery of this Agreement or the consummation by Parent or Sub,
as the case may be, of any of the transactions contemplated by this Agreement,
except for (i) the filing of a premerger notification and report form by Parent
under the HSR Act; (ii) the filing with the SEC of (x) the Form S-4 and (y) the
filing or furnishing with or to the SEC of such reports under Section 13(a) of
the Exchange Act as may be required in connection with this Agreement, and the
transactions contemplated by this Agreement; (iii) the filing of the Certificate
of Merger with the Delaware Secretary of State and appropriate documents with
the relevant authorities of other states in which the Company is qualified to do
business; (iv) such filings with Governmental Entities as may be required to
satisfy the applicable requirements of state securities or "blue sky" laws in
connection with the transactions contemplated by this Agreement; (v) such other
consents, approvals, orders, authorizations, regulations, declarations or
filings, the failure of which to obtain or make not have a material adverse
effect on Parent; and (vi) such filings with and approvals of the NYSE to permit
the shares of Parent Common Stock that are to be issued in the Merger to be
listed on the NYSE.
(f) SEC DOCUMENTS, UNDISCLOSED LIABILITIES. Parent has filed with
the SEC all reports, schedules, forms, statements and other documents required
to be filed since the Balance Sheet Date (the "Parent SEC Documents"). None of
Parent's subsidiaries is required to file with the SEC any report, form or other
document. As of their respective dates, the Parent SEC Documents complied as to
form in all material respects with the requirements of the Securities Act or the
Exchange Act, as the case may be, and the rules and regulations of the SEC
promulgated thereunder applicable to such Parent SEC Documents, and none of the
Parent SEC Documents when filed contained any untrue statement of a material
fact or omitted to state a material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading. The financial statements of Parent
included in the Parent SEC Documents comply as to form in all material respects
with applicable accounting requirements and the published rules and regulations
of the SEC with respect thereto, have been prepared in accordance with generally
accepted accounting principles (except, in the case of unaudited statements, as
permitted by the rules and regulations of the SEC) applied on a consistent basis
during the periods involved (except as may be indicated in the notes thereto)
and fairly present, in all material respects, the consolidated financial
position of Parent and its consolidated subsidiaries as of the dates thereof and
the consolidated results of their operations and cash flows for the periods then
ended (subject, in the case of unaudited statements, to normal year-end audit
adjustments). Except as disclosed in the Parent Disclosure Documents, and except
for liabilities and obligations incurred since October 26, 1997 (the "Parent
Balance Sheet Date") in the ordinary course of business consistent with past
practice, as of the date of this Agreement, neither Parent nor any of its
subsidiaries has any liabilities or obligations of any nature
22
(whether accrued, absolute, contingent or otherwise) required by generally
accepted accounting principles to be recognized or disclosed on a consolidated
balance sheet of Parent and its consolidated subsidiaries or in the notes
thereto and which, individually or in the aggregate, would have a material
adverse effect on Parent.
(g) INFORMATION SUPPLIED. None of the information to be supplied
by Parent or Sub specifically for inclusion or incorporation by reference in (i)
the Form S-4 will, at the time the Form S-4 is filed with the SEC, at any time
it is amended or supplemented or at the time it becomes effective under the
Securities Act, contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary to make the
statements therein not misleading or (ii) the Proxy Statement will, at the date
the Proxy Statement is first mailed to Company stockholders or at the time of
the Company Stockholders Meeting, contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein in light of the circumstances
under which they are not misleading.
(h) ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as contemplated
by this Agreement or as disclosed in the Parent Disclosure Documents, since the
Parent Balance Sheet Date, Parent has conducted its business only in the
ordinary course, and there has not been (i) any material adverse change in
Parent, other than changes relating to or arising from legislative or regulatory
changes or developments generally affecting broadcasting or publishing
operations or general economic conditions, (ii) any declaration, setting aside
or payment of any dividend or other distribution (whether in cash, stock or
property) with respect to any of Parent's capital stock, except for regular
quarterly dividends on the Parent Common Stock, (iii) any split, combination or
reclassification of any of its capital stock or any issuance or the
authorization of any issuance of any other securities in respect of, in lieu of
or in substitution for shares of its capital stock or (iv) any damage,
destruction or loss, whether or not covered by insurance, that has had or would
have a material adverse effect on Parent, (v) (x) any granting by Parent or any
of its subsidiaries to any executive officer or other key employee of Parent or
any of its Significant Subsidiaries of any increase in compensation (except for
normal increases in the ordinary course of business consistent with past
practice or as required under any employment agreement in effect as of the
Parent Balance Sheet Date) or (y) any granting by Parent or any of its
Significant Subsidiaries to any such executive officer or key employee of any
increase in severance or termination pay (except as was required under any
employment, severance or termination agreement in effect as of the Parent
Balance Sheet Date), (vi) any damage, destruction or loss, whether or not
covered by insurance, that has had or would have a material adverse effect on
Parent, or (vii) except as required by a change in generally accepted accounting
principles, any change in accounting methods, principles or practices by Parent
materially affecting the basis of presenting or method of determining its
results of operations, assets, liabilities or businesses.
(i) LITIGATION. There is no suit, action or proceeding pending,
and Parent has not received written notification threatening any suit, action or
proceeding, against or affecting Parent or any of its subsidiaries that
individually or in the aggregate could (i) have a material adverse effect on
Parent or (ii) prevent the consummation of any of the transactions contemplated
by this Agreement, nor is there any judgment, decree, injunction, rule or order
of any Governmental Entity or arbitrator outstanding against Parent or any of
its subsidiaries having, or
23
which, insofar as reasonably can be foreseen, in the future would have, any
effect referred to in clause (i)or (ii) of this sentence.
(j) ERISA AND OTHER COMPENSATION MATTERS.
(i) Except as will not have a material adverse effect on
Parent, all Plans covering employees or former employees of Parent or any of its
subsidiaries ("Parent Employees") have been administered according to their
terms and, to the extent subject to ERISA, are in compliance with ERISA. Each
Plan which is an "employee pension benefit plan" within the meaning of Section
3(2) of ERISA ("Parent Pension Plan") and which is intended to be qualified
under Section 401(a) of the Code, has received a favorable determination letter
from the Service, and Parent is not aware of any circumstances likely to result
in revocation of any such favorable determination letter. Neither Parent nor any
of its subsidiaries or Parent ERISA Affiliates (as defined below) has engaged in
a transaction with respect to any Plan that, assuming the taxable period of such
transaction expired as of the date hereof, could subject Parent or any of its
subsidiaries or Parent ERISA Affiliates to a tax or penalty imposed by either
Section 4975 of the Code or Section 502(i) of ERISA which would have a material
adverse effect on Parent. Neither Parent nor any of its subsidiaries or Parent
ERISA Affiliates has contributed or been required to contribute to any
multi-employer plan.
(ii) No liability under Subtitles C or D of Title IV of ERISA
has been or is expected to be incurred by Parent or any of its subsidiaries or
Parent ERISA Affiliates with respect to any ongoing, frozen or terminated Plan,
currently or formerly maintained by any of them, or the Plan of any person which
is considered one employer with Parent under Section 4001 of ERISA or Section
414 of the Code (a "Parent ERISA Affiliate") which would have a material adverse
effect on Parent.
(iii) All contributions required to be made and all
contributions accrued as of the Balance Sheet Date under the terms of any Plan
for which Parent or any of its subsidiaries or Parent ERISA Affiliates may have
liability have been timely made or have been reflected on the most recent
audited balance sheet included in the Filed Parent SEC Documents. Neither any
Parent Pension Plan nor any single-employer plan of Parent or any of its
subsidiaries or Parent ERISA Affiliates has incurred an "accumulated funding
deficiency" (whether or not waived) within the meaning of Section 412 of the
Code or Section 302 of ERISA which would have a material adverse effect on
Parent. Neither Parent nor any of its subsidiaries has provided, or is required
to provide, security to any Parent Pension Plan or to any Plan of a Parent ERISA
Affiliate pursuant to Section 401(a)(29) of the Code.
(iv) Neither Parent nor any of its subsidiaries has any
obligations for retiree health and life benefits under any Plan, except as set
forth in the Parent Disclosure Schedule, which would have a material adverse
effect on Parent.
(v) The execution and delivery of this Agreement do not, and
the performance of the transactions contemplated by this Agreement will not
(either alone or upon the occurrence of any additional or subsequent events)
constitute an event under any of the Parent's Compensation and Benefit Plans
that will or may result in any payment (whether of severance or
24
otherwise), acceleration, forgiveness of indebtedness, vesting, distribution,
increase in benefits or obligation to fund benefits with respect to any employee
of Parent or any of its subsidiaries or Parent ERISA Affiliates which would have
a material adverse effect on Parent.
