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AGREEMENT AND PLAN OF MERGER
among
SPX CORPORATION,
SAC CORP.
and
GENERAL SIGNAL CORPORATION
Dated as of July 19, 1998
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TABLE OF CONTENTS
Page
ARTICLE I
THE MERGER
Section 1.1. The Merger.....................................................1
Section 1.2. Closing........................................................1
Section 1.3. Effective Time.................................................2
Section 1.4. Effects of the Merger..........................................2
Section 1.5. Certificate of Incorporation and Bylaws........................2
Section 1.6. Directors; Officers............................................2
Section 1.7. Change in Merger Structure.....................................2
ARTICLE II
EFFECT OF THE MERGER ON THE STOCK OF THE
CONSTITUENT CORPORATIONS; EXCHANGE OF CERTIFICATES
Section 2.1. Conversion of Securities.......................................3
Section 2.2. Exchange of Certificates.......................................9
Section 2.3. Stock Transfer Books..........................................12
Section 2.4. Company Options and Restricted Shares.........................12
Section 2.5. Appraisal Rights..............................................13
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Section 3.1. Organization, Qualification, Etc..............................13
Section 3.2. Capital Stock.................................................14
Section 3.3. Corporate Authority; No Violation.............................15
Section 3.4. Reports and Financial Statements..............................16
Section 3.5. No Undisclosed Liabilities....................................17
Section 3.6. Compliance with Laws..........................................17
Section 3.7. Environmental Laws............................................18
Section 3.8. Employee Benefit Plans........................................18
Section 3.9. Absence of Certain Changes or Events..........................21
Section 3.10 Litigation....................................................21
Section 3.11 Material Contracts............................................21
Section 3.12 Labor Matters.................................................21
Section 3.13 Tax Matters...................................................22
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Section 3.14 Opinion of Financial Advisor..................................23
Section 3.15 Takeover Laws; Company Rights Agreement.......................23
Section 3.16 Required Vote of the Company Shareholders.....................24
Section 3.17 Finders or Brokers............................................24
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT
Section 4.1. Organization, Qualification, Etc..............................24
Section 4.2. Capital Stock.................................................25
Section 4.3. Corporate Authority; No Violation.............................26
Section 4.4. Reports and Financial Statements..............................27
Section 4.5. No Undisclosed Liabilities....................................27
Section 4.6. Compliance with Laws..........................................28
Section 4.7. Environmental Laws............................................28
Section 4.8. Employee Benefit Plans........................................28
Section 4.9. Absence of Certain Changes or Events..........................30
Section 4.10 Litigation....................................................31
Section 4.11 Material Contracts............................................31
Section 4.12 Labor Matters.................................................31
Section 4.13 Tax Matters...................................................31
Section 4.14 Opinion of Financial Advisor..................................32
Section 4.15 Takeover Laws; Parent Rights Agreement........................32
Section 4.16 Required Vote of Parent Stockholders..........................33
Section 4.17 Finders or Brokers............................................33
Section 4.18. Financing.....................................................33
ARTICLE V
COVENANTS AND AGREEMENTS
Section 5.1. Conduct of Business by the Company and Parent.................34
Section 5.2. Investigation.................................................36
Section 5.3. Stockholder Approval; Filings.................................37
Section 5.4. Additional Reports............................................39
Section 5.5. Reasonable Best Efforts.......................................39
Section 5.6. Accountants' "Comfort" Letters................................39
Section 5.7. Takeover Statutes.............................................40
Section 5.8. No Solicitation...............................................40
Section 5.9. Public Announcements..........................................42
Section 5.10 Indemnification and Insurance.................................42
Section 5.11 Notification of Certain Matters...............................43
Section 5.12 Board of Directors and Officers of Parent.....................43
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Section 5.13 Employee Plans and Benefit Arrangements.......................43
ARTICLE VI
CONDITIONS TO THE MERGER
Section 6.1. Conditions to Each Party's Obligation to Effect the Merger....44
Section 6.2. Conditions to Obligations of the Company to Effect the Merger.45
Section 6.3. Conditions to Obligations of Parent to Effect the Merger......46
ARTICLE VII
TERMINATION, WAIVER, AMENDMENT AND CLOSING
Section 7.1. Termination or Abandonment....................................46
Section 7.2. Effect of Termination.........................................48
Section 7.3. Termination Payments..........................................48
ARTICLE VIII
MISCELLANEOUS
Section 8.1. No Survival of Representations and Warranties.................51
Section 8.2. Expenses......................................................51
Section 8.3. Counterparts; Effectiveness...................................51
Section 8.4. Governing Law.................................................52
Section 8.5. Notices.......................................................52
Section 8.6. Assignment; Binding Effect....................................53
Section 8.7. Severability..................................................53
Section 8.8. Enforcement of Agreement......................................53
Section 8.9. Miscellaneous.................................................53
Section 8.10 Headings......................................................54
Section 8.11 Certain Definitions...........................................54
Section 8.12 Knowledge.....................................................54
EXHIBITS
Exhibit A Form of Certificate of Incorporation of Merger Sub
Exhibit B Form of Opinion of Wachtell, Lipton, Xxxxx & Xxxx
Exhibit C Form of Opinion of Fried, Frank, Harris, Xxxxxxx & Xxxxxxxx
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Index of Defined Terms
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TERM SECTION
affiliates....................................................8.11
Agreement.....................................................Preamble
Alternative Legal Opinions....................................5.3(f)
Alternative Transaction.......................................1.7
Cash Election.................................................2.1(f)
Cash Fraction.................................................2.1(g)(C)(1)(ii)
Closing.......................................................1.2
Closing Date..................................................1.2
Code..........................................................Recitals
Commitment Expenses...........................................7.3(c)(ii)
Company.......................................................Preamble
Company Affiliated Group......................................5.13(c)
Company Board Recommendation..................................3.3(a)
Company Business Combination..................................7.3(e)
Company Compensation and Benefit Plans........................3.8(a)
Company Competing Transaction.................................5.8(a)
Company Contracts.............................................3.3(b)
Company Disclosure Letter.....................................Article III
