======================================================================
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
XXXX CORPORATION
ECHO ACQUISITION CORP.
A WHOLLY OWNED SUBSIDIARY OF XXXX CORPORATION
AND
ECHLIN INC.
MAY 3, 1998
======================================================================
TABLE OF CONTENTS
Page
ARTICLE I CERTAIN DEFINITIONS.................................. 1
Section 1.1. Certain Definitions.................................. 1
ARTICLE II THE MERGER; EFFECTS OF THE MERGER.................... 6
Section 2.1. The Merger........................................... 6
Section 2.2. Effective Date and Effective Time.................... 7
Section 2.3. Directors............................................ 7
Section 2.4. Officers............................................. 8
Section 2.5. Tax Consequences..................................... 8
Section 2.6. Accounting Treatment................................. 8
ARTICLE III MERGER CONSIDERATION; EXCHANGE PROCEDURES............ 8
Section 3.1. Merger Consideration................................. 8
Section 3.2. Rights as Stockholders; Stock Transfers.............. 9
Section 3.3. Fractional Shares.................................... 9
Section 3.4. Exchange Procedures.................................. 9
Section 3.5. Anti-Dilution Provisions............................. 11
Section 3.6. Treasury Shares...................................... 11
Section 3.7. Options.............................................. 11
Section 3.8. Performance Units.................................... 12
ARTICLE IV ACTIONS PENDING MERGER............................... 12
Section 4.1. Ordinary Course...................................... 12
Section 4.2. Capital Stock........................................ 12
Section 4.3. Dividends, Etc....................................... 13
Section 4.4. Compensation; Employment Agreements; Etc............. 13
Section 4.5. Benefit Plans........................................ 13
Section 4.6. Acquisitions and Dispositions........................ 14
Section 4.7. Amendments........................................... 14
Section 4.8. Accounting Methods................................... 14
Section 4.9. Adverse Actions...................................... 14
Section 4.10. Agreements........................................... 14
-i-
Page
ARTICLE V REPRESENTATIONS AND WARRANTIES....................... 15
Section 5.1. Disclosure Schedules................................. 15
Section 5.2. Standard............................................. 15
Section 5.3. Representations and Warranties....................... 15
ARTICLE VI COVENANTS............................................ 24
Section 6.1. Best Efforts......................................... 24
Section 6.2. Stockholder Approvals................................ 24
Section 6.3. Registration Statement............................... 26
Section 6.4. Press Releases....................................... 27
Section 6.5. Access; Information.................................. 27
Section 6.6. Acquisition Proposals................................ 28
Section 6.7. Affiliate Agreements................................. 28
Section 6.8. Takeover Laws........................................ 29
Section 6.9. No Rights Triggered.................................. 29
Section 6.10. Shares Listed........................................ 29
Section 6.11. Regulatory Applications.............................. 29
Section 6.12. Indemnification; Directors' and Officers' Insurance.. 30
Section 6.13. Benefits Plans....................................... 31
Section 6.14. Notification of Certain Matters...................... 31
ARTICLE VII CONDITIONS TO CONSUMMATION OF THE MERGER............. 32
Section 7.1. Shareholder Vote..................................... 32
Section 7.2. Regulatory Approvals................................. 32
Section 7.3. No Injunction, Etc................................... 32
Section 7.4. Representations, Warranties and Covenants of Xxxx.... 32
Section 7.5. Representations, Warranties and Covenants of
the Company....................................... 33
Section 7.6. Effective Registration Statement..................... 33
Section 7.7. Tax Opinion.......................................... 33
Section 7.8. Exchange Listing..................................... 34
Section 7.9. Company Rights Agreement............................. 34
Section 7.10. Accounting Treatment................................. 34
ARTICLE VIII TERMINATION.......................................... 34
Section 8.1. Termination.......................................... 34
-ii-
Page
Section 8.2. Effect of Termination and Abandonment................ 36
Section 8.3. Break-up Expenses.................................... 36
ARTICLE IX MISCELLANEOUS........................................ 37
Section 9.1. Survival............................................. 37
Section 9.2. Waiver; Amendment.................................... 37
Section 9.3. Counterparts......................................... 38
Section 9.4. Governing Law........................................ 38
Section 9.5. Expenses............................................. 38
Section 9.6. Confidentiality...................................... 38
Section 9.7. Notices.............................................. 39
Section 9.8. Understanding; No Third Party Beneficiaries.......... 39
Section 9.9. Interpretation; Absence of Presumption............... 40
Section 9.10. Headings............................................. 40
Section 9.11. Severability......................................... 40
Section 9.12. Specific Performance................................. 40
Section 9.13. Successors and Assigns............................... 41
EXHIBIT A Form of Stock Option Agreement With Respect to Option
Issued by Echlin Inc.
EXHIBIT B Form of Affiliate Letter Addressed to Echlin Inc.
EXHIBIT C Form of Affiliate Letter Addressed to Xxxx Corporation
-iii-
AGREEMENT AND PLAN OF MERGER, dated as of May 3, 1998 (this
"Agreement"), by and among Xxxx Corporation, a Virginia corporation ("Dana"),
Echo Acquisition Corp., a Connecticut corporation and a wholly owned subsidiary
of Dana ("Merger Sub"), and Echlin Inc., a Connecticut corporation (the
"Company").
WITNESSETH:
WHEREAS, the Boards of Directors of Dana, Merger Sub and the Company
deem it advisable and in the best interests of their respective companies and
their stockholders that Merger Sub merge with and into the Company (the
"Merger"), subject to the terms and conditions set forth herein, so that the
Company is the surviving corporation in the Merger and becomes a wholly owned
subsidiary of Xxxx;
WHEREAS, the Board of Directors of the Company has further
determined that the Merger is consistent with the long-term business strategy of
the Company and in the best interests of the employees, customers, creditors,
suppliers and communities of the Company;
WHEREAS, in connection with the execution of this Agreement, Xxxx
and the Company will enter into a stock option agreement, with the Company as
issuer and Xxxx as grantee (the "Stock Option Agreement") in the form attached
hereto as Exhibit A; and
WHEREAS, the parties desire to make certain representations,
warranties and agreements in connection with the Merger and also to prescribe
certain conditions to the Merger;
NOW, THEREFORE, in consideration of the mutual covenants,
representations, warranties and agreements contained herein, and intending to be
legally bound hereby, the parties hereto agree as follows:
ARTICLE I
CERTAIN DEFINITIONS
1.1. Certain Definitions. As used in this Agreement, the
following terms shall have the meanings set forth below:
"Affiliate" shall have the meaning set forth in Section 6.7(a).
"Agreement" shall have the meaning set forth in the recitals to
this Agreement.
"CBCA" shall mean the Connecticut Business Corporation Act.
"Certificate of Merger" shall have the meaning set forth in
Section 2.1(c).
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Company" shall have the meaning set forth in the recitals to this
Agreement.
"Company Common Stock" shall have the meaning set forth in Section
3.1(a).
"Company Meeting" shall have the meaning set forth in Section 6.2.
"Company Preferred Stock" shall have the meaning set forth in
Section 5.3(b).
"Company Right" shall have the meaning set forth in Section 3.1(a).
"Company Rights Agreement" shall have the meaning set forth in
Section 3.1(a).
"Company Stock" shall mean Company Common Stock and Company
Preferred Stock.
"Company Stock Option" shall have the meaning set forth in Section
3.7.
"Company Stock Option Plans" shall have the meaning set forth in
Section 3.7.
"Compensation and Benefit Plans" shall have the meaning set forth
in Section 5.3(l).
"Competing Transaction" shall mean (i) a merger or consolidation, or
any similar transaction, involving the Company or any Significant Subsidiary of
the Company, (ii) a purchase, lease or other acquisition or assumption of all or
a substantial portion of the assets of the Company or any Significant Subsidiary
of the Company, (iii) a purchase or other acquisition (including by way of
merger, consolidation, tender offer, exchange offer, share exchange or
otherwise) of securities representing 20% or more of the voting power of the
Company or any Significant Subsidiary of the Company, or (iv) any substantially
similar transaction; provided, however, that in no event shall any merger,
consolidation, purchase or similar transaction involving only the Company and
one or more of its wholly owned Subsidiaries or involving only any two or more
of such wholly owned Subsidiaries, be deemed to be a Competing Transaction.
-2-
"Confidentiality Agreement" shall mean the Confidentiality and
Standstill Agreement, dated April 23, 1998, between the Company and Xxxx.
"Xxxx" shall have the meaning set forth in the recitals to this
Agreement.
"Xxxx Common Stock" shall have the meaning set forth in Section
3.1(a).
"Xxxx Meeting" shall have the meaning set forth in Section 6.2.
"Xxxx Preferred Stock" shall have the meaning set forth in Section
5.3(b).
"Xxxx Rights Agreement" shall have the meaning set forth in
Section 3.1(a).
"Disclosure Schedule" shall have the meaning set forth in Section
5.1.
"Effective Date" shall have the meaning set forth in Section 2.2.
"Effective Time" shall have the meaning set forth in Section 2.2.
"Environmental Laws" shall have the meaning set forth in Section
5.3(p).
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended.
"ERISA Affiliate" shall have the meaning set forth in Section
5.3(m)(v).
"Excess Shares" shall have the meaning set forth in Section 3.3.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, and the rules and regulations thereunder.
"Exchange Agent" shall have the meaning set forth in Section
3.4(a).
"Exchange Fund" shall have the meaning set forth in Section 3.4(a).
"Exchange Ratio" shall have the meaning set forth in Section
3.1(a).
"Expense Fee" shall have the meaning set forth in Section 8.3(b).
"Fractional Shares Fund" shall have the meaning set forth in
Section 3.3.
-3-
"Governmental Entity" shall mean any court, administrative agency,
commission or other governmental authority or instrumentality, whether local,
state, federal or foreign.
"HSR Act" shall mean the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements
Act of 1976, as amended.
"International Stock Exchanges" shall mean stock exchanges located
outside of the U.S. on which Xxxx Common Stock is listed as of the Effective
Time.
"Joint Proxy Statement" shall have the meaning set forth in
Section 6.3.
"Liens" shall mean any charge, mortgage, pledge, security interest,
restriction, claim, lien, or encumbrance.
"Material Adverse Effect" shall mean with respect to the Company or
Xxxx, respectively, any effect that (i) is material and adverse to the financial
position, results of operations or business of the Company and its Subsidiaries
taken as a whole, or Xxxx and its Subsidiaries taken as a whole, respectively,
or (ii) would materially impair the ability of the Company or Xxxx,
respectively, to perform its obligations under this Agreement or otherwise
materially threaten or materially impede the consummation of the Merger and the
other transactions contemplated by this Agreement; provided, however, that
Material Adverse Effect shall be deemed not to include the impact of (a) changes
in laws of general applicability or interpretations thereof by Governmental
Entities, (b) changes in generally accepted accounting principles, (c) actions
or omissions of the Company or Xxxx taken with the prior written consent of the
Company or Xxxx, as applicable, in connection with the transactions contemplated
hereby, (d) circumstances affecting the automotive or automotive parts
industries generally, and (e) the effects of the Merger and compliance by either
party with the provisions of this Agreement on the business, financial condition
or results of operations of such party and its Subsidiaries, or the other party
and its Subsidiaries, as the case may be.
"Meeting" shall have the meaning set forth in Section 6.2.
"Merger" shall have the meaning set forth in the recitals to this
Agreement.
"Merger Consideration" shall have the meaning set forth in Section
2.1.
"Merger Sub" shall have the meaning set forth in the Recitals to
this Agreement.
"Multiemployer Plans" shall have the meaning set forth in Section
5.3(m)(iv).
"New Certificates" shall have the meaning set forth in Section
3.4(a).
-4-
"NYSE" shall mean The New York Stock Exchange, Inc.
"Old Certificates" shall have the meaning set forth in Section
3.4(a).
"Pension Plan" shall have the meaning set forth in Section
5.3(m)(iv).
"Person" or "person" shall mean any individual, corporation,
partnership, association, joint-stock company, business trust, limited liability
entity, or unincorporated organization.