(vi) There is no contract, agreement, plan or arrangement
covering any employee or former employee of Parent or any of its subsidiaries or
Parent ERISA Affiliates that, individually or collectively, could give rise as a
result of the transactions contemplated by this Agreement to the payment of any
amount that would not be deductible pursuant to the terms of Section 1 62(a)( I)
or 280G of the Code.
(vii) There has been no amendment to, written interpretation
or announcement (whether or not written) by Parent or any of its subsidiaries or
Parent ERISA Affiliates relating to, or change in employee participation or
coverage under, any of the Parent's Compensation and Benefit Plans which would
increase materially above the level of the expense incurred in respect thereof
for the fiscal year ended on the Balance Sheet Date.
(k) BROKERS. No broker, investment banker, financial advisor or
other person, other than PaineWebber Incorporated, the fees and expenses of
which will be paid by Parent, is entitled to any broker's, finders, financial
advisor's or other similar fee or commission in connection with the transactions
contemplated by this Agreement based upon arrangements made by or on behalf of
Parent or Sub
(1) INTERIM OPERATIONS OF SUB. Sub was formed solely for the
purpose of engaging in the transactions contemplated hereby and has engaged in
no other business other than incident to its creation and this Agreement and the
transactions contemplated hereby.
(m) TAXES. Each of Parent and its subsidiaries has timely filed
(or has had timely filed on its behalf), or will file or cause to be timely
filed, all material Tax Returns required by applicable law to be filed by it
prior to or as of the Effective Time. All such Tax Returns are, or will be at
the time of filing, true, complete and correct in all material respects. Each of
Parent and its subsidiaries has paid (or has had paid on its behalf), or where
payment is not yet due, has established (or has had established on its behalf
and for its sole benefit and recourse), or will establish or cause to be
established on or before the Effective Time, an adequate accrual for the payment
of, all Taxes due with respect to any period ending prior to or as of the
Effective Time, except for Taxes which would not, individually or in the
aggregate, have a material adverse effect on Parent.
(n) COMPLIANCE WITH APPLICABLE LAWS. Each of Parent and its
subsidiaries is in compliance with all applicable statutes, laws, ordinances,
rules, regulations, judgments, decrees and orders of any Governmental Entity
applicable to its business and operations, except for possible noncompliance
that would not, individually or in the aggregate, have a material adverse effect
on Parent.
(o) LABOR. Since the Parent Balance Sheet Date, as of the date of
this Agreement, there has not been any amendment in any material respect by
Parent or any of its subsidiaries of any Collective Bargaining Agreement to
which it is a party or otherwise bound.
25
There is no labor strike, labor dispute, work slowdown, labor stoppage or
lockout actually pending, and Parent has received no written notice of any
threatened labor strike, labor dispute, work slowdown, labor stoppage or
lockout, against Parent or any of its subsidiaries, nor are there, to the
knowledge of Parent, any organizational efforts presently being made involving
any of the unorganized employees of Parent or any of its subsidiaries which in
any such case or all such cases together would have a material adverse effect on
Parent.
(p) ENVIRONMENTAL MATTERS. Except for such matters that, alone or
in the aggregate, would not have a material adverse effect on Parent:
(1) Parent and its subsidiaries have complied with all applicable
Environmental Laws; (2) the properties currently owned or operated by Parent and
its subsidiaries (including soils, groundwater, surface water, buildings or
other structures) are not contaminated with any Hazardous Substances; (3) the
properties formerly owned or operated by Parent or its subsidiaries were not
contaminated with Hazardous Substances during the period of ownership or
operation by Parent or any of its subsidiaries; (4) neither Parent nor any of
its subsidiaries is subject to liability for any Hazardous Substance disposal or
contamination on any third party property; (5) neither Parent nor any of its
subsidiaries has been associated with any release or threat of release of any
Hazardous Substance; (6) neither Parent nor any of its subsidiaries has received
any notice, demand, letter, claim or request for information alleging that
Parent or any of its subsidiaries may be in violation of or liable under any
Environmental Law; (7) neither Parent nor any of its subsidiaries is subject to
any orders, decrees, injunctions or other arrangements with any Governmental
Entity or is subject to any orders, decrees, injunctions or other arrangements
with any Governmental Entity or is subject to any indemnity or other agreement
with any third party relating to liability under any Environmental Law or
relating to Hazardous Substances; (8) there are no circumstances or conditions
involving Parent or any of its subsidiaries that could reasonably be expected to
result in any claims, liability, investigations, costs or restrictions on the
ownership, use or transfer of any property of Parent or its subsidiaries
pursuant to any Environmental Law; (9) none of the properties of Parent or its
subsidiaries contains any underground storage tanks, asbestos-containing
material, lead-based products, or polychlorinated biphenyls; and (10) neither
Parent nor any of its subsidiaries has engaged in any activities involving the
generation, use, handling or disposal of any Hazardous Substances.
(q) LICENSES. Each of Parent and its subsidiaries has all
permits, licenses, waivers and authorizations which are necessary for it to
conduct its business in the manner in which they are presently being conducted
(collectively, the "Parent Licenses") other than any Parent Licenses the failure
of which to have would not, individually or in the aggregate, have a material
adverse effect on Parent. Each of Parent and its subsidiaries is in compliance
with the terms of all Parent Licenses, except for such failures such to comply
which would not have a material adverse effect on Parent. Parent and its
subsidiaries have duly performed their respective obligations under such Parent
Licenses, except for such non-performance as would not have a material adverse
effect on Parent. There is no pending or, to the knowledge of Parent, threatened
application, petition, objection or other pleading with any Governmental Entity
which challenges or questions the validity of, or any rights of the holder
under, any Parent License, except for such applications, petitions, objections
or other pleadings, that would not, individually or in the aggregate, have a
material adverse effect on Parent.
26
(r) INTELLECTUAL PROPERTY. Parent and its subsidiaries own or
have rights to use (i) all material computer software utilized in the conduct of
their respective businesses and (ii) all names and service marks used by Parent
or any such subsidiary and, to the knowledge of Parent, such use does not
conflict with any rights of others with respect thereto, except for such
failures to own or have rights to use and such conflicts that have not had and
would not have a material adverse effect on Parent.
(s) MATERIAL AGREEMENTS. Neither Parent nor any of its
subsidiaries is in breach of any material agreement, except for breaches which
would not, individually or in the aggregate, have a material adverse effect on
Parent.
(t) FINANCING. At the Effective Time, Parent and Sub will have
available all of the funds necessary (i) to satisfy their respective obligations
under this Agreement, and (ii) to pay all the related fees and expenses in
connection with the foregoing.
(u) NO OWNERSHIP OF COMPANY COMMON Stock. Neither Parent nor any
of its subsidiaries owns any shares of Company Common Stock.
ARTICLE IV
COVENANTS RELATING TO CONDUCT OF BUSINESS
SECTION 4.01. CONDUCT OF BUSINESS.
(a) CONDUCT OF BUSINESS BY THE COMPANY. Prior to the Effective
Time, except as contemplated by this Agreement, the Company shall, and shall
cause each of its subsidiaries to, carry on their respective businesses in the
usual, regular and ordinary course in substantially the same manner as
heretofore conducted and in compliance in all material respects with all
applicable laws and regulations and, to the extent consistent therewith, use all
reasonable efforts to preserve intact their current business organizations, keep
available the services of their current officers and employees and preserve
their relationships with customers, suppliers, licensors, licensees and others
having business dealings with them to the end that their goodwill and ongoing
businesses shall not be impaired at the Effective Time. Without limiting the
generality of the foregoing, prior to the Effective Time, except as contemplated
by this Agreement or as set forth on the Company Disclosure Schedule, without
the prior, express written consent of Parent (which may not be unreasonably
delayed or withheld), the Company shall not, and shall not permit any of its
subsidiaries to.
