<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
(Amendment No.1)
AMENDMENT TO CURRENT REPORT
Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934
Date of Report (Date of earliest event) January 6, 1999
ASSOCIATES FIRST CAPITAL CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 06-0876639
(State or other jurisdiction (I.R.S. Employer
of incorporation) Identification Number)
2-44197
(Commission File Number)
250 E. Carpenter Freeway, Irving, Texas 75062-2729
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (972) 652-4000
<PAGE>
Reference is made to the Current Report on Form 8-K filed by Associates First
Capital Corporation on January 6, 1999 (the "Form 8-K"). Pursuant to Rule
12b-15 of the Securities Exchange Act of 1934, as amended, the Form 8-K is
hereby amended and restated to read in its entirety as follows:
Item 2. Acquisition or Disposition of Assets.
On January 6, 1999, Associates First Capital Corporation (the
"Registrant") announced it had completed its acquisition of the assets of and
the assumption of the liabilities of Avco Financial Services, Inc. ("Avco")for
$3.9 billion. The assumption of such liabilities include, among other things,
the substitution of the Registrant as obligor of the debt issued by Avco and
the substitution of the Registrant as guarantor of the debt issued by the
foreign subsidiaries of Avco. The Registrant agreed in August 1998 to acquire
Avco, a wholly owned subsidiary of Textron Inc. There is no material
relationship between Textron Inc. and the Registrant or any of its affiliates,
directors or
officers.
The Registrant financed the acquisition through working capital and the
issuance of short and long term debt.
Avco is a global, diversified financial services company with
approximately $8.9 billion in assets, 8,000 employees, 1,265 branches and 2.5
million customers. As a result of this transaction, the Registrant has begun
a comprehensive review of affected operations and will announce final plans
for integrating the businesses later in the first quarter 1999. The review
will focus on overlapping operations in the U.S. and 15 international
countries served by both organizations.
A copy of the news release dated January 6, 1999 issued by the
Registrant is attached as Exhibit 20 and incorporated by reference
herein.
The Company desires to take advantage of the "safe harbor" provisions
of the Private Securities Litigation Reform Act of 1995 (the "1995 Act").
The 1995 Act provides a "safe harbor" for forward-looking statements to
encourage companies to provide information without fear of litigation so
long as those statements are identified as forward-looking and are
accompanied by meaningful cautionary statements identifying important
factors that could cause actual results to differ materially from those
projected. Although the Company does not anticipate that it will make
forward-looking statements as a general policy, the Company will make
forward-looking statements as required by law or regulation, and from time
to time may make such statements with respect to management's estimation
of the future operating results and business of the Company.
The Company hereby incorporates into this report by reference to its
Form 10-K for the year ended December 31, 1997 the cautionary statements
found on pages 27-28 of such Form 10-K.
Item 7. Financial Statements and Exhibits.
(a) Financial Statements of Businesses acquired
(1) This acquisition does not meet the threshold for financial
statements of the businesses acquired pursuant to Regulation S-X.
(b) Pro forma financial information
(1) This acquisition does not meet the threshold for pro forma financial
information pursuant to Regulation S-X.
(c) Exhibits.
2 - Asset Purchase Agreement among Textron Inc., Avco
Financial Services Inc. and Associates First
Capital Corporation, dated August 11, 1998.
20 - News Release by Associates First Capital Corporation
dated January 6, 1999
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
ASSOCIATES FIRST CAPITAL CORPORATION
By: /s/ Frederic C. Liskow
-------------------
Frederic C. Liskow
Assistant Secretary
Date: January 6, 1999
<PAGE>
ASSET PURCHASE AGREEMENT
AMONG
TEXTRON INC.,
AVCO FINANCIAL SERVICES, INC.
and
ASSOCIATES FIRST CAPITAL CORPORATION
As of August 11, 1998
<PAGE>
TABLE OF CONTENTS
RECITALS . . . . . . . . . . . . . . . . . . . . . . . . . .1
ARTICLE I
DEFINITIONS
1.1 Definitions . . . . . . . . . . . . . . . . . . . . . .2
ARTICLE II
PURCHASE AND SALE OF ASSETS AND
ASSUMPTION OF LIABILITIES
2.1 Purchase and Sale of Assets . . . . . . . . . . . . . 10
2.2 Assumption of Liabilities . . . . . . . . . . . . . . 10
2.3 Purchase Price. . . . . . . . . . . . . . . . . . . . 11
2.4 Closing . . . . . . . . . . . . . . . . . . . . . . . 14
2.5 Closing Obligations . . . . . . . . . . . . . . . . . 14
ARTICLE III
REPRESENTATIONS AND WARRANTIES
OF PARENT AND THE COMPANY
3.1 Corporate Organization and Qualification. . . . . . . 16
3.2 Stock of Subsidiaries . . . . . . . . . . . . . . . . 17
3.3 Authority Relative to This Agreement. . . . . . . . . 18
3.4 Consents and Approvals; No Violations . . . . . . . . 19
3.5 SEC Reports; Financial Statements . . . . . . . . . . 21
3.6 Statutory Statements. . . . . . . . . . . . . . . . . 22
3.7 Absence of Certain Changes or Events. . . . . . . . . 22
3.8 Litigation. . . . . . . . . . . . . . . . . . . . . . 23
3.9 Taxes . . . . . . . . . . . . . . . . . . . . . . . . 23
3.10 Employee Benefit Plans; Labor Matters . . . . . . . . 25
3.11 Environmental Laws and Regulations. . . . . . . . . . 28
3.12 Compliance with Laws. . . . . . . . . . . . . . . . . 29
3.13 Material Contracts. . . . . . . . . . . . . . . . . . 28
3.14 Insurance . . . . . . . . . . . . . . . . . . . . . . 30
3.15 Brokers and Finders . . . . . . . . . . . . . . . . . 30
3.16 Intercompany Loans. . . . . . . . . . . . . . . . . . 30
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER
4.1 Corporate Organization and Qualification. . . . . . . 31
4.2 Authority Relative to This Agreement. . . . . . . . . 31
4.3 Consents and Approvals; No Violations . . . . . . . . 31
4.4 Financing . . . . . . . . . . . . . . . . . . . . . . 32
4.5 Brokers and Finders . . . . . . . . . . . . . . . . . 32
4.6 Certain Proceedings . . . . . . . . . . . . . . . . . 32
ARTICLE V
COVENANTS RELATING TO CONDUCT OF
BUSINESS AND OTHER AGREEMENTS
5.1 Conduct of Business of the Company. . . . . . . . . . 32
5.2 Access to Information . . . . . . . . . . . . . . . . 37
5.3 Other Actions . . . . . . . . . . . . . . . . . . . . 38
5.4 Advice of Changes . . . . . . . . . . . . . . . . . . 39
5.5 HSR Act Filing. . . . . . . . . . . . . . . . . . . . 39
5.6 Consents and Reasonable Efforts . . . . . . . . . . . 39
5.7 Further Assurances. . . . . . . . . . . . . . . . . . .?
5.8 Publicity . . . . . . . . . . . . . . . . . . . . . . 44
5.9 Indemnification . . . . . . . . . . . . . . . . . . . 44
5.10 Employees . . . . . . . . . . . . . . . . . . . . . . 45
5.11 Tax Allocation Agreement. . . . . . . . . . . . . . . 48
5.12 Intercompany Transactions.. . . . . . . . . . . . . . 49
5.13 No Negotiation. . . . . . . . . . . . . . . . . . . . 49
5.14 Non-Disclosure. . . . . . . . . . . . . . . . . . . . 49
5.15 Management of Risk Regarding Currency Translations. . 50
ARTICLE VI
CONDITIONS TO CONSUMMATION OF THE TRANSACTION
6.1 Conditions to Each Party's Obligations to
Complete the Transaction. . . . . . . . . . . . . . 50
6.2 Additional Conditions to the Obligation
of Buyer. . . . . . . . . . . . . . . . . . . . . . 52
6.3 Additional Conditions to the Obligation of the
Company. . . . . . . . . . . . . . . . . . . . . . . . . . 53
ARTICLE VII
TERMINATION
7.1 Termination by Mutual Consent . . . . . . . . . . . . 54
7.2 Termination by Any Party. . . . . . . . . . . . . . . 54
7.3 Termination by Buyer. . . . . . . . . . . . . . . . . 55
7.4 Termination by Parent and the Company . . . . . . . . 55
7.5 Effect of Termination . . . . . . . . . . . . . . . . 56
ARTICLE VIII
OBLIGATIONS AFTER CLOSING
8.1 Survival of Representations and Covenants;
Indemnification . . . . . . . . . . . . . . . . . . . 56
8.2 Guarantees. . . . . . . . . . . . . . . . . . . . . . 62
8.3 Name Changes. . . . . . . . . . . . . . . . . . . . . 57
8.4 Other Matters . . . . . . . . . . . . . . . . . . . . 63
8.5 Non-Competition . . . . . . . . . . . . . . . . . . . 63
ARTICLE IX
MISCELLANEOUS AND GENERAL
9.1 Interpretation. . . . . . . . . . . . . . . . . . . . 64
9.2 Payment of Expenses and Other Payments. . . . . . . . 65
9.3 Amendment . . . . . . . . . . . . . . . . . . . . . . 65
9.4 Waiver and Extension. . . . . . . . . . . . . . . . . 65
9.5 Counterparts. . . . . . . . . . . . . . . . . . . . . 66
9.6 Governing Law . . . . . . . . . . . . . . . . . . . . 66
9.7 Notices . . . . . . . . . . . . . . . . . . . . . . . 66
9.8 Entire Agreement; Assignment. . . . . . . . . . . . . 68
9.9 Parties in Interest . . . . . . . . . . . . . . . . . 68
9.10 Validity. . . . . . . . . . . . . . . . . . . . . . . 69
9.11 Captions. . . . . . . . . . . . . . . . . . . . . . . 69
9.12 Bulk Transfer Laws. . . . . . . . . . . . . . . . . . 69
9.13 Transfer, Sales and Stamp Taxes . . . . . . . . . . . 69
EXHIBIT 1 -- Bill of Sale, Assignment and Assumption Agreement
EXHIBIT 2 -- Tax Allocation Agreement
EXHIBIT 3 -- Separation Agreement
<PAGE>
ASSET PURCHASE AGREEMENT
AGREEMENT, dated as of August 11, 1998, (the "Agreement") among
Textron Inc., a Delaware corporation ("Parent"), Avco Financial
Services, Inc. (the "Company"), a Delaware corporation and a wholly
owned subsidiary of Textron Inc., and Associates First Capital
Corporation, a Delaware corporation ("Buyer").
RECITALS
WHEREAS, the Company desires to sell, and the Buyer desires to
purchase, substantially all of the assets and liabilities of the
Company for the consideration and on the terms and subject to the
conditions set forth in this Agreement;
NOW, THEREFORE, in consideration of the mutual representations,
warranties, covenants and agreements set forth herein, Parent, the
Company and Buyer hereby agree as follows:
<PAGE>
ARTICLE I
DEFINITIONS
1.1 Definitions. For purposes of this Agreement, except
as otherwise expressly provided or unless the context clearly
requires otherwise:
"Adjusted Stockholder's Equity" shall have the meaning ascribed
to it in Section 6.2(c).
"Affiliate" of any Person shall mean any other Person that
directly or indirectly, through one or more intermediaries, controls,
is controlled by, or is under common control with, such first Person.
"Agreement" shall have the meaning ascribed to it in the
Preamble.
"Assets" shall have the meaning ascribed to it in Section 2.1.
"Buyer" shall have the meaning ascribed to it in the Preamble.
"Claim" shall have the meaning ascribed to it in Section
8.1(d).
"Closing" shall have the meaning ascribed to it in Section 2.4.
"Closing Date" shall have the meaning ascribed to it in Section
2.4.
"Code" shall mean the Internal Revenue Code of 1986, as
amended.
"Company" has the meaning ascribed to it in the Preamble.
"Company Employee" shall have the meaning ascribed to it in
Section 5.10(k).
"Company Indemnified Parties" shall have the meaning ascribed
to it in Section 5.9(a).
"Company Plan" shall mean each bonus, incentive, deferred
compensation, pension, retirement, profit-sharing, thrift, savings,
employee stock ownership, stock bonus, stock purchase, restricted
stock, stock option, employment, consulting, termination, retention,
severance, change-in-control, compensation, medical, health or other
plan, agreement, policy, program, or arrangement that covers current
or former employees, officers or directors of the Company or the
Subsidiaries.
"Company's Profit Sharing Plan" shall have the meaning ascribed
to it in Section 5.10(f).
"Company Properties" shall mean all parcels and interests of
real property owned in fee or leased by the Company or any Subsidiary
excluding any real property which is owned as a result of
foreclosure, settlements in lieu of foreclosure, troubled loans or
debt restructuring or other action taken with respect to property
which was security for the repayment of a loan or other advance of
funds by the Company or any Subsidiary.
"Company SAP Statements" shall have the meaning ascribed to it
in Section 3.6.
"Company SEC Reports" shall have the meaning ascribed to it in
Section 3.5(a).
"Confidentiality Agreement" shall mean the agreement between
Parent and Buyer dated June 5, 1998.
"Consent" shall mean any consent, approval, authorization,
clearance, exemption, waiver, or similar affirmation by, or filing
with or notification to, a person pursuant to any Contract, Law,
Order or Permit.
"Contract" shall mean any written or oral agreement,
arrangement, commitment, contract, indenture, instrument, lease or
other obligation of any kind or character, or other obligation that
is binding on any Person or its capital stock, properties or
business.
"Default" shall mean (i) any breach or violation of or default
under any Contract, Order or Permit, (ii) any occurrence of any event
that with the passage of time or the giving of notice or both would
constitute a breach or violation of or default under any Contract,
Order or Permit, or (iii) any occurrence of any event that with or
without the passage of time or the giving of notice would give rise
to a right to terminate or revoke, change the current terms of, or
renegotiate, or to accelerate, increase, or impose any liability
under, or create any Lien in connection with, any Contract, Order or
Permit.
"Designated Subsidiary" shall mean Avco Financial Services
International, Inc. (Nebraska); Avco Financial Services Management
Company; Newport Management Company; Balboa Life Insurance Company;
Balboa Insurance Company; Avco Group Limited (U.K.); Avco Trust PLC
(U.K.); Avco Financial Services (Asia) Limited (Hong Kong); Avco
Australia Pty. Ltd.; Textron Financial Corporation (Australia) Pty.
Ltd.; Avco Financial Services Limited (Australia); Avco Access Ltd.
(Australia); Avco Financial Services Canada Limited; Textron
Financial Corporation (Canada); Atlantic Reinsurance Company;
Hallmark General Insurance Company (Australia); Hallmark Life
Insurance Company (Australia); and London and Midland Insurance
Company (Canada).
"Directly Owned Subsidiaries" shall have the meaning ascribed
to it in Section 3.2(a).
"Disclosure Schedule" shall mean the Disclosure Schedule
prepared by the Company and delivered to Buyer concurrently with the
execution of this Agreement.
"E&Y" shall mean Ernst & Young LLP, independent accountants of
the Company.
"Employee Welfare Benefit Plan" shall mean an employee welfare
benefit plan as defined in Section 3(1) of ERISA and any comparable
plan in locations outside the United States.
"Environmental Claim" shall mean any investigation, notice of
violation, demand, allegation, action, suit, Order, consent decree,
penalty, fine, Lien, proceeding or claim (whether administrative,
judicial or private in nature) arising: (i) pursuant to, or in con-
nection with, an actual or alleged violation of any Environmental
Law; (ii) in connection with any Hazardous Material or actual or
alleged activity associated with any Hazardous Material; (iii) from
any abatement, removal, remedial, corrective or other response action
in connection with any Hazardous Material, Environmental Law or
Order; or (iv) from any actual or alleged damage, injury, threat or
harm to health, safety, natural resources or the environment.
"Environmental Law" shall mean any Law pertaining to: (i) the
protection of health, safety and the indoor or outdoor environment;
(ii) the conservation, management or use of natural resources and
wildlife; (iii) the protection or use of surface water and ground
water; (iv) the management, manufacture, possession, presence, use,
generation, transportation, treatment, storage, disposal, release,
threatened release, abatement, removal, remediation or handling of,
or exposure to, any Hazardous Material; or (v) pollution (including
any release to air, land, surface water and ground water); and
includes, without limitation, the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended, 42
U.S.C. Section 9601 et seq., and the Solid Waste Disposal Act, as amended,
42 U.S.C. Section 6901 et seq.
"ERISA" shall have the meaning ascribed to it in Section
3.10(a).