"Plans" shall have the meaning set forth in Section 5.3(m)(iv).
"Previously Disclosed" by a party shall mean information set forth
in its Disclosure Schedule or in its SEC Documents filed prior to the date
hereof.
"PSE" shall mean the Pacific Exchange.
"Registration Statement" shall have the meaning set forth in
Section 6.3.
"Rights" shall mean, with respect to any person, securities or
obligations convertible into or exchangeable for, or giving any person any right
to subscribe for or acquire, or any options, calls or commitments relating to,
shares of capital stock of such person.
"SEC" shall mean the Securities and Exchange Commission.
"SEC Documents" shall have the meaning set forth in Section 5.3(h).
"Securities Act" shall mean the Securities Act of 1933, as amended,
and the rules and regulations thereunder.
"Stock Option Agreement" shall have the meaning set forth in the
recitals.
"Subsidiary" and "Significant Subsidiary" shall have the meanings
ascribed to them in Rule 1-02 of Regulation S-X of the SEC.
"Superior Proposal" shall mean a bona fide written proposal from a
third party for a Competing Transaction, which the Company's financial advisor
determines is reasonably capable of being financed, on terms which the Board of
Directors of the Company reasonably determines to be more favorable than the
Merger, in accordance with and having regard to the interests of the Company's
stockholders and the other interests required to be considered by the Board of
Directors under Section 33-756(d) of the CBCA. A proposal shall not constitute a
Superior Proposal unless, in the written opinion (with only customary
qualifications) of the Company's independent financial advisors, the value of
the consideration provided for in such proposal
-5-
is more favorable to the stockholders of the Company from a financial point of
view to that offered in the Merger. References in this definition to the
"Merger" shall refer, as applicable, to any proposed alteration of the terms of
this Agreement by Xxxx pursuant to Sections 6.2(c).
"Surviving Corporation" shall have the meaning set forth in
Section 2.1(a).
"Takeover Laws" shall have the meaning set forth in Section 5.3(o).
"Tax Returns" shall have the meaning set forth in Section 5.3(q).
"Taxes" shall mean all taxes, charges, fees, levies or other
assessments, including all net income, gross 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, custom duties, fees, assessments or
charges of any kind whatsoever, together with any interest and any penalties,
additions to tax or additional amounts imposed by any taxing authority.
"Termination Fee" shall have the meaning set forth in Section
8.3(a).
"Treasury Shares" shall have the meaning set forth in Section
3.1(a).
"Triggering Event" shall have the meaning set forth in Section
8.3(a).
ARTICLE II
THE MERGER; EFFECTS OF THE MERGER
2.1. The Merger. (a) The Surviving Corporation. Upon the terms and
subject to the conditions set forth herein, and in accordance with the CBCA, at
the Effective Time, Merger Sub shall merge with and into the Company, the
separate corporate existence of Merger Sub shall cease and the Company shall
survive and continue to exist as a Connecticut corporation (the Company, as the
surviving corporation in the Merger, sometimes being referred to herein as the
"Surviving Corporation"). Xxxx xxx at any time in its sole discretion change the
method of effecting the combination with the Company (including the provisions
of this Article II) if and to the extent it deems such change to be desirable,
including to provide for a merger of the Company into Xxxx or any other
Subsidiary of Xxxx; provided, however, that no such change shall (i) alter or
change the amount or kind of consideration to be issued to holders of Company
Stock as provided for in this Agreement (the "Merger Consideration"), (ii)
adversely affect the tax treatment of the Company or the Company's stockholders
as a result of receiving the Merger Consideration, (iii) materially impede or
-6-
delay consummation of the transactions contemplated by this Agreement, or (iv)
otherwise adversely affect the Company or its stockholders.
(b) Closing. The closing of the Merger will take place at 10:00
a.m. on the Effective Date, at the offices of Wachtell, Lipton, Xxxxx & Xxxx, 00
Xxxx 00xx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, unless another time, date or place
is agreed to in writing by the parties hereto.
(c) Effectiveness and Effects of the Merger. Subject to the
satisfaction or waiver of the conditions set forth in Article VII in accordance
with this Agreement, the Merger shall become effective upon the occurrence of
the filing in the office of the Secretary of State of Connecticut of a
certificate of merger (the "Certificate of Merger"), or such later date and time
as may be set forth in the Certificate of Merger, in accordance with Section
33-819 of the CBCA. The Merger shall have the effects prescribed in Section
33-820 of the CBCA.
(d) Certificate of Incorporation and By-Laws. The certificate of
incorporation and by-laws of the Surviving Corporation shall be those of Merger
Sub, as in effect immediately prior to the Effective Time, except that the name
of the Surviving Corporation shall be Echlin Inc.
2.2. Effective Date and Effective Time. Subject to the
satisfaction or waiver of each of the conditions set forth in Article VII in
accordance with this Agreement, the parties shall cause the effective date of
the Merger (the "Effective Date") to occur on (1) the third business day to
occur after the last of the conditions set forth in Sections 7.1, 7.2 and 7.9
shall have been satisfied or waived in accordance with the terms of this
Agreement, or (2) such other date to which the parties may agree in writing. The
time on the Effective Date when the Merger shall become effective is referred to
as the "Effective Time."
2.3. Directors. The directors of Merger Sub immediately prior to
the Effective Time and the four directors of the Company set forth on Section
2.3 of the Company Disclosure Schedule shall be the directors of the Surviving
Corporation and shall hold office from the Effective Time until their respective
successors are duly elected or appointed and qualified in the manner provided in
the Certificate of Incorporation and by-laws of the Surviving Corporation, or as
otherwise provided by the CBCA.
2.4. Officers. The officers of Merger Sub immediately prior to the
Effective Time shall be the initial officers of the Surviving Corporation and
shall hold office from the Effective Time until their respective successors are
duly elected or appointed and qualified in the manner provided in the
Certificate of Incorporation and by-laws of the Surviving Corporation, or as
otherwise provided by the CBCA.
-7-
2.5. Tax Consequences. It is intended that the Merger shall
qualify as a reorganization under Section 368(a) of the Code, and that the
Agreement shall constitute a "plan of reorganization" for purposes of Section
354 of the Code.
2.6. Accounting Treatment. It is intended that the Merger
be accounted for as a "pooling of interests" under generally accepted
accounting principles.
ARTICLE III
MERGER CONSIDERATION; EXCHANGE PROCEDURES
3.1. Merger Consideration. Subject to the provisions of this
Agreement (including Section 8.1(f)), at the Effective Time, automatically by
virtue of the Merger and without any action on the part of any party or
stockholder:
(a) Outstanding Company Common Stock. Each share (excluding (i)
shares held by the Company or any of its Subsidiaries or by Xxxx, Merger Sub or
any of their Subsidiaries ("Treasury Shares")) of the common stock, par value
$1.00 per share, of the Company, including each attached right (a "Company
Right") issued pursuant to the Rights Agreement, dated June 21, 1989, as amended
prior to the date hereof or pursuant to Section 4.7 (the "Company Rights
Agreement"), between the Company and the Rights Agent named therein (the
"Company Common Stock"), issued and outstanding immediately prior to the
Effective Time shall by virtue of the Merger and without any action on the part
of the holder thereof become and be converted into the right to receive 0.9293
of a share (subject to adjustment as set forth herein, the "Exchange Ratio") of
common stock, par value $1.00 per share of Xxxx (the "Xxxx Common Stock"),
including attached rights, issued pursuant to the Rights Agreement, dated as of
April 25, 1996, between Xxxx and the Rights Agent named therein (the "Xxxx
Rights Agreement").
3.2. Rights as Stockholders; Stock Transfers. At the Effective
Time, holders of Company Stock shall cease to be, and shall have no rights as,
stockholders of the Company, other than to receive any dividend or other
distribution with respect to such Company Stock with a record date occurring
prior to the Effective Time and the consideration provided under this Article
III. After the Effective Time, there shall be no transfers on the stock transfer
books of the Company of shares of Company Stock.
3.3. Fractional Shares. Notwithstanding any other provision
hereof, no fractional shares of Xxxx Common Stock and no certificates or scrip
therefor, or other evidence of ownership thereof, will be issued in the Merger
In lieu of any such fractional share, each holder of an Old Certificate who
would otherwise have been entitled to a fraction of a share of Xxxx Common Stock
upon surrender of an Old Certificates for exchange pursuant to Section 3.4 shall
be paid, upon such surrender, cash (without interest) in an amount equal to such
holder's proportionate in-
-8-
terest in the net proceeds from the sale or sales in the open market by the
Exchange Agent, on behalf of all such holders, of the aggregate fractional
Xxxx Common Stock that would otherwise have been issued pursuant hereto.
>From time to time following the Effective Time, the Exchange Agent shall
determine the excess of (i) the number of full shares of Xxxx Common Stock
to be delivered by the Exchange Agent to holders of Old Certificates that
have been delivered to the Exchange Agent over (ii) the sum of the number
of full shares of Xxxx Common Stock to be distributed to such holders of
Old Certificates (such excess being herein called the "Excess Shares"), and
the Exchange Agent, as agent for the former holders of Old Certificates,
shall sell the Excess Shares at the prevailing prices on the NYSE. Such
sales of Excess Shares by the Exchange Agent shall be executed on the NYSE
through one or more member firms of the NYSE and shall be executed in round
lots to the extent practicable. Xxxx shall pay all commissions, transfer
taxes and other out-of-pocket transaction costs, including the expenses and
compensation of the Exchange Agent, incurred in connection with such sale
of Excess Shares. Until the net proceeds of such sale have been
distributed to the holders of Old Certificates, the Exchange Agent will
hold such proceeds in trust for such former holders of Old Certificates
(the "Fractional Shares Fund"). As soon as practicable after any
determination of the amount of cash to be paid to holders of Old
Certificates in lieu of any fractional interests, the Exchange Agent shall
make available in accordance with this Agreement such amounts to such
holders of Old Certificates. The parties acknowledge that payment of cash
in lieu of issuing fractional shares was not separately bargained for
consideration but merely represents a mechanical rounding off for purposes
of simplifying the corporate and accounting problems that would otherwise
be caused by the issuance of fractional shares.
3.4. Exchange Procedures. (a) At or prior to the Effective Time,
Xxxx shall deposit, or shall cause to be deposited, with an exchange agent (the
"Exchange Agent"), for the benefit of the holders of certificates representing
the shares of Company Common Stock ("Old Certificates"), for exchange in
accordance with this Article III, certificates representing the shares of Xxxx
Stock ("New Certificates") and an estimated amount of cash to be paid in lieu of
fractional shares (such cash and New Certificates, together with any dividends
or distributions with respect thereto (without any interest thereon), being
hereinafter referred to as the "Exchange Fund") to be paid pursuant to this
Article III in exchange for outstanding shares of Company Stock.
(b) The Exchange Agent shall invest any cash included in the
Exchange Fund, as directed by Xxxx, on a daily basis. Any interest and other
income resulting from such investments shall be paid to Xxxx.
(c) As promptly as practicable after the Effective Date, Xxxx shall
send or cause to be sent to each former holder of record of shares (other than
Treasury Shares) of Company Stock immediately prior to the Effective Time
transmittal materials for use in exchanging such stockholder's Old Certificates
for the consideration set forth in this Article III. Xxxx shall cause the New
Certificates into which shares of a stockholder's Company Stock are converted on
the Effective Date and/or any check in
-9-
respect of any fractional share interests or dividends or distributions which
such person shall be entitled to receive to be delivered to such stockholder
upon delivery to the Exchange Agent of Old Certificates representing such shares
of Company Stock (or indemnity reasonably satisfactory to Xxxx and the Exchange
Agent, if any of such certificates are lost, stolen or destroyed) owned by such
stockholder. No interest will be paid on any such cash to be paid pursuant to
this Article III upon such delivery.
(d) Notwithstanding the foregoing, neither the Exchange Agent nor
any party hereto shall be liable to any former holder of Company Stock for any
amount properly delivered to a public official pursuant to applicable abandoned
property, escheat or similar laws.