(i) (x) declare, set aside or pay any dividends on, or make
any other distributions in respect of, any of its capital stock, other than
dividends and distributions by a direct or indirect wholly owned subsidiary of
the Company to its parent, (y) split, combine or reclassify any of its capital
stock or issue or authorize the issuance of any other securities in respect of,
in lieu of or in substitution for shares of its capital stock or (z) purchase,
redeem or otherwise acquire any shares of capital stock of the Company or any of
its subsidiaries or any other securities thereof or any rights, warrants or
options to acquire any such shares or other securities;
27
(ii) issue, deliver, sell, pledge or otherwise encumber any
shares of its capital stock, any other voting securities or any securities
convertible into, or any rights, warrants or options to acquire, any such
shares, voting securities or convertible securities (other than the issuance of
Company Common Stock upon the exercise of Company Employee Stock Options
outstanding on the date of this Agreement in accordance with their present
terms);
(iii) amend its certificate of incorporation, by-laws or
other comparable charter or organizational documents;
(iv) acquire or agree to acquire (x) by merging or
consolidating with, or by purchasing a substantial portion of the assets of, or
by any other manner, any business or any corporation, limited liability company,
partnership, joint venture, association or other business organization or
division thereof, or (y) any assets that, individually or in the aggregate, are
material to the Company and its subsidiaries taken as a whole;
(v) sell, lease, license, mortgage or otherwise encumber or
subject to any Lien or otherwise dispose of any of its properties or assets,
except, in any such case, in the ordinary course of business consistent with
past practice, and except transactions between a wholly owned subsidiary of the
Company and the Company or another wholly owned subsidiary of the Company;
(vi) (x) incur any indebtedness, except for floor plan
financing and borrowings (net of cash, cash equivalents and marketable
securities held by the Company or any of its subsidiaries) not in excess of
$500,000 at any one time outstanding incurred in the ordinary course of business
consistent with past practice, or (y) except in the ordinary course of business
consistent with past practice, make any loans, advances or capital contributions
to, or investments in, any other person, other than to the Company or any direct
or indirect wholly owned subsidiary of the Company;
(vii) make or agree to make any new capital expenditure or
capital expenditures, except in the ordinary course of business consistent with
past practice;
(viii) make any material Tax election or settle or compromise
any material Tax liability;
(ix) except in the ordinary course of business or except as
would not have a material adverse effect on the Company, modify, amend or
terminate any material contract or agreement to which the Company or any
subsidiary is a party or waive, release or assign any material rights or claims
thereunder;
(x) make any material change to its accounting methods,
principles or practices, except as may be required by generally accepted
accounting principles;
(xi) except as required to comply with applicable law and
except as necessary to comply with Section 5.13, (w) adopt, enter into,
terminate or amend any of the Company's Compensation and Benefit Plans or other
arrangement for the benefit or welfare of any current or former director,
officer or employee, (x) increase in any manner the compensation or
28
fringe benefits of, or pay any bonus to, any director, officer or employee
(except for normal increases, promotions or bonuses in the ordinary course of
business consistent with past practice), (y) pay any benefit not provided for
under any of the Companyts Compensation and Benefit Plans, or (z) except as
permitted in clause (x), grant any awards under any bonus, incentive,
performance or other compensation plan or arrangement or of the Company's
Compensation and Benefit Plans (including the grant of stock options, stock
appreciation rights, stock based or stock related awards, performance units or
restricted stock, or the removal of existing restrictions in any of the
Company's Compensation and Benefit Plans or agreement or awards made
thereunder); or
(xii) authorize, or commit or agree to take, any of the
foregoing actions.
(b) CONDUCT OF BUSINESS BY PARENT. Prior to the Effective Time,
without the prior, express written consent of the Company (which may be given or
withheld in its sole discretion), Parent shall not, and shall not permit any of
its subsidiaries to:
(i) declare, set aside or pay any dividends on, or make any
other distributions in respect of; the Parent capital stock, other than
quarterly dividends paid in accordance with past practice;
(ii) split, combine or reclassify the Parent capital stock or
issue or authorize the issuance of any other securities in respect of; in lieu
of or in substitution for the Parent Common Stock, or
(iii) authorize, or commit or agree to take, any of the
foregoing actions.
(c) ADVISEMENT OF CHANGES. The Company and Parent shall promptly
advise the other party orally and in writing upon its becoming aware of (i) any
representation or warranty made by it in this Agreement becoming untrue or
inaccurate in any material respect, (ii) the failure by it to comply with or
satisfy in any material respect any covenant, condition or agreement to be
complied with or satisfied by it under this Agreement or (iii) any change or
event which would have a material adverse effect on such party or on the ability
of the conditions set forth in Article VI to be satisfied; PROVIDED, HOWEVER,
that no such notification shall affect the representations, warranties,
covenants or agreements of the parties or the conditions to the obligations of
the parties under this Agreement.
SECTION 4.02. NO SOLICITATION.
(a) The Company shall not, nor shall it permit any of its
subsidiaries to, nor shall it authorize or permit any officer, director or
employee of or any investment banker, attorney or other advisor or
representative of; the Company or any of its subsidiaries to, directly or
indirectly, (i) solicit, initiate or knowingly encourage the submission of any
takeover proposal (as defined in Section 8.03), (ii) enter into any agreement
providing for any takeover proposal or (iii) participate in any negotiations
regarding, or furnish to any person any non-public information with respect to,
or take any other action knowingly to facilitate the making of; any takeover
proposal; PROVIDED, HOWEVER, that if; at any time prior to the receipt of the
Company Stockholder Approval, the Board of Directors of the Company determines
in good faith that it is necessary to do so in
29
order to comply with its fiduciary duties to the Company's stockholders under
applicable law, as advised by outside counsel, the Company may, with respect to
an actual or potential unsolicited takeover proposal and subject to compliance
with Section 4.02(c), (x) furnish non-public information with respect to the
Company to such person making such actual or potential unsolicited takeover
proposal and (y) participate in negotiations regarding such proposal.
(b) Neither the Board of Directors of the Company nor any
committee thereof shall (i) withdraw or modify, or propose to withdraw or
modify, in a manner adverse to Parent or Sub, the approval or recommendation by
such Board of Directors or any such committee of this Agreement or the Merger,
(ii) approve or recommend or propose to approve or recommend, any takeover
proposal or (iii) enter into any agreement with respect to any takeover
proposal. Notwithstanding the foregoing, the Board of Directors of the Company
may approve or recommend (and, in connection therewith, withdraw or modify its
approval or recommendation of this Agreement or the Merger) a superior proposal
(as defined in Section 8.03) if the Board of Directors of the Company shall have
determined in good faith that it is necessary, in order to comply with its
fiduciary duties to the Company's stockholders under applicable law, as advised
by outside counsel, to approve or recommend such superior proposal, and have
given notice to Parent advising Parent that the Company has received such
superior proposal from a third party, specifying the material terms and
conditions (including the identity of the third party), and specifically stating
that the Company intends to approve or recommend such superior proposal in
accordance with this Section 4.02(b) and if Parent does not, within seven
business days of Parent's receipt of such notice, make an offer which the
Company Board by a majority vote determines in its good faith judgment (based on
the written advice of a financial adviser of nationally recognized reputation)
to be as favorable to the Company's stockholders as such superior proposal.
(c) In addition to the obligations of the Company set forth in
paragraphs (a) and (b) of this Section 4.02, the Company shall promptly advise
Parent orally and in writing of any request for information or of any takeover
proposal or any inquiry with respect to or which could reasonably be expected to
lead to any takeover proposal which, in any such case, is either (i) in writing
or (ii) made to any executive officer or director of the Company (and brought to
the attention of the chief executive officer of the Company), the identity of
the person making any such request (to the extent practicable), takeover
proposal or inquiry and all the material terms and conditions thereof The
Company will keep Parent fully informed of the status and details (including
amendments or proposed amendments) of any such request, takeover proposal or
inquiry.
Nothing contained in this Section 4.02 shall prohibit the Company or its
Board of Directors from (i) taking and disclosing to its stockholders a position
contemplated by Rule I 4e-2 of the Exchange Act or (ii) making any disclosure to
its stockholders that in the judgment of its Board of Directors, as advised by
its outside legal counsel, is required under applicable law.
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ARTICLE V
ADDITIONAL AGREEMENTS
SECTION 5.01. PREPARATION OF THE FORM S-4 AND THE PROXY STATEMENT
STOCKHOLDERS MEETING.
(a) As soon as practicable after execution and delivery of this
Agreement, the Company and Parent shall prepare and the Company shall file with
the SEC the Proxy Statement and Parent shall prepare and file with the SEC the
Form S-4, in which the Proxy Statement will be included as a prospectus. The
Company and Parent shall each use all reasonable efforts to have the Form S-4
declared effective under the Securities Act as promptly as practicable after
such filing. The Company will provide financial and other information required
by Parent in connection with Parent's filings under the Securities Act of 1933
and the Securities Exchange Act of 1934. The Company will use all reasonable
efforts to cause the Proxy Statement to be mailed to the Company's stockholders
and Parent will use all reasonable efforts to cause an appropriate proxy
statement to be mailed to Parent's stockholders, in each case as promptly as
practicable after the Form S-4 is declared effective under the Securities Act.
