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EXHIBIT 10.5
AGREEMENT
AGREEMENT dated as of March 27th, 1997 by and between Textron Inc., a
Delaware corporation ("Textron") and a stockholder of The Xxxx Xxxxxx
Corporation, a Massachusetts corporation ("Xxxx Xxxxxx"), Provident Companies,
Inc., a Delaware corporation ("Provident"), and Patriot Acquisition
Corporation, a Massachusetts corporation and a wholly owned subsidiary of
Provident ("Newco").
WHEREAS, Xxxx Xxxxxx, Provident and Newco have entered into an Amended
and Restated Agreement and Plan of Merger dated as of April 29, 1996 (the
"Merger Agreement") providing for the merger (the "Merger") of Newco with and
into Xxxx Xxxxxx pursuant to the terms and conditions of the Merger Agreement;
and
WHEREAS, in order to induce Provident to enter into the Merger
Agreement, Textron entered into an Amended and Restated Voting Agreement dated
as of April 29, 1996 (the "Voting Agreement") pursuant to which Textron agreed
to the matters set forth therein; and
WHEREAS, in order to further induce Provident to consummate the
transactions contemplated thereby;
NOW, THEREFORE, for good and valuable consideration, the receipt,
sufficiency and adequacy of which is hereby acknowledged, the parties hereby
agree as follows.
1. Certain Severance Costs.
Textron shall promptly reimburse Xxxx Xxxxxx, on an after-tax basis,
for (i) the severance allowance paid by Xxxx Xxxxxx to Xxxxxxx X. Xxxxx,
Executive Vice President and Operating Officer of Xxxx Xxxxxx, as a result of
the termination of employment of Xx. Xxxxx following the consummation of the
Merger pursuant to Section II.a. of the Executive Employment Agreement made as
of January 6, 1996 between Xxxx Xxxxxx and Xx. Xxxxx, and (ii) amounts paid to
Xx. Xxxxx in respect of 4,000 stock appreciation rights ("SARs") having an
exercise price of $21.875 and 11,500 performance share units ("PSUs")
representing a right to receive $414,115, which SARs and PSUs became or will
become exercisable or payable as a result of the transactions contemplated by
the Merger Agreement.
2. Executive Aircraft Upgrade; Usage Prior to Closing.
In lieu of the Cessna Citation III (Aircraft Serial No. 60-0127) to be
provided by Textron to Xxxx Xxxxxx pursuant to the terms of the first sentence
of Section 4(b) of the Voting Agreement, Textron agrees to contribute to Xxxx
Xxxxxx at or prior to the effective date of the Merger a Cessna Citation V
(Aircraft Serial No. C650-0247), free and clear of all liens, which aircraft
may be exchanged by Xxxx Xxxxxx or Provident for a Cessna Citation VII
(Aircraft Serial No. C650-7057), also free and clear of all liens and without
additional payment from Xxxx Xxxxxx or Provident, as soon as the same becomes
available to Textron for such transfer, which is
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currently anticipated to be no later than October 15, 1997, and in the event
that such Citation VII does not become available for transfer by such date, a
comparable aircraft at the earliest opportunity thereafter. Textron further
agrees that neither Xxxx Xxxxxx nor Provident shall be liable for or have any
responsibility with respect to payments resulting from the usage of aircraft
provided by Textron to Xxxx Xxxxxx or Provident prior to the effective date of
the Merger. Except to the extent modified by this Section 2, the provisions of
Section 4(b) of the Voting Agreement shall remain in full force and effect,
unaffected by this Agreement.
3. Proceeds of Sales of Provident Stock.
(a) Subject to compliance with applicable federal and state
securities laws and the provisions of the Standstill Agreement, dated as of
April 29, 1996, between Provident and Textron (the "Standstill Agreement"),
Textron hereby agrees to use its reasonable efforts to sell for cash all shares
of the common stock of Provident ("Provident Common Stock") received by Textron
in the Merger (including any equity securities received as a dividend or other
distribution thereon, the "Shares") as soon as practicable after the effective
date of the Merger, provided that the per share proceeds to Textron from any
sale are not less than the Threshold Price (as defined below). Provident and
Textron agree that by execution and delivery of this Agreement, Textron hereby
requests that Provident effect the registration of all of the Shares under the
Securities Act of 1933, as amended (the "1933 Act"), in accordance with the
terms of the Registration Rights Agreement dated as of April 29, 1996 by and
between Textron and Provident (the "Registration Rights Agreement"), and, in
connection therewith, Provident agrees to effect the registration under the
1933 Act of all of the Shares at the earliest possible date.
(b) Upon each sale of Shares, Textron shall promptly pay Provident
an amount per Share equal to the difference (the "Appreciation") between the
per share proceeds to Textron (after subtracting all commissions and other
costs of sale) from such sale and $38.00 (appropriately adjusted for
subdivisions, combinations, splits and other adjustments in the Provident
Common Stock after the effective date of the Merger, the "Threshold Price");
provided, however, that Textron shall have no obligation pursuant to this
paragraph 3(b) until, and only to the extent that, the Appreciation received by
Textron in respect of all such sales exceeds, in the aggregate, $20 million
(the "Textron Appreciation").