(e) No dividends or other distributions with respect to Xxxx Stock
with a record date occurring after the Effective Time shall be paid to the
holder of any unsurrendered Old Certificate representing shares of Company Stock
converted in the Merger into shares of Xxxx Common Stock until the holder
thereof shall surrender such Old Certificate in accordance with this Article
III. After the surrender of an Old Certificate in accordance with this Article
III, the record holder thereof shall be entitled to receive any such dividends
or other distributions, without any interest thereon, which theretofore had
become payable with respect to shares of Xxxx Common Stock represented by such
Old Certificate.
(f) Any portion of the Exchange Fund that remains unclaimed by the
stockholders of the Company for twelve months after the Effective Time shall be
paid to Xxxx. Any stockholders of the Company who have not theretofore complied
with this Article III shall thereafter look only to Xxxx for payment of the
shares of Xxxx Common Stock, cash in lieu of any fractional shares and unpaid
dividends and distributions on the Xxxx Common Stock deliverable in respect of
each share of Company Stock such stockholder holds as determined pursuant to
this Agreement, in each case, without any interest thereon.
3.5. Anti-Dilution Provisions. In the event Xxxx changes (or
establishes a record date for changing) the number of, or provides for the
exchange of, shares of Xxxx Common Stock issued and outstanding prior to the
Effective Date as a result of a stock split, stock dividend, recapitalization,
reclassification, reorganization or similar transaction with respect to the
outstanding Xxxx Common Stock and the record date therefor shall be prior to the
Effective Date, the Exchange Ratio shall be proportionately adjusted.
3.6. Treasury Shares. Each of the shares of Company Stock
constituting Treasury Shares immediately prior to the Effective Time shall be
canceled and retired at the Effective Time and no consideration shall be issued
in exchange therefor.
3.7. Options. (a) At the Effective Time, all employee and director
stock options to purchase shares of Company Common Stock (each, a "Company Stock
Option"), which are then outstanding and unexercised, shall cease to represent a
-10-
right to acquire shares of Company Common Stock and shall be converted
automatically into options to purchase shares of Xxxx Common Stock, and Xxxx
shall assume each such Company Stock Option subject to the terms of any of the
stock option plans listed under "Stock Option Plans" in Section 5.3(m)(i) of the
Company's Disclosure Schedule (collectively, the "Company Stock Option Plans"),
and the agreements evidencing grants thereunder; provided, however, that from
and after the Effective Time, (i) the number of shares of Xxxx Common Stock
purchasable upon exercise of such Company Stock Option shall be equal to the
number of shares of Company Common Stock that were purchasable under such
Company Stock Option immediately prior to the Effective Time multiplied by the
Exchange Ratio, and rounding to the nearest whole share, and (ii) the per share
exercise price under each such Company Stock Option shall be adjusted by
dividing the per share exercise price of each such Company Stock Option by the
Exchange Ratio, and rounding down to the nearest cent. Notwithstanding the
foregoing, the number of shares and the per share exercise price of each Company
Stock Option which is intended to be an "incentive stock option" (as defined in
Section 422 of the Code) shall be adjusted in accordance with the requirements
of Section 424 of the Code. Accordingly, with respect to any incentive stock
options, fractional shares shall be rounded down to the nearest whole number of
shares and where necessary the per share exercise price shall be rounded up to
the nearest cent.
(b) Prior to the Effective Time, Xxxx shall reserve for issuance
the number of shares of Xxxx Common Stock necessary to satisfy Dana's
obligations under Section 3.7(a). Promptly after the Effective Time, Xxxx shall
file with the SEC a registration statement on an appropriate form or a
post-effective amendment to a previously filed registration statement under the
Securities Act with respect to the shares of Xxxx Common Stock subject to
options to acquire Xxxx Common Stock issued pursuant to Section 3.7(a), and
shall use its best efforts to maintain the current status of the prospectus
contained therein, as well as comply with any applicable state securities or
"blue sky" laws, for so long as such options remain outstanding.
3.8. Performance Units. As soon as practicable following the
Effective Time, each performance unit under the Company's Performance Unit Plan
shall be equitably adjusted by Xxxx.
ARTICLE IV
ACTIONS PENDING MERGER
From the date hereof until the Effective Time, except as expressly
contemplated by this Agreement, (i) without the prior written consent of Xxxx
(which consent shall not be unreasonably withheld or delayed) the Company will
not, and will cause each of its Subsidiaries not to, and (ii) without the prior
written consent of the Company (which consent shall not be unreasonably withheld
or delayed) Xxxx will not, and will cause each of its Subsidiaries not to:
-11-
4.1. Ordinary Course. Conduct the business of it and its
Subsidiaries other than in the ordinary course or fail to use reasonable efforts
to preserve intact their business organizations and assets and maintain their
rights, franchises and existing relations with customers, suppliers, employees
and business associates, or take any action that would (i) adversely affect the
ability of any party to obtain any necessary approvals of any Governmental
Entities required for the transactions contemplated hereby, or (ii) adversely
affect its ability to perform any of its material obligations under this
Agreement.
4.2. Capital Stock. Other than (i) pursuant to Rights or other
stock options or stock-based awards Previously Disclosed in its Disclosure
Schedule, (ii) pursuant to the Stock Option Agreement, (iii) pursuant to the
Company Rights Agreement or the Xxxx Rights Agreement (as the case may be), or
(iv) in the case of the Company, as otherwise set forth on Section 6.13 of the
Company Disclosure Schedule, (x) issue, sell or otherwise permit to become
outstanding, or authorize the creation of, any additional shares of capital
stock, any stock appreciation rights, any Rights, or any other equity-linked
securities, (y) enter into any agreement with respect to the foregoing, or (z)
permit any additional shares of capital stock to become subject to new grants of
employee stock options, stock appreciation rights, or similar stock-based
employee rights.
4.3. Dividends, Etc. (1) Make, declare or pay any dividend (other
than (i) in the case of the Company, (A) regular quarterly cash dividends on
Company Common Stock in an amount not to exceed the rate most recently paid
regular quarterly cash dividend on such Company Common Stock as of the date
hereof, and (B) dividends from Subsidiaries to the Company or a wholly owned
Subsidiary of the Company, as applicable, and (ii) in the case of Xxxx, (A)
regular quarterly cash dividends on Xxxx Common Stock at a quarterly rate of
$0.29 as may be adjusted in the ordinary course consistent with past practice,
and (B) dividends from Subsidiaries to Xxxx or a wholly owned Subsidiary of
Xxxx, as applicable) on or in respect of, or declare or make any distribution on
any shares of its capital stock, or (2) other than (A) as Previously Disclosed
in its Disclosure Schedule, or (B) in the ordinary course pursuant to employee
benefit plans, directly or indirectly combine, redeem, reclassify, purchase or
otherwise acquire, any shares of its capital stock. After the date of this
Agreement, each of Xxxx and the Company shall coordinate with the other the
declaration of any dividends in respect of Xxxx Common Stock and Company Common
Stock and the record dates and payment dates relating thereto, it being the
intention of the parties hereto that holders of Xxxx Common Stock or Company
Common Stock shall not receive two dividends, or fail to receive one dividend,
for any single calendar quarter with respect to their shares of Xxxx Common
Stock and/or Company Common Stock and any shares of Xxxx Common Stock any such
holder receives in exchange therefor in the Merger.
4.4. Compensation; Employment Agreements; Etc. In the case of the
Company and its Subsidiaries, except as set forth on Section 6.13 of the Company
Disclosure Schedule, enter into or amend any written employment, severance or
simi-
-12-
lar agreements or arrangements with any of its directors, officers or
employees, or grant any salary or wage increase or increase any employee benefit
(including incentive or bonus payments), except for (i) normal increases in
compensation to employees in the ordinary course of business consistent with
past practice, or (ii) other changes as are provided for herein or as may be
required by law or to satisfy contractual obligations existing as of the date
hereof or additional grants of awards to newly hired employees consistent with
past practice.
4.5. Benefit Plans. In the case of the Company and its
Subsidiaries, except as set forth on Section 6.13 of the Company Disclosure
Schedule, enter into or amend (except as may be required by applicable law, to
satisfy contractual obligations existing as of the date hereof) any pension,
retirement, stock option, stock purchase, savings, profit sharing, deferred
compensation, consulting, bonus, group insurance or other employee benefit,
incentive or welfare contract, plan or arrangement, or any trust agreement
related thereto, in respect of any of its directors, officers or other
employees, including taking any action that accelerates the vesting or exercise
of any benefits payable thereunder or the funding of the Company's Rabbi Trust.
4.6. Acquisitions and Dispositions. In the case of the Company,
except as Previously Disclosed in its Disclosure Schedule, dispose of or
discontinue any portion of its assets, business or properties, which is material
to it and its Subsidiaries taken as a whole, or acquire (other than by way of
foreclosures or acquisitions of control in a bona fide fiduciary capacity or in
satisfaction of debts previously contracted in good faith, in each case in the
ordinary and usual course of business consistent with past practice) all or any
portion of, the business or property of any other entity which is material to it
and its Subsidiaries taken as a whole. In the case of Xxxx, not, and not cause
its Subsidiaries to, make any acquisition or take any other action which would
materially adversely affect its ability to consummate the transactions
contemplated by this Agreement.
4.7. Amendments. Amend its Certificate of Incorporation or By-laws
or amend or waive any rights under the Company Rights Agreement, in a manner
that would materially and adversely affect either party's ability to consummate
the Merger or the economic benefits of the Merger to either party; provided
however that Xxxx shall not be prevented from amending its Restated Articles of
Incorporation to increase the number of authorized shares of capital stock.
4.8. Accounting Methods. Implement or adopt any change in its
accounting principles, practices or methods, other than as may be required by
generally accepted accounting principles or Regulation S-X promulgated under the
Exchange Act.
4.9. Adverse Actions. (1) Take any action that would, or would be
reasonably likely to, prevent or impede the Merger from qualifying as a
reorganization within the meaning of Section 368(a) of the Code or for "pooling
of interests" accounting treatment under generally accepted accounting
principles, or (2) knowingly
-13-
take any action that is intended or is reasonably likely to result in (x) any of
its representations and warranties set forth in this Agreement being or becoming
untrue in any material respect at any time prior to the Effective Time, (y) any
of the conditions to the Merger set forth in Article VII not being satisfied, or
(z) a material violation of any provision of this Agreement except, in each
case, as may be required by applicable law.
4.10. Agreements. Agree or commit to do anything
prohibited by Sections 4.1 through 4.9.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
5.1. Disclosure Schedules. On or prior to the date hereof, Xxxx
has delivered to the Company and the Company has delivered to Xxxx a schedule
(respectively, its "Disclosure Schedule") setting forth, among other things,
items the disclosure of which is necessary or appropriate in relation to any or
all of its representations and warranties; provided, that (i) no such item is
required to be set forth in a Disclosure Schedule as an exception to a
representation or warranty if its absence is not reasonably likely to result in
the related representation or warranty being deemed untrue or incorrect under
the standard established by Section 5.2, and (ii) the mere inclusion of an item
in a Disclosure Schedule shall not be deemed an admission by a party that such
item represents a material exception or fact, event or circumstance or that such
item is reasonably likely to result in a Material Adverse Effect.
5.2. Standard. No representation or warranty of Xxxx or the
Company contained in Section 5.3 shall be deemed untrue or incorrect, and no
party hereto shall be deemed to have breached a representation or warranty, as a
consequence of the existence of any fact, circumstance or event unless such
fact, circumstance or event, individually or taken together with the existence
of all other facts, circumstances or events inconsistent with any paragraph of
Section 5.3, has had or is reasonably expected to have a Material Adverse
Effect.
