Exhibit 99.2
EXECUTION COPY
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SECURITIES PURCHASE AGREEMENT
dated as of December 20, 2000
by and among
THE FINOVA GROUP INC.
and
LEUCADIA NATIONAL CORPORATION
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NY2:\991489\06\L91D06!.DOC\76830.0246
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TABLE OF CONTENTS
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ARTICLE I DEFINITIONS....................................................................................................1
1.1 Definitions..........................................................................................1
1.2 Terms Defined Elsewhere in the Agreement.............................................................7
1.3 Other Definitional Provisions........................................................................8
ARTICLE II PURCHASE OF SERIES B PREFERRED STOCK AND WARRANTS..............................................................9
2.1 Authorization of Issue...............................................................................9
2.2 Purchase of Series B Preferred Stock and Warrant.....................................................9
2.3 Closing..............................................................................................9
ARTICLE III PURCHASER'S REPRESENTATIONS..................................................................................10
3.1 Corporate Existence.................................................................................10
3.2 Corporate Power; Authorization; Enforceable Obligations.............................................10
3.3 Investment Intention................................................................................10
3.4 Accredited Investor.................................................................................11
3.5 Sufficiency of Funds................................................................................11
ARTICLE IV COMPANY'S REPRESENTATIONS AND WARRANTIES......................................................................11
4.1 Authorized and Outstanding Shares of Capital Stock; Options and Other Rights to
Acquire Capital Stock..............................................................................11
4.2 Authorization and Issuance of the Securities........................................................12
4.3 Securities Laws.....................................................................................12
4.4 Corporate Existence; Compliance with Law............................................................13
4.5 Subsidiaries........................................................................................13
4.6 Corporate Power; Authorization; Enforceable Obligations.............................................13
4.7 SEC Documents.......................................................................................14
4.8 Financial Statements................................................................................14
4.9 No Undisclosed Liabilities..........................................................................14
4.10 Absence of Certain Changes..........................................................................15
4.11 Ownership of Property...............................................................................16
4.12 Material Contracts..................................................................................17
4.13 Environmental Matters...............................................................................17
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4.14 Labor Matters.......................................................................................20
4.15 Taxes...............................................................................................20
4.16 No Litigation.......................................................................................21
4.17 Brokers.............................................................................................21
4.18 [Intentionally left blank]..........................................................................22
4.19 Intellectual Property...............................................................................22
4.20 ERISA...............................................................................................22
4.21 Insurance...........................................................................................25
4.22 Related Party Transactions..........................................................................25
4.23 Opinions of Financial Advisor.......................................................................25
4.24 Takeover Statutes...................................................................................25
4.25 Amendment to the Company Rights Agreement...........................................................26
4.26 Refinancing Representations.........................................................................26
4.27 Financing Contracts; Portfolio Property.............................................................26
4.28 Full Disclosure.....................................................................................27
ARTICLE V COVENANTS RELATING TO CONDUCT OF BUSINESS.....................................................................27
5.1 Conduct of Business of Company......................................................................27
5.2 Access to Information...............................................................................29
ARTICLE VI ADDITIONAL AGREEMENTS.........................................................................................30
6.1 Commercially Reasonable Efforts.....................................................................30
6.2 Supplemental Disclosure.............................................................................30
6.3 Announcements.......................................................................................30
6.4 No Solicitation.....................................................................................31
6.5 Refinancing of Existing Company Bank Debt...........................................................32
6.6 Certificate of Designations.........................................................................32
6.7 Board Representation................................................................................32
6.8 Management Fee......................................................................................33
6.9 Reservation of Common Stock.........................................................................33
6.10 Legends.............................................................................................33
6.11 Rights Offering.....................................................................................34
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6.12 Retention Program...................................................................................35
6.13 Alternative Transaction.............................................................................35
6.14 Sharing Distribution................................................................................36
6.15 Taxes...............................................................................................40
6.16 Merger or Consolidation, Liquidation or Dissolution.................................................40
6.17 Further Assurances..................................................................................40
ARTICLE VII CONDITIONS PRECEDENT.........................................................................................40
7.1 Conditions to Each Party's Obligations..............................................................40
7.2 Conditions to Obligations of Purchaser..............................................................41
7.3 Conditions to Obligations of Company................................................................42
ARTICLE VIII TERMINATION AND AMENDMENT...................................................................................42
8.1 Voluntary Termination...............................................................................42
8.2 Effect of Termination...............................................................................44
8.3 Fees and Expenses...................................................................................44
8.4 Break-Up Fee........................................................................................44
8.5 Amendment...........................................................................................45
8.6 Extension; Waiver...................................................................................45
ARTICLE IX INDEMNIFICATION...............................................................................................45
9.1 Survival of Representation and Warranties...........................................................45
9.2 Indemnification.....................................................................................45
9.3 Procedures..........................................................................................46
ARTICLE X MISCELLANEOUS.................................................................................................46
10.1 Notices.............................................................................................46
10.2 Binding Effect; Benefits............................................................................47
10.3 Complete Agreement..................................................................................48
10.4 Assignability.......................................................................................48
10.5 Remedies............................................................................................48
10.6 Section and Other Headings..........................................................................48
10.7 Severability........................................................................................48
10.8 Counterparts........................................................................................49
10.9 Governing Law; Waiver of Jury Trial.................................................................49
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TABLE OF CONTENTS
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Exhibit A Certificate of Designation - Convertible Preferred Stock
Exhibit B Warrant
Exhibit C Registration Rights Agreement
Exhibit D Management Agreement
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EXECUTION COPY
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SECURITIES PURCHASE AGREEMENT
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SECURITIES PURCHASE AGREEMENT, dated as of December 20,
2000, by and among The FINOVA Group Inc., a Delaware corporation having an
office at 4800 North Scottsdale Road, Scottsdale, Arizona 85251-7623
("Company"), and Leucadia National Corporation, a New York corporation having an
office at 315 Park Avenue South, New York, New York 10010 ("Purchaser").
W I T N E S S E T H :
- - - - - - - - - -
WHEREAS, Company has agreed to issue and sell to Purchaser,
and Purchaser has agreed to purchase from Company, upon the terms and conditions
hereinafter provided, (i) one million shares of Company's Series B Convertible
Preferred Stock, $0.01 par value per share, the terms, preferences and
limitations of which are set forth in the Certificate of Designation attached as
Exhibit A hereto (the "Series B Preferred Stock"), and (ii) a ten-year warrant
to purchase shares of Company's Common Stock, $0.01 par value per share ("Common
Stock"), substantially in the form attached as Exhibit B hereto; and
WHEREAS, as soon as practicable following the purchase of
the Series B Preferred Stock by Purchaser, Company will issue up to an
additional six hundred thousand shares of Company's Series C Convertible
Preferred Stock, $0.01 par value per share, the terms, preferences and
limitations of which are set forth in the Certificate of Designation attached as
Exhibit A hereto and which are identical to those of the Series B Preferred
Stock (the "Series C Preferred Stock" and together with the Series B Preferred
Stock, the "Convertible Preferred Stock"), upon exercise of rights to be issued
by Company to its existing holders of Common Stock, and Purchaser has agreed to
act as a standby purchaser of up to four hundred thousand shares of Series C
Preferred Stock that are not subscribed to by holders of Common Stock or their
transferees in such rights offering.
NOW, THEREFORE, in consideration of the premises and the
covenants hereinafter contained, it is agreed as follows:
ARTICLE I
DEFINITIONS
1.1 Definitions. For purposes of this Agreement, the
following terms shall have the meanings set forth below:
"Acquisition Proposal" shall mean any proposal or offer of
any Person, other than a proposal or offer by Purchaser or any of its
Affiliates, relating to (i) any merger, consolidation, share exchange,
recapitalization, business combination or other similar transaction involving
Company, (ii) any sale, lease or exchange, mortgage, pledge, transfer or other
disposition of 20% or more of the assets of Company, in a single transaction or
in a series of transactions or (iii) any tender offer, exchange offer for
securities of Company or any purchase or other acquisition of beneficial
ownership of 20% or more of the equity of Company (or securities convertible
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into 20% or more of the equity of Company). Notwithstanding the foregoing,
"Acquisition Proposal" shall not include any transaction set forth on Schedule
1.1A.
"Affiliate" shall mean, with respect to any Person, any
other Person directly or indirectly controlling, controlled by or under common
control with such Person. The term "control" (including, with correlative
meaning, the terms "controlled by" and "under common control with"), as used
with respect to any Person, means the possession, directly or indirectly, of the
power to direct or cause the direction of the management and policies of such
Person, whether through the ownership of voting securities, by contract or
otherwise.
"Bank Debt" shall mean Company's existing indebtedness to
the Lenders in the principal amount of approximately $4.7 billion as of December
18, 2000 pursuant to the agreements set forth on Schedule 1.1B.
"Board of Directors" shall mean the Board of Directors of
Company.
"Bond Indebtedness" shall mean indebtedness outstanding as
of the date hereof and issued pursuant to the indentures set forth on Schedule
1.1C.
"Business Day" shall mean any day that is not a Saturday, a
Sunday or a day on which banks are required or permitted to be closed in the
State of New York.
"Certificate of Designation" shall mean the Certificate of
Designation, Rights and Preferences setting forth the rights and preferences of
the Convertible Preferred Stock attached as Exhibit A hereto.
"Common Stock" shall have the meaning set forth in the
recitals hereto.
"Convertible Preferred Stock" shall have the meaning set
forth in the recitals hereto.
"Credit Enhancement" shall mean any (i) security deposit,
unapplied advance rental payment or dealer investment, (ii) investment
certificate, certificate of deposit, authorization to hold funds, hypothecation
of account or like instrument, (iii) letter of credit, repurchase agreement,
agreement of indemnity, guarantee, lease guarantee bond or postponement
agreement, (iv) recourse agreement, (v) security agreement, (vi) Property, (vii)
certificate representing shares or the right to purchase capital of or interests
in, any Person or (viii) bond or debenture, in each case pledged, assigned,
mortgaged, made, delivered or transferred as security for the performance of any
obligation under or with respect to any Financing Contract.
"DGCL" shall mean the General Corporation Law of the State
of Delaware, as amended from time to time.
"ERISA" shall mean the Employee Retirement Income Security
Act of 1974 (or any successor legislation thereto), as amended from time to time
and any applicable regulations thereunder.
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"ERISA Affiliate" shall mean, with respect to Company, any
trade or business (whether or not incorporated) under common control with
Company and which, together with Company, are treated as a single employer
within the meaning of Sections 414(b), (c), (m) or (o) of the IRC, excluding
Purchasers and each other person which would not be an ERISA Affiliate if
Purchasers did not own any issued and outstanding shares of stock of Company.
"Exchange Act" shall mean the Securities Exchange Act of
1934, as amended, and all rules and applicable regulations thereunder.
"Executive Officer" shall mean those officers of Company
and the Subsidiaries designated as executive officers for SEC reporting
purposes.
"Financing Contract" shall mean any contract (including any
schedule or amendment thereto or assignment, assumption, renewal or novation
thereof) in existence on or prior to the Closing in the form of (i) a lease of
or rental agreement with respect to Property, (ii) a sale contract (including an
installment sale contract or conditional sale agreement) arising out of the sale
of Property, (iii) a secured or unsecured financing of Property, or (iv) a
secured or unsecured loan, and in each case, which with respect thereto: (A)
Company is the lessor, seller, lender, secured party or obligee (whether
initially or as an assignee), or (B) is between an obligor, on the one hand, and
a lessor, seller, obligee, secured party or assignee of any of the foregoing, on
the other hand, and (1) which would be a Financing Contract if Company were the
lessor, seller, obligee, secured party or assignee of any of the foregoing
thereunder and (2) with respect to which Company is an assignee of the revenues
or claims with respect thereto.
"GAAP" shall mean generally accepted accounting principles
in the United States of America as in effect from time to time.
"Governmental Authority" shall mean any nation or
government, any state or other political subdivision thereof, and any agency,
department or other entity exercising executive, legislative, judicial,
regulatory or administrative functions of or pertaining to government.
"HSR Act" means the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended.
"IRC" shall mean the Internal Revenue Code of 1986, as
amended, and any successor thereto.
"IRS" shall mean the Internal Revenue Service, or any
successor thereto.
"Lenders" shall mean the banks, other financial
institutions and other lenders who are lenders to Company pursuant to the credit
agreements set forth on Schedule 1.1B.
"Lien" shall mean any mortgage or deed of trust, pledge,
hypothecation, assignment, deposit arrangement, lien, charge, claim, security
interest, easement, encumbrance (including, without limitation, any conditional
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sale or other title retention agreement and any financing lease having
substantially the same economic effect as any of the foregoing).
"Material Adverse Effect" shall mean, with respect to any
Person, a material adverse effect (i) on the business, assets, operations or
financial condition of such Person and its Subsidiaries, if any, taken as a
whole, or (ii) on the ability of such Person to perform on a timely basis any
material obligation under this Agreement or any other Transaction Document or to
consummate the transactions contemplated hereby or thereby, except any such
effect resulting from or arising in connection with (a) changes in circumstances
or conditions affecting the financial services industry in general or affecting
any segment thereof in which such Person or its Subsidiaries operates, (b)
changes in general economic or regulatory conditions or financial markets in the
United States or, (c) any transaction to which Purchaser shall have consented or
requested in writing. Notwithstanding the foregoing, (x) none of the matters set
forth in Schedule 1.1C shall constitute a "Material Adverse Effect" with respect
to Company and (y) any acceleration of Company's Bond Indebtedness shall
constitute a "Material Adverse Effect" with respect to Company.
"Material Contracts" means (i) all of Company's and its
Subsidiaries' contracts, agreements, leases or other instruments to which
Company or any of its Subsidiaries is a party or by which Company, its
Subsidiaries or its properties are bound, which involve payments by Company or
its Subsidiaries of more than $15 million annually, (ii) all of Company's and
its Subsidiaries' loan agreements, bank lines of credit agreements, indentures,
mortgages, deeds of trust, pledge and security agreements, factoring agreements,
conditional sales contracts, letters of credit or other debt instruments which
represent obligations of Company or its Subsidiaries in excess of $15 million,
(iii) all non-competition agreements which restrict Company's ability to
compete, (iv) all contracts for the employment of any officer or employee of
Company or its Subsidiaries who is still employed with the Company or its
Subsidiaries and received an annual compensation for 1999 in excess of $250,000
or who will receive base compensation in 2000 in excess of $200,000 or which has
a term of more than 3 years, (v) all consulting agreements which require minimum
payments by Company in excess of $1,000,000 annually and (vi) all other material
contracts not made in the Ordinary Course of Business; provided, however, that
"Material Contracts" shall not include any agreements, financing agreements,
leases, Financing Contracts, Credit Enhancements or other similar agreements
between Company or its Subsidiaries and borrowers, lessees, guarantors or
customers entered into in the Ordinary Course of Business.
"Non-Disclosure Agreement" means the Confidentiality
Agreement between Purchaser and Company dated August 14, 2000.
"NYSE" shall mean the New York Stock Exchange, Inc.
"Ordinary Course of Business" shall mean the ordinary and
usual course of business of Company, consistent with Company's past practices.
Ordinary Course of Business shall not include any material modification to any
Benefit Plan, compensation agreement, arrangement or policy (except to the
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extent to reflect changes in position, responsibilities or duties) without the
consent of Purchaser.
"PBGC" shall mean the Pension Benefit Guaranty Corporation
or any successor thereto.
"Permit" shall mean any domestic or foreign, federal,
state, provincial, local, municipal or other governmental consent, license,
permit, franchise, concession, grant, authorization, approval, exemption or
similar right.