Company ERISA Affiliate.......................................3.8(d)
Company Meeting...............................................5.3(a)(i)
Company Options...............................................3.2(a)(ii)
Company Pension Plan..........................................3.8(c)
Company Plans.................................................3.2(a)(ii)
Company Preferred Stock.......................................3.2(a)
Company Rights Agreement......................................3.2(a)(i)
Company Rights................................................3.2(a)(i)
Company SEC Reports...........................................3.4
Company Shareholder Approval..................................3.16
Company Termination Fee.......................................7.3(a)
Company Third Party...........................................5.8(a)
Company Triggering Event......................................7.3(a)
Company Warrants..............................................3.2(a)(iii)
Company's 1997 Form 10-K......................................3.1(a)
Confidentiality Agreements....................................5.2
Contracts.....................................................3.3(b)
Decrees.......................................................3.6(a)
Delaware Certificate of Merger................................1.3
Delaware Secretary of State...................................1.3
DGCL..........................................................1.1
Effective Time................................................1.3
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Election Deadline.............................................2.1(j)
Encumbrances..................................................3.1(b)
Environmental Decrees.........................................3.7
Environmental Laws............................................3.7
ERISA.........................................................3.8(c)
Exchange Act..................................................3.3(c)
Exchange Agent................................................2.1(j)
Exchange Fund.................................................2.2(a)
Expense Fee...................................................7.3(c)(i)
Financing Commitments.........................................4.18
Financing Funds...............................................4.18
Form of Election..............................................2.1(f)
GAAP..........................................................3.4
Governmental Entity...........................................3.3(c)
Guarantee of Delivery.........................................2.1(j)
Hazardous Substances..........................................3.7
Holco.........................................................1.7
HSR Act.......................................................3.3(c)
Indemnified Parties...........................................5.10(a)
Joint Proxy Statement.........................................5.3(b)
Laws..........................................................3.6(a)
Lazard........................................................3.14
Letter of Transmittal.........................................2.2(b)
Litigation....................................................3.7
Material Adverse Effect.......................................3.1(a)
Merger........................................................Recitals
Merger Consideration..........................................2.2(c)
Merger Sub....................................................Preamble
Mixed Election................................................2.1(f)
Multiemployer Plan............................................3.8(b)
New York Certificate of Merger................................1.3
New York Department of State..................................1.3
Non-Election Fraction.........................................2.1(i)(D)(1)(ii)
Non-Election..................................................2.1(f)
NYBCL.........................................................1.1
NYSE..........................................................2.1(j)
Parent........................................................Preamble
Parent Board Recommendation...................................4.3(a)
Parent Business Combination...................................7.3(f)
Parent Change in Control Event................................4.8(h)
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Parent Common Stock...........................................2.1(c)
Parent Compensation and Benefit Plans.........................4.8(a)
Parent Contracts..............................................4.3(b)
Parent Disclosure Letter......................................Article IV
Parent ERISA Affiliate........................................4.8(d)
Parent Meeting................................................5.3(a)(ii)
Parent Pension Plan...........................................4.8(c)
Parent Preferred Stock........................................4.2
Parent Rights Agreement.......................................4.2(i)
Parent Rights.................................................4.2(i)
Parent's 1997 Form 10-K.......................................4.1(a)
Parent SEC Reports............................................4.4
Parent Stockholder Approval...................................4.16
Parent Stockholder Proposal...................................5.3(a)(ii)
Parent Termination Fee........................................7.3(b)
Parent Triggering Event.......................................7.3(b)
Pension Plan..................................................3.8(c)
Per Share Cash Amount.........................................2.1(c)
Per Share Mixed Consideration.................................2.1(c)
Per Share Stock Amount........................................2.1(c)
person........................................................8.11
Registration Statement........................................5.3(b)
Representative................................................2.1(f)
Restricted Shares.............................................3.2(a)(iv)
SEC...........................................................3.1(b)
Securities Act................................................3.3(c)
Share.........................................................1.7
Share Arrangements............................................3.1(b)
Significant Subsidiary........................................3.1(b)
Stock Certificates............................................2.1(c)
Stock Election................................................2.1(f)
Stock Fraction................................................2.1(h)(C)(1)
Subsidiaries..................................................8.11
Superior Transaction..........................................5.8(d)
Surviving Corporation.........................................1.1
Takeover Laws.................................................3.15(a)
Taxes.........................................................3.13(b)(i)
Tax Return....................................................3.13(b)(ii)
U.S. Company Compensation and Benefit Plans...................3.8(a)
U.S. Parent Compensation and Benefit Plans....................4.8(a)
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U.S. Subsidiary...............................................8.11
Unvested Restricted Shares....................................2.4(b)
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THIS AGREEMENT AND PLAN OF MERGER, dated as of July 19, 1998
(this "Agreement"), is among SPX Corporation, a Delaware corporation
("Parent"), SAC Corp., a Delaware corporation ("Merger Sub"), and General
Signal Corporation, a New York corporation (the "Company").
WHEREAS, the respective Boards of Directors of Parent, Merger Sub
and the Company have approved and have declared advisable the merger of the
Company with and into Merger Sub (the "Merger"), upon the terms and subject
to the conditions set forth herein, and have determined that the Merger and
the other transactions contemplated hereby are in the best interests of
their respective companies and shareholders;
WHEREAS, the parties intend that the Merger constitute a
"reorganization" within the meaning of Section 368(a) of the Internal
Revenue Code of 1986, as amended (the "Code"); and
WHEREAS, the parties desire to make certain representations,
warranties, covenants and agreements in connection with the Merger and also
to prescribe various conditions to the Merger.