5.3. Representations and Warranties. Subject to Sections 5.1 and
5.2 and except as Previously Disclosed, the Company hereby represents and
warrants to Xxxx, and Xxxx hereby represents and warrants to the Company, to the
extent applicable, in each case with respect to itself and its Subsidiaries, as
follows:
(a) Organization, Standing and Authority. Such party is a
corporation duly organized, validly existing and in good standing under the laws
of the jurisdiction of its organization. Such party is duly qualified to do
business and is in good standing in the states of the United States and foreign
jurisdictions where its ownership or leasing of property or the conduct of its
business requires it to be so qualified. It has in effect all federal, state,
local, and foreign governmental authorizations necessary
-14-
for it to own or lease its properties and assets and to carry on its business as
it is now conducted.
(b) Shares. (i) As of the date hereof, the authorized capital stock
of the Company consists solely of 150,000,000 shares of Company Common Stock, of
which, as of March 31, 1998, 63,594,700 shares were outstanding, and 1,000,000
shares of company preferred stock ("Company Preferred Stock"), of which, as of
March 31, 1998, no shares were outstanding. As of the date hereof, the
authorized capital stock of Xxxx consists solely of 240,000,000 shares of Xxxx
Common Stock, of which, as of April 30, 1998, 105,758,992 shares were
outstanding, and 5,000,000 shares of preferred stock (the "Xxxx Preferred
Stock"), of which, as of the date hereof, no shares were outstanding. As of the
date hereof, 270,264 shares of Company Common Stock and no shares of Xxxx Common
Stock were held in treasury. The outstanding shares of such party's capital
stock are validly issued and outstanding, fully paid and nonassessable, and
subject to no preemptive rights (and were not issued in violation of any
preemptive rights). In the case of Xxxx, as of the date hereof, there are no
shares of Dana's capital stock authorized and reserved for issuance except
pursuant to plans or commitments Previously Disclosed, Xxxx does not have any
Rights issued or outstanding with respect to its capital stock, and Xxxx does
not have any commitment to authorize, issue or sell any such shares or Rights,
except in each case pursuant to this Agreement, the Stock Option Agreement, and
the Xxxx Rights Agreement, as the case may be. In the case of the Company, there
are no shares of such party's capital stock authorized and reserved for issuance
except pursuant to plans or commitments Previously Disclosed, the Company does
not have any Rights issued or outstanding with respect to its capital stock, and
the Company does not have any commitment to authorize, issue or sell any such
shares or Rights, except in each case pursuant to this Agreement, the Stock
Option Agreement, and the Company Rights Agreement, as the case may be. The
authorized capital stock of Merger Sub consists of 1,000 shares of common stock,
par value $.01 per share, all of which are validly issued, fully paid and
nonassessable, and are owned by Xxxx free and clear of any Lien.
(ii) The number of shares of Company Common Stock which are
issuable and reserved for issuance upon exercise of Company Stock Options as of
the date hereof are Previously Disclosed, and the number of shares of Xxxx
Common Stock which are issuable and reserved for issuance upon exercise of any
employee or director stock options to purchase shares of Xxxx Common Stock as of
the date hereof are Previously Disclosed.
(c) Subsidiaries. (i) (A) Such party has Previously Disclosed a
list of all of its Subsidiaries together with the jurisdiction of organization
of each such Subsidiary, (B) it owns, directly or indirectly all of the issued
and outstanding shares of each of its Significant Subsidiaries, (C) no equity
securities of any of its Significant Subsidiaries are or may become required to
be issued (other than to it or a Subsidiary of it) by reason of any Rights, (D)
there are no contracts, commitments, understandings or arrangements by which any
of such Significant Subsidiaries is or may be bound
-15-
to sell or otherwise transfer any shares of the capital stock of any such
Significant Subsidiaries (other than to it or a Subsidiary of it), (E) there are
no contracts, commitments, understandings, or arrangements relating to its
rights to vote or to dispose of such shares (other than to it or a Subsidiary of
it), and (F) all of the shares of capital stock of each such Significant
Subsidiary held by it or its Subsidiaries are fully paid and nonassessable and
are owned by it or its Subsidiaries free and clear of any Liens.
(ii) In the case of the representations and warranties of the
Company, the Company does not own (other than the equity securities of its
Subsidiaries) beneficially, directly or indirectly, any shares of any equity
securities or similar interests of any person, or any interest in a partnership
or joint venture of any kind.
(iii) Each of such party's Significant Subsidiaries and Merger
Sub, in the case of Xxxx, has been duly organized and is validly existing in
good standing under the laws of the jurisdiction of its organization, and is
duly qualified to do business and in good standing in the jurisdictions where
its ownership or leasing of property or the conduct of its business requires it
to be so qualified. Each of such Significant Subsidiaries and Merger Sub has in
effect all federal, state, local, and foreign governmental authorizations
necessary for it to own or lease its properties and assets and to carry on its
business as it is now conducted.
(d) Corporate Power. Such party and each of its Significant
Subsidiaries and Merger Sub, in the case of Xxxx, has the corporate power and
authority to carry on its business as it is now being conducted and to own all
its properties and assets; and it has the corporate power and authority to
execute, deliver and perform its obligations under this Agreement and the Stock
Option Agreement and to consummate the transactions contemplated hereby and
thereby.
(e) Corporate Authority. Subject in the case of this Agreement only
to approval (i) by the holders of two-thirds of the shares of Company Common
Stock entitled to vote thereon, and (ii) by the holders of a majority of the
shares of Xxxx Common Stock casting votes at the Xxxx Meeting, provided that a
majority of the shares of Xxxx Common Stock entitled to vote thereon vote, in
person or by proxy at the Xxxx Meeting, each of this Agreement and the Stock
Option Agreement and the transactions contemplated hereby and thereby (including
the election of the directors of Merger Sub as directors of the Surviving
Corporation pursuant to Section 2.3) have been authorized by all necessary
corporate action of each of the Company, Xxxx and Merger Sub, including by their
respective Boards of Directors, as the case may be, and each of this Agreement
and the Stock Option Agreement is a legal, valid and binding agreement of each
of the Company, Xxxx and Merger Sub, as the case may be, enforceable in
accordance with its terms (except as such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent
transfer and similar laws of general applicability relating to or affecting
creditors' rights or by general equity principles).
-16-
(f) Board Recommendation. In the case of the Xxxx, the Board of
Directors of Xxxx, at a meeting duly called and held, has by unanimous vote of
those directors present (i) determined that this Agreement and the transactions
contemplated hereby, including the Merger, taken together, are fair to and in
the best interests of Xxxx and the stockholders of Xxxx, and (ii) resolved to
recommend that the stockholders of Xxxx approve and authorize the issuance of
shares of Xxxx Common Stock in the Merger. In the case of the Company, the Board
of Directors of the Company, at a meeting duly called and held, has by unanimous
vote of those directors present (i) determined that this Agreement, the Stock
Option Agreement and the transactions contemplated hereby and thereby, including
the Merger, taken together, are fair to and in the best interests of the
stockholders of the Company, and (ii) resolved to recommend that the holders of
the shares of Company Common Stock approve this Agreement and the transactions
contemplated herein, including the Merger.
(g) No Defaults. Subject to receipt of the regulatory approvals,
and expiration of the waiting periods, referred to in Section 7.2, the required
filings under federal and state securities laws and the approvals contemplated
by Sections 7 and 9 of the Stock Option Agreement (in the case of the
representations and warranties of the Company), the execution, delivery and
performance of this Agreement and the Stock Option Agreement and the
consummation of the transactions contemplated hereby and thereby by it do not
and will not (i) constitute a breach or violation of, or a default under, any
law, rule or regulation or any judgment, decree, order, governmental permit or
license, or agreement, indenture or instrument of it or of any of its
Significant Subsidiaries or Merger Sub, in the case of Xxxx, or to which it or
any of its Significant Subsidiaries or Merger Sub, in the case of Xxxx, or
properties is subject or bound, (ii) constitute a breach or violation of, or a
default under, its articles or certificate of incorporation or by-laws, or (iii)
require any consent or approval under any such law, rule, regulation, judgment,
decree, order, governmental permit or license, agreement, indenture or
instrument.
(h) Financial Reports and SEC Documents. Its Annual Report on Form
10-K for the fiscal year ended December 31, 1997, in the case of Xxxx, and
August 31, 1997, in the case of the Company, and all other reports, registration
statements, definitive proxy statements or information statements filed or to be
filed by it or any of its Subsidiaries subsequent to December 31, 1995, in the
case of Xxxx, and August 31, 1995, in the case of the Company, under the
Securities Act, or under Sections 13(a), 13(c), 14 and 15(d) of the Exchange
Act, in the form filed, or to be filed (collectively, its "SEC Documents"), with
the SEC (i) complied or will comply in all material respects as to form with the
applicable requirements under the Securities Act or the Exchange Act, as the
case may be, and (ii) as of its filing date did not or will not contain any
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements made therein, in light of
the circumstances under which they were made, not misleading; and each of the
balance sheets contained in or incorporated by reference into any such SEC
Document (including the related notes and schedules thereto) fairly presents or
will fairly present the financial position of the entity or entities to which it
relates as of its date, and each
-17-
of the statements of income and changes in stockholders' equity and cash flows
or equivalent statements in such SEC Documents (including any related notes and
schedules thereto) fairly presents or will fairly present the results of
operations, changes in stockholders' equity and changes in cash flows, as the
case may be, of the entity or entities to which it relates for the periods to
which it relates, in each case in accordance with generally accepted accounting
principles consistently applied during the periods involved, except in each case
as may be noted therein, subject to normal year-end audit adjustments in the
case of unaudited statements.
(i) Litigation; Regulatory Action. (i) There are no civil, criminal
or administrative actions, suits, claims, hearings or proceedings pending or, to
the best of its knowledge, threatened, or investigation pending, against it or
any of its Subsidiaries.
(ii) Neither it nor any of its Subsidiaries or properties is a
party to or is subject to any order, decree, agreement, memorandum of
understanding or similar arrangement with any Governmental Entity.
(iii) Neither it nor any of its Subsidiaries has been advised by
any Governmental Entity that such Governmental Entity is contemplating issuing
or requesting (or is considering the appropriateness of issuing or requesting)
any such order, decree, agreement, memorandum of understanding or similar
arrangement.
(j) Compliance with Laws. It and each of its Subsidiaries:
(i) in the conduct of its business, is in compliance with all
applicable federal, state, local and foreign statutes, laws, regulations,
ordinances, rules, judgments, orders or decrees applicable thereto or to the
employees conducting such businesses;
(ii) has all permits, licenses, authorizations, orders and
approvals of, and have made all filings, applications and registrations with,
all Governmental Entities that are required in order to permit them to conduct
their businesses substantially as presently conducted; all such permits,
licenses, certificates of authority, orders and approvals are in full force and
effect and, to the best of its knowledge, no suspension or cancellation of any
of them is threatened; and
(iii) has received, since December 31, 1995, in the case of Xxxx,
and August 31, 1995 in the case of the Company, no notification or communication
from any Governmental Entity (A) asserting that it or any of its Subsidiaries is
not in compliance with any of the statutes, regulations, or ordinances which
such Governmental Entity enforces, (B) threatening to revoke any license,
franchise, permit, or governmental authorization, or (C) failing to approve any
proposed acquisition, or stating its intention not to approve acquisitions
proposed to be effected by it within a certain time period or indefinitely.
-18-
(k) Defaults. Neither it nor any of its Subsidiaries is in default
under any contract, agreement, commitment, arrangement, lease, insurance policy,
or other instrument to which it is a party, by which its respective assets,
business, or operations may be bound or affected, or under which it or its
respective assets, business, or operations receives benefits, and there has not
occurred any event that, with the lapse of time or the giving of notice or both,
would constitute such a default.
(l) No Brokers. No action has been taken by it that would give rise
to any valid claim against any party hereto for a brokerage commission, finder's
fee or other like payment with respect to the transactions contemplated by this
Agreement, excluding, in the case of the Company, fees to be paid to Xxxxxxx
Xxxxx Barney Inc. and, in the case of Xxxx, fees to be paid to Xxxxxx Brothers
Inc., in each case pursuant to letter agreements which have been heretofore
disclosed to the other party.
