INDEX TO EXHIBITS (continued)
Exhibit No. Description Page
----------- ------------ ----
10.19 Agreement and Plan of Merger, dated as of February 19, 1996, by and among Davidson &
Associates, Inc., CUC International Inc. and Stealth Acquisition I Corp. (filed as
Exhibit 2(a) to the Company's Report on Form 8-K filed March 12, 1996).*
10.20 Agreement and Plan of Merger, dated as of February 19, 1996, by and among Sierra
On-Line, Inc., CUC International Inc. and Larry Acquisition Corp. (filed as Exhibit
2(b) to the Company's Report on Form 8-K filed March 12, 1996).*
10.21 Agreement and Plan of Merger, dated as of April 19, 1996, by and among Ideon Group,
Inc., CUC International Inc. and IG Acquisition Corp.
11 Statement Re: Computation of Per Share Earnings.
21 Subsidiaries of the Company.
23.1 Consent of Ernst & Young LLP.
23.2 Consent of Deloitte & Touche LLP.
27 Financial Data Schedule.
-44-
Exhibit 10.2
AGREEMENT
---------
This Agreement made effective as of February 1, 1996 by and between CUC
INTERNATIONAL INC. (the "Company"), a Delaware corporation, and E. Kirk Shelton
(the "Executive").
WHEREAS the Executive and the Company are parties to a certain Agreement
dated February 1, 1987 as amended on November 1, 1991 (the "Agreement"); and
WHEREAS the Executive and the Company wish to make certain further
amendments to the Agreement.
NOW, THEREFORE, in consideration of the foregoing and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, it is hereby agreed as follows:
1. Section IX of the Agreement is hereby amended to read as follows:
SECTION IX
OTHER DUTIES OF THE EXECUTIVE DURING AND
----------------------------------------
AFTER THE PERIOD OF EMPLOYMENT
------------------------------
A. The Executive will with reasonable notice during or after the Period of
Employment furnish information as may be in his
Page 1
possession and fully cooperate with the Company and its affiliates as may be
requested in connection with any claims or legal action in which the Company or
any of its affiliates is or may become a party.
B. The Executive recognizes and acknowledges that all information
pertaining to this Agreement or to the affairs; business; results of operations;
accounting methods, practices and procedures; members; acquisition candidates;
financial condition; clients; customers or other relationships of the Company or
any of its affiliates ("Information") is confidential and is a unique and
valuable asset of the Company or any of its affiliates. Access to and knowledge
of certain of the Information is essential to the performance of the Executive's
duties under this Agreement. The Executive will not during the Period of
Employment or thereafter, except to the extent reasonably necessary in
performance of his duties under this Agreement, give to any person, firm,
association, corporation, or governmental agency any Information, except as may
be required by law. The Executive will not make use of the Information for his
own purposes or for the benefit of any person or organization other than the
Company or any of its affiliates. The Executive will also use his best efforts
to prevent the disclosure of this Information by others. All records, memoranda,
etc. relating to the business of the Company or its affiliates whether made by
the Executive or otherwise coming into his
Page 2
possession are confidential and will remain the property of the Company or its
affiliates.
C. During the Period of Employment and for a twelve (12) month period
thereafter, irrespective of the cause, manner or time of any termination, the
Executive will not use his status with the Company or any of its affiliates to
obtain loans, goods or services from another organization on terms that would
not be available to him in the absence of his relationship to the Company or any
of its affiliates. For such period, the Executive will not make any statements
or perform any acts intended to or which may have the effect of advancing the
interest of any existing or prospective competitors of the Company or any of its
affiliates or in any way injuring the interests of the Company or any of its
affiliates. For such period, the Executive, without prior express written
approval by the Board of Directors of the Company, will not directly or
indirectly own or hold proprietary interest in or be employed by or receive
compensation from any party which competes in any way or manner with the
business of the Company or any of its affiliates, as such business or businesses
may be conducted from time to time. The Executive acknowledges that the
Company's and its affiliates' businesses are conducted nationally and
internationally and agrees that the provisions in the foregoing sentence shall
operate throughout the United States and the World. For such period, the
Executive, without express prior written approval from the Board of Directors,
will not solicit any members of the then current clients
Page 3
of the Company or any of its affiliates for any existing business of the Company
or any of its affiliates or discuss with any employee of the Company or any of
its affiliates information or operation of any business intended to compete with
the Company or any of its affiliates. For such period, the Executive will not
meddle with the Employee's or affairs of the Company or any of its affiliates or
solicit or induce any person who is an employee of the Company or any of its
affiliates to terminate any relationship such person may have with the Company
or any of its affiliates, nor shall the Executive during such period directly or
indirectly engage, employ or compensate, or cause or permit any person with
which the Executive may be affiliated, to engage, employ or compensate, any
employee of the Company or any of its affiliates. For the purposes of this
Agreement, proprietary interest means legal or equitable ownership, whether
through stock holding or otherwise, of an equity interest in a business, firm
or entity or ownership of more that 5% of any class of equity interest in a
publicly-held company and the term "affiliate" shall include without limitation
all subsidiaries and licensees of the Company. The Executive hereby represents
and warrants that the Executive has not entered into any agreement,
understanding or arrangement with any employee of the Company or any of its
affiliates pertaining to any business in which the Executive has participated
or plans to participate, or to the employment, engagement or compensation of
any such employee. The Company's obligation to make any payments
Page 4
under the terms of this Agreement will cease upon any violation of the
preceding paragraphs.
D. The Executive hereby acknowledges that damages at law may be an
insufficient remedy to the Company if the Executive violates the terms of this
Agreement and that the Company shall be entitled to preliminary and/or permanent
injunctive relief in any court of competent jurisdiction to restrain the breach
of or otherwise to specifically enforce any of the covenants contained in this
Agreement without the necessity of showing any actual damage or that monetary
damages would not provide an adequate remedy. Such right to an injunction shall
be in addition to, and not in limitation of, any other rights or remedies the
Company may have. Without limiting the generality of the foregoing, neither
party shall oppose any motion the other party may make for any expedited
discovery or hearing in connection with any alleged breach of this Section IX.
E. The period of time during which the provisions of this Section IX shall
be in effect shall be extended by the length of time during which the Executive
is in breach of the terms hereof as determined by any court of competent
jurisdiction on the Company's application for injunctive relief.
Page 5
F. The Executive agrees that the restrictions contained in this Section IX
are an essential element of the compensation the Executive is granted hereunder
and the Executive's right to retain certain stock options granted prior to the
date of this Agreement and but for the Executive's agreement to comply with such
restrictions, the Company would not have entered into this Agreement or allowed
the Executive to retain those stock options.
2. A new Section XVI is hereby added to read as follows:
SECTION XVI
LIFE INSURANCE POLICIES
-----------------------
A. The Executive owns insurance policies nos. 3022608, 2909164 and 2993536
with Guardian Life Insurance Company of America ("Guardian"), policies nos.
1046440 and 1074718 with Security Mutual Life Insurance Company of New York
("Security"), and policy no. 2636034 with Canada Life ("Canada"), (the Guardian,
Security and Canada policies are referred to as the "Policies"). The Policies
provide a death benefit equal to the cash surrender value of the Policies. The
Executive has the right to name a beneficiary for all of the death benefits,
subject to the rights of the Company under the Prior Life Insurance Agreements
described below in Subparagraph F. As part of the compensation paid by the
Company to the Executive, the Company has advanced premium payments on the
Policies through the date hereof.
Page 6
B. In consideration of the services performed by the Executive, the Company
agrees to advance annual premium payments for the Policies, in the aggregate, in
the amount of approximately $285,000 or such other amount as agreed to in
writing between the Company and the Executive per year (the "Required Premiums")
through the calendar year in which the Executive attains age sixty (60)
regardless of whether the Executive is employed by the Company at the time the
premiums are paid; provided, however, that the Required Premiums made by the
Company shall cease in the event the Executive breaches any of the Covenants
contained in Section IX of the Agreement (the "Covenants").
C. In consideration of the Required Premiums to be advanced annually by the
Company whether or not the Executive is employed by the Company pursuant to this
Agreement, the Executive agrees not to breach the Covenants.
D. In further consideration of the premiums to be advanced annually by the
Company, the Executive further agrees that between the date hereof and until the
date the Executive attains age sixty (60), the Executive may not withdraw any
amount (either as a Policy loan or a withdrawal of cash surrender value) from
the Policies.
E. Within fifteen (15) days of the date hereof the Policies shall be
transferred by the Executive to the Escrow Agent to be
Page 7
agreed to by the Executive and the Company (the "Escrow Agent") pursuant to an
escrow agreement between the Company, the Executive and the Escrow Agent (the
"Escrow Agreement"). The Escrow Agreement shall be substantially in the form
annexed hereto as Exhibit A. In the event the Executive violates the Covenants
prior to the Executive attaining age sixty (60), the Executive shall forfeit any
interest in the Policies, and the Escrow Agent shall transfer the Policies to
the Company, subject to the provisions of the Escrow Agreement. The Executive
shall execute an assignment agreement ("Assignment Agreement") annexed hereto as
Exhibit B to reflect the obligation of the Executive to transfer the Policies to
the Company in such event, and the Assignment Agreement shall be held in escrow
by the Escrow Agent. Upon the Executive having attained age sixty (60) without
having violated any of the Covenants, the Escrow Agent shall return the Policies
to the Executive, and the Executive shall hold all right, title and interest in
and to the Policies, without regard to the terms of Section IX, but subject to
the New Collateral Assignments described in Subparagraph F below.
F. Pursuant to collateral assignment agreements dated December 13, 1988,
and August 13, 1991, the Executive has assigned to the Company an interest in
the Policies issued by Security equal to the premiums advanced by the Company.
Pursuant to collateral assignment agreements dated June 2, 1988, the Executive
has
Page 8
assigned to the Company an interest in the Policies issued by Guardian equal
to the premiums advanced by the Company. These agreements are referred to herein
collectively as the "Prior Life Insurance Agreements". Effective as of the date
hereof, new collateral assignments have been entered into between Guardian and
Security (respectively), the Company and the Executive and collateral
assignments have been entered into between Canada, the Company and the Executive
in the form annexed hereto as Exhibit C, for the six individual Policies ("New
Collateral Assignments"). Each provides that the Company shall have an interest
in such Policies equal to the premiums advanced by the Company.
G. During the term of this Agreement and further provided that the
Executive does not breach the terms of the Covenants before his attainment of
age sixty (60), in the event that the Company fails to make Required Premium
payments for the Policies for any calendar year by December 31st of such year
(the "Default Date"), the Company's right under any or all of the New Collateral
Assignments to be repaid from the cash surrender value of the Policies the
premiums advanced by the Company to the Executive shall be reduced by the
shortfall (unless otherwise subsequently advanced by the Company) with interest
at the rate of seven percent (7%) per annum (without regard to which Policy
there is a failure to pay). Such interest shall be calculated from the Default
Date to the earlier of the (a) date the Company advances Required
Page 9
Premiums with respect which there is a shortfall and certifies to the Executive
that such payment is being made to make up for the shortfall or (b) date of
withdrawal of premiums advanced by the Company pursuant to the New Collateral
Assignment. For purposes of the preceding sentence, the Executive may request a
reduction from any Policy of the premiums to be repaid to the Company pursuant
to the New Collateral Assignments.
H. In the event the Executive breaches any of the Covenants after attaining
age sixty (60), the Company may seek an injunction in a court of competent
jurisdiction barring the Executive from breaching such Covenants.
IN WITNESS WHEREOF the undersigned have caused this Agreement to be
executed as of the date first above written.
CUC INTERNATIONAL INC.
by: /s/ Christopher K. McLeod
-------------------------
Executive Vice President
/s/ E. Kirk Shelton
-------------------------
E. Kirk Shelton
Page 10
Exhibit 10.3
AGREEMENT
---------
This Agreement made effective as of February 1, 1996 by and between CUC
INTERNATIONAL INC. (the "Company"), a Delaware corporation, and Christopher
McLeod (the "Executive").
WHEREAS the Executive and the Company are parties to a certain Agreement
dated February 1, 1987 as amended on November 1, 1991 (the "Agreement"); and
WHEREAS the Executive and the Company wish to make certain further
amendments to the Agreement.
NOW, THEREFORE, in consideration of the foregoing and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, it is hereby agreed as follows: 1. Section IX of the Agreement is
hereby amended to read as follows:
SECTION IX
OTHER DUTIES OF THE EXECUTIVE DURING AND
----------------------------------------
AFTER THE PERIOD OF EMPLOYMENT
------------------------------
A. The Executive will with reasonable notice during or after the Period of
Employment furnish information as may be in his
Page 1
possession and fully cooperate with the Company and its affiliates as may be
requested in connection with any claims or legal action in which the Company or
any of its affiliates is or may become a party.
B. The Executive recognizes and acknowledges that all information
pertaining to this Agreement or to the affairs; business; results of operations;
accounting methods, practices and procedures; members; acquisition candidates;
financial condition; clients; customers or other relationships of the Company or
any of its affiliates ("Information") is confidential and is a unique and
valuable asset of the Company or any of its affiliates. Access to and knowledge
of certain of the Information is essential to the performance of the Executive's
duties under this Agreement. The Executive will not during the Period of
Employment or thereafter, except to the extent reasonably necessary in
performance of his duties under this Agreement, give to any person, firm,
association, corporation, or governmental agency any Information, except as may
be required by law. The Executive will not make use of the Information for his
own purposes or for the benefit of any person or organization other than the
Company or any of its affiliates. The Executive will also use his best efforts
to prevent the disclosure of this Information by others. All records, memoranda,
etc. relating to the business of the Company or its affiliates whether made by
the Executive or otherwise coming into his
Page 2
possession are confidential and will remain the property of the Company or its
affiliates.
C. During the Period of Employment and for a twelve (12) month period
thereafter, irrespective of the cause, manner or time of any termination, the
Executive will not use his status with the Company or any of its affiliates to
obtain loans, goods or services from another organization on terms that would
not be available to him in the absence of his relationship to the Company or any
of its affiliates. For such period, the Executive will not make any statements
or perform any acts intended to or which may have the effect of advancing the
interest of any existing or prospective competitors of the Company or any of its
affiliates or in any way injuring the interests of the Company or any of its
affiliates. For such period, the Executive, without prior express written
approval by the Board of Directors of the Company, will not directly or
indirectly own or hold proprietary interest in or be employed by or receive
compensation from any party which competes in any way or manner with the
business of the Company or any of its affiliates, as such business or businesses
may be conducted from time to time. The Executive acknowledges that the
Company's and its affiliates' businesses are conducted nationally and
internationally and agrees that the provisions in the foregoing sentence shall
operate throughout the United States and the World. For such period, the
Executive, without express prior written approval from the Board of Directors,
will not solicit any members of the then current clients
Page 3
of the Company or any of its affiliates for any existing business of the Company
or any of its affiliates or discuss with any employee of the Company or any of
its affiliates information or operation of any business intended to compete with
the Company or any of its affiliates. For such period, the Executive will not
meddle with the Employee's or affairs of the Company or any of its affiliates or
solicit or induce any person who is an employee of the Company or any of its
affiliates to terminate any relationship such person may have with the Company
or any of its affiliates, nor shall the Executive during such period directly or
indirectly engage, employ or compensate, or cause or permit any person with
which the Executive may be affiliated, to engage, employ or compensate, any
employee of the Company or any of its affiliates. For the purposes of this
Agreement, proprietary interest means legal or equitable ownership, whether
through stock holding or otherwise, of an equity interest in a business, firm or
entity or ownership of more that 5% of any class of equity interest in a
publicly-held company and the term "affiliate" shall include without limitation
all subsidiaries and licensees of the Company. The Executive hereby represents
and warrants that the Executive has not entered into any agreement,
understanding or arrangement with any employee of the Company or any of its
affiliates pertaining to any business in which the Executive has participated or
plans to participate, or to the employment, engagement or compensation of any
such employee. The Company's obligation to make any payments
Page 4
under the terms of this Agreement will cease upon any violation of the preceding
paragraphs.
D. The Executive hereby acknowledges that damages at law may be an
insufficient remedy to the Company if the Executive violates the terms of this
Agreement and that the Company shall be entitled to preliminary and/or permanent
injunctive relief in any court of competent jurisdiction to restrain the breach
of or otherwise to specifically enforce any of the covenants contained in this
Agreement without the necessity of showing any actual damage or that monetary
damages would not provide an adequate remedy. Such right to an injunction shall
be in addition to, and not in limitation of, any other rights or remedies the
Company may have. Without limiting the generality of the foregoing, neither
party shall oppose any motion the other party may make for any expedited
discovery or hearing in connection with any alleged breach of this Section IX.
E. The period of time during which the provisions of this Section IX shall
be in effect shall be extended by the length of time during which the Executive
is in breach of the terms hereof as determined by any court of competent
jurisdiction on the Company's application for injunctive relief.
Page 5
F. The Executive agrees that the restrictions contained in this Section IX
are an essential element of the compensation the Executive is granted hereunder
and the Executive's right to retain certain stock options granted prior to the
date of this Agreement and but for the Executive's agreement to comply with such
restrictions, the Company would not have entered into this Agreement or allowed
the Executive to retain those stock options.
2. A new Section XVI is hereby added to read as follows:
SECTION XVI
LIFE INSURANCE POLICIES
-----------------------
A. The Executive owns insurance policies nos. 3023130, 2995020 and 2960304
with Guardian Life Insurance Company of America ("Guardian"), policies nos.
1046439, 1208351 and 1074717 with Security Mutual Life Insurance Company of New
York ("Security"), and policy no. 2636033 with Canada Life ("Canada"), (the
Guardian, Security and Canada policies are referred to as the "Policies"). The
Policies provide a death benefit equal to the cash surrender value of the
Policies. The Executive has the right to name a beneficiary for all of the death
benefits, subject to the rights of the Company under the Prior Life Insurance
Agreements described below in Subparagraph F. As part of the compensation paid
by the Company to the Executive, the Company has advanced premium payments on
the Policies through the date hereof.
Page 6
B. In consideration of the services performed by the Executive, the Company
agrees to advance annual premium payments for the Policies, in the aggregate, in
the amount ofapproximately $ 265,000 or such other amount as agreed to in
writing between the Company and the Executive per year (the "Required Premiums")
through the calendar year in which the Executive attains age sixty (60)
regardless of whether the Executive is employed by the Company at the time the
premiums are paid; provided, however, that the Required Premiums made by the
Company shall cease in the event the Executive breaches any of the Covenants
contained in Section IX of the Agreement (the "Covenants").
C. In consideration of the Required Premiums to be advanced annually by the
Company whether or not the Executive is employed by the Company pursuant to this
Agreement, the Executive agrees not to breach the Covenants.
D. In further consideration of the premiums to be advanced annually by the
Company, the Executive further agrees that between the date hereof and until the
date the Executive attains age sixty (60), the Executive may not withdraw any
amount (either as a Policy loan or a withdrawal of cash surrender value) from
the Policies.
E. Within fifteen (15) days of the date hereof the Policies shall be
transferred by the Executive to the Escrow Agent to be
Page 7
agreed to by the Executive and the Company (the "Escrow Agent")pursuant to an
escrow agreement between the Company, the Executive and the Escrow Agent (the
"Escrow Agreement"). The Escrow Agreement shall be substantially in the form
annexed hereto as Exhibit A. In the event the Executive violates the Covenants
prior to the Executive attaining age sixty (60), the Executive shall forfeit any
interest in the Policies, and the Escrow Agent shall transfer the Policies to
the Company, subject to the provisions of the Escrow Agreement. The Executive
shall execute an assignment agreement ("Assignment Agreement") annexed hereto as
Exhibit B to reflect the obligation of the Executive to transfer the Policies to
the Company in such event, and the Assignment Agreement shall be held in escrow
by the Escrow Agent. Upon the Executive having attained age sixty (60) without
having violated any of the Covenants, the Escrow Agent shall return the Policies
to the Executive, and the Executive shall hold all right, title and interest in
and to the Policies, without regard to the terms of Section IX, but subject to
the New Collateral Assignments described in Subparagraph F below.
F. Pursuant to collateral assignment agreements dated December 13, 1988,
and August 13, 1991, the Executive has assigned to the Company an interest in
the Policies issued by Security(other than policy No. 1208351) equal to the
premiums advanced by the Company. Pursuant to collateral assignment agreements
dated
Page 8
June 2, 1988, the Executive has assigned to the Company an interest in the
Policies issued by Guardian equal to the premiums advanced by the Company. These
agreements are referred to herein collectively as the "Prior Life Insurance
Agreements". Effective as of the date hereof, new collateral assignments have
been entered into between Guardian and Security (respectively), the Company and
the Executive and collateral assignments have been entered into between
Securities and Canada respectively, the Company and the Executive in the form
annexed hereto as Exhibit C, for the seven individual Policies ("New Collateral
Assignments"). Each provides that the Company shall have an interest in such
Policies equal to the premiums advanced by the Company.
G. During the term of this Agreement and further provided that the
Executive does not breach the terms of the Covenants before his attainment of
age sixty (60), in the event that the Company fails to make Required Premium
payments for the Policies for any calendar year by December 31st of such year
(the "Default Date"), the Company's right under any or all of the New Collateral
Assignments to be repaid from the cash surrender value of the Policies the
premiums advanced by the Company to the Executive shall be reduced by the
shortfall (unless otherwise subsequently advanced by the Company) with interest
at the rate of seven percent (7%) per annum (without regard to which Policy
there is a failure to pay). Such interest shall be calculated from the Default
Date
Page 9
to the earlier of the (a) date the Company advances Required Premiums with
respect which there is a shortfall and certifies to the Executive that such
payment is being made to make up for the shortfall or (b) date of withdrawal of
premiums advanced by the Company pursuant to the New Collateral Assignment. For
purposes of the preceding sentence, the Executive may request a reduction from
any Policy of the premiums to be repaid to the Company pursuant to the New
Collateral Assignments.
H. In the event the Executive breaches any of the Covenants after attaining
age sixty (60), the Company may seek an injunction in a court of competent
jurisdiction barring the Executive from breaching such Covenants.
IN WITNESS WHEREOF the undersigned have caused this Agreement to be
executed as of the date first above written.
CUC INTERNATIONAL INC.
by: /s/ E. Kirk Shelton
-----------------------------
/s/ Christopher K. McLeod
-----------------------------
Christopher McLeod
Page 10
Exhibit 10.7
Agreement
---------
This Agreement made effective as of February 21, 1996 by and between CUC
International Inc. (the "Company"), a Delaware corporation; and Cosmo Corigliano
(the "Executive").
WHEREAS, the Executive and the Company are parties to a certain Agreement dated
February 1, 1994 (the "Agreement");
WHEREAS, the Company and the Executive wish to make certain amendments to the
Agreement.
NOW, THEREFORE, in consideration of the foregoing and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, it
is hereby agreed as follows:
1. The third sentence of Section XI is hereby amended to read as follows: "Any
stock options granted to the Executive subject to vesting restrictions will be
fully vested upon a Change in Control."
Except as expressly amended hereby, the Agreement remains in full force and
effect in accordance with its terms.
IN WITNESS WHEREOF, the undersigned have caused the foregoing agreement to be
executed as of the date first above-written.
/s/ Cosmo Corigliano
______________________ CUC International Inc.
Cosmo Corigliano
By: /s/ E. Kirk Shelton
________________________
E. Kirk Shelton
Exhibit 10.8
AGREEMENT
---------
This Agreement made effective as of February 1, 1996 by and between CUC
International Inc. (the "Company"), a Delaware corporation, and Amy N. Lipton
("Executive").
The Executive is willing to serve in the employ of the Company on a full-time
basis upon such other terms and conditions as provided in this Agreement.
In consideration of the mutual covenants contained in this Agreement, the
parties hereby agree as follows:
SECTION I
EMPLOYMENT
----------
The Company agrees to employ the Executive and the Executive agrees to be
employed by the Company for the Period of Employment as provided in Section
III.A below and upon the terms and conditions provided in the Agreement.
SECTION II
POSITION AND RESPONSIBILITIES
-----------------------------
During the Period of Employment, the Executive agrees to serve as a Senior
Vice President and the General Counsel of the Company and to be responsible for
the typical management responsibilities expected of an officer holding such
position.
SECTION III
TERMS AND DUTIES
----------------
A. Period of Employment
--------------------
The period of the Executive's employment under this Agreement (the
"Period of Employment") will commence as of February 1, 1996 and shall continue
for a period of sixty (60) full calendar months subject to termination as
provided in this Agreement. On February 1, 2001, and on each February 1
thereafter, the Period of Employment will be automatically extended by twelve
additional calendar months unless prior to February 1, 2001 or any subsequent
February 1 the Company shall deliver to the Executive or the Executive shall
deliver to the Company, written notice that the Period of Employment will end at
the expiration of the then existing Period of Employment, including any previous
extensions, and will not be further extended except by agreement of the Company
and the Executive. The Period of Employment
1
shall continue until the expiration of all automatic extensions unless it is
terminated as provided in this Agreement.
B. Duties
------
During the Period of Employment and except for illness, incapacity or
any reasonable vacation periods in any calendar year, the Executive shall devote
all of her business time, attention and skill exclusively to the business and
affairs of the Company and its subsidiaries. The Executive will not engage in
any other business activity and will perform faithfully the duties which may be
assigned to her from time to time by the Company consistent with Section II of
this Agreement. Nothing in this Agreement shall preclude the Executive from
devoting time during reasonable periods required for:
i. Serving, with the prior approval of the President or Chief
Executive Officer of the Company, as a director or member of a committee or
organization involving no actual or potential conflict of interest with the
Company;
ii. Delivering lectures and fulfilling speaking engagements;
iii. Engaging in charitable and community activities; and
iv. Investing her personal assets in such form or manner that will not
violate this Agreement or require services on the part of the Executive in the
operation or affairs of the companies in which those investments are made.
The activities described in clauses i, ii and iii, above will be allowed as long
as they do not materially affect or interfere with the performance of the
Executive's duties and obligations to the Company.
SECTION IV
A. Compensation
------------
For all services rendered by the Executive pursuant to this Agreement
during the Period of Employment, including services as an executive, officer,
director or committee member of the Company or any subsidiary of the Company,
the Executive shall be compensated as follows:
i. Base Salary
-----------
The Company shall pay the Executive a fixed base salary ("Base
Salary"), subject to annual increases as the Company deems appropriate, in
accordance with the Company's customary procedures regarding the salaries of
senior
2
officers. Base Salary shall be payable according to the customary payroll
practices of the Company but in no event less frequently than once each month.
ii. Annual Incentive Awards
-----------------------
The Executive will be eligible for discretionary annual incentive
compensation awards.
B. Additional Benefits
-------------------
i. In addition, the Executive will be entitled to participate in all
compensation or employee benefit plans or programs and receive all benefits and
perquisites for which salaried employees of the Company generally are eligible
under any plan or program now or established later by the Company on the same
basis as similarly situated senior executives of the Company. The Executive
will participate to the extent permissible under the terms and provisions of
such plans or programs, in accordance with program provisions. These include
any group hospitalization, health, dental care, life or other insurance,
savings, thrift and profit sharing plans, termination pay programs, sick leave
plans, travel or accident insurance, disability insurance, and contingent
compensation plans, including capital accumulation programs and stock option
plans, which the Company may establish. Nothing in this Agreement will preclude
the Company from amending or terminating any of the plans or programs applicable
to salaried employees or senior executives as long as such amendment or
termination is applicable to all salaried employees or senior executives,
as the case may be.
ii. The Executive will be entitled to a minimum of four (4) weeks of
paid vacation annually.
SECTION V
BUSINESS EXPENSES
-----------------
The Company will reimburse the Executive for all reasonable travel and
other expenses incurred by the Executive in connection with the performance of
her duties and obligations under this Agreement. The Executive shall comply
with such limitations and reporting requirements with respect to expenses as may
be established from time to time.
SECTION VI
DISABILITY
----------
A. i. If the Executive becomes Disabled during the Period of
Employment, the Period of Employment may be terminated at the option of the
3
Executive upon notice of resignation to the Company or at the option of the
Company upon notice of termination to the Executive. "Disabled" means a
determination by independent competent medical authority that the Executive is
unable to perform her duties under this Agreement and in all reasonable medical
likelihood such inability will continue for a period in excess of one hundred
and eighty (180) days. Unless otherwise agreed by the Executive and the
Company, the independent medical authority shall be selected by theExecutive and
the Company each selecting a board-certified licensed physician and the two
physicians selected designating an independent medical authority, whose
determination that the Executive is Disabled shall be binding upon the Company
and the Executive. In such event, until the Executive reaches the age of
sixty-five (65) (or such earlier date on which she is no longer Disabled), the
Company shall continue to pay the Executive sixty percent(60%) of her Base
Salary as in effect at the time of the termination minus the amount of any
disability payments the Executive may receive under any long-term disability
insurance maintained by the Company. Such amount shall be payable as provided
in Section IV.A hereof. Earned but unpaid Base Salary and earned but unpaid
incentive compensation awards will be paid in a lump sum at the time of such
termination. No incentive compensation shall be deemed earned within the
meaning of this Agreement until the Executive is informed in writing as to the
amount of such incentive compensation the Executive is to be awarded as to
a particular period.
ii. The Company will also continue the benefits and perquisites
described in this Agreement for a period of thirty six (36) months subsequent to
any such termination.
iii. In the event of any such termination, all unvested stock options
held by the Executive shall be deemed fully vested on the date of such
termination and shall remain fully exercisable until the applicable expiration
dates contained in the applicable stock option agreements pursuant to which such
stock options were granted.
B. During the period the Executive is receiving payments of either
regular compensation or disability insurance described in this Agreement and as
long as she is physically and mentally able to do so without undue burden, the
Executive will furnish information and assistance to the Company as reasonably
requested and from time to time will make herself reasonably available to the
Company to undertake assignments consistent with her prior position with the
Company and her physical and mental health. If the Company fails to make a
payment or provide a benefit required as part of the Agreement, the Executive's
obligation to furnish information and assistance will end.
4
SECTION VII
DEATH
-----
In the event of the death of the Executive during the Period of Employment,
the Period of Employment shall end and the Company's obligation to make payments
under this Agreement shall cease as of the date of death, except for earned but
unpaid Base Salary and any earned but unpaid incentive compensation awards,
which will be paid to the Executive's surviving spouse, estate or personal
representative, as applicable, in a lump sum within sixty (60) days after the
date of the Executive's death. The Executive's designated beneficiary will be
entitled to receive the proceeds of any life or other insurance or other death
benefit programs provided in this Agreement. The Company will also continue the
benefits and perquisites described in this Agreement for a period of thirty-six
(36) months commencing on the Executive's death. Any stock options held by the
Executive shall be deemed fully vested on the date of the Executive's death and
shall remain fully exercisable until the applicable expiration dates contained
in the applicable stock option agreements pursuant to which such stock options
were granted.
SECTION VIII
EFFECT OF TERMINATION OF EMPLOYMENT
-----------------------------------
A. If the Executive's employment terminates due to either a Without Cause
Termination or a Constructive Discharge (other than as contemplated by Section
XI), as defined in this Section below, the Company shall pay the Executive (or
her surviving spouse, estate or personal representative, as applicable) her Base
Salary as in effect at the time of the termination for a period of twelve (12)
months following such termination. Such amount shall be payable as provided in
Section IV.A hereof. Earned but unpaid Base Salary and earned but unpaid
incentive compensation awards will be paid in a lump sum at the time of such
termination. The benefits and perquisites described in this Agreement will be
continued for twenty-four (24) months. In the event of any such Without Cause
Termination or Constructive Discharge, any unvested stock options held by the
Executive which would have vested during the eighteen (18) months following such
termination, shall continue to vest in accordance with the respective terms of
the applicable stock option agreements pursuant to which such options were
granted, notwithstanding anything to the contrary in any such stock option
agreements.
B. If the Executive resigns or the Executive's employment terminates due
to a Termination for Cause, as defined in this Section below, earned but unpaid
Base Salary and any earned but unpaid incentive compensation will be paid to the
Executive in a lump sum within sixty (60) days of such termination. No other
payments will be made or benefits or perquisites provided by the Company.
5
C. Upon termination of the Executive's employment other than for reasons
due to death, disability, or pursuant to Paragraph A of this Section or Section
XI, the Period of Employment and the Company's obligation to make payments under
this Agreement will cease as of the date of the termination, except as expressly
provided in this Agreement.
D. For this Agreement, the following terms have the following meanings:
i. "Termination for Cause" means termination of the Executive's
employment by the Company upon a good faith determination by the Board of
Directors, by written notice to the Executive specifying the event relied upon
for such termination, due to the Executive's material breach of any of her
duties or covenants under this Agreement or her serious, willful misconduct with
respect to the Company or any of its affiliates (including but not limited to
conviction for a felony or perpetration of a common law fraud) which, in any
such case, is not cured (if such breach is capable of being cured) within thirty
(30) days after written notice thereof to the Executive.
ii. "Constructive Discharge" means termination of the Executive's
employment by the Executive due to a failure of the Company to fulfill any of
its material obligations under this Agreement in any material respect (including
without limitation any reduction of the Executive's Base Salary as the same may
be increased during the Period of Employment (other than reductions applicable
to all senior executives of the Company) or other material change by the Company
in the functions, duties or responsibilities of the Executive's position which
would reduce the level, importance or scope of such position; or any relocation
of the Executive outside of the Stamford, Connecticut area). The Executive will
provide the Company a written notice which describes the circumstances being
relied on for the termination with respect to this Agreement within ninety (90)
days after the event giving rise to the notice. The Company will have thirty
(30) days after receipt of such notice to remedy the situation prior to the
termination for Constructive Discharge.
iii. "Without Cause Termination" or "terminated Without Cause" means
termination of the Executive's employment by the Company other than due to
death, disability, or Termination for Cause. Without limiting the generality of
the foregoing, the Executive shall be deemed to have been terminated Without
Cause if the Company provides notice to the Executive pursuant to Section III A
of this Agreement that the Period of Employment will end at the expiration of
the then existing Period of Employment.
6
SECTION IX
OTHER DUTIES OF THE EXECUTIVE
-----------------------------
DURING AND AFTER THE PERIOD OF EMPLOYMENT
-----------------------------------------
A. The Executive will with reasonable notice during or after the Period
of Employment furnish information as may be in her possession and fully
cooperate with the Company and its affiliates as may be requested in connection
with any claims or legal action in which the Company or any of its affiliates is
or may become a party.
B. The Executive recognizes and acknowledges that all information
pertaining to this Agreement or to the affairs; business; results of operations;
accounting methods, practices and procedures; members; acquisition candidates;
financial condition; clients; customers or other relationships of the Company
or any of its affiliates ("Information") is confidential and is a unique and
valuable asset of the Company or any of its affiliates. Access to and knowledge
of certain of the Information is essential to the performance of the Executive's
duties under this Agreement. The Executive will not during the Period of
Employment or thereafter, except to the extent reasonably necessary in
performance of her duties under this Agreement, give to any person, firm,
association, corporation, or governmental agency any Information, except as may
be required by law. The Executive will not make use of the Information for her
own purposes or for the benefit of any person or organization other than the
Company or any of its affiliates. The Executive will also use her best efforts
to prevent the disclosure of this Information by others. All records,
memoranda, etc. relating to the business of the Company or its affiliates
whether made by the Executive or otherwise coming into her possession are
confidential and will remain the property of the Company or its affiliates.
C. i. During the Period of Employment and for two (2) years thereafter
(the "Restricted Period"), irrespective of the cause, manner or time of any
termination, the Executive will not use her status with the Company or any of
its affiliates to obtain loans, goods or services from another organization on
terms that would not be available to her in the absence of her relationship to
the Company or any of its affiliates.
ii. During the Restricted Period, the Executive will not make any
statements or perform any acts intended to or which may have the effect of
advancing the interest of any existing or prospective competitors of the Company
or any of its affiliates or in any way injuring the interests of the Company or
any of its affiliates. During the Restricted Period, the Executive, without
prior express written approval by the Board of Directors of the Company, will
not engage in, or directly or indirectly (whether for compensation or otherwise)
own or hold proprietary interest in, manage, operate, or control, or join or
participate in the ownership, management, operation or control of, or furnish
any capital to or be connected in any manner with, any party which competes in
any way or manner with the business of the Company or any of its affiliates, as
such business or businesses may be conducted from time to
7
time, either as a general or limited partner, proprietor, common or preferred
shareholder, officer, director, agent, employee, consultant, trustee, affiliate,
or otherwise. The Executive acknowledges that the Company's and its affiliates'
businesses are conducted nationally and internationally and agrees that the
provisions in the foregoing sentence shall operate throughout the United States
and the World.
iii. During the Restricted Period, the Executive, without express
prior written approval from the Board of Directors, will not solicit any members
or the then current clients of the Company or any of its affiliates for any
existing business of the Company or any of its affiliates or discuss with any
employee of the Company or any of its affiliates information or operation of any
business intended to compete with the Company or any of its affiliates.
iv. During the Restricted Period, the Executive will not meddle with
the employees or affairs of the Company or any of its affiliates or solicit or
induce any person who is an employee of the Company or any of its affiliates to
terminate any relationship such person may have with the Company or any of its
affiliates, nor shall the Executive during such period directly or indirectly
engage, employ or compensate, or cause or permit any person with which the
Executive may be affiliated, to engage, employ or compensate, any employee of
the Company or any of its affiliates. The Executive hereby represents and
warrants that the Executive has not entered into any agreement, understanding or
arrangement with any employee of the Company or any of its affiliates pertaining
to any business in which the Executive has participated or plans to participate,
or to the employment, engagement or compensation of any such employee.
v. For the purposes of this Agreement, proprietary interest means
legal or equitable ownership, whether through stock holding or otherwise, of an
equity interest in a business, firm or entity or ownership of more than 5% of
any class of equity interest in a publicly-held company and the term "affiliate"
shall include without limitation all subsidiaries and licensees of the Company.
vi. The Company's obligation to make any payments under the terms of
this Agreement will cease upon any violation of the preceding paragraphs.
D. The Executive hereby acknowledges that damages at law may be an
insufficient remedy to the Company if the Executive violates the terms of this
Agreement and that the Company shall be entitled, upon making the requisite
showing, to preliminary and/or permanent injunctive relief in any court of
competent jurisdiction to restrain the breach of or otherwise to specifically
enforce any of the covenants contained in this Agreement without the necessity
of showing any actual damage or that monetary damages would not provide an
adequate remedy. Such right to an injunction shall be in addition to, and not in
limitation of, any other rights or remedies the Company may have. Without
limiting the generality of the foregoing,
8
neither party shall oppose any motion the other party may make for any expedited
discovery or hearing in connection with any alleged breach of this Section IX.
E. The period of time during which the provisions of this Section IX
shall be in effect shall be extended by the length of time during which the
Executive is in breach of the terms hereof as determined by any court of
competent jurisdiction on the Company's application for injunctive relief.
F. The Executive agrees that the restrictions contained in this Section
IX are an essential element of the compensation the Executive is granted
hereunder and but for the Executive's agreement to comply with such
restrictions, the Company would not have entered into this Agreement.
SECTION X
INDEMNIFICATION; LITIGATION
---------------------------
A. The Company will indemnify the Executive to the fullest extent
permitted by the laws of the state of the Company's incorporation in effect at
that time, or certificate of incorporation and by-laws of the Company, whichever
affords the greater protection to the Executive. The Executive will be entitled
to any insurance policies the Company may elect to maintain generally for the
benefit of its officers and directors against all costs, charges and expenses
incurred in connection with any action, suit or proceeding to which she may be
made a party by reason of being a director or officer of the Company.
B. In the event of any litigation or other proceeding between the Company
and the Executive with respect to the subject matter of this Agreement, the
Company shall reimburse the Executive for all costs and expenses related to the
litigation or proceeding including attorney's fees and expenses, providing that
the litigation or proceeding results in either settlement requiring the Company
to make a payment to the Executive or judgment in favor of the Executive.
9
SECTION XI
CHANGE IN CONTROL
-----------------
A. In the event there is a Change in Control, as defined below, and the
Executive's employment is terminated Without Cause or the Executive's employment
terminates due to a Constructive Discharge, in either case within two (2) years
after such Change of Control, the Company shall pay to the Executive (or her
surviving spouse, estate or personal representative, as applicable) her Base
Salary as in effect at the time of such termination of employment for a period
of two (2) years following such termination. In addition, in such event earned
but unpaid Base Salary and any earned but unpaid incentive compensation awards
will be paid to the Executive (or her surviving spouse, estate or personal
representative, as applicable) in a lump sum at the time of such termination.
The benefits and perquisites described in this Agreement will also be continued
for two (2) years from the effective date of termination of employment or
Constructive Discharge, as the case may be, pursuant to a Change of Control as
aforesaid. In the event there is a Change in Control, all unvested stock
options held by the Executive shall immediately upon such Change in Control be
deemed fully vested and shall remain exercisable until the applicable expiration
dates contained in the applicable stock option agreements pursuant to which such
stock options were granted, whether or not the Executive's employment is
terminated. The Executive shall not be entitled to receive any duplicative
payments as a result of the implementation of the provisions of this Section XI.
B. The Executive shall not be required to mitigate the amount of any
payment provided for after a Change in Control by seeking other employment or
otherwise, nor shall the amount of any such payment be reduced by any
compensation earned by the Executive as the result of employment by another
employer after the date the Executive's employment hereunder terminates.
C. A "Change in Control" shall be deemed to have occurred if (i) a tender
offer shall be made and consummated for the ownership of 51% or more of the
outstanding voting securities of the Company, (ii) the Company or any subsidiary
thereof shall be merged with or into or consolidated with another corporation
and as a result of such merger or consolidation less than 75% of the outstanding
voting securities of the surviving or resulting corporation shall be owned in
the aggregate by the former shareholders of the Company, (iii) the Company shall
sell substantially all of its assets to another corporation which is not a
wholly-owned subsidiary, (iv) a person, within the meaning of Section 3(a)(9) or
of Section 13(d)(3) (as in effect on the date hereof) of the Securities Exchange
Act of 1934, as amended, shall acquire 51% or more of the outstanding voting
securities of the Company (whether directly, indirectly, beneficially or of
record) or (v) any other event shall take place that a majority of the Board of
Directors of the Company, in its sole discretion, shall determine constitutes a
"Change in Control" for the purposes hereof. For purposes hereof, ownership of
voting securities shall take into account and shall include
10
ownership as determined by applying the provisions of Rule 13d-3(d)(1)(i) (as in
effect on the date hereof) pursuant to the Securities Exchange Act of 1934, as
amended.
SECTION XII
WITHHOLDING TAXES
-----------------
The Company may directly or indirectly withhold from any payments under
this Agreement all federal, state, city or other taxes that shall be required
pursuant to any law or governmental regulation.
SECTION XIII
EFFECT OF PRIOR AGREEMENTS
--------------------------
This Agreement contains the entire understanding between the Company and
the Executive with respect to the subject matter hereof and supersedes any prior
employment agreement between the Company and the Executive, except that this
Agreement shall not affect or operate to reduce any benefit or compensation
inuring to the Executive of a kind elsewhere provided and not expressly provided
in this Agreement.
SECTION XIV
CONSOLIDATION, MERGER OR SALE OF ASSETS
---------------------------------------
Nothing in this Agreement shall preclude the Company from consolidating or
merging into or with, or transferring all or substantially all of its assets to,
another corporation which assumes this Agreement and all obligations and
undertakings of the Company hereunder. Upon such a consolidation, merger or
sale of assets the term "the Company" will mean the other corporation and this
Agreement shall continue in full force and effect.
SECTION XV
MODIFICATION
------------
This Agreement may not be modified or amended except in writing signed by
the parties. No term or condition of this Agreement will be deemed to have been
waived except in writing by the party charged with waiver. A waiver shall
operate only as to the specific term or condition waived and will not constitute
a waiver for the future or act on anything other than that which is specifically
waived.