NOW, THEREFORE, in consideration of the mutual agreements,
provisions and covenants contained in this Agreement, the parties hereby
agree as follows:
ARTICLE I
THE MERGER
Section 1.1. The Merger. Upon the terms and subject to the
conditions set forth in this Agreement, and in accordance with the New York
Business Corporation Law (the "NYBCL") and the Delaware General Corporation
Law (the "DGCL"), the Company shall be merged with and into Merger Sub at
the Effective Time (as defined in Section 1.3). Following the Effective
Time, the separate corporate existence of the Company shall cease and
Merger Sub shall be the surviving corporation (the "Surviving Corporation")
and shall succeed to and assume all the rights and obligations of the
Company in accordance with the NYBCL and the DGCL.
Section 1.2. Closing. The closing of the Merger (the "Closing")
will take place at 10:00 a.m., local time, at the offices of Fried, Frank,
Harris, Xxxxxxx & Xxxxxxxx, Xxx Xxx Xxxx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000 on
a date to be specified by the parties (the "Closing Date"), which shall be
no later than the second business day after the first date that all of the
conditions set forth in Sections 6.1 (a) through (e) have been satisfied or
waived, unless another place, time or date is agreed to by the parties
hereto.
Section 1.3. Effective Time. Subject to the provisions of this
Agreement, as soon as practicable on or after the Closing Date, the parties
(i) shall file with the Department of State for the State of New York (the
"New York Department of State") a certificate of merger or other
appropriate documents (in any such case, the "New York Certificate of
Merger") executed in accordance with the relevant provisions of the NYBCL
and (ii) shall file with the Secretary of State for the State of Delaware
(the "Delaware Secretary of State") a certificate of merger or other
appropriate documents (in any such case, the "Delaware Certificate of
Merger") executed in accordance with the relevant provisions of the DGCL
and (iii) shall make all other filings or recordings required under the
NYBCL and the DGCL, in each case necessary to effect the Merger. The Merger
shall become effective at the time of the filing of the New York
Certificate of Merger with the New York Department of State in accordance
with the NYBCL and the Delaware Certificate of Merger with the Delaware
Secretary of State in accordance with the DGCL, or at such subsequent date
or time as Parent and the Company shall agree and specify in the New York
Certificate of Merger and the Delaware Certificate of Merger (the time the
Merger becomes effective being hereinafter referred to as the "Effective
Time").
Section 1.4. Effects of the Merger. The Merger shall have the
effects set forth in Section 906 of the NYBCL and Section 259 of the DGCL.
Section 1.5. Certificate of Incorporation and Bylaws. (a) The
certificate of incorporation of Merger Sub, in the form attached hereto as
Exhibit A, shall be the certificate of incorporation of the Surviving
Corporation until thereafter changed or amended.
(b) The bylaws of Merger Sub, as in effect immediately prior to
the Effective Time, which shall contain indemnification provisions no less
favorable to directors and officers of the Company than the corresponding
provisions in the Company's bylaws as of the date hereof, until thereafter
changed or amended, shall be the bylaws of the Surviving Corporation.
Section 1.6. Directors; Officers. The directors and officers of
Merger Sub at the Effective Time shall be the directors and officers,
respectively, of the Surviving Corporation until their respective
successors are duly elected and qualified.
Section 1.7. Change in Merger Structure. By mutual agreement, the
Company and Parent may at any time change the method and determine a new
method of effectuating the combination with the Company (an "Alternative
Transaction") (including without limitation changing the provisions of this
Article I) if and to the extent they determine the change would be
desirable; provided that either of the following Alternative Transactions
(so long as it satisfies the provisions of the next-to-last sentence of
this Section 1.7) shall be deemed agreed to by the parties, and may be
implemented at
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Parent's election (which election shall be made as promptly as practicable after
the date of this Agreement and in any event prior to the mailing of the Joint
Proxy Statement (as defined in Section 5.3(b)) and provided that if such
Alternative Transaction would result in a Parent Change in Control Event (as
defined in Section 4.8) after giving effect to any amendments to the Parent
Compensation and Benefit Plans (as defined in Section 4.8), such Alternative
Transaction shall require the consent of the Company, which consent shall not be
unreasonably withheld): (i) a merger of the Company with and into Parent in
which Parent is the surviving corporation or (ii) a structure in which a holding
company ("Holco") would be formed, a subsidiary of Holco would merge into Parent
in which merger each stockholder of Parent would receive one share of common
stock of Holco in respect of each share of Parent Common Stock (as defined in
Section 2.1(c)) held by such stockholder immediately prior to such merger, and a
separate subsidiary of Holco would merge into the Company in which merger each
shareholder of the Company would receive cash and/or common stock of Holco in
respect of each share of common stock, par value $6.67 per share issued through
1969, par value $1.00 per share issued subsequent to 1969 of the Company (each,
a "Share") held by such shareholder immediately prior to such merger in the same
amounts as are provided for in Section 2.1(c). No Alternative Transaction
(including either of the Alternative Transactions specified in the preceding
sentence) shall (x) alter or change the amount or kind of consideration to be
issued to holders of Shares as provided herein, (y) materially delay the
consummation of the transactions contemplated hereby, or (z) cause an inability
to satisfy any of the closing conditions set forth in Article VI. The parties
agree to use their reasonable best efforts to determine promptly after the date
hereof whether any Alternative Transaction is desirable.