(m) Employee Benefit Plans. (i) Such Party's Disclosure Schedule
contains a complete list of all material written bonus, vacation, deferred
compensation, pension, retirement, profit-sharing, thrift, savings, employee
stock ownership, stock bonus, stock purchase, restricted stock and stock option
plans, all employment or severance contracts, all medical, dental, disability,
health and life insurance plans, all other employee benefit and fringe benefit
plans, contracts or arrangements and any applicable "change of control" or
similar provisions in any plan, contract or arrangement maintained or
contributed to by it or any of its Subsidiaries for the benefit of officers,
former officers, employees, former employees, directors, former directors, or
the beneficiaries of any of the foregoing (collectively, "Compensation and
Benefit Plans").
(ii) True and complete copies of its Compensation and Benefit
Plans, including, but not limited to, any trust instruments and/or insurance
contracts, if any, forming a part thereof, and all amendments thereto have been
made available to the other party.
(iii) Except as provided in Section 6.13 of the Company Disclosure
Schedule, the Merger and the other transactions contemplated by this Agreement
(including any stockholder approval of the Merger and the employment and
election of the directors under Section 2.3) will not be treated as a "Change in
Control" under any Compensation and Benefit Plan of the Company or its
Subsidiaries.
(iv) Each of its Compensation and Benefit Plans has been
administered in all material respects in accordance with the terms thereof. All
"employee benefit plans" within the meaning of Section 3(3) of ERISA, other than
"multiemployer plans" within the meaning of Section 3(37) of ERISA
("Multiemployer Plans"), covering employees or former employees of it and its
Subsidiaries (its "Plans"), to the extent subject to ERISA, are in material
compliance with ERISA, the Code, the Age Discrimination in Employment Act and
other applicable laws. Each Compensation and Benefit Plan of it or its
Subsidiaries which is an "employee pension benefit plan" within the meaning of
Section 3(2) of ERISA ("Pension Plan") and which is intended to be qualified
under Section 401(a) of the Code has received a favorable
-19-
determination letter from the Internal Revenue Service, and it is not aware of
any circumstances reasonably likely to result in the revocation or denial of any
such favorable determination letter. There is no pending or, to its knowledge,
threatened litigation or governmental audit, examination or investigation
relating to the Plans.
(v) No material liability under Title IV of ERISA has been or is
expected to be incurred by it or any of its Subsidiaries with respect to any
ongoing, frozen or terminated "single-employer plan", within the meaning of
Section 4001(a)(15) of ERISA, currently or formerly maintained by any of them,
or the single-employer plan of any entity which is considered one employer with
it under Section 4001(a)(15) of ERISA or Section 414 of the Code (an "ERISA
Affiliate"). Neither it nor any of its Subsidiaries presently contributes to a
Multiemployer Plan, nor have they contributed to such a plan within the past
five calendar years. No notice of a "reportable event", within the meaning of
Section 4043 of ERISA for which the 30-day reporting requirement has not been
waived, has been required to be filed for any Pension Plan of it or any of its
Subsidiaries or by any ERISA Affiliate within the past 12 months.
(vi) All contributions, premiums and payments required to be made
under the terms of any Compensation and Benefit Plan of it or any of its
Subsidiaries have been made. Neither any Pension Plan of it or any of its
Subsidiaries nor any single-employer plan of an ERISA Affiliate of it or any of
its Subsidiaries has an "accumulated funding deficiency" (whether or not waived)
within the meaning of Section 412 of the Code or Section 302 of ERISA. Neither
it nor any of its Subsidiaries has provided, or is required to provide, security
to any Pension Plan or to any single-employer plan of an ERISA Affiliate
pursuant to Section 401(a)(29) of the Code.
(vii) Under each Pension Plan of it or any of its Subsidiaries
which is a single-employer plan, as of the last day of the most recent plan year
ended prior to the date hereof, the actuarially determined present value of all
"benefit liabilities", within the meaning of Section 4001(a)(16) of ERISA (as
determined on the basis of the actuarial assumptions contained in the Plan's
most recent actuarial valuation) did not exceed the then current value of the
assets of such Plan, and there has been no adverse change in the financial
condition of such Plan (with respect to either assets or benefits) since the
last day of the most recent Plan year.
(viii) Neither it nor any of its Subsidiaries has any obligations
under any Compensation and Benefit Plans to provide benefits, including death or
medical benefits, with respect to employees of it or its Subsidiaries beyond
their retirement or other termination of service other than (i) coverage
mandated by Part 6 of Title I of ERISA or Section 4980B of the Code, (ii)
retirement or death benefits under any employee pension benefit plan (as defined
under Section 3(2) of ERISA), (iii) disability benefits under any employee
welfare plan that have been fully provided for by insurance or otherwise, or
(iv) benefits in the nature of severance pay.
(ix) Neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated hereby will (i) result in any
payment
-20-
(including severance, unemployment compensation, golden parachute or otherwise)
becoming due to any director or any employee of it or any of its Subsidiaries
under any Compensation and Benefit Plan or otherwise from it or any of its
Subsidiaries, (ii) increase any benefits otherwise payable under any
Compensation and Benefit Plan, or (iii) result in any acceleration of the time
of payment or vesting of any such benefit.
(n) Labor Matters. Neither it nor any of its Subsidiaries is a
party to, or is bound by any collective bargaining agreement, contract or other
agreement or understanding with a labor union or labor organization, nor is it
or any of its Subsidiaries the subject of a proceeding asserting that it or any
such Subsidiaries has committed an unfair labor practice (within the meaning of
the National Labor Relations Act) or seeking to compel it or such Subsidiaries
to bargain with any labor organization as to wages and conditions of employment.
(o) Takeover Laws; Rights Plans. (i) It has taken all action
required to be taken by it in order to exempt this Agreement and the Stock
Option Agreement and the transactions contemplated hereby and thereby from, and
this Agreement and the Stock Option Agreement and the transactions contemplated
hereby and thereby are exempt from, the requirements of any "moratorium",
"control share", "fair price" or other anti-takeover laws and regulations
(collectively, "Takeover Laws") of (i) the State of Connecticut in the case of
the representations and warranties of the Company, including Sections 33-841 and
33-844 of the CBCA, and (ii) the State of Virginia in the case of the
representations and warranties of Xxxx, including Sections 13.1-725, 13.1-726
and 13.1-728 of the Virginia Stock Corporation Act.
(ii) In the case of the representations and warranties of the
Company, it has (A) duly entered into an appropriate amendment to the Company
Rights Agreement which amendment has been provided to Xxxx and (B) taken all
other action necessary or appropriate so that the entering into of this
Agreement and the Stock Option Agreement, and the consummation of the
transactions contemplated hereby and thereby (including the Merger) do not and
will not result in the ability of any person to exercise any Rights under the
Company Rights Agreement or enable or require the Company Rights to separate
from the shares of Company Common Stock to which they are attached or to be
triggered or become exercisable and the Company Rights Agreement will expire
immediately prior to the Effective Time, and the Company Rights Agreement, as so
amended, has not been further amended or modified except in accordance herewith.
Copies of such amendments to the Company Rights Agreement have been previously
provided to Xxxx.
(iii) In the case of the representations and warranties of the
Company, no "Distribution Date" or "Stock Acquisition Date" (as such terms are
defined in the Company Rights Plan) has occurred.
(p) Environmental Matters. (i) As used in this Plan, "Environmental
Laws" means all applicable local, state, federal and foreign environmental,
health and safety laws and regulations, including the Resource Conservation and
Recovery Act, the
-21-
Comprehensive Environmental Response, Compensation, and Liability Act, the Clean
Water Act, the Federal Clean Air Act, and the Occupational Safety and Health
Act, each as amended, regulations promulgated thereunder, and state
counterparts.
(ii) Neither the conduct nor operation of such party or its
Subsidiaries nor any condition of any property presently or previously owned,
leased or operated by any of them violates or violated Environmental Laws and no
condition has existed or event has occurred with respect to any of them or any
such property or any predecessor or previously owned or operated asset or
Subsidiary of any of them that, with notice or the passage of time, or both, is
reasonably likely to result in liability under Environmental Laws. Neither such
party nor any of its Subsidiaries has received any notice from any person or
entity that it or its Subsidiaries or the operation or condition of any property
ever owned, leased, operated, held as collateral or held as a fiduciary by any
of them are or were in violation of or otherwise are alleged to have liability
under any Environmental Law, including but not limited to responsibility (or
potential responsibility) for the cleanup or other remediation of any
pollutants, contaminants, or hazardous or toxic wastes, substances or materials
at, on, beneath, or originating from any such property.
(q) Tax Matters. (A) All material returns, declarations, reports,
estimates, information returns and statements required to be filed under
federal, state, local or any foreign tax laws ("Tax Returns") with respect to it
or any of its Subsidiaries, have been timely filed, or requests for extensions
have been timely filed and have not expired; (B) all Tax Returns filed by it are
complete and accurate in all material respects; (C) all Taxes shown to be due on
such Tax Returns have been paid or adequate reserves have been established for
the payment of such Taxes; and (D) no material (1) audit or examination or (2)
refund litigation with respect to any Tax Return is pending.
(r) Tax Treatment; Accounting Treatment. As of the date hereof, it
is aware of no reason why the Merger will, and has not taken or agreed to take
any action that would cause the Merger to (i) fail to qualify as a
reorganization under Section 368(a) of the Code, or (ii) not be accounted for as
a "pooling of interests" under generally accepted accounting principles.
(s) Opinions of Financial Advisors. It has received the written
opinion of its financial advisor, to the effect that, as of the date of this
Agreement, the Exchange Ratio is (i) in the case of the Company, fair to its
stockholders from a financial point of view, and (ii) in the case of Xxxx, fair
to Xxxx from a financial point of view. It has heretofore provided copies of
such opinions to the other party hereto and such opinion has not been withdrawn
or revoked or modified in any material respect.
(t) No Material Adverse Effect. Since December 31, 1997, in the
case of Xxxx and since, August 31, 1997, in the case of the Company, (i) it and
its Subsidiaries have conducted their respective businesses in the ordinary and
usual course (excluding the incurrence of expenses related to this Agreement and
the trans-
-22-
actions contemplated hereby) and (ii) no event has occurred or circumstance
arisen that, individually or taken together with all other existing facts,
circumstances and events (described in any paragraph of Section 5.3 or
otherwise), is reasonably likely to have a Material Adverse Effect with respect
to it.
ARTICLE VI
COVENANTS
The Company hereby covenants to and agrees with Xxxx, and Xxxx
hereby covenants to and agrees with the Company, that:
6.1. Best Efforts. Subject to the terms and conditions of this
Agreement, it shall use its reasonable best efforts in good faith to take, or
cause to be taken, all actions, and to do, or cause to be done, all things
necessary, proper or desirable, or advisable under applicable laws, so as to
permit consummation of the Merger as promptly as practicable and otherwise to
enable consummation of the transactions contemplated hereby including obtaining
(and cooperating with the other party hereto to obtain) any consent,
authorization, order or approval of, or any exemption by, any Governmental
Entity and any other third party that is required to be obtained by the Company
or Xxxx or any of their respective Subsidiaries in connection with the Merger
and the other transactions contemplated by this Agreement, and using reasonable
best efforts to lift or rescind any injunction or restraining order or other
order adversely affecting the ability of the parties to consummate the
transactions contemplated hereby, and using reasonable best efforts to defend
any litigation seeking to enjoin, prevent or delay the consummation of the
transactions contemplated hereby or seeking material damages, and each shall
cooperate fully with the other parties hereto to that end.