11
SECTION XVI
GOVERNING LAW; CONSTRUCTION
---------------------------
This Agreement has been executed and delivered in the State of Connecticut
and its validity, interpretation, performance and enforcement shall be governed
by the internal laws of that state. The construction and interpretation of this
Agreement shall not be strictly construed against the drafter.
SECTION XVII
ARBITRATION
-----------
A. Any controversy, dispute or claim arising out of or relating to this
Agreement or the breach hereof which cannot be settled by mutual agreement
(other than with respect to the matters covered by Section IX for which the
Company may, but shall not be required to, seek injunctive relief) shall be
finally settled by binding arbitration in accordance with the Federal
Arbitration Act (or if not applicable, the applicable state arbitration law) as
follows: Any party who is aggrieved shall deliver a notice to the other party
setting forth the specific points in dispute. Any points remaining in dispute
twenty (20) days after the giving of such notice may be submitted to arbitration
in New York, New York, to Jams/Endispute, before a single arbitrator appointed
in accordance with the arbitration rules of Jams/Endispute, modified only as
herein expressly provided. After the aforesaid twenty (20) days, either party,
upon ten (10) days notice to the other, may so submit the points in dispute to
arbitration. The arbitrator may enter a default decision against any party who
fails to participate in the arbitration proceedings.
B. The decision of the arbitrator on the points in dispute will be final,
unappealable and binding, and judgment on the award may be entered in any court
having jurisdiction thereof.
C. Except as otherwise provided in this Agreement, the arbitrator will be
authorized to apportion its fees and expenses and the reasonable attorneys' fees
and expenses of any such party as the arbitrator deems appropriate. In the
absence of any such apportionment, the fees and expenses of the arbitrator will
be borne equally by each party, and each party will bear the fees and expenses
of its own attorney.
D. The parties agree that this Section has been included to rapidly and
inexpensively resolve any disputes between them with respect to this Agreement,
and that this Section shall be grounds for dismissal of any court action
commenced by either party with respect to this Agreement, other than
postarbitration actions seeking to enforce an arbitration award. In the event
that any court determines that this arbitration procedure is not binding, or
otherwise allows any litigation regarding a dispute, claim, or controversy
covered by this Agreement to proceed, the parties
12
hereto hereby waive any and all right to a trial by jury in or with respect to
such litigation.
E. The parties shall keep confidential, and shall not disclose to any
person, except as may be required by law, the existence of any controversy
hereunder, the referral of any such controversy to arbitration or the status or
resolution thereof.
SECTION XVIII
SURVIVAL
--------
Sections VI, VII, VIII, IX, X, XI, XVI, XVII and XIX shall continue in full
force in accordance with their respective terms notwithstanding any termination
of the Period of Employment.
SECTION XIX
SEPARABILITY
------------
All provisions of this Agreement are intended to be severable. In the
event any provision or restriction contained herein is held to be invalid or
unenforceable in any respect, in whole or in part, such finding shall in no way
affect the validity or enforceability of any other provision of this Agreement.
The parties hereto further agree that any such invalid or unenforceable
provision shall be deemed modified so that it shall be enforced to the greatest
extent permissible under law, and to the extent that any court of competent
jurisdiction determines any restriction herein to be unreasonable in any
respect, such court may limit this Agreement to render it reasonable in the
light of the circumstances in which it was entered into and specifically enforce
this Agreement as limited.
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the
date first above written.
CUC INTERNATIONAL INC.
By: /s/ E. Kirk Shelton
-------------------------
E. Kirk Shelton
13
Exhibit 10.17
CREDIT AGREEMENT
dated as of March 26, 1996
among
CUC INTERNATIONAL INC.
the Banks signatory
hereto
THE CHASE MANHATTAN BANK, N.A.,
BANK OF MONTREAL,
MORGAN GUARANTY TRUST COMPANY OF NEW YORK,
and
THE SAKURA BANK, LIMITED
as Co-Agents
and
THE CHASE MANHATTAN BANK,N.A.
as Administrative Agent
Table of Contents
ARTICLE 1 DEFINITIONS; ACCOUNTING TERMS.
Section 1.1 Definitions
Section 1.2 Accounting Terms
Section 1.3 Rules of Interpretation
ARTICLE 2 THE CREDIT.
Section 2.1 The Loans
Section 2.2 The Notes
Section 2.3 Purpose
Section 2.4 Borrowing Procedures
Section 2.5 Prepayments and Conversions
Section 2.6 Interest Periods; Renewals
Section 2.7 Changes of Commitments
Section 2.8 Certain Notices
Section 2.9 Minimum Amounts
Section 2.10 Interest
Section 2.11 Fees
Section 2.12 Payments Generally
Section 2.13 Margin for Eurodollar Loans
Section 2.14 Facility Fee Rate
ARTICLE 3 YIELD PROTECTION; ILLEGALITY; ETC.
Section 3.1 Additional Costs
Section 3.2 Limitation on Types of Loans
Section 3.3 Illegality
Section 3.4 Certain Conversions Pursuant to Sections 3.1 and 3.3
Section 3.5 Certain Compensation
ARTICLE 4 CONDITIONS PRECEDENT.
Section 4.1 Initial Conditions Precedent
Section 4.2 Additional Conditions Precedent
Section 4.3 Deemed Representations
ARTICLE 5 REPRESENTATIONS AND WARRANTIES.
Section 5.1 Incorporation, Good Standing and Due Qualification
Section 5.2 Corporate Power and Authority; No Conflicts
Section 5.3 Legally Enforceable Agreements
Section 5.4 Litigation
Section 5.5 Financial Statements
Section 5.6 Ownership and Liens
Section 5.7 Taxes
Section 5.8 ERISA
Section 5.9 Material Subsidiaries and Ownership of Stock
Section 5.10 Credit Arrangements
Section 5.11 Operation of Business
Section 5.12 Hazardous Materials
Section 5.13 No Default on Outstanding Judgments or Orders
Section 5.14 No Defaults on Other Agreements
Section 5.15 Labor Disputes and Acts of God
Section 5.16 Governmental Regulation
Section 5.17 Insurance
Section 5.18 Intellectual Property
ARTICLE 6 AFFIRMATIVE COVENANTS.
Section 6.1 Maintenance of Existence
Section 6.2 Conduct of Business
Section 6.3 Maintenance of Properties
Section 6.4 Maintenance of Records
Section 6.5 Maintenance of Insurance
Section 6.6 Compliance with Laws
Section 6.7 Right of Inspection
Section 6.8 Reporting Requirements
Section 6.9 Payment of Taxes and Other Potential
Charges and Priority Claims
Section 6.10 ERISA Plans
ARTICLE 7 NEGATIVE COVENANTS.
Section 7.1 Debt
Section 7.2 Liens
Section 7.3 Investments
Section 7.4 Sale of Assets
Section 7.5 Stock of Subsidiaries, Etc.
Section 7.6 Transactions with Affiliates
Section 7.7 Mergers, Etc.
Section 7.8 Acquisitions
ARTICLE 8 FINANCIAL COVENANTS.
Section 8.1 Minimum Net Worth
Section 8.2 Leverage Ratio
Section 8.3 Interest Coverage Ratio
ARTICLE 9 EVENTS OF DEFAULT.
Section 9.1 Events of Default
Section 9.2 Remedies
ARTICLE 10 THE ADMINISTRATIVE AGENT; RELATIONS AMONG BANKS AND BORROWER.
Section 10.1 Appointment, Powers and Immunities of
Administrative Agent
Section 10.2 Reliance by Administrative Agent
Section 10.3 Defaults
Section 10.4 Rights of Administrative Agent as a Bank
Section 10.5 Indemnification of Administrative Agent
Section 10.6 Documents
Section 10.7 Non-Reliance on Administrative Agent and Other Banks
Section 10.8 Failure of Administrative Agent to Act
Section 10.9 Resignation or Removal of Administrative Agent
Section 10.10 Amendments Concerning Agency Function
Section 10.11 Liability of Administrative Agent
Section 10.12 Transfer of Agency Function
Section 10.13 Non-Receipt of Funds by the Administrative Agent
Section 10.14 Withholding Taxes
Section 10.15 Several Obligations and Rights of Banks
Section 10.16 Pro Rata Treatment of Loans, Etc.
Section 10.17 Sharing of Payments Among Banks
ARTICLE 11 MISCELLANEOUS
Section 11.1 Amendments and Waivers
Section 11.2 Usury
Section 11.3 Expenses; Taxes
Section 11.4 Survival
Section 11.5 Assignment; Participations
Section 11.6 Notices
Section 11.7 Setoff
Section 11.8 Indemnification; Exoneration
Section 11.9 Jurisdiction; Immunities
Section 11.10 Table of Contents; Headings
Section 11.11 Severability
Section 11.12 Counterparts
Section 11.13 Integration
Section 11.14 Governing Law
Section 11.15 Confidentiality
Section 11.16 Treatment of Certain Information
Section 11.17 Changes in Accounting Principles
Section 11.18 Independence of Covenants
Section 11.19 Time of the Essence
EXHIBITS
Exhibit A Syndicated Note
Exhibit B Money Market Note
Exhibit C Money Market Confirmation
Exhibit D-1 Money Market Quote -- LIBOR Auction
Exhibit D-2 Money Market Quote -- Set Rate Auction
Exhibit E-1 Money Market Quote Request -- LIBOR Market Loans
Exhibit E-2 Money Market Quote Request -- Set Rate Loans
Exhibit F Authorization Letter
Exhibit G Confidentiality Agreement
Exhibit H Opinion of Counsel for Borrower
Exhibit I Notice of Borrowing
Exhibit J Financial Covenants Compliance Report
SCHEDULES
Schedule 5.5 Financial Statements
Schedule 5.7 Taxes
Schedule 5.8 ERISA
Schedule 5.9 Subsidiaries of Borrower
Schedule 5.10 Credit Arrangements
Schedule 5.12 Hazardous Materials
Schedule 5.17 Insurance
Schedule 7.2 Liens
CREDIT AGREEMENT dated as of March 26, 1996 among CUC INTERNATIONAL INC., a
corporation organized under the laws of the State of Delaware (the "Borrower"),
each of the banks which is a signatory hereto (individually a "Bank" and
collectively the "Banks"), THE CHASE MANHATTAN BANK, N.A., BANK OF MONTREAL,
MORGAN GUARANTY TRUST COMPANY OF NEW YORK and THE SAKURA BANK, LIMITED, as
agents for the Banks (collectively, in such capacity, the "Co-Agents") and THE
CHASE MANHATTAN BANK, N.A., as administrative agent for the Banks (in such
capacity, together with its successors in such capacity, the "Administrative
Agent").
The Borrower desires that the Banks extend credit as provided herein and
the Banks are prepared to extend such credit. Accordingly, the Borrower, the
Banks, the CoAgents and the Administrative Agent agree as follows:
ARTICLE 1. DEFINITIONS; ACCOUNTING TERMS.
Section 1.1 Definitions. As used in this Agreement the following terms have
the following meanings (terms defined in the singular to have a correlative
meaning when used in the plural and vice versa):
"Acceptable Acquisition" means any Acquisition satisfying all of the
following conditions:
(a) no Default or Event of Default exists or is continuing and no Default
or Event of Default would result from such Acquisition;
(b) the business or Person acquired directly or indirectly is involved in
the provision of consumer goods or services, which shall include the primary
types of businesses conducted by the Borrower and its Subsidiaries as of the
date hereof;
(c) on a consolidated basis with the acquired business or Person, the ratio
of (a) Debt of the Borrower together with the Debt of such acquired business or
Person outstanding on the date of such Acquisition to (b) EBITDA of the Borrower
and such acquired business or Person, such EBITDA measured: (i) on a trailing
four quarters basis as of the end of the immediately preceding fiscal quarter
and (ii) as if such acquired business or Person was owned by the Borrower or any
Subsidiary during such four quarter period, shall not exceed 3.0 to 1.0;
(d) the Borrower, on a consolidated basis with the acquired business or
Person , would have been in compliance with the financial covenants contained in
Article 8 on a trailing four quarters basis as of the end of the immediately
preceding fiscal quarter and as if such acquired business or Person was owned by
the Borrower or any Subsidiary during such four quarter period; and
(e) the Borrower has provided computations showing compliance with
subsections (c) and (d) above to the Administrative Agent upon its request. The
Administrative Agent shall provide copies of such computations to the Banks
following its receipt thereof.
Notwithstanding the foregoing, an Acquisition for less than $15,000,000 in
Total Consideration which does not satisfy subsection (b) above shall be deemed
an Acceptable Acquisition if it satisfies the remaining subsections above.
"Acquisition" means any transaction or series of related transactions
pursuant to which the Borrower or any of its Subsidiaries (a) acquires 50% or
more of the equity securities (or warrants, options or other rights to acquire
such securities) of any Person other than the Borrower or any Person which is
not then a Subsidiary of the Borrower, pursuant to a solicitation of tenders
therefor, or in one or more negotiated block, market or other transactions not
involving a tender offer, or a combination of any of the foregoing, or (b) makes
any Person a Subsidiary of the Borrower, or causes any such Person to be merged
into the Borrower or any of its Subsidiaries, in any case pursuant to a merger,
purchase of assets or any reorganization providing for the delivery or issuance
to the holders of such Person's then outstanding securities, in exchange for
such securities, of cash or securities of the Borrower or any of its
Subsidiaries, or a combination thereof, or (c) purchases all or substantially
all of the business or assets of any Person, or (d) otherwise acquires or
establishes Control over a Person.
"Affiliate" means any Person: (a) which directly or indirectly Controls, or
is Controlled by, or is under common Control with, the Borrower or any of its
Subsidiaries; (b) which directly or indirectly beneficially owns or holds 10% or
more of any class of voting stock of the Borrower or any such Subsidiary; (c)
10% or more of the voting stock of which is directly or indirectly beneficially
owned or held by the Borrower or such Subsidiary; or (d) which is a partnership
in which the Borrower or any of its Subsidiaries is a general partner.
"Agreement" means this Credit Agreement, as amended or supplemented from
time to time. References to Articles, Sections, Exhibits, Schedules and the like
refer to the Arti cles, Sections, Exhibits, Schedules and the like of this
Agreement unless otherwise indicated.
"Authorization Letter" means the letter agreement executed by the Borrower
in the form of Exhibit F.
"Banking Day" means any day on which commercial banks are not authorized or
required to close in New York City and whenever such day relates to a LIBO Rate
Loan or notice with respect to any LIBO Rate Loan, a day on which dealings in
Dollar deposits are also carried out in the London interbank market.
"Capital Lease" means any lease which has been or should be capitalized on
the books of the lessee in accordance with GAAP.
"Cash Equivalent Investments" means any of the following, to the extent
acquired for investment and not with a view to achieving trading profits: (a)
obligations fully backed by the full faith and credit of the United States of
America maturing not in excess of twelve months from the date of acquisition,
(b) commercial paper maturing not in excess of twelve months from the date of
acquisition and rated "P-1" by Moody's or "A-1" by S&P on the date of such
acquisition, (c) the following obligations of any Bank or any domestic
commercial bank having capital and surplus in excess of $500,000,000, which has,
or the holding company of which has, a commercial paper rating meeting the
requirements specified in clause (b) above: (i) time deposits, certificates of
deposit and acceptances maturing not in excess of twelve months from the date of
acquisition, or (ii) repurchase obligations with a term of not more than thirty
(30) days for underlying securities of the type referred to in clause (a) above,
(d) money market funds that invest exclusively in interest bearing, shortterm
money market instruments: (i) having an average remaining maturity of not more
than twelve months and (ii) (A) rated at least "P1" by Moody's or "A-1" by S&P
or (B) which are issued or directly and fully guaranteed or insured by the
United States government or any agency or instrumentality thereof, and (f)
municipal securities: (i) for which the pricing period in effect is not more
than twelve months long and (ii) rated at least "P-1" by Moody's or "A-1" by
S&P.
"Closing Date" means the date this Agreement has been executed by the
Borrower, the Banks, the CoAgents and the Administrative Agent.
"Code" means the Internal Revenue Code of 1986, as amended from time to
time.
"Commitment" means, with respect to each Bank, the obligation of such Bank
to make its Loans under this Agreement in the aggregate principal amount
following, as such amount may be reduced or otherwise modified from time to
time:
The Chase Manhattan Bank, N.A.: $60,000,000;
Bank of Montreal: $50,000,000;
Morgan Guaranty Trust Company of New York: $50,000,000;
The Sakura Bank, Limited: $50,000,000;
ABN AMRO Bank N.V. New York Branch: $25,000,000;
The Bank of New York: $25,000,000;
First American National Bank: $25,000,000;
First Union National Bank: $25,000,000;
Fleet National Bank of Connecticut: $25,000,000;
The Industrial Bank of Japan Trust Company: $25,000,000;
Mellon Bank, N.A.: $25,000,000;
The Mitsubishi Bank, Limited: $25,000,000;
Royal Bank of Canada: $25,000,000;
The Sanwa Bank, Ltd.: $25,000,000;
The Sumitomo Bank, Limited, New York Branch: $25,000,000;
The Fuji Bank, Limited New York Branch: $15,000,000;
Total: $500,000,000.
"Consolidated Subsidiary" means any Subsidiary of a Person whose accounts
are or are required to be consolidated with the accounts of such Person in
accordance with GAAP.
"Control" means the possession, directly or indirectly, of the power to
direct or cause the direction of the management and policies of a Person,
whether through the ownership of voting securities, by contract, or otherwise.
"Debt" means, with respect to any Person at any date (without duplication):
(a) indebtedness created, issued, incurred or assumed by such Person for
borrowed money or evidenced by bonds, debentures, notes or similar instruments;
(b) all obligations of such Person to pay the deferred purchase price of
property or services six (6) months or more from the date of the occurrence or
as evidenced by a note or similar written instrument, excluding, however, trade
accounts payable (other than for borrowed money) arising in, and accrued
expenses incurred in, the ordinary course of business of such Person; (c) all
Debt of others secured by a Lien on any asset of such Person, whether or not
such Debt is assumed by such Person; (d) all Debt of others Guaranteed by such
Person; (e) all obligations of such Person as lessee under Capital Leases; (f)
reimbursement obligations of such Person (whether contingent or otherwise) in
respect of bankers acceptances, surety or other bonds and similar instruments
(other than commercial, standby or performance letters of credit); (g)
contingent obligations under swaps, derivatives, currency exchanges and similar
transactions; and (h) unpaid reimbursement obligations of such Person (other
than contingent obligations) in respect of commercial, standby or performance
letters of credit. For the purposes of calculating Debt only for compliance with
the financial covenants set forth in Article VIII and the definitions of
"Acceptable Acquisition" and "Leverage Ratio", Debt shall not include contingent
obligations under surety or other bonds.
"Debt Rating" shall have the meaning given such term in Section 2.13.
"Default" means any event which with the giving of notice or lapse of time,
or both, would become an Event of Default.
"Default Rate" means, (i) with respect to the principal of any Loan, a rate
per annum equal to 2% above the interest rate for such Loan as provided in
Section 2.10, and (ii) with respect to any other amount payable by the Borrower
under this Agreement or any Note, to the extent permitted by law, a rate per
annum equal to 2% above the Variable Rate as in effect from time to time;
provided, that clause (ii) shall not be interpreted to
- --------
provide for an increase in the facility fee rate to 2% above the Variable Rate
as in effect from time to time.
"Dollars" and the sign "$" mean lawful money of the United States of
America.
"EBIT" means, for any Person, for any period, earn ings before Interest
Expense, taxes, extraordinary items and transaction costs and other
non-recurring costs directly related to Acceptable Acquisitions for such Person
determined on a consolidated basis in accordance with GAAP.
"EBITDA" means, for any Person, for any period, earnings before Interest
Expense, taxes, depreciation, amortization, extraordinary items and transaction
and other non-recurring costs directly related to Acceptable Acquisitions for
such Person determined on a consolidated basis in accordance with GAAP.
"Environmental Affiliate" means, as to any Person, any other Person whose
liability (contingent or otherwise) for any Environmental Claim such Person may
have retained, assumed or otherwise become liable (contingently or otherwise),
whether by contract, operation of law or otherwise; provided that each
Subsidiary of such Person, and each former Subsidiary or division of such Person
transferred to another Person, shall in any event be an "Environmental
Affiliate" of such Person.
"Environmental Claim" means, with respect to any Person, any notice, claim,
demand or other communication (whether written or oral) by any other Person
alleging or asserting liability of such Person for investigatory costs, cleanup
costs, governmental response costs, damages to natural resources or other
Property, personal injuries, fines or penalties arising out of, based on or
resulting from (a) the presence, or release into the environment, of any
hazardous material at any location, whether or not owned by such Person, or (b)
circumstances forming the basis of any violation, or alleged violation, of any
Environmental Law.
"Environmental Laws" means any and all federal, state, local and foreign
statutes, laws, regulations, ordi nances, rules, judgments, orders, decrees,
permits, conces sions, grants, franchises, licenses, agreements or other gov
ernmental restrictions relating to the environment or to emissions, discharges,
releases or threatened releases of pollutants, contaminants, chemicals, or
industrial, toxic or hazardous substances or wastes into the environment
including, without limitation, ambient air, surface water, ground water, or
land, or otherwise relating to the manufacture, processing, distribution, use,
treatment, storage, disposal, transport, or handling of pollutants,
contaminants, chemicals, or industrial, toxic or hazardous substances or wastes.
"ERISA" means the Employee Retirement Income Secu rity Act of 1974, as
amended from time to time, including any applicable rules and regulations
promulgated thereunder.
"ERISA Affiliate" means any corporation or trade or business which is a
member of any group of organizations (i) described in Section 414(b) or (c) of
the Code of which the Borrower is a member, or (ii) solely for purposes of
potential liability under Section 302(c)(11) of ERISA and Section 412(c)(11) of
the Code and the lien created under Section 302(f) of ERISA and Section 412(n)
of the Code, described in Section 414(m) or (o) of the Code of which the
Borrower is a member.
"Eurodollar Loan" means any Syndicated Loan when and to the extent the
interest rate therefor is determined on the basis of the LIBO Base Rate.
"Event of Default" has the meaning given such term in Section 9.1.
"Facility Documents" means this Agreement, the Notes, the Money Market
Quote Requests, the Money Market Confirmations, the Authorization Letter and
each of the documents, certificates or other instruments referred to in Article
4 hereof as well as any other documents, instrument or certificate to be
delivered by the Borrower in connection with this Agreement or in connection
with the documents, certificates or instruments referred to in Article 4,
including documents delivered in connection with any borrowing.
"Federal Funds Rate" means, for any day, the rate per annum (expressed on a
365/366 day basis of calculation) equal to the weighted average of the rates on
overnight federal funds transactions as published by the Federal Reserve Bank of
New York for the immediately preceding Banking Day.
"Forfeiture Proceeding" means any action, proceeding or investigation
affecting the Borrower or any of its Subsidiaries before any Governmental
Authority, or the receipt of notice by any such party that any of them is a
suspect in or a target of any governmental inquiry or investigation, which may
result in an indictment of any of them or the seizure or forfeiture of any of
their property.
"GAAP" means generally accepted accounting princi ples in the United States
of America as in effect from time to time, applied on a basis consistent with
those used in the preparation of the financial statements referred to in Section
5.5 (except for changes concurred in by the Borrower's independent public
accountants).
"Governmental Authority" shall mean any government or political subdivision
or an agency, authority, bureau, central bank, commission, department or
instrumentality of either, or any court, tribunal, grand jury or arbitrator, in
each case whether foreign or domestic.
"Guarantee" means, for any Person, (i) any guarantee, endorsement,
contingent agreement to purchase or to furnish funds for the payment or
maintenance of, or any other contingent liability on or with respect to, the
Debt, other obligations, net worth, working capital or earnings of any other
Person (including, without limitation, the liability of such Person in respect
of the Debt of any partnership of which such person is a general partner), or
(ii) the guarantee by such Person of the payment of dividends or other
distributions upon the stock of any other Person, or the agreement by such
Person to purchase, sell or lease (as lessee or lessor) property, products,
materials, supplies or services primarily for the purpose of enabling any other
Person to make payment of its obligations or to assure a creditor against loss,
provided, however, that the term "Guarantee" shall not include a guarantee of
- --------
performance by the Borrower or any of its Subsidiaries in the ordinary course of
its business or the guarantee of payment of Debt of the Borrower or any
Subsidiary to the Borrower or another Subsidiary . The verb "Guarantee" shall
have a correlative meaning, provided that the term "Guarantee" shall not include
endorsements for collection or deposits in the ordinary course of business.
"Interest Coverage Ratio" means, for any Person, as at any date, the ratio
of (a) EBIT of such Person for the immediately preceding four full fiscal
quarters of such Per son (including the fiscal quarter ending on such date if
such date is the last day of a fiscal quarter) to (b) Interest Expense of such
Person for such period.
"Interest Expense" shall mean, with respect to any Person, for any period,
the sum, for such Person in accordance with GAAP, of (a) all interest on Debt
that is accrued as an expense during such period (including, without limita
tion, imputed interest on Capital Leases), plus (b) all amounts paid, accrued or
----
amortized as an expense during such period in respect of interest rate
protection agreements, minus (c) all amounts received or accrued as income
-----
during such period in respect of interest rate protection agreements. "Interest
Period" means:
(a) With respect to any Eurodollar Loan, the period commencing on the date
such Eurodollar Loan is made, converted from another type of Loan or renewed, as
the case may be, and ending on the numerically corresponding day in the first,
second, third or sixth calendar month thereafter, as the Borrower may select
pursuant to Section 2.6, provided that each such Interest Period which commences
on the last Banking Day of a calendar month (or on any day for which there is no
numerically corresponding day in the appropriate subsequent calendar month)
shall end on the last Banking Day of the appropriate subsequent calendar month.
(b) With respect to any Set Rate Loan, the period commencing on the date
such Set Rate Loan is made and ending on any Banking Day up to 180 days
thereafter, as the Borrower may select pursuant to Section 2.4.
(c) With respect to any LIBOR Market Loan, the period commencing on the
date such LIBOR Market Loan is made and ending on the numerically corresponding
day in the first, second, third or sixth calendar month thereafter, as mutually
agreed by the Borrower and a Bank pursuant to Section 2.4, provided that each
such Interest Period which commences on the last Banking Day of a calendar month
(or on any day for which there is no numerically corresponding day in the
appropriate subsequent calendar month) shall end on the last Banking Day of the
appropriate subsequent calendar month.
Notwithstanding the foregoing: (i) if any Interest Period would otherwise
commence before and end after the Termination Date, such Interest Period shall
end on the Termination Date; (ii) each Interest Period which would otherwise end
on a day which is not a Banking Day shall end on the next succeeding Banking Day
(or, in the case of an Interest Period for any LIBO Rate Loans, if such next
succeeding Banking Day falls in the next succeeding calendar month, on the next
preceding Banking Day); and (iii) notwithstanding clause (i) above, no Interest
Period shall have a duration of less than one month (in the case of a LIBO Rate
Loan) or 7 days (in the case of a Set Rate Loan), and, if the Interest Period
for any such Loans would otherwise be for a shorter period, such Loans shall not
be available hereunder.
"LIBO Base Rate" means, with respect to any Interest Period for a LIBO Rate
Loan, the arithmetic mean, as calculated by the Administrative Agent, of the
respective rates per annum (rounded upwards, if necessary, to the nearest 1/16
of 1%) quoted at approximately 11:00 a.m. London time by the principal London
branch of each of the Reference Banks two Banking Days prior to the first day of
such Interest Period for the offering to leading banks in the London interbank
market of Dollar deposits in immediately available funds, for a period, and in
an amount, comparable to the Interest Period and principal amount of the LIBO
Rate Loan which shall be made by such Reference Bank and outstanding during such
Interest Period; provided, that, in determining the LIBO Base Rate with respect
to any LIBOR Market Loan, each Reference Bank shall be deemed to have made a
LIBOR Market Loan in an amount equal to $1,000,000.
"LIBO Margin" shall have the meaning given such term in Section 2.4(b).
"LIBO Rate" means, for any LIBO Rate Loan for any Interest Period therefor,
a rate per annum (rounded upwards, if necessary, to the nearest 1/100 of 1%)
determined by the Administrative Agent to be equal to the quotient of (i) the
LIBO Base Rate for such Loan for such Interest Period, divided by (ii) one minus
the Reserve Requirement for such Loan for such Interest Period.
"LIBO Rate Loans" shall mean Eurodollar Loans and LIBOR Market Loans.
"LIBOR Auction" means a solicitation of Money Market Quotes setting forth
LIBO Margins based on the LIBO Rate pursuant to Section 2.4.
"LIBOR Market Loans" means Money Market Loans the interest rates on which
are determined on the basis of LIBO Rates pursuant to a LIBOR Auction.
"Lending Office" means, for each Bank and for each type of Loan, the
lending office of such Bank (or of an affil iate of such Bank) designated as
such for such type of Loan on its signature page hereof or such other office of
such Bank (or of an affiliate of such Bank) as such Bank may from time to time
specify to the Administrative Agent and the Borrower as the office by which its
Loans of such type are to be made and maintained.
"Leverage Ratio" means, for any Person, as at any date, the ratio of (a)
Debt of such Person as at the end of such Person's most recently completed full
fiscal quarter to (b) EBITDA of such Person for the immediately preceding four
full fiscal quarters of such Person on a consolidated basis (including the
fiscal quarter ending on such date if such date is the last day of a fiscal
quarter).
"Lien" means any lien (statutory or otherwise), security interest,
mortgage, deed of trust, priority, pledge, negative pledge, charge, conditional
sale, title retention agreement, financing lease or other encumbrance or similar
right of others, or any agreement to give or refrain from giving any of the
foregoing.
"Loan" means any Syndicated Loan or Money Market Loan.
"Margin" means, for a Eurodollar Loan, the margin for such type of Loan
that would apply under Section 2.13.
"Material Adverse Effect" means (a) a material adverse effect on the
business, operations, management, property or financial condition of the
Borrower and its Subsidiaries, taken as a whole, (b) a material adverse effect
on the ability of the Borrower or any of its Subsidiaries to perform or comply
with any of the terms and conditions of this Agreement, any Note or any other
Facility Document, or (c) a material adverse effect on the legality, validity,
binding effect, enforceability or admissibility into evidence of this Agreement,
any Note or any other Facility Document, or the ability of the Administrative
Agent or any Bank to enforce any rights or remedies under or in connection with
this Agreement, any Note or any other Facility Document.
"Material Subsidiary" means, at any time, any Subsidiary of the Borrower
that satisfies at least one of the following conditions:
(a) the portion of the aggregate total fixed and current assets of the
Borrower and its Subsidiaries, determined on a consolidated basis in accordance
with GAAP, attributable to such Subsidiary pursuant to GAAP is 10% or more;
(b) the portion of operating income of the Borrower and its Subsidiaries,
determined on a consolidated basis in accordance with GAAP, attributable to such
Subsidiary pursuant to GAAP is 10% or more; or
(c) the performance of the Subsidiary could, for any other reason, be
considered material to the interests of the Borrower.
"Money Market Borrowing" shall have the meaning given such term in Section
2.4(b).
"Money Market Confirmation" means each confirmation by the Borrower of its
acceptance of Money Market Quotes, which Money Market Confirmation shall be
substantially in the form of Exhibit C and shall be delivered to the
Administrative Agent in writing or by facsimile transmission.
"Money Market Loan Limit" shall have the meaning given such term in Section
2.4(b)(iii)(C).
"Money Market Loans" shall have the meaning given such term in Section
2.1(b).
"Money Market Note" shall have the meaning given such term in Section
2.2(b).
"Money Market Quote" means each offer by a Bank to make Money Market Loans
pursuant to a Money Market Quote Request, which Money Market Quote shall contain
the information specified in, as appropriate, Exhibit D-1 or Exhibit D-2 and
shall be delivered to the Administrative Agent by telephone, immediately
confirmed by facsimile transmission.
"Money Market Quote Request" means each request by the Borrower for Banks
to submit bids to make Money Market Loans, which shall contain the information
in respect of such requested Money Market Loans specified in, as appropriate,
Exhibit E-1 or Exhibit E-2 and shall be delivered to the Administrative Agent in
writing or by facsimile transmission, or by telephone, immediately confirmed by
facsimile transmission.
"Money Market Rate" shall have the meaning given such term in Section 2.4.
"Moody's" means Moody's Investors Service, Inc. and any successor thereto that
is a nationally recognized rating agency.
"Multiemployer Plan" means a Plan defined as such in Section 3(37) of ERISA
to which contributions have been made by the Borrower or any ERISA Affiliate and
which is covered by Title IV of ERISA.
"Net Income" for any period means the net income (loss) of Borrower and its
Subsidiaries for such period determined on a consolidated basis in accordance
with GAAP.
"Net Worth" means, with respect to any Person, at any time, the
stockholders' equity of such Person and its Consolidated Subsidiaries determined
on a consolidated basis in accordance with GAAP.
"Note" means each Syndicated Note and each Money Market Note.
"Notice of Borrowing" shall mean the notice of each borrowing required by
Section 4.2.
"PBGC" means the Pension Benefit Guaranty Corpora tion and any entity
succeeding to any or all of its functions under ERISA.
"Person" means an individual, partnership, corpora tion, business trust,
joint stock company, trust, unincorporated association, joint venture, limited
liability company, Governmental Authority or other entity of whatever nature.
"Plan" means any employee benefit or other plan established or maintained, or to
which contributions have been made, by the Borrower or any ERISA Affiliate and
which is covered by Title IV of ERISA, other than a Multiemployer Plan.
"Prime Rate" means that rate of interest from time to time announced by the
Principal Reference Bank at its principal office as its prime commercial lending
rate.
"Principal Office" means the principal office of the Administrative Agent,
presently located at One Chase Manhattan Plaza, New York, New York 10082.
"Principal Reference Bank" means The Chase Manhattan Bank, N.A.
"Property" means any right or interest in or to property of any kind
whatsoever, whether real, personal or mixed and whether tangible or intangible
(including, without limitation, shares of capital stock).
"Quotation Date" shall have the meaning given such term in Section 2.4(b).
"Reference Banks" means The Chase Manhattan Bank, N.A. and Morgan Guaranty
Trust Company of New York.
"Regulation D" means Regulation D of the Board of Governors of the Federal
Reserve System as the same may be amended or supplemented from time to time.
"Regulation U" means Regulation U of the Board of Governors of the Federal
Reserve System as the same may be amended or supplemented from time to time.
"Regulatory Change" means, with respect to any Bank, any change after the
date of this Agreement in United States federal, state, municipal or foreign
laws or regulations (including without limitation Regulation D) or the adoption
or making after such date of any interpretations, directives or requests
applying to a class of banks including such Bank of or under any United States,
federal, state, municipal or foreign laws or regulations (whether or not having
the force of law) by any Governmental Authority or monetary authority charged
with the interpretation or administration thereof.
"Required Banks" means Banks having at least 51% of the aggregate amount of
the Commitments and, at any time after the Commitments shall have terminated,
Banks holding at least 51% of the aggregate principal amount of the Loans.
"Reserve Requirement" means, for any Interest Period for any LIBO Rate
Loan, the average maximum rate at which reserves (including any marginal,
supplemental or emergency reserves) are required to be maintained during such
Interest Period under Regulation D by member banks of the Federal Reserve System
in New York City with deposits exceeding $1,000,000,000 against "Eurocurrency
liabilities" (as such term is used in Regulation D). Without limiting the effect
of the foregoing, the Reserve Requirement shall reflect any other reserves
required to be maintained by such member banks by reason of any Regulatory
Change against (i) any category of liabilities which includes deposits by
reference to which the LIBO Base Rate for LIBO Rate Loans is to be determined as
provided in the definition of "LIBO Base Rate" in this Section 1.1 or (ii) any
category of extensions of credit or other assets which include LIBO Rate Loans.
"S&P" means Standard & Poor's Ratings Group, a division of McGraw-Hill,
Inc. and any successor thereto which is a nationally recognized rating agency.
"Set Rate Auction" means a solicitation of Money Market Quotes setting
forth Money Market Rates pursuant to Section 2.4.
"Set Rate Loans" means Money Market Loans the interest rates on which are
determined on the basis of Money Market Rates pursuant to a Set Rate Auction.
"Subsidiary" means, with respect to any Person, any corporation or other
entity (a) of which at least a majority of the securities or other ownership
interests having ordinary voting power (absolutely or contingently) for the
election of directors or other persons performing similar functions are at the
time owned directly or indirectly by such Person or (b) with respect to which
such Person otherwise possesses Control.
"Syndicated Loan" shall have the meaning given such term in Section 2.1(a).
"Syndicated Note" shall have the meaning given such term in Section 2.2.
"Termination Date" means March 26, 2001; provided that if such date is not
a Banking Day, the Termination Date shall be the next succeeding Banking Day
(or, if such next succeeding Banking Day falls in the next calendar month, the
next preceding Banking Day).
"Total Consideration" means:
(a) with respect to the Acquisition of any assets, the purchase price of
such assets; and
(b) with respect to the Acquisition of equity securities of any Person, the
sum of (i) the purchase price of such equity securities plus (ii) Debt assumed,
accounts payable and accrued expenses reflected on the balance sheet of such
acquired Person minus (iii) cash, Cash Equivalent Investments and accounts
receivable reflected on the balance sheet of such acquired Person.
"Unfunded Benefit Liabilities" means, with respect to any Plan, the amount
(if any) by which the present value of all benefit liabilities (within the
meaning of Section 4001(a)(16) of ERISA) under the Plan exceeds the fair market
value of all Plan assets allocable to such benefit liabili ties, as determined
on the most recent valuation date of the Plan and in accordance with the
provisions of ERISA for calcu lating the potential liability of the Borrower or
any ERISA Affiliate under Title IV of ERISA.
"Variable Rate" means, for any day, the higher of (a) the Federal Funds
Rate for such day plus 1/2 of 1% and (b) the Prime Rate for such day.
"Variable Rate Loan" means any Syndicated Loan when and to the extent the
interest rate for such Syndicated Loan is determined in relation to the Variable
Rate.
Section 1.2. Accounting Terms. All accounting terms not specifically
----------------
defined herein shall be construed in accordance with GAAP, and all financial
data required to be delivered hereunder shall be prepared in accordance with
GAAP.
Section 1.3. Rules of Interpretation.
-----------------------
(a) A reference to any document or agreement shall include such document or
agreement as amended, modified or supplemented from time to time in accordance
with its terms and the terms of this Agreement.
(b) The singular includes the plural and the plural includes the singular.
(c) A reference to any law includes any amendment or modification to such
law.
(d) A reference to any Person includes its permitted successors and
permitted assigns.
(e) The words "include", "includes" and "including" are not limiting.
(f) The words "herein", "hereof", "hereunder" and words of like import
shall refer to this Agreement as a whole and not to any particular section or
subdivision of this Agreement.
ARTICLE 2. THE CREDIT.
Section 2.1. The Loans.
----------
(a) Subject to the terms and conditions of this Agreement, each of the
Banks severally agrees to make loans (the "Syndicated Loans") to the Borrower
from time to time from and including the date hereof to and including the
Banking Day immediately prior to the Termination Date, up to but not exceeding
in the aggregate principal amount at any one time outstanding, the amount of its
Commitment; provided, that the aggregate outstanding principal amount of Loans
shall at no time exceed the aggregate amount of the Commitments. The Syndicated
Loans may be outstanding as Variable Rate Loans or Eurodollar Loans (each a
"type" of Syndicated Loans). Each type of Syndicated Loans of each Bank shall be
made and maintained at such Bank's Lending Office for such type of Syndicated
Loans. The Syndicated Loans shall be due and payable on the Termination Date.
(b) The Borrower may request uncommitted competitive auction facility
advances (the "Money Market Loans") from time to time on any Banking Day during
the period from the date hereof to the date occurring 14 days prior to the
Termination Date in the manner set forth in Section 2.4(b) and in amounts such
that the aggregate amount
of Loans outstanding at any time shall not exceed the aggregate amount of the
Commitments at such time. Each Money Market Loan shall be due and payable on the
last day of the Interest Period therefor.
Section 2.2. The Notes.
---------
(a) The Syndicated Loans of each Bank shall be evidenced by a single
promissory note in favor of each such Bank in the form of Exhibit A, dated the
date of this Agreement, duly completed and executed by the Borrower (a
"Syndicated Note"). Each Bank is hereby authorized to record the date, amount
and type of each Syndicated Loan made by such Bank to the Borrower and the date
and amount of each payment of principal thereof on the schedule annexed to and
constituting part of its Syndicated Note from the Borrower, or to otherwise
record in its internal records, and any such recordation shall constitute prima
facie evidence of the accuracy of the information so recorded; provided,
however, that the failure to make any such recordation (or any error therein)
shall not affect the obligations of the Borrower hereunder or under its
Syndicated Note. Each Syndicated Loan evidenced by each Syndicated Note shall
bear interest for the period from and including the date of the Syndicated Loan
thereof on the unpaid principal amount thereof from time to time outstanding at
the applicable rate per annum determined as provided in, and such interest shall
be payable as specified in, Section 2.10.
(b) The Money Market Loans made by each Bank to the Borrower shall be
evidenced initially by a single promissory note of the Borrower in favor of each
such Bank in the form of Exhibit B, dated the date of this Agreement, duly
completed and executed by the Borrower (a "Money Market Note"). Each Bank is
hereby authorized to record the date, amount, type and maturity date of each
Money Market Loan made by such Bank to the Borrower, the date and amount of each
payment of principal thereof and the interest rate with respect thereto on the
schedule annexed to and constituting part of its Money Market Note from the
Borrower, or to otherwise record in its internal records, and any such
recordation shall constitute prima facie evidence of the accuracy of the
information so recorded; provided, however, that the failure to make any such
recordation (or any error therein) shall not affect the obligations of the
Borrower hereunder or under its Money Market Note. Each Money Market Loan
evidenced by each Money Market Note shall bear interest for the period from and
including the date of the Money Market Loan thereof on the unpaid principal
amount thereof from time to time outstanding at the applicable rate per annum
determined as provided in, and such interest shall be payable as specified in,
Section 2.10(d).
Section 2.3. Purpose. The Borrower shall use the proceeds of the Loans for
-------
general corporate purposes, which may include Acceptable Acquisitions, Cash
Equivalent Investments, the repurchase of the Borrower's outstanding common
stock and other investments permitted under Section 7.3. Such proceeds shall not
be used for the purpose, whether immediate, incidental or ultimate, of buying or
carrying "margin stock" within the meaning of Regulation U, other than in
compliance with Regulation U.
Section 2.4. Borrowing Procedures.
--------------------
(a) The Borrower shall give the Administrative Agent notice of each
Syndicated Loan to be made hereunder as provided in Section 2.8. Not later than
1:00 p.m. New York City time on the date of such Syndicated Loan, each Bank
shall, through its Lending Office and subject to the conditions of this
Agreement, make the amount of the Syndicated Loan to be made by it on such day
available to the Administrative Agent at the Principal Office and in immediately
available funds for the account of the Borrower. The amount so received by the
Administrative Agent shall, as soon as practicable on such date, subject to the
conditions of this Agreement, be made available to the Borrower, in immediately
available funds, by the Administrative Agent crediting an account of the
Borrower designated by the Borrower and maintained with the Administrative Agent
at the Principal Office.