ARTICLE II
EFFECT OF THE MERGER ON THE STOCK OF THE
CONSTITUENT CORPORATIONS; EXCHANGE OF CERTIFICATES
Section 2.1. Conversion of Securities. At the Effective Time, by
virtue of the Merger and without any action on the part of Merger Sub, the
Company or the holders of any of the following securities:
(a) Each Share held in the treasury of the Company and each Share
owned by Parent or any direct or indirect wholly owned Subsidiary (as
defined in Section 8.11) of Parent or of the Company immediately prior to
the Effective Time (together with the associated Company Right (as defined
in Section 3.2; unless the context requires otherwise, all references
herein to Shares include the associated Company Rights)) shall be canceled
and extinguished without any conversion thereof and no payment shall be
made with respect thereto.
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(b) Each issued and outstanding share of common stock, par value
$.01 per share, of Merger Sub immediately prior to the Effective Time shall
be converted into one validly issued, fully paid and non-assessable share
of common stock of the Surviving Corporation, and the Surviving Corporation
shall be a wholly owned subsidiary of Parent.
(c) Subject to the other provisions of this Section 2.1, each
Share that is issued and outstanding immediately prior to the Effective
Time (excluding any Shares canceled pursuant to Section 2.1(a)) shall be
converted into either (i) the right to receive 0.6977 shares of common
stock, par value $10.00 per share, of Parent ("Parent Common Stock"),
together with the associated Parent Right (as defined in Section 4.2;
unless the context otherwise requires, all references herein to Parent
Common Stock include the associated Parent Rights) (the "Per Share Stock
Amount"), or (ii) the right to receive $45.00 in cash, without interest
(the "Per Share Cash Amount"), or (iii) the right to receive 0.4186 shares
of Parent Common Stock and $18.00 in cash, without interest (the "Per Share
Mixed Consideration") or (iv) a combination of shares of Parent Common
Stock and cash, each as determined in accordance with Section 2.1(g),
Section 2.1(h) or Section 2.1(i). All such Shares shall no longer be
outstanding and shall automatically be canceled and retired and shall cease
to exist, and each stock certificate previously evidencing Shares ("Stock
Certificates") immediately prior to the Effective Time shall thereafter
represent the right to receive the Per Share Stock Amount, the Per Share
Cash Amount, the Per Share Mixed Consideration or a combination of cash and
Parent Common Stock, each in accordance with this Article II. The holders
of Stock Certificates shall cease to have any rights with respect to the
Shares evidenced thereby except as otherwise provided herein or by Law (as
defined in Section 3.6). Such Stock Certificates shall be exchanged for
certificates evidencing whole shares of Parent Common Stock and/or cash, in
accordance with this Article II. No fractional shares of Parent Common
Stock shall be issued, and, in lieu thereof, a cash payment shall be made
pursuant to Section 2.2(e).
(d) If between the date of this Agreement and the Effective Time
the outstanding shares of Parent Common Stock shall have been changed into
a different number of shares, by reason of any stock dividend, subdivision,
split or combination of shares, the Per Share Stock Amount and the Parent
Common Stock component of the Per Share Mixed Consideration, or of the
amount of Parent Common Stock determined pursuant to clause (iv) of Section
2.1(c) shall be correspondingly adjusted to reflect such stock dividend,
subdivision, split or combination of shares.
(e) The aggregate number of Shares which may be converted into
the right to receive cash in the Merger shall be equal to 40% of the number
of Shares outstanding immediately prior to the Effective Time (other than
Shares owned by Parent or any direct or indirect wholly owned Subsidiary of
Parent or of the Company). The aggregate number of Shares which may be
converted into the right to receive Parent Common Stock in the Merger shall
be equal to 60% of the number of Shares outstanding
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immediately prior to the Effective Time (other than Shares owned by Parent or
any direct or indirect wholly owned Subsidiary of Parent or of the Company).
(f) Subject to the allocation and election procedures set forth
in this Section 2.1, each record holder (or beneficial owner through
appropriate and customary documentation and instructions) immediately prior
to the Effective Time of Shares shall be entitled either (i) to elect to
receive the Per Share Cash Amount for each such Share (a "Cash Election"),
or (ii) to elect to receive the Per Share Stock Amount for each such Share
(a "Stock Election"), or (iii) to elect to receive 60% of the Per Share
Stock Amount and 40% of the Per Share Cash Amount for each such Share (a
"Mixed Election") or (iv) to indicate that such record holder has no
preference as to the receipt of cash, Parent Common Stock or a combination
thereof with respect to such holder's Shares (a "Non-Election"). All such
elections shall be made on a form furnished by Parent for that purpose (a
"Form of Election") and reasonably satisfactory to the Company. If more
than one Stock Certificate shall be surrendered for the account of the same
holder, the number of shares of Parent Common Stock, if any, to be issued
to such holder in exchange for the Stock Certificates which have been
surrendered shall be computed on the basis of the aggregate number of
Shares represented by all of the Stock Certificates surrendered for the
account of such holder. Holders of record of Shares who hold such Shares as
nominees, trustees or in other representative capacities (each, a
"Representative") may submit multiple Forms of Election, provided that such
Representative certifies that each such Form of Election covers all Shares
held by such Representative for a particular beneficial owner.
(g) If the sum of (x) the aggregate number of Shares with respect
to which Cash Elections have been made plus (y) 40% of the aggregate number
of Shares with respect to which Mixed Elections have been made exceeds the
aggregate number of Shares which may be converted into the right to receive
cash in the Merger, then:
A. Each Share with respect to which a Stock Election shall have
been made shall be converted into the right to receive the
Per Share Stock Amount;
B. Each Share with respect to which a Non-Election shall have
been made (or deemed to have been made) shall be converted
into the right to receive the Per Share Stock Amount;
C. Each Share with respect to which a Cash Election shall have
been made shall be converted into the right to receive:
(1) the amount in cash, without interest, equal to the
product of (i) the Per Share Cash Amount and (ii) a
fraction (the "Cash Fraction"), the numerator of which
shall be the aggregate
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number of Shares which may be converted into the right to
receive cash in the Merger, and the denominator of which
shall be the sum of (x) the aggregate number of Shares with
respect to which Cash Elections shall have been made plus
(y) 40% of the aggregate number of Shares with respect to
which Mixed Elections shall have been made, and
(2) the number of shares of Parent Common Stock equal to
the product of (x) the Per Share Stock Amount and (y) a
fraction equal to one minus the Cash Fraction; and
D. Each Share with respect to which a Mixed Election shall have
been made shall be converted into the right to receive (i)
60% of the Per Share Stock Amount plus (ii) 40% of the
amount of cash specified in clause (C)(1) of this Section
2.1(g) and 40% of the number of shares of Parent Common
Stock specified in clause (C)(2) of this Section 2.1(g).