(c) In the event that Textron has not sold all of the Shares
within 11 months after the date of this Agreement, Provident shall have the
right, which may be exercised from time to time at Provident's discretion, to
repurchase some or all of the Shares then held by Textron at a purchase price
per Share equal to the Threshold Price; provided, that until such time as
Textron has realized the entire Textron Appreciation, the purchase price
payable by Provident for each Share purchased by Provident pursuant to this
paragraph 3(c) shall equal, if higher than the Threshold Price, the average of
closing prices for the Provident Common Stock as reported on the New York Stock
Exchange, Inc. Composite Transactions for the ten (10) consecutive Trading Days
(as defined in the Merger Agreement) ending on the fifth Trading Day before the
day on which such Shares are purchased by Provident (and such average will be
adjusted for any stock dividend, split, combination or reclassification that
took effect during such ten (10) Trading Day period). At the closing of each
such purchase (which shall occur on such date as may be specified
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by Provident within ten Trading Days after delivery to Textron of notice of
Provident's exercise of such right), Textron will deliver to Provident the
Shares being purchased by Provident against payment of the purchase price
therefor by delivery of a certified check or a wire transfer in the proper
amount and shall warrant that it has sole record and beneficial ownership of
such Shares and that the same are then free and clear of all liens.
(d) In the event that Provident shall enter into an agreement: (i)
to consolidate with or merge into any person and shall not be the continuing or
surviving corporation of such consolidation or merger; (ii) to permit any
person to merge into Provident and Provident shall be the continuing or
surviving corporation, but, in connection with such merger, the
then-outstanding shares of Provident Common Stock shall be changed into or
exchanged for stock or other securities of Provident or any other person or
cash or any other property or the outstanding shares of Provident Common Stock
immediately prior to such merger shall after such merger represent less than
50% of the outstanding shares and share equivalents of the merged company; or
(iii) to sell or otherwise transfer all or substantially all of its assets to
any person, then, and in each such case, (x) if such transaction shall result
in the Shares being converted into the right to receive a cash payment from any
person, such conversion shall be deemed to be a sale of the Shares for purposes
of paragraph 3(b) hereof and Textron shall pay to Provident such portion of the
Appreciation realized by Textron as exceeds the Textron Appreciation and (y)
if such transaction shall result in the Shares being converted into the right
to receive consideration other than cash, Provident shall be entitled to
exercise the right to repurchase the Shares pursuant to paragraph 3(c) at any
time after entry into such agreement and, from and after consummation of the
transaction contemplated by such agreement, the provisions of this paragraph 3
shall apply, with appropriate adjustments, to any securities into which the
Shares are converted and, as applicable, references in this paragraph 3 to
"Shares," "Provident," and "Threshold Price" shall be deemed to be references
to the securities into which the Shares have been converted (the "Substitute
Securities"), each issuer of the Substitute Securities (each a "Substitute
Issuer"), and an amount per Substitute Security as corresponds to the Threshold
Price (the "Substitute Threshold Price"), respectively.
4. Scheduling of Closing.
Provided the Closing (as defined in the Merger Agreement) occurs not
later than the close of business on the date hereof, Provident and Newco hereby
waive all conditions to their obligations to effect the Merger set forth in the
Merger Agreement other than the conditions set forth in Sections 7.1(b) and
Section 7.2(d) and Provident and Newco agree to use their respective reasonable
efforts to cause the Closing to occur not later than the close of business on
the date hereof.
5. Miscellaneous.
(a) Notwithstanding the provisions of Section 7(a) of the Voting
Agreement, the parties agree that, if the Merger occurs, the provisions of
Sections 4, 5 and 6 of the Voting Agreement shall survive termination of the
Voting Agreement. Except as expressly provided herein, nothing in this
Agreement shall be deemed to modify, amend, or supersede in any respect
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any of the provisions of the Voting Agreement, the Registration Rights
Agreement, the Standstill Agreement or the Amended and Restated Separation
Agreement, dated as of April 29, 1996, by and among, Textron, Xxxx Xxxxxx and
Provident.
(b) This Agreement shall be deemed a contract under, and for all
purposes shall be construed in accordance with, the laws of the Commonwealth of
Massachusetts, without reference to its conflict of law principles.
(c) If any provision of this Agreement or the application of such
provision to any person or circumstances shall be held invalid or unenforceable
by a court of competent jurisdiction, such provision or application shall be
unenforceable only to the extent of such invalidity or unenforceability, and
the remainder of such provision held invalid or unenforceable and the
application of such provision to persons or circumstances, other than the party
as to which it is held invalid, and the remainder of this Agreement, shall not
be affected.
(d) This Agreement may be executed in one or more counterparts,
each of which shall be deemed to be an original, but all of which together
shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have executed and delivered
this Agreement as of the date first above written.
TEXTRON INC.
By /s/ Xxxxxxx X. Key
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Executive Vice President and Chief
Financial Officer
PROVIDENT COMPANIES, INC.
By /s/ Xxxxx X. Xxxx
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Vice President, Secretary and Counsel
PATRIOT ACQUISITION CORPORATION
By /s/ Xxxxx X. Xxxx
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Secretary and Clerk
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