"ERISA Affiliate" shall mean any corporation or trade or
business, whether or not incorporated, that together with an entity
or any subsidiary of such entity would be deemed a "single employer"
within the meaning of Section 4001 of ERISA, or considered as being
members of a controlled group of corporations, under common control,
or members of an affiliated service group within the meaning of
Subsections 414(b), (c), (m) or (o) of the Code or Section 4001(a)(1-
4) of ERISA.
"Finance Subsidiary" shall mean any Subsidiary whose principal
business is financial as identified in Schedule A hereto.
"Financial Statements" shall have the meaning ascribed to such
term in Section 3.5(b).
"Foreign Competition Laws" shall mean foreign statutes, rules,
regulations, orders, decrees, administrative and judicial directives,
and other foreign laws, that are designed or intended to prohibit,
restrict or regulate actions having the purpose or effect of
monopolization, lessening of competition or restraint of trade.
"GAAP" shall have the meaning ascribed to it in Section 3.5(b).
"Guarantees" shall have the meaning ascribed to it in Section
5.6(c).
"Governmental Entity" shall have the meaning ascribed to it in
Section 3.4(a).
"Hazardous Material" shall mean any substance, chemical,
compound, product, solid, gas, liquid, waste, by-product, pollutant,
contaminant or material which is hazardous or toxic, and includes
without limitation, asbestos or any substance containing asbestos,
polychlorinated biphenyls, petroleum (including crude oil or any
fraction thereof), and any hazardous or toxic waste, material or
substance regulated under any Environmental Law.
"Indemnified Party" shall have the meaning ascribed to it in
Section 8.1.(b).
"Indemnifying Party" shall have the meaning ascribed to it in
Section 8.1.(b).
"Insurance Subsidiary" shall mean any Subsidiary whose
principal business is insurance as identified in Schedule A hereto.
"Interest Rate" shall mean six (6) percent per year calculated
on the basis of a 365 day year and charged for the actual number of
days elapsed.
"Interim Statements" shall have the meaning ascribed to it in
Section 2.3(b).
"Law" shall mean any federal, state, local or foreign law,
statute, ordinance, rule, regulation, Order, judgment or decree,
administrative or judicial decision, and any other executive or
legislative proclamation.
"Liabilities" shall have the meaning ascribed to it in Section
2.2.
"License" shall mean any license, Permit, certificate of
authority or any other instrument issued by any governmental
authority relating to the ability to do business by the Company and
the Subsidiaries.
"Lien" shall mean any conditional sale agreement, default of
title, easement, encroachment, encumbrance, hypothecation,
infringement, lien, mortgage, option, pledge, reservation,
restriction, security interest, title retention or other security
arrangement, or any adverse right or interest, charge, or claim of
any nature whatsoever of, on, or with respect to any property or
property interest.
"Litigation" shall mean any suit, action, arbitration, cause of
action, claim, complaint, criminal prosecution, investigation, demand
letter, governmental or other administrative proceeding, whether at
law or at equity, before or by any federal, state or foreign court,
tribunal, or agency or before any arbitrator.
"Losses" shall mean any and all actual losses, liabilities,
costs and expenses (including reasonable attorneys' fees and costs of
investigation).
"Material Adverse Effect" shall mean any adverse change in the
business, assets, liabilities, financial condition, or results of
operations of the Company or any of the Subsidiaries which,
individually or together with any other such adverse change, is
material to the Company and the Subsidiaries taken as a whole, other
than any such effect attributable to or resulting from (i) the public
announcement of the transactions contemplated hereby, (ii) any change
in banking, insurance, consumer finance, commercial finance, thrift,
fair lending or similar Laws of general applicability or
interpretations thereof by courts or governmental authorities, (iii)
any change in general economic conditions, in interest rates,
currency exchange rates, or in conditions affecting banking,
insurance, consumer finance, commercial finance, or thrift industries
generally, (iv) any act or omission of the Company or any Subsidiary
taken with the prior consent of the Buyer pursuant to Article V or
(v) actions taken by the Company at the specific request of Buyer.
"Material Contract" shall have the meaning ascribed to it in
Section 3.13.
"Order" shall mean any administrative decision or award,
decree, injunction, judgment, order, quasi-judicial decision or
award, ruling, or writ of any federal, state, local or foreign or
other court, arbitrator, mediator, tribunal, administrative agency or
authority.
"Permit" shall mean any federal, state, local or foreign
governmental approval, authorization, certificate, declaration,
easement, filing, franchise, license, notice, permit, variance,
clearance, exemption, closure or right to which any person is a party
or that is or may be binding upon or inure to the benefit of any
person or its securities, properties or business.
"Person" shall mean any individual, corporation, partnership,
joint venture, trust, association, organization, governmental
authority or other entity.
"Purchase Price" shall have the meaning ascribed to it in
Section 2.3(a).
"Representatives" shall have the meaning ascribed to it in
Section 5.2(a).
"Requisite Regulatory Approvals" shall have the meaning
ascribed to it in Section 3.4(a).
"Section 5.9 Indemnified Parties" shall have the meaning
ascribed to it in Section 5.9.(b).
"Separation Agreement" shall mean the Separation Agreement of
even date herewith entered into by and among Parent, the Company and
Buyer, attached hereto as Exhibit 3.
"Shares" shall have the meaning ascribed to it in Section 2.1.
"Statement" shall have the meaning ascribed to it in Section
2.3(b).
"Subsidiary" shall mean each corporation identified in Schedule
A to this Agreement.
"Tax" or "Taxes" shall mean all United States federal, state,
provincial, local, territorial and foreign income, profits,
franchise, license, capital, transfer, ad valorem, wage, severance,
occupation, import, custom, gross receipts, payroll, sales,
employment, use, property, real estate, excise, value added,
estimated, stamp, alternative or add-on minimum, environmental,
withholding and any other taxes, duties, assessments or governmental
tax charges of any kind whatsoever.
"Tax Authority" shall mean any domestic, foreign, federal,
national, state, provincial, county or municipal or other local
government, any subdivision, agency, commission or authority thereof,
or any quasi-governmental body exercising any taxing authority or any
other authority exercising Tax regulatory authority.
"Tax Return" shall mean any return, report or similar statement
required to be filed with respect to any Tax (including any attached
schedules), including any information return, claim for refund,
amended return or declaration of estimated Tax.
"Transaction" shall mean the purchase of Assets and the
assumption of Liabilities described in Sections 2.1 and 2.2.
"Tax Allocation Agreement" shall mean the Tax Allocation
Agreement of even date herewith by and among Parent, the Company and
Buyer attached hereto as Exhibit 2.
"Transferred Employee" shall have the meaning ascribed to it in
Section 5.10(a).
ARTICLE II
PURCHASE AND SALE OF ASSETS
AND ASSUMPTION OF LIABILITIES
2.1 Purchase and Sale of Assets. Subject to the terms
and conditions of this Agreement, at the Closing the Company shall
sell, transfer, convey, assign and deliver to Buyer and Buyer shall
purchase, acquire and accept from the Company: (a) all the
outstanding capital stock owned by the Company in the Directly Owned
Subsidiaries (the "Shares"); and (b) all of the Company's other
rights, properties, assets, claims, contracts and businesses of every
kind, character and description, whether tangible or intangible,
whether real, personal or mixed, whether accrued, contingent or
otherwise, and wherever located; except for (v) the shares of Parent
Series D Cumulative Preferred Stock, (w) the Company's National Bank
Charter, (x) any rights in or to the names "Textron" and "TFC", alone
or in combination with any other words, and any trade names,
trademarks or service marks relating thereto, and (y) any documents
or records which the Company is required by law to retain in its
possession. (The Shares and the items listed in Section 2.1(b) which
are being purchased by Buyer are collectively referred to as the
"Assets").
2.2 Assumption of Liabilities. Subject to the terms and
conditions of this Agreement, the Tax Allocation Agreement and the
Separation Agreement, at the Closing the Buyer shall assume all of
the liabilities and obligations of the Company (known and unknown and
whether absolute, accrued, contingent or otherwise) existing as of
the Closing Date, whether asserted before or after such time, other
than the liabilities and obligations of the Company (i) in connection
with the transactions contemplated by this Agreement, (ii) in
connection with the deferred tax liability associated with the Parent
Series D Cumulative Preferred Stock or (iii) pursuant to, or as a
result of a breach of, this Agreement or any other Contract entered
into in connection with the Transaction. (The liabilities and
obligations being assumed hereunder are collectively referred to as
the "Liabilities".)
2.3(a) Purchase Price. Subject to the terms and conditions of
this Agreement including the provisions of Section 6.1(b) hereof and
in consideration of the sale, assignment, transfer and delivery of
the Assets, Buyer shall pay to the Company on the Closing Date, in
immediately available funds by wire transfer to an account designated
in writing at least two business days in advance by the Company, the
sum of three billion, nine hundred million dollars ($3,900,000,000)
(the "Purchase Price").
(b) Closing Date Statements.
(1) As soon as practical, but in any event within
sixty (60) days following the Closing Date, unless otherwise extended
by the mutual agreement of the parties, the Company shall deliver to
the Buyer at Buyer's expense (i) the audited consolidated statement
of financial position of the Company and its consolidated
Subsidiaries as of the Closing Date (the "Statement") together with
the report thereon of Ernst & Young LLP, independent accountants of
the Company ("E&Y"), stating that such Statement has been prepared in
conformity with GAAP applied on a basis consistent with the
preparation of the audited December 31, 1997 balance sheet as
contained in the SEC Reports; (ii) a schedule of the intercompany
accounts receivables between Parent or an affiliate of Parent (other
than the Company and the Subsidiaries) on the one hand and the
Company or any Subsidiary on the other hand set forth in the
Statement; (iii) a schedule of deferred tax accounts for each
Directly Owned Subsidiary as set forth in the Statement;(iv) a
schedule of all intercompany payments between Parent and its
Affiliates (other than the Company and the Subsidiaries) on the one
hand and the Company and the Subsidiaries on the other hand from the
date of the Interim Statements to the Closing Date; and (v) a
schedule setting forth the contingent tax reserves as adjusted in
accordance with the Tax Allocation Agreement. The term "Interim
Statements" shall mean the Financial Statements of the Company and
its consolidated subsidiaries as of, and for the six month period
ending on, June 30, 1998. If requested by Buyer, the Company shall
request that E&Y conduct a full audit of the Company and its
consolidated Subsidiaries at Buyer's expense and deliver a statement
of stockholders' equity and cash flows.
(2) Subject to Section 2.3(d), the Statement shall be
final, binding and conclusive on the parties hereto as they relate to
the calculation of the Purchase Price but shall not affect Parent's
or the Company's liability under any other Section of this Agreement.
(c) Settlement of Purchase Price. Subject to the provisions
of Section 2.3(d), within forty-five (45) days after the date of
receipt by the Buyer of the Statement, in the event that the Adjusted
Stockholder's Equity (as defined in Section 6.2(c)) and delivered
pursuant to this Section 2.3 is (i) more than $1,227,400,000, then
the Buyer shall pay the difference to the Company, as an adjustment
to the Purchase Price, or (ii) less than $1,227,400,000, then the
Company shall pay the difference to the Buyer, as an adjustment to
the Purchase Price prior to 11:00 a.m. local time in New York. All
payments pursuant to this Section 2.3(c) or Section 2.3(d) ("Purchase
Price Adjustment Payments") shall be made by wire transfer of
immediately available funds and shall be made together with interest
thereon at the Interest Rate, payable for the period commencing on
the Closing Date and ending on the day immediately prior to the date
of such Purchase Price Adjustment Payment.
(d) Closing Date Statement Disputes.
(i) Buyer may dispute any amounts reflected
on the Statement; provided, however, that the Buyer shall
notify the Company in writing (the "Dispute Notice") of each
disputed item, specifying the amount thereof in dispute and
setting forth, in reasonable detail, the basis for such
dispute, within forty-five (45) days of Buyer's receipt of the
Statement as so submitted; and provided, further, however, that
if an account or item is recorded or treated in a manner
consistent with past practice, then, provided that such
recording or treatment does not prevent the Statement from
being in accordance with GAAP, it must be accepted as correct
by Buyer for purposes of this Section. Buyer shall submit only
one Dispute Notice containing all disputed items. In the event
of such a dispute, the Buyer and the Company shall attempt to
reconcile their difference and any resolution by them as to any
disputed amounts shall be final, binding and conclusive on the
parties hereto. If the Buyer and the Company are unable to
reach a resolution with such effect within thirty (30) days of
the receipt by the Company of the Buyer's written notice of
dispute, the Buyer and the Company shall submit the items
remaining in dispute for resolution to the Independent
Accounting Firm (as defined below) which shall, within thirty
(30) days after submission, determine and report to the parties
upon such remaining disputed items, and such report shall be
final, binding and conclusive on the parties hereto. All costs
and expenses of the Independent Accounting Firm relating to the
disputed items shall be allocated between the Buyer and the
Company in the same proportion that the aggregate dollar amount
of the items unsuccessfully disputed by each party bears to the
total dollar amount of the items disputed hereunder. The term
"Independent Accounting Firm" shall mean Arthur Andersen & Co.,
Certified Public Accountants or such other firm as the Buyer
and the Company shall agree.
(ii) Notwithstanding any dispute pursuant to
this Section 2.3(d) of any amounts payable pursuant to Section
2.3(c), each applicable party shall at the time specified in
Section 2.3(c) pay that portion of the amounts payable by it
pursuant to Section 2.3(c) and not subject at the time of such
payment to such dispute. Subject to the preceding sentence,
any Purchase Price Adjustment Payment made pursuant to this
Section 2.3(d) shall be paid within five (5) business days
following the resolution thereof.
(e) Access to Books and Records. During the periods in
which (x) the Statement is being prepared, or (y) any dispute may be
raised as contemplated by Section 2.3(d), Parent, the Company and the
Buyer shall provide each other, including their authorized agents and
representatives, with reasonable access, during normal business hours
and without disruption to their normal business, to their respective
books, records, facilities, employees, accountants, counsel or other
representatives pertaining to the Company and the transactions
contemplated hereby to the extent affecting the Company including any
consolidated or combined returns, schedules, consolidated or combined
work papers and other related documents and shall promptly provide to
the Company copies of all books, records, contracts, reports and
other information which the Company or E&Y may reasonably request in
connection with the preparation of the Statement; provided, however,
that with respect to consolidated, combined, unitary or similar Tax
Returns which include Parent (or any of its Affiliates other than the
Company and the Subsidiaries) on the one hand and the Company (or any
of the Subsidiaries) on the other hand, Buyer shall only have access
to portions of such Tax Returns relevant to the Company and the
Subsidiaries.
2.4 Closing. The Company shall as promptly as possible
notify the Buyer, and the Buyer shall as promptly as possible notify
the Company when the conditions to such party's obligations to
complete the Transaction have been satisfied or waived. The closing
of the Transaction (the "Closing") shall take place at the offices of
Skadden, Arps, Slate, Meagher & Flom LLP, One Beacon Street, Boston,
Massachusetts at 10:00 a.m. Boston time on the last day of the month
in which all of the conditions set forth in Article VI have been
satisfied or waived, provided, however, that if the day on which such
conditions have been satisfied or waived is not at least three
business days prior to the last day of such month then the Closing
shall occur on the last day of the following month, or at such other
time, date and place as the Company and Buyer may agree in writing;
provided, further, however, that if the conditions set forth in
Article VI are not satisfied or waived prior to the third business
day prior to November 30, 1998 the Closing shall, at the election of
Parent, not occur prior to the first business day of January 1999.
(The date on which the Closing occurs is hereafter referred to as the
"Closing Date".)
2.5 Closing Obligations.
(a) At the Closing, the Company shall deliver to Buyer:
(i) certificates representing the Shares
duly endorsed (or accompanied by duly executed stock powers)
for transfer to Buyer;
(ii) a duly executed Bill of Sale,
Assignment and Assumption Agreement in the form attached as
Exhibit 1 hereto;
(iii) the Officer's Certificate described in
Section 6.2(e);
(iv) the resignation of any officer or director of any
Subsidiary who is an employee or director of Parent;
(v) all such other documents as may be
necessary to convey to Buyer the right, title and interest of
the Company and the Subsidiaries in and to the Assets;
(vi) a certificate executed by the Secretary
or Assistant Secretary of the Company as to the Certificate of
Incorporation and By-Laws of the Company and the resolutions of
the Board of Directors of the Company authorizing and approving
the execution, delivery and performance of this Agreement and
the transactions contemplated hereby, a list of officers of the
Company and setting forth that such Certificate of
Incorporation, By-Laws, and authorizations and approvals are in
full force and effect on the Closing Date;
(vii) a certificate executed by the
Secretary or Assistant Secretary of each Designated Subsidiary
as to the Certificate of Incorporation and By-Laws of such
Subsidiary, a list of officers of such Designated Subsidiary
and setting forth that such Certificate of Incorporation and
By-Laws are in full force and effect on the Closing Date; and
(viii) a certificate under Section
1445(b)(2) of the Code providing that the Company is not a
foreign Person, in form and substance reasonably satisfactory
to Buyer.