Parent shall also take any action (other than qualifying to do business in any
jurisdiction in which it is not now so qualified or filing a general consent to
service of process) required to be taken under any applicable state securities
or "blue sky" laws in connection with the issuance of shares of Parent Common
Stock in the Merger and the Company shall furnish all information concerning the
Company and the holders of Company Common Stock and rights to acquire Company
Common Stock pursuant to the Company Stock Plans as may be reasonably requested
in connection with any such action.
(b) The Company will, as soon as reasonably practicable following
the date of this Agreement, duly call, give notice of; convene and hold a
meeting of its stockholders (the "Company Stockholders Meeting") for the purpose
of obtaining the Company Stockholder Approval. Without limiting the generality
of the foregoing but subject to Section 4.02(b), the Company agrees that its
obligations pursuant to the first sentence of this Section 5.01(b) shall not be
affected by the commencement, public proposal, public disclosure or
communication to the Company of any takeover proposal. The Company will, through
its Board of Directors, recommend to its stockholders the approval and adoption
of this Agreement and the transactions contemplated hereby, subject to Section
4.02(b).
SECTION 5.02. LETTERS OF THE COMPANY'S ACCOUNTANTS. The Company shall
use all reasonable efforts to cause to be delivered to Parent a letter of ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ LLP, the Company's independent public accountants, dated a date within
two business days before the date on which the Form S-4 shall become effective,
addressed to Parent, in form reasonably satisfactory to Parent and customary in
scope and substance for letters delivered by independent public accountants in
connection with registration statements similar to the Form S-4.
SECTION 5.03. LETTERS OF PARENT'S ACCOUNTANTS. Parent shall use all
reasonable efforts to cause to be delivered to the Company a letter of ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ LLP, Parent's independent public accountants for the relevant periods
prior to the date hereof; dated a date within two business days before the date
on which the Form S-4 shall become effective, addressed to
31
the Company, in form reasonably satisfactory to the Company and customary in
scope and substance for letters delivered by independent public accountants in
connection with registration statements similar to the Form S-4.
SECTION 5.04. ACCESS TO INFORMATION, CONFIDENTIALITY. Subject to the
Confidentiality Agreement (as defined below), Parent and the Company shall, and
shall cause each of its subsidiaries to, afford to the other party and to the
officers, employees, accountants, counsel, financial advisors and other
representatives of the other party, reasonable access during normal business
hours during the period prior to the Effective Time to all their properties,
books, contracts, commitments, personnel and records and, during such period
(subject to existing confidentiality and similar non-disclosure obligations and
the preservation of applicable privileges), Parent and the Company shall, and
shall cause each of its subsidiaries to, furnish promptly to the other party (a)
a copy of each material report, schedule, registration statement and other
document filed by it during such period pursuant to the requirements of Federal
or state securities laws and (b) all other information concerning its business,
properties and personnel as the other party may reasonably request. Each party
will hold, and will cause its officers, employees, accountants, counsel,
financial advisors and other representatives and affiliates to hold, any
nonpublic information in accordance with the terms of the Confidentiality
Agreement, dated as of February 9, 1998, between Parent and the Company (the
"Confidentiality Agreement").
SECTION 5.05. REASONABLE EFFORTS.
(a) Upon the terms and subject to the conditions set forth in
this Agreement, each of the parties agrees to use all reasonable efforts to
take, or cause to be taken, all actions, and to do, or cause to be done, and to
assist and cooperate with the other parties in doing, all things necessary,
proper or advisable to consummate and make effective, in the most expeditious
manner practicable, the Merger and the other transactions contemplated by this
Agreement, including (i) the obtaining of all necessary actions, waivers,
consents, licenses and approvals from Governmental Entities and the making of
all necessary registrations and filings (including filings with Governmental
Entities) and the taking of all reasonable steps as may be necessary to obtain
an approval, waiver or license from, or to avoid an action or proceeding by, any
Governmental Entity, (ii) the obtaining of all necessary consents, approvals or
waivers from third parties, (iii) the defending of any lawsuits or other legal
proceedings, whether judicial or administrative, challenging this Agreement or
the Stockholder Agreements, or the consummation of the transactions contemplated
by this Agreement, including seeking to have any stay or temporary restraining
order entered by any court or other Governmental Entity vacated or reversed and
(iv) the execution and delivery of any additional instruments necessary to
consummate the transactions contemplated by, and to carry out fully the purposes
of; this Agreement. Without limiting the foregoing, the Company and Parent shall
use all reasonable efforts and cooperate in promptly preparing and filing as
soon as practicable, and in any event within 15 business days after executing
this Agreement, notifications under the HSR Act and related filings in
connection with the Merger and the other transactions contemplated hereby, and
to respond as promptly as practicable to any injuries or requests received from
the Federal Trade Commission (the "FTC"), the Antitrust Division of the United
States Department of Justice (the "Antitrust Division") and any other
Governmental Entities for additional information or documentation.
Notwithstanding
32
anything to the contrary contained in this Section 5.05, no party shall be
obligated to take any action pursuant to this Section 5.05 if the taking of such
action or the obtaining of any waiver, consent, approval or exemption would have
a material adverse effect on the Company or Parent.
(b) In connection with, but without limiting, the foregoing, the
Company and its Board of Directors shall (i) use all reasonable efforts to
ensure that no state takeover statute or similar statute or regulation is or
becomes applicable to this Agreement, the Stockholder Agreements, the Merger or
any of the other transactions contemplated by this Agreement and (ii) if any
state takeover statute or similar statute or regulation becomes applicable to
this Agreement, the Stockholder Agreements, the Merger or any of the
transactions contemplated by this Agreement, use all reasonable efforts to
ensure that the Merger and the other transactions contemplated by this Agreement
may be consummated as promptly as practicable on the terms contemplated by this
Agreement and otherwise to minimize the effect of such statute or regulation on
the Merger and the other transactions contemplated by this Agreement.
(c) Each of Parent and the Company shall promptly provide the
other with a copy of any inquiry or request for information (including notice of
any oral request for information), pleading, order or other document either
party receives from any Governmental Entities with respect to the matters
referred to in this Section 5.05.
SECTION 5.06 INDEMNIFICATION AND INSURANCE.
(a) Parent and Sub agree that all rights to indemnification for
acts or omissions occurring at or prior to the Effective Time now existing in
favor of the current or former directors, officers, employees or agents of the
Company and its subsidiaries (the "Indemnified Parties") as provided in their
respective certificates of incorporation or bylaws (or comparable charter or
organizational documents) or otherwise (including pursuant to indemnification
agreements) shall survive the Merger and shall continue in hill force and effect
in accordance with their terms for a period of not less than six years from the
Effective Time. From and after the Effective Time, Parent shall guarantee the
performance by the Surviving Corporation of its obligations referred to in the
immediately preceding sentence, provided that, in the event any claim or claims
are asserted or made within such six-year period, all rights to indemnification
in respect of any such claim or claims, and Parent's guarantee with respect
thereto, shall continue until final disposition of any and all such claim From
and after the Effective Time, Parent also agrees to indemnify all Indemnified
Parties to the fullest extent permitted by applicable law with respect to all
acts and omissions arising out of such individuals' services as officers,
directors, employees or agents of the Company or any of its subsidiaries or as
trustees or fiduciaries of any plan for the benefit of employees or directors
of; or otherwise on behalf of; the Company or any of its subsidiaries, occurring
at or prior to the Effective Time, including the transactions contemplated by
this Agreement. Without limiting the generality of the foregoing, from and after
the Effective Time, in the event any such Indemnified Party is or becomes
involved in any capacity in any action, proceeding or investigation in
connection with any matter, including the transactions contemplated by this
Agreement, occurring prior to or at the Effective Time, Parent shall pay as
incurred such Indemnified Party's reasonable legal and other expenses (including
the cost of any investigation and preparation) incurred in connection therewith.
From and after the Effective Time, Parent shall pay all reasonable expenses,
including reasonable attorneys' fees, that
33
may be incurred by any Indemnified Party in enforcing the indemnity and other
obligations provided for in this Section 5.06.