(h) If the sum of (x) the aggregate number of Shares with respect
to which Stock Elections have been made plus (y) 60% of the aggregate
number of Shares with respect to which Mixed Elections have been made
exceeds the aggregate number of Shares which may be converted into the
right to receive Parent Common Stock in the Merger, then:
A. Each Share with respect to which a Cash Election shall have
been made shall be converted into the right to receive the
Per Share Cash Amount;
B. Each Share with respect to which a Non-Election shall have
been made (or deemed to have been made) shall be converted
into the right to receive the Per Share Cash Amount;
C. Each Share with respect to which a Stock Election shall have
been made shall be converted into the right to receive:
(1) the number of shares of Parent Common Stock equal to
the product of (i) the Per Share Stock Amount and (ii)
a fraction (the "Stock Fraction"), the numerator of
which shall be the aggregate number of Shares which may
be converted into the right to receive Parent Common
Stock in the Merger, and the denominator of which shall
be the sum of (x) the aggregate number of Shares with
respect to which Stock Elections shall have been made
plus (y) 60% of the aggregate number of
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Shares with respect to which Mixed Elections shall have been
made, and
(2) the amount in cash, without interest, equal to the
product of (x) the Per Share Cash Amount and (y) a
fraction equal to one minus the Stock Fraction; and
D. Each Share with respect to which a Mixed Election shall have
been made shall be converted into the right to receive (i)
40% of the Per Share Cash Amount plus (ii) 60% of the number
of shares of Parent Common Stock specified in clause (C)(1)
of this Section 2.1(h) and 60% of the amount of cash
specified in clause (C)(2) of this Section 2.1(h).
(i) In the event that neither Section 2.1(g) nor Section 2.1(h)
above is applicable, then:
A. Each Share with respect to which a Cash Election shall have
been made shall be converted into the right to receive the
Per Share Cash Amount;
B. Each Share with respect to which a Stock Election shall have
been made (or deemed to have been made) shall be converted
into the right to receive the Per Share Stock Amount;
C. Each Share with respect to which a Mixed Election shall have
been made shall be converted into the right to receive 40%
of the Per Share Cash Amount and 60% of the Per Share Stock
Amount; and
D. Each Share with respect to which a Non-Election shall have
been made (or deemed to have been made), if any, shall be
converted into the right to receive:
(1) the amount in cash, without interest, equal to the
product of (i) the Per Share Cash Amount and (ii) a
fraction (the "Non-Election Fraction"), the numerator
of which shall be the excess of the (A) aggregate
number of Shares which may be converted into the right
to receive cash in the Merger over (B) the sum of the
aggregate number of Shares with respect to which a Cash
Election shall have been made plus 40% of the aggregate
number of Shares with respect to which Mixed Elections
shall have been made, and the denominator of which
shall be the excess of (A) the aggregate number of
Shares outstanding immediately prior to the Effective
Time
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(other than Shares owned by Parent or any direct or indirect
wholly owned Subsidiary of Parent or of the Company) over
(B) the sum of the aggregate number of Shares with respect
to which a Cash Election, a Stock Election or a Mixed
Election shall have been made, and
(2) the number of shares of Parent Common Stock equal to
the product of (x) the Per Share Stock Amount and (y) a
fraction equal to one minus the Non-Election Fraction.
(j) Elections shall be made by holders of Shares by delivering
the Form of Election to The Bank of New York, or such other bank or trust
company designated by Parent and who is reasonably satisfactory to the
Company (the "Exchange Agent"). To be effective, a Form of Election must be
properly completed, signed and submitted to the Exchange Agent by 5:00 p.m.
(New York City time) on the last business day prior to the date of the
Company Meeting (or, if applicable, the later of the Company Meeting or the
Parent Meeting) or such other time and date as Parent and the Company may
mutually agree (the "Election Deadline"), and accompanied by (1)(x) the
Stock Certificates representing the Shares as to which the election is
being made or (y) an appropriate guarantee of delivery of such Stock
Certificates as set forth in such Form of Election from a firm which is a
member of a registered national securities exchange or of the National
Association of Securities Dealers, Inc. or a commercial bank or trust
company having an office or correspondent in the United States, provided
such Stock Certificates are in fact delivered to the Exchange Agent within
three New York Stock Exchange ("NYSE") trading days after the date of
execution of such guarantee of delivery (a "Guarantee of Delivery") and (2)
a properly completed and signed Letter of Transmittal (as defined in
Section 2.2(b)). Failure to deliver Stock Certificates covered by any
Guarantee of Delivery within three NYSE trading days after the date of
execution of such Guarantee of Delivery shall be deemed to invalidate any
otherwise properly made Cash Election, Stock Election or Mixed Election.
Parent will have the discretion, which it may delegate in whole or in part
to the Exchange Agent, to determine whether Forms of Election have been
properly completed, signed and submitted or revoked and to disregard
immaterial defects in Forms of Election. The good faith decision of Parent
(or the Exchange Agent) in such matters shall be conclusive and binding.