"Permitted Lien" shall mean Taxes and general and special
assessments not in default and payable without penalty and interest; other Liens
which do not materially interfere with Company's or any of its Subsidiaries' use
and enjoyment of the property to which they relate or materially detract from or
diminish the value thereof; workman's, mechanic's and other similar Liens; Liens
relating to assets which have been leased to Third Parties in the Ordinary
Course of Business; Liens reflected in the Company Financial Statements and the
notes thereto; Liens on any property or assets of a Subsidiary granted in favor
of Company or any of its Subsidiaries; and Liens granted with the consent of
Purchaser.
"Person" shall mean any individual, sole proprietorship,
partnership, limited liability company, joint venture, trust, unincorporated
organization, association, corporation, institution, public benefit corporation,
entity or government (whether federal, state, county, city, municipal or
otherwise, including, without limitation, any instrumentality, division, agency,
body or department thereof).
"Portfolio Property" shall mean Property with respect to
which Company is the lessor, seller or secured party, as the case may be,
pursuant to the terms of a Financing Contract (whether initially or as an
assignee).
"Property" shall mean all property and assets of whatsoever
nature including but not limited to personal property, whether tangible or
intangible, and claims, rights and chooses in action.
"Purchaser" shall have the meaning set forth in the
recitals hereto.
"Registration Rights Agreement" shall mean the Registration
Rights Agreement by and between Company and Purchaser, substantially in the form
attached hereto as Exhibit C, as such agreement may be amended, supplemented or
otherwise modified from time to time in accordance with the terms thereof.
"Schedule" shall refer to one of several written Schedules
to this Agreement, each of which is hereby incorporated into and made a part of
this Agreement for all purposes.
"SEC" shall mean the U.S. Securities and Exchange
Commission, or any successor thereto.
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"Securities" shall mean the Series B Preferred Stock and
the Warrant.
"Securities Act" shall mean the Securities Act of 1933, as
amended, and all rules and regulations promulgated thereunder.
"Series B Preferred Stock" shall have the meaning set forth
in the recitals hereto.
"Series C Preferred Stock" shall have the meaning set forth
in the recitals hereto.
"Subsidiary" shall mean, with respect to any Person, (i)
each corporation, partnership, joint venture or other legal entity of which such
Person owns, either directly or indirectly, more than 50% of the stock or other
equity interests the holders of which are generally entitled to vote for the
election of the board of directors or similar governing body of such
corporation, partnership, joint venture or other legal entity, (ii) each
partnership in which such Person or another Subsidiary of such Person is the
general or managing partner and (iii) each limited liability company in which
such Person or another Subsidiary of such Person is the managing member or
otherwise controls (by contract, through ownership of membership interests or
otherwise).
"Tax" or "Taxes" shall mean any and all domestic or
foreign, taxes, charges, fees, imposts, levies or other assessments by any
Governmental Authority, including all net income, gross receipts, capital,
sales, use, ad valorem, value added, transfer, franchise, profits, inventory,
capital stock, license, withholding, payroll, employment, social security,
unemployment, excise, severance, stamp, occupation, property and estimated
taxes, customs duties, fees, assessments and charges of any kind whatsoever,
together with any interest and any penalties, fines, additions to tax or
additional amounts imposed by any taxing authority (domestic or foreign) and
shall include any liability in respect of Taxes as a transferee or as an
indemnitor, guarantor, surety or in a similar capacity under any contract, Tax
sharing agreement, Tax indemnity agreement, Tax reimbursement agreement, Tax
assumption agreement, arrangement, agreement, understanding or commitment
(whether oral or written) and any liability in respect of Taxes which is payable
by reason of contract, assumption, operation of law, Treasury Regulation Section
1.1502-6 (or any predecessor or successor thereof or any analogous or similar
provision under state, local or foreign law) or otherwise.
"Tax Return" shall mean any report, return, statement,
information return or other information required to be supplied to a taxing
authority in connection with Taxes (including any attachment thereto or
amendment thereof), including, but not limited to, any claim for refund,
declaration of any estimated Tax and combined or consolidated return for any
group of entities that includes Company or any of its Subsidiaries.
"Treasury Regulation" shall mean the regulations, including
but not limited to proposed and temporary regulations, promulgated under the
IRC, as amended from time to time.
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"Third Party" shall mean any Person other than Purchaser
and Company.
"Transaction Documents" shall mean this Agreement, the
Certificate of Designation, the Warrant and the Registration Rights Agreement.
"Warrant" shall mean the Warrant to purchase Common Stock
to be issued by Company to Purchaser hereunder, substantially in the form
attached hereto as Exhibit B.
References to this "Agreement" shall mean this Securities
Purchase Agreement, including all amendments, modifications and supplements and
any exhibits or schedules to any of the foregoing, and shall refer to the
Agreement as the same may be in effect at the time such reference becomes
operative.
1.2 Terms Defined Elsewhere in the Agreement. For purposes
of this Agreement, the following terms have the meanings set forth in the
sections indicated:
Term Section
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Actual Gain 6.14
Actual Loss 6.14
After-Tax Gain 6.14
After-Tax Loss 6.14
Agent BanksActual GainActual Gain 6.4(b)
Baseline 6.14
Benefit Plans 4.20
Closing 2.3
Closing Date 2.3
Company Financial Advisors 4.23
Company Financial Statements 4.8
Company Representatives 6.4
Company Rights Agreement 4.25
Company SEC Documents 6.4(b)
Covered Transactions 6.4(b)
Damages 9.2
Downside Distribution 6.14
Environmental Costs and Liabilities 4.13(a) (i)
Environmental Law 4.13(a) (ii)
Environmental Permits 4.13(b)
Fully Diluted Equity 6.14
Hazardous Material 4.13(a) (iii)
Indemnified Party 9.3
Indemnifying Party 9.3
Material Adverse Effect 7.2(a)
Old S/H Ownership 6.14
Other Equity Ownership 6.14
Portfolio 6.14
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Term Section
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Preferred Ownership 6.14
Preferred Percentage of Other Equity 6.14
Purchaser Designees 6.7
Refinancing 6.5
Registration Statement 6.11(b)
Release 4.13(a) (iv)
Remedial Action 4.13(a) (v)
Rights 4.25
Rights Offering 6.11(a)
Rights Ownership 6.14
Rights Percentage of Other Equity 6.14
Sharing Amount 6.14
Standby Shares 6.11(a)
Superior Proposal 6.4
Term Sheet 6.4(b)
TOPrS 4.1
Upside Distribution 6.14
Warrant Ownership 6.14
Warrant Percentage of Other Equity 6.14
1.3 Other Definitional Provisions. (a) Any accounting term
used in this Agreement shall have, unless otherwise specifically provided
herein, the meaning customarily given such term in accordance with GAAP.
(b) The words "hereof", "herein", and "hereunder" and words
of similar import, when used in this Agreement, shall refer to this Agreement as
a whole, including the Exhibits and Schedules hereto, as the same may from time
to time be amended, modified or supplemented, and not to any particular
provision of this Agreement.
(c) Terms defined in the singular shall have a comparable
meaning when used in the plural, and vice versa.
(d) The terms "dollars" and "$" shall mean United States
dollars unless otherwise stated.
(e) The term "including" shall be deemed to be immediately
followed by the term "but not limited to."
(f) The term "knowledge" as it applies to the knowledge of
Company, means the knowledge of any of the individuals named on Schedule 1.3(e)
(the "Company Officers") in each case after due inquiry.
(g) Whenever in this Agreement a party is permitted to make
a decision or take an action in its "sole and absolute discretion" or terms of
similar latitude, such Person shall be entitled to consider only such interests
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and factors as it desires and shall have no duty or obligation to give any
consideration to any interest of, or factors affecting, any other Person.
ARTICLE II
PURCHASE OF SERIES B PREFERRED STOCK AND WARRANTS
2.1 Authorization of Issue. Prior to the Closing, Company
shall have duly authorized the issuance and sale to Purchaser of (i) the number
of shares of Series B Preferred Stock set forth in Section 2.2(a) below, (ii)
the Warrant and (iii) the aggregate number of shares of Common Stock issuable
upon conversion of the Series B Preferred Stock and exercise of the Warrant.
2.2 Purchase of Series B Preferred Stock and Warrant. (a)
Subject to the terms and conditions set forth in this Agreement, Purchaser
agrees to subscribe for and purchase from Company, and Company agrees to issue
and sell to Purchaser, on the Closing Date an aggregate of one million shares of
Series B Preferred Stock containing the terms, preferences and limitations set
forth in the Certificate of Designation.
(b) Subject to the terms and conditions set forth in this
Agreement, Company agrees to issue to Purchaser, on the Closing Date, the
Warrant containing the terms set forth in Exhibit B hereto.
(c) The aggregate purchase price for the aggregate number
of shares of Series B Preferred Stock subscribed for by Purchaser and the
Warrant is $250,000,000, payable in full on the Closing Date. Notwithstanding
anything to the contrary contained herein, Company and Purchaser hereby further
acknowledge and agree that for United States federal, state and local income tax
purposes such aggregate purchase price shall be allocated between the Series B
Preferred Stock and the Warrant. This allocation shall be determined in
accordance with applicable rules, and for this purpose Purchaser shall provide
good faith determinations of the value of each of the Series B Preferred Stock
and the Warrant. Company and Purchaser agree to use the foregoing allocation for
all tax purposes.
(d) The parties hereto acknowledge that, pursuant to the
Certificate of Designation and Section 6.14 of this Agreement, Company in 2006
may be required to make a payment to the holders of the Series B Preferred Stock
and Purchaser, depending upon certain results of Company's operations through
2005. Company and Purchaser agree to treat any such payment as a reduction to
the purchase price for the Securities for all Tax purposes.
2.3 Closing. (a) The closing of the purchase and sale of
the Series B Preferred Stock and the issuance of the Warrant (the "Closing")
shall take place within five Business Days after the satisfaction or waiver of
the conditions set forth in Article VII hereof or such date and time as shall be
mutually agreed to by the parties hereto (the "Closing Date") at the offices of
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Weil, Gotshal & Manges LLP, 767 Fifth Avenue, New York, New York, or such other
place as shall be mutually agreed to by the parties hereto.
(b) On the Closing Date, Company will deliver to Purchaser
(i) a certificate representing the Series B Preferred Stock and (ii) the Warrant
to be purchased by Purchaser against delivery by Purchaser of the purchase price
therefor by wire transfer of immediately available funds to an account of
Company designated in writing by Company no later than two Business Days prior
to the Closing.
ARTICLE III
PURCHASER'S REPRESENTATIONS
Purchaser makes the following representations and
warranties to Company, each and all of which shall survive the execution and
delivery of this Agreement and the Closing hereunder:
3.1 Corporate Existence. Purchaser is a corporation duly
organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation with all requisite power to enable it to own,
lease and operate its assets and properties and to conduct its business as
currently being conducted and is qualified and in good standing to do business
in each jurisdiction in which the nature of the business conducted by it or the
character or location of the properties owned or leased by it requires such
qualification, except where the failure to be so duly qualified and in good
standing does not and would not reasonably be expected to have, individually or
in the aggregate, a Material Adverse Effect on Purchaser.
3.2 Corporate Power; Authorization; Enforceable
Obligations. The execution, delivery and performance by Purchaser of this
Agreement and the other Transaction Documents to be executed by it: (i) are
within Purchaser's corporate power; (ii) have been duly authorized by all
necessary corporate action; (iii) are not in contravention of any provision of
Purchaser's certificate of incorporation or by-laws; and (iv) will not violate
any law or regulation applicable to Purchaser, or any order or decree of any
court or governmental instrumentality binding on Purchaser. This Agreement has
been, and at or prior to the Closing Date, each of the other Transaction
Documents to which Purchaser is a party shall have been, duly executed and
delivered by Purchaser and this Agreement constitutes, and at the Closing date
each of the other Transaction Documents to which Purchaser is a party will
constitute, the legal, valid and binding obligations of Purchaser, enforceable
against it in accordance with their respective terms, subject to applicable
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and
similar laws affecting creditors' rights and remedies generally, and subject, as
to enforceability, to general principles of equity, including principles of
commercial reasonableness, good faith and fair dealing (regardless of whether
enforcement is sought in a proceeding at law or in equity).
3.3 Investment Intention. Purchaser is purchasing the
Securities for its own account, for investment purposes and not with a view to
the distribution thereof. Purchaser will not, directly or indirectly, offer,
transfer, sell, assign, pledge, hypothecate or otherwise dispose of any of the
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Securities (or solicit any offers to buy, purchase, or otherwise acquire any of
the Securities), except in compliance with the Securities Act. Neither Purchaser
nor any Person acting on its behalf has taken or will take action (including,
without limitation, any offering of any securities of Company under
circumstances which would require the integration of such offering with the
offering of the Securities under the Securities Act and the rules and
regulations of the SEC thereunder) which might subject the offering, issuance or
sale of the Securities to the registration requirement of Section 5 of the
Securities Act.
3.4 Accredited Investor. Purchaser is an "accredited
investor" (as that term is defined in Rule 501 of Regulation D under the
Securities Act) and by reason of its business and financial experience, it has
such knowledge, sophistication and experience in business and financial matters
as to be capable of evaluating the merits and risks of the prospective
investment, is able to bear the economic risk of such investment and is able to
afford a complete loss of such investment.
3.5 Sufficiency of Funds. Purchaser has sufficient cash to
consummate the transactions contemplated by this Agreement.
ARTICLE IV
COMPANY'S REPRESENTATIONS AND WARRANTIES
Company makes the following representations and warranties
to Purchaser except as otherwise contemplated by this Agreement or as set forth
in the Schedules to this Agreement:
4.1 Authorized and Outstanding Shares of Capital Stock;
Options and Other Rights to Acquire Capital Stock. The authorized capital stock
of Company consists of (i) 400,000,000 shares of Common Stock, $0.01 par value
per share and (ii) 20,000,000 shares of Preferred Stock, par value $0.01 per
share, of which (A) 600,000 shares have been designated as Series A Junior
Participating Preferred Stock and reserved for issuance under the Company Rights
Agreement, and (B) 250,000 shares of Preferred Stock are reserved for issuance
under the Benefit Plans. As of December 11, 2000, there were outstanding: (i)
61,301,410 shares of Common Stock; (ii) employee and director stock options to
purchase an aggregate of 3,964,601 shares of Common Stock; (iii)
performance-based restricted stock agreements that provide for the issuance of
up to 482,510 shares of Common Stock, (iv) trust originated preferred securities
("TOPrS") convertible into 2,938,020 shares of Common Stock, and (v) no shares
of Preferred Stock. As of December 11, 2000, 3,547,895 shares of Common Stock
were held by Company in its treasury or by Company's Subsidiaries. All of such
issued and outstanding shares are validly issued, fully paid and non-assessable.
Since December 11, 2000, no options, warrants or other securities convertible
into or exchangeable for capital stock of Company have been issued or otherwise
committed by Company to be issued, except as provided for in this Agreement.
Other than (i) as set forth on Schedule 4.1, and (ii) in connection with the
transactions contemplated by the Transaction Documents, (a) there is no existing
option, warrant, call, commitment or other agreement to which Company is a party
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requiring, and there are no convertible securities of Company outstanding which
upon conversion would require, the issuance of any additional shares of capital
stock of Company or other securities convertible into shares of equity
securities of Company, other than the Securities, (b) there are no agreements to
which Company is a party with respect to the voting or transfer of the capital
stock of Company or with respect to any other aspect of Company's affairs, and
(c) there are no stockholders' preemptive rights, nor are there any rights of
first refusal or other similar rights with respect to the issuance of capital
stock by Company to which Company is a party. Except as set forth on Schedule
4.1, there are no voting trusts or other agreements or understandings to which
Company or any of its Subsidiaries is a party with respect to the voting of
capital stock of Company.