(b) Parent will cause to be maintained, for a period of not less
than six years from the Effective Time, the Company's current directors' and
officers insurance and indemnification policy to the extent that it provides
coverage for events occurring prior to or at the Effective Time ("D&O
Insurance"), provided that Parent shall not be obligated to pay annual premiums
for such D&O Insurance in excess of 200% of the last annual premium paid prior
to the date of this Agreement (the amount equal to such percentage of such last
annual premium, the "Maximum Premium"); PROVIDED, HOWEVER, that Parent may, in
lieu of maintaining such existing D&O Insurance as provided above, cause
coverage to be provided under any policy maintained for the benefit of Parent or
any of its subsidiaries, so long as the terms thereof are no less advantageous
to the intended beneficiaries thereof than the existing D&O Insurance. If the
existing D&O Insurance expires, is terminated or canceled or is not available
during such six-year period, Parent will use all reasonable efforts to cause to
be obtained as much D&O Insurance as can be obtained for the remainder of such
period for an annualized premium not in excess of the Maximum Premium, on terms
and conditions not materially less advantageous to the covered persons than the
existing D&O Insurance. The Company represents to Parent that the Maximum
Premium is $400,000.
SECTION 5.07. FEES AND EXPENSES.
(a) All fees and expenses incurred in connection with the Merger,
this Agreement, the Stockholder Agreement and the transactions contemplated by
this Agreement and the Stockholder Agreement shall be paid by the party
incurring such fees or expenses, whether or not the Merger is consummated,
except that each of Parent and the Company shall bear and pay one-half of the
costs and expenses incurred in connection with the filing, printing and mailing
of the Form S-4 and the Proxy Statement referred to in Section 5.01(a).
Notwithstanding the above, in the event that Parent terminates this Agreement
pursuant to Section 7.01 (b)(i) or Section 7.03(c) (other than a termination
that requires the Company to pay a Termination Fee as contemplated by Section
5.07(B) below) the Company shall reimburse Parent and Sub (not later than 10
days after submission of statements therefor) for all actual documented
out-of-pocket fees and expenses, not to exceed $1,000,000, incurred by either of
them or on their behalf in connection with the Merger and the transactions
contemplated by this Agreement (including without limitation fees payable to
investment bankers, counsel to any of the foregoing, and accountants).
(b) The Company shall pay, or cause to be paid, in same day funds
to Parent $6 million (the "Termination Fee") upon demand if (i) the Company or
Parent terminates this Agreement pursuant to Section 7.01(c) or (ii) if the
Company or Parent terminates this Agreement pursuant to Section 7.01 (b)(i);
PROVIDED, HOWEVER, that, with respect to clause (ii) of this paragraph (b) only,
the Termination Fee shall not be payable unless and until (x) any Person (other
than Parent) (an "Acquiring Party") has acquired, by purchase, merger,
consolidation, sale, assignment, lease, transfer or otherwise, in one
transaction or any related series of transactions within 12 months after such
termination, a majority of the voting power of the outstanding securities of the
Company or all or substantially all of the assets of the Company or (y) there
has
35
been consummated within 12 months after such termination a consolidation, merger
or similar business combination between the Company and an Acquiring Party in
which stockholders of the Company immediately prior to such consolidation,
merger or similar transaction do not own securities representing at least 50% of
the outstanding voting power of the surviving entity (or, if applicable, any
entity in control of such Acquiring Party) of such consolidation, merger or
similar transaction immediately following the consummation thereof; in either of
cases (x) or (y) involving a consideration for Company Common Stock (including
the value of any stub equity) in excess of the Aggregate Merger Consideration;
and PROVIDED FURTHER, that, with respect to clause (ii) of this paragraph (b)
only, no such Termination Fee shall be payable unless there shall have been made
public prior to the Company Stockholders Meeting a takeover proposal involving
consideration for Company Common Stock (including the value of any stub equity)
in excess of the Aggregate Merger Consideration. The Company acknowledges that
the agreements contained in this Section 5.07(b) are an integral part of the
transactions contemplated by this Agreement, and that, without these agreements,
Parent and Sub would not enter into this Agreement; accordingly, if the Company
fails promptly to pay the amount due pursuant to this Section 5.07(b) and, in
order to obtain such payment, Parent or Sub commences a suit which results in a
judgment against the Company for the Termination Fee, the Company shall pay to
Parent or Sub its costs and expenses (including attorneys' fees) in connection
with such suit, together with interest on the amount of the Termination Fee at
the prime rate of Citibank, N.A. in effect on the date such payment was required
to be made.
(c) TRANSFER AND GAINS TAXES AND CERTAIN OTHER TAXES. Parent and
Sub agree that the Surviving Corporation will pay all real property transfer,
gains and other similar taxes and all documentary stamps, filing fees, recording
fees and sales and use .taxes, if any, and any penalties or interest with
respect thereto, payable in connection with consummation of the Merger without
any offset, deduction, counterclaim or deferment of the payment of the Aggregate
Merger Consideration.
SECTION 5.08. PUBLIC ANNOUNCEMENTS. Prior to the Closing Date, Parent
and Sub, on the one hand, and the Company, on the other hand, will use all
reasonable efforts to consult with each other before issuing, and provide each
other the opportunity to review and comment upon, any press release or other
public statements with respect to the transactions contemplated by this
Agreement, including the Merger, and shall not issue any such press release or
make any such public statement prior to such consultation, except as may be
required by applicable law, court order or by obligations pursuant to any
listing agreement with any national securities exchange. The parties agree that
the initial press release to be issued with respect to the transactions
contemplated by this Agreement shall be in the form heretofore agreed to by the
parties.
SECTION 5.09. AFFILIATES. At least thirty days prior to the Closing
Date, the Company shall deliver to Parent a letter identifying all persons who
are, at the time the Merger is submitted for approval to the stockholders of the
Company, "affiliates" of the Company for purposes of Rule 145(c) under the
Securities Act. The Company shall use all reasonable efforts to cause each such
person to deliver to Parent, on or prior to the Closing Date, a written
agreement substantially in the form attached hereto as Exhibit A (each an
"Affiliate Agreement") and shall deliver to Parent on or prior to the Closing
Date the agreement of each Company director and former principal stockholder of
the Founding Companies that the one year sale restrictions in
35
connection with the Company's initial public offering shall continue to apply
until November 21, 1998 with respect to 50% of the number of shares of Parent
Common Stock to which such director or stockholder would be entitled if he
elects solely to receive Parent Common Stock in the Merger.
SECTION 5.10. NYSE LISTING. Parent shall use all reasonable efforts to
cause the shares of Parent Common Stock to be issued in the Merger to be
approved for listing on the NYSE, subject to official notice of issuance, prior
to the Closing Date.
SECTION 5.11. STOCKHOLDER LITIGATION. The Company shall advise Parent of
all material developments in any stockholder litigation against the Company and
its directors relating to the transactions contemplated by this Agreement and
the Company shall not agree to any settlement of such litigation without
Parent's consent, which consent shall not be unreasonably withheld.
SECTION 5.12. STOCK OPTIONS. The Parent will cause a Form S-8 ("Form
S-8") to be filed with the SEC as soon as practicable following the Effective
Time, but in no event more than thirty (30) days after the Effective Time, which
registration statement shall register the shares of the Parent Common Stock
underlying the Parent Options granted in replacement of Company Options, or will
cause such shares underlying such Parent Options to be subject to an existing
Form 5-8, and the Parent shall use its best efforts to maintain the
effectiveness of such registration statement or registration statements (and
maintain the current status of the prospectus or prospectuses contained therein)
for so long as such Parent Options remain outstanding. At or before the
Effective Time, the Company shall cause to be effected any necessary amendments
to the Plan to give effect to the foregoing provisions of this Section 5.12.
SECTION 5.13. BENEFIT PLANS. Promptly after the Effective Time, Parent
shall cause the Surviving Corporation and its subsidiaries to provide Company
employees who are employees thereof or any of its subsidiaries with compensation
and employee benefit plans that are in the aggregate similar to the compensation
and Plans provided to similarly situated employees of Parent or its subsidiaries
who are not employees of the Company; provided, however, that employees of the
Company shall not be required to satisfy' any additional copayment or other
deductible requirements in connection therewith; provided further, that this
sentence shall not apply to any employees of the Company or any of its
subsidiaries covered by a Collective Bargaining Agreement to which the Company
or any of its subsidiaries is a party or otherwise bound. For the purpose of
determining eligibility to participate in Plans, eligibility for benefit forms
and subsidies and the vesting of benefits under such Plans (including any
pension, severance, 401(k), vacation and sick pay), and for purposes of accrual
of benefits under any severance, sick leave, vacation and other similar employee
benefit plans (other than defined benefit pension plans), Parent shall give
effect to years of service (and for purposes of qualified and nonqualified
pension plans, prior earnings) with the Company or its subsidiaries, as the case
may be, as if they were with Parent or one of its subsidiaries. Parent also
shall cause the Surviving Corporation to assume and agree to perform the
Company's obligations under all employment, severance, consulting and other
compensation contracts between the Company or any of its subsidiaries and any
current or former director, officer or employee thereof. Nothing in this Section
5.13 shall be construed or applied to restrict the ability of the Surviving
Corporation to establish such types and levels of compensation and benefits as
it determines to be appropriate
36
or to modify or terminate compensation or benefit programs adopted pursuant to
the first sentence of this Section 5.13.