(b) (i) In addition to borrowings of Syndicated Loans, at any time at
least 14 days prior to the Termination Date the Borrower may, as set forth
herein, request the Banks to make offers to make Money Market Loans to the
Borrower in Dollars. The Banks may, but shall not have the obligation to, make
any such offers and the Borrower may, but shall have no obligation to, accept
any such offers in the manner set forth herein. Money Market Loans may be LIBOR
Market Loans or Set Rate Loans, provided that the aggregate unpaid principal
amount of all Money Market Loans, together with the aggregate unpaid principal
amount of all Syndicated Loans, at any one time outstanding shall not exceed
the aggregate amount of the Commitments at such time.
(ii) The Borrower shall request Money Market Loans by delivering a
Money Market Quote Request to the Administrative Agent, not later than 10:00
a.m. New York City time (x) four (4) Banking Days prior to the date of the
proposed Money Market Loan in the case of a LIBOR Auction or (y) one (1)
Banking Day prior to the date of the proposed Money Market Loan in the case of
a proposed Set Rate Auction (or, in any such case, such other time and date as
the Borrower and the Administrative Agent, with the consent of the Required
Banks, may agree). The Borrower may request offers to make both LIBOR Market
Loans and Set Rate Loans and an aggregate of up to four different Interest
Periods in a single notice (for which purpose Interest Periods in different
lettered clauses of the definition of the term "Interest Period" shall be
deemed to be different Interest Periods even if they are coterminous); provided
that the request for each separate Interest Period shall be deemed a separate
Money Market Quote Request for a separate borrowing (a "Money Market
Borrowing"). Each such notice shall be substantially in the form of Exhibit E-1
or E-2 hereto and shall specify as to each Money Market Borrowing:
(A) the proposed date of such borrowing, which shall be a
Banking Day;
(B) the aggregate amount of such Money Market Borrowing, which
shall be at least $5,000,000 (or a higher integral multiple of $1,000,000) but
which shall not cause the limits in clause (b)(i) above to be violated;
(C) the Interest Period applicable thereto;
(D) whether the Money Market Quote Requests requested for a
particular Interest Period are seeking quotes for LIBOR Market Loans or Set Rate
Loans; and
(E) if the Money Market Quote Requests are seeking quotes for Set
Rate Loans, the date on which the Money Market Quotes are to be submitted if it
is before the proposed date of borrowing (the date on which such Money Market
Quotes are to be submitted is called the "Quotation Date").
Except as otherwise provided in this clause (b)(ii), no Money Market Quote
Request shall be given within five (5) Banking Days (or such other number of
days as the Borrower and the Administrative Agent, with the consent of the
Required Banks, may agree) of any other Money Market Quote Request.
(iii) (A) Any Bank that elects, in its sole discretion, to do so, shall
irrevocably offer to make one or more Money Market Loans in response to any
Money Market Quote Request; provided that, if the Borrower's request under
clause (b)(ii) above specified more than one Interest Period, such Bank may make
a single submission containing one or more Money Market Quotes for each such
Interest Period. Each such Money Market Quote must be submitted to the
Administrative Agent, before (x) 2:00 p.m. New York City time on the fourth
Banking Day prior to the proposed date of borrowing, in the case of a LIBOR
Auction or (y) 10:00 a.m. New York City time on the Quotation Date, in the case
of a Set Rate Auction (or, in any such case, such other time and date as the
Borrower and the Administrative Agent, with the consent of the Required Banks,
may agree); provided that any Money Market Quote may be submitted by the
Administrative Agent in its role as a Bank (or its applicable Lending Office)
only if the Administrative Agent (or such applicable Lending Office) notifies
the Borrower of the terms of the offer contained therein not later than (x) 1:45
p.m. New York City time on the fourth Banking Day prior to the proposed date of
the borrowing, in the case of a LIBOR Market Loan or (y) 9:45 a.m. New York City
time on the Quotation Date, in the case of a Set Rate Loan. Subject to Sections
3.2(b), 3.3, 4.2 and 9.2 hereof, any Money Market Quote so made shall be
irrevocable except with the consent of the Administrative Agent given on the
instructions of the Borrower.
(B) Each Money Market Quote shall be substantially in the form of
Exhibit D-1 or D-2 hereto and shall specify:
(1) the proposed date of the borrowing and the Interest
Period therefor;
(2) the principal amount of the Money Market Loan for which
such offer is being made, which principal amount shall be at least $5,000,000
(or a higher integral multiple of $1,000,000); provided, that the aggregate
principal amount of all Money Market Loans for which a Bank submits Money Market
Quotes (x) may be greater or less than the Commitment of such Bank but (y) may
not exceed the principal amount of the Money Market Borrowing for a particular
Interest Period for which offers were requested;
(3) in the case of a LIBOR Auction, the margin above or
below the applicable LIBO Rate (the "LIBO Margin") offered for each such Money
Market Loan, expressed as a percentage (quoted to the nearest 1/10,000th of 1%)
to be added to or subtracted from the applicable LIBO Rate;
(4) in the case of a Set Rate Loan, the rate of interest
per annum (quoted to the nearest 1/10,000th of 1%) offered for each such Money
Market Loan (the "Money Market Rate"); and
(5) the identity of the quoting Bank.
(C) Unless otherwise agreed by the Administrative Agent and the
Borrower, no Money Market Quote shall contain qualifying, conditional or similar
language or propose terms other than or in addition to those set forth in the
applicable Money Market Quote Request and, in particular, no Money Market Quote
may be conditioned upon acceptance by the Borrower of all (or some specified
minimum) of the principal amount of the Money Market Loan for which such Money
Market Quote is being made, provided that the submission by any Bank containing
more than one Money Market Quote may be conditioned on the Borrower not
accepting offers contained in such submission that would result in such Bank
making Money Market Loans pursuant thereto in excess of a specified aggregate
amount (the "Money Market Loan Limit").
(iv) The Administrative Agent shall (x) in the case of a Set Rate
Auction, as promptly as practicable after a Money Market Quote is submitted
(but in any event not later than 10:15 a.m. New York City time on the Quotation
Date) or (y) in the case of a LIBOR Auction, by 4:00 p.m. New York City time on
the day a Money Market Quote is submitted, notify the Borrower of the terms (A)
of any Money Market Quote that is in accordance with clause (iii) above and (B)
of any Money Market Quote that amends, modifies or is otherwise inconsistent
with a previous Money Market Quote submitted by the same Bank with respect to
the same Money Market Quote Request. Any such subsequent Money Market Quote
shall be disregarded unless such subsequent Money Market Quote is submitted
solely to correct a manifest error in such former Money Market Quote. The
Administrative Agent's notice to the Borrower shall specify (A) the aggregate
principal amount of the Money Market Borrowing for which offers have been
received, (B) the respective principal amounts and LIBO Margins or Money Market
Rates, as the case may be, so offered by each Bank (identifying the Bank that
made each Money Market Quote) and (C) such other terms as are required by clause
(iii) (C) above.
(v) Not later than 11:00 a.m. New York City time on (x) the third
Banking Day prior to the proposed date of borrowing, in the case of a LIBOR
Auction or (y) the Quotation Date, in the case of a Set Rate Auction (or, in
any such case, such other time and date as the Borrower and the Administrative
Agent, with the consent of the Required Banks, may agree), the Borrower shall
notify the Administrative Agent of its acceptance or nonacceptance of the offers
so notified to it pursuant to clause (iv) above pursuant to a Money Market
Confirmation (which shall be substantially in the form of Exhibit C and specify
the aggregate principal amount of offers from each Bank for each Interest Period
that are accepted, it being understood that the failure of the Borrower to give
such notice by such time shall constitute nonacceptance) and the Administrative
Agent shall promptly notify each affected Bank. The notice from the
Administrative Agent shall also specify the aggregate principal amount of offers
for each Interest Period that were accepted and the lowest and highest LIBO
Margins and Money Market Rates that were accepted for each Interest Period. The
Borrower may accept any Money Market Quote in whole or in part (provided that
any Money Market Quote accepted in part from any Bank shall be in an integral
multiple of $1,000,000, subject to the provisions of clause (vi) below);
provided that:
(A) the aggregate principal amount of each Money Market Loan may
not exceed the applicable amount set forth in the related Money Market Quote
Request;
(B) the aggregate principal amount of each Money Market Loan
shall be at least $5,000,000 (or a higher integral multiple of $1,000,000) but
shall not cause the limits specified in clause (i) above to be violated;
(C) acceptance of offers may, subject to clause (E) below, be
made only in ascending order of LIBO Margins or Money Market Rates, as the case
may be, in each case beginning with the lowest rate so offered;
(D) the Borrower may not accept any offer where the
Administrative Agent has advised the Borrower that the offer fails to comply
with clause (iii)(B) above or otherwise fails to comply with the terms of this
Agreement (including, without limitation, clause (i) above); and
(E) the aggregate principal amount of each Money Market
Borrowing from any Bank may not exceed any applicable Money Market Loan
Limit of such Bank.
(vi) If offers are made by two or more Banks with the same LIBO
Margins or Money Market Rates, as the case may be, for a greater aggregate
principal amount than the amount in respect of which offers are accepted for
the related Interest Period, the principal amount of Money Market Loans in
respect of which such offers are accepted shall be allocated by the Borrower
among such Banks as nearly evenly as possible (in integral multiples of
$1,000,000) in proportion to the aggregate principal amount of such offers;
provided that, if such calculation would otherwise result in allocations to
any such Banks that would not be integral multiples of $1,000,000 and such
allocations are equidistant from the nearest integral multiple of $1,000,000,
the Borrower shall have the discretion to arbitrarily round up to the nearest
$1,000,000 for certain Bank(s) and round down to the nearest $1,000,000 for
certain other Bank(s). Determinations by the Borrower as to the amounts of
Money Market Loans shall be conclusive absent manifest error.
(vii) Each Bank which is to make a Money Market Loan shall, before
1:00 p.m. (New York City time) on the date of the proposed Money Market Loan
specified in the Money Market Quote Request applicable thereto, make available
to the Administrative Agent at its Principal Office the amount of Money Market
Loans to be made by such Bank, in immediately available funds. The
Administrative Agent will make such funds available to the Borrower as soon as
practicable on such date at the Principal Office.
(viii) The amount of any Money Market Loan made by any Bank shall not
constitute a utilization of such Bank's Commitment.
Section 2.5. Prepayments and Conversions.
---------------------------
(a) The Borrower shall have the right to make prepayments of principal, or
to convert one type of Syndicated Loans into another type of Syndicated Loans,
at any time or from time to time; provided that: (i) the Borrower shall give the
Administrative Agent notice of each such prepayment or conversion as provided in
Section 2.8; (ii) Eurodollar Loans may be prepaid or converted only on the last
day of an Interest Period for such Loans, unless the Borrower compensates the
Banks pursuant to Section 3.5; and (iii) conversions from any type of Syndicated
Loans into Eurodollar Loans may not be made at any time that a Default or Event
of Default exists.
(b) Notwithstanding any other provision of this Agreement to the contrary,
the Borrower shall not have the right to prepay the principal amount of any
Money Market Loan unless the Borrower compensates the Bank making such Money
Market Loan pursuant to Section 3.5.
Section 2.6. Interest Periods; Renewals.
--------------------------
(a) In the case of each Eurodollar Loan and each Money Market Loan, the
Borrower shall select an Interest Period of any duration in accordance with the
definition of Interest Period in Section 1.1, subject to the limitation that
there may be no more than six (6) different Interest Periods for both Syndicated
Loans and Money Market Loans outstanding at the same time (for which purpose
Interest Periods described in different lettered clauses of the definition of
"Interest Period" shall be deemed to be different Interest Periods even if they
are coterminous).
(b) Upon notice to the Administrative Agent as provided in Section 2.8, the
Borrower may renew any Eurodollar Loan on the last day of the Interest Period
therefor as the same type of Loan with an Interest Period of the same or
different duration in accordance with the limitations provided above; provided
that Eurodollar Loans may not be renewed at any time that a Default or Event of
Default exists. If the Borrower shall fail to give notice to the Administrative
Agent of such a renewal, such Eurodollar Loan shall automatically become a
Variable Rate Loan on the last day of the current Interest Period.
Section 2.7. Changes of Commitments. The Borrowershall have the right to
----------------------
reduce or terminate the amount of unused Commitments at any time or from time to
time, provided that: (a) the Borrower shall give notice of each such reduc tion
or termination to the Administrative Agent as provided in Section 2.8; and (b)
each partial reduction shall be in an aggregate amount at least equal to
$5,000,000 and shall be an integral multiple of $1,000,000. The Commitments once
reduced or terminated may not be reinstated.
Section 2.8. Certain Notices. Notices by the Borrower to the Administrative
---------------
Agent of each borrowing pursuant to Section 2.4(a), each prepayment or
conversion pursuant to Section 2.5, each renewal pursuant to Section 2.6(b) and
each reduction or termination of the Commitments pursuant to Section 2.7 shall
be irrevocable and shall be effective only if received by the Administrative
Agent not later than 11:00 a.m. New York City time, and (a) in the case of
borrowings and prepayments of, conversions into and (in the case of Eurodollar
Loans) renewals of (i) Variable Rate Loans, given not later than the Banking Day
therefor and (ii) Eurodollar Loans, given not later than three Banking Days
prior thereto; and (b) in the case of reductions or termination of the
Commitments, given not later than three Banking Days prior thereto. Each such
notice shall specify the Loans to be borrowed, prepaid, converted or renewed and
the amount (subject to Section 2.9) and type of the Loans to be borrowed, or
converted, or prepaid or renewed (and, in the case of a conversion, the type of
Loans to result from such conversion and, in the case of a Eurodollar Loan, the
Interest Period therefor) and the date of the borrowing or prepayment, or
conversion or renewal (which shall be a Banking Day). Each such notice of
reduction or termination shall specify the amount of the Commitments to be
reduced or terminated. The Administrative Agent shall promptly notify the Banks
of the contents of each such notice.
Section 2.9. Minimum Amounts. Except for borrowings which exhaust the full
---------------
remaining amount of the Commitments, prepayments or conversions which result in
the prepayment or conversion of all Syndicated Loans of a particular type or
conversions made pursuant to Section 3.4, each borrowing, pre payment,
conversion and renewal of principal of (i) Variable Rate Loans shall be in an
amount at least equal to $5,000,000 in the aggregate for all Banks and (ii)
Eurodollar Loans shall be in an amount at least equal to $10,000,000 in the
aggregate for all Banks (borrowings, prepayments, conversions or renewals of or
into Loans of different types or, in the case of Eurodollar Loans, having
different Interest Periods at the same time hereunder to be deemed separate
borrowings, prepayments, conversions and renewals for the purposes of the
foregoing, one for each type of Interest Period) and, in the case of Eurodollar
Loans, in integral multiples of $1,000,000.
Section 2.10. Interest.
--------
(a) Interest shall accrue on the outstanding and unpaid principal amount of
each Syndicated Loan for the period from and including the date of such
Syndicated Loan to but excluding the date such Loan is due at the following
rates per annum: (i) for a Variable Rate Loan, at a variable rate per annum
equal to the Variable Rate and (ii) for a Eurodollar Loan, at a fixed rate equal
to the LIBO Rate plus the Margin. If the principal amount of any Syndicated Loan
and any other amount payable by the Borrower hereunder or under any Note shall
not be paid when due (at stated maturity, by acceleration or otherwise),
interest shall accrue on such amount to the fullest extent permitted by law from
and including such due date to but excluding the date such amount is paid in
full at the Default Rate. After the occurrence of an Event of Default other than
payment defaults described in the preceding sentence, then the Administrative
Agent may, and if directed by the Required Banks the Administrative Agent shall,
by written notice to the Borrower, increase the interest rate hereunder during
the continuance of such Event of Default to the Default Rate, effective on the
date of such notice.
(b) The interest rate on each Variable Rate Loan shall change when the
Variable Rate changes and interest on each such Loan shall be calculated on the
basis of a year of 365 (or, in the case of a leap year, 366) days for the actual
number of days elapsed. Interest on each Eurodollar Loan shall be calculated on
the basis of a year of 360 days for the actual number of days elapsed. Promptly
after the determination of any interest rate provided for herein or any change
therein, the Administrative Agent shall notify the Borrower and the Banks.
(c) Accrued interest shall be due and payable in arrears upon any payment
of principal or conversion and (i) for each Variable Rate Loan, on the last day
of each January, April, July and October, commencing the first such date after
such Loan; (ii)
for each Eurodollar Loan, on the last day of the Interest Period with respect
thereto and, in the case of an Interest Period greater than three months, at
three month intervals after the first day of such Interest Period; provided that
interest accruing at the Default Rate shall be due and payable from time to time
on demand of the Administrative Agent.
(d) The Borrower shall pay interest on the unpaid principal amount of each
Money Market Loan made to the Borrower from the date of such Money Market Loan
to the stated maturity date thereof, at the rate of interest determined pursuant
to Section 2.4(b) above (calculated on the basis of a 360 day year for actual
days elapsed), payable on the last day of the Interest Period with respect
thereto and, in the case of an Interest Period greater than three months, at
three month intervals after the first day of such Interest Period; provided that
interest accruing at the Default Rate shall be due and payable from time to time
on demand of the Administrative Agent. If all or a portion of the principal
amount of any Money Market Loan shall not be paid when due (whether at the
stated maturity, by acceleration or otherwise), such overdue principal amount
shall, without limiting any rights of any Bank under this Agreement, bear
interest from the date on which such payment was due until paid in full at the
Default Rate.
Section 2.11. Fees.
----
(a) The Borrower shall pay to the Administrative Agent for the account of
each Bank a facility fee on the daily average Commitment (used and unused) of
such Bank for the period from and including the date hereof to the earlier of
the date the Commitments are terminated in full or the Termination Date at a
rate per annum equal to the rate determined in accordance with Section 2.14,
calculated on the basis of a year of 365 (or, in a leap year, 366) days for the
actual number of days elapsed. The accrued facility fee shall be due and payable
in arrears upon any termination of the Commitments, including, without
limitation, the Termination Date, and on the last day of each January, April,
July and October, commencing on the first such date after the Closing Date.
(b) The Borrower shall pay to the Administrative Agent as compensation for
its services hereunder an agency fee in the amount heretofore mutually agreed.
The agency fee shall be due and payable on the Closing Date and on each
anniversary thereof until all the Commitments shall have terminated and the
Loans and other obligations of the Borrower to the Administrative Agent and the
Banks pursuant to this Agreement and the other Facility Documents shall have
been paid in full.
(c) The Borrower shall pay to the Administrative Agent a fee of $750 each
time the Borrower delivers a Money Market Quote Request to the Administrative
Agent.
Section 2.12. Payments Generally. All payments under this Agreement or the
------------------
Notes shall be made in Dollars in immediately available funds not later than
1:00 p.m. New York City time on the relevant dates specified above (each such
payment made after
such time on such due date to be deemed to have been made on the next succeeding
Banking Day) to the Administrative Agent's account number 900 9000002 maintained
at the Principal Office for the account of the applicable Lending Office of each
Bank. The Administrative Agent, or any Bank for whose account any such payment
is to be made, may (but shall not be obligated to) debit the amount of any such
payment which is not made by such time to any ordinary deposit account of the
Borrower with the Administrative Agent or such Bank, as the case may be, and any
Bank so doing shall promptly notify the Administrative Agent and the Borrower.
The Borrower shall, at the time of making each payment under this Agreement or
the Notes, specify to the Administrative Agent the principal or other amount
payable by the Borrower under this Agreement or the Notes to which such payment
is to be applied (and in the event that it fails to so specify, or if a Default
or Event of Default has occurred and is continuing, the Administrative Agent may
apply such payment as it may elect in its sole discretion (subject to Section
10.16)). If the due date of any payment under this Agreement or the Notes would
otherwise fall on a day which is not a Banking Day, such date shall be extended
to the next succeeding Banking Day and interest shall be payable for any
principal so extended for the period of such extension. Each payment received by
the Administrative Agent hereunder or under any Note for the account of a Bank
shall be paid promptly to such Bank, in immediately available funds, for the
account of such Bank's Lending Office.
Section 2.13. Margin for Eurodollar Loans.
---------------------------
(a) Until such time as: (i) the Borrower shall have received a rating of
"A2" or higher by S&P or "P2" or higher by Moody's with respect to the
Borrower's senior, unsecured, non-credit enhanced short term indebtedness for
borrowed money (a "Debt Rating") and (ii) the Borrower has not received a Debt
Rating lower than "A2" or "P2" from S&P or Moody's, respectively, the Margin
that will apply to each Eurodollar Loan is set forth below and is based upon the
Borrower's Leverage Ratio as at the end of the Borrower's most recent fiscal
quarter:
Margin
Eurodollar Loans
Leverage Ratio (Basis Points)
- -------------------------------------------------------------------
Greater than 2.50 35.00
- -------------------------------------------------------------------
Greater than or equal to 2.01, but not
greater than 2.50 30.00
- -------------------------------------------------------------------
Greater than or equal to 1.00, but less
than 2.01 25.00
- -------------------------------------------------------------------
Less than 1.00 17.00
- -------------------------------------------------------------------
Margin adjustments resulting from such calculations shall become effective
five (5) Banking Days after the date such calculations are accepted by the
Administrative Agent. Promptly after the determination of any Margin adjustment
provided for in this subsection (a), the Administrative Agent shall notify the
Borrower and the Banks.
(b) At such time, and from time to time, as: (i) the Borrower shall have
received a Debt Rating of "A2" or higher from S&P or "P2" or higher from Moody's
and (ii) the Borrower has not received a Debt Rating lower than "A2" or "P2"
from S&P or Moody's, respectively, the Margin that will apply to each Eurodollar
Loan is set forth below:
Margin
Eurodollar Loans
Debt Rating (Basis Points)
----------------------------------------------
"A1" or "P1" 17.00
----------------------------------------------
"A2" or "P2" 25.00
----------------------------------------------
Margin adjustments resulting from such a rating shall become effective five
(5) Banking Days after the date such rating is received by the Administrative
Agent. Promptly after any Margin adjustment provided for in this subsection (b),
the Administrative Agent shall notify the Banks.
For the purposes of clause (b) of this Section 2.13, if the Borrower's
short-term indebtedness is split rated (e.g., it has received a Debt Rating of
"A1" from S&P and a Debt Rating of "P2" from Moody's), the lower of the two
ratings will apply.
(c) If S&P or Moody's, having given a Debt Rating of "A2" or "P2" or
higher, respectively, changes its Debt Rating to lower than "A2" or "P2",
respectively, the Margin shall be calculated pursuant to subsection (a) above
until such time as an event occurs that would require the Margin to adjust in
the manner set forth in subsection (b) above.
Section 2.14. Facility Fee Rate.
-----------------
(a) Until such time as: (i) the Borrower shall have received a Debt Rating
of "A2" or higher by S&P or "P2" or higher by Moody's and (ii) the Borrower has
not received a Debt Rating lower than "A2" or "P2" from S&P or Moody's,
respectively, the per annum facility fee rate that the Borrower shall use to
calculate the facility fee that is payable pursuant to Section 2.11(a) is set
forth below and is based upon the Borrower's Leverage Ratio as at the end of the
Borrower's most recent fiscal quarter:
Facility Fee Rate
Leverage Ratio (Basis Points)
- ------------------------------------------------------------------
Greater than 2.50 15.00
- ------------------------------------------------------------------
Greater than or equal to 2.01, but not 12.50
greater than 2.50
- ------------------------------------------------------------------
Greater than or equal to 1.00, but less 10.00
than 2.01
- ------------------------------------------------------------------
Less than 1.00 8.00
- ------------------------------------------------------------------
Facility fee rate adjustments resulting from such calculations shall become
effective five (5) Banking Days after such calculations are accepted by the
Administrative Agent. Promptly after the determination of any facility fee rate
adjustment provided for in this subsection (a), the Administrative Agent shall
notify the Borrower and the Banks.
(b) At such time, and from time to time, as: (i) the Borrower shall have
received a Debt Rating of "A2" or higher from S&P or "P2" or higher from Moody's
and (ii) the Borrower has not received a Debt Rating lower than "A2" or "P2"
from S&P or Moody's, respectively, the facility fee rate that the Borrower shall
use to calculate the facility fee that is payable pursuant to Section 2.11(a) is
set forth below:
Facility Fee Rate
Debt Rating (Basis Points)
--------------------------------------------------------
"A1" or "P1" 8.00
--------------------------------------------------------
"A2" or "P2" 10.00
--------------------------------------------------------
Facility fee rate adjustments resulting from such a Debt Rating shall
become effective five (5) Banking Days after such rating is received by the
Administrative Agent. Promptly after any facility fee rate adjustment provided
for in this subsection (b), the Administrative Agent shall notify the Banks.
For the purposes of clause (b) of this Section 2.14, if the Borrower's
short-term indebtedness is split rated (e.g., it has received a Debt Rating of
"A1" from S&P and a Debt Rating of "P2" from Moody's), the lower of the two
ratings will apply.
(c) If S&P or Moody's, having given a Debt Rating of "A2" or "P2" or
higher, respectively, changes its Debt Rating to lower than "A2" or "P2",
respectively, the facility fee rate adjustment pursuant to subsection (b) shall
be ineffective as of such date, and the facility fee rate shall be calculated
pursuant to subsection (a) above until such time as an event occurs that would
require the facility fee rate to adjust in the manner set forth in subsection
(b) above.
(d) The facility fee payable under Section 2.11(a) shall be calculated by
applying the average daily facility fee rate to the average daily Commitments.
ARTICLE 3. YIELD PROTECTION; ILLEGALITY; ETC.
Section 3.1. Additional Costs.
----------------
(a) The Borrower shall pay directly to each Bank from time to time on
demand such amounts as such Bank may determine to be necessary to compensate it
for any costs which such Bank determines are attributable to its making or
maintaining any Loans under this Agreement or either of its Notes or its
obligation to make any Loans hereunder, or any reduction in any amount
receivable by such Bank hereunder in respect of any such Loans or such
obligation (such increases in costs and reductions in amounts receivable being
herein called "Additional Costs"), resulting from any Regulatory Change which:
(i) changes the basis of taxation of any amounts payable to such Bank under this
Agreement or either of its Notes in respect of any of such Loans (other than
taxes imposed on the overall net income of such Bank or of its Lending Office
for any of such Loans by the jurisdiction in which such Bank has its principal
office or such Lending Office); or (ii) imposes or modifies any reserve, special
deposit, deposit insurance or assessment, minimum capital, capital ratio or
similar requirements relating to any extensions of credit or other assets of, or
any deposits with or other liabilities of, such Bank (including, without
limitation, any of such Loans or any deposits referred to in the definition of
"LIBO Base Rate" in Section 1.1); or (iii) imposes any other condition affecting
this Agreement or either of its Notes (or any of such extensions of credit or
liabilities) or its Commitment. Each Bank will notify the Borrower of any event
occurring after the date of this Agreement which will entitle such Bank to
compensation pursu ant to this Section 3.1(a) as promptly as practicable after
it obtains knowledge thereof and determines to request such compensation. If any
Bank requests compensation from the Bor rower under this Section 3.1(a), the
Borrower may, by notice to such Bank (with a copy to the Administrative Agent),
suspend the obligation of such Bank thereafter to make Loans until the
Regulatory Change giving rise to such request ceases to be in effect (in which
case the provisions of Section 3.4 hereof shall be applicable), provided, that
such suspension shall not affect the right of such Bank to receive the
compensation so requested (or any facility fees).
(b) Without limiting the effect of the forego ing provisions of this
Section 3.1, in the event that, by reason of any Regulatory Change, any Bank
either (i) incurs Additional Costs based on or measured by the excess above a
specified level of the amount of a category of deposits or other liabilities of
such Bank which includes deposits by ref erence to which the interest rate on
LIBO Rate Loans is determined as provided in this Agreement or a category of
extensions of credit or other assets of such Bank which includes LIBO Rate Loans
or (ii) becomes subject to restrictions on the amount of such a category of
liabilities or assets which it may hold, then, if such Bank so elects by notice
to the Borrower (with a copy to the Administrative Agent), the obligation of
such Bank to make or renew, and to convert Syndicated Loans of any other type
into, LIBO Rate Loans hereunder shall be suspended until the date such
Regulatory Change ceases to be in effect (in which case the provisions of
Section 3.4 hereof shall be applicable).
(c) Without limiting the effect of the forego ing provisions of this
Section 3.1 (but without duplication), the Borrower shall pay directly to each
Bank from time to time on request such amounts as such Bank may determine to be
necessary to compensate such Bank for any costs which it determines are
attributable to the maintenance by it or any of its affiliates pursuant to any
law or regulation of any jurisdiction or any interpretation, directive or
request (whether or not having the force of law and whether in effect on the
date of this Agreement or thereafter) of any Governmental Authority or monetary
authority of capital in respect of its Loans hereunder or its obligation to make
Loans hereunder (such compensation to include, without limitation, an amount
equal to any reduction in return on assets or equity of such Bank to a level
below that which it could have achieved but for such law, regulation,
interpretation, directive or request). Each Bank will notify the Borrower if it
is entitled to compensation pursuant to this Section 3.1(c) as promptly as
practicable after it determines to request such compensation.
(d) Determinations and allocations by a Bank for purposes of this Section
3.1 of the effect of any Regula tory Change pursuant to subsections (a) or (b),
or of the effect of capital maintained pursuant to subsection (c), on its costs
of making or maintaining Loans or its obligation to make Loans, or on amounts
receivable by, or the rate of return to, it in respect of Loans or such
obligation, and of the additional amounts required to compensate such Bank under
this Section 3.1, shall be conclusive, provided that such determinations and
allocations are made on a reasonable basis.
Section 3.2. Limitation on Types of Loans. Anything herein to the contrary
----------------------------
notwithstanding, if:
(a) the Administrative Agent determines in its good faith judgment after
due diligence (which determination shall be conclusive) that quotations of
interest rates for the relevant deposits referred to in the definition of "LIBO
Base Rate" in Section 1.1 are not being provided in the relevant amounts or for
the relevant maturities for purposes of determining the rate of interest for any
type of LIBO Rate Loans as provided in this Agreement; or
(b) the Required Banks determine in their good faith judgment after due
diligence (or any Bank that has outstanding a Money Market Quote with respect to
a LIBOR Market Loan determines), which determination shall be conclusive, and
notify (or notifies, as the case may be) the Administrative Agent that the
relevant rates of interest referred to in the definition of "LIBO Base Rate" in
Section 1.1 do not adequately cover the cost to the Banks (or such offering
Bank) of making or maintaining its LIBO Rate Loans;
then the Administrative Agent shall give the Borrower and each Bank prompt
notice thereof, and so long as such condition remains in effect, the Banks (or
such offering Bank) shall be
under no obligation to make or renew LIBO Rate Loans or to convert Syndicated
Loans of any other type into Syndicated Loans of such type.
Section 3.3. Illegality. Notwithstanding any other provision in this
----------
Agreement, in the event that it becomes unlawful for any Bank or its Lending
Office to (a) honor its obligation to make or renew LIBO Rate Loans hereunder or
convert Syndicated Loans of any type into Syndicated Loans of such type, or (b)
maintain LIBO Rate Loans hereunder, then such Bank shall promptly notify the
Borrower thereof (with a copy to the Administrative Agent) and such Bank's
obligation to make or renew Eurodollar Loans and to convert other types of
Syndicated Loans into Syndicated Loans of such type hereunder shall be suspended
until such time as such Bank may again make, renew, or convert and maintain such
Eurodollar Loans (in which case the provisions of Section 3.4 hereof shall be
applicable) and such Bank shall no longer be obligated to make any LIBOR Market
Loan that it has offered to make.
Section 3.4. Certain Conversions pursuant to Sections 3.1 and 3.3. If the
----------------------------------------------------
obligation of any Bank to make or renew or convert into LIBO Rate Loans shall be
suspended pursuant to Section 3.1 or 3.3 (Loans of such type being herein called
"Affected Loans" and such type being herein called the "Affected Type"), all
Loans (other than Money Market Loans) which would otherwise be made or renewed
by such Bank as Loans of the Affected Type shall be made instead as Variable
Rate Loans and all Loans of such Bank which would otherwise be converted into
Loans of the Affected Type shall be converted instead into (or shall remain as)
Variable Rate Loans (and, if an event referred to in Section 3.1(b) or 3.3
hereof has occurred and such Bank so requests by notice to the Borrower with a
copy to the Administrative Agent, such Bank's Affected Loans then outstanding
shall be automatically converted into Variable Rate Loans on the last day(s) of
the then current Interest Period(s) for the Affected Loans or on such earlier
date as such Bank may specify to the Borrower with a copy to the Administrative
Agent) and, to the extent that such Bank's Affected Loans have been made as (or
converted into) Variable Rate Loans, all payments and prepayments of principal
which would otherwise be applied to such Bank's Affected Loans shall be applied
instead to its Variable Rate Loans.
Section 3.5 Certain Compensation. The Borrower shall pay to the
--------------------
Administrative Agent for the account of each Bank, upon the request of such
Bank through the Administrative Agent, such amount or amounts as shall be
sufficient (in the reasonable opinion of such Bank) to compensate it for any
loss, cost or expense which such Bank reasonably determines is attributable to:
(a) any payment, prepayment, conversion or renewal of a LIBO Rate Loan
or a Set Rate Loan made by such Bank on a date other than the last day of an
Interest Period for such Loan (whether by reason of acceleration or otherwise);
or
(b) any failure by the Borrower to borrow, convert into or renew a
LIBO Rate Loan or a Set Rate Loan to be made, converted into or renewed by
such Bank
on the date specified therefor in the relevant notice under Section 2.4, 2.5 or
2.6, as the case may be.
Without limiting the foregoing, such compensation shall include an amount
equal to the excess, if any, of: (i) the amount of interest which otherwise
would have accrued on the principal amount so paid, prepaid, converted or
renewed or not borrowed, converted or renewed for the period from and including
the date of such payment, prepayment or conversion or failure to borrow, convert
or renew to but excluding the last day of the then current Interest Period for
such Loan (or, in the case of a failure to borrow, convert or renew, to but
excluding the last day of the Interest Period for such Loan which would have
commenced on the date specified therefor in the relevant notice) at the
applicable rate of interest for such Loan provided for herein; over (ii) with
respect to a LIBO Rate Loan, the amount of interest (as reasonably determined by
such Bank) such Bank would have bid in the London interbank market for Dollar
deposits for amounts comparable to such principal amount and maturities
comparable to such period, and with respect to a Set Rate Loan, the rate
determined by such Bank to be its marginal cost of funds for commonly available
liabilities issued by it on the date of such Loan for a term comparable to such
Interest Period. A determination of any Bank as to the amounts payable pursuant
to this Section 3.5 shall be conclusive absent manifest error.
ARTICLE 4. CONDITIONS PRECEDENT.
Section 4.1. Initial Conditions Precedent. The obligations of the Banks to
----------------------------
make the Loans constituting the initial borrowing are subject to the condition
precedent that the Administrative Agent shall have received on or before the
date of such Loans each of the following items, in form and substance reasonably
satisfactory to the Administrative Agent and its counsel, or, with respect to
non-documentary conditions precedent, that the Administrative Agent shall have
reasonably determined that such conditions shall have been satisfied on or
before the date of such Loans:
(a) the Notes duly executed by the Borrower;
(b) the Authorization Letter duly executed by the Borrower;
(c) a favorable opinion of Robert T. Tucker, Esq., counsel for the
Borrower, dated the date of such initial borrowing, in substantially the form of
Exhibit H and as to such other matters as the Administrative Agent or any Bank
may reasonably request;
(d) a favorable opinion of Cummings & Lockwood, counsel for the
Administrative Agent, dated the date of such initial borrowing;
(e) a certificate of the Secretary or Assistant Secretary of the Borrower,
dated the date of such initial borrowing, attesting to all corporate action
taken by the Borrower, including resolutions of its Board of Directors
authorizing the execution, delivery and performance of the Facility Documents to
which it is a party and each other document to be delivered pursuant to this
Agreement and certifying true copies of the articles of incorporation, bylaws
and other organizational documents of the Borrower;
(f) a certificate of the Secretary or Assistant Secretary of the Borrower,
dated the date of such initial borrowing, certifying the names and true
signatures of the officers of the Borrower authorized to sign the Facility
Documents to which it is a party and the other documents to be delivered by the
Borrower under this Agreement;
(g) a certificate of good standing for the Borrower from the Secretary of
State of the Borrower's incorporation and each jurisdiction in which the
Borrower is qualified to do business;
(h) a certificate of a duly authorized officer of the Borrower, dated the
date of such initial borrowing, stating that the representations and warranties
in the Facility Documents to which it is a party are true and correct on such
date as though made on and as of such date and that no event has occurred and is
continuing which constitutes a Default or Event of Default;
(i) the Borrower's Form 10-K for January 31, 1995, and each of the
Borrower's Forms 10-K and 10-Q filed since said date;
(j) contemporaneous searches of Uniform Commercial Code, real estate, tax,
patent and trademark and other appropriate registers, dockets, offices and
records, which shall have revealed no filings or recordings evidencing or
relating to any Liens with respect to any property of the Borrower (other than
Liens permitted by Section 7.3);
(k) a payoff letter and releases from General Electric Capital Corporation
in form and substance reasonably satisfactory to the Administrative Agent;
(l) payment by the Borrower to the Administrative Agent of all fees owing
to the Administrative Agent and all other expenses and fees incurred by the
Administrative Agent (including, without limitation, the reasonable fees,
charges and disbursements of counsel to the Administrative Agent due and owing
through the date of the initial borrowing); and
(m) such other documents as the Administrative Agent, any Bank or any of
their respective counsel may reasonably request.
Section 4.2. Additional Conditions Precedent. The obligations of the Banks
-------------------------------
to make any Loans pursuant to a borrowing which increases the amount
outstanding hereunder (including the initial borrowing) and to make borrowings
to repay Money Market Loans shall be subject to the further conditions precedent
that on the date of such Loans:
(a) the following statements shall be true in all material respects:
(i) the representations and warranties contained in Article 5 herein
and in each other Facility Document are true and correct on and as of the date
of such Loan as though made on and as of such date; and
(ii) no Default or Event of Default has occurred and is continuing,
or would result from such Loan; and
(iii) there has been no change in the business, management,
operations, properties or financial condition of the Borrower or any of its
Subsidiaries since the Closing Date which has had, or could reasonably be
expected to have, a Material Adverse Effect; and
(b) either
(i) the Borrower shall have delivered to the Administrative Agent a
Notice of Borrowing in substantially the form of Exhibit I; or
(ii) the Borrower shall have delivered to the Administrative Agent a
Money Market Quote Request substantially in the form of Exhibit E-1 or
Exhibit E-2.
Section 4.3. Deemed Representations. Each Notice of Borrowing hereunder and
----------------------
acceptance by the Borrower of the proceeds of such borrowing shall constitute a
representation and warranty that the statements contained in Section 4.2(a) are
true and correct in all material respects both on the date of such notice and,
unless the Borrower otherwise notifies the Administrative Agent prior to such
borrowing, as of the date of such borrowing.
ARTICLE 5. REPRESENTATIONS AND WARRANTIES.
The Borrower hereby represents and warrants that:
Section 5.1. Incorporation, Good Standing and Due Qualification. Each of
--------------------------------------------------
the Borrower and its Material Subsidiaries is duly incorporated, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation, has the corporate
power and authority to own its assets and to transact the business in which it
is now engaged or proposed to be engaged, and is duly qualified as a foreign
corporation and in good standing under the laws of each other jurisdiction in
which such qualification is required.
Section 5.2. Corporate Power and Authority; No Conflicts. The execution,
-------------------------------------------
delivery and performance by the Borrower of the Facility Documents to which it
is a party have been duly authorized by all necessary corporate action and do
not and will not: (a) require any consent or approval of its stockholders; (b)
contravene its charter or by-laws; (c) violate any provision of, or require any
filing, registration, consent or approval under, any law, rule, regulation
(including, without limitation, Regulation U), order, writ, judgment,
injunction, decree, determination or award presently in effect having
applicability to the Borrower or any of its Subsidiaries; (d) result in a breach
of or constitute a default or require any consent under any indenture or loan or
credit agreement or any other agreement, lease or instrument to which the
Borrower is a party or by which it or its properties may be bound or affected;
(e) result in, or require, the creation or imposition of any Lien, upon or with
respect to any of the properties now owned or hereafter acquired by the
Borrower; or (f) cause the Borrower (or any Subsidiary) to be in default under
any such law, rule, regulation, order, writ, judgment, injunction, decree,
determination or award or any such indenture, agreement, lease or instrument.
Section 5.3. Legally Enforceable Agreements. Each Facility Document to
------------------------------
which the Borrower is a party is, or when delivered under this Agreement will
be, a legal, valid and binding obligation of the Borrower enforceable against
the Borrower in accordance with its terms, except to the extent that such
enforcement may be limited by applicable bankruptcy, insolvency and other
similar laws affecting creditors' rights generally.
Section 5.4. Litigation. There are no actions, suits or proceedings pending
----------
or, to the knowledge of the Borrower, threatened, against or affecting the
Borrower or any of its Subsidiaries before any Governmental Authority, which, in
any one case or in the aggregate, could reasonably be expected to have a
Material Adverse Effect.
Section 5.5 Financial Statements. The consolidated balance sheet of the
--------------------
Borrower and its Consolidated Subsidiaries as at January 31, 1995 , and the
related consolidated income statement and statements of cash flows and changes
in stockholders' equity of the Borrower and its Consolidated Subsidiaries for
the fiscal year then ended, and the accompanying footnotes, together with the
opinion thereon, of Ernst & Young, LLP, independent certified public
accountants, and the interim consolidated balance sheet of the Borrower and its
Consolidated Subsidiaries as at October 31, 1995, and the related consolidated
income statement and statements of cash flows and changes in stockholders'
equity for the nine (9) month period then ended, copies of which have been
furnished to the Administrative Agent, are complete and correct and fairly
present the financial condition of the Borrower and its Consolidated
Subsidiaries as at such dates and the results
of the operations of the Borrower and its Consolidated Subsidiaries for the
periods covered by such statements, all in accordance with GAAP consistently
applied (subject to recurring year end adjustments in the case of the interim
financial statements). Except as disclosed on Schedule 5.5, there are no
liabilities of the Borrower or any of its Consolidated Subsidiaries, fixed or
contingent, which are material but are not reflected in such financial
statements or in the notes thereto, other than liabilities arising in the
ordinary course of business since January 31, 1995. No information, exhibit or
report furnished by the Borrower to the Administrative Agent in connection with
the negotiation of this Agreement contained any material misstatement of fact or
omitted to state a material fact or any fact necessary to make the statements
contained therein not materially misleading. Since January 31, 1995, there has
been no change in the financial condition, business or operations of the
Borrower or any of its Subsidiaries which has had, or could reasonably be
expected to have, a Material Adverse Effect.
Section 5.6. Ownership and Liens. Except as set forth on Schedule 7.2, each
-------------------
of the Borrower and its Material Subsidiaries has good, marketable title in fee
simple to, or valid leasehold interests in, all of its material properties and
assets, real and personal, including the properties and assets, and leasehold
interests reflected in the financial statements referred to in Section 5.5 or
submitted pursuant to Section 6.8 hereof, as the case may be (other than any
properties or assets disposed of in the ordinary course of business), and none
of the material properties and assets owned by the Borrower or any of its
Subsidiaries and none of its material leasehold interests is subject to any
Lien, except as disclosed in such Schedule 7.2, such financial statements or as
may be permitted hereunder.
Section 5.7. Taxes. To the best of the Borrower's knowledge, all material
-----
tax and other information returns required to be filed by or on behalf of the
Borrower and its Subsidiaries have been properly prepared, executed and filed.