4.2 Authorization and Issuance of the Securities. (a) The
issuance and sale of the Securities has been duly authorized by all necessary
corporate action on the part of Company and, upon delivery to Purchaser of the
Securities against payment in accordance with the terms hereof, the Securities
will have been validly issued and the Series B Preferred Stock will be fully
paid and non-assessable), free and clear of all Liens and preemptive rights. The
issuance of shares of Common Stock upon conversion of the Convertible Preferred
Stock and exercise of the Warrant has been duly authorized by all necessary
corporate action on the part of Company and, when issued upon conversion of the
Convertible Preferred Stock and exercise of the Warrant, as applicable, in each
case in accordance with their respective terms such Common Stock will have been
validly issued and fully paid and non-assessable. Company has duly reserved
1,000,000 shares of Series B Preferred Stock for issuance pursuant to this
Agreement, 600,000 shares of Series C Preferred Stock for issuance pursuant to
the Rights Offering and 317,539,000 shares of Common Stock for issuance pursuant
to the terms of the Convertible Preferred Stock and the Warrant.
(b) The Board of Directors has, by unanimous vote of those
present (who constituted 100% of the directors then in office), duly and validly
authorized the execution and delivery of this Agreement and the other
Transaction Documents and approved the consummation of the transactions
contemplated hereby and thereby, and taken all corporate actions required to be
taken by the Board of Directors for the consummation of the transactions
contemplated hereby and thereby and has resolved to deem this Agreement and the
other Transaction Documents and the transactions contemplated hereby and
thereby, taken together, advisable and fair to, and in the best interests of,
Company and its stockholders.
4.3 Securities Laws. In reliance on the investment
representations contained in Sections 3.3 and 3.4, the offer, issuance, sale and
delivery of the Securities, as provided in this Agreement, are exempt from the
registration requirements of the Securities Act and all applicable state
securities laws. Neither Company nor any Person acting on its behalf has taken
or will take any action (including, without limitation, any offering of any
securities of Company under circumstances which would require the integration of
such offering with the offering of the Securities under the Securities Act and
the rules and regulations of the SEC thereunder) which might subject the
offering, issuance or sale of the Securities to the registration requirements of
Section 5 of the Securities Act.
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4.4 Corporate Existence; Compliance with Law. Company and
each of its Subsidiaries (i) is a corporation, partnership or limited liability
company duly formed, validly existing and in good standing under the laws of the
State of Delaware in the case of Company and set forth on Schedule 4.4 in the
case of its Subsidiaries; (ii) is duly qualified as a foreign corporation,
partnership or limited liability company and in good standing under the laws of
each jurisdiction where its ownership or lease of property or the conduct of its
business requires such qualification (except for jurisdictions in which such
failure to so qualify or to be in good standing would not have a Material
Adverse Effect on Company); (iii) has the requisite corporate, partnership or
limited liability company power and authority and the legal right to own,
pledge, mortgage or otherwise encumber and operate its properties, to lease the
property it operates under lease, and to conduct its business as now being
conducted; (iv) has, or has applied for, all material Permits from or by, and
has made all material filings with, and has given all material notices to, all
Governmental Authorities having jurisdiction, to the extent required for such
ownership, operation and conduct; (v) is in compliance with its certificate or
articles of incorporation and by-laws or, if not a corporation, its governing
documents; and (vi) is in compliance with all applicable provisions of law,
except with respect to clauses (ii) through (vi) where such failure,
individually or in the aggregate, would not have a Material Adverse Effect on
Company.
4.5 Subsidiaries. Schedule 4.4 sets forth a complete list
of Subsidiaries of Company. Except for TOPrS and the related convertible
debentures, there are no options, warrants, rights to purchase or similar rights
covering capital Stock for any such Subsidiary.
4.6 Corporate Power; Authorization; Enforceable
Obligations. Except as set forth on Schedule 4.6, the execution, delivery and
performance by Company of this Agreement, the other Transaction Documents to
which it is a party, the issuance and sale of the Securities and the
consummation of the other transactions contemplated by any of the foregoing: (i)
are within Company's corporate power and authority; (ii) have been duly
authorized by all necessary corporate action; (iii) are not in contravention of
any provision of Company's certificate of incorporation or by-laws; (iv) will
not violate any law or regulation applicable to Company or its Subsidiaries, or
any order or decree of any court or governmental instrumentality binding upon
Company or its Subsidiaries; (v) will not conflict with or result in the breach
or termination of, the loss of any benefit to which Company is entitled under,
constitute a default or require any payment to be made by Company under, or
accelerate any performance required by, any indenture, mortgage, deed of trust,
loan, credit agreement, lease, agreement or other instrument to which Company or
any of its Subsidiaries is a party or by which Company, any of its Subsidiaries
or any of their property is bound; (vi) will not result in the creation or
imposition of any Lien upon any of the property of Company or any of its
Subsidiaries and (vii) do not require the consent or approval of, or any filing
with, any Governmental Authority or any other Person (except (A) for the filing
of the Certificate of Designation with the Secretary of State of the State of
Delaware, (B) for those filings required by the Exchange Act, (C) for those
filings required by the Registration Rights Agreement, (D) for those required by
the HSR Act and (E) to the extent previously obtained or made), other than, in
the case of clauses (iv) through (vii), any such violation, conflict, breach,
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termination, loss, default, payment, acceleration, creation, imposition or
failure to obtain the consent or approval, individually or in the aggregate,
that would be immaterial to the Company and its Subsidiaries taken as a whole or
to the Company's ability to own its assets and conduct its business. At or prior
to the Closing Date, each of this Agreement and the other Transaction Documents
shall have been duly executed and delivered by Company and each shall then
constitute a legal, valid and binding obligation of Company, enforceable against
it in accordance with its terms, subject to applicable bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and similar laws affecting
creditors' rights and remedies generally, and subject, as to enforceability, to
general principles of equity, including principles of commercial reasonableness,
good faith and fair dealing (regardless of whether enforcement is sought in a
proceeding at law or in equity), and the Certificate of Designation shall have
been duly filed with the Secretary of State of the State of Delaware.
4.7 SEC Documents. Company has made available to Purchaser
a true and complete copy of each report, schedule, registration statement and
definitive proxy statement filed by Company with the SEC since January 1, 1998
and prior to the date of this Agreement, as any such filings have been amended
or restated (the "Company SEC Documents"), which are all the documents (other
than preliminary material) that Company was required to file with the SEC since
such date. As of their respective dates, the Company SEC Documents complied in
all material respects with the requirements of the Securities Act or the
Exchange Act, as the case may be, and the rules and regulations of the SEC
thereunder applicable to such Company SEC Documents, and none of the Company SEC
Documents contained any untrue statement of a material fact or omitted to state
a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading.
4.8 Financial Statements. The financial statements of
Company included in the Company SEC Documents (the "Company Financial
Statements") comply as to form in all material respects with applicable
accounting requirements and with the published rules and regulations of the SEC
with respect thereto, have been prepared in accordance with GAAP applied on a
consistent basis during the periods involved (except as may be indicated in the
notes thereto) and fairly present (subject, in the case of the unaudited
financial statements, to normal, recurring audit adjustments) the consolidated
financial position of Company and its consolidated Subsidiaries as at the dates
thereof and the consolidated results of their operations and cash flows for the
periods then ended.
4.9 No Undisclosed Liabilities. Except as and to the extent
publicly disclosed by Company in the Company SEC Documents filed as of the date
of this Agreement, none of Company or any of its Subsidiaries has any material
indebtedness or obligations, contingent or otherwise, including, without
limitation, liabilities for charges, long-term leases or unusual forward or
long-term commitments, required to be included in a financial statement prepared
in accordance with GAAP, other than:
(a) liabilities and obligations disclosed or provided for
in the Company Financial Statements or in the notes thereto or in any of the
Company SEC Documents;
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(b) liabilities and obligations incurred or entered into in
the Ordinary Course of Business since the date of the most recent financial
statements included in the Company SEC Documents that would not, individually or
in the aggregate, have, or be reasonably expected to have, a Material Adverse
Effect on Company; and
(c) liabilities and obligations under this Agreement or
incurred in connection with the transactions contemplated hereby.
4.10 Absence of Certain Changes. Except as disclosed in the
Company SEC Documents or as set forth on Schedule 4.10, since September 30, 2000
there has not been any event, occurrence or development or a state of
circumstances or facts that has had or could be reasonably expected to have a
Material Adverse Effect on Company. Except as set forth on Schedule 4.10, as
disclosed in the Company SEC Documents or as contemplated by this Agreement,
since September 30, 2000:
(a) neither Company nor any of its Subsidiaries has sold,
leased, transferred, or assigned any of its assets, tangible or intangible,
other than in the Ordinary Course of Business;
(b) no Person (including Company) has accelerated,
terminated, modified, or canceled any Material Contract other than in the
Ordinary Course of Business;
(c) neither Company nor any of its Subsidiaries has
canceled, compromised, waived or released any right or claim (or series of
related rights and claims), in any case, material to Company and its
Subsidiaries, taken as a whole, other than in the Ordinary Course of Business;
(d) there has been no change made or authorized in the
certificate of incorporation or bylaws of Company;
(e) neither Company nor any of its Subsidiaries has
experienced any material damage, destruction or loss (whether or not covered by
insurance) to its tangible property that had or would reasonably be expected to
have a Material Adverse Effect on Company;
(f) neither Company nor any of its Subsidiaries has made
any loan to, or entered into any other transaction with, any of its directors,
officers or employees, except for any advances made to employees in the Ordinary
Course of Business;
(g) neither Company nor any of its Subsidiaries has (i)
granted any material increase in the compensation of any of its directors,
Company Officers or, to the extent material individually or in the aggregate, of
any of its officers, employees, consultants or independent contractors, or made
any other material change in employment terms for any of its directors, Company
Officers or, to the extent material individually or in the aggregate, officers,
employees or, to the extent material individually or in the aggregate, in the
terms of its agreements with any consultants or independent contractors except,
in each case, to the extent to reflect changes in responsibility, position, or
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duties or (ii) adopted, amended or modified in any material respect or
terminated any bonus, profit-sharing, incentive, stock option, severance,
retention, or other plan, contract, or commitment for the benefit of any of the
directors, officers, and employees of the Company or its Subsidiaries (or taken
any such action with respect to any other Benefit Plan);
(h) neither Company nor any of its Subsidiaries has made or
rescinded any material express or deemed election relating to Taxes, settled or
compromised any material claim, action, suit, litigation, proceeding,
arbitration, investigation, audit or controversy relating to Taxes, entered into
any Tax ruling, agreement, contract, arrangement or plan, filed any amended Tax
Return, or except as may be required by applicable law, made any change to any
of its material methods of reporting income or deductions for federal income Tax
purposes from those employed in the preparation of its most recently filed
federal income tax return;
(i) there has not been any declaration or payment of any
dividends, other than regular quarterly dividends declared and paid with respect
to the TOPrS, or other distributions in respect of the outstanding shares of
Company or any Subsidiary of Company (except for any dividends declared by any
Subsidiary that was paid solely to Company);
(j) neither Company nor any Subsidiary has entered into a
contract or settlement with any taxing authority;
(k) neither Company nor any Subsidiary has entered into any
arrangement or commitment, whether written or oral, to do any of the foregoing.
4.11 Ownership of Property. Except as set forth on Schedule
4.11(a), neither Company nor any of its Subsidiaries owns any real estate. Each
of Company and its Subsidiaries has good and marketable and insurable fee simple
title to its material owned real property, free and clear of all Liens. Each of
Company and its Subsidiaries has valid and marketable leasehold interests in the
leases described in Schedule 4.11(b) hereto, and, except as set forth on
Schedule 4.11(b), good and marketable title to, or valid leasehold interests in,
all of its other material properties and assets free and clear of all Liens
other than Permitted Liens.
All material real property leased or subleased by Company
and its Subsidiaries is set forth on Schedule 4.11(b). Each of such leases is
valid and enforceable in accordance with its terms (subject to applicable
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and
similar laws affecting creditors' rights and remedies generally, and subject, as
to enforceability, to general principles of equity, including principles of
commercial reasonableness, good faith and fair dealing (regardless of whether
enforcement is sought in a proceeding at law or in equity)) and is in full force
and effect. Company has made available to Purchasers true and complete copies of
each of such leases set forth on Schedule 4.11(b) and all documents affecting
the rights or obligations of Company or any of its Subsidiaries, including,
without limitation, any non-disturbance and recognition agreements,
subordination agreements, attornment agreements and agreements regarding the
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term or rental of any of the leases. Except as set forth on Schedule 4.11(b),
none of Company, any of its Subsidiaries nor, to its knowledge, any other party
to any such lease is in default of its obligations thereunder or has delivered
or received any notice of default under any such lease, nor has any event
occurred which, with the giving of notice, the passage of time or both, would
constitute a default under any such lease. None of such leases is subject to any
Liens, other than Permitted Liens.
Except as disclosed on Schedule 4.11(c), and except for
leveraged, operating and financing leases entered into with Company or its
Subsidiaries as lessor or sublessor, neither Company nor any of its Subsidiaries
is obligated under or a party to, any option, right of first refusal or any
other contractual right to purchase, acquire, sell, assign or dispose of any
material real property owned or leased by Company or such Subsidiary.
4.12 Material Contracts. Other than (i) Material Contracts
included in the Company SEC Documents and (ii) any other Material Contracts
entered into after the date hereof in accordance with Section 5.1 hereof,
Schedule 4.12 contains a true, correct and complete list and description of all
Material Contracts. Each Material Contract is a valid and binding agreement of
Company or its Subsidiaries (as the case may be) enforceable against Company or
such Subsidiary in accordance with its terms (subject to applicable bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and similar laws
affecting creditors' rights and remedies generally, and subject, as to
enforceability, to general principles of equity, including principles of
commercial reasonableness, good faith and fair dealing (regardless of whether
enforcement is sought in a proceeding at law or in equity)), and neither Company
nor any of its Subsidiaries has any knowledge that any Material Contract is not
a valid and binding agreement against the other parties thereto. Except as set
forth in Schedule 4.12, Company and each of its Subsidiaries has fulfilled all
obligations required pursuant to the Material Contract to have been performed by
Company or such Subsidiary on its part. Except as set forth in Schedule 4.12,
neither Company nor any of its Subsidiaries is in default or breach, nor to
Company's or such Subsidiary's knowledge is any third party in default or
breach, under or with respect to any Material Contract.
4.13 Environmental Matters. (a) For purposes of this
Agreement:
(i) "Environmental Costs and Liabilities" means any and
all losses, liabilities, obligations, damages
(including compensatory, punitive and consequential
damages), fines, penalties, judgments, actions,
claims, costs and expenses (including, without
limitation, reasonable fees, disbursements and
expenses of legal counsel, experts, engineers and
consultants and the costs of investigation,
feasibility studies and the costs to clean up,
remove, treat, or in any other way address any
Hazardous Materials (as hereinafter defined)) arising
from, under or pursuant to any Environmental Law (as
hereinafter defined);
(ii) "Environmental Law" means any applicable federal,
state, local or foreign law (including common law),
statute, or other legal requirement relating to the
protection of natural resources, the environment and
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public and employee health and safety or pollution or
the release or exposure to Hazardous Materials (as
hereinafter defined) as such laws have been and may
be amended or supplemented as of the Closing Date;
(iii) "Hazardous Material" means any substance, material or
waste which is regulated, classified or otherwise
characterized as hazardous, toxic, pollutant,
contaminant or words of similar meaning or regulatory
effect by any Governmental Authority, and includes,
without limitation, petroleum, petroleum by-products
and wastes, asbestos and polychlorinated biphenyl's;
(iv) "Release" means any release, spill, effluent,
emission, leaking, pumping, injection, deposit,
disposal, discharge, dispersal, leaching, or
migration into the indoor or outdoor environment, or
into or out of any property owned, operated or leased
by Company or its Subsidiaries; and
(v) "Remedial Action" means all actions, including,
without limitation, any capital expenditures,
required by a Governmental Authority or required
under or taken pursuant to any Environmental Law to
(A) clean up, remove, treat, or in any other way,
ameliorate or address any Hazardous Materials or
other substance in the indoor or outdoor environment;
(B) prevent the Release or threat of Release, or
minimize the further Release of any Hazardous
Material so it does not endanger or threaten to
endanger the public health or welfare of the indoor
or outdoor environment; (C) perform pre-remedial
studies and investigations or post-remedial
monitoring and care pertaining or relating to a
Release; or (D) bring the applicable party into
compliance in all material respects with any
Environmental Law.