ARTICLE VI
CONDITIONS PRECEDENT
SECTION 6.01. CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE
MERGER. The respective obligation of each party to effect the Merger is subject
to the satisfaction or waiver on or prior to the Closing Date of each of the
following conditions:
(a) STOCKHOLDER APPROVAL. The Company Stockholder Approval shall
have been obtained.
(b) HSR ACT. The waiting period (and any extension thereof)
applicable to the Merger under the HSR Act shall have been terminated or shall
have expired.
(c) OTHER GOVERNMENTAL APPROVALS. All other consents,
authorizations, orders and approvals of (or filings or registrations with) any
Governmental Entity (other than under the HSR Act) required in connection with
the execution, delivery and performance of this Agreement shall have been
obtained or made, except for filing the Certificate of Merger and any other
documents required to be filed after the Effective Time and except where the
failure to have obtained or made any such consent, authorization, order,
approval, filing or registration would not have a material adverse effect on
Parent and the Company after the Effective Time.
(d) NO INJUNCTIONS OR RESTRAINTS. There shall not be in effect
any (i) decree, temporary restraining order, preliminary or permanent injunction
or other order entered, issued or enforced by any court of competent
jurisdiction or (ii) federal statute, rule or regulation enacted or promulgated,
in each case (i) or (ii) that prohibits the consummation of the Merger. There
shall not be in effect any state or local statute, rule or regulation enacted or
promulgated that prohibits the consummation of the Merger and which would have a
material adverse effect on Parent after the Effective Time.
(e) FORM S-4. The Form S-4 shall have become effective under the
Securities Act and shall not be the subject of any stop order or proceedings
seeking a stop order.
(f) NYSE LISTING. The shares of Parent Common Stock, issuable to
the Company's stockholders pursuant to this Agreement shall have been approved
for listing on the New York Stock Exchange, Inc. ("NYSE"), subject to official
notice of issuance.
SECTION 6.02. CONDITIONS TO OBLIGATIONS OF PARENT AND SUB. The
obligations of Parent and Sub to effect the Merger are further subject to
satisfaction or waiver of each of the following conditions:
(a) REPRESENTATIONS AND WARRANTIES. The representations and
warranties of the Company set forth in this Agreement shall be true and correct,
in each case as of the date of this Agreement and as of the Closing Date as
though made on and as of the Closing Date, except (i)
37
for representations and warranties that are made as of a specific date (in which
case such representations and warranties shall be true and correct on and as of
such date, subject to the following clause (ii)) and (ii) for inaccuracies in
such representations and warranties that individually or in the aggregate do not
have a material adverse effect on the Company. Parent shall have received a
certificate dated the Closing Date and signed on behalf of the Company by the
chief financial officer of the Company to ;i((foregoing effects.
(b) PERFORMANCE OF OBLIGATIONS OF THE COMPANY. The Company shall
have performed in all material respects all obligations required to be performed
by it under this Agreement at or prior to the Closing Date, and Parent shall
have received a certificate dated the Closing Date signed on behalf of the
Company by the chief financial officer of the Company to such effect.
(c) TAX OPINIONS. Parent shall have received from ▇▇▇▇▇▇, ▇▇▇▇ &
▇▇▇▇▇▇▇▇ LLP, counsel to Parent, on the date of the Proxy Statement and on the
Closing Date, opinions, in each case dated as of such respective dates and
stating that the Merger will be treated for Federal income tax purposes as a
reorganization within the meaning of Section 368 of the Code and that Parent,
Sub and the Company will each be a party to that reorganization within the
meaning of Section 368 of the Code. In rendering such opinions, counsel for
Parent shall be entitled to rely upon representations of officers of Parent, Sub
and the Company and representations of stockholders of the Company, in each case
reasonably satisfactory in form and substance to such counsel.
(d) LEGAL OPINION. Parent shall have received an opinion from
▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, L.L.P., special counsel to the Company, effective as of
the Closing Date, with respect to matters customary in public company merger
transactions.
(e) WAIVERS. Each executive officer and director of the Company
and former principal stockholder of the Founding Companies shall have waived all
applicable change of control provisions with respect to the Merger in any
employment agreement, stock option agreement or other contract and all such
agreements and contracts shall remain in full force and effect as of the
Effective Time.
SECTION 6.03. CONDITIONS TO OBLIGATIONS OF THE COMPANY. The obligation
of the Company to effect the Merger is further subject to satisfaction or waiver
of each of the following conditions:
(a) REPRESENTATIONS AND WARRANTIES. The representations and
warranties of Parent and Sub set forth in this Agreement shall be true and
correct, in each case as of the date of this Agreement and as of the Closing
Date as though made on and as of the Closing Date, except (i) for
representations and warranties that are made as of a specific date (in which
case such representations and warranties shall be true and correct on and as of
such date, subject to the following clause (ii)) and (ii) for inaccuracies in
such representations and warranties that individually or in the aggregate do not
have a material adverse effect on Parent. Parent shall have received a
certificate dated the Closing Date and signed on behalf of Parent by the chief
financial officer of Parent to the foregoing effects.
38
(b) PERFORMANCE OF OBLIGATIONS OF PARENT AND SUB. Parent and Sub
shall have performed in all material respects all obligations required to be
performed by them under this Agreement at or prior to the Closing Date, and the
Company shall have received a certificate signed on behalf of Parent by the
chief financial officer of Parent to such effect.
(c) TAX OPINIONS. The Company shall have received from ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ LLP, on the date of the Proxy Statement and on the Closing Date,
opinions, in each case dated as of such respective dates and stating that the
Merger will be treated for Federal income tax purposes as a reorganization
within the meaning of Section 368 of the Code and that Parent, Sub and the
Company will each be a party to that reorganization within the meaning of
Section 368 of the Code. In rendering such opinions, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP for the
Company shall be entitled to rely upon representations of officers of Parent,
Sub and the Company and representations of stockholders of the Company, in each
case reasonably satisfactory in form and substance to such entity.
(d) LEGAL OPINION. The Company shall have received an opinion or
opinions from ▇▇▇▇▇▇, ▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP, special counsel to Parent and Sub,
dated the Closing Date, reasonably satisfactory to the Company, with respect to
matters customary in public company merger transactions.
ARTICLE VII
TERMINATION AMENDMENT AND WAIVER
SECTION 7.01. TERMINATION. This Agreement may be terminated at any time
prior to the Effective Time, whether before or after the Company Stockholder
Approval:
(a) by mutual written consent of Parent, Sub and the Company; or
(b) by either Parent or the Company as follows:
(i) if the Company Stockholders Meeting (including as it may
be adjourned from time to time) shall have concluded without the Company
Stockholder Approval having been obtained;
(ii) if the Merger shall not have been consummated on or
before August 30, 1998 (the 1'Termination Datet9), provided that the party
seeking to terminate this Agreement is not otherwise in material breach of this
Agreement;
(iii) if any Governmental Entity shall have issued an order,
injunction, decree or ruling or taken any other action permanently enjoining,
restraining or otherwise prohibiting the Merger and such order, injunction,
decree, ruling or other action shall have become final and nonappealable; or
(iv) in the event of a breach by the other party of any
representation, warranty, covenant or other agreement contained in this
Agreement which (x) would give rise to the failure of a condition set forth in
Section 6.02(a) or (b) or Section 6.03(a) or (b), as
39
applicable, and (y) cannot be cured by the Termination Date (provided that the
terminating party is not then in material breach of any representation,
warranty, covenant or other agreement contained in this Agreement); or
(c) by Parent if the Board of Directors of the Company approves
or recommends a superior proposal, or by the Company if the Board of Directors
of the Company approves or recommends a superior proposal pursuant to Section
4.02(b).
SECTION 7.02. EFFECT OF TERMINATION. If this Agreement is terminated by
either the Company or Parent pursuant to Section 7.01, this Agreement shall
forthwith become void and have no effect, without any liability or obligation on
the part of Parent, Sub or the Company, (a) other than liabilities and
obligations under Section 3.01(m), the last sentence of Section 5.04, Section
5.07, this Section 7.02 and Article VIII and (b) except that no such termination
shall relieve any party of any liability for damages resulting from any material
breach by such party of this Agreement.