All material taxes, assessments, fees and other governmental charges upon the
Borrower or any of its Subsidiaries or upon any of their respective properties,
incomes, sales or franchises which are due and payable have been paid other than
those not yet delinquent and payable without premium or penalty, and except for
those being diligently contested in good faith and by appropriate proceedings,
and in each case adequate reserves and provisions for taxes on the books of the
Borrower and each of its Subsidiaries are adequate for all open years and for
its current fiscal period. None of the Borrower or its Subsidiaries knows of any
proposed additional assessment or basis for any material assessment for
additional taxes (whether or not reserved against). The federal, state and local
and foreign income tax liabilities of the Borrower have been finally determined
by the Internal Revenue Service and other relevant taxing authorities, or the
time for audit has expired, for all fiscal periods ending on or prior to January
31, 1989 and all such liabilities (including all deficiencies assessed following
audit) have been satisfied. None of the Borrower, its Subsidiaries or any of
their respective consolidated return groups has at any time filed a consolidated
tax return with any Person other than the Borrower and its Subsidiaries, except
as set forth in Schedule 5.7. Schedule 5.7 describes all tax sharing
arrangements or agreements to which
the Borrower or any of its Subsidiaries is bound.
Section 5.8. ERISA.
-----
(a) Schedule 5.8 sets forth a correct and complete list of each Plan or
Multiemployer Plan with respect to the employees of the Borrower and its ERISA
Affiliates.
(b) Each Plan, and, to the best knowledge of the Borrower, each
Multiemployer Plan, is in compliance in all material respects with, and has been
administered in all material respects in compliance with, the applicable
provisions of ERISA, the Code and any other applicable Federal or state law, and
no event or condition is occurring or exists concerning which the Borrower would
be under an obligation to furnish a report to the Banks in accordance with
Section 6.8(h) hereof. As of the most recent valuation date for each Plan, each
Plan was "fully funded", or shall be "fully funded" within twelve (12) months of
the later of: (i) the date such Plan became a Plan with respect to the employees
of the Borrower and its ERISA Affiliates or (ii) the date such Plan was deemed
other than "fully funded". For purposes of this Section 5.8, "fully funded"
shall mean that the fair market value of the assets of the Plan is not less than
the present value of the accrued benefits of all participants in the Plan,
computed on a Plan termination basis. To the best knowledge of the Borrower, no
Plan has been other than "fully funded" for greater than the twelve (12) month
period prescribed above as of the date these representations are made with
respect to any Loan under this Agreement.
Section 5.9. Material Subsidiaries and Ownership of Stock. Schedule 5.9 is
--------------------------------------------
a complete and accurate list of the Material Subsidiaries of the Borrower,
showing the jurisdiction of incorporation or organization of each such Material
Subsidiary and showing the percentage of the Borrower's or any of its
Subsidiaries' ownership of the outstanding stock or other interest of each such
Material Subsidiary. All of the outstanding capital stock or other interest of
each such Material Subsidiary has been validly issued, is fully paid and
nonassessable and is owned by the Borrower or such Subsidiary free and clear of
all Liens, except as set forth on Schedule 7.2.
Section 5.10. Credit Arrangements. Schedule 5.10 is a complete and correct
-------------------
list of all credit agreements, inden tures, purchase agreements, guaranties,
Capital Leases and other investments, agreements and arrangements presently in
effect providing for or relating to extensions of Debt equal to or greater than
$1,000,000 in respect of which the Borrower or any of its Subsidiaries is in any
manner directly or contingently obligated; and the maximum principal or face
amounts of the Debt in question, outstanding and which can be outstanding, are
correctly stated, and all Liens of any nature given or agreed to be given as
security therefor are correctly described or indicated in such Schedule.
Section 5.11. Operation of Business. To the best of the Borrower's
---------------------
knowledge, each of the Borrower and its Subsidiaries possesses all material
licenses,
permits, franchises, patents, copyrights, trademarks and trade names, or rights
thereto, to conduct its business substantially as now conducted and as presently
proposed to be conducted, and neither the Borrower nor any of its Subsidiaries
is in violation of any valid rights of others with respect to any of the
foregoing, except where such violation is not reasonably expected to have a
Material Adverse Effect.
Section 5.12. Hazardous Materials. The Borrower and each of its
-------------------
Subsidiaries have obtained all permits, licenses and other authorizations which
are required under all Environmental Laws, except to the extent failure to have
any such permit, license or authorization would not have a Mate rial Adverse
Effect. The Borrower and each of its Subsid iaries are in compliance with the
terms and conditions of all such permits, licenses and authorizations, and are
also in compliance with all other limitations, restrictions, conditions,
standards, prohibitions, requirements, obligations, schedules and timetables
contained in any applicable Environmental Law or in any regulation, code, plan,
order, decree, judgment, injunction, notice or demand letter issued, entered,
promulgated or approved thereunder, except to the extent failure to comply would
not have a Material Adverse Effect. To the best of the Borrower's knowledge,
except as heretofore disclosed to the Administrative Agent or as set forth on
Schedule 5.12, there have been no environmental investigations, studies, audits,
tests, reviews or other analyses conducted by or that are in the possession of
the Borrower or any of its Subsidiaries with respect to any property or facility
now or previously owned or leased by the Borrower or any of its Environmental
Affiliates which reveal facts or circumstances that could reasonably be expected
to have a Material Adverse Effect.
Section 5.13. No Default on Outstanding Judgments or Orders. Each of the
---------------------------------------------
Borrower and its Subsidiaries has sat isfied all judgments and neither the
Borrower nor any of its Subsidiaries is in default with respect to any judgment,
writ, injunction or decree of any Governmental Authority, except where the
failure so to do is not reasonably expected to have a Material Adverse Effect.
Section 5.14. No Defaults on Other Agreements. Neither the Borrower nor any
-------------------------------
of its Subsidiaries is in default in any respect in the performance, observance
or fulfillment of any of the obligations, covenants or conditions contained in
any indenture, loan or credit agreement or any lease or other agreement or
instrument with respect to its business to which it is a party which default
could reasonably be expected to have a Material Adverse Effect.
Section 5.15. Labor Disputes and Acts of God. Neither the business nor the
------------------------------
properties of the Borrower or of any of its Subsidiaries are currently affected
by any fire, explosion, accident, strike, lockout or other labor dispute,
drought, storm, hail, earthquake, embargo, act of God or of the public enemy or
other casualty (whether or not covered by insurance) that could reasonably be
expected to have a Material Adverse Effect.
Section 5.16. Governmental Regulation. Neither the Borrower nor any of its
-----------------------
Subsidiaries is subject to regulation under the Public Utility Holding Company
Act of 1935, the Investment Company Act of 1940, the Interstate Commerce Act,
the Federal Power Act or any statute or regulation limiting its ability to incur
indebtedness for money borrowed as con templated hereby.
Section 5.17. Insurance. The Borrower maintains through itself or through
---------
financially sound and reputable insurers not related to or affiliated with the
Borrower insurance with respect to its properties and business and against at
least such liabilities, casualties and contingencies and in at least such types
and amounts as is customary in the case of corporations engaged in the same or a
similar business or having similar properties similarly situated. It is
understood that the Borrower shall be self-insured only for noncatastrophic
insurance coverage. Schedule 5.17 sets forth a complete and correct list and
brief description of all insurance currently maintained by or on respect of the
Borrower, setting forth the identity of the insurance carrier, the type of
coverage, the amount of coverage and the deductible. There are no claims,
actions, suits, proceedings against, arising under or based upon any of such
insurance policies except as set forth in Schedule 5.17 which could reasonably
be expected to have a Material Adverse Effect. Schedule 5.17 identifies each
insurance policy providing for a retrospective premium adjustment or other
change in compensation payable to the insurer on the basis of claim or loss
experience, and describes any liability the Borrower has in respect of such
matters.
Section 5.18. Intellectual Property. To the best of the Borrower's
---------------------
knowledge, the Borrower and each of its Subsidiaries owns, or is licensed or
otherwise has the right to use, all the material patents, trademarks, service
marks, names (trade, service, fictitious or otherwise), copyrights, technology
(including but not limited to computer programs and software), processes, data
bases and other rights, free from burdensome restrictions, necessary to own and
operate its properties and carry on its business as presently conducted and
presently planned to be conducted without conflict with the rights of others.
ARTICLE 6. AFFIRMATIVE COVENANTS.
So long as any of the Notes shall remain unpaid or any Bank shall
have any Commitment under this Agreement, the Borrower shall:
Section 6.1. Maintenance of Existence. Preserve and maintain, and cause
------------------------
each of its Subsidiaries to preserve and maintain, its corporate existence and
good standing in the jurisdiction of its incorporation, and qualify and remain
qualified, and cause each of its Subsidiaries to qualify and remain qualified,
as a foreign corporation in each jurisdiction in which such qualification is
required, except where the failure to do so could not be reasonably expected to
have a Material Adverse Effect.
Section 6.2. Conduct of Business. Continue, and cause each of its
-------------------
Subsidiaries to continue, to engage in, directly or indirectly, the provision of
consumer goods or services, except for other businesses that may be operated as
a result of an Acceptable Acquisition.
Section 6.3. Maintenance of Properties. Maintain, keep and preserve, and
-------------------------
cause each of its Subsidiaries to maintain, keep and preserve, all of its
material properties (tangible and intangible), permits and licenses necessary or
useful in the proper conduct of its business in good working order and
condition, ordinary wear and tear excepted.
Section 6.4. Maintenance of Records. Keep, and cause each of its
----------------------
Subsidiaries to keep, adequate records and books of account, in which complete
entries will be made in accordance with GAAP, reflecting all material financial
transactions of the Borrower and its Subsidiaries.
Section 6.5 Maintenance of Insurance. Maintain, either through itself or
------------------------
with financially sound and reputable insurers, insurance with respect to its
properties and business and against such liabilities, casualties and
contingencies and of such types and in such amounts as is customary in the case
of corporations engaged in the same or similar businesses or having similar
properties similarly situated, which insurance shall in any event not provide
for a materially lower level of coverage than the insurance referred to in
Section 5.17 in effect on the Closing Date. Further, the Borrower shall furnish
to the Administrative Agent from time to time upon request the policies under
which such insurance is issued, certificates of insurance and such other
information relating to such insurance as the Administrative Agent may
reasonably request.
Section 6.6. Compliance with Laws. Comply, and cause each of its
--------------------
Subsidiaries to comply, with all applicable material laws, rules, regulations
and orders.
Section 6.7. Right of Inspection. At any reasonable time and from time to
-------------------
time and, so long as no Default or Event of Default shall have occurred or be
continuing, upon not less than five (5) Banking Days' prior notice, and subject
to the provisions of Section 11.15, permit the Administrative Agent or any Bank
or any agent or representative thereof, to examine and make copies and abstracts
from the records and books of account of, and visit the properties of, the
Borrower and any of its Subsidiaries, and to discuss the affairs, finances and
accounts of the Borrower and any such Subsidiary with any of their respective
officers and directors and the Borrower's independent accountants, and to
conduct an audit of the Borrower; provided, that so long as no Default or Event
--------
of Default shall have occurred or be continuing, each Bank may not exercise the
benefits conferred upon it under this Section 6.7 more than once during any
calendar year.
Section 6.8. Reporting Requirements. Furnish to the Administrative Agent,
----------------------
who shall provide copies thereof to the Banks:
(a) as soon as available and in any event within 90 days after the end of
each fiscal year of the Bor rower, a consolidated balance sheet of the Borrower
and its Consolidated Subsidiaries as of the end of such fiscal year and a
consolidated and consolidating income statement and statements of cash flows and
changes in stockholders' equity of the Borrower and its Consolidated
Subsidiaries for such fiscal year, all in reasonable detail and stating in
comparative form the respective consolidated and consolidating figures for the
corresponding date and period in the prior fiscal year and all prepared in
accordance with GAAP and as to the consolidated statements accompanied by an
unqualified opinion by Ernst & Young, LLP or other independent accountants of
national standing selected by the Borrower;
(b) as soon as available and in any event within 45 days after the end of
each of the first three quarters of each fiscal year of the Borrower, a
consolidated balance sheet of the Borrower and its Consolidated Subsidiaries as
of the end of such quarter and a consolidated and consolidating income statement
and statements of cash flows and changes in stockholders' equity, of the
Borrower and its Consolidated Subsidiaries for the period commencing at the end
of the previous fiscal year and ending with the end of such quarter, all in
reasonable detail and stating in comparative form the respective consolidated
and consolidating figures for the corresponding date and period in the previous
fiscal year and all prepared in accordance with GAAP and certified by the chief
financial officer of the Borrower (subject to normally recurring year-end
adjustments);
(c) (i) promptly upon receipt thereof, copies of any reports, inclusive of
any management letters, submitted to the Borrower or any of its Subsidiaries by
independent certified public accountants in connection with examination of the
financial statements of the Borrower or any such Subsidiary made by such
accountants and (ii) within five (5) Banking Days of receipt thereof, any Debt
Ratings issued by Moody's or S&P;
(d) simultaneously with the delivery of the financial statements referred
to above, a certificate substantially in the form of Exhibit J of the chief
financial officer of the Borrower (i) certifying that to the best of his
knowledge no Default or Event of Default has occurred and is continuing or, if a
Default or Event of Default has occurred and is continuing, a statement as to
the nature thereof and the action which is proposed to be taken with respect
thereto, and (ii) with computations demonstrating compliance with the covenants
contained in Article 8;
(e) simultaneously with the delivery of the annual financial statements
referred to in Section 6.8(a), a certificate of the independent public
accountants who audited such statements to the effect that, in making the
examination necessary for
the audit of such statements, they have obtained no knowledge of any condition
or event which constitutes a Default or Event of Default, or if such accountants
shall have obtained knowledge of any such condition or event, specifying in such
certificate each such condition or event of which they have knowledge and the
nature and status thereof;
(f) promptly after the commencement thereof, notice of all actions, suits,
and proceedings before any Governmental Authority, affecting the Borrower or any
of its Subsidiaries which, if determined adversely to the Borrower or such
Subsidiary, could reasonably be expected to have a Material Adverse Effect;
(g) as soon as possible, and in any event within 5 Banking Days after the
occurrence of each Default or Event of Default, a written notice setting forth
the details of such Default or Event of Default and the action which is proposed
to be taken by the Borrower with respect thereto;
(h) as soon as possible, and in any event within ten days after the
Borrower knows or has reason to know that any of the events or conditions
specified below have occurred or exist, a statement signed by a senior financial
officer of the Borrower setting forth details respecting such event or condition
and the action, if any, which the Borrower or its ERISA Affiliate proposes to
take with respect thereto (and a copy of any report or notice required to be
filed with or given to PBGC by the Borrower or an ERISA Affiliate with respect
to such event or condition):
(i) any reportable event, as defined in Section 4043(b) of ERISA, with
respect to a Plan, as to which PBGC has not by regulation waived the requirement
of Section 4043(a) of ERISA that it be notified within 30 days of the occurrence
of such event (provided that a failure to meet the minimum funding standard of
Section 412 of the Code or Section 302 of ERISA including, without limitation,
the failure to make on or before its due date a required installment under
Section 412(m) of the Code or Section 302(e) of ERISA, shall be a reportable
event regardless of the issuance of any waivers in accordance with Section
412(d) of the Code) and any request for a waiver under Section 412(d) of the
Code for any Plan;
(ii) the distribution under Section 4041 of ERISA of a notice of
intent to terminate any Plan which is not "fully funded", as such term is
defined in Section 5.8(b), or any action taken by the Borrower or an ERISA
Affiliate to terminate any such Plan;
(iii) the institution by PBGC of pro ceedings under Section 4042 of
ERISA for the termination of, or the appointment of a trustee to administer,
any Plan, or the receipt by the Borrower or any ERISA Affiliate of a notice
from a Multiemployer Plan that such action has been taken by PBGC with respect
to such Multiemployer Plan;
(iv) the complete or partial withdrawal from a Multiemployer Plan
by the Borrower or any ERISA Affiliate that results in liability under Section
4201 or 4204 of ERISA (including the obligation to satisfy secondary liability
as a result of a purchaser default) or the receipt of the Borrower or any ERISA
Affiliate of notice from a Multiemployer Plan that it is in reorganization or
insolvency pursuant to Section 4241 or 4245 of ERISA or that it intends to
terminate or has terminated under Section 4041A of ERISA;
(v) the institution of a proceeding by a fiduciary or any
Multiemployer Plan against the Borrower or any ERISA Affiliate to enforce
Section 515 of ERISA, which proceeding is not dismissed within 30 days;
(vi) the adoption of an amendment to any Plan that pursuant to Section
401(a)(29) of the Code or Section 307 of ERISA would result in the loss of tax
exempt status of the trust of which such Plan is a part if the Borrower or an
ERISA Affiliate fails to timely provide security to the Plan in accordance with
the provisions of said Sections;
(vii) any event or circumstance exists which may reasonably be
expected to constitute grounds for the Borrower or any ERISA Affiliate to
incur liability under Title IV of ERISA or under Sections 412(c)(11) or 412(n)
of the Code with respect to any Plan; and
(viii) the Unfunded Benefit Liabilities of one or more Plans equal or
exceed $5,000,000 in the aggregate;
(i) promptly after the request of the Administrative Agent, copies of each
annual report filed pursuant to Section 104 of ERISA with respect to each Plan
(including, to the extent required by Section 104 of ERISA, the related
financial and actuarial statements and opinions and other supporting statements,
certifications, schedules and information referred to in Section 103) and each
annual report filed with respect to each Plan under Section 4065 of ERISA;
provided, however, that in the case of a Multiemployer Plan, such annual reports
shall be furnished only if they are available to the Borrower or an ERISA
Affiliate;
(j) promptly after the furnishing thereof, copies of any statement or
report furnished to any other party pursuant to the terms of any indenture, loan
or credit or similar agreement and not otherwise required to be fur nished to
the Administrative Agent pursuant to any other clause of this Section 6.8;
(k) as soon as available and in any event within three (3) Banking Days
after filing the same with the Securities and Exchange Commission, but in no
event later than 110 days after the end of each fiscal quarter of the Borrower,
a true and complete copy of the Borrower's Form 10Q;
(l) as soon as available and in any event within three (3) Banking Days
after filing the same with the Securities and Exchange Commission, but in no
event later than 110 days after the end of each fiscal year of the Borrower, a
true and complete copy of the Borrower's Form 10K;
(m) promptly after the sending or filing thereof, copies of all proxy
statements, financial statements and reports which the Borrower has made
generally available to its stockholders, and copies of all regular, periodic and
special reports, and all registration statements, which the Borrower files with
the Securities and Exchange Commission or any Governmental Authority which may
be substituted therefor, or with any national securities exchange; and
(n) such other information respecting the condition or operations,
financial or otherwise, of the Bor rower or any of its Subsidiaries as the
Administrative Agent, or any Bank through the Administrative Agent, may from
time to time reasonably request.
Section 6.9. Payment of Taxes and Other Potential Charges and Priority
---------------------------------------------------------
Claims. Pay or discharge
- ------
(a) on or prior to the date on which penalties attach thereto, all taxes,
assessments and other governmental charges imposed upon it or any of its
properties;
(b) on or prior to the date when due, all lawful claims of materialmen,
mechanics, carriers, warehousemen, landlords and other like Persons which, if
unpaid, might result in the creation of a Lien upon any such property; and
(c) on or prior to the date when due, all other lawful claims which, if
unpaid, might result in the creation of a Lien upon any such property or which,
if unpaid, might give rise to a claim entitled to priority over general
creditors of the Borrower in a case under Title 11 (Bankruptcy) of the United
States Code, as amended;
provided, that unless and until foreclosure, distraint, levy, sale or similar
proceedings shall have been commenced, the Borrower need not pay or discharge
any such tax, assessment, charge or claim so long as (x) the validity thereof is
contested in good faith and by appropriate proceedings diligently conducted, and
(y) such reserves or other appropriate provisions as may be required by GAAP
shall have been made therefor.
Section 6.10. ERISA Plans. Within twelve (12) months of the later of: (i)
-----------
the date any Plan or Multiemployer Plan became a Plan or Multiemployer Plan with
respect to the employees of the Borrower and its ERISA Affiliates or (ii) the
date any such Plan or Multiemployer Plan was deemed other than "fully funded",
the Borrower shall
cause such Plan or Multiemployer Plan to be "fully funded". For purposes of this
Section 6.10, "fully funded" shall mean that the fair market value of the assets
of the Plan is not less than the present value of the accrued benefits of all
participants in the Plan, computed on a Plan termination basis.
ARTICLE 7. NEGATIVE COVENANTS.
So long as any of the Notes shall remain unpaid or any Bank shall have any
Commitment under this Agreement, the Borrower shall not:
Section 7.1. Debt. Create, incur, assume or suffer to exist, or permit any
----
of its Subsidiaries to create, incur, assume or suffer to exist any Debt,
except:
(a) Debt of the Borrower under this Agreement or the Notes;
(b) Debt described in Schedule 5.10, including renewals, extensions or
refinancings thereof, provided that the principal amount thereof does not
increase;
(c) Debt of the Borrower subordinated on terms reasonably satisfactory to
the Banks to the Borrower's obligations under this Agreement and the Notes;
(d) Debt of the Borrower to any such Subsid iary or of any Subsidiary to
the Borrower or another such Subsidiary;
(e) Debt in respect of letters of credit issued for the account of the
Borrower or any such Subsidiary in an aggregate face amount outstanding at any
time of up to $30,000,000;
(f) Debt incurred in connection with accep tances of the Borrower or any
such Subsidiary in an aggregate amount outstanding at any one time of up to
$25,000,000;
(g) Debt of any Person which becomes a
Subsidiary of the Borrower in connection with any Acceptable Acquisition
permitted by Section 7.8 or Debt which is acquired and assumed by the Borrower
or any of its Subsidiaries in connection with an Acceptable Acquisition
permitted by Section 7.8; provided that such Debt was in existence and
--------
outstanding prior to and on the date that such Person became a Subsidiary or
such Acceptable Acquisition was consummated, and such Debt was not created in
contemplation of such Person becoming a Subsidiary or such Acceptable
Acquisition being consummated, and any renewals, extensions or refinancings
thereof, provided that the principal amount thereof does not increase; and
provided, further, however, that the Debt
- -------- ------- -------
permitted by this subsection (g) shall not (i) cause the Borrower to exceed the
limitations contained in subsections (e) or (f) of this Section 7.1 or (ii)
cause the Borrower to exceed the limitation contained in subsection (h) of this
Section 7.1 after recalculating such amounts on a consolidated basis with the
acquired Debt and the acquired business or Person;
(h) Debt of the Borrower up to five percent (5%) of its total assets,
including Debt permitted by subsection (g) of this Section 7.1, as measured at
the end of the immediately preceding fiscal quarter, as calculated on a
consolidated basis in accordance with GAAP; and
(i) Debt of the Borrower or any such Subsid iary secured by purchase money
Liens permitted by Section 7.2.
Section 7.2. Liens. Create, incur, assume or suffer to exist, or permit any
-----
of its Subsidiaries to create, incur, assume or suffer to exist, any Lien, upon
or with respect to any of its properties, now owned or hereafter acquired,
except:
(a) Liens for taxes or assessments or other government charges or levies if
not yet due and payable or if due and payable if they are being contested in
good faith by appropriate proceedings and for which appropriate reserves are
maintained;
(b) Liens imposed by law, such as mechanic's, materialmen's, landlord's,
warehousemen's and carrier's Liens, and other similar Liens, securing
obligations incurred in the ordinary course of business which are not past due
for more than 30 days, or which are being contested in good faith by appropriate
proceedings and for which appropriate reserves have been established;
(c) Liens under workmen's compensation, unem ployment insurance, social
security or similar legislation (other than ERISA);
(d) Liens, deposits or pledges to secure the performance of bids, tenders,
contracts (other than contracts for the payment of money), leases (permitted
under the terms of this Agreement), public or statutory obligations, surety,
stay, appeal, indemnity, performance or other similar bonds, or other similar
obligations arising in the ordinary course of business;
(e) judgment and other similar Liens arising in connection with court
proceedings; provided that the exe cution or other enforcement of such Liens is
effectively stayed and the claims secured thereby are being actively con tested
in good faith and by appropriate proceedings;
(f) easements, rights-of-way, restrictions and other similar encumbrances
which, in the aggregate, do not materially interfere with the occupation, use
and enjoyment by the Borrower or any such Subsidiary of the property or assets
encumbered thereby in the normal course of its business or materially impair the
value of the property sub ject thereto;
(g) Liens securing obligations of: (i) any such Subsidiary to the Borrower
or another such Subsidiary or (ii) the Borrower to any such Subsidiary;
(h) Liens securing Debt greater than $500,000 in the aggregate existing on
the Closing Date as set forth in Schedule 7.2 and Liens securing Debt equal to
or less than $500,000 in the aggregate existing on the Closing Date;
(i) Liens securing Debt permitted under Section 7.1(g), provided that such
Liens only affect property acquired in connection with the Acceptable
Acquisition pursuant to which such Debt was incurred;
(j) As at any time, Liens securing up to an aggregate of $30,000,000 of
Debt permitted under Section 7.1 (including, for purposes of determining such
aggregate amount, Debt secured by Liens permitted under other subsections of
this Section 7.2); and
(k) purchase money Liens on any property hereafter acquired or the
assumption of any Lien on property existing at the time of such acquisition, or
a Lien incurred in connection with any conditional sale or other title retention
agreement or a Capital Lease; provided that:
(i) any property subject to any of the foregoing is acquired by the
Borrower or any such Subsidiary in the ordinary course of its business and the
Lien on any such property is created contemporaneously with such acquisition;
(ii) the obligation secured by any Lien so created, assumed or
existing shall not exceed 100% of the lesser of cost or fair market value as of
the time of acquisition of the property covered thereby to the Borrower or such
Subsidiary acquiring the same;
(iii) each such Lien shall attach only to the property so acquired and
fixed improvements thereon;
(iv) the Debt secured by all such Liens shall not exceed $30,000,000
in the aggregate; and
(v) the obligations secured by such Lien are permitted by the
provisions of Section 7.1.
Section 7.3. Investments. Make, or permit any of its Subsidiaries to make,
-----------
any loan or advance to any Person or purchase or otherwise acquire, or permit
any such Subsidiary to purchase or otherwise acquire, any capital stock, assets,
obligations or other securities of, make any capital contribution to, or
otherwise invest in, or acquire any interest in, any Person, except: (a) Cash
Equivalent Investments ; (b) for stock, obligations or securities received in
settlement of debts (created in the ordinary course of business) owing to the
Borrower or any such Subsid iary; (c) any Acceptable Acquisition permitted by
Section 7.8; (d) investments by the Borrower in one of its Subsidiaries or
investments by one or more Subsidiaries of the Borrower in another Subsidiary of
the Borrower; (e) for other investments (including minority interests in joint
ventures, partnerships and other Persons that are held for investment purposes)
not exceeding $50,000,000 in the aggregate for all such investments; or (f) for
the repurchase of outstanding equity securities of the Borrower.
Section 7.4. Sale of Assets. Sell, lease, assign, transfer or otherwise
--------------
dispose of, or permit any of its Subsidiaries to sell, lease, assign, transfer
or otherwise dispose of, any of its now owned or hereafter acquired assets
(including, without limitation, shares of stock and indebtedness of such
Subsidiaries, receivables and leasehold interests); except: (a) for inventory
disposed of in the ordinary course of business; (b) the sale or other disposi
tion of assets no longer used or useful in the conduct of its business; (c) that
any such Subsidiary may sell, lease, assign, or otherwise transfer its assets to
the Borrower or any other such Subsidiary; (d) the sale or other disposition of
assets by the Borrower to its Subsidiaries with an aggregate value not exceeding
twenty percent (20%) of the consolidated revenues of the Borrower and its
Subsidiaries for the immediately preceding fiscal year; and (e) the sale or
other disposition of assets in any fiscal year to a Person other than the
Borrower, its Subsidiaries or any of their respective Affiliates with an
aggregate value not exceeding fifteen percent (15%) of the consolidated revenues
of the Borrower and its Subsidiaries for the immediately preceding fiscal year.
Section 7.5. Stock of Subsidiaries, Etc. Sell or otherwise dispose of any
--------------------------
equity interest of any of its Subsidiaries, except in connection with a
transaction permitted under Section 7.4, 7.7 or 7.8 or permit any such
Subsidiary to issue any additional equity interest to any Person other than
Borrower or another such Subsidiary, except directors' qualifying shares.
Section 7.6. Transactions with Affiliates. Enter into any transaction,
----------------------------
including, without limitation, the purchase, sale or exchange of property or the
rendering of any service, with any Affiliate (other than a Subsidiary of the
Borrower) or permit any of its Subsidiaries to enter into any such transaction,
including, without limitation, the purchase, sale or exchange of property or the
rendering of any service, with any Affiliate (other than a Subsidiary of the
Borrower), except in the ordinary course of and pursuant to the reasonable
requirements of the Borrower's or such Subsidiary's business and upon fair and
reasonable terms no less favorable to the Borrower or such Subsidiary than would
it obtain in a comparable arm's length transaction with a Person not an
Affiliate.
Section 7.7. Mergers, Etc. Merge or consolidate with, or sell, assign,
------------
lease or otherwise dispose of (whether in one transaction or in a series of
transactions) all or substantially all of its assets (whether now owned or
hereaf ter acquired) to, any Person, or acquire all or substantially all of the
assets or the business of any Person (or enter into any agreement to do any of
the foregoing), or permit any of its Subsidiaries to do so, except that: (a) any
such Sub sidiary may merge into or transfer assets to the Borrower; (b) any
Subsidiary may merge into or consolidate with or transfer assets to any other
Subsidiary; (c) the Borrower or any such Subsidiary may effect any Acceptable
Acquisition permitted by Section 7.8 and (d) the Borrower or any of its
Subsidiaries may make any sale or other disposition of assets permitted by
Section 7.4.
Section 7.8. Acquisitions. Make any Acquisition other than an Acceptable
------------
Acquisition.
ARTICLE 8. FINANCIAL COVENANTS.
So long as any of the Notes shall remain unpaid or any Bank shall have any
Commitment under this Agreement:
Section 8.1. Minimum Net Worth. The Borrower shall maintain at all times a
-----------------
Net Worth of not less than: (a) $200,000,000, plus (b) the greater of zero (0)
----
or 50% of cumulative Net Income after January 31, 1996, plus (c) at such time as
----
Davidson & Associates, Inc. and Sierra Online, Inc. are acquired by the
Borrower, 50% of the Net Worth of such Persons.
Section 8.2. Leverage Ratio. The Borrower shall maintain at all times, as
--------------
measured at the end of the most recently completed fiscal quarter, a Leverage
Ratio of not greater than 3.5 to 1.0.
Section 8.3. Interest Coverage Ratio. The Borrower shall maintain at all
-----------------------
times an Interest Coverage Ratio, measured as of the end of the most recently
completed fiscal quarter, of not less than 3.5 to 1.0 at any time.
ARTICLE 9. EVENTS OF DEFAULT.
Section 9.1. Events of Default. Any of the following events shall be an
-----------------
"Event of Default":
(a) the Borrower shall: (i) fail to pay the principal of any Note as and
when due and payable; or (ii) fail to pay interest on any Note or any fee or
other
amount due hereunder within five (5) Banking Days after such amount shall
become due and payable;
(b) any representation or warranty made or deemed made by the Borrower in
this Agreement or in any other Facility Document to which it is a party or which
is contained in any certificate, document, opinion, financial or other statement
furnished at any time under or in connection with any Facility Document shall
prove to have been incorrect in any material respect on or as of the date made
or deemed made;
(c) the Borrower shall: (i) fail in any material respect to perform or
observe any term, covenant or agreement contained in Section 2.3, subsections
(e) through (i) and (l) through (n) of Section 6.8 or Articles 7 or 8; or (ii)
fail in any material respect to perform or observe any term, covenant or
agreement on its part to be performed or observed under subsections (a), (b),
(c), (d), (j) or (k) of Section 6.8 and such failure shall continue for 10
consecutive days after notice from the Administrative Agent; or (iii) fail in
any material respect to perform or observe any term, covenant or agreement on
its part to be performed or observed (other than the obligations specifically
referred to in clause (i) or (ii) or elsewhere in this Section 9.1) in any
Facility Document and such failure shall continue for 30 consecutive days after
notice from the Administrative Agent to the Borrower or from the Borrower to the
Administrative Agent;
(d) the Borrower or any of its Subsidiaries shall: (i) fail to pay any Debt
in aggregate amount in excess of $5,000,000 (other than the payment obligations
described in (a) above), of the Borrower or such Subsidiary, as the case may be,
or any interest or premium thereon, when due (whether by scheduled maturity,
required prepayment, acceleration, demand or otherwise); or (ii) fail to perform
or observe any term, covenant or condition on its part to be performed or
observed under any agreement or instrument relating to any such indebtedness,
when required to be performed or observed, if the effect of such failure to
perform or observe is to accelerate, or to permit the accel eration of, after
the giving of notice or passage of time, or both, the maturity of such Debt; or
any such Debt shall be declared to be due and payable, or required to be prepaid
(other than by a regularly scheduled required prepayment), prior to the stated
maturity thereof;
(e) the Borrower or any of its Subsidiaries: (i) shall generally not, or be
unable to, or shall admit in writing its inability to, pay its debts as such
debts become due; or (ii) shall make an assignment for the benefit of creditors,
petition or apply to any tribunal for the appointment of a custodian, receiver
or trustee for it or a substantial part of its assets; or (iii) shall commence
any proceeding under any bankruptcy, reorganization, arrangement, readjustment
of debt, dissolution or liquidation law or statute of any jurisdiction, whether
now or hereafter in effect; or (iv) shall have had any such petition or
application filed or any such proceeding shall have been commenced, against it,
in which an adjudication or appointment is made or order for relief is entered,
or which petition, application or proceeding remains undismissed for a period of
60 days or more; or (v) by any act or omission shall indicate its consent to,
approval of or acquiescence in any such
petition, application or proceeding or order for relief or the appointment of a
custodian, receiver or trustee for all or any substantial part of its property;
or (vi) shall suffer any such custodianship, receivership or trusteeship to
continue undischarged for a period of 60 days or more;
(f) one or more judgments, decrees or orders for the payment of money in
excess of $10,000,000 in the aggregate shall be rendered against the Borrower or
any of its Subsidiaries and such judgments, decrees or orders shall continue
unsatisfied and in effect for a period of 60 consecutive days without being
vacated, discharged, satisfied or stayed or bonded pending appeal;
(g) any event or condition shall occur or exist with respect to any Plan or
Multiemployer Plan concern ing which the Borrower is under an obligation to
furnish a report to the Administrative Agent in accordance with Section 6.8(h)
hereof and as a result of such event or condition, together with all other such
events or conditions, the Borrower or any ERISA Affiliate has incurred or in the
reasonable opinion of the Required Banks is reasonably likely to incur a
liability to a Plan, a Multiemployer Plan, the PBGC, or a Section 4042 Trustee
(or any combination of the foregoing) which is material in relation to the
financial position of the Borrower and its Subsidiaries, on a consolidated
basis; provided, however, that any such amount shall not be deemed to be
material so long as all such amounts do not exceed $5,000,000 in the aggregate;
(h) (i) any Person or two or more Persons acting in concert shall have
acquired beneficial ownership (within the meaning of Rules 13d-3 of the
Securities and Exchange Commission under the Securities Exchange Act of 1934) of
greater than 50% of the outstanding shares of voting stock of the Borrower; or
(ii) during any period of 12 con secutive months, commencing before or after the
date of this Agreement, individuals who at the beginning of such 12month period
were directors of the Borrower, together with any new directors whose election
by the board of directors of the Borrower or whose nomination by stockholders of
the Borrower was approved by a majority of the directors then still in office
and who are either directors at the beginning of such period or whose election
or nomination for election was previously so approved, cease for any reason to
constitute a majority of the board of directors of the Borrower; or
(i) this Agreement or any other Facility Document or term or provision
hereof or thereof shall cease to be in full force and effect (except in
accordance with the express terms of such document), or the Borrower shall, or
purport to, terminate (except in accordance with the terms of such document),
repudiate, declare voidable or void or otherwise contest, this Agreement or any
Facility Document or any other term hereof or thereof or any obligation or
liability of the Borrower hereunder or thereunder.
Section 9.2. Remedies. If any Event of Default shall occur and be
--------
continuing, the Administrative Agent shall, upon request of the Required Banks,
by notice to the Borrower, (a) declare the Commitments to be terminated,
whereupon the same shall
forthwith terminate, and/or (b) declare the outstanding principal of the Notes,
all interest thereon and all other amounts payable under this Agreement and the
Notes to be forthwith due and payable, whereupon the Notes, all such interest
and all such amounts shall become and be forthwith due and payable, without
presentment, demand, protest or further notice of any kind, all of which are
hereby expressly waived by the Borrower; provided that, in the case of an Event
of Default referred to in Section 9.1(e) above, the Commitments shall be
immediately terminated, and the Notes, all interest thereon and all other
amounts payable under this Agreement shall be immediately due and payable
without notice, presentment, demand, protest or other formalities of any kind,
all of which are hereby expressly waived by the Borrower.
ARTICLE 10. THE
ADMINISTRATIVE AGENT; RELATIONS AMONG BANKS AND BORROWER.
Section 10.1. Appointment, Powers and Immunities of Administrative Agent.
----------------------------------------------------------
Each Bank hereby irrevocably (but subject to removal by the Required Banks
pursuant to Section 10.9) appoints and authorizes the Administrative Agent to
act as its agent hereunder and under any other Facility Document with such
powers as are specifically delegated to the Administrative Agent by the terms of
this Agreement and any other Facility Document, together with such other powers
as are reasonably incidental thereto. The Administrative Agent shall have no
duties or responsibilities except those expressly set forth in this Agreement
and any other Facility Document, and shall not by reason of this Agreement be a
trustee for any Bank. The Administrative Agent shall not be responsible to the
Banks for any recitals, statements, representations or warranties made by the
Borrower or any officer or official of the Borrower or any other Person
contained in this Agreement or any other Facility Document, or in any
certificate or other document or instrument referred to or provided for in, or
received by any of them under, this Agreement or any other Facility Document, or
for the value, legality, validity, effectiveness, genuineness, enforceability or
sufficiency of this Agreement or any other Facility Document or any other
document or instrument referred to or provided for herein or therein, for the
perfection or priority of any collateral security for the Loans or for any
failure by the Borrower to perform any of its obligations hereunder or
thereunder. The Administrative Agent may employ agents and attorneysinfact and
shall not be responsible, except as to money or securities received by it or its
authorized agents, for the negligence or misconduct of any such agents or
attorneys-in-fact selected by it with reasonable care. Neither the
Administrative Agent nor any of its directors, officers, employees or agents
shall be liable or responsible for any action taken or omitted to be taken by it
or them hereunder or under any other Facility Document or in connection herewith
or therewith, except for its or their own gross negligence or willful
misconduct. The Borrower shall pay any fee agreed to by the Borrower and the
Administrative Agent with respect to the Administrative Agent's services
hereunder.
Section 10.2. Reliance by Administrative Agent. The Administrative Agent
--------------------------------
shall be entitled to rely upon any certification, notice or other communication
(including any thereof by telephone, telex, telegram or cable) believed by it to
be genuine and correct and to have been signed or sent by or on behalf of the
proper Person or Persons, and upon advice and statements of legal counsel,
independent accountants and other experts selected by the Administrative Agent.
The Administrative Agent may deem and treat each Bank as the holder of the Loans
made by it for all purposes hereof unless and until a notice of the assignment
or transfer thereof satisfactory to the Administrative Agent signed by such Bank
shall have been furnished to the Administrative Agent but the Administrative
Agent shall not be required to deal with any Person who has acquired a
participation in any Loan from a Bank. As to any matters not expressly provided
for by this Agreement or any other Facility Document, the Administrative Agent
shall in all cases be fully protected in acting, or in refraining from acting,
hereunder in accordance with instructions signed by the Required Banks, and such
instructions of the Required Banks and any action taken or failure to act
pursuant thereto shall be binding on all of the Banks and any other holder of
all or any portion of any Loan.
Section 10.3. Defaults. The Administrative Agent shall not be deemed to
--------
have knowledge of the occurrence of a Default or Event of Default (other than
the non-payment of principal of or interest on the Loans to the extent the same
is required to be paid to the Administrative Agent for the account of the Banks)
unless the Administrative Agent has received notice from a Bank or the Borrower
specifying such Default or Event of Default and stating that such notice is a
"Notice of Default." In the event that the Administrative Agent receives such a
notice of the occurrence of a Default or Event of Default, the Administrative
Agent shall give prompt notice thereof to the Banks (and shall give each Bank
prompt notice of each such non-payment). The Administrative Agent shall (subject
to Section 10.8) take such action with respect to such Default or Event of
Default which is continuing as shall be directed by the Required Banks; provided
that, unless and until the Administrative Agent shall have received such
directions, the Administrative Agent may take such action, or refrain from
taking such action, with respect to such Default or Event of Default as it shall
deem advisable in the best interest of the Banks; and provided further that the
Administrative Agent shall not be required to take any such action which it
determines to be contrary to law.
Section 10.4. Rights of Administrative Agent as a Bank. With respect to its
----------------------------------------
Commitment and the Loans made by it, the Administrative Agent in its capacity as
a Bank hereunder shall have the same rights and powers hereunder as any other
Bank and may exercise the same as though it were not acting as the
Administrative Agent, and the term "Bank" or "Banks" shall, unless the context
otherwise indicates, include the Administrative Agent in its capacity as a Bank.
The Administrative Agent and its affiliates may (without having to account
therefor to any Bank) accept deposits from, lend money to (on a secured or
unsecured basis), and generally engage in any kind of banking, trust or other
business with, the Borrower (and any of its affiliates) as if it were not acting
as the Administrative Agent, and the Administrative Agent may accept fees and
other
consideration from the Borrower for services in connection with this Agreement
or otherwise without having to account for the same to the Banks. Although the
Administrative Agent and its affiliates may in the course of such relationships
and relationships with other Persons acquire information about the Borrower, its
Affiliates and such other Persons, the Administrative Agent shall have no duty
to disclose such information to the Banks.
Section 10.5. Indemnification of Administrative Agent. The Banks agree to
---------------------------------------
indemnify the Administrative Agent (to the extent not reimbursed under Section
11.3 or 11.8 or under the applicable provisions of any other Facility Document,
but without limiting the obligations of the Borrower under Section 11.3 or 11.8
or such provisions), ratably in accordance with the aggregate unpaid principal
amount of the Loans made by the Banks (without giving effect to any
participations, in all or any portion of such Loans, sold by them to any other
Person) (or, if no Loans are at the time outstanding, ratably in accordance with
their respective Commitments), for any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
of any kind and nature whatsoever which may be imposed on, incurred by or
asserted against the Administrative Agent in any way relating to or arising out
of this Agreement, any other Facility Document or any other documents
contemplated by or referred to herein or the transactions contemplated hereby or
thereby (including, with out limitation, the costs and expenses which the
Borrower is obligated to pay under Section 11.3 or 11.8 or under the applicable
provisions of any other Facility Document but excluding, unless a Default or
Event of Default has occurred, normal administrative costs and expenses incident
to the performance of its agency duties hereunder) or the enforcement of any of
the terms hereof or thereof or of any such other documents or instruments;
provided that no Bank shall be liable for any of the foregoing to the extent
they arise from the gross negligence or willful misconduct of the party to be
indemnified.
Section 10.6. Documents. The Administrative Agent will forward to each
---------
Bank, promptly after the Administrative Agent's receipt thereof, a copy of each
report, notice or other document required by this Agreement or any other
Facility Document to be delivered to the Administrative Agent for such Bank.
Section 10.7. Non-Reliance on Administrative Agent and Other Banks.