(b) Except as set forth in Schedule 4.13:
(i) Company and its Subsidiaries have been and, as of the
Closing Date, will be, in material compliance with
all Environmental Laws, except where the failure to
so comply does not or would not be reasonably
expected to have, individually or in the aggregate, a
Material Adverse Effect on Company, and, to Company's
knowledge, there are no facts, circumstances or
conditions relating to the current or former
operations of Company and its Subsidiaries or any
real property currently or formerly owned, operated
or leased by Company or its Subsidiaries, which
without material capital expenditures, would prevent
material compliance in the future;
(ii) Company and its Subsidiaries have obtained and will,
as of the Closing Date, maintain all permits,
authorizations, licenses or similar approvals
required under applicable Environmental Laws
("Environmental Permits") for the continued
operations of their respective businesses as
currently operated and as will be operated as of the
Closing Date, except such Environmental Permits the
lack of which do not or would not be reasonably
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expected to have, individually or in the aggregate, a
Material Adverse Effect on Company;
(iii) Company and its Subsidiaries are not subject to any
outstanding written orders or parties to material
contracts with any Governmental Authority or other
person respecting (A) Environmental Laws, (B)
Remedial Action or (C) any Release or threatened
Release of a Hazardous Material except for such
orders or contracts that would not reasonably be
expected to have a Material Adverse Effect on
Company;
(iv) Company and its Subsidiaries have not received any
written communication alleging, with respect to any
such party, the violation of or liability (real or
potential) under any Environmental Law, and to
Company's knowledge there are no investigations or
proceedings pending or threatened against Company
regarding potential liability under Environmental
Laws which violation or liability would reasonably be
expected to have, individually or in the aggregate, a
Material Adverse Effect on Company;
(v) To the knowledge of Company, neither Company nor any
of its Subsidiaries has any contingent liability in
connection with the Release of any Hazardous Material
(whether on-site or off-site) which does or would
reasonably be expected to have, individually or in
the aggregate, a Material Adverse Effect on Company;
(vi) The operations of Company or its Subsidiaries do not
involve the transportation, treatment, storage or
disposal of hazardous waste, as defined and regulated
under 40 C.F.R. Parts 260-270 (in effect as of the
date of this Agreement) or any state equivalent at
quantities or for durations requiring an
Environmental Permit;
(vii) There is not now, nor to Company's knowledge, has
there been in the past, on or in any property of
Company or its Subsidiaries any of the following: (A)
any underground storage tanks or surface
impoundments, (B) any asbestos-containing materials,
or (C) any polychlorinated biphenyls, the presence of
which would reasonably be expected to have a Material
Adverse Effect on Company; and
(c) None of the exceptions set forth on Schedule 4.13 are
reasonably likely to result in Company and its Subsidiaries incurring
Environmental Costs and Liabilities which would reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect on Company.
(d) Company has made available to Purchaser copies of all
environmentally related assessments, audits, investigations, sampling or similar
reports relating to Company or its Subsidiaries or any real property currently
or formerly owned, operated or leased by Company and its Subsidiaries, to the
extent in the possession, custody or control of Company or its Subsidiaries.
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4.14 Labor Matters. There are no strikes or other
collective labor disputes against Company or any of its Subsidiaries pending or,
to Company's or its Subsidiaries' knowledge, threatened. Neither Company nor any
of its Subsidiaries is, or during the five years preceding the date hereof was,
a party to any labor or collective bargaining agreement and there are no labor
or collective bargaining agreements which pertain to employees of Company or any
of its Subsidiaries.
4.15 Taxes. Except as set forth on Schedule 4.15:
(a) all federal, state, local and foreign Tax Returns
required to be filed by Company and its Subsidiaries have been properly prepared
and timely filed with the appropriate Governmental Authority, and all such Tax
Returns are true, correct and complete in all material respects. All Taxes due
and payable for any period have been paid when due. With respect to any period
for which Taxes are not yet due or owing, Company and its Subsidiaries have made
due and sufficient current accruals for such Taxes in their books and records,
including without limitation in the Company Financial Statements. Proper amounts
have been withheld by Company and its Subsidiaries for all periods in compliance
with the Tax withholding provisions of applicable federal, state, local and
foreign law and such withholdings have been timely paid to the respective
Governmental Authority;
(b) neither Company nor any of its Subsidiaries has
executed or filed with the IRS or any other Governmental Authority any agreement
or other document extending the period for assessment or collection of any
Taxes;
(c) no Tax audits or other administrative or judicial
proceedings are pending or threatened in writing with regard to any Taxes for
which Company or any Subsidiary may be liable, no assessment of Taxes is
proposed against Company or any Subsidiary and no audit report has been issued
in the five years prior to the date of this Agreement relating to Taxes due from
or with respect to Company or its Subsidiaries, their respective incomes, assets
or operations;
(d) neither Company nor any of its Subsidiaries has filed a
consent pursuant to IRC Section 341(f) or agreed to have IRC Section 341(f)(2)
apply to any dispositions of subsection (f) assets (as such term is defined in
IRC Section 341(f)(4));
(e) there is no contract, plan or arrangement involving
Company or its Subsidiaries and covering any Person that, individually or
collectively, could give rise to the payment of any amount that would not be
deductible by Company or any of its Subsidiaries by reason of Section 280G or
Section 162(m) of the IRC;
(f) neither Company nor any of its Subsidiaries has
constituted either a "distributing corporation" or a "controlled corporation"
(within the meaning of Section 355(a)(1)(A) of the IRC) in a distribution of
stock qualifying for tax-free treatment under Section 355 of the IRC (A) in the
two years prior to the date of this Agreement or (B) in a distribution which
could otherwise constitute part of a "plan" or "series of related transactions"
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(within the meaning of Section 355(e) of the IRC) in conjunction with the
transactions contemplated by this Agreement;
(g) all of the lease agreements that the Company or any of
its Subsidiaries have treated as true leases for federal income tax purposes are
true leases for federal income tax purposes;
(h) neither Company nor any of its Subsidiaries (i) engaged
in any "intercompany transactions" in respect of which material gain was and
continues to be deferred pursuant to Treasury Regulation Section 1.1502-13 or
any predecessor or successor thereof or analogous or similar provision under
state, local or foreign law or (ii) has material "excess loss accounts" in
respect of the stock of any subsidiary pursuant to Treasury Regulation Section
1.1502-19, or any predecessor or successor thereof or analogous or similar
provision under state, local or foreign law;
(i) no prior ownership change (within the meaning of
Section 382 of the IRC) has occurred (i) that would result in the imposition of
a limitation upon the use of net operating losses or upon the future
deductibility of any tax basis or built-in deduction item of Company or any of
its Subsidiaries, or (ii) that resulted in a readjustment of the tax basis of
the assets of Company or any of its Subsidiaries under Section 56(g)(4)(G) of
the IRC; and
(j) (i) the TOPrS are treated as debt for federal income
Tax purposes; (ii) the federal income tax treatment of securitization
transactions of the Company or any of its Subsidiaries are as set forth on
Schedule 4.15(j); and (iii) there is no entity or asset included in Company
Financial Statements which is not included in the consolidated federal income
tax return filed by Company as the common parent.
4.16 No Litigation. Except as disclosed in the Company SEC
Documents, or as set forth on Schedule 4.16, no action, suit, claim, proceeding
or investigation is now pending or, to the knowledge of Company or its
Subsidiaries, threatened against Company or any of its Subsidiaries, at law, in
equity or otherwise, before any court, board, commission, agency or
instrumentality of any federal, state, or local government or of any agency or
subdivision thereof, or before any arbitrator or panel of arbitrators, which
would be reasonably expected to have a Material Adverse Effect on Company.
4.17 Brokers. Except as set forth on Schedule 4.17, no
broker or finder acting on behalf of Company or any of its Subsidiaries brought
about the consummation of the transactions contemplated pursuant to this
Agreement and neither Company nor any of its Subsidiaries has any obligation to
any Person in respect of any finder's or brokerage fees (or any similar
obligation) in connection with the transactions contemplated by this Agreement.
Company is solely responsible for the payment of all such finder's or brokerage
fees.
4.18 [Intentionally left blank].
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4.19 Intellectual Property. Company and each of its
Subsidiaries owns or has a right to use all licenses, patents, patent
applications, copyrights, service marks, trademarks and registrations and
applications for registration thereof, and trade names necessary to continue to
conduct its business as heretofore conducted by it and now being conducted by
it, each of which is listed, together with Patent and Trademark Office or
Copyright Office application or registration numbers, where applicable, on
Schedule 4.19 hereto. To Company's knowledge, Company and each of its
Subsidiaries conducts its businesses without infringement or claim of
infringement of any license, patent, copyright, service mark, trademark, trade
name, trade secret or other intellectual property right of others, except as
such would not reasonably expected to have a Material Adverse Effect or as set
forth on Schedule 4.19 hereto. To Company's knowledge, there is no infringement
by others of any license, patent, copyright, service mark, trademark, trade
name, trade secret or other intellectual property right of Company or any of its
Subsidiaries, except as set forth on Schedule 4.19 hereto.
4.20 ERISA. (a) Schedule 4.20 sets forth: (i) all "employee
benefit plans", as defined in Section 3(3) of ERISA, and all severance,
retention, sick leave, vacation pay, salary continuation, retirement, deferred
compensation, bonus or other incentive compensation, stock option, stock
purchase, hospitalization, medical, life insurance and scholarship plans,
programs or agreements (the "Benefit Plans") to which Company or any of its
Subsidiaries has any obligation or liability (contingent or otherwise).
(b) None of the Benefit Plans is a "multiemployer plan"
within the meaning of Section 3(37) of ERISA or a plan subject to Section 4063
of ERISA.
(c) The Benefit Plans intended to be qualified under
Section 401 of the IRC have been determined by the I.R.S. to be so qualified and
the trusts maintained pursuant thereto have been determined by the I.R.S. to be
exempt from federal income taxation under Section 501(a) of the IRC.
(d) All contributions required by law or pursuant to the
terms of the Benefit Plans to any funds or trusts established thereunder or in
connection therewith have been made by the due date therefor (including any
valid extension).
(e) True, correct and complete copies of the following
documents, with respect to each of the Benefit Plans, have been made available
or delivered to Purchasers by Company: (A) any plans and related trust
documents, and amendments thereto, (B) the most recent Forms 5500 (including any
schedules thereto) and the most recent actuarial valuation report, if any, (C)
the last IRS determination letter and (D) the most recent summary plan
descriptions.
(f) Except as set forth in Schedule 4.15 there are no
pending actions, audits, claims or lawsuits which have been asserted or
instituted against the Benefit Plans, the assets of any of the trusts under such
Benefit Plans or the Benefit Plan sponsor or the Benefit Plan administrator, or
against any fiduciary of the Benefit Plans with respect to the operation of such
Benefit Plans (other than routine benefit claims), which, if adversely
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determined, could reasonably be expected to result in a Material Adverse Effect
nor does Company or any of its Subsidiaries have knowledge of facts which could
form the basis for any such claim or lawsuit.
(g) Except as set forth in Schedule 4.20(g), the
consummation of the transactions contemplated by this Agreement shall not
result, with respect to any current or former employee or director of Company or
any of its Subsidiaries, (i) in any acceleration of payment or vesting of any
compensation or benefits, (ii) in any increase in compensation or benefits,
(iii) in any requirement to fund any compensation or benefits, or (iv) in any
vesting of rights with respect to compensation benefits.
(h) The Benefit Plans have been maintained, in all material
respects, in accordance with their terms and with all applicable Federal and
state law, except for non-compliance which could not reasonably be expected to
result in a Material Adverse Effect.
(i) Except as set forth in Schedule 4.20(i), neither
Company or any of its ERISA Affiliates sponsors, maintains or has established
any welfare plan, as defined in Section 3(1) of ERISA, which provides for
continuing benefits or coverage for any participant or any beneficiary of a
participant after such participant's termination of employment, except as may be
required by Code section 4980B or Section 601 (et seq.) of ERISA, or under any
applicable state law, and at the expense of the participant or the beneficiary
of the participant.
(j) Company and its ERISA Affiliates have filed or caused
to be filed every material return, report statement, notice, declaration and
other document required by any law or governmental agency, federal, state and
local (including, without limitation, the IRS and the Department of Labor) with
respect to each such Benefit Plan, each of such filings has been complete and
accurate in all material respects and neither Company or any of its ERISA
Affiliates has incurred any liability in connection with such filings.
(k) Company and its ERISA Affiliates have delivered or
caused to be delivered to every participant, beneficiary and other party
entitled to such material, all material plan descriptions, returns, reports,
schedules, notices, statements and similar materials, including, without
limitation, summary plan descriptions and summary annual reports, as are
required under Title I of ERISA, the Code, or both and neither Company or any of
its ERISA Affiliates has incurred any material liability in connection with such
requirements.
(l) Neither Company or any of its ERISA Affiliates is
delinquent in making contributions or payments to or in respect of any Benefit
Plan as to which any is obligated to make contributions or payments (without
regard to any waiver granted by the IRS under Code Section 412), nor has Company
or any of its ERISA Affiliates failed to pay any assessments made with respect
to any such Benefit Plan. All contributions and payments (including salary
deferral contributions elected by employees) with respect to Benefit Plans that
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are due and owing or required to be made by Company or any of its ERISA
Affiliates with respect to periods ending on or before the Closing Date
(including periods from the first day of the current plan year or policy year to
the Closing Date) have been, or will be, made before the Closing Date in
accordance with the appropriate plan document, actuarial report, collective
bargaining agreements or insurance contracts or arrangements or as otherwise
required by ERISA or the Code.
(m) With respect to each Benefit Plan, to the Company's
knowledge there has not occurred, and no person or entity is contractually bound
to enter into, any "prohibited transaction" within the meaning of Section
4975(c) of the Code or Section 406 of ERISA, which transaction is not exempt
under Section 4975(d) of the Code or Section 408 of ERISA.
(n) There has not been any "Reportable Event," as described
in Section 4043 of ERISA, with respect to any Benefit Plan (other than such
events for which the thirty (30) day notification period has been waived by the
Pension Benefit Guaranty Corporation ("PBGC")) subject to Title IV of ERISA.
(o) Neither Company or any of its ERISA Affiliates has
incurred: (i) any liability to the PBGC or to a trust (for plan terminations
instituted prior to December 18, 1987) described in Section 4049 of ERISA (prior
to its repeal), (ii) any multiemployer Plan (as defined in Section 4001(a)(3) of
ERISA ("Multiemployer Plan")) withdrawal liability (and no event has occurred
which, with the giving of the notice under Section 4219 of ERISA, would result
in such liability) under Section 4201 of ERISA as a result of a complete or
partial withdrawal (within the meaning of Sections 4203 or 4205 or ERISA,
respectively) from, or on behalf of, a Multiemployer Plan, or (iii) any other
liability under Title IV of ERISA other than premiums incurred in the Ordinary
Course of Business.