(b) At the Closing, the Buyer shall deliver to the
Company:
(i) a duly executed Bill of Sale, Assignment
and Assumption Agreement in the form attached as Exhibit 1
hereto;
(ii) documents in a form reasonably
satisfactory to the Company and Buyer under which Buyer assumes
the Company's obligations under the agreements identified in
Section 3.4(a)(vi) of the Disclosure Schedule;
(iii) the Officer's Certificate described in
Section 6.3(d); and
(iv) the Purchase Price in the manner set
forth in Section 2.3.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
OF PARENT AND THE COMPANY
Parent and the Company jointly and severally represent and war-
rant to Buyer that:
3.1 Corporate Organization and Qualification.
(a) Parent, the Company and each Designated Subsidiary
is a corporation duly organized, validly existing and in good
standing under the Laws of its jurisdiction of incorporation. Each
Subsidiary other than the Designated Subsidiaries is a corporation
duly organized, validly existing and in good standing under the Laws
of its jurisdiction of incorporation except where the failure to be
duly organized, validly existing and in good standing is not
reasonably likely to have a Material Adverse Effect. Parent, the
Company and each of its Subsidiaries is qualified and in good
standing as a foreign corporation in each jurisdiction where the prop-
erties owned, leased or operated, or the business conducted, by it
require such qualification, except where the failure to so qualify or
be in good standing is not reasonably likely to have a Material
Adverse Effect. Parent, the Company and each of its Subsidiaries has
all requisite corporate power and authority and all necessary govern-
mental Consents to own, lease and operate its properties and to carry
on its business as it is now being conducted, except where the
failure to have such power and authority is not reasonably likely to
have a Material Adverse Effect. The Company has or will have made
available to Buyer prior to Closing complete and correct copies of
the articles of organization or articles of or certificates of
incorporation, as the case may be, and by-laws or other equivalent
organizational documents of it and each Designated Subsidiary as in
effect as of the date hereof.
(b) Each Finance Subsidiary has the necessary Licenses
or other certificates of authority to conduct its business as is
being currently conducted in each jurisdiction where such Licenses or
certificates are required except where the failure to be so licensed
or authorized is not reasonably likely to result in a Material
Adverse Effect.
(c) Each Insurance Subsidiary is (i) duly licensed or
authorized as an insurance company in its jurisdiction of
incorporation as set forth in Schedule A to the Agreement and
is not deemed to be "commercially domiciled" in any other
jurisdiction, (ii) duly licensed or authorized as an insurance
company in each other jurisdiction where it is required to be so
licensed or authorized, and (iii)duly authorized in its jurisdiction
of incorporation and each other applicable jurisdiction to write
each line of business reported as being written in the Company
SAP Statements, except, in any such case, where the failure to
be so licensed or authorized is not reasonably likely to result
in a Material Adverse Effect.
3.2 Stock of Subsidiaries.
(a) Schedule A to the Agreement identifies each
Subsidiary of the Company and separately identifies each Subsidiary
whose capital stock is directly owned by the Company (the "Directly
Owned Subsidiaries"). The Company does not own, directly or
indirectly, any equity interests in any other Person.
(b) All of the shares of capital stock of the Directly
Owned Subsidiaries, except for any directors' qualifying shares, are
owned by the Company, free and clear of all Liens, and have been duly
authorized, validly issued and are fully paid and nonassessable and
were not issued in violation of any preemptive rights. Except for
(i) any director's qualifying shares and (ii) as set forth in Section
3.2(b) of the Disclosure Schedule, all of the shares of the other
Subsidiaries are owned by the Company or another Subsidiary or
Subsidiaries free and clear of all Liens and have been duly
authorized, validly issued and are fully paid and nonassessable and
were not issued in violation of any preemptive rights except for any
such Liens or where any such failures to be duly authorized, validly
issued, and fully paid or nonassessable would not reasonably be
expected to have a Material Adverse Effect.
(c) Except as set forth in Section 3.2(c) of the
Disclosure Schedule, there are no options, warrants, convertible
securities or other rights, agreements, arrangements or commitments
relating to the capital stock of, or other equity interest in, the
Subsidiaries obligating the Company or a Subsidiary to issue, sell,
transfer or otherwise dispose of or sell any shares of capital stock
of, or other equity interest in, a Subsidiary.
(d) Upon consummation of the Transaction, the Buyer will
acquire valid title to the Shares free and clear of all Liens.
Except as set forth in Section 3.2(d) of the Disclosure Schedule,
there are no voting trusts, stockholder or registration rights
agreements, proxies or other agreements or understandings in effect
with respect to the voting or transfer of the shares of capital stock
of the Subsidiaries.
3.3 Authority Relative to This Agreement. Each of
Parent and the Company has the requisite corporate power and
authority to execute and deliver this Agreement and to consummate
the transactions contemplated hereby. This Agreement and the
consummation by each of Parent and the Company of the transactions
contemplated hereby have been duly and validly authorized by the
Board of Directors of each of Parent and the Company and the
stockholder of the Company and no other corporate proceeding on the
part of the Company or Parent is necessary to authorize this
Agreement or to consummate the transactions contemplated hereby. This
Agreement has been duly and validly executed and delivered by Parent
and the Company and, assuming this Agreement constitutes the valid
and binding agreement of Buyer, constitutes the valid and binding
agreement of Parent and the Company, enforceable against Parent and
the Company in accordance with its terms, except that the enforcement
hereof may be limited by (a) bankruptcy, insolvency, reorganization,
moratorium or other similar Laws now or hereafter in effect relating
to creditors' rights generally and (b) general principles of equity
(regardless of whether enforceability is considered in a proceeding
in equity or at law).
3.4 Consents and Approvals; No Violations.
(a) Except for (i) the filing of applications and
notices, as applicable, with federal and state regulatory authorities
governing consumer finance, commercial finance, mortgage lending and
insurance in the states in which the Company and its domestic
Subsidiaries operate their respective businesses and the approval of
such applications or the grant of required Licenses by such
authorities, (ii) the filing of applications and notices, as
applicable, with the foreign governmental authorities regulating
consumer finance, commercial finance, mortgage lending and insurance
in the foreign jurisdictions in which the Subsidiaries operate their
businesses, and the approval of such applications or the grant of
required Licenses by such authorities, (iii) the filing of
notification and report forms with the United States Federal Trade
Commission and the United States Department of Justice under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the
"HSR Act") and the expiration or termination of any applicable
waiting period thereunder, (iv) the filing of applications and
notices, as applicable, with foreign governmental authorities under
the Foreign Competition Laws, and the approval of such applications
by such authorities, if required (including, without limitation, (x)
in the instance of Australia, receipt of approval from the Treasurer
under the Foreign Acquisitions and Takeovers Act, (y) in the instance
of Canada, receipt of either an Advanced Ruling Certificate or no-
action letter from the Bureau of Competition, in such form and to
such effect as would be determined to be reasonably satisfactory, and
(z) in the instance of the United Kingdom, receipt of a response from
either the Office of Fair Trading or the Monopolies and Mergers
Commission under the Merger Control Law, in such form and to such
effect as would be determined to be reasonably satisfactory), (v) the
Consents of third parties under the Contracts listed in Section
3.4(a)(v) of the Disclosure Schedule, and (vi) the assumption by
Buyer of the Company's obligations under the Contracts identified in
Section 3.4(a)(vi) of the Disclosure Schedule, no notices to,
Consents or approvals of, or filings or registrations with, any
court, administrative agency or commission or other governmental
authority or instrumentality (each, a "Governmental Entity") or with
any self-regulatory authority or with any third party are necessary
in connection with the execution and delivery by Parent and the
Company of this Agreement and the consummation by Parent and the
Company of the transactions contemplated hereby, except for such
notices, Consents, approvals, filings or registrations, the failure
of which to be made or obtained would not reasonably be expected to
have a Material Adverse Effect. The notices, Consents, or approvals,
filings or registrations, and expirations or terminations of waiting
periods referred in clauses 3.4(a)(i) through 3.4(a)(iv), without
giving effect for purposes of this definition to any qualifier as to
materiality or Material Adverse Effect are hereinafter referred to as
the "Requisite Regulatory Approvals". As of the date hereof, neither
Parent nor the Company knows of any reason why the Requisite
Regulatory Approvals should not be obtained.
(b) Neither the execution and delivery of this Agreement
by Parent or the Company nor the consummation by Parent and the
Company of the transactions contemplated hereby, does nor will (i)
conflict with or result in any breach of any provisions of the
certificate of incorporation or by-laws of the Parent or Company or
the certificate of incorporation or by-laws or other equivalent
organizational documents of any of the Subsidiaries; (ii) subject to
obtaining the Consents listed in Section 3.4(a)(v) of the Disclosure
Schedule and the Buyer assuming the Company's obligations under the
Contracts identified in Section 3.4(a)(vi) of the Disclosure
Schedule, and except as set forth in Section 3.4(b) of the Disclosure
Schedule, conflict with, result in a violation or breach of, or
constitute a Default (or give rise to any right of termination,
cancellation or acceleration) under, any of the terms, conditions or
provisions of any note, bond, mortgage, indenture, License, Contract,
agreement or other instrument or obligation to which the Parent or
Company or any of the Subsidiaries is a party or by which any of them
or any of their respective properties or assets may be bound; (iii)
conflict with, result in a violation or breach of, or constitute a
Default (or give rise to any right of termination, cancellation or
acceleration) under, any of the terms, conditions or provisions of
any License or Permit; or (iv) subject to giving the notices, making
the filings or registrations or obtaining the Consents or approvals
referred to in clauses (i) through (vi) in paragraph (a) above,
conflict with, violate any order, writ, injunction, decree, statute,
rule or regulation applicable to the Company, any of the Subsidiaries
or any of their respective properties or assets, except, in the case
of clauses (ii), (iii) or (iv) of this paragraph (b) for violations,
breaches or Defaults which would not reasonably be expected to have a
Material Adverse Effect.
3.5 SEC Reports; Financial Statements.
(a) The Company has timely filed all reports required to
be filed by it with the Securities and Exchange Commission (the
"SEC") since January 1, 1997 pursuant to the federal securities Laws
and the SEC rules and regulations thereunder which complied in all
material respects with applicable requirements of the Securities Ex-
change Act of 1934, as amended (collectively, the "Company SEC
Reports"). None of the Company SEC Reports, as of their respective
dates, contained or will contain any untrue statement of a material
fact or omitted or will omit to state a material fact required to be
stated therein or necessary in order to make the statements therein,
in light of the circumstances under which they were made, not mis-
leading.
(b) The consolidated statements of financial position
and the related consolidated statements of operations, stockholders'
equity and cash flows (including the related notes thereto) of the
Company included in the Company SEC Reports (the "Financial
Statements") complied in all material respects with applicable
accounting requirements and the published rules and regulations of the
SEC with respect thereto, have been prepared in conformity with
United States generally accepted accounting principles ("GAAP")
(except, in the case of unaudited statements, as permitted by Form
10-Q of the SEC) applied on a basis consistent with prior periods
(except as otherwise noted therein), and present fairly the
consolidated financial position of the Company as of their respective
dates, and the consolidated results of its operations and its cash flows
for the periods presented therein (subject, in the case of the unaudited
interim financial statements, to normal and recurring year-end
adjustments that have not been and are not expected to be material in
amount).
3.6 Statutory Statements. Each of the Insurance
Subsidiaries has filed all annual or quarterly statements, together
with all exhibits and schedules thereto, required to be filed with or
submitted to the appropriate regulatory authorities of the
jurisdiction in which it is domiciled on forms prescribed or permitted
by such authority (collectively, the "Company SAP Statements") since
January 1, 1997. Financial statements included in the Company SAP
Statements and prepared on a statutory basis, including the notes
thereto, have been prepared in all material respects in accordance
with accounting practices prescribed or permitted by applicable
regulatory authorities in effect as of the date of the respective
statements and such accounting practices have been applied in all
material respects on a consistent basis throughout the periods
involved, except as expressly set forth in the notes or schedules
thereto, and such financial statements present fairly the respective
statutory financial positions and results of operation of each of the
Insurance Subsidiaries as of their respective dates and for the
respective periods presented therein.
3.7 Absence of Certain Changes or Events.
(a) Except as disclosed in the Company SEC Reports filed
prior to the date of this Agreement, or as set forth in Section
3.7(a) of the Disclosure Schedule or as a consequence of, or as
expressly contemplated by, this Agreement, since December 31, 1997,
(i) the business of the Company has been carried on only in the
ordinary and usual course consistent with past practice, and (ii)
there has not occurred any event, development or change which has
resulted or is reasonably likely to result in a Material Adverse
Effect; provided, however, that if the Material Adverse Effect
results from a lawsuit identified in Section 3.8 of the Disclosure
Schedule, Parent may cure the Material Adverse Effect by contribution
to the capital of the Company in an amount sufficient to avoid a
Material Adverse Effect.
(b) Except as set forth in the Company SEC Reports filed
prior to the date of this Agreement or as listed in Section 3.7(b) of
the Disclosure Schedule, and except for liabilities and obligations
incurred in the ordinary course of business consistent with past
practice, since December 31, 1997, neither the Company nor any of its
Subsidiaries has any liabilities or obligations (i) of any nature
(whether accrued, absolute, contingent or otherwise) required by GAAP
to be recognized or disclosed on a consolidated balance sheet of the
Company and its consolidated subsidiaries or in the notes thereto
except for liabilities or obligations which have not resulted in or
are not reasonably likely to have a Material Adverse Effect or
(ii) of any other nature (whether accrued, absolute, contingent or
otherwise) which exceed in the aggregate three hundred and twenty-
five million dollars ($325,000,000), before giving effect to any
related reduction in Taxes. The reference to a threshold of $325
million in this Section 3.7(b)(ii) shall not be deemed in any way to
define the terms "material" or "Material Adverse Effect" and shall
not be construed to limit or qualify in any way the right of Buyer to
claim that any other representation or warranty set forth in this
Agreement has been inaccurate or has been breached; provided,
however, that if the Material Adverse Effect results from a lawsuit
identified in Section 3.8 of the Disclosure Schedule, Parent may cure
the Material Adverse Effect by a cash contribution to the capital of
the Company in an amount sufficient to avoid a Material Adverse
Effect.
3.8 Litigation. Except as set forth in Section 3.8 of
the Disclosure Schedule, there is no Litigation pending, or to the
knowledge of the members of the Executive Committee of the Board of
Directors of the Company (which includes the General Counsel of the
Company), threatened, the outcome of which is reasonably likely to
have a Material Adverse Effect.
3.9 Taxes.
(a) Tax Returns Filed and Taxes Paid. Each of the
Company and the Subsidiaries has timely filed all material Tax
Returns that it was required to file and all such Tax Returns were
correct and complete in all material respects. Each of the Company
and the Subsidiaries has timely paid in full all Taxes that are due
or owing.
(b) Tax Payments and Withholdings. Each of the Company
and the Subsidiaries has withheld and paid all Taxes required to have
been withheld and paid in connection with amounts paid or owing to
any employee, independent contractor, creditor, stockholder, or other
third party.
(c) No Liens. There are no Liens or other encumbrances
on any of the material assets or properties of the Company and the
Subsidiaries that arose in connection with any failure (or alleged
failure) to pay Tax.
(d) Tax Positions. No position has been asserted in
writing by any Tax Authority with respect to Taxes of the Company and
the Subsidiaries which, if asserted by such Tax Authority in a Tax
period ending after the Closing Date would reasonably be expected to
have a Material Adverse Effect on the Company and the Subsidiaries.
(e) No Pending Ruling, Closing Agreements, or Changes in
Accounting Method. There are no outstanding requests for rulings
with any Tax Authority that would have a Material Adverse Effect on
the operations of the Company or the Subsidiaries for periods after
the Closing Date. None of the Company and the Subsidiaries has (i)
executed, become subject to, or entered into any closing agreement
pursuant to Code Section 7121 or any similar or predecessor
provisions thereof under the Code or other Tax Law, or (ii) received
approval to make or agreed to a change in accounting method, which
closing agreement or change in accounting method would have a
Material Adverse Effect on the Company or any of the Subsidiaries for
any Tax period ending after the Closing Date. None of the Company
and the Subsidiaries has any application pending with any Tax
Authority requesting permission for any change in accounting method
that would have a Material Adverse Effect on the Company or the
Subsidiaries for any Tax period ending after the Closing Date.
(f) No Affiliated Group Liability. No liability has
been asserted against the Company or the Subsidiaries with respect to
Taxes of any affiliated group within the meaning of Section 1504(a)
of the Code of which the Company or the Subsidiaries have been a
member and of which Parent was not the common parent corporation.