Neither Parent nor the Exchange Agent will be under any obligation to
notify any person of any defect in a Form of Election submitted to the
Exchange Agent. The Exchange Agent shall also make all computations
contemplated by this Section 2.1 and all such computations shall be
conclusive and binding on the holders of Shares in the absence of manifest
error. Any Form of Election may be changed or revoked prior to the Election
Deadline. In the event a Form of Election is revoked prior to the Election
Deadline, Parent shall, or shall cause the Exchange Agent to, cause the
Stock Certificates representing the Shares covered by such Form of Election
to be promptly returned without charge to the person submitting the Form of
Election upon written request to that effect from such person.
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(k) For the purposes hereof, a holder of Shares who does not
submit a Form of Election which is received by the Exchange Agent prior to
the Election Deadline (including a holder who submits and then revokes his
or her Form of Election and does not resubmit a Form of Election which is
timely received by the Exchange Agent), or who submits a Form of Election
without the corresponding Stock Certificates or a Guarantee of Delivery,
shall be deemed to have made a Non-Election. If any Form of Election is
defective in any manner that the Exchange Agent cannot reasonably determine
the election preference of the shareholder submitting such Form of
Election, the purported Cash Election, Stock Election or Mixed Election set
forth therein shall be deemed to be of no force and effect and the
shareholder making such purported Cash Election, Stock Election or Mixed
Election shall, for purposes hereof, be deemed to have made a Non-Election.
(l) A Form of Election and a Letter of Transmittal shall be
included with each copy of the Joint Proxy Statement (as defined in Section
5.3) mailed to shareholders of the Company in connection with the Company
Meeting (as defined in Section 5.3). Parent and the Company shall each use
its reasonable best efforts to mail or otherwise make available the Form of
Election and a Letter of Transmittal to all persons who become holders of
Shares during the period between the record date for the Company Meeting
and the Election Deadline.
Section 2.2. Exchange of Certificates. (a) At or prior to the
Effective Time, Parent shall deposit, or shall cause to be deposited, with
the Exchange Agent for the benefit of the holders of Shares for exchange in
accordance with this Article II, through the Exchange Agent, (i)
certificates evidencing such number of shares of Parent Common Stock equal
to (x) the Per Share Stock Amount multiplied by (y) the aggregate number of
Shares which may be converted into the right to receive Parent Common Stock
in the Merger, and (ii) (1) cash in an amount equal to (x) the Per Share
Cash Amount multiplied by (y) the aggregate number of Shares which may be
converted into the right to receive cash in the Merger, and (2) any cash
necessary to pay amounts due pursuant to Section 2.2(e) (such certificates
for shares of Parent Common Stock and such cash being hereinafter referred
to as the "Exchange Fund"). The Exchange Agent shall, pursuant to
irrevocable instructions in accordance with this Article II, deliver the
Parent Common Stock and cash contemplated to be issued pursuant to Section
2.1 out of the Exchange Fund. The Exchange Fund shall not be used for any
other purpose. The Exchange Agent shall invest any cash included in the
Exchange Fund, as directed by Parent, on a daily basis. Any interest and
other income resulting from such investments shall be paid to Parent.
(b) Parent will instruct the Exchange Agent to mail to each
holder of record of Stock Certificates who has not previously surrendered
his or her Stock Certificates with a validly executed Form of Election and
Letter of Transmittal as soon as reasonably practicable after the Effective
Time, (i) a letter of transmittal (which shall
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specify that delivery shall be effected, and risk of loss and title to such
holder's Stock Certificates shall pass, only upon proper delivery of the Stock
Certificates to the Exchange Agent and shall be in such form and have such other
provisions as Parent may reasonably specify) and (ii) instructions for use in
effecting the surrender of the Stock Certificates in exchange for certificates
evidencing shares of Parent Common Stock and/or cash (collectively, the "Letter
of Transmittal").
(c) Upon the later of the Effective Time and the surrender of a
Stock Certificate for cancellation (or the affidavits and indemnification
regarding the loss or destruction of such certificates reasonably
acceptable to Parent) to the Exchange Agent together with the Letter of
Transmittal, duly executed, and such other customary documents as may be
required pursuant thereto, the holder of such Stock Certificate shall be
entitled to receive in exchange therefor, and the Exchange Agent shall
deliver in accordance with the Letter of Transmittal: (A) certificates
evidencing that number of whole shares of Parent Common Stock or cash, or a
combination thereof, which such holder has the right to receive in respect
of the Shares formerly evidenced by such Stock Certificate in accordance
with Section 2.1 and (B) cash in lieu of fractional shares of Parent Common
Stock to which such holder is entitled pursuant to Section 2.2(e) (the
shares of Parent Common Stock and cash described in clause (A) being
collectively referred to as the "Merger Consideration"), and the Stock
Certificate so surrendered shall forthwith be canceled. In the event of a
transfer of ownership of Shares which is not registered in the transfer
records of the Company, a certificate evidencing the proper number of
shares of Parent Common Stock and/or cash may be issued and/or paid in
accordance with this Article II to a transferee if the Stock Certificate
evidencing such Shares is presented to the Exchange Agent, accompanied by
all documents required to evidence and effect such transfer and by evidence
that any applicable stock transfer taxes have been paid. Until surrendered
as contemplated by Section 2.1(j) or this Section 2.2, each Stock
Certificate shall be deemed at any time after the Effective Time to
evidence only the right to receive upon such surrender the Merger
Consideration together with any dividends or other distributions paid on
shares of Parent Common Stock after the Effective Time.
(d) All shares of Parent Common Stock issued and cash paid upon
the surrender for exchange of Stock Certificates in accordance with the
terms of this Article II shall be deemed to have been issued and paid,
respectively, in full satisfaction of all rights pertaining to the Shares
theretofore represented by such Stock Certificates.