6.2. Stockholder Approvals. (a) Each of them shall take, as soon
as practicable, in accordance with applicable law, applicable stock exchange
rules and their respective articles or certificate of incorporation and by-laws,
all action necessary to convene, respectively, an appropriate meeting of
stockholders of Xxxx to consider and vote upon the approval of the issuance of
shares of Xxxx Common Stock pursuant to this Agreement and any other matters
required to be approved by Xxxx stockholders for consummation of the Merger
(including any adjournment or postponement, the "Xxxx Meeting"), and an
appropriate meeting of stockholders of the Company to consider and vote upon the
approval of this Agreement, the Merger and any other matters required to be
approved by the Company's stockholders for consummation of the Merger (including
any adjournment or postponement, the "Company Meeting"; and each of the Xxxx
Meeting and the Company Meeting, a "Meeting"), respectively, as promptly as
practicable after the date hereof. The Board of Directors of each of Xxxx and
the Company shall recommend such approval, and each of Xxxx and the Company
shall take all reasonable lawful action to solicit such approval by its
respective stockholders. Notwithstanding the previous sentence, the Company's
Board of Directors
-23-
may withdraw or modify its approval or recommendation of this Agreement or the
Merger if the Board of Directors of the Company, after having consulted with
outside counsel, determines that the refusal to do so would constitute a breach
by the Board of Directors of the Company of their fiduciary duties under
applicable laws, including their duties under Section 33-756(d) of the CBCA;
provided, however, the Company's Board of Directors may not approve or recommend
(and in connection therewith, withdraw or modify its approval or recommendation
of this Agreement or the Merger) a Competing Transaction unless such Competing
Transaction is a Superior Proposal and unless it shall have first consulted with
outside counsel, and have determined that the refusal to do so would constitute
a breach by the Board of Directors of the Company of their fiduciary duties
under applicable laws, including their duties under Section 33-756(d) of the
CBCA. Dana's Board of Directors may withdraw or modify its approval or
recommendation of this Agreement, the Merger or the issuance of shares of Xxxx
Common Stock in the Merger if the Board of Directors of Xxxx, after having
consulted with outside counsel, determines that the refusal to do so would
constitute a breach by the Board of Directors of Xxxx of their fiduciary duties
under applicable laws.
(b) The Company shall promptly (within 8 hours) advise Xxxx orally
and in writing of its receipt of any proposal or inquiry which may be or may
result in a Superior Proposal, of the substance thereof, and of the identity of
the person making such proposal or inquiry. The Company will keep Xxxx fully
informed of the status and material details of any such proposal or inquiry or
negotiations or discussions relating thereto.
(c) Prior to approving or recommending (and, in connection
therewith, withdrawing or modifying its approval or recommendation of this
Agreement or the Merger) a third party proposal as a Superior Proposal pursuant
to Section 6.2(a), the Company shall, unless to do so would constitute a breach
by the Board of Directors of the Company of their fiduciary duties under
applicable laws, including their duties under Section 33-756(d) of the CBCA,
first offer Xxxx and Merger Sub the right to propose alterations to the terms of
the Merger Agreement. If after considering such proposed alterations, the Board
of Directors of the Company determines that the third party proposal is a
Superior Proposal and, after having consulted with outside counsel, that the
failure to approve or recommend (and, in connection therewith, withdraw or
modify its approval or recommendation of this Agreement or the Merger) such
Superior Proposal would constitute a breach by the Board of Directors of the
Company of their fiduciary duties under applicable laws, including their duties
under Section 33-756(d) of the CBCA, then the Company's Board of Directors may
approve or recommend (and, in connection therewith, withdraw or modify its
approval or recommendation of this Agreement or the Merger) such Superior
Proposal; provided, however, that nothing contained in Section 6.2(a) shall
prohibit the Company or its Board of Directors from taking and disclosing to the
Company's stockholders a position pursuant to Rules 14d-9 and 14e-2(a)
promulgated under the Exchange Act or from making such other disclosure to the
Company's stockholders which, in the reasonable determination of the Board of
Directors of the Company after consultation with outside
-24-
counsel, may be required under applicable law. Any such initial disclosure
pursuant to Rules 14d-9 and 14e-2(a) shall be consistent with the recommendation
of the Board of Directors of the Company in Section 6.2(a), and all disclosures
pursuant to Rules 14d-9 and 14e-2(a) (initial or otherwise) shall be in a form
that has been reviewed by Xxxx.
6.3. Registration Statement. (a) Each of Xxxx and the Company
agrees to cooperate in the preparation of a registration statement on Form S-4
(the "Registration Statement") to be filed by Xxxx with the SEC in connection
with the issuance of Xxxx Common Stock in the Merger (including the joint proxy
statement, prospectus and other proxy solicitation materials of Xxxx and the
Company constituting a part thereof (the "Joint Proxy Statement") and all
related documents). Provided the Company has cooperated as required above, Xxxx
agrees to file the Registration Statement with the SEC as promptly as
practicable, but in no event later than 30 days after the date of this
Agreement. Each of the Company and Xxxx agrees to use all reasonable best
efforts to cause the Registration Statement to be declared effective under the
Securities Act as promptly as reasonably practicable after filing thereof, and
to cause the Joint Proxy Statement to be mailed as promptly as practicable to
the stockholders of the Company and Xxxx. Xxxx also agrees to use all reasonable
best efforts to obtain all necessary state securities law or "Blue Sky" permits
and approvals required to carry out the transactions contemplated by this
Agreement. The Company agrees to furnish to Xxxx all information concerning the
Company, its Subsidiaries, officers, directors and stockholders as may be
reasonably requested in connection with the foregoing.
(b) Each of the Company and Xxxx agrees, as to itself and its
Subsidiaries, that none of the information supplied or to be supplied by it for
inclusion or incorporation by reference in (i) the Registration Statement will,
at the time the Registration Statement and each amendment or supplement thereto,
if any, becomes effective under the Securities Act and at the Effective Time,
will not contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the statements
therein not misleading, and (ii) the Joint Proxy Statement and any amendment or
supplement thereto will, at the date of mailing to stockholders and at the times
of the Xxxx Meeting and the Company Meeting, contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein not misleading or any statement
which, in the light of the circumstances under which such statement is made,
will be false or misleading with respect to any material fact, or which will
omit to state any material fact necessary in order to make the statements
therein not false or misleading or necessary to correct any statement in any
earlier statement in the Joint Proxy Statement or any amendment or supplement
thereto. Each of the Company and Xxxx further agrees that if it shall become
aware prior to the Effective Date of any information that would cause any of the
statements in the Joint Proxy Statement to be false or misleading with respect
to any material fact, or to omit to state any material fact necessary to make
the statements therein not false or misleading, to promptly inform the other
party thereof and to take the necessary steps to correct the Joint Proxy
Statement.
-25-
(c) In the case of Xxxx, Xxxx will advise the Company, promptly
after Xxxx receives notice thereof, of the time when the Registration Statement
has become effective or any supplement or amendment has been filed, of the
issuance of any stop order or the suspension of the qualification of the Xxxx
Stock for offering or sale in any jurisdiction, of the initiation or threat of
any proceeding for any such purpose, or of any request by the SEC for the
amendment or supplement of the Registration Statement or for additional
information.
6.4. Press Releases. It will not, without the prior approval of
the other party hereto, which approval shall not be unreasonably withheld or
delayed, issue any press release or written statement for general circulation
relating to the transactions contemplated hereby, except as otherwise required
by applicable law or regulation or the rules of the NYSE.
6.5. Access; Information. (a) Upon reasonable notice and subject
to applicable laws relating to the exchange of information, it shall, and shall
cause its Subsidiaries to, afford the other parties and their officers,
employees, counsel, accountants and other authorized representatives, access,
during normal business hours throughout the period prior to the Effective Date,
to all of its properties, books, contracts, commitments and records, and to its
officers, employees, accountants, counsel or other representatives, and, during
such period, it shall, and shall cause its Subsidiaries to, furnish promptly to
such other parties and representatives (i) a copy of each material report,
schedule and other document filed by it pursuant to the requirements of federal
or state securities or banking laws (other than reports or documents that Xxxx
or the Company, or their respective Subsidiaries, as the case may be, are not
permitted to disclose under applicable law), and (ii) all other information
concerning the business, properties and personnel of it as the other may
reasonably request. Neither Xxxx nor the Company nor any of their respective
Subsidiaries shall be required to provide access to or to disclose information
where such access or disclosure would violate or prejudice the rights of its
customers, jeopardize the attorney-client privilege of the institution in
possession or control of such information or contravene any law, rule,
regulation, order, judgment, decree, fiduciary duty or binding agreement entered
into prior to the date of this Agreement. The parties hereto will make
appropriate substitute disclosure arrangements under the circumstances in which
the restrictions of the preceding sentence apply.
(b) It will not use any information obtained pursuant to this
Section 6.5 for any purpose unrelated to the consummation of the transactions
contemplated by this Agreement and, if this Agreement is terminated, will
promptly destroy all information and documents obtained pursuant to this
paragraph. No investigation by either party of the business and affairs of the
other shall affect or be deemed to modify or waive any representation, warranty,
covenant or agreement in this Agreement, or the conditions to either party's
obligation to consummate the transactions contemplated by this Agreement.
-26-
6.6. Acquisition Proposals. Without the prior written consent of
Xxxx, the Company shall not, shall cause its Subsidiaries not to, and shall use
best efforts to cause the Company's and its Subsidiaries' officers, directors,
agents, advisors and affiliates not to, facilitate, solicit or encourage any
inquiries or proposals, whether made prior to or after the date hereof, with
respect to, or engage in any negotiations concerning, or provide any information
to, or have any discussions with, any person relating to, any Competing
Transaction; provided, however that the Company's Board of Directors may, and
may authorize and permit its officers, directors, employees or agents to,
furnish information and participate in such discussions and negotiations if the
Company's Board of Directors, after having consulted with outside counsel, has
reasonably determined that the failure to provide information or participate in
negotiations and discussions in response to a proposed Competing Transaction
which may be a Superior Proposal would constitute a breach by the Board of
Directors of the Company of their fiduciary duties under applicable laws. Upon
such determination, the Company shall notify Xxxx of its taking of such actions
within 8 hours thereof.
6.7. Affiliate Agreements. (a) Not later than the 15th day prior
to the mailing of the Joint Proxy Statement, the Company shall deliver to Xxxx
and Xxxx shall deliver to the Company, a schedule of each person that, to the
best of its knowledge, is or is reasonably likely to be, as of the date of the
relevant Meeting, deemed to be an "affiliate" of it (each, an "Affiliate") as
that term is used in SEC Accounting Series Releases 130 and 135 and, in the case
of the Company only, in Rule 145 under the Securities Act.
(b) The Company and Xxxx shall use its respective reasonable best
efforts to cause each person who may be deemed to be an Affiliate of the Company
or Xxxx, as the case may be, to execute and deliver to the Company and Xxxx on
or before the date of mailing of the Joint Proxy Statement an agreement in the
form attached hereto as Exhibit B (in the case of affiliates of the Company) or
Exhibit C (in the case of affiliates of Xxxx).
(c) Xxxx shall use its reasonable best efforts to publish, not
later than 45 days after the end of the first full calendar month commencing
after the Effective Time occurs, financial results covering at least thirty (30)
days of post-Merger combined operations as contemplated by and in accordance
with the terms of SEC Accounting Series Release No. 135.
6.8. Takeover Laws. Neither party shall take any action that would
cause the transactions contemplated by this Agreement and the Stock Option
Agreement to be subject to requirements imposed by any Takeover Law and each of
them shall take all necessary steps within its control to exempt (or ensure the
continued exemption of) the transactions contemplated by this Agreement and the
Stock Option Agreement from, or if necessary challenge the validity or
applicability of, any applicable Takeover Law, as now or hereafter in effect,
including Sections 33-841 and 33-844 of the CBCA, Sections 13.1-725, 13.1-726
and 13.1-728 of the Virginia Stock Corporation Act and Takeover Laws of any
other State that purport to apply to this
-27-
Agreement, the Stock Option Agreement or the transactions contemplated hereby or
thereby.
6.9. No Rights Triggered. Each of Company and Xxxx shall use their
respective reasonable best efforts to ensure that the entering into of this
Agreement and the consummation of the transactions contemplated hereby and any
other action or combination of actions, or any other transactions contemplated
hereby, do not and will not result in the grant of any rights to any person (i)
under any material agreement to which it or any of its Subsidiaries is a party
(including, in the case of the Company, the Company Rights Agreement), or (ii)
in the case of the Company, to exercise or receive certificates for Rights, or
acquire any property in respect of Rights, under the Company Rights Agreement.