(g) No Tax Indemnities. No liability has been asserted
against the Company or the Subsidiaries with respect to Taxes of any
other Person pursuant to any Tax allocation or sharing agreement with
any such Person, or any agreement to indemnify any such Person with
respect to Taxes.
3.10 Employee Benefit Plans; Labor Matters.
(a) A copy of each (i) employee benefit plan covered by
the Employee Retirement Income Security Act of 1974, as amended
("ERISA")(and comparable foreign plans) (ii) each stock option plan
and (iii) each employment agreement with any officer of the Company
or a Subsidiary will be made available to Buyer prior to Closing.
(b) Each Company Plan has been operated in accordance
with its terms and the requirements of ERISA, the Code, and all other
applicable Laws, except where the failure to have been so operated is
not reasonably likely to result in a Material Adverse Effect. All
reports and disclosures relating to the Company Plans required to be
filed or furnished to any governmental entity, participants or bene-
ficiaries prior to the Closing Date have been or will be filed or
furnished in a timely manner and in accordance in all respects with
applicable Law, except where the failure to be so filed or furnished
is not reasonably likely to have a Material Adverse Effect.
(c) (i) Neither the Company, any Subsidiary, any Company
Plan, any trust created thereunder nor any trustee or administrator
thereof has engaged in any transaction with the Company or any ERISA
Affiliate, any Company Plan, any such trust, or any trustee or
administrator thereof, or any party dealing with any Company Plan or
any such trust, which could result in a liability assessed pursuant
to Section 409 or 502(i) of ERISA or a tax imposed pursuant to
Section 4975 of the Code; and (ii) the Company, the Subsidiaries, and
all fiduciaries (as defined in Section 3(21) of ERISA) with respect
to the Company Plans, have complied in all material respects with
Section 404 of ERISA.
(d) Determination Letters. (i) Each Company Plan
currently in effect which is intended to be qualified under Section
401(a) of the Code has received a favorable determination letter from
the Internal Revenue Service with respect to the Code, or an
application has been filed for such determination letter on a timely
basis and is currently pending, and (ii) nothing has occurred that
could reasonably be expected to adversely affect the qualified status
of such Company Plan.
(e) Except as is not reasonably likely to result in a
Material Adverse Effect, no event or condition has occurred, or
failed to occur, in connection with which the Company or any ERISA
Affiliate or any of the Subsidiaries is or may reasonably be expected
to be, directly or indirectly through any Affiliate, subject to any
liability, lien or encumbrance with respect to any plan under ERISA
or other applicable Law or under any agreement, instrument or
understanding pursuant to or under which the Company or the
Subsidiaries are required to indemnify any person against such
liability, lien or encumbrance. No liability under Subtitle C, D or
E of Title IV of ERISA has been or is expected to be incurred by the
Company or any Subsidiary with respect to any ongoing frozen or
terminated "single-employer plan", within the meaning of Section
4001(a)(15) of ERISA, or "multi-employer plan" within the meaning of
Section 4001(a)(3) of ERISA, currently or formerly maintained by any
of them, or the single-employer plan of any ERISA Affiliate. The
Company and the Subsidiaries have not sponsored, maintained,
contributed, or been obligated to contribute, to a multi-employer
plan under Subtitle E of Title IV of ERISA. No notice of a
"reportable event" within the meaning of Section 4043 of ERISA, for
which the 30-day reporting requirement has not been waived, has been
required to be filed for any Company Plan or by any ERISA Affiliate
within the 12-month period ending on the date hereof or will be
required to be filed in connection with the transactions contemplated
by this Agreement.
(f) All contributions required to be made under the
terms of any Company Plan as of the Closing Date have been or will be
timely made on or prior to the Closing Date. No single-employer plan
of the Company has an "accumulated funding deficiency" (whether or
not waived) within the meaning of Section 412 of the Code or Section
302 of ERISA. Neither the Company nor any Subsidiary has provided,
or is required to provide, security to any plan pursuant to Section
401(a)(29) of the Code.
(g) The consummation of the transactions contemplated in
this Agreement will not, except as set forth in Schedule 3.10(g)
(which may be amended any time prior to September 15, 1998), (A)
entitle any employees of the Company or the Subsidiaries to severance
pay, (B) accelerate the time of payment or vesting or trigger any
payment of compensation or benefits under, increase the amount
payable or trigger any other material obligation pursuant to, any of
the Company Plans or (C) result in any breach or violation of, or a
default under, any of the Company Plans.
(h) Except as is not reasonably likely to result in a
Material Adverse Effect, the Company and the Subsidiaries have
complied with all applicable provisions of Section 6.01 et seq. of
ERISA and Section 4980B of the Code and with all applicable
provisions of the Health Insurance Portability and Accountability Act
of 1996.
(i) Since January 1, 1997, except as is not reasonably
likely to result in a Material Adverse Effect, neither the Company
nor any of the Subsidiaries has in the past or is now engaged in any
unfair labor practice, nor is any complaint against the Company or
any of the Subsidiaries pending or threatened before the National
Labor Relations Board; (i) there is no labor strike, dispute,
slowdown or stoppage actually pending or threatened with respect to
any employees of the Company or any of the Subsidiaries; (ii) no
attempt to organize any group or all of the employees of the Company
or the Subsidiaries has been made, or to the best of the Company's
knowledge, proposed; and (iii) no grievance which might have an
adverse effect on the Company or the Subsidiaries or the conduct of
their business is pending in accordance with the Company's and the
Subsidiaries' established procedures for handling grievances and no
claim therefor has been asserted. Except as is not reasonably likely
to have a Material Adverse Effect, (i) no agreement restricts the
Company or any of the Subsidiaries from relocating, closing or
terminating any of their operations or facilities; and (ii) in the
past three years there has not been any work stoppage at the Company
or any Subsidiary. Neither the Company nor any of the Subsidiaries
is now, and the consummation of the transactions contemplated by this
Agreement will not cause the Company or the Subsidiaries to become
bound by, obligated under or responsible for any labor contract,
collective bargaining agreement, consent decree or conciliation
agreement relating to employment (other than plans or arrangements of
a type described in Section 3.10(a)).
(j) The Company and the Subsidiaries are in compliance
with their obligations pursuant to the Worker Adjustment and
Retraining Notification Act of 1988 ("WARN" Act). The Company and
the Subsidiaries have not effectuated a "mass layoff" (as defined
under the WARN Act) affecting in whole or in part any site of
employment, facility, operating unit or employees of the Company or
any Subsidiary.
3.11 Environmental Laws and Regulations. Except as
disclosed in Section 3.11 of the Disclosure Schedule, or except as is
not reasonably likely to result in a Material Adverse Effect: (a) the
Company and the Subsidiaries and each of the Company Properties are
and have been in compliance with all applicable Environmental Laws
with respect to the Company Properties; (b) the Company and the
Subsidiaries have obtained all Permits required for the operation of
the Company Properties by any applicable Environmental Law; (c)
neither the Company nor any Subsidiary has, and the Company has no
knowledge of any other person who has caused any release, threatened
release or disposal of any Hazardous Material at any of the Company
Properties; (d) the Company has no knowledge that any of the Company
Properties are adversely affected by any release, threatened release
or disposal of a Hazardous Material originating or emanating from any
other property; (e) neither the Company nor any Subsidiary has manu-
factured, used, generated, stored, treated, transported, disposed of,
arranged for the disposal of, released, or otherwise managed any
Hazardous Material at the Company Properties or at any other
Property; (f) neither the Company nor any Subsidiary (i) has any
liability for response or corrective action, natural resources
damage, or any other harm pursuant to any Environmental Law involving
any of the Company Properties, (ii) is subject to, has notice or
knowledge of, or is required to give any notice of any Environmental
Claim involving any of the Company Properties or (iii) has knowledge
of any condition or occurrence at any of the Company Properties which
could form the basis of an Environmental Claim against the Company,
any Subsidiary or any of the Company Properties; (g) the Company
Properties are not subject to any, and the Company has no knowledge
of any imminent, restriction on the ownership, occupancy, use or
transferability of the Company Properties with respect to any (i)
Environmental Law or (ii) release, threatened release or disposal of
any Hazardous Material; and (h) there are no conditions or
circumstances at any of the Company Properties that pose a risk to
the environment or the health or safety of any person; provided,
however, that for purposes of clauses (c),(d), (e),(f) and (h) of
this Section 3.11 Company Properties shall be deemed to include any
Property previously owned or leased by the Company or any Subsidiary
that would qualify as a Company Property were such Property owned by
the Company or a Subsidiary as of the date hereof.
3.12 Compliance with Laws. The Company and each
Subsidiary are in compliance with all applicable Laws, Orders,
Permits and Licenses except for instances of non-compliance which are
not reasonably likely to have a Material Adverse Effect. Except as
set forth in Section 3.12 of the Disclosure Schedule, since January
1, 1996, neither the Company nor any Subsidiary has received any
written notification or written communication from any agency or de-
partment of foreign, federal, state, or local government
(a) asserting that the Company or any Subsidiary is not in compliance
with any of the Laws, Orders, Licenses or Permits of any governmental
agency or authority or that any such agency or authority enforces,
except such instances of non-compliance that are not reasonably
likely to have a Material Adverse Effect, or (b) requiring the
Company or any Subsidiary to enter into or consent to the issuance of
a cease and desist order, formal agreement, directive or commitment
which restricts materially the conduct of the Company's business or
its assets, liabilities, financial condition, results of operations,
capital, credit or reserve policies, its management, or the payment
of dividends.
3.13 Material Contracts. Each Material Contract is in
full force and effect, and is a legal, valid and binding obligation
of the Company or a Subsidiary and, to the knowledge of the Company,
each of the other parties thereto, enforceable in accordance with its
terms, except that the enforcement thereof may be limited by (a)
bankruptcy, insolvency, reorganization, moratorium or other similar
Laws now or hereafter in effect relating to creditors' rights
generally and (b) general principles of equity (regardless of whether
enforceability is considered in a proceeding in equity or at law) and
except as would not reasonably be likely to have a Material Adverse
Effect. No condition exists or event has occurred which (whether
with or without notice or lapse of time or both, or the happening or
occurrence of any other event) would constitute a default by the
Company or a Subsidiary or, to the knowledge of the Company, any
other party thereto under, or result in a right in termination of,
any Material Contract, except as would not reasonably be likely to
have a Material Adverse Effect. The term "Material Contract" shall
mean any Contract which is material to the Company and the
Subsidiaries taken as a whole.
3.14 Insurance. Parent or the Company and the
Subsidiaries self-insure or maintain with third parties policies of
fire and casualty, liability and other forms of insurance in such
amounts, with such deductibles and retained amounts, and against such
risks and losses, as are reasonable for the conduct of the business
as conducted on the date hereof and for the assets of the Company and
the Subsidiaries. Parent and the Company shall, or shall cause the
Subsidiaries to, maintain in full force and effect all such self-
insurance or insurance, as the case may be, during the period from
the date of this Agreement through the Closing Date.
3.15 Brokers and Finders. Other than Goldman, Sachs &
Co. and J.P. Morgan and Co. (the fees and expenses of which shall be
borne solely by Parent), neither Parent nor the Company have employed
any investment banker, broker, finder, consultant or intermediary in
connection with the transactions contemplated by this Agreement which
would be entitled to any investment banking, brokerage, finder's,
financial advisory or similar fee or commission in connection with
this Agreement or the transactions contemplated hereby.
3.16 Intercompany Loans. Neither the Company nor any
Subsidiary (i) have outstanding loans to Parent or any Affiliate of
Parent (other than the Company or any Subsidiary) whose aggregate
balance exceeds five million dollars ($5,000,000), (ii) have loans
outstanding to customers of Parent or any Affiliate of Parent which
in the aggregate exceeds twelve million dollars ($12,000,000), or
(iii) have any other significant commercial relationships with Parent
or any Affiliate of Parent (other than the Company or any
Subsidiary).
<PAGE>
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER
The Buyer represents and warrants to the Company that:
4.1 Corporate Organization and Qualification. The Buyer
is a corporation duly organized, validly existing and in good
standing under the Laws of the State of Delaware.
4.2 Authority Relative to This Agreement. The Buyer has
the requisite corporate power and authority to execute and deliver
this Agreement and to consummate the transactions contemplated
hereby. This Agreement and the consummation by Buyer of the
transactions contemplated hereby have been duly and validly
authorized by its Board of Directors and no other corporate
proceedings on the part of Buyer are necessary to
authorize this Agreement or to consummate the transactions
contemplated hereby. This Agreement has been duly and
validly executed and delivered by Buyer and, assuming this Agreement
constitutes the valid and binding agreement of Parent and the Company,
constitutes the valid and binding agreement of Parent and Buyer,
enforceable against it in accordance with its terms, except that the
enforcement hereof may be limited by (a) bankruptcy, insolvency,
reorganization, moratorium or other similar Laws now or hereafter in
effect relating to creditors' rights generally and (b) general
principles of equity (regardless of whether enforceability is
considered in a proceeding at law or in equity).
4.3 Consents and Approvals; No Violations. Neither the
execution, delivery or performance of this Agreement by Buyer nor the
consummation by Buyer of the transactions contemplated hereby nor
compliance by Buyer with any of the provisions hereof will
(a) conflict with or result in any breach of any provision of its
certificate of incorporation, or articles of organization, as the
case may be, or respective by-laws or other equivalent organizational
documents, of Buyer or any of its subsidiaries; (b) require any
Consent of any governmental or regulatory authority except for the
Requisite Regulatory Approvals and Consents which are not reasonably
likely to have an adverse material effect on Buyer or its ability to
consummate the transactions hereunder; (c) result in a Default under
any of the terms, conditions or provisions of any Contract to which
Buyer or any of the Buyer's subsidiaries or any of their respective
assets may be bound, except for such Defaults as to which requisite
waivers or Consents have been obtained or which are not reasonably
likely to have a Material Adverse Effect on Buyer or its ability to
consummate the transactions hereunder; or (d) assuming the Consents
referred to in this Section 4.3 are duly and timely obtained or made,
violate any Order or Law applicable to Buyer or any of its
subsidiaries or to any of their respective assets, except for violations
which are not reasonably likely to have a Material Adverse Effect on
Buyer or its ability to consummate the transactions hereunder. As of
the date hereof, Buyer knows of no reason why the Requisite
Regulatory Approvals should not be obtained.
4.4 Financing. Buyer has or will have on the Closing
Date sufficient funds available to pay the Purchase Price for all of
the Assets being purchased under this Agreement.
4.5 Brokers and Finders. Except as set forth in
Schedule 4.5 to this Agreement, Buyer has not employed any investment
banker, broker, finder, or intermediary in connection with the trans-
actions contemplated by this Agreement which would be entitled to any
investment banking, brokerage, finder's, financial advisory or
similar fee or commission in connection with this Agreement or the
transactions contemplated hereby.
4.6 Certain Proceedings. There is no pending proceeding
that has been commenced against Buyer that challenges, or may have
the effect of preventing, delaying, making illegal, or otherwise
interfering with, Buyer's performance of the Agreement or the
consummation by Buyer of the transaction contemplated hereby. To
Buyer's knowledge, no such proceeding has been threatened.
ARTICLE V
COVENANTS RELATING TO CONDUCT OF
BUSINESS AND OTHER AGREEMENTS
5.1 Conduct of Business of the Company. Except as set
forth in Section 5.1 of the Disclosure Schedule, during the period
from the date of this Agreement to the Closing Date (unless Buyer
shall otherwise agree in writing and except as otherwise expressly
contemplated by this Agreement), the Company will conduct and will
cause the Subsidiaries to conduct their operations in the ordinary
course of business consistent with past practice and shall use all
reasonable efforts to preserve intact their Assets and current busi-
ness organizations, keep available the services of their current
officers and employees, maintain their Licenses and Contracts and
preserve their relationships with customers, suppliers, creditors,
reinsurers, brokers, agents and others having business dealings with
them. Without limiting the generality of the foregoing, and except
as otherwise expressly contemplated by this Agreement, or as set
forth in Section 5.1 of the Disclosure Schedule, or as agreed to in
writing by the Buyer, the Company agrees as to itself and its
Subsidiaries that:
(a) Issuance of Securities. The Company and its Subsidiaries
shall not issue, sell, grant, dispose of, pledge or otherwise
encumber or transfer, or cause, authorize or propose the
issuance, sale, grant, disposition or pledge or other encumbrance or
transfer of (i) any additional shares of capital stock of any class,
or any securities or rights convertible into, exchangeable for, or
evidencing the right to subscribe for any shares of capital stock, or
any rights, warrants, options, calls, commitments or any other
agreements of any character to purchase or acquire any shares of capital
stock or any securities or rights convertible into, exchangeable for,
or evidencing the right to subscribe for, any shares of capital stock
or (ii) any other securities in respect of, in lieu of, or in substi-
tution for, shares outstanding on the date hereof.