SECTION 7.03. AMENDMENT. This Agreement may be amended by the parties at
any time before or after the Company Stockholder Approval; provided, however,
that after any such approval, there shall not be made any amendment that by law
requires further approval by the stockholders of the Company without obtaining
such further approval. This Agreement may not be amended except by an instrument
in writing signed on behalf of each of the parties.
SECTION 7.04. EXTENSION; WAIVER. At any time prior to the Effective
Time, a party may (a) extend the time for the performance of any of the
obligations or other acts of the other parties, (b) waive any inaccuracies in
the representations and warranties of the other parties contained in this
Agreement or in any document delivered pursuant to this Agreement or (c) subject
to the proviso to the first sentence of Section 7.03, waive compliance by the
other parties with any of the agreements or conditions contained in this
Agreement. Any agreement on the part of a party to any such extension or waiver
shall be valid only if set forth in an instrument in writing signed on behalf of
such party. The failure of any party to this Agreement to assert any of its
rights under this Agreement or otherwise shall not constitute a waiver of such
rights.
SECTION 7.05. PROCEDURE FOR TERMINATION, AMENDMENT, EXTENSION OR WAIVER.
A termination of this Agreement pursuant to Section 7.01, an amendment of this
Agreement pursuant to Section 7.03 or an extension or waiver pursuant to Section
7.04 shall, in order to be effective, require in the case of Parent, Sub or the
Company, action by Board of Directors or the duly authorized designee of its
Board of Directors.
ARTICLE VIII
GENERAL PROVISIONS
SECTION 8.01. NONSURVIVAL OF REPRESENTATIONS AND WARRANTIES. None of the
representations and warranties contained in this Agreement or in any document or
instrument delivered pursuant to this Agreement shall survive the Effective
Time. This Section 8.01 shall not
40
limit any covenant or agreement of the parties which by its terms contemplates
performance after the Effective Time.
SECTION 8.02. NOTICES. All notices, requests, claims, demands and other
communications under this Agreement shall be in writing and shall be deemed
given if delivered personally, telecopied (which is confirmed) or sent by
overnight courier (providing proof of delivery) to the parties at the following
addresses and telecopier numbers (or at such other address or telecopier number
for a party as shall be specified by like notice):
(a) if to Parent or Sub, to
▇▇▇▇▇▇▇ ▇. ▇▇▇▇, Esq.
Vice President-General Counsel and Secretary
Fleetwood Enterprises, Inc.
3 ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇, ▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP
▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇)▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇, Esq.
(b) if to the Company, to
HomeUSA, Inc.
▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, Chief Executive Officer
with a copy to:
Bracewell & ▇▇▇▇▇▇▇▇▇, L.L.P
South Tower Pemizoil Place
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇)▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Esq.
41
SECTION 8.03. DEFINITIONS. For purposes of this Agreement
(a) an "affiliate" of any person means another person that
directly or indirectly, through one or more intermediaries, controls, is
controlled by, or is under common control with, such first person.
(b) "Compensation and Benefit Plans" means all bonus, deferred
compensation, pension, retirement, profit-sharing, thrift, savings, employee
stock ownership, stock bonus, stock purchase, restricted stock and other stock
plans, all employment or severance contracts, all other employee benefit plans
and any applicable "change of control" or similar provisions in any plan,
contract or arrangement which cover employees or former employees of a person or
any of its ERISA Affiliates and all other benefit plans, contracts or
arrangements (regardless of whether they are funded or unfunded or foreign or
domestic) covering employees or former employees of a person or any of its ERISA
Affiliates, including "employee benefit plans" within the meaning of Section
3(3) of ERISA.
(c) "indebtedness" means, with respect to any person, without
duplication, (i) all obligations of such person for borrowed money, (ii) all
obligations of such person evidenced by bonds, debentures, notes or similar
instruments, (iii) all obligations of such person under conditional sale or
other title retention agreements relating to property purchased by such person,
and (iv) all guarantees of such person of any indebtedness of any other person.
(d) "person" means an individual, corporation, partnership,
limited liability company, joint venture, association, trust, unincorporated
organization or other entity.
(e) "material adverse change" or "material adverse effect" means,
when used in connection with the Company or Parent, any change or effect that is
or would be materially adverse to the business, operations, management or
condition (financial or otherwise) of such party and its subsidiaries taken as a
whole.
(f) "Significant Subsidiary" means (i) with respect to the
Company, the subsidiaries listed on the Company Disclosure Schedule and (ii)
with respect to Parent, those subsidiaries listed on the Parent Disclosure
Schedule.
(g) a "subsidiary" of any person means another person, an amount
of the voting securities or other voting ownership or voting partnership
interests of which is sufficient to elect at least a majority of its Board of
Directors or other governing body (or, if there are no such voting securities or
interests, 50% or more of the equity interests of which) is owned directly or
indirectly by such first person.
(h) "superior proposal" means (i) a bona fide takeover proposal
to acquire, directly or indirectly, all or a substantial portion of the shares
of Company Common Stock then outstanding or all or substantially all the assets
of the Company and (ii) otherwise on terms which the Board of Directors of the
Company determines in its good faith judgment to be more
42
favorable to the Company's stockholders than the Merger after receipt of the
written advice of the Company's independent financial advisor.
(i) "takeover proposal" means any proposal for a merger,
consolidation or other business combination involving the Company or any of its
Significant Subsidiaries or any proposal or offer to acquire in any manner,
directly or indirectly, an equity interest in, any voting securities of; or a
substantial portion of the assets of; the Company or any of its Significant
Subsidiaries, other than the transactions contemplated by this Agreement.
(j) "Taxes" means all Federal, state, local and foreign taxes,
and other assessments of a similar nature (whether imposed directly or through
withholding), including any interest, additions to tax, or penalties applicable
thereto.
(k) "Tax Returns" means all Federal, state, local and foreign tax
returns, declarations, statements, reports, schedules, forms and information
returns and any amended tax return relating to Taxes.
SECTION 8.04. INTERPRETATION. When a reference is made in this Agreement
to an Article, Section, subsection, Exhibit or Schedule, such reference shall be
to an Article or Section, subsection of; or an Exhibit or Schedule to, this
Agreement unless otherwise indicated. The table of contents and headings
contained in this Agreement are for reference purposes only and shall not affect
in any way the meaning or interpretation of this Agreement. 'Whenever the words
"include", "includes" and "including" are used in this Agreement, they shall be
deemed to be followed by the words "without limitation". The words "hereof',
"herein" and "hereunder" and words of similar import when used in this Agreement
shall refer to this Agreement as a whole and not to any particular provision of
this Agreement. Headings of the Articles and Sections of this Agreement are for
the convenience of reference only, and shall be given no substantive or
interpretive effect whatsoever. All terms defined in this Agreement shall have
the defined meanings when used in any certificate or other document made or
delivered pursuant hereto unless otherwise defined therein. The definitions
contained in this Agreement are applicable to the singular as well as the plural
forms of such terms and to the masculine as well as to the feminine and neuter
genders of such term. Any agreement, instrument or statute defined or referred
to herein or in any agreement or instrument that is referred to herein means
such agreement, instrument or statute as from time to time amended, modified or
supplemented, including (in the case of agreements or instruments) by waiver or
consent and (in the case of statutes) by succession of comparable successor
statutes and references to all attachments thereto and instruments incorporated
therein. References to a person are also to its permitted successors and assigns
and, in the case of an individual, to his or her heirs and estate, as
applicable.
SECTION 8.05. COUNTERPARTS. This Agreement may be executed in one or
more counterparts, all of which shall be considered one and the same agreement
and shall become effective when one or more counterparts have been signed by
each of the parties and delivered to the other parties.
SECTION 8.06. ENTIRE AGREEMENT NO THIRD-PARTY BENEFICIARIES. This
Agreement (including the documents and instruments referred to herein) and the
Confidentiality Agreement
43
(a) constitute the entire agreement, and supersede all prior agreements and
understandings, both written and oral, among the parties with respect to the
subject matter of this Agreement and (b) except for the provisions of Article II
and Section 5.06, are not intended to confer upon any person other than the
parties any rights or remedies. The Company Disclosure Schedule and the Parent
Disclosure Schedule and all Exhibits attached hereto are hereby incorporated
herein and made a part hereof for all ,'purposes, as if fully set forth herein.