6.10. Shares Listed. In the case of Xxxx, Xxxx shall use its best
efforts to list, prior to the Effective Date, on the NYSE, PSE and International
Stock Exchanges, upon official notice of issuance, the shares of Xxxx Common
Stock to be issued in the Merger.
6.11. Regulatory Applications. Xxxx and the Company and their
respective Subsidiaries shall cooperate and use their respective reasonable best
efforts (i) to prepare all documentation, to effect all filings, to obtain all
permits, consents, approvals and authorizations of all third parties and
Governmental Entities necessary to consummate the transactions contemplated by
this Agreement, and to comply with the terms and conditions of such permits,
consents, approvals and authorizations and (ii) to cause the Merger to be
consummated as expeditiously as practicable. Each of Xxxx and the Company shall
have the right to review in advance, and to the extent practicable each will
consult with the other, in each case subject to applicable laws relating to the
exchange of information, with respect to, all material written information
submitted to any third party or any Governmental Entities in connection with the
transactions contemplated by this Agreement. In exercising the foregoing right,
each of the parties hereto agrees to act reasonably and as promptly as
practicable. Each party hereto agrees that it will consult with the other
parties hereto with respect to the obtaining of all material permits, consents,
approvals and authorizations of all third parties and Governmental Entities
necessary or advisable to consummate the transactions contemplated by this
Agreement and each party will keep the other parties apprised of the status of
material matters relating to completion of the transactions contemplated hereby.
6.12. Indemnification; Directors' and Officers' Insurance. (a)
>From and after the Effective Time, Xxxx shall indemnify, defend and hold
harmless the present and former officers and directors of the Company in respect
of acts or omissions occurring on or prior to the Effective Time to the fullest
extent permitted by applicable law, including with respect to taking all actions
necessary to advance expenses to the extent permitted by applicable law.
-28-
(b) Xxxx shall use its best efforts to cause the Surviving
Corporation or Xxxx to obtain and maintain in effect for a period of six years
after the Effective Time policies of directors' and officers' liability
insurance at no cost to the beneficiaries thereof with respect to acts or
omissions occurring on or prior to the Effective Time with substantially the
same coverage and containing substantially similar terms and conditions as
existing policies; provided, however, that neither the Surviving Corporation nor
Xxxx shall be required to pay an annual premium for such insurance coverage in
excess of 200% of the Company's current annual premium, but in such case shall
purchase as much coverage as possible for such amount.
(c) In the event Xxxx or any of its successors or assigns (i)
consolidates with or merges into any other person and shall not be the
continuing or surviving corporation or entity of such consolidation or merger,
or (ii) transfers or conveys all or substantially all of its properties and
assets to any person, then, and in each such case, to the extent necessary,
proper provision shall be made so that the successors and assigns of Xxxx shall
assume the obligations set forth in this Section 6.12.
(d) The provisions of this Section 6.12 are intended to be for the
benefit of, and shall be enforceable by, each Indemnified Party and his or her
heirs and representatives.
6.13. Benefits Plans. (a) At and following the Effective Time,
Xxxx agrees that it shall honor all obligations of the Company or its
Subsidiaries under the severance plans, policies or agreements, and
indemnification agreements of the Company or its Subsidiaries set forth on
Section 5.3(m) of the Company Disclosure Schedule. Xxxx agrees to employ all key
management employees of the Company through October 31, 1998 and to employ the
employees of the Company set forth on Schedule 6.13(a) of the Company Disclosure
Schedule until January 31, 1999, and to give each employee at least one business
day's notice of any termination of such employee's employment thereafter.
(b) Xxxx shall, during the period commencing at the Effective Time
and ending on the first anniversary thereof, provide or cause the Company or its
Subsidiaries to provide the employees of the Company and its Subsidiaries with
benefits under employee benefit plans (other than plans involving the issuance
of stock-based awards) that are no less favorable in the aggregate than either
those benefits currently provided by the Company and its Subsidiaries to such
employees or provided by Xxxx and its Subsidiaries to similarly situated
employees of Xxxx and its Subsidiaries.
(c) The parties hereto agree that, except as provided on Section
6.13(c) of the Company Disclosure Schedule, the Merger and the other
transactions contemplated by this Agreement (including any stockholder approval
of the Merger and the appointment and election of directors under Section 2.3)
will not be treated as a Change in Control under any Compensation and Benefit
Plan of the Company or any of its Subsidiaries.
-29-
(d) The Company shall be permitted to establish a retention pool in
an amount not to exceed $8.7 million in the aggregate to be paid to key
management employees of the Company who are employed by the Company at least
through October 31, 1998.
6.14. Notification of Certain Matters. Each of the Company and
Xxxx shall give prompt notice to the other of any fact, event or circumstance
known to it that (i) is reasonably likely, individually or taken together with
all other existing facts, events and circumstances known to it, to result in any
Material Adverse Effect with respect to it, or (ii) would cause or constitute a
material breach of any of its representations, warranties, covenants or
agreements contained herein.
ARTICLE VII
CONDITIONS TO CONSUMMATION OF THE MERGER
The obligations of each of the parties to consummate the Merger is
conditioned upon the satisfaction (or waiver by the party for whose benefit the
applicable condition exists) of each of the following:
7.1. Shareholder Vote. Approval of the Plan of Merger
contained in this Agreement by the requisite votes of the stockholders of the
Company and of Xxxx, respectively.
7.2. Regulatory Approvals. All regulatory approvals required to
consummate the transactions contemplated hereby, including the termination or
expiration of the waiting period under the HSR Act, shall have been obtained and
shall remain in full force and effect and all statutory waiting periods in
respect thereof shall have expired, other than any such regulatory approvals the
failure to obtain which are not reasonably likely, individually, in the
aggregate or together with all other existing facts, events and circumstances,
to result in any Material Adverse Effect with respect to the Company or Xxxx.
7.3. No Injunction, Etc. No order, decree or injunction of any
court or agency of competent jurisdiction shall be in effect, and no law,
statute or regulation shall have been enacted or adopted, that enjoins,
prohibits or makes illegal consummation of any of the transactions contemplated
hereby provided, however, that each of Xxxx and the Company shall have used its
best efforts to prevent any such rule, regulation, injunction, decree or other
order, and to appeal as promptly as possible any injunction, decree or other
order that may be entered.
7.4. Representations, Warranties and Covenants of Xxxx. In the
case of the Company's obligation to consummate the Merger: (i) each of the
representations and warranties contained herein of Xxxx shall be true and
correct as of the Effective Date with the same effect as though all such
representations and warranties
-30-
had been made on the Effective Date, except for any such representations and
warranties made as of a specified date, which shall be true and correct as of
such date, in any case subject to the standard set forth in Section 5.2, (ii)
each and all of the agreements and covenants of Xxxx to be performed and
complied with pursuant to this Agreement on or prior to the Effective Date shall
have been duly performed and complied with in all material respects, and (iii)
the Company shall have received a certificate signed by an executive officer of
Xxxx, dated the Effective Date, to the effect set forth in clauses (i) and (ii)
of this Section 7.5.
7.5. Representations, Warranties and Covenants of the Company. In
the case of Dana's obligation to consummate the Merger: (i) each of the
representations and warranties contained herein of the Company shall be true and
correct as of the Effective Date with the same effect as though all such
representations and warranties had been made on the Effective Date, except for
any such representations and warranties made as of a specified date, which shall
be true and correct as of such date, in any case subject to the standard set
forth in Section 5.2, (ii) each and all of the agreements and covenants of the
Company to be performed and complied with pursuant to this Agreement on or prior
to the Effective Date shall have been duly performed and complied with in all
material respects, and (iii) Xxxx shall have received a certificate signed by an
executive officer of the Company, dated the Effective Date, to the effect set
forth in clauses (i) and (ii) of this Section 7.5.
7.6. Effective Registration Statement. The Registration Statement
shall have become effective and no stop order suspending the effectiveness of
the Registration Statement shall have been issued and no proceedings for that
purpose shall have been initiated or threatened by the SEC or any other
Governmental Entity.
7.7. Tax Opinion. In the case of Xxxx, Xxxx shall have received an
opinion from Wachtell, Lipton, Xxxxx & Xxxx dated as of the Effective Time, and
in the case of the Company, the Company shall have received an opinion from
Xxxxx Xxxx & Xxxxxxxx dated as of the Effective Time, each substantially to the
effect that, on the basis of the facts, representations, covenants and
assumptions set forth in such opinions or certificates of officers referred to
below, the Merger will be treated for Federal income tax purposes as a
reorganization within the meaning of Section 368(a) of the Code and that
accordingly (other than in the case of the opinion of Xxxxx Xxxx & Xxxxxxxx,
which shall not address (i)):
(i) No gain or loss will be recognized by Xxxx, Merger Sub, or the
Company as a result of the Merger;
(ii) No gain or loss will be recognized by the stockholders of the
Company who exchange all of their Company Common Stock solely for Xxxx Common
Stock pursuant to the Merger (except with respect to cash received in lieu of a
fractional share interest in Xxxx Common Stock); and
-31-
(iii) The aggregate tax basis of the Xxxx Common Stock received by
stockholders who exchange all of their Company Common Stock solely for Xxxx
Common Stock in the Merger will be the same as the aggregate tax basis of the
Company Common Stock surrendered in exchange therefor (reduced by any amount
allocable to a fractional share interest for which cash is received).
In rendering such opinions, such counsel may require and rely upon
representations and covenants including those contained in certificates of
officers of Xxxx, the Company and others, reasonably satisfactory in form and
substance to such counsel.
7.8. Exchange Listing. The shares of Xxxx Common Stock issuable
pursuant to this Agreement shall have been approved for listing on the NYSE,
subject to official notice of issuance.
7.9. Company Rights Agreement. Each of the representations and
warranties of the Company contained in Section 5.3(o) shall be true and correct
as of the Effective Time in all respects with the same effect as though such
representations and warranties had been made at the Effective Time, without
giving effect to the standard set forth in Section 5.2.
7.10. Accounting Treatment. Xxxx and the Company shall have
received from Price Waterhouse LLP, independent public accountants for Xxxx and
the Company, a letter, dated as of or shortly before the Effective Date, stating
its opinion that the Merger shall qualify for "pooling of interests" accounting
treatment.
A failure to satisfy any of the conditions set forth in Section 7.5 or 7.9 shall
only constitute conditions if asserted by Xxxx, and a failure to satisfy the
condition set forth in Section 7.4 shall only constitute a condition if asserted
by the Company, and a failure to satisfy the condition set forth in Section 7.7
shall only constitute a condition if asserted by the party which has not
received an opinion contemplated thereby to be delivered to such party.
ARTICLE VIII
TERMINATION
8.1. Termination. This Agreement may be terminated, and the Merger
may be abandoned:
(a) Mutual Consent. At any time prior to the Effective Time, by the
mutual consent of Xxxx and the Company in a written instrument, if the Board of
Directors of each so determines by vote of a majority of the members of its
entire Board.
-32-
(b) Breach. At any time prior to the Effective Time, by Xxxx or the
Company (provided that the terminating party is not then in material breach of
any representation, warranty, covenant or other agreement contained herein), if
its Board of Directors so determines by vote of a majority of the members of its
entire Board, in the event of either: (i) a breach by the other party of any
representation or warranty contained herein (subject to the standard set forth
in Section 5.2), which breach cannot be or has not been cured within 30 days
after the giving of written notice to the breaching party of such breach; or
(ii) a material breach by the other party of any of the covenants or agreements
contained herein, which breach cannot be or has not been cured within 30 days
after the giving of written notice to the breaching party of such breach.
(c) Delay. At any time prior to the Effective Time, by Xxxx or the
Company, if its Board of Directors so determines by vote of a majority of the
members of its entire Board, in the event that the Merger is not consummated by
December 31, 1998, except to the extent that the failure of the Merger then to
be consummated arises out of or results from the failure of the party seeking to
terminate this Agreement to perform or observe the covenants and agreements of
such party set forth herein.