(b) Dividends. The Company shall not, nor shall it
permit any Subsidiary to (i) split, combine, subdivide or reclassify
any shares of its capital stock or (ii) declare, set aside for pay-
mended or pay any dividend, or make any other actual, constructive or
deemed distribution in respect of, or redeem or repurchase, any of
its capital stock or otherwise make any payments to Parent in its
capacity as a stockholder, the effect of which, in the case of this
clause (ii), shall be to cause the closing condition contained in
Section 6.2(c) to be incapable of being satisfied.
(c) Restructuring. The Company and its Subsidiaries
shall not adopt a plan of complete or partial liquidation, dissolu-
tion, merger, consolidation, restructuring, recapitalization or other
reorganization of the Company or any Subsidiary.
(d) Governing Documents. The Company and its
Subsidiaries shall not adopt any amendments to their articles of
organization or to the articles or certificates of incorporation, as
the case may be, or their by-laws or other equivalent organizational
documents, or alter through merger, liquidation, reorganization,
restructuring or in any other fashion the corporate structure or
ownership of the Company or any Subsidiary.
(e) Indebtedness. The Company and the Subsidiaries
shall not incur any indebtedness for money borrowed other than in the
ordinary course of business consistent with past practice or
guarantee any such indebtedness of another Person (other than the
Company or any other Subsidiary), enter into any "keep well" or other
agreement to maintain any financial condition of another Person
(other than the Company or any other Subsidiary) or enter into any
arrangement having the economic effect of any of the foregoing.
(f) No Acquisitions. Except in connection with
foreclosure, settlements in lieu of foreclosure or troubled loan or
debt restructurings and the acquisition from time to time of
receivables within the limits set forth in Section 5.1(f) of the
Disclosure Schedule, the Company and the Subsidiaries shall not
acquire or agree to acquire (i) 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 (ii) any assets that,
individually or in the aggregate, are material to the Company and the
Subsidiaries.
(g) No Dispositions. Except in the ordinary course of
business consistent with past practice including the sale of
receivables within the limits set forth in Section 5.1(g) of the
Disclosure Schedule, the Company and the Subsidiaries shall not sell,
lease, license or otherwise encumber or subject to any Lien or
otherwise dispose of any of the properties or assets of the Company
or any Subsidiary.
(h) Capital Expenditures. The Company and the
Subsidiaries shall not make or agree to make any capital expenditures
relating to a single project in excess of two hundred and fifty
thousand dollars ($250,000) or in the aggregate in excess of one
million dollars ($1,000,000).
(i) Contracts. Except in the ordinary course of
business consistent with past practice, the Company and the
Subsidiaries shall not (y) enter into any Material Contract, or (z)
modify, amend or transfer in any material respect or terminate any
Material Contract to which the Company or any Subsidiary is a party
or waive, release or assign any material rights or claims thereunder.
(j) Employee Matters. Except as required by Law or in
the ordinary course of business consistent with past practice or in
accordance with this Agreement, the Company and the Subsidiaries
shall not (i) increase the compensation or fringe benefits of any of
their respective employees, (ii) enter into any Contract with any of
their respective employees, officers or directors regarding his or
her employment, compensation or benefits, or (iii) adopt any plan,
arrangement or policy which would become a Company Plan or amend any
Company Plan to the extent such adoption or amendment would create or
increase any liability or obligation on the part of the Company or
the Subsidiaries.
(k) Approvals. The Company and its subsidiaries shall
not take any action or enter into any agreement that could reasonably
be expected to jeopardize or delay in any material respect the
receipt of any Requisite Regulatory Approval.
(l) Accounting Policies and Procedures. The Company and
its Subsidiaries shall not make any change to their accounting
methods, principles or practices, except as may be required by GAAP,
Regulation S-X promulgated by the SEC, or applicable statutory
accounting principles.
(m) Liens. The Company shall not, and shall not permit
any of its Subsidiaries to, create, incur, suffer to exist or assume
any material Lien on any of their material assets.
(n) Claims. The Company and its Subsidiaries shall not
settle any material claim, action or proceeding or waive, assign or
release any material rights or claims except in either case (i) in
the ordinary course of business consistent with past practice and
(ii) to settle any Litigation which settlement would not (A) impose
either material restrictions on the conduct of the business of the
Company or any Subsidiary or (B) for any individual Litigation item
settled for money, exceed $250,000 in cost to the Company or any
Subsidiary. The Company and the Subsidiaries shall not pay,
discharge or satisfy any Liabilities or obligations (absolute,
accrued, asserted or unasserted, contingent or otherwise), except in
the ordinary course of business consistent with past practice or in
accordance with their terms as in effect of the date hereof.
(o) Interest Rate and Foreign Exchange. Except in the
ordinary course of business consistent with past practice, the
Company and its Subsidiaries shall not materially restructure or
materially change its gap position, through purchases, sales, hedges,
swaps, caps or collars or otherwise or the manner in which any
current hedges are classified or reported.
(p) Representations and Warranties. The Company and the
Subsidiaries shall not (i) take, or agree or commit to take any ac-
tion that would make any representation and warranty of the Company
hereunder that is qualified as to materiality from being untrue or
inaccurate in any respect or any such representation or warranty that
is not so qualified from being untrue or inaccurate in any material
respect on the Closing Date (except for representations and
warranties which speak as of a particular date or period of time,
which need be accurate only as of such date or period of time), or
(ii) omit, or agree to omit, to take any action necessary to prevent
any such representation or warranty that is qualified as to
materiality from being untrue or inaccurate in any respect or any
such representation or warranty that is not so qualified from being
untrue or inaccurate in any material respect on the Closing Date;
provided, however, that the Company and any Subsidiary shall be
permitted to take or omit to take such action which can be cured, and
in fact is cured, at or prior to the Closing Date.
(q) Taxes. The Company and the Subsidiaries shall not
make any Tax election or settle or compromise any material Tax
liability, except in respect of ongoing matters or in the ordinary
course of business consistent with past practice; provided, however,
that the foregoing restrictions shall not apply to any Tax matter
involving a Tax Return filed by the Company as part of any Parent
consolidated group.
(r) No Agreements. The Company and the Subsidiaries
shall not authorize, recommend, propose or announce an intention to
do any of the foregoing, or agree or enter into any Contract to do
any of the foregoing.
5.2 Access to Information.
(a) Upon reasonable notice, the Company shall (and shall
cause each of the Subsidiaries to) afford to officers, employees,
counsel, accountants, financing sources and other authorized repre-
sentatives of the Buyer ("Representatives"), in order to evaluate the
transactions contemplated by this Agreement, reasonable access,
during normal business hours throughout the period prior to the
Closing Date, to its officers, directors, employees, accountants and
other advisors and agents, properties, books, records and Contracts
and, during such period, it shall (and shall cause each of the
Subsidiaries to) furnish promptly to such Representatives all
financial, operating and other data and other information concerning
its business, properties and personnel as may reasonably be requested.
(b) Buyer agrees that it will, and will cause its Repre-
sentatives to, use any information obtained pursuant to this Section
only in connection with the consummation of the transactions contem-
plated by this Agreement.
(c) The Confidentiality Agreement shall apply with respect
to Information, as defined therein, furnished to the
Representatives pursuant to this Section.
(d) As reasonably requested by Buyer, Parent shall cause
Company to provide Buyer with (i) a list of all affiliated groups
within the meaning of Section 1504(a) of the Code of which the
Company or the Subsidiaries have been a member and of which Parent
was not the common parent corporation, (ii) a list of all Tax
allocation or Tax sharing agreements to which the Company and the
Subsidiaries is a party with any Person and any agreements that
provide for the Company and the Subsidiaries to indemnify any Person
with respect to Taxes, (iii) a list of the federal, state and foreign
income Tax Returns and other Tax Returns which are material and that
were filed by the Company and each of the Subsidiaries during the
three year period ending on the date of the latest balance sheet
included with the Financial Statements indicating periods for which
such Tax Returns were filed that are closed under applicable statutes of
limitation, and (iv) copies of all United States federal pro forma
consolidated income Tax Return information of the Company
and the Subsidiaries and all material, state, local, and foreign
income or franchise Tax Returns of the Company and the Subsidiaries
(including only the relevant portions of Parent's Tax Returns that
relate solely to the Company and the Subsidiaries) for all Tax
periods ending on or after the date which is three years prior
to the Closing Date.
(e) Prior to September 1, 1998, the Company shall
provide to Buyer a list of all material services provided to the
Company or any Subsidiary by Parent or any Affiliate of Parent (other
than the Company or any Subsidiary) or pursuant to Contracts between
Parent or any Affiliate of Parent (other than the Company or any
Subsidiary) and third parties. If requested by Buyer, Parent shall
enter into an amendment to the Separation Agreement to provide, to
the extent feasible and not otherwise prohibited by Law, for the
continuation for a reasonable period subsequent to the Closing of any
services included on such list, any such services to be provided on
commercially reasonable terms.
5.3 Other Actions. Parent, the Company, the Buyer and
their respective subsidiaries shall not take any action that would,
or could reasonably be expected to, result in any of the conditions
to the consummation of the Transaction set forth in Article VI not
being satisfied.
5.4 Advice of Changes. Parent, the Company and Buyer
shall promptly advise the other party orally and in writing of (a)
any representation or warranty made by it contained in this Agreement
that is qualified as to materiality becoming untrue or inaccurate in
any respect or any such representation or warranty that is not so
qualified becoming untrue or inaccurate in any material respect, (b)
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 (c) any change or event (i) having, or
which, insofar as can reasonably be foreseen, would have, in the case
of Buyer, a material adverse effect on Buyer, and, in the case of the
Company, a Material Adverse Effect, or (ii) which has resulted, or
which, insofar as can reasonably be foreseen, would result, in any of
the conditions set forth in Article VI not being 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.
5.5 HSR Act Filing. Each party hereto shall, as
promptly as practicable, file, or cause to be filed, any required
notification and report forms under the HSR Act with the Federal
Trade Commission (the "FTC") and the Antitrust Division of the United
States Department of Justice (the "Antitrust Division") in connection
with the transactions contemplated by this Agreement, and will use
their respective commercially reasonable efforts to respond as
promptly as practicable to all inquiries received from the FTC or the
Antitrust Division for additional information or documentation and to
cause the waiting periods under the HSR Act to terminate or expire at
the earliest possible date. Each party hereto will each furnish to
the other such necessary information and reasonable assistance as the
other may reasonably request in connection with its preparation of
necessary filings or submissions to any governmental or regulatory
agency, including, without limitation, any filings necessary under
the provisions of the HSR Act.
5.6 Consents and Reasonable Efforts.
(a) Prior to September 1, 1998, the Company will provide
Buyer with a list of each material License and shall cooperate with
Buyer to determine a list of all Requisite Regulatory Approvals.
(b) Upon the terms and subject to the conditions set
forth in this Agreement, each of the parties hereto agrees to use all
commercially 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 party or parties in doing, all things necessary,
proper or advisable to consummate and make effective the transactions
contemplated by this Agreement as promptly as practicable (it being
recognized that time is of the essence), including, (i) obtaining all
Consents, approvals and agreements of, and giving and making all
notices and filings with, any governmental and regulatory authorities
necessary to authorize, approve or permit the consummation of the
transactions contemplated by this Agreement, including, the Requisite
Regulatory Approvals and (ii) obtain all other approvals and Consents
to the transactions contemplated by this Agreement including (x) the
Consents of third parties required to assign or otherwise transfer to
Buyer the Contracts identified in Section 3.4(a)(v) of the Disclosure
Schedule, and (y) the approvals of third parties to Buyer's
assumption of the Company's obligations under the Contracts
identified in Section 3.4(a)(vi) of the Disclosure Schedule. In
connection with and in furtherance of the foregoing, Buyer agrees to
use its commercially reasonable efforts to file all required
applications with state insurance commissioners or departments on
Form A and all comparable forms in Canada, the U.K., Australia and
New Zealand, not later than thirty (30) days from the date hereof.
Each of the Company and Buyer shall promptly inform the other of any
material communication received by such party or any of its
Affiliates from any regulatory agency regarding any of the
transactions contemplated hereby. Each of the Company and Buyer
shall advise the other promptly of any understandings, undertakings
or agreements which such party or any of its affiliates proposes to
make or enter into with any regulatory agency in connection with the
transactions contemplated hereby. The Company shall be entitled to
notice of and to participate in all hearings of any regulatory agency
held in connection with or relating to any of the transactions
contemplated hereby.
(c) The Company and Buyer shall use all commercially
reasonable efforts to terminate the guarantees by the Company of
obligations of Subsidiaries as identified in Section 5.6(c) of the
Disclosure Schedule (the "Guarantees"), and arrange for Buyer to
assume the obligations of the Company under the Guarantees.
(d) In the event and to the extent that Buyer and the
Company are unable to obtain any required approval or Consent of any
person other than a Governmental Entity to any Contract to be
assigned to Buyer hereunder, (i) the Company shall use commercially
reasonable efforts in cooperation with Buyer to (x) provide or cause
to be provided to Buyer the benefits of any such Contract, (y)
cooperate in any arrangement, reasonable and lawful as to the Company
and Buyer, designed to provide such benefits to Buyer and (z) enforce
for the account of Buyer any rights of the Company arising from such
Contract, including the right to elect to terminate in accordance
with the terms thereof on the advice of Buyer; (ii) Buyer shall use
commercially reasonable efforts to perform the obligations of the
Company arising under such Contract, to the extent that, by reason of
the transactions consummated pursuant to this Agreement, Buyer has
control over the resources necessary to perform such obligations; and
(iii) the consummation of the transactions contemplated hereby shall
not be deemed to have resulted in the assignment of such Contract.
If and when any such approval or Consent shall be obtained or such
Contract shall otherwise become assignable, the Company shall
promptly assign all of its rights and obligations thereunder to Buyer
without the payment of further consideration and Buyer shall, without
the payment of any further consideration therefor, assume such rights
and obligation and the Company shall be relieved of any and all
obligation or liability hereunder.
(e) (i) If, on the Closing Date, there has not been
obtained any Requisite Regulatory Approval with respect to any
Subsidiary in the absence of which the conditions precedent to
the Closing set forth in Article VI would nevertheless be
satisfied, the securities (or other ownership interests)
representing all of the Company's ownership of such Subsidiary
(the "Deferred Securities") shall not be delivered to Buyer at
Closing and, if owned by another Subsidiary, shall be
transferred, by dividend or otherwise, from such Subsidiary to
the Company immediately prior to Closing; provided that, Buyer
may, at its election, proceed to take delivery of the Deferred
Securities if such action would not (i) subject Parent or any
subsidiary or Affiliate of Parent (other than a Subsidiary), or
any officer, director or agent of any such Person, to any
liability or penalty or (ii) be in violation of any Law or
Order applicable to or binding on Parent or any subsidiary or
Affiliate or Parent (other than a Subsidiary), or any officer,
director or agent of any such Person. From and after the
Closing, the parties hereto, at their respective expense, shall
continue to use reasonable best efforts to obtain all Requisite
Regulatory Approvals relating to the Deferred Securities or the
transfer thereof.
(ii) Until such time as any Deferred Securities have been
transferred to Buyer or a third party in
accordance with this Section 5.6(e) (each a "Deferred
Transfer"), the Subsidiaries to which any Deferred Securities
relate shall be managed and operated by the Company in the
manner hereinafter provided from the Closing and until the
respective Deferred Transfer, with all gains, income, excess
cash flow, losses, expenses, Taxes or other items generated
thereby to be for the account of such Subsidiaries and not in
any respect for the account of Parent or its other Affiliates.
From the Closing Date to the date of the Deferred Transfer, the
Company shall hold the Deferred Securities and operate the
Subsidiaries to which the Deferred Securities relate only in
the ordinary course substantially consistent with past practice
and shall use all reasonable efforts to preserve intact such
Subsidiaries' business, keep available such Subsidiaries'
officers and employees, maintain such Subsidiaries' Licenses
and Contracts and preserve such Subsidiaries' relationships
with customers, suppliers, creditors, reinsurers, brokers,
agents and others having business dealings with them.
(iii) Unless otherwise transferred upon
Buyer's instructions in accordance with this Section 5.6(e),
the certificates for the relevant Deferred Securities, duly
endorsed in blank and with all necessary transfer stamps
affixed thereto or such other assignments, deeds, share
transfer forms or other instruments or documents are necessary
in order to effectively transfer the Deferred Securities, will
be delivered to Buyer free and clear of all Liens, without the
payment of any additional consideration by Buyer, on the date
which is no more than five business days after all Requisite
Regulatory Approvals relating to any such Deferred Securities
or the transfer thereof shall have been obtained or on such
other date as the parties may mutually agree.