(e) (i) No certificates or scrip evidencing fractional shares of
Parent Common Stock shall be issued upon the surrender for exchange of
Stock Certificates, and such fractional share interests will not entitle
the owner thereof to vote or to any rights of a stockholder of Parent. In
lieu of any such fractional shares, each holder of Shares upon surrender of
a Stock Certificate for exchange pursuant to this Section 2.2 shall be paid
an amount in cash (without interest), rounded to the nearest cent,
determined by multiplying
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(x) the per share closing price on the NYSE of Parent Common Stock on the
trading day immediately prior to the Effective Time by (y) the fractional
interest to which such holder would otherwise be entitled (after taking into
account all Shares then held of record by such holder).
(ii) As soon as practicable after the determination of the
amount of cash, if any, to be paid to holders of Shares with respect to any
fractional share interests, the Exchange Agent shall promptly pay such
amounts to such holders of Shares subject to and in accordance with the
terms of Section 2.2(c). Any payment received by a holder of Shares with
respect to fractional share interests is merely intended to provide a
mechanical rounding off of, and is not separately bargained for,
consideration. If more than one Stock Certificate shall be surrendered for
the account of the same holder, the number of shares of Parent Common Stock
to be issued to such holder in exchange for the Stock Certificates which
have been surrendered shall be computed on the basis of the aggregate
number of shares represented by all of the Stock Certificates surrendered
for the account of such holder.
(f) Any portion of the Exchange Fund which remains undistributed
to the holders of the Stock Certificates for six months after the Effective
Time shall be delivered to Parent, upon demand, and any holders of Stock
Certificates who have not theretofore complied with this Article II shall
thereafter look only to Parent for payment of their claim for the Merger
Consideration and any cash in lieu of fractional shares of Parent Common
Stock.
(g) None of Parent, the Company, Merger Sub or the Exchange Agent
shall be liable to any person in respect of any shares of Parent Common
Stock or cash from the Exchange Fund in each case delivered to a public
official pursuant to any applicable abandoned property, escheat or similar
law. If any Stock Certificate shall not have been surrendered prior to
seven years after the Effective Time (or immediately prior to such earlier
date on which any Merger Consideration and any cash payable to the holder
of such Stock Certificate pursuant to Section 2.2(e) would otherwise
escheat to or become the property of any governmental body or authority),
any such Merger Consideration and any cash in lieu of fractional shares of
Parent Common Stock shall, to the extent permitted by applicable Law,
become the property of the Surviving Corporation, free and clear of all
claims or interest of any person previously entitled thereto.
(h) Parent and Merger Sub shall be entitled to deduct and
withhold from the consideration otherwise payable pursuant to this
Agreement to any holder of Shares such amounts as Parent or Merger Sub is
required to deduct and withhold with respect to the making of such payment
under the Code or any provision of state, local or foreign tax law. To the
extent that amounts are so withheld by Parent or Merger Sub, such withheld
amounts shall be treated for all purposes of this Agreement as having been
paid to the
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holder of the Shares in respect of which such deduction and withholding was made
by Parent or Merger Sub.
(i) If any Stock Certificate shall have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the person
claiming such Stock Certificate to be lost, stolen or destroyed and, if
required by the Surviving Corporation, the posting by such person of a bond
in such reasonable amount as the Surviving Corporation may direct as
indemnity against any claim that may be made against it with respect to
such Stock Certificate, the Exchange Agent will issue in exchange for such
lost, stolen or destroyed Stock Certificate the Merger Consideration and
any cash in lieu of fractional shares, pursuant to this Article II.
(j) In the event this Agreement is terminated without the
occurrence of the Effective Time, Parent shall, or shall cause the Exchange
Agent to, return promptly any Stock Certificates theretofore submitted or
delivered to Parent or the Exchange Agent without charge to the person who
submitted such Stock Certificates.
Section 2.3. Stock Transfer Books. There shall be no further
registration of transfers on the stock transfer books of the Surviving
Corporation of the Shares which were outstanding immediately prior to the
Effective Time. If, after the Effective Time, Stock Certificates are
presented to the Surviving Corporation or the Exchange Agent for any
reason, they shall be canceled and exchanged as provided in this Article
II, except as otherwise provided by Law.
Section 2.4. Company Options and Restricted Shares. (a)
Immediately prior to the Effective Time, all outstanding Company Options
(as defined in Section 3.2), whether or not vested or exercisable, shall be
canceled and, in lieu thereof, immediately prior to the Effective Time, the
holders thereof shall receive a cash payment from the Company equal to the
product of (i) the total number of Shares previously subject to such
Company Options, whether or not vested or exercisable, and (ii) the excess
of the Per Share Cash Amount over the exercise price per Share subject to
such Company Options, subject to any required withholding of taxes.
(b) Immediately prior to the Effective Time, Restricted Shares
(as defined in Section 3.2) that, but for the effect on such Restricted
Shares of the Company Shareholder Approval (as defined in Section 3.18),
would be unvested as of the Effective Time ("Unvested Restricted Shares"),
shall be canceled and, in lieu thereof, immediately prior to the Effective
Time, each holder of an Unvested Restricted Shares shall receive a cash
payment from the Company equal to the product of (i) the Per Share Cash
Amount and (ii) the number of Unvested Restricted Shares held by such
holder immediately prior to the Effective Time, subject to any required
withholding of taxes.
(c) Prior to the Effective Time, the Company shall (i) use its
reasonable best efforts to obtain any consents from holders of Company
Options and Restricted
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Shares to the cancellation thereof in exchange for the payment provided for in
Section 2.4(a) or (b) in the form reasonably agreed upon by Parent and the
Company as promptly as practicable after the date of this Agreement and (ii)
make any amendments to the terms of the Company Plans (as defined in Section
3.2) that are necessary to give effect to the transactions contemplated by
Sections 2.4(a) and (b). Notwithstanding any other provision of this Section
2.4, payment may be withheld in respect of any Company Option or Restricted
Shares (if applicable) until any such consents are obtained.