----------------------------------------------------
Each Bank agrees that it has, independently and without reliance on the
Administrative Agent or any other Bank, and based on such documents and
information as it has deemed appropriate, made its own credit analysis of the
Borrower and its Subsidiaries and decision to enter into this Agreement and that
it will, independently and without reliance upon the Administrative Agent or any
other Bank, and based on such documents and information as it shall deem
appropriate at the time, continue to make its own analysis and decisions in
taking or not taking action under this Agreement or any other Facility Document.
The Administrative Agent shall not be required to keep itself informed as to the
performance or observance by the Borrower of this Agreement or any other
Facility Document or any other document referred to or provided for herein or
therein or to inspect the properties or
books of the Borrower or any Subsidiary. Except for notices, reports and other
documents and information expressly required to be furnished to the Banks by the
Administrative Agent hereunder, the Administrative Agent shall not have any duty
or responsibility to provide any Bank with any credit or other information
concerning the affairs, financial condition or business of the Borrower or any
Subsidiary (or any of their Affiliates) which may come into the possession of
the Administrative Agent or any of its affiliates. The Administrative Agent
shall not be required to file this Agreement, any other Facility Document or any
document or instrument referred to herein or therein, for record or give notice
of this Agreement, any other Facility Document or any document or instrument
referred to herein or therein, to anyone.
Section 10.8. Failure of Administrative Agent to Act. Except for action
--------------------------------------
expressly required of the Administrative Agent hereunder, the Administrative
Agent shall in all cases be fully justified in failing or refusing to act
hereunder unless it shall have received further assurances of the
indemnification obligations of the Banks under Section 10.5 in respect of any
and all liability and expense which may be incurred by it by reason of taking or
continuing to take any such action.
Section 10.9. Resignation or Removal of Administrative Agent. Subject to
----------------------------------------------
the appointment and acceptance of a successor Administrative Agent as provided
below, the Administrative Agent may resign at any time by giving written notice
thereof to the Banks and the Borrower, and the Administrative Agent may be
removed at any time with or without cause by the Required Banks; provided that
the Borrower and the other Banks shall be promptly notified thereof. Upon any
such resignation or removal, the Required Banks shall have the right to appoint
a successor Administrative Agent reasonably acceptable to the Borrower. If no
successor Administrative Agent shall have been so appointed by the Required
Banks and shall have accepted such appointment within 30 days after the retiring
Administrative Agent's giving of notice of resignation or the Required Banks'
removal of the retiring Administrative Agent, then the retiring Administrative
Agent may, on behalf of the Banks, appoint a successor Administrative Agent
(provided no Default or Event of Default shall have occurred and be continuing,
such successor shall be reasonably acceptable to the Borrower), which shall be a
bank which has an office in New York, New York with combined capital and surplus
of at least $100,000,000. The Required Banks or the retiring Administrative
Agent, as the case may be, shall upon the appointment of a successor
Administrative Agent promptly so notify the Borrower and the other Banks. Upon
the acceptance of any appointment as Administrative Agent hereunder by a
successor Administrative Agent, such successor Administrative Agent shall
thereupon succeed to and become vested with all the rights, powers, privileges
and duties of the retiring Administrative Agent, and the retiring Administrative
Agent shall be discharged from its duties and obligations hereunder. After any
retiring Administrative Agent's resignation or removal hereunder as
Administrative Agent, the provisions of this Article 10 shall continue in effect
for its benefit in respect of any actions taken or omitted to be taken by it
while it was acting as the Administrative Agent.
Section 10.10. Amendments Concerning Agency Function. The Administrative
-------------------------------------
Agent shall not be bound by any waiver, amendment, supplement or modification of
this Agreement or any other Facility Document which affects its duties hereunder
or thereunder unless it shall have given its prior consent thereto.
Section 10.11. Liability of Administrative Agent. The Administrative Agent
---------------------------------
shall not have any liabilities or responsibilities to the Borrower on account of
the failure of any Bank to perform its obligations hereunder or to any Bank on
account of the failure of the Borrower to perform its obligations hereunder or
under any other Facility Document.
Section 10.12. Transfer of Agency Function. Without the consent of the
---------------------------
Borrower or any Bank, the Administrative Agent may at any time or from time to
time transfer its functions as Administrative Agent hereunder to any of its
offices wherever located, provided that the Administrative Agent shall promptly
notify the Borrower and the Banks thereof.
Section 10.13. Non-Receipt of Funds by the Administrative Agent. Unless the
------------------------------------------------
Administrative Agent shall have been notified by a Bank or the Borrower (either
one as appropriate being the "Payor") prior to the date on which such Bank is to
make payment hereunder to the Administrative Agent of the proceeds of a Loan or
the Borrower is to make payment to the Administrative Agent, as the case may be
(either such payment being a "Required Payment"), which notice shall be
effective upon receipt, that the Payor does not intend to make the Required
Payment to the Administrative Agent, the Administrative Agent may assume that
the Required Payment has been made and may, in reliance upon such assumption
(but shall not be required to), make the amount thereof available to the
intended recipient on such date and, if the Payor has not in fact made the
Required Payment to the Administrative Agent, the recipient of such payment
(and, if such recipient is the Borrower and the Payor Bank fails to pay the
amount thereof to the Administrative Agent forthwith upon demand, the Borrower)
shall, on demand, repay to the Administrative Agent the amount made available to
it together with interest thereon for the period from the date such amount was
so made available by the Administrative Agent until the date the Administrative
Agent recovers such amount at a rate per annum equal to the average daily
Federal Funds Rate for such period.
Section 10.14. Withholding Taxes. Each Bank represents that, as of the date
-----------------
hereof, it is entitled to receive any payments to be made to it hereunder
without the withholding of any tax and will furnish to the Administrative Agent
such forms, certifications, statements and other documents as the Administrative
Agent may request from time to time to evidence such Bank's exemption from the
withholding of any tax imposed by any jurisdiction or to enable the
Administrative Agent to comply with any applicable laws or regulations relating
thereto. Without limiting the effect of the foregoing, if any Bank is not
created or organized under the laws of the United States of America or any state
thereof, in the event that the payment of interest by the Borrower is treated
for
U.S. income tax purposes as derived in whole or in part from sources from within
the U.S., such Bank will furnish to the Administrative Agent Form 4224 or Form
1001 of the Internal Revenue Service, or such other forms, certifications,
statements or documents, duly executed and completed by such Bank as evidence of
such Bank's exemption from the withholding of U.S. tax with respect thereto,
unless it is prevented from doing so by a Regulatory Change . The Administrative
Agent shall not be obligated to make any payments hereunder to such Bank in
respect of any Loan or such Bank's Commitment if such Bank shall have failed to
comply with any requirement applicable to such Bank set forth in the preceding
sentence.
Section 10.15. Several Obligations and Rights of Banks. The failure of any
---------------------------------------
Bank to make any Loan to be made by it on the date specified therefor shall not
relieve any other Bank of its obligation to make its Loan on such date, but no
Bank shall be responsible for the failure of any other Bank to make a Loan to be
made by such other Bank. The amounts payable at any time hereunder to each Bank
shall be a separate and independent debt, and each Bank shall be enti tled to
protect and enforce its rights arising out of this Agreement, and it shall not
be necessary for any other Bank to be joined as an additional party in any
proceeding for such purpose.
Section 10.16. Pro Rata Treatment of Loans, Etc. Except to the extent
--------------------------------
otherwise provided: (a) each borrowing under Section 2.4(a) shall be made from
the Banks, each reduction or termination of the amount of the Commitments under
Section 2.7 shall be applied to the Commitments of the Banks, and each payment
of facility fee accruing under Section 2.11 shall be made for the account of the
Banks, pro rata according to the amounts of their respective unused Com
mitments; (b) each conversion under Section 2.5 of Loans of a particular type
(but not conversions provided for by Section 3.4), shall be made pro rata among
the Banks holding Loans of such type according to the respective principal
amounts of such Loans by such Banks; (c) each prepayment and payment of
principal of or interest on Syndicated Loans of a particular type and a
particular Interest Period shall be made to the Administrative Agent for the
account of the Banks holding Syndicated Loans of such type and Interest Period
pro rata in accordance with the respective unpaid principal amounts of such
Syndicated Loans of such Interest Period held by such Banks.
Section 10.17. Sharing of Payments Among Banks. If a Bank shall obtain
-------------------------------
payment of any principal of or interest on any Syndicated Loan made by it
through the exercise of any right of setoff, banker's lien, counterclaim, or by
any other means, it shall promptly purchase from the other Banks participations
in (or, if and to the extent specified by such Bank, direct interests in) the
Syndicated Loans made by the other Banks in such amounts, and make such other
adjustments from time to time as shall be equitable to the end that all the
Banks shall share the benefit of such payment (net of any expenses which may be
incurred by such Bank in obtaining or preserving such benefit) pro rata in
accordance with the unpaid principal and interest on the Syndicated Loans held
by each of them. To such end the Banks shall make appropriate adjustments among
themselves (by
the resale of participations sold or otherwise) if such payment is rescinded or
must otherwise be restored. The Borrower agrees that any Bank so purchasing a
participation (or direct interest) in the Syndicated Loans made by other Banks
may exercise all rights of setoff, banker's lien, counterclaim or similar rights
with respect to such participation (or direct interest). Nothing contained
herein shall require any Bank to exercise any such right or shall affect the
right of any Bank to exercise, and retain the benefits of exercising, any such
right with respect to any other indebtedness of the Borrower.
ARTICLE 11 MISCELLANEOUS.
Section 11.1. Amendments and Waivers. Except as otherwise expressly
----------------------
provided in this Agreement, any provision of this Agreement may be amended or
modified only by an instrument in writing signed by the Borrower, the
Administrative Agent and the Required Banks, or by the Borrower and the
Administrative Agent acting with the consent of the Required Banks, and any
provision of this Agreement may be waived by the Required Banks or by the
Administrative Agent acting with the consent of the Required Banks; provided
--------
that no amendment, modification or waiver shall, unless by an instrument signed
by all of the Banks or by the Administrative Agent acting with the consent of
all of the Banks: (a) increase or extend the term, or extend the time or waive
any requirement for the reduction or termination, of the Commitments, (b) extend
the date fixed for the payment of principal of or interest on any Loan or any
fee payable hereunder, (c) reduce the amount of any payment of principal thereof
or the rate at which interest is payable thereon or any fee payable hereunder,
(d) alter the terms of Section 10.16, Section 10.17, this Section 11.1 or the
first sentence of Section 11.5(a), (e) amend the definition of the term
"Required Banks" or (f) waive any of the conditions precedent set forth in
Article 4 hereof and provided, further, that any amendment of Article 10 hereof
-------- -------
or any amendment which increases the obligations of the Administrative Agent
hereunder shall require the consent of the Administrative Agent. No failure on
the part of the Administrative Agent or any Bank to exercise, and no delay in
exercising, any right hereunder shall operate as a waiver thereof or preclude
any other or further exercise thereof or the exercise of any other right. The
remedies herein provided are cumulative and not exclusive of any remedies
provided by law.
Section 11.2. Usury. Anything herein to the contrary notwithstanding, the
-----
obligations of the Borrower under this Agreement and the Notes shall be subject
to the limitation that payments of interest shall not be required to the extent
that receipt thereof would be contrary to provisions of law applicable to a Bank
limiting rates of interest which may be charged or collected by such Bank.
Section 11.3. Expenses; Taxes.
---------------
(a) The Borrower hereby agrees to pay or cause to be paid and to save the
Administrative Agent harmless against liability for the payment of all
reasonable
out-of-pocket costs and expenses (including but not limited to
reasonable fees and expenses of counsel, auditors, consulting engineers,
appraisers, and all other reasonable professional, accounting, evaluation and
consulting costs) incurred by the Administrative Agent from time to time arising
from or relating to (i) the negotiation, preparation, execution, delivery,
administration and performance of this Agreement and the other Facility
Documents or (ii) any requested amendments, modifications, supplements, waivers
or consents (whether or not ultimately entered into or granted) to this
Agreement or any other Facility Document. The Borrower further agrees to pay or
cause to be paid to save the Administrative Agent and each Bank harmless against
liability for the payment of all reasonable out-ofpocket costs and expenses
(including but not limited to reasonable fees and expenses of counsel, auditors,
consulting engineers, appraisers, and all other reasonable professional,
accounting, evaluation and consulting costs) incurred by the Administrative
Agent or any of the Banks from time to time arising from or relating to the
enforcement, defense or preservation of rights under this Agreement or any other
Facility Document (including, without limitation, to any such costs or expenses
arising from or relating to (i) collection or enforcement of an outstanding Loan
or any other amount owing hereunder or thereunder by the Administrative Agent or
any Bank, and (ii) any litigation, proceeding, dispute, workout, restructuring
or rescheduling related in any way to this Agreement or the other Facility
Documents).
(b) The Borrower hereby agrees to pay all stamp, document, transfer,
recording, filing, registration, search, sales and excise fees and taxes and all
similar impositions now or hereafter reasonably determined by the Administrative
Agent to be payable in connection with this Agreement or any other Facility
Document or any other documents, instruments or transactions pursuant to or in
connection therewith or herewith, and Borrower agrees to save the Administrative
Agent and each Bank harmless from and against any and all present or future
claims, liabilities or losses with respect to or resulting from any omission to
pay or delay in paying such fees, taxes or impositions.
Section 11.4. Survival. All representations and warranties of the Borrower
--------
contained herein or in any other Facility Document or made in connection
herewith or therewith shall survive the making of, and shall not be waived by,
the execution and delivery of this Agreement and the other Facility Documents,
any investigation by or knowledge of the Administrative Agent or any Bank, the
making of the Loans or any other event or condition whatsoever. All covenants
and agreements of the Borrower contained herein or in any other Facility
Document shall continue in full force and effect from and after the date hereof
so long as the Borrower may borrow hereunder and until repayment in full of the
Loans and all obligations of the Borrower hereunder or any other Facility
Document. Without limitation, all obligations of the Borrower hereunder or under
any other Facility Document to make payments or indemnify the Administrative
Agent or any Bank shall survive the repayment in full of all Loans and all other
obligations hereunder or under any other Facility Document, the termination of
the Commitments, and all other events and conditions whatsoever. In addition,
all obligations of each Bank to make payments to or indemnify the Administrative
Agent shall survive the payment in full by the
Borrower of all Loans and other obligations hereunder or under any other
Facility Document, the termination of the Commitments, and all other events and
conditions whatsoever.
Section 11.5. Assignment; Participations.
--------------------------
(a) This Agreement shall be binding upon, and shall inure to the benefit
of, the Borrower, the Administrative Agent, the Banks and their respective
successors and assigns, except that the Borrower may not assign or transfer its
rights or obligations hereunder without the consent of all of the Banks. Each
Bank may assign or sell participations in all or any part of any Loan or
Commitment to another bank or other entity, in which event (i) in the case of an
assignment, upon notice thereof by the Bank to the Borrower with a copy to the
Administrative Agent, the assignee shall have, to the extent of such assignment
(unless otherwise provided therein), the same rights, benefits and obligations
as it would have if it were a Bank hereunder; and (ii) in the case of a
participation, the participant shall have no rights under the Facility Documents
and all amounts payable by the Borrower under Article 3 shall be determined as
if such Bank had not sold such partic ipation. Any assignment pursuant to this
Section 11.5 shall be in an amount not less than $10,000,000, shall leave any
assigning Bank that remains a "Bank" hereunder with a Commitment of at least
$5,000,000 and, if no Default or Event of Default has occurred and is
continuing, shall be subject to the prior consent of the Borrower (which shall
not be unreasonably withheld), except that (i) no such minimum amount will be
required to be transferred or retained and no such prior consent will be
required if such assignment is necessary for regulatory purposes and (ii) no
such minimum amount will be required to be transferred and no such prior consent
will be required if the transferee is already a "Bank" or an affiliate of a
"Bank" hereunder. The agreement executed by any Bank in favor of a participant
shall not give the participant the right to require such Bank to take or omit to
take any action hereunder except action directly relating to (i) the extension
of a payment date (including the Termination Date) with respect to any portion
of the principal of or interest on any amount outstanding hereunder allocated to
such participant, (ii) the reduction of the principal amount outstanding
hereunder or (iii) the reduction of the rate of interest payable on such amount
or any amount of fees payable hereunder to a rate or amount, as the case may be,
below that which the participant is entitled to receive under its agreement with
such Bank. Such Bank may furnish any information concerning the Borrower in the
possession of such Bank from time to time to assignees and participants
(including prospective assignees and participants); provided that such Bank
shall require any such prospective assignee or such participant (prospective or
otherwise) to agree in writing to maintain the confidentiality of such
information. In connection with any assignment pursuant to this paragraph (a),
the assigning Bank shall pay the Administrative Agent an administrative fee for
processing such assignment in the amount of $2,500.
(b) In addition to the assignments and participations permitted under
paragraph (a) above, any Bank may assign and pledge, without meeting any of the
requirements of paragraph (a) above, all or any portion of its Loans and Note to
(i) any affiliate of such Bank or (ii) any Federal Reserve Bank as collateral
security pursuant to Regulation A of the Board of Governors of the Federal
Reserve System and any Operating Circular issued by such Federal Reserve Bank.
No such assignment shall release the assigning Bank from its obligations
hereunder.
Section 11.6. Notices. Unless the party to be notified otherwise notifies
-------
the other party in writing as provided in this Section, and except as otherwise
provided in this Agreement, notices shall be delivered in person or sent by
overnight courier, facsimile, ordinary mail, cable or telex addressed to such
party at its "Address for Notices" on the signature page of this Agreement.
Notices pertaining to Sections 2.4 and 2.8 may be made by telephone and shall be
confirmed in writing via telex or facsimile not later than 5 p.m. on the day
such notice is given. Notices shall be effective: (a) on the day on which
delivered to such party in person, (b) on the first Banking Day after the day on
which sent to such party by overnight courier, (c) if given by mail, 48 hours
after deposit in the mails with first-class postage prepaid, addressed as
aforesaid, and (d) if given by facsimile, cable or telex, when the facsimile,
cable or telex is transmitted to the facsimile, cable or telex number as
aforesaid; provided that notices to the Administrative Agent and the Banks shall
be effective upon receipt.
Section 11.7. Setoff. The Borrower agrees that, in addition to (and without
------
limitation of) any right of setoff, banker's lien or counterclaim a Bank may
otherwise have, upon the occurrence of any Event of Default, each Bank shall be
entitled, at its option, to offset balances (general or special, time or demand,
provisional or final) held by it for the account of the Borrower at any of such
Bank's offices, in Dollars or in any other currency, against any amount payable
by the Borrower to such Bank under this Agreement or such Bank's Notes which is
not paid when due (regardless of whether such balances are then due to the
Borrower), in which case it shall promptly notify the Borrower and the
Administrative Agent thereof; provided that such Bank's failure to give such
notice shall not affect the validity thereof. Payments by the Borrower hereunder
shall be made without setoff or counterclaim.
Section 11.8. Indemnification; Exoneration. In consideration of the
----------------------------
execution and delivery of this Agreement by the Administrative Agent and the
Banks, the Borrower will defend, indemnify, exonerate and hold harmless each
Bank, the Administrative Agent and their affiliates and each of their respective
officers, directors, stockholders, affiliates, trustees, employee and agents,
and each other Person, if any, controlling such Bank or any of its affiliates
(herein collectively called the "Indemnitees") from and against any and all
actions, causes of action, suits, losses, liabilities and damages, and expenses
in connection therewith, including without limitation reasonable counsel fees
and disbursements incurred in the investigation and defense of claims and
actions (herein collectively called the "Indemnified Liabilities"), incurred by
the Indemnitees or any of them as a result of, or arising out of or relating to
the execution, delivery, performance or
enforcement of this Agreement, the Notes, or any other Facility Document, or any
instrument or document contemplated hereby or thereby by any of the Indemnitees,
or by any act, event or transaction related or attendant thereto or contemplated
hereby or thereby, or any action or inaction by any Indemnitee under or in
connection therewith, or the falseness of any representation or warranty made by
or on behalf of the Borrower, except for any Indemnified Liabilities that are
finally judicially determined to have resulted from the any Indemnitee's gross
negligence or willful misconduct, and if and to the extent that the foregoing
may be unenforceable for any reason, the Borrower hereby agrees to make the
maximum contribution to the payment and satisfaction of each of the Indemnified
Liabilities that is permissible under applicable law. The obligations of the
Borrower under this Section 11.8 shall be in addition to any liability that the
Borrower may otherwise have and shall survive the payment or prepayment in full
or transfer of any Note, the termination of the Bank's obligations hereunder and
the enforcement of any provision hereof or thereof.
SECTION 11.9. JURISDICTION; IMMUNITIES.
--------------------------------------
(a) THE BORROWER HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY NEW
--------------------------------------------------------------------------
YORK STATE OR UNITED STATES FEDERAL COURT SITTING IN NEW YORK COUNTY, NEW YORK
- ------------------------------------------------------------------------------
OVER ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR
- -----------------------------------------------------------------------------
THE NOTES, AND THE BORROWER HEREBY IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT
- --------------------------------------------------------------------------------
OF SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH NEW YORK STATE
- -------------------------------------------------------------------------------
OR FEDERAL COURT. THE BORROWER IRREVOCABLY CONSENTS TO THE SERVICE OF ANY AND
- -----------------------------------------------------------------------------
ALL PROCESS IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF COPIES OF SUCH
- -----------------------------------------------------------------------------
PROCESS TO THE BORROWER AT ITS ADDRESS SPECIFIED IN SECTION 11.6. THE BORROWER
- ------------------------------------------------------------------------------
AGREES THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL BE
- ----------------------------------------------------------------------
CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR
- --------------------------------------------------------------------------------
IN ANY OTHER MANNER PROVIDED BY LAW. THE BORROWER FURTHER WAIVES ANY OBJECTION
- ------------------------------------------------------------------------------
TO VENUE IN SUCH STATE AND ANY OBJECTION TO AN ACTION OR PROCEEDING IN SUCH
- ---------------------------------------------------------------------------
STATE ON THE BASIS OF FORUM NON CONVENIENS. THE BORROWER FURTHER AGREES THAT ANY
- --------------------------------------------------------------------------------
ACTION OR PROCEEDING BROUGHT AGAINST THE ADMINISTRATIVE AGENT SHALL BE BROUGHT
- ------------------------------------------------------------------------------
ONLY IN NEW YORK STATE OR UNITED STATES FEDERAL COURT SITTING IN NEW YORK
- -------------------------------------------------------------------------
COUNTY, NEW YORK. THE BORROWER, THE ADMINISTRATIVE AGENT AND EACH BANK EACH
- ---------------------------------------------------------------------------
WAIVES ANY RIGHT IT MAY HAVE TO JURY TRIAL.
- --------------------------------------------
(b) Nothing in this Section 11.9 shall affect the right of the
Administrative Agent or any Bank to serve legal process in any other manner
permitted by
law or affect the right of the Administrative Agent or any Bank to bring any
action or proceeding against the Borrower or its property in the courts of any
other jurisdictions.
(c) To the extent that the Borrower has or hereafter may acquire any
immunity from jurisdiction of any court or from any legal process (whether from
service or notice, attachment prior to judgment, attachment in aid of execution,
execution or otherwise) with respect to itself or its property, the Borrower
hereby irrevocably waives such immunity in respect of its obligations under this
Agreement and the Notes.
Section 11.10. Table of Contents; Headings. Any table of contents and the
------------------
headings and captions hereunder are for convenience only and shall not affect
the interpretation or construction of this Agreement.
Section 11.11. Severability. The provisions of this Agreement are intended
------------
to be severable. If for any reason any provision of this Agreement shall be held
invalid or unenforceable in whole or in part in any jurisdiction, such provision
shall, as to such jurisdiction, be ineffective to the extent of such invalidity
or unenforceability without in any manner affecting the validity or
enforceability thereof in any other jurisdiction or the remaining provisions
hereof in any jurisdiction.
Section 11.12. Counterparts. This Agreement may be executed in any number
------------
of counterparts, all of which taken together shall constitute one and the same
instrument, and any party hereto may execute this Agreement by signing any such
counterpart.
Section 11.13. Integration. The Facility Documents set forth the entire
-----------
agreement among the parties hereto relating to the transactions contemplated
thereby and supersede any prior oral or written statements or agreements with
respect to such transactions.
SECTION 11.14. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
----------------------------------------------------------------------
INTERPRETED AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK
- ------------------------------------------------------------------------------
WITHOUT GIVING EFFECT TO THE CONFLICTS OF LAWS PRINCIPLES THEREOF.
- ------------------------------------------------------------------
Section 11.15. Confidentiality. Each Bank and the Administrative Agent
---------------
agrees (on behalf of itself and each of its affiliates, directors, officers,
employees and representatives) to use its best efforts to keep confidential, in
accordance with safe and sound banking practices, any non-public information
supplied to it by the Borrower pursuant to this Agreement, provided that nothing
herein shall limit the disclosure of any such information (i) to the extent
required by statute, rule, regulation or judicial process, (ii) to counsel for
any of the Banks or the Administrative Agent, (iii) to bank examiners, auditors
or accountants, (iv) in connection with any litigation concerning the Borrower
to which any one or more of the Banks is a party or (v) to any assignee or
participant (or
prospective assignee or participant) so long as such assignee or participant (or
prospective assignee or participant) first executes and delivers to the
respective Bank a Confidentiality Agreement in substantially the form of Exhibit
G hereto; and provided, further, that in no event shall any Bank or the
-------- -------
Administrative Agent be obligated or required to return any materials furnished
by the Borrower, unless reasonably requested to do so in writing by the
Borrower.
Section 11.16. Treatment of Certain Information. The Borrower (a)
--------------------------------
acknowledges that services may be offered or provided to it (in connection with
this Agreement or other wise) by each Bank or by one or more of their respective
sub sidiaries or affiliates and (b) acknowledges that information delivered to
each Bank by the Borrower may be provided to each such subsidiary and affiliate.
Section 11.17. Changes in Accounting Principles.
--------------------------------
(a) If any changes in accounting principles from those used in the
preparation of the financial statements referred to in Section 5.5 are hereafter
occasioned by the promulgation of rules, regulations, pronouncements, or
opinions of, or required by, the Financial Accounting Standards Review Board of
the American Institute of Certified Public Accountants (or successors thereto or
agencies with similar functions), or there shall occur any change in the
Borrower's or any Subsidiary's fiscal or tax years and, as a result of any such
changes, there shall result a change in the method of calculating any of the
financial covenants, negative covenants, standards, or other terms or conditions
found in this Agreement or any other Facility Document, or
(b) If the Borrower, for reasonable business purposes, shall desire to
change such accounting principles or the application thereof (which change shall
be consistent with accounting principles then in effect pursuant to rules,
regulations, pronouncements, or opinions or the Financial Accounting Standards
Review Board of the American Institute of Certified Public Accountants) and such
desired change would result in a change in the method of calculating any of the
financial covenants, negative covenants or other terms and conditions found in
this Agreement or any other Facility Document, then the parties hereto agree to
enter into negotiations in order to amend such provisions and the definition of
GAAP set forth in Section 1.1 so as to reflect equitably such changes with the
desired result that the criteria for evaluating the financial condition and
performance of the Borrower and its Subsidiaries shall be the same after such
changes as if such changes had not been made.
Section 11.18. Independence of Covenants. All covenants hereunder shall be
-------------------------
given independent effect so that if a particular action or condition is not
permitted by any of such covenants, the fact that it would be permitted by an
exception to, or be otherwise within the limitations of, another covenant shall
not avoid the occurrence of a Default or Event of Default if such action is
taken or condition exists.
Section 11.19. Time of the Essence. Time and punctuality shall be of the
-------------------
essence with respect to this instrument, but no delay or failure of the
Administrative Agent or any Bank to enforce any of the provisions herein
contained and no conduct or statement of the Administrative Agent or any Bank
shall waive or affect any of the Administrative Agent's or any Bank's rights
hereunder.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
CUC INTERNATIONAL INC.
By /s/ E. Kirk Shelton
-------------------------
E. Kirk Shelton
President and Chief Operating Officer
Address for Notices:
707 Summer Street Stamford,
Connecticut 06901 Facsimile
No.: (203) 348-4528
CO-AGENTS:
---------
THE CHASE MANHATTAN BANK, N.A.
By
---------------------------
Susan Timmerman
Vice President
Address for Notices:
999 Broad Street, 2nd Floor
Bridgeport, Connecticut 06604
Facsimile No.: (203) 382-6573
BANK OF MONTREAL
By /s/ Brian L. Banke
-------------------
Name: Brian L. Banke
Title: Director
Address for Notices:
430 Park Avenue
New York, New York 10022
Facsimile No.: (212) 605 1454
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK
By
-------------------
Name:
Title:
Address for Notices:
----------------------------
----------------------------
----------------------------
Facsimile No.:
-------------
THE SAKURA BANK, LIMITED
By /s/ Masahiro Nakajo
-----------------------
Name: Masahiro Nakajo
Title: Senior Vice President & Manager
Address for Notices:
The Sakura Bank, Limited
277 Park Avenue
New York, New York 10172
Facsimile No.: (212) 888-7651
ADMINISTRATIVE AGENT:
---------------------
THE CHASE MANHATTAN BANK, N.A.
By /s/ Susan Timmerman
-------------------
Susan Timmerman
Vice President
Address for Notices:
999 Broad Street, 2nd Floor
Bridgeport, Connecticut 06604
Facsimile No.: (203) 382-6573
BANKS:
------
THE CHASE MANHATTAN BANK, N.A.
By /s/ Susan Timmerman
-------------------
Susan Timmerman
Vice President
Address for Notices:
999 Broad Street, 2nd Floor
Bridgeport, Connecticut 06604
Facsimile No.: (203) 382-6573
BANK OF MONTREAL
By
-----------------------
Name:
Title:
Address for Notices:
----------------------------
----------------------------
----------------------------
Facsimile No.:
-------------
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK
By /s/ Eugenia Wilds
-------------------------
Name: Eugenia Wilds
Title: Vice President
Address for Notices:
----------------------------
----------------------------
----------------------------
Facsimile No.:
-------------
THE SAKURA BANK, LIMITED
By
-----------------------
Name:
Title:
Address for Notices:
----------------------------
----------------------------
----------------------------
Facsimile No.:
-------------
ABN AMRO BANK N.V.
NEW YORK BRANCH
By /s/ Frances O. Logan
-------------------------------
Name:Frances O. Logan
Title: Vice President
By /s/ Thomas T. Rogers
-------------------------------
Name:Thomas T. Rogers
Title: Assistant Vice President
Address for Notices:
500 Park Avenue
New York, New York 10022
Facsimile No.: (212) 446-4203
THE BANK OF NEW YORK
By
-----------------------
Name:
Title:
Address for Notices:
----------------------------
----------------------------
----------------------------
Facsimile No.:
-------------
FIRST AMERICAN NATIONAL BANK
By
-----------------------
Name:
Title:
Address for Notices:
----------------------------
----------------------------
----------------------------
Facsimile No.:
-------------
FIRST UNION NATIONAL BANK
By /s/ Susan E. Scott
---------------------------
Name: Susan E. Scott
Title: Senior Vice President
Address for Notices:
Att: Mark P. Smith
First Union National Bank
550 Broad Street NJ1535
Newark, NJ 07102
Facsimile No.: (201) 565-5808
FLEET NATIONAL BANK OF
CONNECTICUT
By /s/ Jane C. Lee
-------------------------
Name: Jane C. Lee
Title: Vice President
Address for Notices:
One Landmark Square, 12th Floor
Stamford, CT
06904-1454
Facsimile No.: (203) 358-6111
THE INDUSTRIAL BANK OF JAPAN
TRUST COMPANY
By
-----------------------
Name:
Title:
Address for Notices:
----------------------------
----------------------------
----------------------------
Facsimile No.:
-------------
MELLON BANK, N.A.
By /s/ David N. Smith
-------------------------
Name: David N. Smith
Title: Vice President
Address for Notices:
65 East 55th Street, 15th Floor
New York, New York 10022
Facsimile No.: 212-702-5269
THE MITSUBISHI BANK, LIMITED
By /s/ David A. Kelson
-----------------------
Name: David A. Kelson
Title: Vice President
By
-----------------------
Name:
Title:
Address for Notices:
----------------------------
----------------------------
----------------------------
Facsimile No.:
-------------
ROYAL BANK OF CANADA
By /s/ Sheryl L. Greenberg
--------------------------
Name: Sheryl L. Greenberg
Title: Manager
Address for Notices:
Royal Bank of Canada
Financial Square, 23rd Flr.
New York, N.Y. 10005-3531
Facsimile No.: (212) 428-2372
THE SANWA BANK, LTD.
By
-----------------------
Name:
Title:
Address for Notices:
----------------------------
----------------------------
----------------------------
Facsimile No.:
-------------
THE SUMITOMO BANK, LIMITED,
NEW YORK BRANCH
By /s/ Yoshinori Kawamura
Name: Yoshinori Kawamura
Title: Joint General Manager
Address for Notices:
277 Park Avenue, 6th Floor
New York, NY 10172
Attention: Jeff Toner
Facsimile No.: (212) 224-5188
THE FUJI BANK, LIMITED
NEW YORK BRANCH
By
-----------------------
Name:
Title:
Address for Notices:
----------------------------
----------------------------
----------------------------
Facsimile No.:
-------------
Exhibit 10.21
============================================================
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
IDEON GROUP, INC.,
CUC INTERNATIONAL INC.
AND
IG ACQUISITION CORP.
DATED
AS OF
APRIL 19, 1996
===========================================================
TABLE OF CONTENTS
Page
----
ARTICLE I
THE MERGER . . . . . . . . . . . . . . . 2
SECTION 1.1 The Merger . . . . . . . . . . . . . . . . . . . . . . . 2
SECTION 1.2 Effect on Shares . . . . . . . . . . . . . . . . . . . . 3
SECTION 1.3 Exchange of Certificates . . . . . . . . . . . . . . . . 4
SECTION 1.4 Dividends; Transfer Taxes . . . . . . . . . . . . . . . . 5
SECTION 1.5 No Fractional Shares . . . . . . . . . . . . . . . . . . 6
SECTION 1.6 Return of Exchange Fund . . . . . . . . . . . . . . . . . 7
SECTION 1.7 Adjustment of Conversion Number . . . . . . . . . . . . . 7
SECTION 1.8 No Further Ownership Rights in Shares . . . . . . . . . . 7
SECTION 1.9 Closing of Company Transfer Books . . . . . . . . . . . . 8
SECTION 1.10 Stock Options . . . . . . . . . . . . . . . . . . . . . . 8
SECTION 1.11 Restricted Stock . . . . . . . . . . . . . . . . . . . . 9
ARTICLE II
CLOSING . . . . . . . . . . . . . . . 9
SECTION 2.1 Closing . . . . . . . . . . . . . . . . . . . . . . . . . 9
ARTICLE III
THE SURVIVING CORPORATION . . . . . . . . . . . . . . . 10
SECTION 3.1 Certificate of Incorporation . . . . . . . . . . . . . . 10
SECTION 3.2 Bylaws . . . . . . . . . . . . . . . . . . . . . . . . . 10
SECTION 3.3 Directors and Officers . . . . . . . . . . . . . . . . . 10
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY . . . . . . . . . . 10
SECTION 4.1 Corporate Existence and Power . . . . . . . . . . . . . . 10
SECTION 4.2 Corporate Authorization . . . . . . . . . . . . . . . . . 11
SECTION 4.3 Governmental Authorization . . . . . . . . . . . . . . . 12
SECTION 4.4 Non-Contravention . . . . . . . . . . . . . . . . . . . . 12
SECTION 4.5 Capitalization . . . . . . . . . . . . . . . . . . . . . 13
SECTION 4.6 Subsidiaries. . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 4.7 SEC Documents . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 4.8 Financial Statements; No Undisclosed Liabilities . . . . 16
SECTION 4.9 Form S-4 Registration Statement and Company Proxy
Statement/Prospectus . . . . . . . . . . . . . . . . . 16
SECTION 4.10 Absence of Certain Changes . . . . . . . . . . . . . . . 17
SECTION 4.11 Litigation . . . . . . . . . . . . . . . . . . . . . . . 19
Page
----
SECTION 4.12 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 4.13 Employee Matters . . . . . . . . . . . . . . . . . . . . 21
SECTION 4.14 Labor Matters . . . . . . . . . . . . . . . . . . . . . 23
SECTION 4.15 Compliance with Laws . . . . . . . . . . . . . . . . . . 23
SECTION 4.16 Finders' Fees . . . . . . . . . . . . . . . . . . . . . 24
SECTION 4.17 Environmental Matters . . . . . . . . . . . . . . . . . 24
SECTION 4.18 Property . . . . . . . . . . . . . . . . . . . . . . . . 25
SECTION 4.19 Intangible Property . . . . . . . . . . . . . . . . . . 25
SECTION 4.20 Material Contracts . . . . . . . . . . . . . . . . . . . 26
SECTION 4.21 Accounting Matters . . . . . . . . . . . . . . . . . . . 27
SECTION 4.22 Vote Required . . . . . . . . . . . . . . . . . . . . . 27
SECTION 4.23 Fairness Opinion . . . . . . . . . . . . . . . . . . . . 27
SECTION 4.24 Disclosure . . . . . . . . . . . . . . . . . . . . . . . 28
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF BUYER
AND MERGER SUBSIDIARY . . . . . . . . . . . . . . . . . . . 28
SECTION 5.1 Corporate Existence and Power . . . . . . . . . . . . . . 28
SECTION 5.2 Corporate Authorization . . . . . . . . . . . . . . . . . 29
SECTION 5.3 Governmental Authorization . . . . . . . . . . . . . . . 29
SECTION 5.4 Non-Contravention . . . . . . . . . . . . . . . . . . . . 29
SECTION 5.5 Form S-4 Registration Statement and Company Proxy
Statement/Prospectus . . . . . . . . . . . . . . . . . 30
SECTION 5.6 Finders' Fees . . . . . . . . . . . . . . . . . . . . . . 31
SECTION 5.7 No Vote Required . . . . . . . . . . . . . . . . . . . . 31
SECTION 5.8 Share Ownership . . . . . . . . . . . . . . . . . . . . . 31
SECTION 5.9 Capitalization . . . . . . . . . . . . . . . . . . . . . 31
SECTION 5.10 Accounting Matters . . . . . . . . . . . . . . . . . . . 32
SECTION 5.11 Ownership of Merger Subsidiary; No Prior Activities;
Assets of Merger Subsidiary . . . . . . . . . . . . . . 32
SECTION 5.12 SEC Documents . . . . . . . . . . . . . . . . . . . . . . 33
SECTION 5.13 Financial Statements . . . . . . . . . . . . . . . . . . 33
SECTION 5.14 Absence of Certain Changes or Events . . . . . . . . . . 34
SECTION 5.15 Litigation . . . . . . . . . . . . . . . . . . . . . . . 34
SECTION 5.16 Authorization for Buyer Common Stock . . . . . . . . . . 34
SECTION 5.17 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . 35
SECTION 5.18 Disclosure . . . . . . . . . . . . . . . . . . . . . . . 35
ARTICLE VI
COVENANTS OF THE COMPANY . . . . . . . . . . . . . . . 36
SECTION 6.1 Conduct of the Company . . . . . . . . . . . . . . . . . 36
ii
Page
----
SECTION 6.2 Stockholder Meeting; Proxy Material . . . . . . . . . . . 39
SECTION 6.3 Access to Information; Confidential Agreement . . . . . . 41
SECTION 6.4 No Solicitation . . . . . . . . . . . . . . . . . . . . . 41
SECTION 6.5 Conveyance Taxes . . . . . . . . . . . . . . . . . . . . 44
ARTICLE VII
COVENANTS OF BUYER . . . . . . . . . . . . . 44
SECTION 7.1 Obligations of Merger Subsidiary . . . . . . . . . . . . 44
SECTION 7.2 Voting of Shares . . . . . . . . . . . . . . . . . . . . 44
SECTION 7.3 Director and Officer Liability . . . . . . . . . . . . . 45
ARTICLE VIII
COVENANTS OF BUYER, MERGER SUBSIDIARY
AND THE COMPANY . . . . . . . . . . . . . 48
SECTION 8.1 Reasonable Best Efforts . . . . . . . . . . . . . . . . . 49
SECTION 8.2 Certain Filings . . . . . . . . . . . . . . . . . . . . . 49
SECTION 8.3 Public Announcements . . . . . . . . . . . . . . . . . . 49
SECTION 8.4 Conveyance Taxes . . . . . . . . . . . . . . . . . . . . 49
SECTION 8.5 Further Assurances . . . . . . . . . . . . . . . . . . . 50
SECTION 8.6 Employee Matters. . . . . . . . . . . . . . . . . . . . . 50
SECTION 8.7 Company Proxy Statement and Registration Statement . . . 51
SECTION 8.8 Tax-Free Reorganization Treatment . . . . . . . . . . . . 51
SECTION 8.9 Notification of Certain Matters . . . . . . . . . . . . . 52
SECTION 8.10 Blue Sky Permits . . . . . . . . . . . . . . . . . . . . 52
SECTION 8.11 NYSE Listing . . . . . . . . . . . . . . . . . . . . . . 52
SECTION 8.12 Pooling Letter . . . . . . . . . . . . . . . . . . . . . 52
SECTION 8.13 Pooling . . . . . . . . . . . . . . . . . . . . . . . . . 53
SECTION 8.14 SEC Filings . . . . . . . . . . . . . . . . . . . . . . . 53
SECTION 8.16 Affiliates . . . . . . . . . . . . . . . . . . . . . . . 54
ARTICLE IX
CONDITIONS TO THE MERGER . . . . . . . . . . . 54
SECTION 9.1 Conditions to the Obligations of Each Party . . . . . . . 54
SECTION 9.2 Conditions to the Obligations of the Company . . . . . . 55
SECTION 9.3 Conditions to the Obligations of Buyer and Merger
Subsidiary . . . . . . . . . . . . . . . . . . . . . . 57
iii
Page
----
ARTICLE X
TERMINATION . . . . . . . . . . . . . . 58
SECTION 10.1 Termination . . . . . . . . . . . . . . . . . . . . . . 58
SECTION 10.2 Effect of Termination . . . . . . . . . . . . . . . . . 60
ARTICLE XI
DEFINED TERMS . . . . . . . . . . . . . . 60
ARTICLE XII
MISCELLANEOUS . . . . . . . . . . . . . . 66
SECTION 12.1 Notices . . . . . . . . . . . . . . . . . . . . . . . . 66
SECTION 12.2 Survival of Representations and Warranties . . . . . . . 67
SECTION 12.3 Amendments; No Waivers . . . . . . . . . . . . . . . . . 68
SECTION 12.4 Expenses . . . . . . . . . . . . . . . . . . . . . . . . 68
SECTION 12.5 Successors and Assigns . . . . . . . . . . . . . . . . . 70
SECTION 12.6 Governing Law . . . . . . . . . . . . . . . . . . . . . 70
SECTION 12.7 Severability . . . . . . . . . . . . . . . . . . . . . . 70
SECTION 12.8 Third Party Beneficiaries . . . . . . . . . . . . . . . 71
SECTION 12.9 Entire Agreement . . . . . . . . . . . . . . . . . . . . 71
SECTION 12.10 Counterparts; Effectiveness . . . . . . . . . . . . . . 71
COMPANY DISCLOSURE SCHEDULE
SCHEDULE 4.1 Corporate Existence and Power
SCHEDULE 4.3 Governmental Authorization
SCHEDULE 4.4 Non-Contravention
SCHEDULE 4.5 Capitalization
SCHEDULE 4.6 Subsidiaries
SCHEDULE 4.8 Financial Statements
SCHEDULE 4.10 Absence of Certain Changes
SCHEDULE 4.11 Litigation
SCHEDULE 4.12 Taxes
SCHEDULE 4.13(a) Employee Matters
SCHEDULE 4.14 Labor Matters
SCHEDULE 4.15 Compliance With Laws
SCHEDULE 4.17 Environmental Matters
SCHEDULE 4.19 Intangible Property
SCHEDULE 4.20 Material Contracts
SCHEDULE 6.1 Conduct of the Company
SCHEDULE 6.1(p) Conduct of the Company
iv
Page
----
SCHEDULE 7.3 Directors and Officers' Liability
SCHEDULE 8.6 Employee Matters
EXHIBIT 1 Form of Affiliate Letter
EXHIBIT 2 Buyer Tax Certificate
EXHIBIT 3 Company Tax Certificate
BUYER DISCLOSURE SCHEDULE
SCHEDULE 5.1 Corporate Existence and Power
SCHEDULE 5.9 Capitalization
SCHEDULE 5.14 Absence of Certain Changes or Events
SCHEDULE 5.15 Litigation
SCHEDULE 5.17 Taxes
SCHEDULE 6.2 Buyer Transactions
v
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of April 19, 1996 (this
"Agreement"), by and among Ideon Group, Inc., a Delaware corporation (the
"Company"), CUC International Inc., a Delaware corporation ("Buyer"), and IG
Acquisition Corp., a Delaware corporation and a wholly owned subsidiary of Buyer
("Merger Subsidiary").