(iv) The Company shall, on the Buyer's
written instructions at any time after the Closing Date
(subject to applicable Law), or may at any time after 12 months
after the Closing Date, for Buyer's benefit, sell or dispose of
the Deferred Securities or the assets of the Subsidiaries to
which such Deferred Securities relate, on such terms and
conditions as Buyer shall reasonably determine, and remit the
proceeds of such sale to Buyer; provided that the Company shall
have no liability to any transferee of such Deferred Securities
or assets other than for negligence or wilful misconduct.
(v) The Company shall provide Buyer with a
quarterly accounting, as well as an accounting as of the date
of any Deferred Transfer, covering all transactions entered
into on behalf of Buyer from the Closing Date or, if more
recent, the date as of which any previous accounting was
measured, to the date as of which such accounting is measured.
Buyer shall have full access, subject to applicable Law, upon
reasonable notice and during normal business hours to the
properties, officers, employees, books, papers and records of
any Subsidiary to which Deferred Securities relate.
5.7 Further Assurances. On and after the Closing Date,
(a) the parties hereto shall use all reasonable efforts to take or
cause to be taken all appropriate action and do, or cause to be done,
all things necessary or appropriate to consummate and make effective
the transactions contemplated hereby, including the execution of any
additional documents, instruments or conveyances of any kind (not
containing additional representations and warranties) which may be
reasonably necessary or appropriate to carry out any of the
provisions hereof, including putting Buyer in full possession and
operating control of the Assets and causing Buyer to have full
unencumbered ownership of all Shares, and giving effect to the
assumption of Liabilities by Buyer as contemplated by this Agreement
and (b) as requested by Buyer, Parent and the Company shall use all
reasonable best efforts to deliver to the Buyer, originals of all
Contracts, agreements, commitments, books, records, files,
certificates, Licenses, Permits and plans of the Company and the
Subsidiaries in possession of the Company or a Subsidiary and copies
of all documents and records identified in clause (y) of Section 2.1.
5.8 Publicity. The parties will consult with each other
and will mutually agree upon any press releases pertaining to the
purchase of assets under this Agreement and shall not issue any such
press releases prior to such consultation and agreement, except as
may be required by applicable Law or by obligations pursuant to any
listing agreement with any national securities exchange, in which
case the party proposing to issue such press release shall use its
reasonable efforts to consult in good faith with the other party
before issuing any such press releases.
5.9 Indemnification.
(a) Buyer agrees that all rights to indemnification and
exculpation existing in favor of the directors, officers, employees
and agents of the Company and its Subsidiaries in their capacity as
such (the "Company Indemnified Parties"), with respect to matters
occurring at or prior to the Closing Date, under the provisions
existing on the date hereof of the applicable certificate of
incorporation or by-laws or other equivalent organizational documents
shall survive and continue in full force after Closing, and that
after the Closing, Buyer shall assume any obligations of the Company
and Parent in respect thereof as to any claim or claims asserted
after the Closing Date.
(b) Buyer shall cause to be maintained in effect for the
Section 5.9 Indemnified Parties (as defined below) for not less than
six years after the Closing Date policies of directors' and officers'
liability insurance with respect to matters occurring at or prior to
the Closing Date (including, without limitation, the transactions
contemplated by this Agreement) providing substantially the same
coverage and containing terms and conditions which are no less
advantageous, in any material respect, to those currently maintained for
the benefit of the Company's present or former directors, officers,
employees or agents covered by such insurance policies prior to the
Closing Date (the "Section 5.9 Indemnified Parties"); provided,
however, that Buyer may, in lieu of maintaining such existing
insurance as provided above, cause comparable coverage to be provided
under any policy maintained for the benefit of Buyer or any of the
Buyer's subsidiaries, so long as the material terms thereof are no
less advantageous than such existing insurance.
(c) This Section 5.9 is intended to benefit the Company
Indemnified Parties and the Section 5.9 Indemnified Parties and shall
be binding on all successors and assigns of Buyer.
(d) The Company shall use its reasonable efforts to
provide all required or appropriate notices under such existing
insurance with respect to potential claims of which it is aware prior
to the Closing Date.
5.10 Employees.
(a) Buyer shall offer employment on terms substantially
similar in the aggregate to those currently provided by the Company
to all of the employees of the Company whose employment with the
Company has not ended as of the Closing Date (it being understood
that individuals who are on long-term disability as of the Closing
Date shall not be considered to be employed by the Company as of the
Closing Date); provided, however, that no such continued employment
shall be construed to limit the ability of Buyer to terminate any
such employee at any time for any reason. Each employee of the
Company or the Subsidiaries who accepts continued employment and
becomes an employee of Buyer on the Closing Date or continues to be
an employee of a Subsidiary (or, in the case of any employee offered
continued employment upon returning to work from a leave of absence,
on such date as such employee becomes an employee of Buyer) shall be
hereinafter referred to as a "Transferred Employee." Notwithstanding
anything to the contrary, employment of the Transferred Employees
shall be subject to all of Buyer's policies and practices, including
the policy of employment-at-will. Buyer agrees to provide and pay
the severance benefits and other payments as set forth in the
documents identified in Section 3.7 (a)(2) of the Disclosure
Schedule.
(b) On and after the Closing Date, Buyer shall provide
the Transferred Employees with the employee benefits generally
provided to other employees of Buyer, subject to the terms and
conditions of Buyer's plans; provided, however, that Buyer may elect
to provide vacation benefits under the Company's or any Subsidiaries'
plans (and not under Buyer's vacation policies). (At Buyers's
option, welfare plan benefits may be provided in the manner set forth
in the Separation Agreement described in Section 8.4(a).) Company
and the Subsidiaries shall use their best efforts to provide Buyer
prior to the Closing Date with such information as Buyer requires to
implement the provisions of this Section 5.10.
(c) Buyer shall grant for purposes of all of Buyer's
Employee Welfare Benefit Plans and, if applicable, Buyer's vacation
policy past service credit to all Transferred Employees for all
periods of time credited to such Transferred Employees under the
Employee Welfare Benefit Plans and vacation policy maintained for the
Transferred Employees immediately prior to the Closing Date;
provided, however, that Buyer shall not be required to grant past
service credit to Transferred Employees for any purposes under
Buyer's retiree medical plan; and provided, further, that with
respect to Buyer's short-term disability plan, past service credit
shall be granted to Transferred Employees only for purposes of
determining eligibility and not for purposes of determining the
applicable schedule.
(d) With respect to any benefits provided under any
Employee Welfare Benefit Plan, Buyer shall (i) waive all limitations
as to preexisting conditions, exclusions, and waiting periods with
respect to participation and coverage requirements applicable to the
Transferred Employees so that the Transferred Employees may be
eligible to participate in such plans after the Closing Date, other than
limitations or waiting periods that are already in effect with
respect to such employees and that have not been satisfied as of the
Closing Date under any Employee Welfare Benefit Plan maintained for
the Transferred Employees immediately prior to the Closing Date, and
(ii) provide each Transferred Employee with credit for any co-
payments and deductibles paid prior to the Closing Date in satisfying
any applicable deductible or out-of-pocket requirements under any
Employee Welfare Benefit Plans that the Transferred Employees are
eligible to participate in after the Closing Date; provided, however,
that (i) and (ii) above shall apply only to the extent that the
Company, Parent and the Subsidiaries provide Buyer with the
information Buyer requires to administer such provisions.
(e) Buyer shall assume all liability for, and any
obligations under, to the extent any such liability or obligations
pertain to Company Employees, any retiree medical, dental and life
insurance plans maintained for any of the Company Employees
immediately prior to the Closing Date.
(f) As soon as practicable after the Closing Date, Buyer
shall assume and agrees to be the plan sponsor (as the term is
defined in ERISA Section 3(16)(B)) of the Avco Financial Services,
Inc. Profit Sharing Retirement Plan (the "Company's Profit Sharing
Plan"), and accordingly, shall assume responsibility and authority
over the Company's Profit Sharing Plan and the related trust, which
is intended to qualify under Section 401(a) and Section 501(a) of the
Code. Upon such assumption, Buyer shall assume all of the Company's
rights and obligations and shall indemnify Company from any and all
liabilities with respect to the Company's Profit Sharing Plan and the
Company shall be relieved of all such rights and obligations
including liabilities regarding such accrued benefits under the
Company's Profit Sharing Plan.
(g) Buyer shall advise the Transferred Employees, in a
written communication issued to such employees within sixty days
following the date of this Agreement, of Buyer's undertakings set
forth in this Section 5.10. Any general communication prepared by
the Company, Parent or any Subsidiary specifically referencing any
action to be taken by Buyer relating to the subjects covered in
Section 5.10 shall be approved in advance by Buyer, to the extent of
such specific references.
(h) Transferred Employees shall receive credit for their
service with the Company and the Subsidiaries for eligibility and
vesting purposes only under the Associates Savings and Profit-Sharing
Plan; provided, however, that such past service credit shall be
granted under the Associates Savings and Profit-Sharing Plan only to
the extent that such service was recognized and credited to such
Transferred Employees under the Company's Profit Sharing Plan.
Transferred Employees shall not receive credit for their service with
the Company and the Subsidiaries for any purposes under Buyer's tax-
qualified defined benefit pension plan. Parent shall take the action
necessary to vest, to the extent necessary, Transferred Employees who
participate in the Textron Savings Plan in their accrued benefits
under such plan as of the Closing Date.
(i) For a period of two (2) years from and after the
Closing Date, neither Parent nor the Company nor any of the Parent's
subsidiaries shall, without Buyer's consent, solicit or employ the
Transferred Employees.
(j) Nothing contained in this Agreement, whether ex
pressed or implied, is intended to confer upon any employee of the
Company or the Subsidiaries or any Transferred Employee or their
legal representatives, any rights or remedies, including, without
limitation, any rights of employment for any period of any nature or
kind whatsoever under or by reason of this Agreement.
(k) Except for claims or demands relating to the Textron
Savings Plan and any matter subject to indemnification pursuant to
Section 8.1(b)(iii), after Closing, Buyer shall assume, discharge,
pay and be solely liable for and shall indemnify, defend and hold
harmless the Company, Parent and any of their present and former
officers, directors, employees, agents, assigns and representatives
from and against all Losses arising directly or indirectly from any
claims or demands by any person employed by the Company or the
Subsidiaries on or prior to the Closing Date ("Company Employee") or
their family members arising out of the employment by Company or the
Subsidiaries of the Company Employees including any claims relating
to any severance arrangements and any Employee Welfare Benefit Plans.
5.11 Tax Allocation Agreement. Parent and Buyer have
executed as of the date hereof the Tax Allocation Agreement relating
to the allocation of the purchase price, the payment of taxes,
elections under Section 338 of the Code, and related matters.
5.12 Intercompany Transactions. Intercompany transactions
shall be treated in accordance with the Separation Agreement.
At or prior to the Closing, Parent and the Company will obtain the
release of all Liens on assets of the Company or any Subsidiary
securing, and all guarantees by the Company or any Subsidiary of, any
indebtedness of Parent or any of its Affiliates (other than the
Company and the Subsidiaries). Except as otherwise provided in the
Separation Agreement, Parent and any Affiliate of Parent (other than
the Company or a Subsidiary) will (a) cancel any indebtedness for
money borrowed by the Company or any Subsidiary from Parent or any
Affiliate of Parent (other than the Company or any Subsidiary) and
(b) repay any indebtedness for money borrowed by Parent or any
Affiliate of Parent (other than the Company or any Subsidiary) from
the Company or any Subsidiary.
5.13 No Negotiation. Neither the Company, any Subsidiary
nor Parent will, directly or indirectly, through any director,
employee, representative, affiliate or agent of the Company, any
Subsidiary or Parent, or otherwise (i) solicit, initiate, encourage
or assist in the submission of any inquiries, proposals or offers
from any Person or group relating to any acquisition or purchase of
any assets of, or any equity interest in, the Company or any
Subsidiary or any form of recapitalization transaction, merger,
consolidation, business combination, spin-off, liquidation or similar
transaction involving, directly or indirectly, the Company or any
Subsidiary(each an "Acquisition Proposal"), (ii) participate in any
discussions or negotiations regarding any Acquisition Proposal or
furnish to any Person any information concerning the Company,
any Subsidiary or any Acquisition Proposal or (iii) otherwise
cooperate in any way with, or assist or participate in, facilitate or
encourage, any effort or attempt by any other Person to make or
enter into an Acquisition Proposal. If the Company, any Subsidiary or the
Parent receives any inquiry, proposal or offer to enter into any
transaction of any type referred to above, such party agrees to inform the
Buyer promptly of the terms thereof and the identity of the party making
such inquiry, proposal or offer.
5.14 Non-Disclosure. Each of Parent and the Company
agrees that, at all times from and after the date hereof, except as
required by law or by the order of any court or government agency, it
shall keep secret and retain in strictest confidence and shall not,
except with the express prior written consent of Buyer, directly or
indirectly disclose, communicate or divulge to any Person or use for
the benefit of any Person, any Proprietary information (meaning, all
information or data with respect to the conduct or details of the
businesses of the Company or any Subsidiary as of the date hereof and
the Closing Date, including, without limitation, methods of operation,
customers and customer lists, details of contracts with customers,
consultants, suppliers or employees, products, proposed products, former
products, proposed, pending or completed acquisitions of
any company, divisions, product line or other business unit, prices
and pricing policies, fees, costs, plans, designs, technology,
inventions, trade secrets, know-how, software, marketing methods,
policies, plans, personnel, suppliers, competitors, markets or other
specialized information or proprietary matters of the business of the
Company or the Subsidiaries, as of the date hereof and the Closing
Date). The restrictions contained in the preceding sentence shall
not apply to any Proprietary Information that (i) is or becomes a
matter of public knowledge other than through disclosure by Parent or
the Company or (ii) is or becomes known to Parent or the Company from
another source which is under no known obligation of confidentiality
to Buyer.
5.15 Management of Risk Regarding Currency Translations.
At the request of Buyer, the Company or a Subsidiary shall enter into
transactions or arrangements to manage the risk of foreign currency
translations for periods anticipated to be prior to Closing, provided
that any such transactions or arrangements are undertaken at the cost
and risk of, and for the benefit of, Buyer and Buyer shall indemnify,
defend and hold the Company and any Subsidiary harmless from any
liability associated therewith and the Company will make available to
Buyer any benefit associated therewith.
<PAGE>
ARTICLE VI
CONDITIONS TO CONSUMMATION OF THE TRANSACTION
6.1 Conditions to Each Party's Obligations to Complete
the Transaction. The respective obligations of each party to complete
the Transaction are subject to the satisfaction at or prior to
the Closing Date of the following conditions:
(a) Injunction. There shall not be in effect any Law or
Order of a court or governmental or regulatory agency of competent
jurisdiction directing that the transactions contemplated herein not
be consummated as provided herein; provided, however, that, subject
to the terms and provisions herein provided, prior to invoking this
condition each party shall use all reasonable efforts to have any
such Order vacated.
(b) Governmental Filings and Consents. All Requisite
Regulatory Approvals shall have been obtained and be in effect as of
the Closing Date with respect to (i) (x) Finance Subsidiaries incor-
porated in Canada, the United Kingdom and Australia, (y) Finance
Subsidiaries incorporated in the United States (excluding the terri-
tory of Puerto Rico) which, as of December 31, 1997 accounted for at
least 95% of the consolidated receivables of all Finance Subsidiaries
in the United States and (z) Finance Subsidiaries which, as of
December 31, 1997 accounted for at least 90% of the consolidated
receivables of all Finance Subsidiaries, and (ii) (x) Insurance
Subsidiaries incorporated in Canada, the United Kingdom and Australia,
(y) Insurance Subsidiaries incorporated in the United States
which accounted for at least 95% of the revenue of all Insurance
Subsidiaries in the United States for the year ending December 31,
1997, and (z) and Insurance Subsidiaries which accounted for at least
90% of the revenues of all Insurance Subsidiaries for the year ending
December 31, 1997, and the waiting periods under the HSR Act shall
have expired or been terminated; provided, however, that in the event
that either all conditions to Closing set forth in this Article VI
have been satisfied or waived and the Requisite Regulatory Approvals
relating to operations of the Company or its Subsidiaries in the
Commonwealth of Puerto Rico (the "Puerto Rican Regulatory Approvals")
have not been obtained or all conditions to Closing set forth in this
Article VI have been satisfied or waived other than the Puerto Rican
Regulatory Approvals, then at the election of Parent, either the
Puerto Rican Regulatory Approvals shall be a condition to Closing
under this Article VI or the Purchase Price shall be reduced by
$150,000,000 and Buyer and Seller shall be deemed to have waived the
Puerto Rican Regulatory Approvals.