(p) Neither Company or any of its ERISA Affiliates, or any
organization which is a successor or parent corporation of such entities, within
the meaning of ERISA Section 4069(b), has engaged in a transaction described in
ERISA Section 4069.
(q) Except as otherwise previously disclosed, the value of
the assets of each Benefit Plan subject to Title IV of ERISA (other than a
Multiemployer Plan) equal or exceed the present value of "Benefit Liabilities"
(as defined in Section 4001(a)(16) of ERISA) of each such Benefit Plan as of the
last day of the plan year most recently ended using PBGC termination actuarial
assumptions currently in effect or other actuarial assumptions certified by the
Benefit Plan's actuary as reasonable for purposes of a standard termination (as
described in 4041(b) of ERISA) with respect to any defined benefit pension plan.
(r) With respect to each Benefit Plan maintained by Company
or any of its ERISA Affiliates, such plan permits the plan sponsor to amend or
terminate the plan at any time and without any liability, subject to the
applicable requirements of ERISA and the Code for plan termination.
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(s) To the Company's knowledge, no assets of, and no assets
managed by, Company or any of its ERISA Affiliates constitute "plan assets" as
defined in 29 C.F.R. Section 2510.3-101, and none of the transactions
contemplated by this Agreement (including those transactions occurring after the
Closing) with constitute a "prohibited transaction" within the meaning of
Section 4975(c) of the Code or Section 406 of ERISA, which transaction is not
exempt under Section 4975(d) of the Code or Section 408 of ERISA.
4.21 Insurance. Other than insurance maintained in
connection with the business, assets or operations of Company's or the
Subsidiaries' borrowers or lessees or insurance insuring residual values,
Schedule 4.21 hereto contains a complete and correct list of all policies of
insurance of any kind or nature covering Company and its Subsidiaries,
including, without limitation, policies of life, fire, theft, employee fidelity
and other casualty and liability insurance, indicating the type of coverage,
name of insured, the insurer, the premium, the expiration date of each policy
and the amount of coverage, and such policies are in full force and effect.
Complete and correct copies of each such policy have been furnished or made
available to Purchasers. Such policies are in amounts customary for the industry
in which Company or such Subsidiary operates.
4.22 Related Party Transactions. Except as disclosed in the
Company SEC Documents or as set forth in Schedule 4.22, no director or Executive
Officer of Company nor any Affiliate of Company (other than a Subsidiary of
Company) or of any such director or Executive Officer (i) has borrowed any money
from or has outstanding, directly or indirectly, any indebtedness or other
similar obligations to Company or any Subsidiary thereof; (ii) to the knowledge
of Company, owns any direct or indirect interest equal to or in excess of 5% of
the equity in, or controls or is a director, officer or partner of, or
consultant or lender to, or borrower from, or has the right to participate in
the profits of, any Person which is a competitor, lender, landlord, lessor or
creditor of Company; (iii) is a party to any contract with Company; or (iv) has
entered into any other transaction with the Company or its Subsidiaries which
would require disclosure thereof under Item 404 of Regulation S-K under the
Securities Act.
4.23 Opinions of Financial Advisor. Credit Suisse First
Boston and Lehman Brothers (the "Company Financial Advisors") have delivered to
the Board of Directors their opinions to the effect that the transactions
contemplated hereby are fair to Company from a financial point of view, and such
opinions have not been withdrawn or modified.
4.24 Takeover Statutes. Company has taken all action
required to be taken by it in order to exempt each of this Agreement and the
other Transaction Documents and each of the transactions contemplated hereby and
thereby including the conversion or exercise of any Securities (the "Covered
Transactions") from, and each of this Agreement, the other Transaction Documents
and the Covered Transactions is exempt from the requirements of any
"moratorium", "control share", "fair price", "affiliate transaction", "business
combination" or other antitakeover laws and regulations of any state, including
Section 203 of the DGCL, or any antitakeover provision in Company's restated
certificate of incorporation (including the approval of each Covered Transaction
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under Section 2(A) of Article IX thereof) and bylaws. The provisions of Section
203 of the DGCL do not apply to this Agreement, the Other Transaction Documents
or the Covered Transactions.
4.25 Amendment to the Company Rights Agreement. The Board
of Directors of Company has taken all necessary action (including any amendment
thereof) under the Company Rights Agreement, dated as of February 15, 1992, as
amended and restated as of September 14, 1995, between Company and Bank One,
Arizona, NA (succeeded by Harris Trust & Savings Bank, NA), as Rights Agent, as
amended (the "Company Rights Agreement") so that none of the execution or
delivery of this Agreement or the other Transaction Documents or consummation of
each Covered Transaction will cause (i) the rights (the "Rights") issued
pursuant to the Company Rights Agreement to become exercisable under the Company
Rights Agreement, (ii) Purchaser to be deemed an "Acquiring Person" (as defined
in the Company Rights Agreement), or (iii) the "Distribution Date" (as defined
in the Company Rights Agreement) to occur upon any such event.
4.26 Refinancing Representations. Company hereby
incorporates for the benefit of Purchaser any representation and warranty made
or to be made to the Lenders in connection with the consummation of the
Refinancing as if such representation and warranty was specifically incorporated
herein.
4.27 Financing Contracts; Portfolio Property.
(a) Except as set forth on Schedule 4.27, each Financing
Contract and Credit Enhancement (i) is valid, binding and enforceable by Company
or its Subsidiaries against the lessee, obligor or borrower thereunder in
accordance with its terms, except (x) as may be limited by bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium or similar laws
affecting creditors rights and remedies generally and, with respect to
enforceability, by general principles of equity and fair dealing, and (y) to the
extent that the failure of any Financing Contract or Credit Enhancement to be
valid, binding and enforceable would not, individually or in the aggregate,
reasonably be likely to have a Material Adverse Effect on Company and (ii) arose
out of a bona fide business transaction entered into in the Ordinary Course of
Business.
(b) Except as set forth on Schedule 4.27, to the knowledge
of Company, (i) each Financing Contract and Credit Enhancement is held free and
clear of Liens (in the case of Credit Enhancements, to the extent of any Liens
that are superior to Company's Liens) other than Permitted Liens, and is not
subject to any defense, offset, right of rescission or counterclaim by the
obligor, borrower or lessee under such Financing Contract in the case of a
Financing Contract or by the obligor thereunder in the case of a Credit
Enhancement, except where such Lien or defense, offset, right of rescission or
counterclaim would not, individually or in the aggregate, reasonably be likely
to have a Material Adverse Effect on Company and (ii) Company is not in breach
of or in default under any Financing Contract or Credit Enhancement and no other
event has occurred which, with notice and/or lapse of time, would constitute a
default by Company or any other party thereunder, except where such breach or
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default would not, individually or in the aggregate, reasonably be likely to
have a Material Adverse Effect on Company.
(c) Company and its Subsidiaries maintain appropriate and
customary documentation in their files evidencing their respective Financing
Contracts and Credit Enhancements and the Company's or such Subsidiary's title
thereto, except where the failure to maintain such documentation would not
reasonably be likely to have a Material Adverse Effect on Company. Such
documentation has been made available to Purchaser. Company and its Subsidiaries
have taken all commercially reasonable action to ensure that Company or such
Subsidiary, as the case may be, has good and valid title to its Portfolio
Property, Financing Contracts and Credit Enhancements, in each case free and
clear of all Liens other than Permitted Liens or, in the case of Credit
Enhancements, Liens that are junior to Company's Liens, except where the failure
to take such action or to have good and valid title would not reasonably be
likely to have a Material Adverse Effect on Company.
(d) Except as set forth on Schedule 4.27, Company has, with
respect to each item of Portfolio Property and to each Financing Contract and
Credit Enhancement, good and valid title to such Property (or, with respect to
Portfolio Property, a valid security interest in such Portfolio Property),
Financing Contract and Credit Enhancement, free and clear of all Liens other
than Permitted Liens, except where the failure to have such title or security
interest would not, individually or in the aggregate, reasonably be likely to
have a Material Adverse Effect on Company.
4.28 Full Disclosure. No information contained in this
Agreement, any other Transaction Document or any written statement furnished by
or on behalf of Company pursuant to the terms of this Agreement (or any
Schedules hereto) contains an untrue statement of a material fact or omits to
state a material fact necessary to make the statements contained herein or
therein not misleading in light of the circumstances under which made.
ARTICLE V
COVENANTS RELATING TO CONDUCT OF BUSINESS
5.1 Conduct of Business of Company. Except as otherwise
expressly permitted by the terms of this Agreement or as set forth on Schedule
5.1, from the date hereof to the Closing, Company shall, and shall cause each of
its Subsidiaries to, carry on their respective businesses in the Ordinary Course
of Business in substantially the same manner as presently conducted and in
compliance in all material respects with applicable laws, and use their
respective reasonable best efforts consistent with past practices to preserve
their relationships with customers, suppliers and others with whom they deal.
Company shall not, and shall cause each of its Subsidiaries not to, take any
action that would, or that is reasonably likely to, result in any of the
representations and warranties of Company set forth in Article IV being untrue
in any material respect as of the date made or as of the Closing Date or in any
of the conditions to the consummation of the transactions contemplated hereby
not being satisfied. In addition, and without limiting the generality of the
foregoing, except as otherwise expressly permitted or required by the terms of
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this Agreement, during the period from the date hereof to the Closing, Company
shall not, and shall cause any of its Subsidiaries not to, without the written
consent of Purchaser, which decision regarding consents shall be made promptly
(in light of its circumstances) after receipt of notice seeking such consent:
(i) amend its certificate of incorporation, bylaws or
other comparable organizational documents or those of
any Subsidiary of Company;
(ii) except (A) pursuant to the exercise or conversion of
outstanding securities, (B) for issuances of Common
Stock upon the exercise of outstanding options under
the Benefit Plans, (C) in connection with other
awards outstanding on the date of this Agreement
under any Benefit Plan, or (D) upon conversion of
TOPrS, redeem or otherwise acquire any shares of its
capital stock, or issue or sell any securities
(including securities convertible into or
exchangeable for any shares of its capital stock), or
grant any option, warrant or right relating to any
shares of its capital stock, or split, combine or
reclassify any of its capital stock or issue any
securities in exchange or in substitution for shares
of its capital stock;
(iii) make any material amendment to any existing, or enter
into any new, employment, consulting, severance,
change in control or similar agreement, or establish
any new compensation or benefit or commission plans
or arrangements for directors or employees, or amend
or agree to amend any existing benefit plan;
(iv) other than in connection with foreclosures in the
Ordinary Course of Business and mergers or
consolidations among wholly-owned Subsidiaries of
Company, merge, amalgamate or consolidate with any
other entity in any transaction, sell all or any
substantial portion of its business or assets, or
acquire all or substantially all of the business or
assets of any other Person;
(v) enter into any plan of reorganization or
recapitalization, dissolution or liquidation of
Company;
(vi) declare, set aside or make any dividends, payments or
distributions in cash, securities or property to the
stockholders of Company in respect of any capital
stock of Company other than dividends and
distributions by a direct or indirect wholly owned
Subsidiary of Company to its parent and for any
quarterly dividends payable with respect to the
TOPrS;
(vii) except for borrowings under credit facilities or
lines of credit existing on the date hereof, incur or
assume any indebtedness of the Company or any of its
Subsidiaries, except indebtedness of the Company or
any of its Subsidiaries incurred in the Ordinary
Course of Business;
(viii) refinance any existing indebtedness with a principal
amount in excess of $15 million;
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(ix) voluntarily grant any material Lien on any of its
material assets, other in the Ordinary Course of
Business;
(x) take any action that would have a material impact on
the consolidated federal income tax return filed by
Company as the common parent, make or rescind any
express or deemed material election relating to
Taxes, settle or compromise any material claim,
action, suit, litigation, proceeding, arbitration,
investigation, audit or controversy relating to
Taxes, enter into any material Tax ruling, agreement,
contract, arrangement or plan, file any amended Tax
Return, or, except as required by applicable law or
GAAP or in accordance with past practices, make any
material change in any method of accounting for Taxes
or otherwise or any Tax or accounting practice or
policy;
(xi) enter into any Contract, understanding or commitment
that restrains, restricts, limits or impedes the
ability of Company or any of its Subsidiaries, or the
ability of Purchaser, to compete with or conduct any
business or line of business in any geographic area;
(xii) enter into, or amend the terms of, any Contract
relating to interest rate swaps, caps or other
hedging or derivative instruments relating to
Indebtedness of Company or any of its Subsidiaries;
or
(xiii) agree or commit, whether in writing or otherwise, to
do any of the foregoing.
5.2 Access to Information. (a) From the date hereof until
the Closing, Company shall, and shall cause each of its Subsidiaries to, permit
Purchaser and its representatives to have reasonable access during normal
business hours to the management, facilities, accounts, books, stock transfer
records and other records (including budgets, forecasts and personnel files and
records), contracts and other written materials of Company and each of its
Subsidiaries and, with the consent of Company which shall not be withheld
unreasonably, the names and other reasonably requested information concerning
Company's borrowers, as is reasonably requested by Purchaser or such
representatives and to make available to Purchaser and its representatives the
officers, employees and independent accountants of Company and each of its
Subsidiaries for interviews for the purpose, among other things, of verifying
the information furnished to Purchaser. Such access shall be conducted by
Purchaser and its representatives during normal business hours, upon reasonable
advance notice and in such a manner as not to interfere unreasonably with the
business or operations of Company and its Subsidiary.
(b) Purchaser will hold, and will cause its consultants and
advisers to hold, in confidence all documents and information furnished to it by
or on behalf of Company in connection with the transactions contemplated by this
Agreement pursuant to the terms of the Non-Disclosure Agreement.
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ARTICLE VI
ADDITIONAL AGREEMENTS
6.1 Commercially Reasonable Efforts. Subject to the terms
and conditions of this Agreement, each of the parties hereto agrees to use its
commercially reasonable efforts to take, or cause to be taken, all action and to
do, or cause to be done, all things necessary, proper or advisable under
applicable laws to consummate and make effective the transactions contemplated
by this Agreement, including (a) the obtaining of all necessary actions,
waivers, consents and approvals from Governmental Authorities and the making of
all necessary registrations and filings (including filings required under the
HSR Act), and the taking of all reasonable steps as may be necessary to obtain
an approval or waiver from, or to avoid an action or proceeding by, any
Governmental Authority, (b) the obtaining of all necessary consents, approvals
or waivers from Third Parties and (c) the execution and delivery of any
additional instruments necessary to consummate the transactions contemplated by
this Agreement; provided, however, that nothing herein shall limit or diminish
each party's right to approve the Refinancing referred to in Section 6.5. In
furtherance of the foregoing, Purchaser and Company each shall furnish to the
other such necessary information and reasonable assistance as the other may
request in connection with obtaining any consents required to be obtained by it
hereunder.
6.2 Supplemental Disclosure. Company shall promptly notify
Purchaser of, and furnish Purchaser with, any information it may reasonably
request with respect to, any event or condition or the existence of any fact
that would cause any of the conditions to Purchaser's obligation to consummate
the transactions contemplated hereby not to be completed, and Purchaser shall
promptly notify Company of, and furnish Company any information it may
reasonably request with respect to, any event or condition or the existence of
any fact that would cause any of the conditions to Company's obligation to
consummate the transactions contemplated hereby not to be completed.