WHEREAS, the respective Boards of Directors of Buyer, Merger
Subsidiary and the Company have determined that it is fair to, and in the best
interests of their respective stockholders to consummate the acquisition of the
Company by Buyer upon the terms and subject to the conditions set forth herein;
and
WHEREAS, the respective Boards of Directors of the Company, Buyer and
Merger Subsidiary have approved and declared advisable this Agreement and the
merger of Merger Subsidiary with and into the Company, upon terms and subject to
the conditions set forth herein, whereby each issued and outstanding share of
common stock, par value $.01 per share, of the Company (the "Shares"), not owned
directly or indirectly by Buyer or Merger Subsidiary, will be converted into the
number of shares of common stock, par value $.01 per share of Buyer ("Buyer
Common Stock"), determined pursuant to Section 1.2(a) hereof; and
WHEREAS, it is intended that the Merger (as defined herein) shall be
recorded for accounting purposes as a pooling-of-interests; and
WHEREAS, for federal income tax purposes, it is intended that the
Merger shall qualify as a reorganization within the meaning of Section 368(a) of
the Internal Revenue Code of 1986, as amended (the "Code");
WHEREAS, the Company has delivered to Buyer a letter (the "Company
Affiliate Letter") identifying all persons (each, a "Company Affiliate") who are
at the date hereof, "affiliates" of the Company for purposes of Rule 145 under
the Securities Act of 1933, as amended (the "Securities Act"), and each Company
Affiliate has delivered to Buyer a letter substantially in the form attached
hereto as Exhibit 1 (each, an "Affiliate Letter") relating to (i) the transfer
prior to the Effective Time (as
defined in Section 1.1(b)), of the Shares beneficially owned by such Company
Affiliate on the date hereof, and (ii) the transfer of the shares of Buyer
Common Stock to be received by such Company Affiliate in the Merger (as defined
in Section 1.1(a)); and
WHEREAS, Buyer, Merger Subsidiary and the Company desire to make
certain representations, warranties, covenants and agreements in connection with
the Merger and also to prescribe various conditions to the Merger.
NOW, THEREFORE, in consideration of the representations, warranties,
covenants and agreements
contained in this Agreement, the parties hereto agree as follows:
ARTICLE I
THE MERGER
SECTION 1.1 The Merger. (a) Subject to the terms and conditions of
----------
this Agreement, and in accordance with the Delaware General Corporation Law (the
"DGCL"), at the Effective Time, Merger Subsidiary shall be merged (the "Merger")
with and into the Company, whereupon the separate existence of Merger Subsidiary
shall cease, and the Company shall be the surviving corporation (the "Surviving
Corporation") and shall continue to be governed by the laws of the State of
Delaware.
(b) The Company, Buyer and Merger Subsidiary will cause a certificate
of merger (the "Certificate of Merger") with respect to the Merger to be
executed and filed with the Secretary of State of the State of Delaware (the
"Secretary of State") as provided in the DGCL. The Merger shall become
effective on the date the Certificate of Merger has been duly filed with the
Secretary of State or at such date as is agreed between the parties and speci-
fied in the Certificate of Merger, and such time is hereinafter referred to as
the "Effective Time."
(c) From and after the Effective Time, the Surviving Corporation
shall possess all the rights, privileges, powers and franchises and be subject
to all of
2
the restrictions, disabilities, liabilities and duties of the Company and Merger
Subsidiary.
SECTION 1.2 Effect on Shares. At the Effective Time:
----------------
(a) Conversion of Shares; Merger Consideration. Subject to the
------------------------------------------
provisions of Section 1.5 and Section 1.7 hereof, each Share issued and out-
standing immediately prior to the Effective Time (other than Shares held by the
Company as treasury stock or by any Subsidiary of the Company or owned by Buyer,
Merger Subsidiary or any other Subsidiary of Buyer) shall, by virtue of the
Merger and without any action on the part of the holder thereof, be converted
into the right to receive that number of duly authorized, validly issued, fully
paid and nonassessable shares of Buyer Common Stock (the "Merger
Consideration")(such applicable number being hereinafter referred to as the
"Conversion Number"), equal to the quotient obtained by dividing (x) $13.50 by
(y) the Average Stock Price (as hereinafter defined); provided, however, that if
-------- -------
the Average Stock Price is $22 or less the Conversion Number shall be 0.6136 and
if the Average Stock Price is $36 or more the Conversion Number shall be 0.3750.
The "Average Stock Price" shall mean the average closing price per share of
Buyer Common Stock on the New York Stock Exchange (the "NYSE") as reported on
the NYSE Composite Tape during the fifteen consecutive trading day period (the
"Measurement Period") ending on the second calendar day immediately preceding
the Company Stockholder Meeting (as defined herein); provided, however, that if
-------- -------
such second calendar day is not a trading day, the Measurement Period shall end
on the next calendar day immediately preceding such second calendar day that is
a trading day.
(b) Cancellation of Shares. Each Share held by the Company as
----------------------
treasury stock or owned by Buyer, Merger Subsidiary or any other Subsidiary of
Buyer immediately prior to the Effective Time shall automatically be canceled
and retired and cease to exist, and no payment shall be made with respect there-
to. All Shares to be converted into Buyer Common Stock pursuant to this Section
1.2 shall, by virtue of the Merger and without any action on the part of the
holders thereof, cease to be outstanding, be canceled and retired and cease to
exist; and each holder of a certificate representing
3
prior to the Effective Time any such Shares shall thereafter cease to have any
rights with respect to such Shares, except the right to receive (i) certificates
representing shares of Buyer Common Stock into which such Shares have been
converted, (ii) any dividends and other distributions in accordance with Section
1.4 hereof and (iii) any cash, without interest, to be paid in lieu of any
fractional share of Buyer Common Stock in accordance with Section 1.5 hereof.
(c) Capital Stock of Merger Subsidiary. Each share of common stock
----------------------------------
of Merger Subsidiary issued and outstanding immediately prior to the Effective
Time shall be converted into and become one share of common stock, par value
$0.01, of the Surviving Corporation with the same rights, powers and privileges
as the shares so converted and shall constitute the only outstanding shares of
capital stock of the Surviving Corporation.
SECTION 1.3 Exchange of Certificates. (a) Prior to the Effective
------------------------
Time, Buyer shall appoint a commercial bank having capital of not less than
$500,000,000 (or such other Person or Persons as shall be acceptable to Buyer
and the Company) to act as exchange agent hereunder (the "Exchange Agent"). At
the Effective Time, Buyer shall deposit with the Exchange Agent, certificates
(the "Buyer Certificates") representing Buyer Common Stock which immediately
prior to the Effective Time represent a number of shares of Buyer Common Stock
required to be issued pursuant to Section 1.2(a) in exchange for the outstanding
Shares (together with cash as required to (i) pay any dividends or distributions
with respect thereto in accordance with Section 1.4 hereof and (ii) make
payments in lieu of fractional Shares pursuant to Section 1.5 hereof, being
hereinafter referred to as the "Exchange Fund"). The Exchange Fund shall not be
used for any other purpose except as provided for in this Agreement.
(b) Promptly after the Effective Time, the Exchange Agent shall mail
to each holder of record of a certificate or certificates which immediately
prior to the Effective Time represented outstanding Shares (the "Share Certifi-
cates") (i) a form of a letter of transmittal (which shall specify that delivery
shall be effected, and risk of loss and title to the Share Certificates shall
pass, only upon actual delivery thereof to the
4
Exchange Agent) and (ii) instructions for use in effecting the surrender of the
Share Certificates in exchange for the property described in the next sentence.
Upon surrender for cancellation to the Exchange Agent of Share Certificate(s)
held by any record holder of a Share Certificate, together with such letter of
transmittal duly executed, such holder shall be entitled to receive in exchange
therefor (x) a Buyer Certificate representing the number of whole shares of
Buyer Common Stock into which the Shares represented by the surrendered Share
Certificate(s) shall have been converted at the Effective Time pursuant to this
Article I, (y) cash in lieu of any fractional share of Buyer Common Stock in
accordance with Section 1.5 hereof and (z) certain dividends and other
distributions in accordance with Section 1.4 hereof; and the Share
Certificate(s) so surrendered shall forthwith be cancelled.
(c) Subject to the provisions of Section 1.4 and Section 1.5 hereof,
each Share Certificate which immediately prior to the Effective Time represented
Shares to be converted in the Merger shall, from and after the Effective Time
until surrendered in exchange for Buyer Certificate(s) in accordance with this
Section 1.3, be deemed for all purposes to represent the number of shares of
Buyer Common Stock into which such Shares shall have been so converted.
SECTION 1.4 Dividends; Transfer Taxes. No dividends or other
-------------------------
distributions that are declared on or after the Effective Time on Buyer Common
Stock, or are payable to the holders of record thereof who became such on or
after the Effective Time, shall be paid to any Person entitled by reason of the
Merger to receive Buyer Certificates representing Buyer Common Stock, and no
cash payment in lieu of any fractional share of Buyer Common Stock shall be paid
to any such person pursuant to Section 1.5 hereof, until such Person shall have
surrendered its Share Certificate(s) as provided in Section 1.3 hereof. Subject
to applicable law, there shall be paid to each Person receiving a Buyer Certifi-
cate representing such shares of Buyer Common Stock: (i) at the time of such
surrender or as promptly as practicable thereafter, the amount of any dividends
or other distributions theretofore paid with respect to the shares of Buyer
Common Stock represented by such Buyer Certificate and having a record date on
or after the Effective Time and a payment
5
date prior to such surrender, and (ii) at the appropriate payment date or as
promptly as practicable thereafter, the amount of any dividends or other
distributions payable with respect to such shares of Buyer Common Stock and
having a record date on or after the Effective Time but prior to such surrender
and a payment date on or subsequent to such surrender. In no event shall the
Person entitled to receive such dividends or other distributions be entitled to
receive interest on such dividends or other distributions. Buyer shall make
available to the Exchange Agent the cash necessary for this purpose. If any
cash or Buyer Certificate representing shares of Buyer Common Stock is to be
paid to or issued in a name other than that in which the Share Certificate
surrendered in exchange therefor is registered, it shall be a condition of such
exchange that the Share Certificate so surrendered shall be properly endorsed
and otherwise in proper form for transfer and that the person requesting such
exchange shall pay to the Exchange Agent any transfer or other taxes required by
reason of the issuance of such Buyer Certificate and the distribution of such
cash payment in a name other than that of the registered holder of the Share
Certificate so surrendered, or shall establish to the satisfaction of the
Exchange Agent that such tax has been paid or is not applicable. "Person" means
an individual, a corporation, limited liability company, a partnership, an
association, a trust or any other entity or organization, including a government
or political subdivision or any agency or instrumentality thereof.
SECTION 1.5 No Fractional Shares. No certificates or scrip
--------------------
representing fractional shares of Buyer Common Stock shall be issued upon the
surrender for exchange of Share Certificates pursuant to this Article I; no
dividend or other distribution by Buyer and no stock split, combination or
reclassification shall relate to any such fractional share; and no such
fractional share shall entitle the record or beneficial owner thereof to vote or
to any other rights of a stockholder of Buyer. In lieu of any such fractional
share, each holder of Shares who would otherwise have been entitled thereto upon
the surrender of Share Certificate(s) for exchange pursuant to this Article I
will be paid an amount in cash (without interest) rounded to the nearest whole
cent, determined by multiplying (i) the per share closing price on the NYSE of
Buyer Common Stock (as reported on the
6
NYSE Composite Tape) on the date on which the Effective Time shall occur (or, if
Buyer Common Stock shall not trade on the NYSE on such date, the first day of
trading in Buyer Common Stock on the NYSE, thereafter) by (ii) the fractional
share to which such holder would otherwise be entitled. Buyer shall make
available to the Exchange Agent the cash necessary for this purpose.
SECTION 1.6 Return of Exchange Fund. Any portion of the Exchange
-----------------------
Fund which remains undistributed to the former holders of the Shares for one
year after the Effective Time shall be delivered to Buyer, upon its request, and
any such former holders who have not theretofore surrendered to the Exchange
Agent their Share Certificate(s) in compliance with this Article I shall
thereafter look only to Buyer for payment of their claim for shares of Buyer
Common Stock, any cash in lieu of fractional shares of Buyer Common Stock and
any dividends or distributions with respect to such shares of Buyer Common
Stock. Neither Buyer nor the Company shall be liable to any former holder of
Shares for any such shares of Buyer Common Stock held in the Exchange Fund (and
any cash, dividends and distributions payable in respect thereof) which is
delivered to a public official pursuant to any applicable abandoned property,
escheat or similar law.
SECTION 1.7 Adjustment of Conversion Number. In the event of any
-------------------------------
stock split, combination, reclassification or stock dividend with respect to
Buyer Common Stock, any change or conversion of Buyer Common Stock into other
securities or any other dividend or distribution with respect to Buyer Common
Stock (other than quarterly cash dividends issued in the ordinary course
consistent with past practice) and any distribution by Buyer of shares of
capital stock of any of its affiliates, or if a record date with respect to any
of the foregoing should occur, prior to the Effective Time, appropriate and
proportionate adjustments shall be made to the Conversion Number, and thereafter
all references in this Agreement to the Conversion Number shall be deemed to be
the Conversion Number as so adjusted.
SECTION 1.8 No Further Ownership Rights in Shares. All certificates
-------------------------------------
representing shares of Buyer Common Stock delivered upon the surrender for
exchange of any Share Certificate in accordance with the terms hereof
7
(including any cash paid pursuant to Section 1.4 or Section 1.5 hereof) shall be
deemed to have been delivered (and paid) in full satisfaction of all rights per-
taining to the Shares previously represented by such Share Certificate.
SECTION 1.9 Closing of Company Transfer Books. At the Effective
---------------------------------
Time, the stock transfer books of the Company shall be closed, and no transfer
of Shares shall thereafter be made. Subject to the last sentence of Section 1.6
hereof, if after the Effective Time, Share Certificates are presented to the
Surviving Corporation, they shall be cancelled and exchanged as provided in this
Article I.
SECTION 1.10 Stock Options. (a) Not later than the Effective Time,
-------------
each outstanding employee or director stock option (an "Option") to purchase
Shares granted under any employee or director stock option or compensation plan
or arrangement of the Company (other than any "stock purchase plan" within the
meaning of Section 423 of the Code) immediately prior to the Effective Time in
effect on the date hereof ("Company Stock Plans") whether or not then vested or
exercisable, shall become and represent an option to purchase the number of
shares of Buyer Common Stock (a "Substitute Option"), rounded up to the nearest
whole share, determined by multiplying (i) the number of Shares subject to such
Option immediately prior to the Effective Time by (ii) the Conversion Number, at
an exercise price per share of Buyer Common Stock (increased to the nearest
whole cent) equal to the exercise price per Share immediately prior to the
Effective Time divided by the Conversion Number; provided, however, that in the
-------- -------
case of any Option to which Section 421 of the Code applies by reason of its
qualification as an incentive stock option under Section 422 of the Code, the
conversion formula shall be adjusted if necessary to comply with Section 424(a)
of the Code. After the Effective Time, except as provided above in this Section
1.10, each Substitute Option shall be exercisable upon the same terms and
conditions as were applicable to the related Option immediately prior to the
Effective Time. Buyer shall register under the Securities Act on Form S-8 or
another appropriate form (and use its best efforts to maintain the effectiveness
thereof and maintain the current status of the prospectuses contained therein)
all Substitute Options and all shares of
8
Buyer Common Stock issuable pursuant to all Substitute Options. At or prior to
the Effective Time, Buyer shall take all corporate action necessary to reserve
for issuance a sufficient number of shares of Buyer Common Stock for delivery in
connection with the Substitute Options.
(b) Notwithstanding the foregoing, each Option held by any director
of the Company at the Effective Time, shall be converted at the Effective Time
into the right to receive that number of duly authorized, validly issued, fully
paid and nonassessable shares of Buyer Common Stock determined by multiplying
(i) the number of Shares such holder could have purchased had such holder
exercised such Option in full immediately prior to the Effective Time by (ii) a
fraction, the numerator of which shall be the excess, if any, of (A) the
Conversion Number multiplied by the Average Stock Price over (B) the applicable
exercise price of such Option and the denominator of which shall be the Average
Stock Price.
SECTION 1.11 Restricted Stock. Any unvested shares of restricted
----------------
stock of the Company, however granted, shall to the extent required in the plan,
agreement or instrument pursuant to which such restricted stock was granted,
vest and become free of all restrictions immediately prior to the Effective Time
and shall be convertible into Buyer Common Stock pursuant to Section 1.2 hereof.
ARTICLE II
CLOSING
SECTION 2.1 Closing. The closing of the Merger (the "Closing") will
-------
take place at 10:00 a.m., New York City time, on a date to be specified by the
parties, which shall be no later than the third business day after satisfaction
or waiver of all of the conditions set forth in Article IX hereof (the "Closing
Date"), at the offices of Weil, Gotshal & Manges LLP, 767 Fifth Avenue, New
York, New York 10153 unless another time, date or place is agreed to in writing
by the parties hereto.
9
ARTICLE III
THE SURVIVING CORPORATION
SECTION 3.1 Certificate of Incorporation. The certificate of
----------------------------
incorporation of the Company (the "Company Certificate of Incorporation") in
effect at the Effective Time shall be the certificate of incorporation of the
Surviving Corporation until amended in accordance with applicable law.
SECTION 3.2 Bylaws. The by-laws of the Company (the "Company By-
------
laws") in effect at the Effective Time shall be the by-laws of the Surviving
Corporation until amended in accordance with applicable law.
SECTION 3.3 Directors and Officers. From and after the Effective
----------------------
Time, until successors are duly elected or appointed and qualified in accordance
with applicable law, the directors of Merger Subsidiary at the Effective Time
shall be the initial directors of the Surviving Corporation and the officers of
the Company at the Effective Time shall be the initial officers of the Surviving
Corporation, in each case until their respective successors are duly elected and
appointed or qualified.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Buyer and Merger Subsidiary
that:
SECTION 4.1 Corporate Existence and Power. The Company is a
-----------------------------
corporation duly incorporated, validly existing and in good standing under the
laws of the State of Delaware, and except as set forth on Schedule 4.1 of the
disclosure schedule delivered by the Company in connection herewith (the "Compa-
ny Disclosure Schedule"), has all corporate powers and all governmental
licenses, authorizations, consents and approvals (collectively, "Licenses") re-
quired to carry on its business as now conducted except where the failure to
have any such License would not have a Material Adverse Effect (as defined
below). The Company is duly qualified to do business as a foreign corporation
and is in good standing
10
in each jurisdiction where the character of the property owned or leased by it
or the nature of its activities makes such qualification necessary, except for
those jurisdictions where the failure to be so qualified would not have a Mate-
rial Adverse Effect. As used herein, the term "Material Adverse Effect" means a
material adverse effect on the condition (financial or otherwise), business,
assets or results of operations of the Company and its Subsidiaries (as defined
in Section 4.6 hereof), or Buyer and Merger Subsidiary, as the case may be, in
each case taken as a whole, that is not a result of general changes in the
economy or the industries in which such entities operate. The Company has
heretofore delivered or made available to Buyer true and complete copies of the
Company Certificate of Incorporation and Company By-laws as currently in effect.
SECTION 4.2 Corporate Authorization. The execution, delivery and
-----------------------
performance by the Company of this Agreement and the consummation by the Company
of the transactions contemplated hereby are within the Company's corporate
powers and, except for any required approval by the Company's stockholders in
connection with the consummation of the Merger, have been duly authorized by all
necessary corporate action. This Agreement, assuming due and valid
authorization, execution and delivery by the parties hereto, constitutes a valid
and binding agreement of the Company enforceable against the Company in accor-
dance with its terms, except that (i) enforcement may be subject to applicable
bankruptcy, insolvency, reorganization, moratorium or other similar laws, now or
hereafter in effect, affecting creditors' rights generally, and (ii) the remedy
of specific performance and injunctive and other forms of equitable relief may
be subject to equitable defenses and to the discretion of the court before which
any proceeding therefor may be brought. To the extent permitted under any
Option or option plan, restricted stock plan, agreement or instrument or any em-
ployment, executive, severance or similar agreement to which the Company or any
of its Subsidiaries is a party, such that none of the execution, delivery and
performance by the Company of this Agreement or the consummation of the
transactions contemplated hereby (including, without limitation, the election of
the members of the Board of Directors of Merger Subsidiary as the initial
directors of the Surviving Corporation at the Effective Time pursuant to Section
3.3) will constitute a "change of control"
11
or "change in control" thereunder or result in an alteration of the benefits and
burdens (including, without limitation, by means of acceleration) thereunder,
the necessary majority of members of the Board of Directors has approved the
execution, delivery and performance by the Company of this Agreement, and the
consummation by the Company of the transactions contemplated hereby.
SECTION 4.3 Governmental Authorization. Except as set forth in
--------------------------
Schedule 4.3 of the Company Disclosure Schedule, the execution, delivery and
performance by the Company of this Agreement and the consummation by the Company
of the transactions contemplated hereby require no action by or in respect of,
or filing with, any governmental body, agency, official or authority (each, a
"Governmental Entity") other than: (i) the filing of a certificate of merger in
accordance with the DGCL; (ii) compliance with any applicable requirements of
the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the "HSR Act");
(iii) compliance with any applicable requirements of the Securities Exchange Act
of 1934, as amended (the "Exchange Act"); (iv) compliance with the applicable
requirements of state blue sky laws; (v) compliance with the applicable re-
quirements of any applicable takeover laws; and (vi) such other actions by or in
respect of, or filings with, any Governmental Entity the failure of which to
obtain or make would not have a Material Adverse Effect and which would not
materially impair or materially delay the ability of the Company to consummate
the transactions contemplated hereby.
SECTION 4.4 Non-Contravention. The execution, delivery and
-----------------
performance by the Company of this Agreement and the consummation by the Company
of the transactions contemplated hereby do not and will not (i) contravene or
conflict with the Company Certificate of Incorporation or Company By-laws, (ii)
except as set forth in Schedule 4.4 of the Company Disclosure Schedule and
assuming compliance with the matters referred to in Section 4.3 hereof, con-
travene or conflict with or constitute a violation of any provision of any law,
regulation, judgment, injunction, order or decree binding upon or applicable to
the Company or any Subsidiary of the Company, (iii) except as set forth in
Schedule 4.4 of the Company Disclosure Schedule, with or without the giving of
notice or passage of time or both, constitute a default under or give rise to a
right of termination, cancellation or acceleration
12
of any right or obligation of the Company or any Subsidiary of the Company or to
a loss of any benefit to which the Company or any Subsidiary of the Company is
entitled under any provision of any agreement, contract or other instrument
binding upon the Company or any Subsidiary of the Company or any license, fran-
chise, permit or other similar authorization held by the Company or any Subsid-
iary of the Company, or (iv) result in the creation or imposition of any Lien
(as defined below) on any asset of the Company or any Subsidiary of the Company,
excluding from the foregoing clauses (ii), (iii) or (iv), such violations,
breaches, defaults or Liens which would not have a Material Adverse Effect, and
which will not materially impair or materially delay the ability of the Company
to consummate the transactions contemplated hereby. For purposes of this
Agreement, "Lien" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such asset.
SECTION 4.5 Capitalization. The authorized capital stock of the
--------------
Company consists of 90,000,000 Shares and 10,000,000 shares of preferred stock
(the "Preferred Stock"). As of March 31, 1996, there were (i) 27,981,831 Shares
issued and outstanding; (ii) 6,964,169 Shares held in the Company's treasury;
and (iii) no shares of Preferred Stock issued and outstanding. As of March 31,
1996, there were (i) 1,713,900 outstanding Options pursuant to the 1994 Long
Term Stock-Based Incentive Plan with an exercise price range of a minimum
exercise price of $7.625 and a maximum exercise price of $20.75; (ii) 108,700
outstanding Options pursuant to the Employees Stock Option Plan with a minimum
exercise price of $9.875 and a maximum exercise price of $19.125; (iii) 300,000
outstanding Options granted to outside directors with an exercise price range of
a minimum exercise price of $9.00 and a maximum exercise price of $13.00; (iv)
8,333 outstanding Options pursuant to the 1991 Employee Stock Option Plan with
an exercise price of $9.00; (v) 10,000 outstanding Options pursuant to the 1992
Employee Stock Option Plan with an exercise price of $8.875 and (vi) 30,000
outstanding Options pursuant to the Directors Stock Plan with an exercise price
of $15.875. Schedule 4.5 of the Company Disclosure Schedule accurately sets
forth information regarding the exercise price, date of grant and number of
granted Options for each holder of Options as of March 31, 1996. All outstand-
ing shares of
13
capital stock of the Company have been duly authorized and validly issued and
are fully paid and nonassessable. Except as set forth in this Section 4.5, and
except for changes since March 31, 1996 resulting from the exercise of employee
Options outstanding on such date, there are outstanding (i) no shares of capital
stock or other voting securities of the Company, (ii) no securities of the
Company or of any Subsidiary of the Company convertible into or exchangeable for
shares of capital stock or voting securities of the Company, and (iii) except as
set forth on Schedule 4.5 of the Company Disclosure Schedule, no options or
other rights to acquire from the Company, and no obligation of the Company to
issue, any capital stock, voting securities or securities convertible into or
exchangeable for capital stock or voting securities of the Company (the items in
clauses (i), (ii) and (iii) being referred to collectively as the "Company
Securities"). There are no outstanding obligations of the Company or any
Subsidiary of the Company to repurchase, redeem or otherwise acquire any Company
Securities. Except as set forth on Schedule 4.5 of the Company Disclosure
Schedule, there are no stockholder agreements, voting trusts or understandings
to which the Company is a party or by which it is bound relating to the voting
or registration of any shares of capital stock of the Company. Except as
otherwise provided in Section 1.11 of this Agreement, the Company has not taken
any action that would result in any Options or shares of restricted stock that
are unvested becoming vested in connection with or as a result of the execution
and delivery of this Agreement or the consummation of the transactions contem-
plated hereby. No Subsidiary of the Company owns any capital stock of the
Company.
SECTION 4.6 Subsidiaries. (a) Each Subsidiary of the Company that
------------
is actively engaged in any business or owns any material assets (an "Active
Subsidiary") (i) is a corporation duly incorporated, validly existing and in
good standing under the laws of its jurisdiction of incorporation, (ii) except
as set forth in Schedule 4.6 of the Company Disclosure Schedule, has all cor-
porate powers and all material governmental licenses, authorizations, consents
and approvals required to carry on its business as now conducted and (iii) is
duly qualified to do business as a foreign corporation and is in good standing
in each jurisdiction where the character of the property owned or leased by it
or the nature of its ac-
14
tivities makes such qualification necessary, except with respect to (ii) and
(iii) above to the extent the failure of this representation and warranty to be
true would not have a Material Adverse Effect. For purposes of this Agreement,
"Subsidiary" means with respect to any Person, any corporation or other legal
entity of which such Person owns, directly or indirectly, more than 50% of the
outstanding stock or other equity interests, the holders of which are entitled
to vote for the election of the board of directors or other governing body of
such corporation or other legal entity. All Active Subsidiaries, their
respective jurisdictions of incorporation and the ownership interest of the
Company and its Subsidiaries in such Active Subsidiaries are identified on
Schedule 4.6 of the Company Disclosure Schedule.
(b) Each outstanding share of capital stock of each Subsidiary of the
Company has been duly and validly authorized and issued, is fully paid and
nonassessable and is owned by the Company and/or one or more of its Subsidiaries
free and clear of any Liens. There are no subscriptions, options, warrants,
calls, rights, convertible securities or other agreements or commitments of any
character relating to the issuance, transfer, sale, delivery, voting or redemp-
tion (including any rights of conversion or exchange under any outstanding
security or other instrument) for, any of the capital stock or other equity
interests of any of such Subsidiaries. There are no agreements requiring the
Company or any of its Subsidiaries to make contributions to the capital of, or
lend or advance funds to, any of the Subsidiaries of the Company.
SECTION 4.7 SEC Documents. The Company has filed all required
-------------
reports, proxy statements, forms and other documents with the SEC since January
1, 1994 ("Company SEC Documents"). As of their respective dates, (i) 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 Securities and Exchange Commission (the "SEC") promulgated
thereunder applicable to such Company SEC Documents, and (ii) none of the
Company SEC Documents contained any untrue statement of a material fact or
omitted to state any material fact required to be stated therein or necessary in
order to make the state-
15
ments made therein, in the light of the circumstances under which they were
made, not misleading.
SECTION 4.8 Financial Statements; No Undisclosed Liabilities. The
------------------------------------------------
consolidated financial statements of the Company included in the Company SEC
Documents (i) comply as to form in all material respects with all applicable
accounting requirements and the published rules and regulations of the SEC with
respect thereto, (ii) have been prepared in conformity with generally accepted
accounting principles ("GAAP"), applied on a consistent basis (except in the
case of unaudited statements, as permitted by Form 10-Q of the SEC) during the
periods involved (except as may be indicated in the related notes and schedules
thereto) and (iii) fairly present in all material respects the consolidated fi-
nancial position of the Company and its consolidated Subsidiaries as of the
dates thereof and the consolidated results of their operations and cash flows
for the periods then ended (subject, in the case of unaudited statements, to
normal year-end audit adjustments). Except as set forth in Schedule 4.8 of the
Company Disclosure Schedule and except as set forth in the Company SEC Documents
filed and publicly available prior to the date of this Agreement, and except for
liabilities and obligations incurred in the ordinary course of business since
the date of the most recent consolidated balance sheet included in the Company
SEC Documents filed and publicly available prior to the date of this Agreement,
neither the Company nor any of its Subsidiaries has any liabilities or obliga-
tions of any nature (whether accrued, absolute, contingent or otherwise) re-
quired by GAAP to be set forth on a consolidated balance sheet of the Company
and its consolidated Subsidiaries or in the notes thereto.
SECTION 4.9 Form S-4 Registration Statement and Company Proxy
-------------------------------------------------
Statement/Prospectus. None of the information to be supplied by the Company for
- --------------------
inclusion or incorporation by reference in the Form S-4 Registration Statement
(as hereinafter defined) or the Company Proxy Statement (as hereinafter defined)
will (i) in the case of the Form S-4 Registration Statement, at the time it
becomes effective, at the Effective Time or at the Company Stockholder Meeting
(as hereinafter defined), contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary in
order to make the statements therein not
16
misleading, or (ii) in the case of the Company Proxy Statement, at the time of
the mailing of the Company Proxy Statement and at the time of the Company Stock-
holder Meeting, contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary in order to make
the statements therein not misleading. If at any time prior to the Effective
Time any event with respect to the Company, its officers and directors or any of
its Subsidiaries should occur which is required to be described in an amendment
of, or a supplement to, the Company Proxy Statement or the Form S-4 Registration
Statement, such event shall be so described, and such amendment or supplement
shall be promptly filed with the SEC and, as required by law, disseminated to
the stockholders of the Company. The Company Proxy Statement will (with respect
to information relating to the Company) comply as to form in all material
respects with the requirements of the Exchange Act and the rules and regulations
promulgated thereunder.
SECTION 4.10 Absence of Certain Changes. Except as disclosed in the
--------------------------
Company SEC Documents filed by the Company or as set forth in Schedule 4.10 of
the Company Disclosure Schedule, the Company and its Subsidiaries have conducted
their business in the ordinary course of business and there has not been since
January 1, 1996:
(a) any event, occurrence or facts which has had or reasonably could
be expected to have a Material Adverse Effect;
(b) any declaration, setting aside or payment of any dividend (other
than regular quarterly dividends) or other distribution with respect to any
shares of capital stock of the Company, or any repurchase, redemption or
other acquisition by the Company or any Subsidiary of the Company of any
outstanding shares of capital stock or other securities of, or other
ownership interests in, the Company or any Subsidiary of the Company;
(c) any amendment of any term of any outstanding security of the
Company or any Subsidiary of the Company;
17
(d) any incurrence, assumption or guarantee by the Company or any
Subsidiary of the Company of any indebtedness for borrowed money other than
in the ordinary course of business;
(e) any creation or assumption by the Company or any Subsidiary of
the Company of any Lien on any asset other than in the ordinary course of
business and other than Liens which do not have and could not reasonably be
expected to have a Material Adverse Effect;
(f) any making of any loan, advance or capital contributions to or
investment in any Person other than advances to employees in the ordinary
course of business and loans, advances or capital contributions to or
investments in wholly-owned Subsidiaries of the Company made in the
ordinary course of business;
(g) any damage, destruction or other casualty loss (whether or not
covered by insurance) affecting the business or assets of the Company or
any Subsidiary of the Company which has had or could reasonably be expected
to have a Material Adverse Effect;
(h) any transaction or commitment made, or any contract or agreement
entered into, by the Company or any Subsidiary of the Company relating to
its assets or business (including the acquisition or disposition of any as-
sets) or any relinquishment by the Company or any Subsidiary of the Company
of any contract or other right, in either case, that have had or could
reasonably be expected to have a Material Adverse Effect, other than trans-
actions and commitments in the ordinary course of business and those
contemplated by this Agreement;
(i) any change, or any application or request to the SEC for any
change, in any method of accounting or accounting practice by the Company
or any Subsidiary of the Company, except for any such change required by
reason of a concurrent change in generally accepted accounting principles;
18
(j) any (i) grant of any severance or termination pay to any
director, officer or employee of the Company or any Subsidiary of the
Company, (ii) employment, consulting, indemnification, severance,
termination, deferred compensation or other similar agreement (or any
amendment to any such existing agreement) with any director, officer or
employee of the Company or any Subsidiary of the Company entered into,
(iii) increase in benefits payable under any existing severance or
termination pay policies or employment agreements or (iv) increase in
compensation, bonus or other benefits payable to directors, officers or
employees of the Company or any Subsidiary of the Company, in each case,
other than in the ordinary course of business; or
(k) any authorization of any of, or commitment or agreement to take
any of, the foregoing actions except as otherwise expressly permitted by
this Agreement.
SECTION 4.11 Litigation. Except as set forth in either the Company
----------
SEC Documents or in Schedule 4.11 of the Company Disclosure Schedule, there is
no action, suit, investigation or proceeding pending against, or to the
knowledge of the Company threatened against, the Company, any Subsidiary of the
Company or any of their respective properties before any court or arbitrator or
any Governmental Entity, which, (a) if determined or resolved adversely to the
Company or any Subsidiary of the Company in accordance with the plaintiff's
demands, could reasonably be expected to have, individually or in the aggregate,
a Material Adverse Effect or (b) as of the date hereof, questions the validity
of this Agreement or any action to be taken by the Company in connection with
the consummation of the transactions contemplated by this Agreement. Except as
set forth in the Company SEC Documents, as of the date of this Agreement, none
of the Company or its Subsidiaries is subject to any outstanding order, writ,
injunction or decree which, insofar as can be reasonably foreseen, could
reasonably be expected to have a Material Adverse Effect or would prevent or
materially delay the consummation of the transactions contemplated hereby.
Except as set forth in the Company SEC Documents, Schedule 4.11 of the Company
Disclosure Schedule sets forth a complete list of (x) all actions, suits, inves-
tigations or proceedings pending against, or to the
19
knowledge of the Company, threatened against any former or current director or
officer of the Company or any Subsidiary of the Company and (y) to the knowledge
of the Company, all material actions, suits, investigations, or proceedings
pending or threatened against any former or current employee of the Company or
any Subsidiary of the Company, in the case of each of (x) and (y), based on, or
arising out of the fact that, such person is or was a director, officer or
employee, as the case may be, of the Company or any Subsidiary of the Company,
as well as such matters as have been completed and in respect of which the
Company has any remaining indemnification or other monetary obligations.
SECTION 4.12 Taxes. (a) Except as set forth on Schedule 4.12 of the
-----
Company Disclosure Schedule: (i) the Company and each of its Subsidiaries has
filed or has had filed on its behalf in a timely manner (within any applicable
extension periods) with the appropriate Governmental Entity all income and other
material Tax Returns (as defined herein) with respect to Taxes (as defined
herein) of the Company and each of its Subsidiaries; (ii) all material Taxes
with respect to the Company and its Subsidiaries have been paid in full or have
been provided for in accordance with GAAP on the Company's most recent balance
sheet which is part of the Company SEC Documents; (iii) there are no outstanding
agreements or waivers extending the statutory period of limitations applicable
to any federal, state, local or foreign income or other material Tax Returns
required to be filed by or with respect to the Company and its Subsidiaries;
(iv) none of the Tax Returns of or with respect to the Company or any of its
Subsidiaries is currently being audited or examined by any Governmental Entity;
and (v) no deficiency for any income or other material Taxes has been assessed
with respect to the Company or any of its Subsidiaries which has not been abated
or paid in full.
(b) For purposes of this Agreement, (i) "Taxes" shall mean all taxes,
charges, fees, levies or other assessments, including, without limitation,
income, gross receipts, sales, use, ad valorem, goods and services, capital,
----------
transfer, franchise, profits, license, withholding, payroll, employment,
employer health, excise, estimated, severance, stamp, occupation, property or
other taxes, customs duties, fees, assessments or charges of
20
any kind whatsoever, together with any interest and any penalties, additions to
tax or additional amounts imposed by any taxing authority and (ii) "Tax Return"
shall mean any report, return, documents, declaration or other information or
filing required to be supplied to any taxing authority or jurisdiction with
respect to Taxes.
SECTION 4.13 Employee Matters. (a) Schedule 4.13(a) contains a true
----------------
and complete list of each bonus, deferred compensation, incentive compensation,
stock purchase, stock option, severance or termination pay, hospitalization or
other medical, life or other insurance, supplemental unemployment benefits,
profit-sharing, pension, or retirement plan, program, agreement or arrangement,
and each other employee benefit plan, program, agreement or arrangement,
sponsored, maintained or contributed to or required to be contributed to by the
Company or by any trade or business, whether or not incorporated (an "ERISA
Affiliate"), that together with the Company would be deemed a "single employer"
within the meaning of Section 4001(b)(1) of the Employee Retirement Income
Security Act of 1974, as amended, and the rules and regulations promulgated
thereunder ("ERISA"), for the benefit of any employee or former employee of the
Company, whether formal or informal and whether legally binding or not (the
"Plans"). Schedule 4.13(a) identifies each of the Plans that is an "employee
welfare benefit plan," or "employee pension benefit plan" as such terms are de-
fined in Sections 3(1) and 3(2) of ERISA (such plans being hereinafter referred
to collectively as the "ERISA Plans").
(b) With respect to each of the Plans, the Company has heretofore
delivered or made available to Buyer true and complete copies of each of the
following documents:
(i) a copy of the Plan or a description of all material terms
thereof (including all amendments thereto);
(ii) a copy of the annual report, if required under ERISA, with
respect to each such Plan for the last three years;
21
(iii) a copy of the actuarial report, if required under ERISA,
with respect to each such Plan for the last three years; and
(iv) the most recent determination letter received from the
Internal Revenue Service with respect to each Plan that is intended to be
qualified under Section 401 of the Code.
(c) No material liability under Title IV of ERISA has been incurred
by the Company or any ERISA Affiliate since the effective date of ERISA that has
not been satisfied in full, and no condition exists that presents a material
risk to the Company or an ERISA Affiliate of incurring a material liability
under such Title, other than liability for premiums due the Pension Benefit
Guaranty Corporation ("PBGC"), which payments have been or will be made when
due.
(d) With respect to each of the ERISA Plans that is subject to Title
IV of ERISA, the present value of accrued benefits under such Plan, based upon
the actuarial assumptions used for funding purposes in the most recent actuarial
report prepared by such Plan's actuary with respect to such Plan, did not, as of
its latest valuation date, exceed the then current value of the assets of such
Plan allocable to such accrued benefits.
(e) Neither the Company, any ERISA Affiliate, any of the ERISA Plans,
any trust created thereunder nor any trustee or administrator thereof has
engaged in a transaction or has taken or failed to take any action in connection
with which the Company, any ERISA Affiliate, any of the ERISA Plans, any such
trust, any trustee or administrator thereof, or any party dealing with the ERISA
Plans or any such trust could be subject to either a material civil penalty
assessed pursuant to Section 409 or Section 502(i) of ERISA or a material tax
imposed pursuant to Section 4975, Section 4976 or Section 4980B of the Code.
(f) Full payment has been made, or will be made in accordance with
Section 404(a)(6) of the Code, of all amounts which the Company or any ERISA
Affiliate is required to pay under the terms of each of the ERISA Plans and
Section 412 of the Code.
22
(g) Each of the Plans has been operated and administered in all
material respects in accordance with applicable laws, including but not limited
to ERISA and the Code.
(h) The Company has not taken any action that would result in the
acceleration of any benefits under any Plan in connection with or as a result of
the execution, delivery and performance by the Company of this Agreement or the
consummation by the Company of the transactions contemplated hereby.
SECTION 4.14 Labor Matters. Except to the extent set forth in
-------------
Schedule 4.14 of the Disclosure Schedule (i) there is no labor strike, dispute,
slowdown, stoppage or lockout actually pending or threatened, to the knowledge
of the Company, against the Company and during the past three years there has
not been any such action; (ii) to the knowledge of the Company, there is no
current union organizing activities among the Company's employees nor does any
question concerning representation exist concerning such employees; (iii) there
is no unfair labor practice charge or complaint against the Company pending or,
to the knowledge of the Company, threatened before the National Labor Relations
Board or any similar state or foreign agency; (iv) there is no grievance pending
relating to any collective bargaining agreement or other grievance procedure;
(v) to the knowledge of the Company, no charges with respect to or relating to
the Company are pending before the Equal Employment Opportunity Commission or
any other agency responsible for the prevention of unlawful employment
practices; (vi) the Company and its Subsidiaries have complied with the Worker
Adjustment and Retraining Notification Act (the "WARN Act"), and other state or
local laws substantially similar in effect to the WARN Act, where the failure to
be in compliance with such state or local laws would have a Material Adverse Ef-
fect; and (vii) there are no collective bargaining agreements, employment con-
tracts or severance agreements with any union or any employees of the Company.
SECTION 4.15 Compliance with Laws. Except as set forth in Schedule
--------------------
4.11 (as applicable) and Schedule 4.15 of the Company Disclosure Schedule, the
Company and its Subsidiaries, and their respective businesses, are in compliance
with all Licenses, laws, statutes, ordinances
23
or regulations, including, but not limited to, Environmental Laws (as defined in
Section 4.17 below), except where such violations would not have a Material
Adverse Effect.