(c) Third Party Consents. Consents of third parties
under the Contracts identified in Section 3.4(a)(v) of the Disclosure
Schedule have been obtained except where the failure to obtain the
Consents either individually or in the aggregate shall not have a
material adverse effect on the ability of the Buyer to conduct the
Company's business (taken as a whole) as conducted by the Company as
of the date hereof.
6.2 Additional Conditions to the Obligation of Buyer.
The obligation of Buyer to complete the Transaction is subject to the
satisfaction at or prior to the Closing Date of the following
conditions, any and all of which may be waived in whole or in part by
Buyer to the extent permitted by applicable law:
(a) Representations and Warranties. For purposes of
this Section 6.2(a), the accuracy of the representations and
warranties of the Company set forth in Article III of this Agreement
shall be assessed as of the date of this Agreement and as of the Closing
Date with the same effect as though all such representations and
warranties had been made on and as of the Closing Date; provided,
however, that representations and warranties which are confined to a
specified date or period of time shall speak only as of such date or
period of time. All representations and warranties set forth in
Article III hereof which are qualified by reference to materiality or
a Material Adverse Effect shall be true and correct and all other
representations and warranties set forth in Article III of this
Agreement shall be true and correct in all material respects.
(b) Performance. Parent and the Company shall have
performed in all material respects all of their respective covenants
and agreements under this Agreement theretofore to be performed.
(c) Adjusted Stockholder's Equity. Adjusted Stock
holder's Equity, as defined below, shall be greater than one billion
two hundred twenty-seven million four hundred thousand dollars
($1,227,400,000). (If Adjusted Stockholder's Equity is less than
$1,227,400,000, this condition can be satisfied by a contribution of
cash to the capital of the Company on or before Closing equal to the
difference between Adjusted Stockholder's Equity and $1,227,400,000.)
For purposes of this Section, the term "Adjusted Stockholder's
Equity" shall mean stockholder's equity (i.e., total consolidated
assets, less total consolidated liabilities) of the Company as set
forth in the Statement computed (i) without regard to (A) any
securities valuation adjustment and any currency translation adjustment
and(B) the Parent Series D Cumulative Preferred Stock and the deferred
Tax liability attributable thereto, (ii) without including any of the
assets referred to in clauses (w), (x) and (y) of Section 2.1 to the
extent such assets were reflected on the Interim Statements (iii) by
adding an amount equal to any accruals or payments made after June
30, 1998 and prior to the Closing Date pursuant to the agreements and
programs identified as item 2 of Section 3.7(a) of the Disclosure
Schedule; and (iv) otherwise taking into account Sections 19(b) and
19(c)of the Tax Allocation Agreement.
(d) Separation Agreement. Each of the Parent and the
Company shall have performed its respective obligations under the
Separation Agreement to be performed by it on or before the Closing.
(e) Officer's Certificates. Buyer shall have received
on the Closing Date certificates dated the Closing Date and executed
by the Chief Executive Officer or the Chief Financial Officer of each
of Parent and the Company certifying to the fulfillment of the
conditions specified in Sections 6.2(a),(b),(c) and (d) hereof.
6.3 Additional Conditions to the Obligation of the
Company. The obligation of Parent and the Company to complete the
Transaction is subject to the satisfaction at or prior to the Closing
Date of the following conditions, any and all of which may be waived
in whole or in part by the Company to the extent permitted by appli
cable law:
(a) Representations and Warranties. For purposes of
this Section 6.3(a), the accuracy of the representations and warran
ties set forth in Article IV of this Agreement shall be assessed as
of the date of this Agreement and as of the Closing Date with the
same effect as though all such representations and warranties had
been made on and as of the Closing Date; provided, however, that
representations and warranties which are confined to a specified date
or period of time shall speak only as of such date or period of time.
All representations and warranties set forth in Article IV of this
Agreement which are qualified by reference to materiality shall be
true and correct and all other representations and warranties set
forth in Article IV of this Agreement shall be true and correct in
all material respects.
(b) Performance. Buyer shall have performed in all
material respects its respective covenants and agreements under this
Agreement theretofore to be performed.
(c) Assumed Obligations. Buyer shall have assumed the
obligations of the Company under the Contracts identified in Section
3.4(a)(vi) of the Disclosure Schedule in a form reasonably satisfac
tory to the Company, the Buyer and the other parties to said Con
tracts.
(d) Officer's Certificate. The Company shall have
received on the Closing Date a certificate dated the Closing Date and
executed by the Chief Executive Officer or the Chief Financial
Officer of the Buyer certifying to the fulfillment of the conditions
specified in Sections 6.3(a), (b) and (c) hereof.
ARTICLE VII
TERMINATION
7.1 Termination by Mutual Consent. This Agreement may
be terminated and the Transaction may be abandoned at any time prior
to the Closing Date, by the mutual written consent of the Company and
the Buyer.
7.2 Termination by Any Party. This Agreement may be
terminated and the Transaction may be abandoned by the Company or the
Buyer if (i) any court of competent jurisdiction in the United States
or some other governmental body or regulatory authority shall have
issued an Order permanently restraining, enjoining or otherwise
prohibiting the Transaction and such Order shall have become final
and nonappealable; provided, however, that the party seeking to
terminate this Agreement pursuant to this clause (i) shall have used
all commercially reasonable efforts to remove such Order, or (ii) the
Transaction shall not have been consummated by May 31, 1999; pro
vided, however, that the right to terminate this Agreement pursuant
to this Section 7.2(ii) shall not be available to any party whose
failure to fulfill any of its material obligations under this Agreement
results in the failure of the Transaction to occur on or prior
to such date.
7.3 Termination by Buyer. This Agreement may be terminated by
Buyer and the Transaction may be abandoned prior to the
Closing Date, (i) in the event of a material breach by Parent or by
the Company of any covenant or agreement contained in this Agreement
which, by its nature, cannot be cured prior to the Closing or which
has not been cured within 30 days after the giving of written notice
to Parent or the Company of such breach, (ii) in the event of an
inaccuracy of any representation or warranty of Parent or the Company
contained in this Agreement which, by its nature, cannot be cured
prior to the Closing or which has not been cured within 30 days after
the giving of written notice to Parent or the Company of such
inaccuracy and which inaccuracy, in either case, would cause the conditions
set forth in Section 6.2(a) not to be satisfied, or (iii) in the
event that any of the conditions precedent to the obligations of
Buyer to consummate the Transaction cannot be satisfied or fulfilled
by the date set forth in Section 7.2(ii) of this Agreement, provided
that the failure of such conditions to be so satisfied shall not be
as a result of Buyer's failure to fulfill its material obligations
under this Agreement.
7.4 Termination by Parent and the Company. This Agree-
ment may be terminated by Parent and the Company and the Transaction
may be abandoned at any time prior to the Closing Date, (i) in the
event of a material breach by Buyer of any covenant or agreement
contained in this Agreement which, by its nature, cannot be cured
prior to the Closing or which has not been cured within 30 days after
the giving of written notice to Buyer of such breach, (ii) in the
event of an inaccuracy of any representation or warranty of Buyer
contained in this Agreement which, by its nature, cannot be cured
prior to the Closing or which has not been cured within 30 days after
the giving of written notice to the Buyer of such inaccuracy and
which inaccuracy, in either case, would cause the conditions set
forth in Section 6.3(a) not to be satisfied, or (iii) in the event
that any of the conditions precedent to the obligations of Parent and
the Company to consummate the Transaction cannot be satisfied or ful-
filled by the date set forth in Section 7.2(ii) of this Agreement,
provided that the failure of such conditions to be so satisfied shall
not be as a result of Parent's or the Company's failure to fulfill
its material obligations under this Agreement.
7.5 Effect of Termination. In the event of termination
of this Agreement and the abandonment of the Transaction pursuant to
this Article VII, written notice thereof shall as promptly as
practicable be given to the other party to this Agreement and this
Agreement shall terminate and the transactions contemplated hereby shall
be abandoned, without further action by any of the parties hereto.
If this Agreement is terminated as provided herein, this Agreement
shall forthwith become void and have no effect except that (i) the
obligations of the Buyer set forth in the Confidentiality Agreement
shall remain in effect, (ii) no party shall be relieved from any
liabilities or damages arising out of a willful breach of any provi-
sion of this Agreement, and (iii) the respective obligations of the
parties set forth in Sections 5.15 and 9.2 shall remain in effect.
ARTICLE VIII
OBLIGATIONS AFTER CLOSING
8.1 Survival of Representations and Covenants; Indemnification.
(a)Except as provided in this Section 8.1, the respective representa-
tions, warranties, covenants and agreements of the parties made herein shall
not survive beyond the earlier of termination of this Agreement or the
Closing; provided, however that this Section shall not limit any covenant or
agreement of the parties hereto which by its express terms contemplates per-
formance after the Closing. The representations and warranties contained in
Section 3.2(b),(c) and (d) of this Agreement shall survive the Closing until
June 30, 2001 and the representations and warranties contained in Section 3.5
and Section 3.7(b) of this Agreement shall survive the Closing until June 30,
2000. All other representations and warranties of Parent and the Company
contained in this Agreement shall not survive the Closing. The provisions of
Section 5.15 and of Section 7.5 shall survive the Closing or any termination
of this Agreement. The provisions of this Section 8.1 in no way limit the
undertakings set forth in the Tax Allocation Agreement, except as expressly
set forth in Section 8.1(c)(i) with respect to the three billion dollar cap
described therein.
(b) Agreement to Indemnify.
Subject to the other provisions of this Section 8.1, Parent and the
Company (individually or collectively, the "Indemnifying Party") hereby agree
jointly and severally to defend, indemnify and hold harmless Buyer and the
Subsidiaries (individually or collectively, the "Indemnified Party") from and
against and in respect of any and all Losses incurred by the Indemnified Party
which may be imposed on, sustained, incurred or suffered by or assessed
against the Indemnified Party, directly or indirectly, as a result of or
relating to or to the extent arising out of the following:
(i)any breach of the representations or warranties of Parent or the
Company contained in Sections 3.2(b),(c) and (d) and Section 3.5, with
any such breach determined as if any such representations or warranties
were given as of the Closing Date; provided, however, the ability of
Buyer to recover hereunder in respect of a breach of Sections 3.2(b),(c)
or (d)hereof shall not be deemed qualified by any references to
materiality contained in such representation and any breach thereof
shall be determined without regard to whether such breach constitutes a
Material Adverse Effect; provided, further, however, that with respect
to the representations and warranties contained in Section 3.5, such
indemnification shall not cover any Losses to the extent that such
Losses are a result of any actions taken by Buyer or reflect changes
implemented to reflect accounting policies or practices of Buyer;
(ii)any breach of the representations or warranties of Parent or the
Company contained in Section 3.7(b), provided, however, that (x) the
ability of Buyer to recover hereunder in respect of a breach of the
representation and warranty included in Section 3.7(b)(i) shall be
determined without regard to whether the related liabilities or
obligations have resulted in or are reasonably likely to have a Material
Adverse Effect and (y) solely for purposes of the indemnification
provided by this clause (b)(ii), a breach of the representations and
warranties included in Section 3.7(b)(ii) shall be determined as if the
reference in Section 3.7(b)(ii) to $325 million was $100 million, and
the Indemnified Party shall be indemnified, subject to the other
provisions of this Section 8.1, including subsection (c) hereof, only to
the extent of Losses in excess of $100 million (all numbers referenced
in this clause(ii) to be determined before giving effect to any related
reduction in any Indemnified Party's Taxes); provided, further however,
that no indemnification shall be provided hereunder with respect to any
Losses to the extent that such Losses are a result of any actions taken
by Buyer or reflect changes implemented to reflect accounting policies
or practices of Buyer; and
(iii)with respect to any defined benefit plan of an ERISA Affiliate of
Parent, (x) any accumulated funding deficiency within the meaning of
Section 412 of the Code or Section 302 of ERISA and (y) any withdrawal
liability relating to a multi-employer pension plan.
(c) Limitation of Liability.
The obligations and liabilities of Parent and Company under this Section
8.1 shall be subject to the following additional limitations:
(i)No indemnification shall be required to be made by the Indemnifying
Party to the Indemnified Party with respect to the Transaction
contemplated hereby except (x) to the extent that the aggregate amount
of Losses previously incurred by the Indemnified Party to which the
Indemnified Party would otherwise be entitled to indemnification
pursuant to Section 8.1(b) exceeds two hundred and twenty-five million
dollars ($225,000,000) before giving effect to any related reduction in
any Indemnified Party's Taxes (the "Deductible") and (y) thereafter,
only to the extent of such excess; provided, however, that the
Deductible shall not apply in respect of any Claim pursuant to Section
8.1(b)(iii) above; and provided, further, however, that the Indemnifying
Party's obligation and liability hereunder shall terminate at such time
as the Indemnifying Party shall have paid three billion dollars
($3,000,000,000) before giving effect to any related reduction in any
Indemnified Party's Taxes hereunder, it being understood that all
payments, if any, made pursuant to the Tax Allocation Agreement shall be
included for purposes of calculating this cap;
(ii)the Indemnifying Party shall not be liable with respect to any
Losses unless the Indemnified Party has (x) delivered the notice of
Claim in respect of such Loss required by Section 8.1(d) below and (y)
such notice of Claim is received by the Indemnifying Party (i) on or
prior to June 30, 2001, with respect to Claims relating to a breach of
the representations or warranties of Parent or the Company included in
Sections 3.2(b),(c) or (d) hereof, (ii) on or prior to the fifth
anniversary of the Closing Date with respect to claims pursuant to
Section 8.1(b)(iii) and (iii) on or prior to June 30, 2000 with respect
to all other Claims as to which indemnification is sought hereunder.
(iii)Notwithstanding anything in this Section 8.1 to the contrary, the
Indemnifying Party shall not be liable for any Losses arising out of any
matter to the extent that the Losses with respect to such matter have
been mitigated as a result of having been reflected in the Statement or
subject to a Purchase Price Adjustment pursuant to Section 2.3 (provided
that the fact that any such matter has been reflected in such Statement
or subject to such Adjustment shall not determine whether or to what
extent any related Losses have been mitigated).
(d) Notice of Claim.
If the Indemnified Party shall become aware of any claim,
proceeding or other matter (a "Claim") which may give rise to a Loss
that will be taken into account for purposes of calculating whether
the Indemnifying Party's indemnification obligation arises pursuant
to Section 8.1(c)(i) above, the Indemnified Party shall promptly give
notice thereof to the Indemnifying Party. Such notice shall specify
whether the Claim arises as a result of a Claim by a Person against
the Indemnified Party (a "Third Party Claim") or whether the Claim
does not so arise (a "Direct Claim"), and shall also specify with
reasonable particularity (to the extent that the information is
available) the factual basis for the Claim and the amount of the
Claim, if known.
If, through the fault of the Indemnified Party, the
Indemnifying Party does not receive notice of any Claim in
time to contest effectively the determination of any Loss
susceptible of being contested, the Indemnifying Party
shall be entitled to set off against the amount claimed
by the Indemnified Party (to be applied to the Deductible set forth in
Section 8.1(c) or, if the Deductible has been satisfied to be paid to the
Indemnified Party) the amount of any Losses incurred by the
Indemnifying Party resulting from the Indemnified Party's
failure to give such notice on a timely basis.
(e) Direct Claims.
With respect to any Direct Claim, following receipt of notice
from the Indemnified Party of the Claim, the Indemnifying Party shall
have 60 days to make such investigation of the Claim as is considered
necessary or desirable. For the purpose of such investigation, the
Indemnified Party shall make available to the Indemnifying Party the
information relied upon by the Indemnified Party to substantiate the
Claim, together with all such other information as the Indemnifying
Party may reasonably request. If both parties agree at or prior to
the expiration of such 60-day period (or any mutually agreed upon
extension thereof) to the validity and amount of such Claim, they
shall agree to apply it to the Deductible, or if the Deductible has
been satisfied, the Indemnifying Party shall immediately pay to the
Indemnified Party the full agreed upon amount of the Claim, failing
which the matter shall be referred to binding arbitration in such
manner as the parties may agree or shall be determined by a court of
competent jurisdiction in the State of New York.
(f) Third Party Claims.
(i) With respect to any Third Party Claims,
the Indemnifying Party shall have the right, at its expense and
at its election, to assume control of the negotiation,
settlement and defense of the Claim through counsel of its choice.