6.3 Announcements. Each of Company and Purchaser shall not,
without the prior written consent of the other (which consent shall not be
unreasonably withheld) issue any press release or otherwise make any public
statement with respect to this Agreement, the other Transaction Documents and
the transaction contemplated hereby and thereby, in each case except as may be
required by applicable law (including pursuant to U.S. federal securities laws)
or rules of the SEC or the NYSE, or as such party may be advised by its counsel
is legally necessary or advisable, in which event the party required to make the
release or announcement shall allow the other party reasonable time, in light of
the circumstances, to comment on such release or announcement in advance of such
issuance.
6.4 No Solicitation. (a) To allow time for negotiation of
the Refinancing, from and after the date hereof until the earlier of (i) the
Closing and (ii) expiration of the provisions of this Section 6.4(a) pursuant to
Section 6.4(b) hereof, and except as expressly permitted by the following
provisions of this Section 6.4(a), Company shall not, and shall not authorize or
permit any of Company's officers, directors, employees, agents, investment
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bankers, attorneys, financial advisors or other representatives (collectively,
"Company Representatives") to, directly or indirectly, solicit, initiate or
encourage (including by way of furnishing information or assistance), or take
other action to facilitate any inquiries or the making of any proposal that
constitutes or may reasonably be expected to lead to, an Acquisition Proposal
from any Third Party or engage in any discussions or negotiations relating
thereto or in furtherance thereof or furnish to any Person any information with
respect to, or accept or enter into any agreement that would result in, or waive
any agreement that would prevent or discourage, any Acquisition Proposal;
provided, however, that nothing contained in this paragraph shall prohibit the
Board of Directors from (1) obtaining such information with respect to any
unsolicited Acquisition Proposal, which the Board of Directors determines, after
consultation with counsel, is necessary to determine whether such Acquisition
Proposal would constitute a Superior Proposal, or (2) furnishing information to,
or entering into discussions or negotiations with, any person that makes an
unsolicited bona fide, fully financed, written Acquisition Proposal which
relates to the acquisition by any Third Party of all of the equity of Company,
whether by merger, tender offer or otherwise, if and only to the extent that (A)
the Board of Directors, after consultation with independent legal counsel,
determines in good faith that such action is necessary for the Board of
Directors to comply with its fiduciary duties to Company's stockholders under
applicable law, (B) the Board of Directors determines in good faith after
consultation with a nationally recognized expert with experience in appraising
the terms and conditions of such unsolicited Acquisition Proposal, that such
unsolicited Acquisition Proposal after taking into account the strategic
benefits to be derived from the transaction with Purchaser and the long-term
prospects of Company, would, if consummated, result in a transaction more
favorable to the Company's stockholders from a financial point of view than the
transactions contemplated hereby (any such more favorable bona fide unsolicited
Acquisition Proposal being referred to as a "Superior Proposal"), and (C) prior
to taking such action, Company (i) notifies Purchaser of any Acquisition
Proposal (including, without limitation, the material terms and conditions
thereof and the identity of the person making the Acquisition Proposal) as
promptly as practicable (but in no case later than 24 hours) after receipt
thereof, (ii) provides Purchaser with a copy of any written Acquisition
Proposal, (iii) thereafter informs Purchaser on a prompt basis of the status of
any discussion or negotiations with such a Third Party and any material changes
to the terms and conditions of such Acquisition Proposal, (iv) promptly gives
Purchaser a copy of any information delivered to such Third Party which has not
been previously reviewed by Purchaser and (v) receives from such Third Party an
executed confidentiality agreement in reasonably customary form and in any event
containing terms at least as stringent as those contained in the Non-Disclosure
Agreement.
(b) The provisions of Section 6.4(a) shall expire (without
affecting the provisions of Section 8.4) if either (i) a term sheet for the
Refinancing (which shall have been agreed to by Company and Purchaser) (the
"Term Sheet") is not presented to the agent banks for the Company's Bank Debt
(the "Agent Banks") by December 21, 2000 assuming reasonable cooperation from
Company, or (ii) if the Agent Banks do not recommend approval of the Term Sheet
(as such Term Sheet may be amended from time to time with the approval of
Company and Purchaser) to the Lenders by February 27, 2001.
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6.5 Refinancing of Existing Company Bank Debt. As soon as
practicable after the date hereof, Company and Purchaser shall use their
respective commercially reasonable efforts so that Company may complete a
refinancing or restructuring of the Bank Debt with the Lenders (the
"Refinancing") upon terms acceptable both to Purchaser and Company. Company has
notified the Lenders of its agreement with Purchaser and has requested the
Lenders to commence negotiation of the Refinancing with Company and Purchaser.
Purchaser shall participate in the Refinancing negotiations. Company and
Purchaser shall keep the other party fully informed in all respects to such
negotiations. The parties shall make their respective personnel available to
each other in Scottsdale, Arizona, Los Angeles, California or New York, New York
and shall cause their personnel to cooperate with the other in establishing a
mutually acceptable plan for the Refinancing and shall promptly notify the other
party of any threatened event of default, termination or acceleration of the
Bank Debt or any long term indebtedness of Company or its Subsidiaries. Company
shall promptly notify Purchaser of the receipt of any written notices from any
Lender or any holder of the Bond Indebtedness of Company or its Subsidiaries and
shall promptly provide a copy of same to Purchaser.
6.6 Certificate of Designations. Prior to the Closing,
Company shall cause to be filed the Certificate of Designations with the
Secretary of State of the State of Delaware, as required pursuant to the laws of
the State of Delaware.
6.7 Board Representation. (a) Upon consummation of the
purchase and sale of the Series B Preferred Stock and the Warrant pursuant to
Section 2.1 hereof, Purchaser shall be entitled to designate for appointment to
the Board of Directors six (6) out of the ten (10) members of the Board of
Directors, which designees (the "Purchaser Designees") shall be distributed
evenly among the three classes of members of the Board of Directors. Prior to
the Closing, Company shall take all necessary corporate action to increase the
size of its Board of Directors to ten (10) members and obtain all necessary
resignations in consultation with Purchaser for existing directors to enable all
six Purchaser Designees to be appointed to the Board of Directors, and Company
shall cause the Board of Directors to fill the vacancies created thereby by
electing the Purchaser Designees effective as of the Closing. If a vacancy shall
exist on the Board of Directors as a result of the resignation, removal, death
or failure to stand for re-election of a Purchaser Designee, Purchaser shall be
entitled to designate a successor who shall be appointed to the Board of
Directors by the remaining Directors. If a vacancy shall exist on the Board of
Directors as a result of the resignation, removal, death or failure to stand for
re-election of a Continuing Director (as such term is defined in Article IX of
Company's Restated Certificate of Incorporation), the remaining Continuing
Directors shall be entitled to designate a successor who shall be appointed to
the Board of Directors by the remaining directors pursuant to the recommendation
of the remaining Continuing Directors. If, prior to Closing, the number of
directors of Company is increased by virtue of any right of security holders (in
the event dividends or other payments provided for under the terms of such
securities are not made, or otherwise), then such increase shall include a
sufficient number of directors of the Company, who shall be designated by
Purchaser and appointed to the Board of Directors by the Continuing Directors so
that Purchaser's Designees shall constitute a majority of such increased Board
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of Directors. Purchaser agrees that it shall vote all Company securities
beneficially owned by it that are entitled to vote in the election of directors
in favor of the Continuing Directors' designees for election or re-election as
Continuing Directors until the first election of directors following the payment
of the distribution contemplated by Section 6.14 of this Agreement, and that it
will require any transferee of any such Company securities (other than
transferees that acquire such securities in a registered public offering or in a
transaction pursuant to Rule 144 of the Securities Act) to agree to vote such
securities in the manner provided herein. For so long as Purchaser is obligated
to vote for the Continuing Directors' designees, no Purchaser Designee shall be
deemed to be a Continuing Director for purposes of Article IX of Company's
Restated Certificate of Incorporation.
(b) Prior to the Closing, Purchaser shall timely furnish to
Company all information concerning the Purchaser Designees required to be
included in the information statement referred to in Section 7.2(d) so that such
information may be included in that information statement.
6.8 Management Fee. Upon consummation of the purchase and
sale of the Series B Preferred Stock and the Warrant pursuant to Section 2.1
hereof, Purchaser and Company shall enter into a Management Agreement
substantially in the form of Exhibit D hereto, pursuant to which Purchaser shall
receive an annual management fee of $5,000,000 per year for a period of five
years commencing on the Closing Date. The management fee shall be payable
quarterly in advance at the beginning of each calendar quarter; provided,
however, that the first quarterly installment on account of the annual
management fee (in the amount of $1,250,000) shall be paid at the Closing. Each
payment on account of the management fee shall be paid by wire transfer of
immediate funds to an account designated in writing by Purchaser and delivered
to Company no later than two Business Days prior to the scheduled payment date.
6.9 Reservation of Common Stock. Company shall take all
action necessary to reserve for issuance a sufficient number of shares of Common
Stock to satisfy its conversion obligations under the Certificate of Designation
and the Warrant, respectively. Company shall recommend amendments to its
Restated Certificate of Incorporation to increase the number of authorized
shares of Common Stock necessary to satisfy this provision.
6.10 Legends.
Each of the certificates representing (i) shares of Series
B Preferred Stock, (ii) shares of Common Stock issued upon conversion of the
Series B Preferred Stock, (iii) the Warrant, and (iv) shares of Common Stock
issued upon exercise of the Warrant, unless registered pursuant to an effective
registration statement under the Securities Act, shall bear a legend
substantially in the following form:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT") OR ANY STATE SECURITIES OR "BLUE SKY"
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LAWS AND MAY NOT BE SOLD OR OTHERWISE TRANSFERRED EXCEPT
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
ACT OR STATE SECURITIES OR "BLUE SKY" LAWS OR AN EXEMPTION
THEREFROM."
6.11 Rights Offering.
(a) As soon as practicable after the Closing, Company shall
conduct a rights offering (the "Rights Offering") whereby then existing holders
of Common Stock will be offered the right to purchase up to six hundred thousand
shares of Series C Preferred Stock to be issued by Company at a price of $250.00
per share. Pursuant to the Rights Offering, each such holder of Common Stock
shall have the right to purchase from Company such number of shares of Series C
Preferred Stock (rounded up or down, with .5 being rounded up, to the nearest
whole number which could be zero or as otherwise required by the rules of the
NYSE) equal to the product of (i) a fraction, the numerator of which is the
number of shares of Common Stock then held by such holder and the denominator of
which is the total number of shares of Common Stock then outstanding, multiplied
by (ii) 600,000. The rights shall be transferable. If fewer than 400,000 shares
of Series C Preferred Stock are purchased pursuant to the Rights Offering,
Purchaser shall purchase a number of shares of Series C Preferred Stock (the
"Standby Shares") equal to the difference between (x) 400,000 and (y) the number
of shares of Series C Preferred Stock that are purchased in the Rights Offering
at a purchase price of $250.00 per share. In addition, Purchaser shall have the
right to purchase, but shall not be required to purchase, any shares of Series C
Preferred Stock offered in the Rights Offering (in addition to the Standby
Shares) that are not purchased in the Rights Offering. As compensation for
agreeing to act as standby purchaser of up to 400,000 shares of Series C
Preferred Stock that are not purchased in the Rights Offering, Company shall pay
Purchaser $5,000,000 in immediately available funds upon distribution of the
rights under the Rights Offering.
(b) Company shall, as promptly as practicable following the
Closing prepare and file with the SEC a registration statement, including a
prospectus (the "Registration Statement"), in connection with the registration
under the Securities Act of the Rights Offering, including shares of Series C
Preferred Stock (and the underlying share of Common Stock issuable upon
conversion thereof) issuable pursuant to the Rights Offering. Company will
provide Purchaser with a reasonable opportunity to review and comment on the
Registration Statement (including the prospectus contained therein) or any
amendment or supplement thereto prior to the filing thereof with the SEC.
Company and Purchaser shall consult and cooperate with each other in the
preparation and filing of the Registration Statement (including the Prospectus
contained therein) and will provide Purchaser with a copy of all such filings
with the SEC. Company shall, as promptly as practicable after the receipt
thereof, provide to Purchaser copies of any written comments and advise
Purchaser of any oral comments, with respect to the Registration Statement
received from the staff of the SEC. Company shall use commercially reasonable
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efforts to cause the Registration Statement to be declared effective as promptly
as practicable after filing with the SEC, including, without limitation, using
commercially reasonable efforts to cause its accountants to deliver necessary or
required instruments, such as opinions, consents and certificates, and will take
any other action required or necessary to be taken under federal or state
securities laws or otherwise in connection with the registration process (other
than qualifying to do business in any jurisdiction in which it is not now so
qualified or filing a general consent to service of process in any such
jurisdiction). Each of the parties hereto shall furnish all information
concerning itself which is required or customary for inclusion in the
Registration Statement (including in response to any comments of the staff of
the SEC). The information provided by any party hereto for use in the
Registration Statement shall be true and correct in all material respects,
without misstatement of any material fact or omission of any material fact which
is necessary or required to make the statements therein, in light of the
circumstances under which they were made, not false or misleading and, in the
event any party becomes aware of any information that should be included in the
Registration Statement such that the Registration Statement shall not contain
any misstatement of any material fact or omission of any material fact which is
necessary or required to make the statements therein, in light of the
circumstances under which they were made, not false or misleading, such party
shall promptly notify the other party and, to the extent required by applicable
law, an appropriate amendment to the Registration Statement shall be promptly
prepared, filed with the SEC and disseminated to stockholders.
6.12 Retention Program. As promptly as practicable after
the date of this Agreement, Company shall adopt a retention program for senior
executives and other key employees of Company and its Subsidiaries acceptable to
Purchaser as to covered executives and employees and the terms of such program.
Company shall consult with Purchaser in the development of the retention
program, which shall commence immediately upon execution of this Agreement.
6.13 Alternative Transaction. Company and Purchaser agree
that they will cooperate in implementing this Agreement and the transactions
contemplated hereby pursuant to a proceeding under chapter 11 of title 11 of the
United States Code, 11 U.S.C. Sections 101 et seq. if, in the good faith
judgment of each of Company and Purchaser, such a proceeding would be feasible
and the most advantageous method of implementing this Agreement and the
transactions contemplated hereby. Company and Purchaser agree that this Section
is not intended to create any obligations on Company that it would not otherwise
have if this Section had not been included in the Agreement, nor shall this
Section operate to increase or decrease any claim that Purchaser otherwise would
have for a breach or rejection of this Agreement.
6.14 Sharing Distribution. Company hereby agrees that, as
soon as practicable after December 31, 2005, but in no event later than May 31,
2006 (or if not then permitted under Delaware law, as soon thereafter as it is
legally able to make such distribution), the Board of Directors shall determine
the Sharing Amount (as defined herein) and shall make the distribution provided
herein. If the Sharing Amount shall be a number other than zero, Company shall
make the required distribution to (a) the holders of shares of Common Stock that
were outstanding immediately prior to consummation of the transactions
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contemplated by this Agreement, if the Sharing Amount results in an Upside
Distribution, or (b) the holders of the Other Equity determined pursuant to the
provisions of this Section, if the Sharing Amount results in a Downside
Distribution. Company agrees that any equity securities of Company that may be
issued on or after the Closing Date (other than the Convertible Preferred Stock,
the Warrant or pursuant to the Rights Offering to the extent provided herein)
shall not participate in the Upside Distribution or the Downside Distribution
and any such securities shall have such limitation noted conspicuously on the
face of such securities. Company and Purchaser agree to modify this provision in
a manner that will achieve the same economic results if necessary to comply with
Delaware law or the rules of the NYSE.