SECTION 8.07. GOVERNING LAW. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Delaware, regardless of
the laws that might otherwise govern under applicable principles of conflicts of
laws thereof.
SECTION 8.08. ASSIGNMENT. Neither this Agreement nor any of the rights,
interests or obligations under this Agreement shall be assigned, in whole or in
part, by operation of law or otherwise by any of the parties without the prior
written consent of the other parties, except that Sub may assign, in its sole
discretion, any of or all its rights, interests and obligations under this
Agreement to Parent or to any direct wholly owned subsidiary of Parent, but no
such assignment shall relieve Sub of any of its obligations under this
Agreement. Any attempted assignment in violation of the preceding sentence shall
be void. Subject to the preceding sentence, this Agreement will be binding upon,
inure to the benefit of; and be enforceable by, the parties and their respective
successors and assigns.
SECTION 8.09. ENFORCEMENT. The parties agree that irreparable damage
would occur and that the parties would not have any adequate remedy at law in
the event that any of the provisions of this Agreement were not performed in
accordance with their specific terms or were otherwise breached. It is
accordingly agreed that the Parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions of this Agreement in any Federal court located in the
State of Delaware or in Delaware state court, this being in addition to any
other remedy to which they are entitled at law or in equity. In addition, each
of the parties hereto (a) consents to submit itself to the personal jurisdiction
of any Federal court located in the State of Delaware or any Delaware state
court in the event any dispute arises out of this Agreement or any of the
transactions contemplated by this Agreement, (b) agrees that it will not attempt
to deny or defeat such personal jurisdiction by motion or other request for
leave from any such court and (c) agrees that it will not bring any action
relating to this Agreement or any of the transactions contemplated by this
Agreement in any court other than a Federal court sitting in the State of
Delaware or a Delaware state court.
SECTION 8.10. SEVERABILITY. Any term or provision of this Agreement
which is invalid or unenforceable in any jurisdiction shall, as to that
jurisdiction, be ineffective to the extent of such invalidity or
unenforceability without rendering invalid or unenforceable the remaining terms
and provisions of this Agreement or affecting the validity or enforceability of
any of the terms or provisions of this Agreement in any other jurisdiction. [f
any provision of this Agreement is so broad as to be unenforceable, the
provision shall be interpreted to be only so broad as is enforceable.
44
IN WITNESS WHEREOF, Parent, Sub and the Company have caused this
Agreement !Q be signed by their respective officers thereunto duly authorized,
all as of the date first written above.
FLEETWOOD ENTERPRISES, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Chairman and Chief Executive
Officer
HUSA ACQUISITION COMPANY
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
Title: President
HOMEUSA, INC.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
Title: Chief Executive Officer
45
EXHIBIT A
TO AGREEMENT
AND PLAN OF MERGER
FORM OF AFFILIATE LETTER
Fleetwood Enterprises, Inc.
3 ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
I have been advised that as of the date of this letter I may be deemed
to be an affiliate" of HomeUSA, Inc., a Delaware corporation (the "Company"), as
the term "affiliate" 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 "Commission") under the Securities Act of 1933, as
amended (the "Act"). I understand that subject to and pursuant to the terms of
the Agreement and Plan of Merger, dated as of February 17, 1998 (the
"Agreement"), among Fleetwood Enterprises, Inc., a Delaware corporation
("Parent"), HUSA Acquisition Company, a Delaware corporation ("Sub"), and the
Company, pursuant to which the Company will be merged with and into Sub (the
"Merger").
As a result of the Merger, I may receive shares of Stock, par value
$1.00 per share, of Parent (the "Parent Stock") in exchange for shares owned by
me of Common Stock, par value $0.01 per share, of the Company ("Company Stock").
I hereby represent, warrant and covenant to Parent that in the event I
receive any Parent Stock in the Merger:
A. I will not sell, transfer or otherwise dispose of any shares
of Parent Stock in violation of the Act or the Rules and Regulations.
B. I have carefully read this letter and the Agreement and
discussed the requirements of such documents and other applicable
limitations upon my ability to sell, transfer or otherwise dispose of
the Parent Stock to the extent I felt necessary, with counsel
C. I have been advised that the issuance of Parent Stock to me
pursuant to the Merger has been registered with the Commission under the
Act on a Registration Statement on Form S-4. However, I have also been
advised that at the time the Merger is submitted for a vote of the
stockholders of the Company, I may be considered an affiliate of the
Company and that the distribution by me of the Parent Stock has not been
registered under the Act. Therefore, I will not sell, transfer or
otherwise dispose of any shares of Parent Stock issued to me in the
Merger unless (i) such sale, transfer or other disposition has been
registered under the Act, (ii) such sale, transfer or other disposition
is made in conformity with Rule 145 promulgated by the Commission under
the Act ("Rule 145"), or (iii) in the opinion of counsel reasonably
acceptable to Parent, or pursuant to a
46
"no action" letter obtained by the undersigned from the staff of the
Commission, such sale, transfer or other disposition is otherwise exempt
from registration under the Act.
D. I understand that Parent is under no obligation to register
the sale, transfer or other disposition of shares of Parent Stock by me
or on my behalf under the Act or to take any other action necessary in
order to make compliance with an exemption from such registration
available.
E. I also understand that stop transfer instructions will be
given to Parent's transfer agents with respect to the Parent Stock and
that there will be placed on the certificates for the shares of Parent
Stock issued to me, or any substitutions therefor, 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 APPLIES.
THE SHARES REPRESENTED BY THIS CERTIFICATE MAY ONLY BE TRANSFERRED IN
ACCORDANCE WITH THE TERMS OF AN AGREEMENT, DATED _________ 1998, BETWEEN
THE REGISTERED HOLDER HEREOF AND FLEETWOOD ENTERPRISES, INC., A COPY OF
WHICH AGREEMENT IS ON FILE AT THE PRINCIPAL OFFICES OF FLEETWOOD
ENTERPRISES, INC."
F. I also understand that unless the transfer by me of any shares
of my Parent Stock has been registered under the Act or is a sale made
in conformity with the provisions of Rule 145, Parent reserves the right
to put the following legend on the certificates issued to my transferee:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933 AND WERE ACQUIRED FROM A PERSON WHO
RECEIVED SUCH SHARES IN A TRANSACTION TO WHICH RULE 145 PROMULGATED
UNDER THE SECURITIES ACT OF 1933 APPLIES. THE SHARES HAVE BEEN ACQUIRED
BY THE HOLDER NOT WITH A VIEW TO, OR FOR RESALE IN CONNECTION WITH, ANY
DISTRIBUTION THEREOF WITHIN THE MEANING OF THE SECURITIES ACT OF 1933
AND MAY NOT BE SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO
AN EFFECTIVE REGISTRATION STATEMENT OR IN ACCORDANCE WITH AN EXEMPTION
FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT OF 1933."
It is understood and agreed that the legends set forth in paragraphs E
and F above shall be removed by delivery of substitute certificates without such
legend if such legend is not required for purposes of the Act or this Agreement.
It is understood and agreed that such legends and the stop orders referred to
above will be removed if (i) one year shall have elapsed from the date the
undersigned acquired the Parent Stock received in the Merger and the provisions
of Rule 145(d)(2) are then available to the undersigned, (ii) two years shall
have elapsed from the date the
47
undersigned acquired the Parent Stock received in the Merger and the provisions
of Rule 145(d)(3) are then available to the undersigned, or (iii) Parent has
received either an opinion of counsel, which opinion and counsel shall be
reasonably satisfactory to Parent, or a "no action" letter obtained by the
undersigned from the staff of the Commission, to the effect that the
restrictions imposed by Rule 145 no longer apply to the undersigned.
Execution of this letter should not be considered an admission on my
part that I am an "affiliate" of the Company as described in the first paragraph
of this letter or as a waiver of any rights I may have to object to any claim
that I am such an affiliate on or after the date of this letter.
This letter constitutes the complete understanding between Parent and me
concerning the subject matter hereof. The Surviving Corporation (as defined in
the Agreement) is expressly intended to be a beneficiary of this letter
agreement. Any notice required to be sent to any party hereunder shall be sent
by registered or certified mail, return receipt requested, using the addresses
set forth herein or such other address as shall be furnished in writing by
Parent and the undersigned. This letter shall be governed by, and construed and
interpreted in accordance with, the laws of the State of Delaware applicable to
contracts made and to be performed within such state.
Very truly yours,
[Name]
Address: _____________________________
______________________________________
______________________________________
Accepted this ___ day of
__________, 199__ by
FLEETWOOD ENTERPRISES, INC.
By: _______________________
Name:
Title:
48