In such event, the Indemnifying Party shall reimburse the
Indemnified Party for all the Indemnified Party's reasonable
out-of-pocket expenses as a result of such assumption. The
election of the Indemnifying Party to assume such control shall
be made within 60 days of receipt of notice of the Third Party
Claim, failing which the Indemnifying Party shall be deemed to
have elected not to do so. If the Indemnifying Party elects to
assume such control, the Indemnified Party shall have the right
to be informed and consulted with respect to the negotiation,
settlement or defenses of such Third Party Claim and to retain
counsel to act on its behalf, but the fees and disbursements of
such counsel shall be paid by the Indemnified Party unless the
Indemnifying Party consents to the retention of such counsel or
unless the named parties to any action or proceeding include
both the Indemnifying Party and the Indemnified Party and a
representation of both the Indemnifying Party and the
Indemnified Party by the same counsel would be inappropriate due to
the actual or potential differing interests between them (such
as the availability of different defenses). If the
Indemnifying Party, having elected to assume such control,
thereafter fails to defend the Third Party Claim within a
reasonable time, the Indemnified Party shall be entitled to
assume such control, and the Indemnifying Party shall be
bound by the results obtained by the Indemnified Party with
respect to the Third Party Claim. If any Third Party Claim
is of a nature such that the Indemnified party is
required by applicable Law to make a payment to any Person
(a "Third Party") with respect to the Third Party
Claim before the completion of settlement negotiations or
related legal proceedings, the Indemnified Party may
make such payment and the Indemnifying Party shall, subject to
Section 8.1(b) and Section 8.1(c) above, forthwith after demand
by the Indemnified Party, reimburse the Indemnified Party for
such payment. If the amount of any liability of the Indemnified
Party under the Third Party Claim in respect of which such
payment was made, as finally determined, is less than the
amount which was paid by the Indemnifying Party to the
Indemnified Party, the Indemnified party shall, promptly after receipt
of the difference from the Third Party, pay the amount of such
difference to the Indemnifying Party.
(ii) If the Indemnifying Party fails to assume control of
the defense of any Third Party Claim, the
Indemnified Party shall have the exclusive right to consent,
settle or pay the amount claimed. Whether or not the Indemnifying
Party assumes control of the negotiation, settlement
or defenses of any Third Party Claim, the Indemnifying Party shall
not settle any Third Party Claim without the written consent of
the Indemnified Party, which consent shall not be unreasonably
withheld or delayed; but then the liability of the Indemnifying
Party shall be limited to the proposed settlement amount if any
such consent is not obtained for any reason.
(iii) The Indemnified Party and the Indemnifying Party shall
cooperate fully with each other with respect
to Third Party Claims, and, regardless of which party has
control thereof as provided for herein, shall keep each other
fully advised with respect thereto (including supplying copies
of all relevant documentation promptly as it becomes avail
able).
8.2 Guarantees. If any Guarantee shall be in effect
after Closing, Buyer shall pay or cause to be paid all debt covered
by the Guarantee as the same shall become due and payable, and shall
indemnify and hold the Company harmless with respect to any payments
made by Company pursuant to any Guarantee provided that such payments
have been made in good faith.
8.3 Name Changes.
(a) No later than three months after the Closing Date,
Buyer will change the names of the following corporations and cease
using the names Textron and TFC in any manner: Textron Finance
Company Limited (U.K.), Textron Finance Compagnie, S.A. (France),
Textron Finance Compagnie, SAS, TFC Location S.A. (France), Textron
Financial Corporation (Canada), Textron Finance Corporation (Australia)
Pty. Ltd., and Textron Australia Deposits Pty. Ltd.
(b) No later than two business days after the Closing
Date the Company will change its name.
8.4 Other Matters.
(a) Parent and Buyer have executed as of the date
hereof, a Separation Agreement covering the treatment of services
provided to the Company and certain of the Subsidiaries by Parent,
and Contracts between Parent and third parties under which goods or
services are provided to the Company and certain of the Subsidiaries,
and other intercompany matters.
(b) Buyer shall indemnify, defend, and hold harmless the
Company and Parent and their present and former officers, directors,
employees, agents, assigns and representatives following the Closing
from all Losses resulting from the Assets and Liabilities transferred
to Buyer pursuant to this Agreement.
8.5 Non-Competition. Except for any Subsidiaries
retained by the Company because a Requisite Regulatory Approval was
not obtained prior to the Closing Date, Parent agrees that for a
period of two (2) years from the Closing Date hereof it will not and
it will cause its subsidiaries not to (a) engage in consumer finance
lending which has as its primary purpose direct general consumer
lending, except as otherwise contemplated by this Agreement or (b)
specifically target customers of the Company or its Subsidiaries as
of the Closing Date for financial services or insurance products.
Except for clause (b) in the immediately preceding sentence, nothing
herein shall be interpreted, however, to restrict Parent or its
subsidiaries from engaging in consumer lending and leasing (secured
or unsecured) which is related to the purchase, financing or
refinancing of (i) timeshare intervals, whether fee simple, fractional,
right to use, membership, or any similar resort industry description;
(ii) memberships of any kind or classification in golf courses,
country clubs, boating clubs, or yacht clubs, or other clubs, resorts
or any organizations related to any of the foregoing; (iii) aircraft,
aircraft engines, avionics or flight related equipment; (iv) products
manufactured, distributed or sold by Parent or any entity which
formerly or may in the future be a commercial finance customer of
Parent or its subsidiaries, whether or not such products are also
financed by Parent or its subsidiaries under a flooring or wholesale
arrangement, (v) residential real estate, improved or unimproved; or
(vi) premiums for any insurance products. It is expressly understood
that Parent and its subsidiaries are in the global commercial finance
and insurance business, and in the business of purchasing and/or
servicing consumer notes, invoices, accounts, mortgages, security
instruments and other paper, and nothing herein shall be interpreted
as restricting Parent's or its subsidiaries' right to continue in
those businesses. It is also expressly understood that Parent and
its subsidiaries routinely accept the pledge of consumer notes,
invoices, accounts, mortgages, security instruments and other paper
in connection with global commercial finance transactions and nothing
herein shall be interpreted as restricting Parent's or its
subsidiaries' continued right to accept such security.
ARTICLE IX
MISCELLANEOUS AND GENERAL
9.1 Interpretation.
(a) When a reference is made in this Agreement to a
section or article, such reference shall be to a section or article
of this Agreement unless otherwise clearly indicated to the contrary.
(b) Whenever the words "include", "includes" or "including"
are used in this Agreement they shall be deemed to be followed
by the words "without limitation."
(c) The words "hereof", "hereby" "herein" and "herewith"
and words of similar import shall, unless otherwise stated, be
construed to refer to this Agreement as a whole and not to any
particular provision of this Agreement, and article, section,
paragraph, exhibit and schedule references are to the articles,
sections, paragraphs, exhibits and schedules of this Agreement
unless otherwise specified.
(d) The plural of any defined term shall have a meaning
correlative to such defined term, and words denoting any gender shall
include all genders. Where a word or phrase is defined herein, each
of its other grammatical forms shall have a corresponding meaning.
(e) A reference to any party to this Agreement or any
other agreement or document shall include such party's permitted
successors and permitted assigns.
(f) A reference to any legislation or to any provision
of any legislation shall include any modification or re-enactment
thereof, any legislative provision substituted therefor and all
regulations and statutory instruments issued thereunder or pursuant
thereto.
(g) The parties have participated jointly in the negotiation
and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be
construed as if drafted jointly by the parties, and no presumption or
burden of proof shall arise favoring or disfavoring any party by
virtue of the authorship of any provisions of this Agreement.
9.2 Payment of Expenses and Other Payments. Whether or
not the Transaction shall be consummated and except as otherwise
provided in this Agreement, each party hereto shall pay its own
expenses incident to preparing for, entering into and carrying out this
Agreement and the consummation of the transactions contemplated hereby;
provided, however, that if the transaction is consummated, all
expenses of the Company and the Subsidiaries shall be paid by Parent.
9.3 Amendment. This Agreement may be amended only by a
written agreement signed by all parties to this Agreement.
9.4 Waiver and Extension. At any time prior to the
Closing Date, the parties may (a) extend the time for the performance
of any of the obligations or other acts of the other parties hereto,
(b) waive any inaccuracies in the representations and warranties
contained herein or in any document delivered pursuant hereto or (c)
except to the extent prohibited by Law, waive compliance with any of
the agreements or conditions contained herein. Any agreement on the
part of a party hereto to any such extension or waiver shall be valid
only if set forth in an instrument in writing signed on behalf of
such party. The failure of any party at any time or times to require
performance of any provision hereof shall in no manner affect the
right of such party at a later time to enforce the same or any other
provision of this Agreement. No waiver of any condition or of the
breach of any term contained in this Agreement in one or more in
stances shall be deemed to be or construed as a further or continuing
waiver or such condition or breach or a waiver of any condition or of
the breach of any other term of this Agreement.
9.5 Counterparts. For the convenience of the parties
hereto, this Agreement may be executed in any number of counterparts,
each such counterpart being deemed to be an original instrument, and
all such counterparts shall together constitute the same agreement.
9.6 Governing Law. This Agreement shall be governed by,
and construed in accordance with, the Laws of the State of New York
without giving effect to the principles of conflicts of law thereof.
9.7 Notices. Any notice, request, instruction or other
document to be given hereunder by any party to another party shall be
in writing and shall be deemed given when delivered personally, upon
receipt of a transmission confirmation (with a confirming copy sent
by overnight courier) if sent by facsimile or like transmission, and
on the next business day when sent by Federal Express, United Parcel
Service, Express Mail, or other reputable overnight courier, as
follows:
(a) If to the Company, to
Avco Financial Services, Inc.
c/o Textron Inc.
40 Westminster Street
Providence, Rhode Island 02903
Attention: Stephen L. Key
(401) 421-2800 (telephone)
(401) 457-2418 (facsimile)
with a copy to:
Textron Inc.
40 Westminster Street
Providence, Rhode Island 02903
Attention: Wayne W. Juchatz
(401) 421-2800 (telephone)
(401) 457-2418 (facsimile)
Skadden, Arps, Slate, Meagher & Flom LLP
One Beacon Street
Boston, MA 02108
Attention: Margaret A. Brown, Esq.
(617) 573-4800 (telephone)
(617) 573-4822 (facsimile)
(b) If to Parent, to
Textron Inc.
40 Westminster Street
Providence, Rhode Island 02903
Attention: Stephen L. Key
(401) 421-2800 (telephone)
(401) 457-2418 (facsimile)
with a copy to:
Skadden, Arps, Slate, Meagher & Flom LLP
One Beacon Street
Boston, MA 02108
Attention: Margaret A. Brown, Esq.
(617) 573-4800 (telephone)
(617) 573-4822 (facsimile)
(c) If to Buyer, to
250 East Carpenter Freeway
Irving, Texas 75062
Attention: President
(972) 652-3333 (telephone)
(972) 652-7095 (facsimile)
with a copy to:
250 East Carpenter Freeway
Irving, Texas 75062
Attention: General Counsel
(972) 652-4449 (telephone)
(972) 652-5798 (facsimile)
or to such other persons or addresses as may be designated in writing
by the party to receive such notice. Nothing in this section shall
be deemed to constitute consent to the manner and address for service
of process in connection with any legal proceeding (including liti-
gation arising out of or in connection with this Agreement), which
service shall be effected as required by applicable Law.
9.8 Entire Agreement; Assignment. This Agreement and
the Confidentiality Agreement (a) constitute the entire agreement
among the parties with respect to the subject matter hereof and
supersede all other prior agreements and understandings, both written
and oral, among the parties or any of them with respect to the
subject matter hereof and (b) shall not be assigned by operation of
law or otherwise without the prior written consent of the other party
hereto; provided, however, that (i) the Buyer may assign its rights,
in whole or in part, to one or more of its Affiliates and such
Affiliate or Affiliates may assume Buyer's obligations hereunder and
(ii) the capital stock of any Subsidiary may be purchased by any
subsidiary of Buyer, provided that in the case of each of clauses (i)
and (ii) Buyer shall remain jointly and severally liable hereunder
with such Affiliate, and provided further that no such assignment or
purchase by any subsidiary of Buyer may be made, if the effect
thereof would be to (x) result in an economic cost to Parent or its
Affiliates, (y) create any additional financial risk to the Company
or Parent under any document relating to indebtedness for borrowed
money or any Guarantee, or (z) delay or adversely affect the satis
faction of the conditions set forth in Article VI.
9.9 Parties in Interest. This Agreement shall be bind-
ing upon and inure solely to the benefit of each party hereto and
their respective successors and assigns and to the benefit of any
person or entity which is indemnified under this Agreement. Nothing
in this Agreement, express or implied, is intended to or shall confer
upon any other person any rights, benefits or remedies of any nature
whatsoever under or by reason of this Agreement.
9.10 Validity. The invalidity or unenforceability of
any provision of this Agreement shall not affect the validity or
enforceability of any other provisions of this Agreement, each of
which shall remain in full force and effect.
9.11 Captions. The article, section and paragraph
captions herein are for convenience of reference only, do not consti
tute part of this Agreement and shall not be deemed to limit or
otherwise affect any of the provisions hereof.
9.12 Bulk Transfer Laws. The Buyer acknowledges that
the Company will not comply with the provisions of any bulk transfer
laws of any jurisdiction in connection with the transactions contem
plated by the Agreement.
9.13 Transfer, Sales and Stamp Taxes. All transfer,
sales and stamp taxes and similar charges, fees and assessments
incurred in connection with this Agreement and the transactions
contemplated hereby shall be borne one-half by the Company and one-
half by Buyer. The Buyer shall prepare and file (or cause to be
filed), to the extent required by, or permissible under, applicable
Law, all necessary Tax Returns and other documentation with respect
to all such transfer, sales and stamp taxes and similar charges, fees
and assessments, and, if required by applicable Law, the Company
shall join in the execution of any such Tax Returns and other docu
mentation as reasonably requested by Buyer.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective duly authorized officers as
of the date first above written.
TEXTRON INC.
By: /s/ Stephen L. Key
Name: Stephen L. Key
Title: Executive Vice President and
Chief Financial Officer
AVCO FINANCIAL SERVICES, INC.
By: /s/ Stephen L. Key
Name: Stephen L. Key
Title: Vice President
ASSOCIATES FIRST CAPITAL
CORPORATION
By: /s/ Roy A. Guthrie
Name: Roy A. Guthrie
Title: Senior Executive
Vice President,
Chief Financial Officer
<PAGE>
THE ASSOCIATES.
NEWS
FOR IMMEDIATE RELEASE
THE ASSOCIATES COMPLETES ACQUISITION
OF AVCO FINANCIAL SERVICES
DALLAS, Jan. 6, 1999 - Associates First Capital Corporation (NYSE:AFS) today
announced it has completed its acquisition of Avco Financial Services, Inc.
for $3.9 billion. The Associates agreed in August 1998 to acquire Avco, a
wholly owned subsidiary of Textron Inc. (NYSE:TXT).
"This is an important day for both organizations, as Avco joins The Associates
portfolio of businesses," said Keith W. Hughes, chairman and chief executive
officer of The Associates. "This acquisition is an excellent strategic fit,
bringing together two well-respected brands, solid financial services
products, a strong branch network and combined operations in 16 countries. We
believe this acquisition will enable us to continue to lead the industry and
raise customer service standards everywhere we do business."
As a result of this transaction, The Associates has begun a comprehensive
review of affected operations and will announce final plans for integrating
the businesses later in the first quarter 1999. The review will focus on
overlapping operations in the U.S. and 15 international countries served by
both organizations.
According to Hughes, the combined organization worldwide will have more than
22 million customers, 35,000 employees and managed receivables of about $79
billion. The operations of the two organizations will be fully integrated
during 1999.
- -more-
<PAGE>
THE ASSOCIATES COMPLETES ACQUISITION OF AVCO FINANCIAL SERVICES
January 6, 1999
Page 2
Avco is a global, diversified financial services company with approximately
$8.9 billion in assets, 8,000 employees, 1,265 branches and 2.5 million
customers. Its product offerings include real estate, retail sales finance
and consumer loans, equipment, inventory and vendor finance, and credit and
collateral-related insurance. Avco has the fourth largest U.S. consumer
branch network and a significant international presence with offices in
Canada, Puerto Rico, Australia, the United Kingdom, New Zealand, France, Hong
Kong, Spain, Ireland, India and Sweden.
Associates First Capital Corporation, established in 1918, is a leading
diversified finance company providing consumer and commercial finance,
leasing, insurance and related services worldwide. The Associates has
operations in the U.S., Canada, the United Kingdom, Japan, Puerto Rico,
Mexico, Costa Rica and Taiwan. Headquartered in Dallas, it is one of the
nation's 100 largest companies, based on total market capitalization.
# # #
Contacts:
Media: (972) 652-4522
Securities Analysts: (972) 652-7294
[email protected]
Shareholders: 1-800-NYSE-AFS