(a) The distribution shall be made by Company, out of funds
legally available therefore and shall be in an amount determined in accordance
with the applicable formula below:
For Upside Distributions, the formula for the distribution
(D) shall be:
D = T [(.5-C) / E]
For Downside Distributions, the formula for the
distribution (D) shall be:
D = T [(.5 - E)/C]
The letters in the foregoing formulas refer to terms
defined in this Section 6.14, as follows:
D: Amount of the Upside Distribution or
Downside Distribution
T: Sharing Amount
C: Old S/H Ownership
E: Other Equity
(b) An Upside Distribution or Downside Distribution shall
be paid in such form or forms, including capital stock of Company, as the Board
of Directors of the Company shall determine. The valuation of any such
securities or property shall be determined by the Board of Directors, with the
concurrence of a majority of the Continuing Directors. The Continuing Directors
collectively may retain, at Company's expense, independent advisors to advise
them on any determinations required under Sections 6.14(b) and 6.14(d). If a
majority of the Board of Directors and a majority of the Continuing Directors
are unable to agree upon such valuation, the matter shall be referred for final
determination to an investment banking firm mutually acceptable to the majority
of the Board of Directors and a majority of the Continuing Directors. Company
shall make available to such investment banking firm all such information, books
and records as the investment banking firm may determine to be necessary for the
purpose of its determination and shall pay the fees and expenses of such firm.
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No payments are guaranteed to be made under this Section. No interest shall be
payable in respect of any distribution pursuant to this Section.
(c) Company will maintain such records as may be required
for calculation of the Sharing Amount, including a cumulative record of the
actual collection of assets in the Portfolio measured against the gross amount
recorded for each asset as of June 30, 2000 or, in the case of commitments,
actual collections measured against the actual amount funded pursuant to or in
connection with the commitment. The gross amount recorded for each asset shall
mean the amount recorded before any specific or general reserves in respect of
such asset. In the case of loans, a particular loan will be deemed "collected"
for purposes of this calculation when the loan is collected, sold or written-off
in full; it is not deemed collected at such time as it is extended or modified.
In the case of a leased asset, the asset will be deemed "collected" for purposes
of this calculation when the leased asset is finally sold or otherwise disposed
of. To the extent the investment in any loan or lease is increased or extended
pursuant either to a revolving commitment or due to management's judgment that,
to protect collection of the loan or recovery of Company's investment in the
lease, such increase or extension is in the Company's best interest, the final
collection will be compared to the loan or lease as so increased.
(d) In determining the "Actual Gain" or "Actual Loss" for
purposes of determining the Sharing Amount hereunder, unrealized gains and
unrealized losses, if any, on the balance of the Portfolio outstanding at
December 31, 2005 shall be estimated by the Board of Directors, which estimate
shall be approved by a majority of the Continuing Directors. If a majority of
the Board of Directors and a majority of the Continuing Directors are unable to
agree upon any such estimate, the matter shall be referred for final
determination of an independent accounting firm, (other than the Company's or
Purchaser's independent auditors), which is mutually acceptable to a majority of
the Board of Directors and a majority of the Continuing Directors. The Company
shall make available to such independent accounting firm all such information,
books and records as the independent accounting firm may determine to be
necessary for the purpose of its determination and shall pay the fees and
expenses of such firm. Any determination made by the Board of Directors, or
where so required made by the Board of Directors with the concurrence of a
majority of the Continuing Directors, or made by an independent accounting firm
or investment banking firm as herein provided, shall be conclusive and binding
and shall not be subject to challenge or dispute absent manifest error.
Set forth on Schedule 6.14 are examples, solely for
purposes of illustration, of various calculations of the Sharing Amount and the
Upside Distribution or Downside Distribution relating to such Sharing Amounts.
(e) For purposes of this Section, the following definitions
shall apply:
"Actual Loss" shall mean the actual cumulative loss on the
Portfolio. Actual cumulative loss on the Portfolio shall include all realized
and unrealized gains and losses as set forth in (c) and (d) above. Gains and
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losses on the Portfolio shall be determined without reference to any specific or
general reserves in respect of the relevant assets.
"Actual Gain" shall mean the actual cumulative gain on the
Portfolio. Actual cumulative gain on the Portfolio shall include all realized
and unrealized gains and losses as set forth in (c) and (d) above. Gains and
losses on the Portfolio shall be determined without reference to any specific or
general reserves in respect of the relevant assets.
"After-Tax Loss" shall mean the Actual Loss multiplied by
60%.
"After-Tax Gain" shall mean the Actual Gain multiplied by
60%.
"Baseline" shall mean $780 million.
"Downside Distribution" shall mean the distribution made to
the holders of the Convertible Preferred Stock and the Purchaser in respect of
the Warrant (the "Other Equity") The allocation of any Downside Distribution
shall be calculated by multiplying the amount of the Downside Distribution by
the Preferred Percentage of Other Equity, the Warrant Percentage of Other Equity
and the Rights Percentage of Other Equity, respectively. Amounts in respect of
the Preferred Percentage of Other Equity shall be paid to the holders of record
of the Series B Preferred Stock and of the Series C Preferred Stock, if any,
purchased by Purchaser as a result of its standby commitment set forth in
Section 6.11(a), amounts in respect of the Warrant Percentage shall be paid to
Purchaser, and amounts in respect of the Rights Percentage shall be paid to
holders of record of Series C Preferred Stock purchased in the Rights Offering
(which shall exclude shares of Series C Preferred Stock, if any, purchased by
Purchaser as a result of its standby commitment set forth in Section 6.11(a),
but which shall include any shares of Series C Preferred Stock subsequently
purchased by Purchaser).
"Fully Diluted Equity" shall mean all outstanding shares of
Common Stock of Company and all other shares of Common Stock that may be issued
by Company upon the exercise, conversion or exchange of all rights, options,
warrants or other securities convertible into or exchangeable for shares of
Common Stock (including the Convertible Preferred Stock and the Warrant),
whether or not such rights, options, warrants or other securities are then
vested, convertible or exercisable.
"Other Equity Ownership" shall mean the sum of (i)
Preferred Ownership, (ii) Warrant Ownership, and (iii) Rights Ownership.
"Old S/H Ownership" shall mean the percentage of Fully
Diluted Equity represented by the shares of Common Stock of Company outstanding
immediately prior to Purchaser's acquisition of securities pursuant to the
Purchase Agreement.
"Portfolio" shall mean (a) all loans, advances, capital
leases or other investments included in the (i) gross "Investment in Financing
Transactions," as reflected on the Company's June 30, 2000 consolidated balance
sheet (the "June 30 Balance Sheet"), (ii) "Investments," as reflected on the
June 30 Balance Sheet, (iii) "Offlease Aircraft," as reflected in the June 30
Balance Sheet and (b) the aggregate amount of all unfunded commitments of the
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Company existing as of June 30, 2000 as reflected on Schedule 6.14(e), which
shall be prepared by Company upon consultation with Purchaser and shall be
finalized and delivered prior to the Closing Date, but only to the extent that
such commitments have been funded by the Company after June 30, 2000.
"Preferred Ownership" shall mean the percentage of Fully
Diluted Equity of Company owned by Purchaser by virtue of Purchaser's ownership
of shares of Convertible Preferred Stock (including any Convertible Preferred
Stock owned by Purchaser pursuant to Purchaser's obligations in connection with
the Rights Offering) based on the number of shares of Common Stock into which
each share of Convertible Preferred Stock may be converted, regardless of
whether or not such Convertible Preferred Stock is then convertible.
"Preferred Percentage of Other Equity" shall mean the
fraction, expressed as a percentage, the numerator of which is the Preferred
Ownership and the denominator of which is the Other Equity Ownership.
"Rights Ownership" shall mean the percentage of Fully
Diluted Equity of Company owned by stockholders (excluding Purchaser in respect
of shares of Series C Preferred Stock included in the Preferred Ownership, but
including shares of Series C Preferred Stock subsequently purchased by
Purchaser) by virtue of their respective ownership of shares of Series C
Preferred Stock based on the number of shares of Common Stock into which each
share of Series C Preferred Stock may be converted, regardless of whether or not
such Series C Preferred Stock is then convertible.
"Rights Percentage of Other Equity" shall mean the
fraction, expressed as a percentage, the numerator of which is the Rights
Ownership and the denominator of which is the Other Equity Ownership.
"Sharing Amount" shall mean the Baseline minus the
After-Tax Loss or plus the After-Tax Gain. If such amount is negative, it shall
be divided by 60%.
"Upside Distribution" shall mean the distribution to be
made to certain holders of Common Stock, as contemplated by this Section 6.14,
if the Sharing Amount is a positive number.
"Warrant Ownership" shall mean the percentage of Fully
Diluted Equity of Company represented by the Warrant based on the number of
shares of Common Stock into which the Warrant is exercisable as of the date of
determination, regardless of whether or not the Warrant is then exercisable.
"Warrant Percentage of Other Equity" shall mean the
fraction, expressed as a percentage, the numerator of which is the Warrant
Ownership and the denominator of which is the Other Equity Ownership.
6.15 Taxes. Company shall consult with Purchaser in
connection with any Tax planning and in the fashioning and implementation of any
transaction or course of conduct that would materially impact Company's tax
attributes, including Company's tax attributes after completion of the
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transactions contemplated under this Agreement; Company will not effectuate any
such planning, transaction or course of action without prior written consent of
Purchaser, which consent may not be unreasonably withheld.
6.16 Merger or Consolidation, Liquidation or Dissolution.
In case the Company shall consolidate or merge with or into another corporation
(where Company is not the surviving corporation), the successor corporation
shall expressly assume the due and punctual observance and performance of
Company's obligations under Section 6.14. In case Company shall liquidate or
dissolve prior to December 31, 2005, Company and any trustee, receiver and
similar person shall make appropriate arrangements to satisfy Company's
obligations under Section 6.14. Company agrees that it will not enter into any
agreements that would reasonably be expected to restrict Company's ability to
make the distribution provided for in Section 6.14.
6.17 Further Assurances. Each of the parties hereto shall
execute such documents and other instruments and take such further actions as
may be reasonably required or desirable to carry out the provisions hereof and
consummate the transactions contemplated by this Agreement and the other
Transaction Documents. Upon the terms and subject to the conditions hereof, each
of the parties hereto shall take or cause to be taken all actions and to do or
cause to be done all other things necessary, proper or advisable to consummate
and make effective as promptly as practicable the transactions contemplated by
this Agreement and to obtain in a timely manner all necessary waivers, consents
and approvals and to effect all necessary registrations and filings.
ARTICLE VII
CONDITIONS PRECEDENT
7.1 Conditions to Each Party's Obligations. The respective
obligation of each party to complete the purchase and sale of the Securities
hereunder shall be subject to the satisfaction prior to or concurrently with the
Closing Date of the following conditions:
(a) No Injunctions or Restraints. No statute, rule,
regulation, injunction, restraining order or decree of any court or Governmental
Authority of competent jurisdiction shall be in effect which restrains or
prevents the transactions contemplated hereby.
(b) HSR Act. The waiting period applicable to the
consummation of the transaction contemplated hereunder under the HSR Act shall
have expired or been terminated.
(c) Refinancing. The Refinancing shall have been
consummated upon terms acceptable to both Company and Purchaser (it being
understood that in making this determination, Purchaser may consider the effect
such Refinancing will have on Purchaser and on the value of the securities
contemplated to be purchased under this Agreement or the other Transaction
Documents).
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(d) Bond Indebtedness. Modification of the Bond
Indebtedness on terms acceptable to both Company and Purchaser shall have been
consummated (it being understood that in making this determination, Purchaser
may consider the effect this modification of the Bond Indebtedness will have on
Purchaser and on the value of the security contemplated to be purchased under
this agreement or the other Transaction Documents).
7.2 Conditions to Obligations of Purchaser. The obligation
of Purchaser to complete the purchase of the Securities hereunder is subject to
the satisfaction of the following conditions, any or all of which may be waived
in whole or in part by Purchaser:
(a) Representations and Warranties. The representations and
warranties of Company made hereunder shall be true and correct in all material
respects (except for those representations and warranties that are qualified as
to materiality, "Material Adverse Effect," which shall be true and correct), on
and as of the date hereof (except to the extent such representations and
warranties speak as of an earlier date) and after giving effect to consummation
of the Refinancing on and as of the Closing Date.
(b) Agreements. Company shall have performed and complied
in all material respects with all of its respective undertakings, covenants,
conditions and agreements required by this Agreement to be performed or complied
with by it prior to or at the Closing.
(c) Certificate of Designation. The Certificate of
Designation shall have been filed with the Secretary of State of the State of
Delaware in accordance with the laws of that State.
(d) Rule 14f-1 Information Statement. Company shall have
filed with the SEC and transmitted to all holders of record of securities of
Company who would be entitled to vote at a meeting for election of directors the
information required by Section 14(f) of the Exchange Act and Rule 14f-1
thereunder, and the Closing shall not take place until at least ten days shall
have elapsed after such transmittal.
(e) Officer's Certificate. Company shall have delivered to
Purchaser (i) a copy of the resolutions adopted by the Board of Directors,
certified by the Secretary or an Assistant Secretary of Company authorizing this
Agreement and evidencing compliance with Sections 4.24 and 4.25 hereof and (ii)
a certificate dated the Closing Date, of an appropriate officer of Company
(without any personal liability) certifying as to fulfillment of the conditions
set forth in Sections 7.2(a) and 7.2(b).
(f) Registration Rights Agreement. Company shall have
executed and delivered the Registration Rights Agreement.
(g) Opinion of Company's Counsel. Purchaser shall have
received an opinion letter, dated as of the Closing Date, of Gibson, Dunn &
Crutcher LLP, counsel to Company, in form and substance reasonably satisfactory
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to Purchaser. In rendering such opinion, Gibson, Dunn & Crutcher LLP may rely on
the opinion of Company's general counsel.
7.3 Conditions to Obligations of Company. The obligation of
Company to complete the sale of the Securities hereunder is subject to the
satisfaction of the following conditions, any or all of which may be waived, in
whole or in part, by Company:
(a) Representations and Warranties. The representations and
warranties of Purchaser made hereunder shall be true and correct in all material
respects on and as of the date hereof and (except to the extent such
representations and warranties speak as of an earlier date) on and as of the
Closing Date as if made on such date.
(b) Agreements. Purchaser shall have performed and complied
in all material respects with all of the undertakings, covenants, conditions and
agreements required by this Agreement to be performed or complied with by
Purchaser prior to or at the Closing.
(c) Officer's Certificate. Company shall have received a
certificate signed by an appropriate officer of Purchaser certifying as to
fulfillment of the conditions set forth in Sections 7.3(a) and 7.3(b).
(d) Opinion of Purchaser's Counsel. Company shall have
received an opinion letter, dated as of the Closing Date, of Weil, Gotshal &
Manges LLP, counsel to Purchaser, in form and substance reasonably satisfactory
to Company.