SECTION 4.16 Finders' Fees. Except for Lazard Freres & Co., L.L.C.,
-------------
there is no investment banker, broker, finder or other intermediary which has
been retained by or is authorized to act on behalf, of the Company or any Sub-
sidiary of the Company who would be entitled to any fee or commission from the
Company, any Subsidiary of the Company, Buyer or any of Buyer's affiliates upon
consummation of the transactions contemplated by this Agreement. An executed,
true and complete copy of such engagement letter has been delivered to Buyer.
SECTION 4.17 Environmental Matters. (a) Except as set forth in the
---------------------
Company SEC Documents or in Schedule 4.17 of the Company Disclosure Schedule:
(i) since January 1, 1995, the Company has not received any
written communication from any person or entity (including any Governmental
Entity) stating that it or its Subsidiaries may be a potentially
responsible party under Environmental Law (as defined in Section 4.17(c)
hereof) with respect to any actual or alleged environmental contamination;
neither the Company nor its Subsidiaries nor, to the Company's knowledge,
any Governmental Entity is conducting or has conducted any environmental
remediation or environmental investigation which could reasonably be
expected to result in liability for the Company or its Subsidiaries under
Environmental Law; and the Company and its Subsidiaries have not received
any request for information under Environmental Law from any Governmental
Entity with respect to any actual or alleged environmental contamination,
except, in each case, for communications, environmental remediation and
investigations and requests for information which would not, individually
or in the aggregate, have a Material Adverse Effect; and
(ii) since January 1, 1995, the Company and its Subsidiaries
have not received any written communication from any person or entity
(including any Governmental Entity) stating or alleging that
24
the Company or its Subsidiaries may have violated any Environmental Law, or
that the Company or its Subsidiaries has caused or contributed to any envi-
ronmental contamination that has caused any property damage or personal
injury under Environmental Law, except, in each case, for statements and
allegations of violations and statements and allegations of responsibility
for property damage and personal injury which would not, individually or in
the aggregate, have a Material Adverse Effect.
(b) (i) The Company has made available to Buyer each material
environmental investigation, study, audit, test, review and other analysis in
the possession of the Company or its Subsidiaries prepared in the last five
years conducted in relation to the business of the Company or any property or
facility now or previously owned, operated or leased by the Company or any
Subsidiary of the Company; and (ii) the Company has made available to Buyer each
consent decree, consent order or similar document currently in force and to
which it is a party relating to any property currently owned, leased or operated
by the Company or its Subsidiaries.
(c) For purposes of this Section 4.17, "Environmental Law" means all
applicable state, federal and local laws, regulations and rules, including
common law, judgments, decrees and orders relating to pollution, the preser-
vation of the environment, and the release of material into the environment.
SECTION 4.18 Property. The Company and its Subsidiaries, as the case
--------
may be, have good and valid title to, or in the case of leased property, have
valid leasehold interests in all properties and assets necessary to conduct the
business of the Company as currently conducted, except to the extent the failure
of this representation and warranty to be true would not have a Material Adverse
Effect. There are no developments affecting any of such properties or assets
pending or, to the knowledge of the Company threatened, which, could reasonably
be expected to have a Material Adverse Effect.
SECTION 4.19 Intangible Property. (a) The Company and its
-------------------
Subsidiaries own or possess adequate licenses or other valid rights to use all
trademarks, trademark rights, trade names, trade name rights, copy-
25
rights, service marks, trade secrets and applications for trademarks and for
service marks, which are material to the Company's business and operations (col-
lectively, "Intangible Property") used or held for use in connection with the
business of the Company and the Subsidiaries of the Company as currently
conducted. All material trademarks are validly registered or registrations have
been applied for.
(b) The Company, except as set forth in Schedule 4.19(b) of the
Company Disclosure Schedule, is unaware of any assertion or claim challenging
the validity of any Intangible Property. Except as set forth in Schedule
4.19(b) of the Company Disclosure Schedule, the conduct of the business of the
Company and its Subsidiaries as currently conducted does not conflict with any
trademark, trademark right, trade name or trade name right of any third party in
a manner that could reasonably be expected to have a Material Adverse Effect.
To the knowledge of the Company, there are no material infringements of any
Intangible Property.
SECTION 4.20 Material Contracts. Except as set forth on Schedule
------------------
4.13(a), Schedule 4.20 or Schedule 7.3 of the Company Disclosure Schedule, the
Company SEC Documents list all Material Contracts (as defined below) of the
Company (and all material amendments thereto) and all agreements or commitments
to enter into a Material Contract, and except as set forth on Schedule 4.20 of
the Company Disclosure Schedule or in the Company SEC Documents, to the knowl-
edge of the Company, each Material Contract is valid, binding and enforceable
and in full force and effect, except where such failure to be valid, binding and
enforceable and in full force and effect would not have a Material Adverse Ef-
fect, and there are no defaults thereunder, except those defaults that would not
have a Material Adverse Effect. For purposes of this Agreement, "Material Con-
tracts" shall mean (i) all contracts, agreements or understandings with
customers of the Company and its Subsidiaries in the last fiscal year where each
customers' contracts, agreements or understandings in the aggregate account for
more than $5 million of (x) SafeCard Services, Incorporated's ("SafeCard") net
annual billings or (y) each Subsidiaries' of the Company, other than SafeCard's,
annual revenues; (ii) all the acquisition, merger, asset purchase or sale agree-
ments entered into by the Company
26
in the last two fiscal years with a transaction value in excess of $10 million;
(iii) all indemnification, termination, severance, or "golden parachute"
agreements; and (iv) any other agreement within the meaning set forth in Item
601(b)(10) Regulation S-K of Title 17, Part 229 of the Code of Federal Regula-
tions. Except as set forth on Schedule 4.20 of the Company Disclosure Schedule,
no party to any such Material Contract has (i) given written notice to the
Company or any Subsidiary of the Company of or made a claim in writing against
the Company or any Subsidiary of the Company with respect to any breach or
default thereunder, in any such case in which such breach or default could
reasonably be expected to have a Material Adverse Effect on the Company or (ii)
given written or, to the knowledge of the senior executive officers of the
Company, oral notice to the Company or any Subsidiary of the Company that it
does not intend to renew or it intends to terminate any of its business rela-
tionships with the Company or any Subsidiary of the Company.
SECTION 4.21 Accounting Matters. Neither the Company nor, to the
------------------
best of the Company's knowledge, any of its affiliates has taken or agreed to
take any action that would prevent Buyer from accounting for the transactions to
be effected pursuant to this Agreement as a pooling of interests in accordance
with GAAP and applicable SEC regulations. The Company has not knowingly and
willfully failed to bring to the attention of Buyer any actions, or agreements
or understandings, whether written or oral, to act that would be reasonably
likely to prevent Buyer from accounting for the Merger as a pooling of
interests. The representations and warranties of the Company in the Company
Affiliate Letter are true and correct.
SECTION 4.22 Vote Required. The affirmative vote of the holders of a
-------------
majority of the outstanding Shares is the only vote of the holders of any class
or series of the Company's capital stock necessary or required under this
Agreement or under applicable law to approve the Merger, this Agreement and the
transactions contemplated hereby.
SECTION 4.23 Fairness Opinion. The Board of Directors of the Company
----------------
has received the written opinion of Lazard Freres & Co. L.L.C., to the effect
that, as of such date, the consideration to be received by holders of
27
Shares pursuant to the Merger is fair from a financial point of view to such
holders. An executed, true and complete copy of such opinion has been delivered
to Buyer and, as of the date hereof, such opinion has not been modified in any
material respect or withdrawn.
SECTION 4.24 Disclosure. No representation or warranty by the
----------
Company contained in this Agreement and no statement contained in any certifi-
cate delivered by the Company to Buyer or Merger Subsidiary pursuant to this
Agreement contains any untrue statement of a material fact or omits to state a
material fact necessary to make the statements contained herein and therein not
misleading when taken together in light of the circumstances in which they were
made.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
OF BUYER AND MERGER SUBSIDIARY
Buyer and Merger Subsidiary represent and warrant to the Company that:
SECTION 5.1 Corporate Existence and Power. Each of Buyer and Merger
-----------------------------
Subsidiary is a corporation duly incorporated, validly existing and in good
standing under the laws of its jurisdiction of incorporation, and except as set
forth on Schedule 5.1 of the disclosure schedule delivered by Buyer and Merger
Subsidiary in connection herewith (the "Buyer Disclosure Schedule"), has all
corporate powers and all Licenses required to carry on its business as now con-
ducted except where the failure to have any such License would not, individually
or in the aggregate, have a Material Adverse Effect. Each of Buyer and Merger
Subsidiary is duly qualified to do business as a foreign corporation and is in
good standing in each jurisdiction where the character of the property owned or
leased by it or the nature of its activities makes such qualification necessary,
except for those jurisdictions where the failure to be so qualified would not,
individually or in the aggregate, have a Material Adverse Effect. Each of Buyer
and Merger Subsidiary has heretofore delivered or made available to the Company
true and complete copies of Buyer's and Merger Subsidiary's Certificate of
Incorporation and By-laws as currently in effect.
28
SECTION 5.2 Corporate Authorization. The execution, delivery and
-----------------------
performance by Buyer and Merger Subsidiary of this Agreement and the
consummation by Buyer and Merger Subsidiary of the transactions contemplated
hereby are within the corporate powers of Buyer and Merger Subsidiary and have
been duly authorized by all necessary corporate action. This Agreement,
assuming due and valid authorization, execution and delivery by the other
parties hereto, constitutes a valid and binding agreement of each of Buyer and
Merger Subsidiary enforceable against Buyer and Merger Subsidiary in accordance
with its terms, except that (i) enforcement may be subject to applicable bank-
ruptcy, insolvency, reorganization, moratorium or other similar laws, now or
hereafter in effect, affecting creditors' rights generally, and (ii) the remedy
of specific performance and injunctive and other forms of equitable relief may
be subject to equitable defenses and to the discretion of the court before which
any proceeding therefor may be brought.
SECTION 5.3 Governmental Authorization. The execution, delivery and
--------------------------
performance by Buyer and Merger Subsidiary of this Agreement and the
consummation by Buyer and Merger Subsidiary of the transactions contemplated
hereby require no action by or in respect of, or filing with, any Governmental
Entity other than: (i) the filing of a certificate of merger in accordance with
the DGCL; (ii) compliance with any applicable requirements of the HSR Act;
(iii) compliance with any applicable requirements of the Securities Act and Ex-
change Act; (iv) compliance with the applicable requirements of any applicable
takeover laws; and (v) such other actions by or in respect of, or filings with,
any Governmental Entity the failure of which to obtain or make would not have a
Material Adverse Effect and which would not materially impair or delay the
ability of Buyer or Merger Subsidiary to consummate the transactions contem-
plated hereby.
SECTION 5.4 Non-Contravention. The execution, delivery and
-----------------
performance by Buyer and Merger Subsidiary of this Agreement and the
consummation by Buyer and Merger Subsidiary of the transactions contemplated
hereby do not and will not (i) contravene or conflict with the Certificate of
Incorporation or By-laws of Merger Subsidiary or Buyer, (ii) assuming compliance
with the matters referred to in Section 5.3 hereof, contravene or conflict with
or constitute a violation of any provision of law,
29
regulation, judgment, injunction, order or decree binding upon or applicable to
Buyer or Merger Subsidiary, (iii) with or without the giving of notice or
passage of time or both, constitute a default under or give rise to a right of
termination, cancellation or acceleration of any right or obligation of Buyer or
Merger Subsidiary or to a loss of any benefit to which Buyer or Merger Subsid-
iary is entitled under any provision of any agreement, contract or other
instrument binding upon Buyer or Merger Subsidiary or any license, franchise,
permit or other similar authorization held by Buyer or Merger Subsidiary, or
(iv) result in the creation or imposition of any Lien on any asset of Buyer or
Merger Subsidiary excluding from the foregoing clauses (ii), (iii) or (iv) such
violations, breaches, defaults or Liens which would not have a Material Adverse
Effect, and which will not materially impair or materially delay the ability of
Buyer and Merger Subsidiary to consummate the transactions contemplated hereby.
SECTION 5.5 Form S-4 Registration Statement and Company Proxy
-------------------------------------------------
Statement/Prospectus. None of the information to be supplied by Buyer and
- --------------------
Merger Subsidiary for inclusion or incorporation by reference in the Form S-4
Registration Statement will (i) in the case of the Form S-4 Registration
Statement at the time it becomes effective, at the Effective Time or at the
Company Stockholder Meeting, contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary in
order to make the statements therein not misleading, or (ii) in the case of the
Company Proxy Statement, at the time of the mailing of the Company Proxy State-
ment and at the time of the Company Stockholder Meeting or at the Effective
Time, contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein not misleading. If at any time prior to the Effective Time
any event with respect to Buyer and Merger Subsidiary, their respective officers
and directors or any of Buyer's Subsidiaries should occur which is required to
be described in an amendment of, or a supplement to, the Form S-4 Registration
Statement or the Company Proxy Statement, such event shall be so described, and
such amendment or supplement shall be promptly filed with the SEC and, as
required by law, disseminated to the stockholders of the Company. The S-4
Registration Statement will
30
(with respect to information relating to Buyer and Merger Subsidiary) comply as
to form in all material respects with the requirements of the Securities Act and
the rules and regulations promulgated thereunder.
SECTION 5.6 Finders' Fees. Except for Goldman, Sachs & Co., whose
-------------
fees will be paid by Buyer, there is no investment banker, broker, finder or
other intermediary who might be entitled to any fee or commission in connection
with or upon consummation of the transactions contemplated by this Agreement
based upon arrangements made by or on behalf of Buyer or Merger Subsidiary.
SECTION 5.7 No Vote Required. No vote or special meeting of the
----------------
stockholders of Buyer or Merger Subsidiary is necessary or required by this
Agreement or under applicable law to approve the Merger, this Agreement or the
transactions contemplated hereby.
SECTION 5.8 Share Ownership. As of the date hereof, Buyer and Merger
---------------
Subsidiary do not own any Shares.
SECTION 5.9 Capitalization. The authorized capital stock of Buyer
--------------
consists of 400,000,000 shares of Buyer Common Stock, and 1,000,000 shares of
preferred stock, par value $.01 par value per share (the "Buyer Preferred
Stock"). As of March 29, 1996, there were issued and outstanding (i)
190,460,240 shares of Buyer Common Stock; (ii) no shares of Buyer Preferred
Stock; and (iii) options to purchase an aggregate of 21,056,064 shares of Buyer
Common Stock with exercise prices ranging from $.36 to $35.75. All of the out-
standing shares of capital stock of Buyer have been duly authorized and validly
issued and are fully paid and nonassessable. Schedule 5.9 of the Buyer Disclo-
sure Schedule accurately sets forth, as of the date of this Agreement, certain
information regarding the outstanding options, and such information is true and
correct. Except as set forth in this Section 5.9 or as disclosed on Schedule
5.9 of the Buyer Disclosure Schedule or in the Buyer SEC Documents, and except
for changes since March 29, 1996 resulting from the exercise of employee stock
options outstanding on such date, as of the date of this Agreement, there are
outstanding (i) no shares of capital stock or other voting securities of Buyer,
(ii) no securities of Buyer
31
or of any Subsidiary of Buyer convertible into or exchangeable for shares of
capital stock or voting securities of Buyer, and (iii) no options or other
rights to acquire from Buyer, and no obligation of Buyer to issue, any capital
stock, voting securities or securities convertible into or exchangeable for
capital stock or voting securities of the Company (the items in clauses (i),
(ii) and (iii) being referred to collectively as the "Buyer Securities"). There
are no outstanding obligations of Buyer or of any Subsidiary of Buyer to repur-
chase, redeem or otherwise acquire any Buyer Securities. There are no
stockholder agreements, voting trusts or understandings to which Buyer is a
party or to which it is bound relating to the voting of any shares of capital
stock of Buyer.
SECTION 5.10 Accounting Matters. Neither Buyer, nor Merger
------------------
Subsidiary, nor, to the best of Buyer's or Merger Subsidiary's knowledge, any of
its affiliates has taken or agreed to take any action that would prevent Buyer
or Merger Subsidiary from accounting for the transactions to be effected
pursuant to this Agreement as a pooling of interests in accordance with GAAP and
applicable SEC regulations. Buyer has not knowingly and willfully failed to
bring to the attention of the Company any actions, or agreements or
understandings, whether written or oral, to act that would be reasonably likely
to prevent Buyer from accounting for the Merger as a pooling of interests.
SECTION 5.11 Ownership of Merger Subsidiary; No Prior Activities;
----------------------------------------------------
Assets of Merger Subsidiary. (a) Merger Subsidiary was formed solely for the
- ---------------------------
purpose of the Merger and engaging in the transactions contemplated hereby.
(b) As of the date hereof and the Effective Time, the capital stock
of Merger Subsidiary is and will be directly owned 100% by Buyer. Further,
there are not as of the date hereof and there will not be at the Effective Time
any outstanding or authorized options, warrants, calls, rights, commitments or
any other agreements of any character which Merger Subsidiary is a party to, or
may be bound by, requiring it to issue, transfer, sell, purchase, redeem or
acquire any shares of capital stock or any securities or rights convertible
into, exchangeable for, or evidencing the right to subscribe
32
for or acquire, any shares of capital stock of Merger Subsidiary.
(c) As of the date hereof and the Effective Time, except for
obligations or liabilities incurred in connection with its incorporation or
organization and the transactions contemplated hereby, Merger Subsidiary has not
and will not have incurred, directly or indirectly through any Subsidiary or
affiliate, any obligations or liabilities or engaged in any business or
activities of any type or kind whatsoever or entered into any agreements or
arrangements with any Person or entity.
SECTION 5.12 SEC Documents. Buyer has filed all required reports,
-------------
proxy statements, forms and other documents with the SEC since January 1, 1994
("Buyer SEC Documents"). As of their respective dates (i) the Buyer SEC Docu-
ments 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 promulgated thereunder applicable to such Buyer SEC Documents, and (ii)
none of the Buyer SEC Documents contained any untrue statement of a material
fact or omitted to state any material fact required to be stated therein or
necessary in order to make the statements made therein, in the light of the cir-
cumstances under which they were made, not misleading.
SECTION 5.13 Financial Statements. The consolidated financial
--------------------
statements of Buyer included in the Buyer SEC Documents (i) comply as to form in
all material respects with applicable accounting requirements and the published
rules and regulations of the SEC with respect thereto, (ii) have been prepared
in conformity with GAAP applied on a consistent basis (except in the case of
unaudited statements, as permitted by Form 10-Q of the SEC) during the periods
involved (except as may be indicated in the related notes and schedules thereto)
and (iii) fairly present in all material respects the consolidated financial
position of Buyer and its consolidated subsidiaries as of the dates thereof, and
the results of its operations and its cash flows for the periods then ended
(subject, in the case of the unaudited statements, to normal year-end audit
adjustments and except that, in the case of financial statements included there-
in which were later restated to account for one or more business combinations
accounted for as poolings-of-interest, such
33
original financial statements do not reflect such restatements).
SECTION 5.14 Absence of Certain Changes or Events. Except as
------------------------------------
disclosed in the Buyer SEC Documents filed by Buyer and as set forth in Schedule
5.14 of the Buyer Disclosure Schedule, since the date of the most recent
consolidated balance sheet included in the Buyer SEC Documents filed and
publicly available prior to date of this Agreement, the business of Buyer has
been carried on only in the ordinary and usual course and there has not been any
adverse change in its business, properties, operations or financial condition
and no event has occurred and no fact or set of circumstances has arisen which
has resulted in or could reasonably be expected to result in a Material Adverse
Effect.
SECTION 5.15 Litigation. Except as set forth in either Buyer SEC
----------
Documents or in Schedule 5.15 of the Buyer Disclosure Schedule, there is no ac-
tion, suit, investigation or proceeding pending against, or to the knowledge of
Buyer or Merger Subsidiary threatened against, Buyer or Merger Subsidiary or any
of their respective properties before any court or arbitrator or any Governmen-
tal Entity, which, (a) if determined or resolved adversely to Buyer or Merger
Subsidiary in accordance with the plaintiff's demands, could reasonably be
expected to have, individually or in the aggregate, a Material Adverse Effect or
(b) as of the date of this Agreement, questions the validity of this Agreement
or any action to be taken by Buyer or Merger Subsidiary in connection with the
consummation of the transactions contemplated by this Agreement. Except as
publicly disclosed by Buyer, as of the date of this Agreement, none of Buyer or
its Subsidiaries is subject to any outstanding order, writ, injunction or decree
which, insofar as can be reasonably foreseen in the future, could reasonably be
expected to have a Material Adverse Effect on Buyer or would prevent or
materially delay the consummation of the transactions contemplated hereby.
SECTION 5.16 Authorization for Buyer Common Stock. Buyer has taken
------------------------------------
all necessary action to permit it to issue the number of shares of Buyer Common
Stock required to be issued pursuant to this Agreement. Shares of Buyer Common
Stock issued pursuant to Agreement will, when issued, be validly issued, fully
paid and nonassess
34
able and no person will have any preemptive right of subscription or purchase in
respect thereof. Shares of Buyer Common Stock will, when issued, be registered
under the Securities Act and the Exchange Act and registered or exempt from
registration under any applicable state securities laws and will, when issued,
be listed on the NYSE, subject to official notice of issuance.
SECTION 5.17 Taxes. Except as set forth on Schedule 5.17 of the
-----
Buyer Disclosure Schedule: (i) Buyer and each of its Subsidiaries has filed or
has had filed on its behalf in a timely manner (within any applicable extension
periods) with the appropriate Governmental Entity all income and other material
Tax Returns with respect to Taxes of Buyer and each of its Subsidiaries; (ii)
all material Taxes with respect to Buyer and its Subsidiaries have been paid in
full or have been provided for in accordance with GAAP on the Buyer's most
recent balance sheet which is part of the Buyer SEC Documents; (iii) there are
no outstanding agreements or waivers extending the statutory period of limi-
tations applicable to any federal, state, local or foreign income or other
material Tax Returns required to be filed by or with respect to Buyer and its
Subsidiaries; (iv) none of the Tax Returns of or with respect to Buyer or any of
its Subsidiaries is currently being audited or examined by any Governmental
Entity; and (v) no deficiency for any income or other material Taxes has been
assessed with respect to Buyer or any of its Subsidiaries which has not been
abated or paid in full.
SECTION 5.18 Disclosure. No representation or warranty by Buyer or
----------
Merger Subsidiary contained in this Agreement and no statement contained in any
certificate delivered by Buyer or Merger Subsidiary to the Company pursuant to
this Agreement contains any untrue statement of a material fact or omits to
state a material fact necessary to make the statements contained herein and
therein not misleading when taken together in light of the circumstances in
which they were made.
35
ARTICLE VI
COVENANTS OF THE COMPANY
The Company agrees that:
SECTION 6.1 Conduct of the Company. From the date hereof until the
----------------------
Effective Time, the Company and its Subsidiaries shall conduct their business in
the ordinary course and shall use their reasonable efforts to preserve intact
their business organizations and relationships with third parties and to keep
available the services of their present officers and employees. Without
limiting the generality of the foregoing other than as set forth on Schedule 6.1
of the Company Disclosure Schedule, as specifically contemplated by this
Agreement or with the written consent of Buyer or Merger Subsidiary (which
consent shall not be unreasonably withheld or delayed), from the date hereof
until the Effective Time, the Company will not (and will not cause or permit any
Subsidiary to):
(a) split, combine or reclassify any shares of capital stock,
declare, set aside or pay any dividend (other than regular quarterly
dividends and any dividend of a wholly-owned Subsidiary of the Company to
the Company or another wholly-owned Subsidiary of the Company) or other
distribution (whether in cash, stock or property or any combination
thereof) with respect to any shares of capital stock of the Company, or any
repurchase, redemption or other acquisition by the Company or any Subsid-
iary of the Company of any outstanding shares of capital stock or other
securities of, or other ownership interests in, the Company or any
Subsidiary of the Company;
(b) amend any term of any outstanding security of the Company or any
Subsidiary of the Company;
(c) except for working capital purposes pursuant to the Revolving
Credit Agreement, dated as of February 8, 1996, by and among the First
National Bank of Boston, Fleet Bank of Maine, Key Bank of Maine, Bank of
Scotland and Wright Express Corporation, and, except in the ordinary course
of business consistent with past practice pursuant to the Equipment Financ-
ing Agreement, dated as of February 7,
36
1996, by and between The First National Bank of Boston and Wright Express
Corporation, incur, assume or guarantee any indebtedness for borrowed money
of (x) except in the ordinary course of business in an amount not to exceed
$500,000 in the aggregate at any one time outstanding, the Company or any
Subsidiary of the Company or (y) any other Person;
(d) create, assume or suffer to exist any Lien on any material asset,
other than in the ordinary course of business;
(e) make any loan, advance or capital contribution to or invest in
any Person, other than in the ordinary course of business;
(f) cause any damage, destruction or other casualty loss (whether or
not covered by insurance) affecting the business or assets of the Company
or any Subsidiary of the Company which has had or could reasonably be
expected to have a Material Adverse Effect;
(g) (x) other than in the ordinary course of business consistent with
past practice, (i) enter into any transaction, commitment, contract or
agreement by the Company or any Subsidiary of the Company relating to their
assets or business (excluding the acquisition or disposition of any assets)
or (ii) relinquish any contract or other right, that (with respect to (ii))
has had or could reasonably be expected to have a Material Adverse Effect,
other than (with respect to each of (i) and (ii)) those expressly permitted
by this Agreement or (y) enter into any transaction, commitment, contract
or agreement to acquire or dispose of any assets of the Company or any
Subsidiary of the Company in excess of $150,000 in any individual
transaction or $750,000 in the aggregate;
(h) change, or apply to the SEC for, or request from the SEC any
change of, any method of accounting or accounting practice by the Company
or any Subsidiary of the Company, except for any such change required by
reason of a concurrent change in GAAP;
37
(i) (A) grant any severance or termination pay to any current or
former director or executive officer, or, other than in the ordinary course
of business, to any officer or any other employee of the Company or any
Subsidiary of the Company, (B) enter into any employment, consulting,
indemnification, severance, termination, deferred compensation or other
similar agreement (or any amendment to any such existing agreement) with
any current or former director or executive officer, or other than in the
ordinary course of business, with any officer or any other employee of the
Company or any Subsidiary of the Company, (C) other than in the ordinary
course of business, increase the benefits payable under any existing
severance or termination pay policies or employment agreements or
(D) increase the compensation, bonus or other benefits payable to any
current or former director or executive officer, or other than in the
ordinary course of business, to any officer or any other employee of the
Company or any Subsidiary of the Company;
(j) amend its certificate of incorporation or bylaws (or other
similar governing instrument);
(k) authorize for issuance, sell, deliver or agree to issue, sell or
deliver (whether through the issuance or granting of options, warrants,
commitments, subscriptions, rights to purchase or otherwise) any stock of
any class or any other securities or equity equivalents (including, without
limitation, any stock options or stock appreciation rights) of the Company,
except for the issuance of stock upon the exercise of Options outstanding
on the date of this Agreement;
(l) except as may be required pursuant to GAAP, revalue in any mate-
rial respect any of its assets, including, without limitation, writing down
the value of inventory or writing-off notes or accounts receivable other
than in the ordinary course of business;
(m) adopt a plan of complete or partial liquidation, dissolution,
merger, consolidation, restructuring, recapitalization or other
reorganization of
38
the Company or any of its Subsidiaries (other than the Merger);
(n) make or revoke any tax election or settle or compromise any tax
liability, in each case, material to the Company and its Subsidiaries taken
as a whole or change (or make a request to any taxing authority to change)
any material aspect of its method of accounting for tax purposes;
(o) subject to Section 6.1(q) below, pay, discharge or satisfy any
liabilities or obligations (absolute, accrued, asserted or unasserted,
contingent or otherwise), other than the payment, discharge or satisfaction
in the ordinary course of business of liabilities or obligations reflected
or reserved against in, or contemplated by, the consolidated financial
statements (or notes thereof) of the Company and its Subsidiaries or
incurred in the ordinary course of business consistent with past practice;
(p) except as otherwise permitted by paragraph (i) or as set forth on
Schedule 6.1(p) of the Company Disclosure Schedule, settle or compromise
any pending or threatened suit, action, or proceeding;
(q) enter into any agreement or understanding, whether oral or
written, with any Halmos Entity or Halmos Assign (as each such term is
defined in Section 7.3(c)); except for agreements or understandings in the
ordinary course necessary for the continued defense or prosecution of any
such pending litigation matters set forth in Schedule 4.11 of the Company
Disclosure Schedule or as disclosed in the Company SEC Documents; or
(r) take, authorize any of, or commit or agree to take any of, the
foregoing actions except as otherwise expressly permitted by this
Agreement.
SECTION 6.2 Stockholder Meeting; Proxy Material. The Company shall
-----------------------------------
cause a meeting of its stockholders (including any postponements or adjournments
thereto, the "Company Stockholder Meeting") to be duly called and held as soon
as reasonably practicable for the purpose of voting on the approval and adoption
of this Agreement and
39
the Merger. The Board of Directors of the Company shall recommend approval and
adoption of this Agreement and the Merger by the Company's stockholders;
provided that the Company's Board of Directors may withdraw, modify or change
- --------
such recommendation if it has determined, based upon the advice of outside legal
counsel to the Company, that such recommendation would be reasonably likely to
be inconsistent with the Board of Directors' fiduciary duties under applicable
law. The Company will (i) as promptly as practicable following the date of this
Agreement, prepare and file with the SEC, will use its reasonable efforts to
have cleared by the SEC and thereafter mail to its stockholders as promptly as
practicable, a proxy statement that will be the same proxy statement/prospectus
contained in the Form S-4 Registration Statement (as hereinafter defined) and a
form of proxy, in connection with the vote of the Company's stockholders with
respect to the Merger (such proxy statement/prospectus, together with any amend-
ments thereof or supplements thereto, in each case in the form or forms mailed
to the Company's stockholders, is herein called the "Company Proxy Statement"),
(ii) use its reasonable efforts to obtain the necessary approvals by its stock-
holders of this Agreement and the transactions contemplated hereby and (iii)
otherwise comply in all material respects with all legal requirements applicable
to such meeting. The Company may, if it withdraws, modifies or changes its
recommendation in accordance with this Section 6.2, delay the filing or mailing,
as the case may be, of the Company Proxy Statement or the holding of the Company
Stockholder Meeting, in each case only to the extent necessary to revise the
Company Proxy Statement to reflect such withdrawal, modification or change and,
in the case of the Company Stockholder Meeting, to provide the minimum notice
thereof required under applicable law, the Company Certificate of Incorporation
or the Company By-laws. In addition, the Company will upon reasonable advance
notice provide Buyer with all financial and other data regarding the Company as
may be reasonably requested by Buyer in connection with the proxy statements and
registration statements on Form S-4 relating to the transactions described in
Schedule 6.2 of the Buyer Disclosure Schedule. The Company acknowledges that
such proxy statements and registration statements may be required to include
such data concerning the Company, and that the Company Proxy Statement may be
required to
40
contain certain financial and other data concerning the other parties to such
transactions.
SECTION 6.3 Access to Information; Confidential Agreement. (a) From
---------------------------------------------
the date hereof until the Effective Time, the Company will give Buyer, its
counsel, financial advisors, auditors and other authorized representatives
reasonable access during normal business hours to the offices, properties, books
and records of the Company and the Subsidiaries of the Company, will furnish to
Buyer, its counsel, financial advisors, auditors and other authorized repre-
sentatives such financial and operating data and other information as such
Persons may reasonably request and will instruct the Company's employees, coun-
sel and financial advisors to cooperate with Buyer in its investigation of the
business of the Company and the Subsidiaries of the Company; provided that all
--------
requests for information, to visit plants or facilities or to interview the
Company's employees or agents should be directed to and coordinated with an
executive officer of the Company; and provided further that no investigation
--------
pursuant to this Section 6.3 shall affect any representation or warranty given
by the Company to Buyer hereunder and any information received by Buyer or its
representatives shall remain subject to the Confidentiality Agreement dated
February 13, 1996 between Buyer and the Company (the "Confidentiality
Agreement").
(b) The parties hereto agree that the Confidentiality Agreement shall
be hereby amended to provide that any provision therein which in any manner
limits, restricts or prohibits the voting or acquisition of Shares by Buyer or
any of its affiliates or the representation of Buyer's designees on the
Company's Board of Directors or which in any manner would be inconsistent with
this Agreement or the transactions contemplated hereby shall be amended as of
the date hereof to permit the acquisition of Shares pursuant to the Merger, the
voting of Shares at the Company Stockholder Meeting or to otherwise effect the
transactions contemplated hereby. The Confidentiality Agreement shall otherwise
remain in full force and effect.
SECTION 6.4 No Solicitation. (a) From the date of this Agreement
---------------
until the termination of this Agreement in accordance with its terms, the Compa-
ny and its Subsidiaries will not, and the Company will use its
41
reasonable best efforts to ensure that the respective officers, directors and
employees of the Company and its Subsidiaries, and any investment banker,
financial advisor, attorney, accountant or other representative or agent
retained by it or any of its Subsidiaries, will not (i) solicit, initiate or
encourage (including by way of furnishing information) any Acquisition Proposal
(as defined below) or (ii) participate or engage in negotiations or discussions,
or disclose any nonpublic information relating to the Company or any Subsidiary
of the Company or afford access to the properties, books or records of the
Company or any Subsidiary of the Company, regarding any Acquisition Proposal;
provided that, if the Company's Board of Directors determines, based upon the
- --------
advice of outside legal counsel to the Company, that the failure to engage in
such negotiations or discussions or provide such information would be reasonably
likely to be inconsistent with the Board of Directors' fiduciary duties under
applicable law, the Company may in response to an Acquisition Proposal and sub-
ject to compliance with Section 6.4(c), furnish information with respect to the
Company and its Subsidiaries pursuant to a confidentiality agreement and par-
ticipate in negotiations regarding such Acquisition Proposal. For purposes of
this Agreement, "Acquisition Proposal" means any inquiry, offer or proposal from
any person relating to any direct or indirect acquisition or purchase of a
substantial portion of the assets of the Company or any of its Subsidiaries or
of over 20% of any class of equity securities of the equity interest of the
Company or any of its Subsidiaries, any tender offer or exchange offer that if
consummated would result in any person beneficially owning 20% or more equity
interest of any class of equity securities of the Company or any of its Subsid-
iaries, any merger, consolidation, business combination, sale of substantially
all the assets, recapitalization, liquidation, dissolution or similar transac-
tion involving the Company or any of its Subsidiaries, other than the trans-
actions contemplated by this Agreement. Nothing contained in this Section 6.4
shall prohibit the Company or its Board of Directors from taking and disclosing
to the Company's stockholders a position with respect to a tender or exchange
offer by a third party pursuant to Rules 14d-9 and 14e-2(a) promulgated under
the Exchange Act or from making such disclosure to the Company's stockholders or
making such disclosure as may be required by applicable law; provided, however,
-------- -------
neither the Company nor its Board
42
of Directors nor any committee thereof shall, except as permitted by Section 6.2
or 6.4(b), withdraw, modify or change, or propose to withdraw, modify or change,
its recommendation of approval and adoption of this Agreement and the Merger or
approve or recommend, or propose to approve or recommend, an Acquisition Pro-
posal.
(b) Except as set forth in this Section 6.2 or Section 6.4(b),
neither the Company nor the Board of Directors of the Company nor any committee
thereof shall (x) withdraw, modify or change, or propose to withdraw, modify or
change, in a manner adverse to Buyer, the recommendation by such Board of
Directors or such committee of the approval and adoption of this Agreement and
the Merger, (y) approve or recommend, or propose to approve or recommend, any
Acquisition Proposal or (z) cause the Company to enter into any agreement with
respect to any Acquisition Proposal. Notwithstanding the foregoing, in the
event that the Board of Directors of the Company determines, based upon the
advice of outside legal counsel to the Company, that the failure to take any of
the actions contemplated by the preceding sentence would be reasonably likely to
be inconsistent with the Board of Directors' fiduciary duties, the Board of
Directors of the Company may withdraw, modify or change its recommendation of
approval and adoption of this Agreement and the Merger, approve or recommend a
Superior Proposal or cause the Company to enter into an agreement with respect
to a Superior Proposal; but in the case of approving, recommending or causing
the Company to enter into an agreement with respect to a Superior Proposal, only
at a time that is after the second day following Buyer's receipt of written
notice (a "Notice of Superior Proposal") advising Buyer that the Board of
Directors of the Company has received a Superior Proposal, specifying the
material terms and conditions of such Superior Proposal and identifying the
person making such Superior Proposal. In addition, if the Company enters into
an agreement with respect to a Superior Proposal and this Agreement is terminat-
ed pursuant to Section 10.1(vi)(B) or Section 10.1(vii), the Company shall
promptly pay, or cause to be paid, to Buyer, the Buyers' Expenses (as such term
is defined in Section 12.4). For purposes of this Agreement, a "Superior Pro-
posal" means any bona fide Acquisition Proposal to acquire, directly or indi-
rectly, for consideration consisting of cash and/or securities, more than 50% of
the shares of the Company common stock
43
then outstanding or all or substantially all the assets of the Company and
otherwise on terms which the Board of Directors of the Company determines in its
good faith judgment (based on the advice of a financial advisor of nationally
recognized reputation) to be more favorable to the Company's stockholders than
the Merger.
(c) In addition to the obligations of the Company set forth in
paragraphs (a) and (b) of this Section 6.4, the Company shall notify Buyer in
writing within one business day of any request for information or of any Acqui-
sition Proposal, or any inquiry with respect to or which would reasonably be
expected to result in an Acquisition Proposal, the material terms and conditions
of such request, Acquisition Proposal or inquiry. The Company will use it
reasonable best efforts to keep Buyer informed of the status and details (in-
cluding amendments or proposed amendments) of any such request, Acquisition Pro-
posal or inquiry.
SECTION 6.5 Conveyance Taxes. The Company shall timely pay any real
----------------
property transfer or gains, sales, use, transfer, value added, stock transfer
and stamp taxes, any transfer, recording, registration and other fees, and any
similar taxes (collectively, the "Conveyance Taxes") which become payable prior
to the Effective Time in connection with the transactions contemplated hereunder
that are required to be paid in connection therewith.
ARTICLE VII
COVENANTS OF BUYER
Buyer agrees that:
SECTION 7.1 Obligations of Merger Subsidiary. Buyer will take all
--------------------------------
action necessary to cause Merger Subsidiary to perform its obligations under
this Agreement and to consummate the Merger on the terms and conditions set
forth in this Agreement.
SECTION 7.2 Voting of Shares. Merger Subsidiary shall and Buyer
----------------
shall cause Merger Subsidiary to vote all Shares, if any, beneficially owned by
Merger Subsidiary or its affiliates in favor of adoption and
44
approval of the Merger and this Agreement at the Company Stockholder Meeting.
SECTION 7.3 Director and Officer Liability. (a) Buyer, Merger
------------------------------
Subsidiary and the Company agree that all rights to indemnification and all
limitations on liability existing in favor of any Indemnitee (as defined below)
as provided in the Company Certificate of Incorporation, Company By-laws or any
Indemnity Agreement (as hereinafter defined) shall survive the Merger and con-
tinue in full force and effect. To the extent permitted by (i) the DGCL, (ii)
the Company's Certificate of Incorporation and the Company's By-laws or (iii)
any agreement providing for indemnification by the Company or any Subsidiary of
the Company of any Indemnitee (A) in effect on the date of this Agreement (or
entered into thereafter in accordance with the provisions of Section 6.1 of this
Agreement) and listed on Schedule 7.3 of the Company Disclosure Schedule (unless
entered into after the date hereof in accordance with Section 6.1) or (B) in
effect on the date of this Agreement and listed in the Company SEC Documents
(each, an "Indemnity Agreement"), advancement of Expenses (as hereinafter de-
fined) pursuant to this Section 7.3 shall be mandatory rather than permissive
and the Surviving Corporation shall advance Costs (as defined in Section 7.3(b)
hereof) in connection with such indemnification. Buyer shall, and shall cause
the Surviving Corporation to, expressly assume and honor in accordance with
their terms all Indemnity Agreements.
(b) In addition to the other rights provided for in this Section 7.3
and not in limitation thereof (but without in any way limiting or modifying the
obligations of any insurance carrier contemplated by Section 7.3(d)), for ten
years from and after the Effective Time, Buyer shall, and shall cause the
Surviving Corporation to, to the fullest extent permitted by applicable law, (i)
indemnify and hold harmless the individuals who on or prior to the Effective
Time were officers, directors or employees of the Company or any of its Subsid-
iaries, and the heirs, executors, trustees, fiduciaries and administrators of
such officers, directors or employees (collectively, the "Indemnitees," which
term shall not include any Halmos Entity or other Person described or referred
to in Section 7.3(c) hereof, even if any such Halmos Entity or other Person is
or was an officer, director or employee of the Company) against all losses,
Expenses (as
45
hereinafter defined), claims, damages, liabilities, judgments, or amounts paid
in settlement (collectively, "Costs") in respect to any threatened, pending or
completed claim, action, suit or proceeding, whether criminal, civil, adminis-
trative or investigative based on, or arising out of or relating to the fact
that such person is or was a director, officer or employee of the Company or any
of its Subsidiaries and arising out of acts or omissions occurring on or prior
to the Effective Time (including, without limitation, in respect of acts or
omissions in connection with this Agreement and the transactions contemplated
hereby) (an "Indemnifiable Claim") and (ii) advance to such Indemnitees all
Expenses incurred in connection with any Indemnifiable Claim promptly after
receipt of reasonably detailed statements therefor; provided, that, except as
--------
otherwise provided pursuant to any Indemnity Agreement, the person to whom
Expenses are to be advanced provides an undertaking to repay such advances if it
is ultimately determined that such person is not entitled to indemnification
from Buyer or the Surviving Corporation. In the event any Indemnifiable Claim
is asserted or made within such ten year period, all rights to indemnification
and advancement of Expenses in respect of any such Indemnifiable Claim shall
continue until such Indemnifiable Claim is disposed of or all judgments, orders,
decrees or other rulings in connection with such Indemnifiable Claim are fully
satisfied; provided, however, that Buyer shall not be liable for any settlement
-------- -------
effected without its written consent (which consent shall not be unreasonably
withheld or delayed). Except as otherwise may be provided pursuant to any
Indemnity Agreement, the Indemnitees as a group may retain only one law firm
with respect to each related matter except to the extent there is, in the
opinion of counsel to an Indemnitee, under applicable standards of professional
conduct, a conflict on any significant issue between positions of any two or
more Indemnitees; provided, that, any law firm or firms so retained shall be
-------- ----
reasonably acceptable to Buyer. For the purposes of this Section 7.3, "Expens-
es" shall include reasonable attorneys' fees and all other costs, charges and
expenses paid or incurred in connection with investigating, defending, being a
witness in or participating in (including on appeal), or preparing to defend, be
a witness in or participate in any Indemnifiable Claim.
46
(c) Notwithstanding the foregoing, with respect to any Indemnifiable
Claim commenced or threatened by or on behalf of, (i) Peter Halmos, Steven
Halmos, Halmos Trading and Investment Company, The Halmos Foundation, Creditline
Corporation, Continuity Marketing Corporation and High Plains Capital Corpo-
ration (collectively, the "Halmos Entities"), (ii) any heirs, executors, succes-
sors, family members, assigns and any other Person claiming by, through or be-
cause of, a Halmos Entity ("Halmos Assign"), (iii) a Person that directly or
indirectly, whether through the ownership of voting securities or otherwise,
controls or is controlled by or is under common control with any Halmos Entity,
(iv) any Person in which any Halmos Entity or Halmos Assign has a 10% ownership
interest, (v) any employee or agent as of the date of this Agreement of any
Halmos Entity or (vi) any Person acting at the direct or indirect request of any
Halmos Entity or Halmos Assign, against any Indemnitee asserted at any time
after ten years after the Effective Time, Buyer shall, and shall cause the Sur-
viving Corporation to, indemnify and hold harmless and advance Expenses to such
Indemnitees to the extent provided in Section 7.3(b), but without any time limit
on the period for which the obligation of Buyer pursuant to this Section 7.3(c)
shall be in effect.