(d) No Approval. By the Company or Xxxx, if its Board of Directors
so determines by a vote of a majority of the members of its entire Board, in the
event (i) any Governmental Entity of competent jurisdiction shall have issued a
final nonappealable order enjoining or otherwise prohibiting the consummation of
the transactions contemplated by this Agreement, or (ii) any stockholder
approval required by Section 7.1 herein is not obtained at (x) the Company
Meeting or (y) the Xxxx Meeting.
(e) Company Recommendation. By the Board of Directors of Xxxx if
the Board of Directors of the Company shall or shall resolve to (i) not
recommend, or withdraw its approval or recommendation of, the Merger, this
Agreement or any of the transactions contemplated hereby, (ii) modify such
approval or recommendation in a manner adverse to Xxxx or Merger Sub, or (iii)
approve, recommend or fail to take a position that is adverse to any proposed
Competing Transaction.
(f) Xxxx Recommendation. By the Board of Directors of the Company
if the Board of Directors of Xxxx shall or shall resolve to (i) not recommend,
or withdraw its approval or recommendation of, the Merger, this Agreement or any
of the transactions contemplated hereby, or (ii) modify such approval or
recommendation in a manner adverse to the Company.
(g) Competing Transaction. By the Board of Directors of the Company
if to the extent permitted by Section 6.2, the Board of Directors of the Company
approves or recommends any Superior Proposal.
-33-
8.2. Effect of Termination and Abandonment. In the event of
termination of this Agreement and the abandonment of the Merger pursuant to this
Article VIII, no party to this Agreement shall have any liability or further
obligation to any other party hereunder except (i) as set forth in Section 9.1,
and (ii) that termination will not relieve a breaching party from liability for
any willful breach of this Agreement giving rise to such termination.
8.3. Break-up Expenses. (a) Provided that neither of Xxxx or
Merger Sub is in material breach of their representations, warranties and
agreements under this Agreement, (w) if this Agreement is terminated by the
Board of Directors of the Company pursuant to Section 8.1(g), (x) if this
Agreement is terminated by the Board of Directors of Xxxx pursuant to Section
8.1(e) and any Competing Transaction has been proposed or announced on or after
the date hereof, (y) if this Agreement is terminated by Xxxx pursuant to Section
8.1(d)(ii)(x) and any Competing Transaction has been proposed or announced on or
after the date hereof, or (z) if within 12 months of the termination of this
Agreement by Xxxx pursuant to Section 8.1(b), 8.1(c), 8.1(d)(ii)(x) or 8.1(e),
any Competing Transaction is entered into, agreed to or consummated by the
Company (any such event specified in clauses (w)-(z) of this Section 8.3, a
"Triggering Event"), then the Company shall pay to Xxxx (or to any Subsidiary of
Xxxx designated in writing by Xxxx to the Company) $87,500,000 (the "Termination
Fee") (less any Expense Fee that may previously have been paid or is payable in
the same circumstances) in same-day funds, on the date of such termination, in
the case of clause (w), (x), or (y), or on the earlier of the date an agreement
is entered into with respect to a Competing Transaction or a Competing
Transaction is consummated in the case of clause (z). In no event shall more
than one Termination Fee be payable under this Agreement.
(b) If this Agreement is terminated by either the Company or Xxxx
for any reason pursuant to Section 8.1(b), 8.1(e) or 8.1(f), then the
non-terminating party shall (notwithstanding Section 9.5), on the date of such
termination, pay to the terminating party (or to any Subsidiary of the
terminating party designated in writing to the other party) $5,000,000 (the
"Expense Fee") representing the cash amount necessary to compensate the
terminating party and its affiliates for all fees and expenses incurred at any
time prior to such termination by any of them or on their behalf in connection
with the Merger, the preparation of this Agreement and the transactions
contemplated by this Agreement.
(c) The parties acknowledge that the agreements contained in
paragraphs (a) and (b) of this Section 8.3 are an integral part of the
transactions contemplated by this Agreement, and that, without these agreements,
they would not enter into this Agreement; accordingly, if any party fails to pay
promptly any amount due pursuant to this Section 8.3 and, in order to obtain
such payment, any other party commences a suit that results in a judgment
against any other party for any such amount, such first party shall pay to such
other party its cost and expenses (including attorneys' fees) in connection with
such suit, together with interest on the amount of
-34-
the fee at the prime or base rate of Citibank, N.A. from the date such payment
was due under this Agreement.
ARTICLE IX
MISCELLANEOUS
9.1. Survival. All representations, warranties, agreements and
covenants contained in this Agreement shall not survive the Effective Time or
termination of this Agreement if this Agreement is terminated prior to the
Effective Time; provided, however, if the Effective Time occurs, the agreements
of the parties in Sections 3.4, 3.7, 6.7(c), 6.12, 6.13, 9.1, 9.4 and 9.8 shall
survive the Effective Time, and if this Agreement is terminated prior to the
Effective Time, the agreements of the parties in Sections 6.5(b), 8.2, 8.3, 9.1,
9.4, 9.5, 9.6, 9.7 and 9.8, shall survive such termination.
9.2. Waiver; Amendment. (a) Subject to compliance with applicable
law, prior to the Effective Time, any provision of this Agreement may be amended
or waived if, but only if, such amendment or waiver is in writing and is signed,
in the case of an amendment, by each party to this Agreement 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,
reduce the amount or change the kind of consideration to be received in exchange
for 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.
9.3. Counterparts. This Agreement may be executed in one
or more counterparts and by facsimile, each of which shall be deemed to
constitute an original.
9.4. Governing Law. (a) This Agreement shall be governed by, and
interpreted in accordance with, the laws of the State of Connecticut, without
regard to the conflict of law principles thereof (except to the extent that
mandatory provisions of Federal law govern).
(b) Any suit, action or proceeding seeking to enforce any provision
of, or based on any matter arising out of or in connection with, this Agreement
or the transactions contemplated hereby may be brought in any federal court
located in the State of Connecticut or any Connecticut state court, and each of
the parties hereby consents to the jurisdiction of such courts (and of the
appropriate appellate courts therefrom) in any such suit, action or proceeding
and irrevocably waives, to the fullest
-35-
extent permitted by law, any objection which it may now or hereafter have to the
laying of the venue of any such suit, action or proceeding in any such court or
that any such suit, action or proceeding which is brought in any such court has
been brought in an inconvenient form. Process in any such suit, action or
proceeding may be served on any party anywhere in the world, whether within or
without the jurisdiction of any such court. Without limiting the foregoing, each
party agrees that service of process on such party as provided in Section 9.7
shall be deemed effective service of process on such party.
(c) EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES ANY AND
ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATED TO
THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
9.5. Expenses. Except as set forth in Section 8.3, each party
hereto will bear all expenses incurred by it in connection with this Agreement
and the transactions contemplated hereby, except that the costs of printing,
mailing and filing the Registration Statement with the SEC and the filings of
the pre-merger notification and report forms under the HSR Act (including filing
fees) shall be shared equally between the Company and Xxxx.
9.6. Confidentiality. Each of the parties hereto and their
respective agents, attorneys and accountants will maintain the confidentiality
of all information provided in connection herewith in accordance, and subject to
the limitations of, the Confidentiality Agreement. From and after the date
hereof, unless and until this Agreement shall have been terminated in accordance
with the terms hereof (and including that any Expense Fee or Termination Fee
shall have been paid to the extent payable in accordance with the terms hereof)
Section 10 of the Confidentiality Agreement shall no longer be of any force or
effect.
9.7. Notices. All notices, requests and other communications
hereunder to a party shall be in writing and shall be deemed given if personally
delivered, telecopied (with confirmation) or mailed by registered or certified
mail (return receipt requested) to such party at its address set forth below or
such other address as such party may specify by notice to the parties hereto.
If to Xxxx, to:
Xxxx Corporation
0000 Xxxx Xxxxxx
Xxxxxx, Xxxx 00000
Attention: Xxxxxx X. Xxxxxxx, Esq.
Telecopier: (000) 000-0000
-36-
With copies to:
Wachtell, Lipton, Xxxxx & Xxxx
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx X. Xxxxxxxx, Esq.
Telecopier: (000) 000-0000
If to the Company, to:
Echlin Inc.
000 Xxxxxx Xxxxx Xxxx
Xxxxxxxx, Xxxxxxxxxxx 00000
Attention: Xxx X. Xxxxxxxxxx, Esq.
Telecopier: (000) 000-0000
With copies to:
Xxxxx Xxxx & Xxxxxxxx
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx X. XxXxxxxx, Xx., Esq.
Telecopier: (000) 000-0000
9.8. Understanding; No Third Party Beneficiaries. Except for the
Confidentiality Agreement (which shall remain in effect; provided, however, that
the provisions of Section 10 thereof will remain in effect as modified by
Section 9.6) and the Stock Option Agreements, this Agreement represents the
entire understanding of the parties hereto with reference to the transactions
contemplated hereby and thereby and supersede any and all other oral or written
agreements heretofore made. Except for Section 6.12, nothing in this Agreement,
expressed or implied, is intended to confer upon any person, other than the
parties hereto or their respective successors, any rights, remedies, obligations
or liabilities under or by reason of this Agreement.
9.9. Interpretation; Absence of Presumption. (a) For the purposes
hereof, (i) words in the singular shall be held to include the plural and vice
versa and words of one gender shall be held to include the other gender as the
context requires, (ii) the terms "hereof," "herein," and "herewith" and words of
similar import shall, unless otherwise stated, be construed to refer to this
Agreement as a whole (including all of the Schedules and Exhibits hereto) and
not to any particular provision of this Agreement, and Article, Section,
paragraph and Schedule and Exhibit references are to the Articles, Sections,
paragraphs, Schedules and Exhibits to this Agreement unless otherwise specified,
(iv) the word "including" and words of similar import when used in this
Agreement shall mean "including, without limitation," unless the context
otherwise requires or unless otherwise specified, (v) the word "or" shall not be
exclusive,
-38-
and (vi) provisions shall apply, when appropriate, to successive events and
transactions.
(b) This Agreement shall be construed without regard to any
presumption or rule requiring construction or interpretation against the Party
drafting or causing any instrument to be drafted.
9.10. Headings. The Section, Article and other headings contained
in this Agreement are inserted for convenience of reference only and shall not
affect the meaning or interpretation of this Agreement. All references to
Sections or Articles contained herein mean Sections or Articles of this
Agreement unless otherwise stated.
9.11. Severability. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction or
other authority to be invalid, void or unenforceable, the remainder of the
terms, provisions, covenants and restrictions of this Agreement shall remain in
full force and effect and shall in no way be affected, impaired or invalidated
so long as the economic or legal substance of the transactions contemplated
hereby is not affected in any manner materially adverse to any party. Upon such
a determination, the parties shall negotiate in good faith to modify this
Agreement so as to effect the original intent of the parties as closely as
possible in an acceptable manner in order that the transactions contemplated
hereby be consummated as originally contemplated to the fullest extent possible.
9.12. Specific Performance. The parties hereto agree that
irreparable damage would occur in the event any provision of this Agreement was
not performed in accordance with the terms hereof and that the parties shall be
entitled to specific performance of the terms hereof in addition to any other
remedy to which they are entitled at law or in equity.
9.13. 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 each other party hereto.
IN WITNESS WHEREOF, the parties hereto have caused this instrument
to be executed in counterparts by their duly authorized officers, all as of the
day and year first above written.
ECHLIN INC.
By: /s/ Xxxxx X. XxXxxxx
---------------------------------
Name: Xxxxx X. XxXxxxx
Title: Chairman, President and
Chief Executive Officer
XXXX CORPORATION
By: /s/ Southwood X. Xxxxxxx
---------------------------------
Name: Southwood X. Xxxxxxx
Title: Chairman and Chief Executive
Officer
ECHO ACQUISITION CORP.
By: /s/ Xxxxxx X. Xxxxxxx
---------------------------------
Name: Xxxxxx X. Xxxxxxx
Title: Vice President