ARTICLE VIII
TERMINATION AND AMENDMENT
8.1 Voluntary Termination. This Agreement may be terminated
and the transactions contemplated hereby may be abandoned at any time prior to
the Closing:
(a) by mutual written consent of Company and Purchaser;
(b) by Purchaser, if either (i) any of the conditions set
forth in Section 7.1 or 7.2 shall have become impossible to satisfy, and shall
not have been waived by Purchaser, or (ii) Company shall breach in any material
respect any of its representations, warranties, covenants or obligations
hereunder and such breach shall not have been cured in all material respects or
waived and Company shall not have provided reasonable assurance that such breach
will be cured in all material respects on or before the Closing Date;
(c) by Company, if either (i) any of the conditions set
forth in Section 7.1 or 7.3 shall have become impossible to satisfy, and shall
not have been waived by Company, or (ii) Purchaser shall breach in any material
respect any of its representations, warranties, covenants or obligations
hereunder and such breach shall not have been cured in all material respects or
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waived and Purchaser shall not have provided reasonable assurance that such
breach will be cured in all material respects on or before the Closing Date;
(d) by Company if (i) Company is not in material breach of
Section 6.4 hereof, (ii) the Board of Directors authorizes Company, subject to
complying with the terms of this Agreement, to enter into a binding written
agreement concerning a transaction that constitutes a Superior Proposal and
Company notifies Purchaser in writing that it intends to enter into such an
agreement, attaching the most current form of such agreement to such notice, and
(iii) during the three-day period after Company's notice, (A) Company shall have
negotiated with, and shall have caused its respective financial and legal
advisors to, negotiate with Purchaser to attempt to make such commercially
reasonable adjustments in the terms and conditions of this Agreement as would
enable Company to proceed with the transactions contemplated herein and (B) the
Board of Directors shall have concluded, after considering the results of such
negotiations, that any Superior Proposal giving rise to Company's notice
continues to be a Superior Proposal. Company may not effect such termination
unless contemporaneously therewith Company pays to Purchaser in immediately
available funds the fee required to be paid pursuant to Section 8.4. Company
agrees (x) that it will not enter into a binding agreement referred to in clause
(ii) above until at least the fourth day after it has provided the notice to
Purchaser required thereby and (y) to notify Purchaser promptly if its intention
to enter into a written agreement referred to in its notification shall change
at any time after giving such notification.
(e) by Purchaser, if Company accepts an offer or enters
into a written agreement for an Acquisition Proposal;
(f) by either Company or Purchaser, if the Closing shall
not have occurred on or before June 30, 2001;
(g) by either Company or Purchaser if, in the good faith
judgment of the Board of Directors, the Board determines that it is in the best
interests of the Company to commence a voluntary petition for reorganization
relief pursuant to chapter 11 of title 11 of the United States Code, 11 U.S.C.
Sections 101 et seq. Company shall provide Purchaser notice of such
determination as promptly as practicable following the Board's determination; or
(h) by Company if, in its good faith judgment after
reasonable inquiry of Purchaser, Company determines that Purchaser is not
pursuing the Refinancing in good faith.
In the event of a termination by Company or Purchaser
pursuant to this Section 8.1, written notice thereof shall promptly be given to
the other party hereto. Notwithstanding the foregoing, a party shall not be
permitted to terminate this Agreement pursuant to clause (b) or (c) hereof if
such party is in breach of any of its representations, warranties, covenants or
agreements contained in this Agreement and such breach would have a material
adverse effect on the ability of such party to consummate the transactions
contemplated hereby. Neither party may rely on the failure of any condition
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precedent set forth in Article VII to be satisfied if such failure was caused by
such party's failure to act in good faith or to use its commercially reasonable
efforts to consummate the transactions contemplated by this Agreement in
accordance with Section 6.1.
8.2 Effect of Termination. In the event of a termination by
Company or Purchaser pursuant to Section 8.1, except as otherwise provided
herein, the transactions contemplated by this Agreement shall be terminated
without further action by any party, and such termination shall be without
liability of either party (or any stockholder, director, officer, partner,
employee, agent, consultant or representative of such party). Notwithstanding
the foregoing, nothing in this Section 8.2 shall be deemed to release any party
from any liability for (i) the willful failure of such party to fulfill a
condition to the performance of any obligation of the other party hereto, (ii)
any breach by such party of the terms and provisions of any covenant or
agreement contained in this Agreement, or (iii) the breach by such party of any
representation or warranty contained in this Agreement. The provisions of this
Article VIII and Article X and Sections 5.2(b) and 6.3 shall survive any
termination of this Agreement pursuant to Section 8.1 hereof. In the event of a
termination pursuant to Section 8.1(g), Purchaser shall have a liquidated
damages claim of $3 million. Upon a termination of this Agreement pursuant to
Section 8.1(g), Purchaser shall be released from the restrictions set forth in
paragraph 9 of the Non-Disclosure Agreement.
8.3 Fees and Expenses. Except as contemplated by Article IX
hereof, each of the parties hereto shall pay the fees and expenses of its
counsel, accountants, financial advisors and other experts and shall pay all
other costs and expenses incurred by it in connection with the conduct of due
diligence reviews, the negotiation, preparation and execution of this Agreement
and the other Transaction Documents and the consummation of the transactions
contemplated hereby and thereby.
8.4 Break-Up Fee. In the event that this Agreement is
terminated by Company or Purchaser for any reason and on or before November 10,
2001, Company accepts an offer or enters into a written agreement with respect
to, or consummates, an Acquisition Proposal, Company shall pay to Purchaser in
immediately available funds, at Purchaser's option, either (I) $15 million or
(II) in the case of an Acquisition Proposal involving the Common Stock of
Company, an amount equal to the product of 3,000,000 multiplied by the excess of
(x) the fair market value of the consideration to be paid for each share of
Common Stock pursuant to such Acquisition Proposal over (y) $2.50; provided,
however, for the purpose of determining the amount referred to in clause (II),
the amount referred to in clause (y) shall be adjusted downwards or upwards, as
appropriate, to give effect to any stock split or reverse split applicable to
the Common Stock or to any stock dividend or other distribution payable in
shares of Common Stock which occurs after the date hereof. Company hereby waives
any right to set off or counterclaim against Purchaser with respect to such
payment.
8.5 Amendment. This Agreement may be amended, modified or
supplemented at any time by an agreement in writing signed by the parties hereto
by written agreement of Purchaser and Company.
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8.6 Extension; Waiver. At any time prior to the Closing,
Purchaser and Company may, to the extent legally allowed: (i) extend the time
for the performance of any of the obligations or other acts of the other party
hereto; (ii) waive any inaccuracies in the representations and warranties of the
other party contained herein or in any document delivered pursuant hereto; and
(iii) waive compliance by the other party with any of the agreements or
conditions contained herein. Any such extension or waiver shall be valid only if
set forth in a written instrument. The failure of Purchaser or Company to assert
any of its rights hereunder shall not constitute a waiver of such rights nor in
any way affect the validity of this Agreement or any part hereof or the right of
such party thereafter to enforce each and every provision of this Agreement. No
waiver of any breach of or non-compliance with this Agreement shall be held to
be a waiver of any other or subsequent breach or non-compliance.
ARTICLE IX
INDEMNIFICATION
9.1 Survival of Representation and Warranties. All
representations and warranties contained in this Agreement and all claims with
respect thereto shall terminate upon the expiration of the later of (i) 12
months after the Closing Date or (ii) March 31 of the year following the year in
which the Closing Date occurs, except that the representations and warranties
contained in Sections 4.1 and 4.2 shall survive indefinitely and the
representations and warranties contained in Section 4.15 and in the certificate
delivered pursuant to section 7.2(e) as they relate to section 4.15 shall
survive until the applicable statute of limitations has run for the matters
contained therein. Notwithstanding the preceding sentence, any covenant,
agreement, representation or warranty in respect of which indemnity may be
sought under this Agreement shall survive the time at which it would otherwise
terminate pursuant to the preceding sentence, if notice of the inaccuracy or
breach thereof giving rise to such right of indemnity shall have been given to
the party against whom such indemnity may be sought prior to such time.
9.2 Indemnification. (a) Company shall indemnify Purchaser
against and shall hold Purchaser harmless from any and all damages, loss,
liability and expense (including, without limitation, reasonable expenses of
investigation and reasonable attorneys' fees and expenses in connection with any
action, suit or proceeding, including any action, suit or proceeding against
Company to enforce its indemnification rights hereunder) ("Damages") incurred or
suffered by Purchaser arising out of any material misrepresentation or breach of
warranty, covenant or agreement made or to be performed by Company pursuant to
this Agreement; provided that (i) Company shall not be liable under this Section
9.2(a) with respect to any misrepresentation or breach of warranty unless the
aggregate amount of Damages with respect to all misrepresentations and breaches
of warranties exceeds $10 million, in which event Purchaser shall be entitled to
make a claim against Company for the full amount of such Damages with respect to
any misrepresentation or breach of warranty and (ii) Company's maximum liability
under this Section 9.2(a) with respect to any misrepresentation or breach of
warranty shall not exceed the aggregate amount invested by Purchaser in Company
pursuant to this Agreement and the Rights Offering, up to a maximum amount of
$350 million.
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(b) Purchaser shall indemnify Company against and shall
hold Company harmless from any and all Damages (including any action, suit or
proceeding against Purchaser to enforce its indemnification rights hereunder)
incurred or suffered by Company arising out of any misrepresentation or breach
of warranty, covenant or agreement made or to be performed by Purchaser pursuant
to this Agreement; provided that (i) Purchaser shall not be liable under this
Section 9.2(b) with respect to any misrepresentation or breach of warranty
unless the aggregate amount of Damages with respect to all misrepresentations
and breaches of warranties exceeds $10 million, in which event Company shall be
entitled to make a claim against the Purchaser for the full amount of such
Damages and (ii) Purchaser's maximum liability under this Section 9.2(b) with
respect to any misrepresentation or breach of warranty shall not exceed the
aggregate amount invested by Purchaser in Company pursuant to this Agreement and
the Rights Offering, up to a maximum of $350 million.
9.3 Procedures. The party seeking indemnification under
Section 9.2 (the "Indemnified Party") agrees to give prompt notice to the party
against whom indemnity is sought (the "Indemnifying Party") of the assertion of
any claim, or the commencement of any suit, action or proceeding in respect of
which indemnity may be sought under such Section; provided, however, that the
failure of an Indemnified Party to give prompt notice to the Indemnifying Party
shall not affect the rights of the Indemnified Party to indemnification
hereunder except (and then only to the extent that) the Indemnifying Party is
actually materially prejudiced by reason of such failure to give prompt notice.
The Indemnifying Party may at the request of the Indemnified Party participate
in and control the defense of any such suit, action or proceeding at its own
expense. The Indemnifying Party shall not be liable under Section 9.2 for any
settlement effected without its prior written consent (which shall not be
unreasonably withheld) of any claim, litigation or proceeding in respect of
which indemnity may be sought hereunder.
ARTICLE X
MISCELLANEOUS
10.1 Notices. All notices, requests, permissions, waivers,
and other communications hereunder shall be in writing and shall be deemed to
have been duly given, (a) five Business Days following sending by registered or
certified mail, postage prepaid, (b) when sent if sent by facsimile during the
normal business hours of the recipient, or one Business Day after the date sent
if sent by facsimile after the normal business hours of the recipient; provided
that the sending party receives written confirmation that the facsimile has been
successfully transmitted to the intended recipient, (c) when delivered, if
delivered personally to the intended recipient and (d) one Business Day
following sending by overnight delivery via a national courier service, and in
each case, addressed to a party at the following address for such party:
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(i) If to Company, to:
The FINOVA Group Inc.
4800 North Scottsdale Road
Scottsdale, Arizona 85251-7623
Attention: William Hallinan, Senior Vice-President,
General Counsel and Secretary
Facsimile No.: (480) 636-4949
with a copy (which shall not
constitute notice) to:
Gibson, Dunn & Crutcher LLP
333 South Grand Avenue
Los Angeles, California 90071-3197
Attention: Andrew E. Bogen, Esq.
Facsimile No.: (213) 229-7520
(ii) If to Purchaser, to:
Leucadia National Corporation
315 Park Avenue South
New York, New York 10010
Attention: Joseph S. Steinberg, President
Facsimile No.: (212) 598-4869
with a copy (which shall not
constitute notice) to:
Weil, Gotshal & Manges LLP
767 Fifth Avenue
New York, New York 10153
Attention: Stephen E. Jacobs, Esq.
Facsimile No: (212) 310-8007
Such names and addresses may be changed by notice given in accordance with this
Section.
10.2 Binding Effect; Benefits. Except as otherwise provided
herein, this Agreement shall be binding upon and inure to the benefit of the
parties to this Agreement and their respective successors and permitted assigns.
Nothing in this Agreement, express or implied, is intended or shall be construed
to give any Person other than the parties to this Agreement or their respective
successors or assigns any legal or equitable right, remedy or claim under or in
respect of any agreement or any provision contained herein, other than the
Continuing Directors and then solely with respect to the provisions of Sections
6.7 and 6.14 of this Agreement. The Continuing Directors shall be entitled to
pursue such rights, remedies and claims at Company's expense.
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10.3 Complete Agreement. This Agreement (including the
Exhibits and Schedules attached hereto, all of which are a part hereof),
together with the Non-Disclosure Agreement and the Transaction Documents,
constitute the complete agreement and understanding of the parties with respect
to the subject matter hereof and thereof and supersede any previous agreement or
understanding between them relating thereto. No action taken pursuant to this
Agreement, including, without limitation, any investigation by or on behalf of
any party, shall be deemed to constitute a waiver by the party taking such
action, of compliance with any representations, warranties, covenants or
agreements contained herein.
10.4 Assignability. Neither this Agreement nor any of the
rights, interest or obligations hereunder or under any other Transaction
Document shall be assigned by any of the parties hereto without the prior
written consent of the other party; provided, however, that Purchaser shall have
the right to assign this Agreement and the other Transaction Documents to any
wholly-owned Subsidiary of Purchaser without obtaining such consent.
10.5 Remedies. Purchaser, in addition to being entitled to
exercise all rights granted by law, including recovery of damages, will be
entitled to specific performance of its rights under this Agreement and the
other Transaction Documents. Company agrees that monetary damages would not be
adequate compensation for any loss incurred by reason of a breach by it of the
provisions of this Agreement or any other Transaction Documents and hereby
agrees to waive the defense in any action for specific performance that a remedy
at law would be adequate. In any action or proceeding brought to enforce any
provision of this Agreement or any other Transaction Document or where any
provision hereof is validly asserted as a defense, the successful party shall be
entitled to recover reasonable attorneys' fees in addition to any other
available remedy.
10.6 Section and Other Headings. The section and other
headings contained in this Agreement are for reference purposes only and shall
not affect the meaning or interpretation of this Agreement. All references
herein to "Articles", "Sections" or "Exhibits" shall be deemed to be references
to Articles or Sections hereof or Exhibits hereto unless otherwise indicated.
10.7 Severability. In the event that any one or more of the
provisions contained in this Agreement shall be determined to be invalid,
illegal or unenforceable in any respect for any reason, the validity, legality
and enforceability of any such provision or provisions in every other respect
and the remaining provisions of this Agreement shall not be in any way impaired.
10.8 Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be deemed to be an original and all
of which together shall be deemed to be one and the same instrument.
10.9 Governing Law; Waiver of Jury Trial. This Agreement
shall be governed by, construed and enforced in accordance with, the laws of the
State of New York without regard to the principles thereof relating to conflict
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of laws. Each of the parties hereby submits to personal jurisdiction and waives
any objection as to venue in the federal or state courts located in the County
of New York, State of New York. Service of process on the parties in any action
arising out of or relating to this Agreement shall be effective if mailed to the
parties in accordance with Section 10.1 hereof. The parties hereto waive all
right to trial by jury in any action or proceeding to enforce or defend any
rights under this Agreement and any other Transaction Document.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK.]
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IN WITNESS WHEREOF, Company and Purchaser have executed
this Agreement as of the day and year first above written.
THE FINOVA GROUP INC.
By: /s/ Matthew M. Breyne
----------------------------------------
Name: Matthew M. Breyne
Title: President and
Chief Executive Officer
LEUCADIA NATIONAL CORPORATION
By: /s/ Joseph S. Steinberg
----------------------------------------
Name: Joseph S. Steinberg
Title: President
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