(d) For three years from the Effective Time, Buyer will, and will
cause the Surviving Corporation to maintain in effect the Company's current
directors' and officers' liability insurance covering those Persons who are cur-
rently covered by the Company's directors' and officers' liability insurance
policy (a copy of which has been made available to Buyer), or Buyer may
substitute therefor policies for directors' and officers' liability insurance
covering such Persons for at least the same coverage with respect to matters
occurring prior to the Effective Time; provided, however, that in no event shall
--------
Buyer be required to expend in any one year an amount in excess of $887,040
(i.e., the amount that is 200% of the annual premiums currently paid by the
Company for such insurance); provided, further, that if the annual premiums of
--------
such insurance coverage exceed such amount, Buyer shall be obligated to cause
the Surviving Corporation to obtain a policy with the greatest coverage avail-
able for a cost not exceeding such amount. In the event that any Indemnitee is
entitled to coverage under an officers' and directors' liability insurance
policy pursuant to this
47
Section 7.3(d) and such policy has lapsed, terminated, been repudiated or is
otherwise in breach or default as a result of Buyer's failure to maintain and
fulfill its obligations pursuant to such policy as provided in this Section
7.3(d), Buyer shall, and shall cause the Surviving Corporation to pay to the
Indemnitee such amounts and provide any other coverage or benefits as the Indem-
nitee shall have received pursuant to such policy. Buyer agrees that, should
the Surviving Corporation fail to comply with the obligations of this Section
7.3, Buyer shall be responsible therefor.
(e) Notwithstanding any other provisions hereof, the obligations of
the Company, the Surviving Corporation and Buyer contained in this Section 7.3
shall be binding upon the successors and assigns of Buyer and the Surviving
Corporation. In the event the Company or the Surviving Corporation or any of
their respective successors or assigns (i) consolidates with or merges into any
other Person or (ii) transfers all or substantially all of its properties or
assets to any Person, then, and in each case, proper provision shall be made so
that successors and assigns of the Company or the Surviving Corporation, as the
case may be, honor the indemnification obligations set forth in this Section
7.3.
(f) The obligations of the Company, the Surviving Corporation, and
Buyer under this Section 7.3 shall not be terminated or modified in such a man-
ner as to adversely affect any Indemnitee to whom this Section 7.3 applies with-
out the consent of such affected Indemnitee (it being expressly agreed that the
Indemnitees to whom this Section 7.3 applies shall be third party beneficiaries
of this Section 7.3).
(g) Buyer shall, and shall cause the Surviving Corporation to,
advance all Expenses to any Indemnitee incurred by enforcing the indemnity or
other obligations provided for in this Section 7.3.
ARTICLE VIII
COVENANTS OF BUYER, MERGER SUBSIDIARY
AND THE COMPANY
48
The parties hereto agree that:
SECTION 8.1 Reasonable Best Efforts. Subject to the terms and
-----------------------
conditions of this Agreement, each party will use its reasonable best efforts to
take, or cause to be taken, all actions and to do, or cause to be done, all
things necessary, proper or advisable under applicable laws and regulations to
consummate the transactions contemplated by this Agreement.
SECTION 8.2 Certain Filings. The Company and Buyer shall cooperate
---------------
with one another (a) in connection with the preparation of the Proxy Statement
and the Form S-4 Registration Statement, and (b) in determining whether any
action by or in respect of, or filing with, any Governmental Entity is required,
or any actions, consents, approvals or waivers are required to be obtained from
parties to any material contracts, in connection with the consummation of the
transactions contemplated by this Agreement and (c) in seeking any such actions,
consents, approvals or waivers or making any such filings, furnishing infor-
mation required in connection therewith or with the Company Proxy Statement or
the Form S-4 Registration Statement and seeking timely to obtain any such ac-
tions, consents, approvals or waivers.
SECTION 8.3 Public Announcements. Buyer, Merger Subsidiary and the
--------------------
Company will consult with each other before issuing any press release or making
any public statement with respect to this Agreement and the transactions contem-
plated hereby and, except as may be required by applicable law or any listing
agreement with any national securities exchange or foreign securities exchange,
as determined by Buyer, Merger Subsidiary or the Company, as the case may be,
will not issue any such press release or make any such public statement prior to
such consultation.
SECTION 8.4 Conveyance Taxes. Buyer and the Company shall cooperate
----------------
in the preparation, execution and filing of all Tax Returns, questionnaires,
applications, or other documents regarding any Conveyance Taxes which become
payable in connection with the transactions contemplated hereunder that are
required to be filed on or before the Effective Time.
49
SECTION 8.5 Further Assurances. At and after the Effective Time, the
------------------
officers and directors of the Surviving Corporation will be authorized to
execute and deliver, in the name and on behalf of the Company or Merger
Subsidiary, any deeds, bills of sale, assignments or assurances and to take and
do, in the name and on behalf of the Company or Merger Subsidiary, any other
actions and things to vest, perfect or confirm of record or otherwise in the
Surviving Corporation any and all right, title and interest in, to and under any
of the rights, properties or assets of the Company acquired or to be acquired by
the Surviving Corporation as a result of, or in connection with, the Merger.
SECTION 8.6 Employee Matters. (a) For a period of one year
----------------
immediately following the Effective Time, Buyer agrees to cause the Surviving
Corporation and its Subsidiaries to provide to all active employees of the
Company as of the Effective Time who continue to be employed by the Company
("Continuing Employees") coverage under group medical, dental, 401(k) savings,
disability insurance, life insurance, accidental death and disability, and
vacation plans or arrangements which are, in the aggregate, substantially simi-
lar to the Plans providing such benefits to the employees immediately prior to
the Effective Time.
(b) Buyer shall, and shall cause its Subsidiaries to, honor in
accordance with their terms all agreements, contracts, arrangements, commitments
and understandings described in Schedule 8.6 of the Company Disclosure Schedule.
(c) For a period of one year immediately following the Closing Date,
Buyer agrees to cause the Surviving Corporation and its Subsidiaries to provide
to all active employees of the Company at the Closing Date which may be affected
by any reduction in force subsequent to the Closing Date the benefits set forth
in the Severance Policy adopted by the Board of Directors of the Company in
connection with the July 1995 restructuring and applied in the September 1995
and December 1995 restructurings and adopted by resolution for any reductions in
force in 1996 at the February 6, 1996 meeting of the Board of Directors.
50
SECTION 8.7 Company Proxy Statement and Registration Statement.
--------------------------------------------------
Buyer will, as promptly as practicable, prepare and, following receipt of
notification from the SEC that it has no further comments on the Company Proxy
Statement, file with the SEC a registration statement on Form S-4 (the "Form S-4
Registration Statement"), containing the Company Proxy Statement, and the
prospectus in connection with the registration under the Securities Act of Buyer
Common Shares issuable upon conversion of the Shares and the other transactions
contemplated hereby. Buyer will cooperate with the Company in the preparation
and filing of the Company Proxy Statement and will provide the Company with all
financial and other data concerning Buyer (including, if required, pro forma
financial statements and financial and other data regarding the other parties to
the transactions described in Schedule 6.2 of the Buyer Disclosure Schedule) as
is necessary in order for the Company to prepare the Company Proxy Statement.
Buyer and the Company will, and will cause their accountants and lawyers to, use
their best efforts to have or cause the Form S-4 Registration Statement declared
effective as promptly as practicable, including, without limitation, causing
their accountants to deliver necessary or required instruments such as opinions
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.
SECTION 8.8 Tax-Free Reorganization Treatment. The Company, Buyer
---------------------------------
and Merger Subsidiary shall execute and deliver to Skadden, Arps, Slate, Meagher
& Flom, counsel to the Company, a certificate substantially in the form attached
hereto as Exhibit 2 or Exhibit 3, as the case may be, (the "Buyer Tax Certifi-
cate" and the "Company Tax Certificate", as the case may be) at such time or
times as reasonably requested by such law firm in connection with its delivery
of an opinion with respect to the transactions contemplated hereby, and shall
provide a copy thereof to Buyer and the Company. Prior to the Effective Time,
none of the Company, Buyer and Merger Subsidiary shall take or cause to be taken
any action which would cause to be untrue (or fail to take or cause not to be
taken any action which would cause to be true) any of the information, represen-
tations or covenants in Exhibit 2 or Exhibit 3, as the case may be.
51
SECTION 8.9 Notification of Certain Matters. The Company shall give
-------------------------------
prompt notice to Buyer and Merger Subsidiary, and Buyer and Merger Subsidiary
shall give prompt notice to the Company, of (i) the occurrence or nonoccurrence
of any event the occurrence or nonoccurrence of which would be likely to cause
any representation or warranty contained in this Agreement to be untrue or
inaccurate in any material respect at or prior to the Effective Time, (ii) any
material failure of the Company, Buyer or Merger Subsidiary, as the case may be,
to comply with or satisfy in any material respect any covenant, condition or
agreement to be complied with or satisfied by it hereunder, (iii) any notice of,
or other communication relating to, a default or event which, with notice or
lapse of time or both, would become a default, received by it or any of its
subsidiaries subsequent to the date of this Agreement and prior to the Effective
Time, under any material contract or agreement, (iv) any notice or other
communication from any third party alleging that the consent of such third party
is or may be required in connection with the transactions contemplated by this
Agreement, or (v) any Material Adverse Effect, other than changes resulting from
general economic conditions; provided, however, that the delivery of any notice
--------
pursuant to this Section 8.9 shall not cure such breach or noncompliance or
limit or otherwise affect the remedies available hereunder to the party
receiving such notice.
SECTION 8.10 Blue Sky Permits. Buyer shall use its best efforts to
----------------
obtain, prior to the effective date of the Form S-4 Registration Statement, all
necessary state securities laws or "blue sky" permits and approvals required to
carry out the transactions contemplated by this Agreement and the Merger, and
will pay all expenses incident thereto.
SECTION 8.11 NYSE Listing. Buyer shall use its best efforts to cause
------------
the shares of Buyer Common Stock constituting the Merger Consideration to be
listed on the NYSE, subject to notice of official issuance thereof.
SECTION 8.12 Pooling Letter. (a) Buyer shall use its best efforts
--------------
to cause Ernst & Young LLP, its independent auditors, to deliver to Buyer a
letter to the effect that pooling of interests accounting (under Accounting
Principles Board Opinion No. 16) is appropriate
52
for the Merger, provided that the Merger is consummated in accordance with the
terms and conditions of this Agreement, and the Company shall use its best ef-
forts to cause its independent auditors, Price Waterhouse LLP, to cooperate
fully with Ernst & Young LLP (including, without limitation, by delivering to
the Company a letter substantially similar to Ernst & Young LLP's letter to
Buyer) in connection with the delivery to Buyer of such letter.
(b) The Company shall use its best efforts to cause Price Waterhouse
LLP to deliver to the Company a letter to the effect that pooling of interests
accounting (under Accounting Principles Board Opinion No. 16) is appropriate for
the Merger, provided that the Merger is consummated in accordance with the terms
and conditions of this Agreement, and Buyer shall use its best efforts to cause
Ernst & Young LLP to cooperate fully with Price Waterhouse LLP (including,
without limitation, by delivering to Buyer a letter substantially similar to
Price Waterhouse LLP's letter to the Company) in connection with the delivery to
the Company of such letter.
SECTION 8.13 Pooling. The Company and Buyer each agrees that it will
-------
not knowingly take any action which could prevent the Merger from being
accounted for as a pooling of interests for accounting purposes (under
Accounting Principles Board Opinion No. 16) and the Company will bring to the
attention of Buyer, and Buyer will bring to the attention of the Company, any
actions, or agreements or understandings, whether written or oral, that could be
reasonably likely to prevent Buyer from accounting for the Merger as a pooling
of interests. The Company will use its reasonable best efforts to inform all
Company Affiliates and other relevant employees as to those actions that should
or should not be taken by such persons so that the Merger will be accounted for
as a pooling of interests.
SECTION 8.14 SEC Filings. Each of Buyer and the Company shall
-----------
promptly provide the other party (or its counsel) with copies of all filings
made by the other party or any of its Subsidiaries with the SEC or any other
state or federal Governmental Entity in connection with this Agreement and the
transactions contemplated hereby.
53
SECTION 8.15 Affiliate Agreements. Buyer and Merger Subsidiary shall
--------------------
have received the Affiliate Letters from the Company Affiliates.
SECTION 8.16 Affiliates. Promptly upon the Company obtaining
----------
knowledge of persons who, to the best knowledge of the Company, following the
date of this Agreement until the Effective Time, become "affiliates" of the
Company for purposes of Rule 145 of the Securities Act, the Company shall use
its reasonable best efforts to identify any such person in writing to Buyer, and
will use its reasonable best efforts to cause such persons prior to the mailing
of the Company Proxy Statement, or if thereafter as soon as reasonably practi-
cable, to deliver to Buyer an Affiliate Letter; provided, however, that the
-------- -------
Company will not affirmatively, without the prior written consent of Buyer, take
any action, by hiring or appointing a new officer or director or otherwise, so
as to cause any person to become an "affiliate" unless such person executes an
Affiliate Letter prior thereto.
ARTICLE IX
CONDITIONS TO THE MERGER
SECTION 9.1 Conditions to the Obligations of Each Party. The
-------------------------------------------
obligations of the Company, Buyer and Merger Subsidiary to consummate the Merger
are subject to the satisfaction on or prior to the Effective Time of the fol-
lowing conditions, except to the extent permitted by applicable law, that such
conditions may be waived:
(i) Stockholder Approval. The Merger shall have been duly
--------------------
approved by a majority of the votes cast by stockholders of the Company
entitled to vote thereon in accordance with applicable law and the Company
Certificate of Incorporation and Company By-laws.
(ii) Listing of Buyer Common Stock. The shares of Buyer Common
-----------------------------
Stock issuable in accordance with the Merger shall have been approved for
listing on the NYSE, subject to official notice of issuance.
54
(iii) Registration Statement. The Form S-4 Registration
----------------------
Statement shall have become effective in accordance with the provisions of
the Securities Act, and no order suspending such effectiveness shall have
been issued and remain in effect.
(iv) HSR Act. Any applicable waiting period under the HSR Act
-------
relating to the Merger shall have expired.
(v) No Injunction. No provision of any applicable law or
-------------
regulation and no judgment, injunction, order or decree shall prohibit the
consummation of the Merger or any transactions contemplated hereby.
(vi) Pooling. Buyer shall have received a letter from Ernst &
-------
Young LLP and the Company shall have received a letter from Price Water-
house LLP each to the effect that pooling of interests accounting (under
Accounting Principles Board Opinion No. 16) is appropriate for the Merger,
provided that the Merger is consummated in accordance with the terms of
this Agreement; provided, further, that the foregoing shall not be a condi-
-------- -------
tion to the Company's obligations if either Price Waterhouse LLP or Ernst &
Young LLP is unable to deliver such letter as a result of the Company
having breached the Company's representation set forth in Section 4.21 or
the Company's covenants set forth in Sections 8.12, 8.13 or 8.16 or the
Company or any of its affiliates having taken or failed to take any other
action, in any such case that would prevent, in the opinion of such firm,
Buyer from accounting for the Merger as a pooling of interests.
SECTION 9.2 Conditions to the Obligations of the Company. The
--------------------------------------------
obligations of the Company to consummate the Merger are subject to the
satisfaction on or prior to the Effective Time of the following conditions,
except to the extent permitted by applicable law, that such conditions may be
waived:
(i) Performance of Obligations Buyer and Merger Subsidiary.
------------------------------------------------------
Each of Buyer and Merger Subsidiary will have performed in all material
respects its agreements and covenants contained in or contem
55
plated by this Agreement which are required to be performed by it at or
prior to the Effective Time.
(ii) Representations and Warranties. The representations and
------------------------------
warranties of Buyer and Merger Subsidiary set forth in this Agreement shall
be true and correct in all material respects (i) on and as of the date
hereof and (ii) on and as of the Closing Date with the same effect as
thought such representations and warranties had been made on and as of the
Closing Date (except for representations and warranties that expressly
speak only as of a specific date or time which need only be true and
correct as of such date and time).
(iii) Closing Certificate. The Company shall have received a
-------------------
certificate signed by the chief executive officer of Buyer, dated the
Closing Date, to the effect that, to the best of such officer's knowledge,
the conditions set forth in Section 9.2(i) and 9.2(ii) hereof have been
satisfied.
(iv) Tax Opinion. The Company shall have received an opinion of
-----------
Skadden, Arps, Slate, Meagher & Flom, counsel to the Company, in form and
substance reasonably satisfactory to the Company, dated as of the Effective
Time, substantially to the effect that on the basis of facts, representa-
tions and assumptions set forth in such opinion which are consistent with
the state of facts then existing, the Merger will be treated as a
reorganization within the meaning of Section 368(a) of the Code, and,
accordingly, for United States federal income tax purposes, that:
(A) no gain or loss will be recognized by the Company, Buyer or
Merger Subsidiary as a result of the Merger;
(B) no gain or loss will be recognized by a stockholder of the
Company whose Shares are exchanged solely for Buyer Common Stock
pursuant to the Merger (except with respect to cash received by a
holder of Shares in lieu of a fractional share interest in Buyer
Common Stock);
56
(C) the tax basis of the Buyer Common Stock received by a holder of
Shares in the Merger will be the same as the tax basis of the
Shares surrendered in exchange therefor (reduced by any amount
allocable to a fractional share interest in Buyer Common Stock
for which cash is received); and
(D) the holding period of the shares of Buyer Common Stock received
by a holder of Shares in the Merger will include the period
during which such Shares surrendered in exchange therefor were
held, provided that such Shares were held as capital assets at
the Effective Time of the Merger.
In rendering such opinion, such firm may require and rely upon
representations contained in the Buyer Tax Certificate, the Company Tax
Certificate and such other certificates from such other persons as such firm may
require.
SECTION 9.3 Conditions to the Obligations of Buyer and Merger
-------------------------------------------------
Subsidiary. The obligations of Buyer and Merger Subsidiary to consummate the
- ----------
Merger are subject to the satisfaction on or prior to the Effective Time of the
following conditions, except to the extent permitted by applicable law, that
such conditions may be waived:
(i) Performance of Obligations the Company. The Company will
--------------------------------------
have performed in all material respects its agreements and covenants
contained in or contemplated by this Agreement which are required to be
performed by it at or prior to the Effective Time.
(ii) Representations and Warranties. The representations and
------------------------------
warranties of the Company set forth in this Agreement shall be true and
correct in all material respects (i) on and as of the date hereof and (ii)
on and as of the Closing Date with the same effect as though such
representations and warranties had been made on and as of the Closing Date
(except for representations and warranties that
57
expressly speak only as of a specific date or time which need only be true
and correct as of such date and time).
(iii) Closing Certificate. Buyer and Merger Subsidiary shall
-------------------
have received a certificate signed by the chief executive officer of the
Company, dated the Closing Date, to the effect that, to the best of such
officer's knowledge, the conditions set forth in Section 9.3(i) and 9.3(ii)
hereof have been satisfied.
(iv) Affiliate Agreements. Each Company Affiliate shall have
--------------------
performed his or its respective obligations under the applicable Affiliate
Letter.
ARTICLE X
TERMINATION
SECTION 10.1 Termination. This Agreement may be terminated and the
-----------
Merger may be abandoned at any time prior to the Effective Time (notwithstanding
any approval of this Agreement by the stockholders of the Company):
(i) by mutual written consent of the Company and Buyer;
(ii) by either the Company or Buyer, if the Merger has not been
consummated by December 31, 1996 (as such date may be extended by mutual
agreement or pursuant to the proviso to this sentence, the "Outside Termi-
nation Date"); provided, however, that the right to terminate this
--------
Agreement under this paragraph shall not be available to any party whose
failure to fulfill any obligation under this Agreement has been the cause
of, or resulted in, the failure to meet the date requirements of this para-
graph;
(iii) by either the Company or Buyer, if there shall be any law or
regulation that makes consummation of the Merger illegal or if any
judgment, injunction, order or decree enjoining Buyer or the Company from
consummating the Merger is entered and
58
such judgment, injunction, order or decree shall become final and
nonappealable;
(iv) by the Company if (A) there shall have been a breach of any
representation or warranty on the part of Buyer or Merger Subsidiary set
forth in this Agreement, or if any representation or warranty of Buyer or
Merger Subsidiary shall have become untrue, in either case such that the
condition set forth in Section 9.2(ii) would be incapable of being
satisfied by the Outside Termination Date or (B) there shall have been a
breach by Buyer or Merger Subsidiary of any of their respective covenants
or agreements hereunder having a Material Adverse Effect on Buyer or
materially adversely affecting (or materially delaying) the consummation of
the Merger, and Buyer or Merger Subsidiary, as the case may be, has not
cured such breach within twenty business days after notice by the Company
thereof;
(v) by Buyer and Merger Subsidiary if (A) there shall have been a
breach of any representation or warranty on the part of the Company set
forth in this Agreement, or if any representation or warranty of the
Company shall have become untrue, in either case such that the condition
set forth in Section 9.3(ii) would be incapable of being satisfied by the
Outside Termination Date or (B) there shall have been a breach by the
Company of its covenants or agreements hereunder having a Material Adverse
Effect on the Company or materially adversely affecting (or materially
delaying) the consummation of the Merger, and the Company has not cured
such breach within twenty business days after notice by Buyer or Merger
Subsidiary thereof;
(vi) by Buyer or Merger Subsidiary, if (A) the Board of Directors of
the Company or any committee thereof shall have withdrawn, modified or
changed in a manner adverse to Buyer or Merger Subsidiary its
recommendation of the Merger or this Agreement or approved or recommended a
Superior Proposal or (B) the Company shall have entered into a definitive
agreement with respect to an Acquisition Proposal;
(vii) by the Company, upon entering into a definitive agreement in
accordance with Section
59
6.4(b), provided (x) it has complied with all provisions of Section 6.4,
including the notice provisions therein, and (y) that it makes simultaneous
payment of Buyer's Expenses (as defined in Section 12.4); or
(viii) by Buyer, Merger Subsidiary or the Company, if the Company's
stockholders do not approve the Merger at the Company Stockholder Meeting.
The party desiring to terminate this Agreement pursuant to this Section 10.1
(other than with respect to Section 10.1(i)) shall give written notice of such
termination to the other party.
SECTION 10.2 Effect of Termination. If this Agreement is terminated
---------------------
pursuant to Section 10.1 hereof, this Agreement shall become void and of no
effect with no liability on the part of any party hereto; provided that (i) the
--------
agreements contained in Sections 4.16, 5.6, 10.2 and 12.4, hereof shall survive
the termination hereof; (ii) the Confidentiality Agreement shall remain in full
force and effect and Section 6.3(b) hereof shall have no binding effect whatso-
ever; and (iii) nothing contained in this Section 10.2 shall relieve any party
from liability for any breach of this Agreement.
ARTICLE XI
DEFINED TERMS
For the purposes of this Agreement, the following terms shall have the
following respective meanings:
"Active Subsidiary" shall have the meaning set forth in Section
4.6(a).
"Affiliate Letter" shall have the meaning set forth in the
Introduction.
"Agreement" shall have the meaning set forth in the Introduction.
"Acquisition Proposal" shall have the meaning set forth in Section
6.4.(a).
60
"Affiliates" shall have the meaning set forth in Section 8.9.
"Average Stock Price" shall have the meaning set forth in Section
1.2(a).
"blue sky" shall have the meaning set forth in Section 8.10.
"Buyer" shall have the meaning set forth in the Introduction.
"Buyer Certificates" shall have the meaning set forth in Section
1.3(a).
"Buyer Common Stock" shall have the meaning set forth in the
Introduction.
"Buyer Disclosure Schedule" shall have the meaning set forth in
Section 5.1.
"Buyer Preferred Stock" shall have the meaning set forth in Section
5.9.
"Buyer's Expenses" shall have the meaning set forth in Section
12.4(d).
"Buyer SEC Documents" shall have the meaning set forth in Section
5.12.
"Buyer Securities" shall have the meaning set forth in Section 5.9.
"Buyer Tax Certificate" shall have the meaning set forth in Section
8.8.
"Buyer's Accountants" shall have the meaning set forth in Section
8.12(a).
"Certificate of Merger" shall have the meaning set forth in Section
1.1(b).
"Closing" shall have the meaning set forth in Section 2.1.
"Closing Date" shall have the meaning set forth in Section 2.1.
61
"Code" shall have the meaning set forth in the Introduction.
"Company" shall have the meaning set forth in the Introduction.
"Company Affiliate" shall have the meaning set forth in Section the
Introduction.
"Company Affiliate Letter" shall have the meaning set forth in the
Introduction.
"Company By-laws" shall have the meaning set forth Section 3.2.
"Company Certificate of Incorporation" shall have the meaning set
forth in Section 3.1.
"Company Disclosure Schedule" shall have the meaning set forth in
Section 4.1.
"Company Proxy Statement" shall have the meaning set forth in Section
6.2(i).
"Company SEC Documents" shall have the meaning set forth in Section
4.7.
"Company Securities" shall have the meaning set forth in Section 4.5.
"Company Stock Plans" shall have the meaning set forth in Section
1.10.
"Company Stockholder Meeting" shall have the meaning set forth in
Section 6.2.
"Company Tax Certificate" shall have the meaning set forth in Section
8.8.
"Company's Accountants" shall have the meaning set forth in Section
8.12(a).
"Company's Expenses" shall have the meaning set forth in Section
12.4(e).
62
"Confidentiality Agreement" shall have the meaning set forth in
Section 6.3(a).
"Continuing Employees" shall have the meaning set forth in Section
8.6(a).
"Conversion Number" shall have the meaning set forth in Section
1.2(a).
"Conveyance Taxes" shall have the meaning set forth in Section 6.5.
"Costs" shall have the meaning set forth in Section 7.3(b).
"DGCL" shall have the meaning set forth in Section 1.1(a).
"Effective Time" shall have the meaning set forth in Section 1.1(b).
"employee pension benefit plan" shall have the meaning set forth in
Section 4.13(a).
"employee welfare benefit plan" shall have the meaning set forth in
Section 4.13(a).
"Environmental Law" shall have the meaning set forth in Section
4.17(c).
"ERISA" shall have the meaning set forth in Section 4.13(a).
"ERISA Affiliate" shall have the meaning set forth in Section 4.13(a).
"ERISA Plans" shall have the meaning set forth in Section 4.13(a).
"Exchange Act" shall have the meaning set forth in Section 4.3.
"Exchange Agent" shall have the meaning set forth in Section 1.3(a).
"Exchange Fund" shall have the meaning set forth in Section 1.3(a).
63
"Expenses" shall have the meaning set forth in Section 7.3(b).
"Form S-4 Registration Statement" shall have the meaning set forth in
Section 8.7.
"GAAP" shall have the meaning set forth in Section 4.8.
"Governmental Entity" shall have the meaning set forth in Section 4.3.
"Halmos Entities" shall have the meaning set forth in Section
7.3(c)(i).
"Halmos Assign" shall have the meaning set forth in Section
7.3(c)(iii).
"HSR Act" shall have the meaning set forth in Section 4.3.
"Indemnifiable Claim" shall have the meaning set forth in Section
7.3(b).
"Indemnitees" shall have the meaning set forth in Section 7.3(b).
"Indemnity Agreement" shall have the meaning set forth in Section
7.3(a).
"Intangible Property" shall have the meaning set forth in Section
4.19(a).
"Licenses" shall have the meaning set forth in Section 4.1.
"Lien" shall have the meaning set forth in Section 4.4.
"Material Adverse Effect" shall have the meaning set forth in Section
4.1.
"Material Contracts" shall have the meaning set forth in Section 4.20.
"Measurement Period" shall have the meaning set forth in Section
1.2(a).
64
"Merger" shall have the meaning set forth in Section 1.1(a).
"Merger Consideration" shall have the meaning set forth in Section
1.2(a).
"Merger Subsidiary" shall have the meaning set forth in the
Introduction.
"Notice of Superior Proposal" shall have the meaning set forth in
Section 6.4(b).
"NYSE" shall have the meaning set forth in Section 1.2(a).
"Option" shall have the meaning set forth in Section 1.10.
"Outside Termination Date" shall have the meaning set forth in Section
10.1(ii).
"PBGC" shall have the meaning set forth in Section 4.13(c).
"Person" shall have the meaning set forth in Section 1.4.
"Plans" shall have the meaning set forth in Section 4.13(a)
"Preferred Stock" shall have the meaning set forth in Section 4.5.
"SafeCard" shall have the meaning set forth in Section 4.20.
"SEC" shall have the meaning set forth in Section 4.7.
"Secretary of State" shall have the meaning set forth in Section
1.1(b).
"Securities Act" shall have the meaning set forth in the Introduction.
"Share Certificates" shall have the meaning set forth in Section
1.3(b).
65
"Shares" shall have the meaning set forth in the Introduction.
"single employer" shall have the meaning set forth in Section 4.13(a).
"Subsidiary" shall have the meaning set forth in Section 4.6(a).
"Substitute Option" shall have the meaning set forth in Section 1.10.
"Surviving Corporation" shall have the meaning set forth in Section
1.1(a).
"Tax Return" shall have the meaning set forth in Section 4.12(b)(ii).
"Taxes" shall have the meaning set forth in Section 4.12(b)(i).
"Third Party" shall have the meaning set forth in Section 12.4(e).
"Third Party Acquisition" shall have the meaning set forth in Section
12.4(e).
ARTICLE XII
MISCELLANEOUS
SECTION 12.1 Notices. All notices, requests and other communications
-------
to any party hereunder shall be in writing (including telecopy or similar
writing) and shall be given,
if to Buyer or Merger Subsidiary, to:
CUC International, Inc.
707 Summer Street
Stamford, CT 06901
Telecopy: (203) 348-1982
Attention: Amy N. Lipton, Esq.
66
with a copy to:
Weil, Gotshal & Manges LLP
767 Fifth Avenue
New York, New York 10153
Telecopy: (212) 310-8007
Attention: Howard Chatzinoff, Esq.
if to the Company, to:
Ideon Group, Inc.
7596 Centurion Parkway
Jacksonville, Florida 32256
Telecopy: (904) 218-1850
Attention: Mr. Eugene Miller, Chairman of
the Board and Chief Executive Officer
with a copy to:
Skadden, Arps, Slate, Meagher & Flom
919 Third Avenue
New York, New York 10022
Telecopy: (212) 735-2000
Attention: Roger S. Aaron, Esq.
or such other address or telecopy number as such party may hereafter specify for
the purpose by notice to the other parties hereto. Each such notice, request or
other communication shall be effective (i) if given by telecopy, when such
telecopy is transmitted to the telecopy number specified in this Section 11.1
and the appropriate telecopy confirmation is received or (ii) if given by any
other means, when delivered at the address specified in this Section 12.1.
SECTION 12.2 Survival of Representations and Warranties. The
------------------------------------------
representations and warranties contained herein and in any certificate or other
writing delivered pursuant hereto shall not survive the Effective Time or the
termination of this Agreement. All covenants and agreements contained herein
which by their terms are to be performed in whole or in part subsequent to the
Effective Time shall survive the Merger in accordance with their terms. Nothing
contained in this Section 12.2 shall relieve any party from liability for any
willful breach of this Agreement.
67
SECTION 12.3 Amendments; No Waivers. (a) Except as may otherwise be
----------------------
provided herein, any provision of this Agreement may be amended or waived prior
to the Effective Time if, and only if, such amendment or waiver is in writing
and signed, in the case of an amendment, by the Company, Buyer and Merger
Subsidiary or in the case of a waiver, by the party against whom the waiver is
to be effective; provided that after the adoption of this Agreement by the
--------
stockholders of the Company, no such amendment or waiver shall, without the
further approval of such stockholders, alter or change (i) the amount or kind of
consideration to be received in exchange for any shares of capital stock of the
Company or (ii) any of the terms or conditions of this Agreement if such alter-
ation or change could adversely affect the holders of any shares of capital
stock of the Company.
(b) No failure or delay by any party in exercising any right, power
or privilege hereunder shall operate as a waiver thereof nor shall any single or
partial exercise thereof preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. The rights and remedies herein
provided shall be cumulative and not exclusive of any rights or remedies
provided by law.
SECTION 12.4 Expenses. (a) Except as provided below in this Section
--------
12.4, all fees and expenses incurred in connection with the Merger, this Agree-
ment and the transactions contemplated by this Agreement shall be paid by the
party incurring such fees or expenses, whether or not the Merger is consummated.
(b) The Company shall pay, or cause to be paid, in same day funds to
Buyer, Buyer's Expenses (as hereinafter defined), in the event that the Company
shall enter into a definitive agreement with respect to a Superior Proposal and
this Agreement shall be terminated pursuant to Section 10.1(vi)(B) or Section
10.1(vii). In addition, in the event that this Agreement shall be terminated
pursuant to Section 10.1(vi) or Section 10.1(vii) and, (i) within twelve months
thereafter, the Company enters into an agreement with respect to a Third Party
Acquisition (which is consummated within twelve months after such termination),
or a Third Party Acquisition occurs and is completed, (ii) after the date hereof
and prior to the date of termination, (x) the Company or its agents had engaged
in negotiations with a Third Party with respect to a Third Party Acquisition,
(y)
68
the Company or its agents furnished information to a Third Party with respect to
a Third Party Acquisition or (z) a Third Party submitted to the Company a pro-
posal (which shall include price and other material terms and conditions) for a
Third Party Acquisition and (iii) with respect to (x) and (y) above, the rele-
vant Third Party makes or announces (before or after such termination) a propos-
al with respect to a Third Party Acquisition; then the Company shall pay, or
cause to be paid, in same day funds, to Buyer, (A) a termination fee in the
amount of $7,000,000, which termination fee shall be paid on the date of consum-
mation of a Third Party Acquisition (if and only if a Third Party Acquisition
shall be consummated within twelve months after the date of termination), and
(B) to the extent not previously paid by the Company to Buyer pursuant to the
first sentence of this Section 12.4(b), Buyers' Expenses. It is expressly
agreed that the amount to be paid pursuant to this Section 12.4(b) represents
liquidated damages and not a penalty.
(c) The cost of printing the Form S-4 Registration Statement and the
Company Proxy Statement shall be borne equally by the Company and Buyer.
(d) The Company shall pay or cause to be paid (not later than ten
business days after submission of statements therefor) in same day funds to
Buyer, Buyer's Expenses in the event this Agreement shall be terminated pursuant
to Section 10.1(v). Buyer shall pay or cause to be paid (not later than ten
business days after submission of statements therefor) in same day funds to the
Company, Company's Expenses in the event this Agreement shall be terminated
pursuant to Section 10.1(iv). If Buyer or Merger Subsidiary shall submit a
request for reimbursement hereunder, Buyer or Merger Subsidiary will provide the
Company in due course with invoices or other reasonable evidence of such
expenses upon request. If the Company shall submit a request for reimbursement
hereunder, the Company will provide Buyer in due course with invoices or other
reasonable evidence of such expenses upon request.
(e) For purposes of this Section 12.4, "Third Party Acquisition"
means the occurrence of any of the following events: (i) the acquisition of the
Company by merger or otherwise by any person (which includes a "person" as such
term is defined in Section 13(d)(3) of the Exchange Act) or entity other than
Buyer, Merger Subsidiary or any affiliate thereof (a "Third Party"); (ii) the
acquisition by
69
a Third Party of more than 35% of the total assets of the Company and its
Subsidiaries, taken as a whole; or (iii) the acquisition by a Third Party of 35%
or more of the outstanding shares of Company Common Stock. For purposes of this
Section 12.4, "Buyer's Expenses" shall mean documented out-of-pocket fees and
expenses reasonably and actually incurred or paid by or on behalf of Buyer in
connection with the Merger and the consummation of any of the transactions con-
templated by this Agreement, including, reasonable fees and expenses of counsel,
accountants, experts, financial advisors and consultants to Buyer, in an
aggregate amount not to exceed $1,000,000. For purposes of this Section 12.4,
"Company's Expenses" shall mean documented out-of-pocket fees and expenses
reasonably and actually incurred or paid by or on behalf of the Company in
connection with the Merger and the consummation of any of the transactions con-
templated by this Agreement, including, reasonable fees and expenses of counsel,
accountants, experts, financial advisors and consultants to the Company, in an
aggregate amount not to exceed $1,000,000.
SECTION 12.5 Successors and Assigns. The provisions of this
----------------------
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns, provided that no party may assign,
--------
delegate or otherwise transfer any of its rights or obligations under this
Agreement without the consent of the other parties hereto.
SECTION 12.6 Governing Law. This Agreement shall be construed in
-------------
accordance with and governed by the law of the State of Delaware without regard
to conflicts of laws.
SECTION 12.7 Severability. If any term or other provision of this
------------
Agreement is invalid, illegal or incapable of being enforced by any rule of law,
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated herein is not affected in any manner
materially adverse to any party hereto. Upon such determination that any term
or other provision is invalid, illegal or incapable of being enforced, the
parties hereto shall negotiate in good faith to modify this Agreement so as to
effect the original intent of the parties as closely as possible in a mutually
acceptable manner.
70
SECTION 12.8 Third Party Beneficiaries. No provision of this
-------------------------
Agreement other than Section 7.3 and Section 8.6 hereof is intended to confer
upon any Person other than the parties hereto any rights or remedies hereunder.
SECTION 12.9 Entire Agreement. This Agreement, including any
----------------
exhibits or schedules hereto and the Confidentiality Agreement constitutes the
entire agreement among the parties hereto with respect to the subject matter
hereof and supersede all other prior agreements or undertaking with respect
thereto, both written and oral.
SECTION 12.10 Counterparts; Effectiveness. This Agreement may be
---------------------------
signed in any number of counterparts, each of which shall be an original, with
the same effect as if the signatures thereto and hereto were upon the same
instrument. This Agreement shall become effective when each party hereto shall
have received counterparts hereof signed by all of the other parties hereto.
71
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed by their respective authorized officers as of the day and year
first above written.
IDEON GROUP, INC.
By: /s/ Eugene Miller
--------------------------
Name: Eugene Miller
Title: Chairman and CEO
CUC INTERNATIONAL INC.
By:
----------------------
Name:
Title:
IG ACQUISITION CORP.
By:
----------------------
Name:
Title:
Exhibit 11
CUC International Inc. and Subsidiaries
Exhibit 11--Statement Re: Computation of per Share Earnings
Year ended January 31,
1996 1995 1994
-----------------------------------
(in thousands, except
per common share amounts)
Primary
Average shares outstanding 180,821 177,480 171,489
Net effect of dilutive stock options or
stock options exercised during the
year--based on the treasury stock method
using average market price 13,845 11,739 11,624
-----------------------------------
Total 194,666 189,219 183,113
===================================
Net income $163,374 $124,566 $ 94,151
===================================
Net income per common share $ .839 $ .658 $ .514
===================================
Fully diluted
Average shares outstanding 180,821 177,480 171,489
Net effect of dilutive stock options or
stock options exercised during the
year--based on the treasury stock method
using the year-end market price, if
higher than average market price or
market price at date of exercise 14,569 12,153 12,628
Net effect of zero coupon convertible
notes--based on the if converted method 2,436 2,780 6,198
-----------------------------------
197,826 192,413 190,315
===================================
Net income $163,374 $124,566 $94,151
Interest expense:
Zero coupon convertible notes 1,010 1,026 1,965
-----------------------------------
Net income $164,384 $125,592 $96,116
===================================
Net income per common share $ .831 $ .653 $ .505
===================================
Exhibit 21
CUC International Inc. and Subsidiaries
Exhibit 21--Subsidiaries of the Company
Subsidiary State of Incorporation
---------- ----------------------
FISI*Madison Financial Corporation Tennessee
Benefit Consultants, Inc. Delaware
Entertainment Publications, Inc. Michigan
Interval International, Inc. Florida
Exhibit 23.1
Consent of Independent Auditors
We consent to the incorporation by reference in the Registration Statements
(Form S-8s: Numbers 33-17247, 33-17248, 33-17249, 33-26875, 33-75682, 33-93322,
33-41823, 33-48175, 33-58896, 33-91656, 33-74068, 33-74066, 33-91658, 333-00475,
33-75684, 33-80834, and 33-93372) pertaining to the CUC International Inc. 1985
Non-Qualified Stock Option Plan, the CUC International Inc. 1985 Incentive Stock
Option Plan, the CUC International Inc. 1987 Performance Share Stock Option
Plan, the CUC International Inc. 1987 Stock Option Plan, the CUC International
Inc. 1987 Stock Option Plan as amended, the CUC International Inc. 1987 Stock
Option Plan as amended, the CUC International Inc. 1990 Directors' Stock Option
Plan, the Entertainment Publications Inc. 1988 Non-Qualified Stock Option Plan,
the CUC International Inc. 1992 Bonus and Salary Replacement Stock Option Plan,
the CUC International Inc. 1992 Bonus and Salary Replacement Stock Option Plan
as amended, the CUC International Inc. 1992 Directors Stock Option Plan, the CUC
International Inc. 1992 Employee Stock Option Plan, the CUC International Inc.
1992 Employee Stock Option Plan as amended, the CUC International Inc. 1992
Employee Stock Option Plan as amended, the CUC International Inc. 1994 Employee
Stock Purchase Plan, the CUC International Inc. Savings Incentive Plan, and the
CUC International Inc. 1994 Directors Stock Option Plan, respectively, and in
the Registration Statements (Form S-3s: Numbers 33-30306, 33-47271, 33-58598,
33-63237 and 33-95126) and in the Registration Statement (Form S-4: Number 33-
64801) and in the related Prospectuses of our report dated March 19, 1996, with
respect to the consolidated financial statements and schedule of CUC
International Inc. included in its Annual Report (Form 10-K) for the year ended
January 31, 1996.
ERNST & YOUNG LLP
Stamford, Connecticut
April 22, 1996
Exhibit 23.2
Independent Auditors' Consent
We consent to the incorporation by reference in the Annual Report on Form 10-K
under the Securities Exchange Act of 1934 of CUC International Inc. for the year
ended January 31, 1996 of our report dated March 13, 1995 (relating to the
financial statements of Advance Ross Corporation not presented separately
herein), and contained in Registration Statements Nos. 33-17247, 33-17248,
33-17249, 33-26875, 33-75682, 33-93322, 33-41823, 33-48175, 33-58896, 33-91656,
33-74068, 33-74066, 33-91658, 333-00475, 33-75684, 33-80834, and 33-93372 of CUC
International Inc. on Form S-8 and in Registration Statement Nos. 33-30306,
33-47271, 33-58598, 33-63237, 33-95126 of CUC International Inc. on Form S-3 and
in Registration Statement No. 33-64801 of CUC International Inc. on Form S-4,
all under the Securities Act of 1933, insofar as such report relates to the
financial statements and schedule of Advance Ross Corporation (not presented
separately herein) as of December 31, 1994 and for the years ended December 31,
1994 and 1993.
DELOITTE & TOUCHE LLP
Chicago, Illinois
April 22, 1996
5
0000723612
CUC INTERNATIONAL INC.
1,000
YEAR
JAN-31-1996
JAN-31-1996
269,987
0
308,547
10,705
0
767,707
135,016
73,575
1,141,306
149,845
14,410
0
0
1,918
725,294
1,141,306
1,414,964
1,414,964
0
1,144,240
5,247
0
(866)
266,343
102,969
163,374
0
0
0
163,374
.839
.831