Section 2.5. Appraisal Rights. In accordance with Section 910 of
the NYBCL, no appraisal rights shall be available to holders of Shares in
connection with the Merger.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Parent and Merger Sub that
except as set forth in the corresponding sections or subsections of the
Disclosure Letter delivered to Parent by the Company concurrently with
entering into this Agreement (the "Company Disclosure Letter"):
Section 3.1. Organization, Qualification, Etc. (a) The Company is
a corporation duly organized, validly existing and in good standing under
the Laws of the jurisdiction of its incorporation and has the corporate
power and authority to own its assets and to carry on its business as it is
now being conducted, and is duly qualified to do business and is in good
standing in each jurisdiction in which the ownership of its assets or the
conduct of its business requires such qualification, except for
jurisdictions in which such failure to be so qualified or to be in good
standing does not, individually or in the aggregate, have a Material
Adverse Effect on the Company (as hereinafter defined). As used in this
Agreement, any reference to any state of facts, event, change or effect
having a "Material Adverse Effect" on or with respect to the "Company" or
"Parent," as the case may be, means such state of facts, event, change or
effect that (i) has had, or would reasonably be expected to have, a
material adverse effect on the business, results of operations or financial
condition of the Company and its Subsidiaries, taken as a whole, or Parent
and its Subsidiaries, taken as a whole, as the case may be, or (ii) would
reasonably be expected to prevent or substantially delay consummation of
the transactions contemplated by this Agreement. The copies of the
Company's certificate of incorporation and bylaws filed or incorporated by
reference in the Company's Annual Report on Form 10-K for the year ended
December 31, 1997 (the "Company's 1997 Form 10-K") are complete and correct
and in full force and effect on the date hereof.
(b) Each of the Company's Subsidiaries is an entity duly
organized, validly existing and in good standing (where applicable) under
the Laws of its jurisdiction
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of incorporation or organization, has the corporate power and authority to own
its assets and to carry on its business as it is now being conducted, and is
duly qualified to do business and is in good standing in each jurisdiction in
which the ownership of its assets or the conduct of its business requires such
qualification, except where the failure to be so organized, existing, qualified
or in good standing does not, individually or in the aggregate, have a Material
Adverse Effect on the Company. All the outstanding shares of capital stock of,
or other ownership interests in, the Company's Significant Subsidiaries (as such
term is defined in Rule 1-02 of Regulation S-X of the Securities and Exchange
Commission (the "SEC") (each such Subsidiary, a "Significant Subsidiary")) are
validly issued, fully paid and non-assessable and, other than directors'
qualifying shares, are owned by the Company, directly or indirectly, free and
clear of all liens, claims, charges or encumbrances ("Encumbrances"), except for
Encumbrances which individually or in the aggregate do not have a Material
Adverse Effect on the Company. There are no existing options, rights of first
refusal, conversion rights, preemptive rights, calls, commitments, arrangements
or obligations of any character ("Share Arrangements") relating to the issued or
unissued capital stock or other securities of, or other ownership interests in,
any Significant Subsidiary of the Company, other than directors' qualifying
shares. None of the certificates of incorporation or bylaws or other
organizational documents of any of the Company's Significant Subsidiaries
purport to grant rights to any person other than (1) customary rights given to
all shareholders pro rata in accordance with their holdings and (2) customary
rights with respect to corporate governance (including rights to notices) and
rights of indemnification of directors and officers. The Company has delivered
to Parent complete and correct copies of the certificate of incorporation and
bylaws or other organizational documents of each of the Company's Significant
Subsidiaries which is not wholly owned by the Company and/or another of its
wholly owned Subsidiaries (ignoring for this purpose directors' qualifying
shares).
A complete listing of the Company's Subsidiaries is set forth in
Section 3.1(b) of the Company Disclosure Letter. Except for the Company's
Subsidiaries listed in Section 3.1(b) of the Company Disclosure Letter, the
Company does not directly or indirectly own any equity or similar interest
in, or any interest convertible into or exchangeable or exercisable for any
equity or similar interest in, any corporation, partnership, joint venture
or other business association or entity that directly or indirectly
conducts any activity which is material to the Company and its Subsidiaries
taken as a whole.
Section 3.2. Capital Stock. (a) The authorized stock of the
Company consists of 150,000,000 Shares and 10,000,000 shares of preferred
stock, par value $1.00 per share (the "Company Preferred Stock"). As of
July 13, 1998, 43,703,528 Shares and no shares of the Company Preferred
Stock were issued and outstanding and 21,366,682 Shares were held in
treasury. All of the outstanding Shares have been validly issued and are
fully paid and non-assessable. As of July 13, 1998, there were no
outstanding Share
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Arrangements to which the Company is a party relating to the issued or unissued
capital stock or other securities of, or other ownership interests in, the
Company, other than:
(i) rights ("Company Rights") to acquire shares of the
Company Preferred Stock pursuant to the Rights Agreement, dated as of
February 1, 1996, between the Company and First Chicago Trust Company of
New York, as Rights Agent (the "Company Rights Agreement");
(ii) options to purchase 2,633,419 Shares granted on or
prior to the date hereof pursuant to the Company's 1985 Stock Option Plan,
1989 Stock Option and Incentive Plan, 1992 Stock Incentive Plan, 1996 Stock
Option Plan and the 1997 Non-Employee Directors' Stock Option Plan (such
plans being referred to collectively as the "Company Plans", and options
that have been or may be issued under any of the Company Plans being
referred to collectively as the "Company Options");
(iii) warrants ("Company Warrants") to purchase an aggregate
of 1,452 Shares at $34.83 per Share issued pursuant to the Warrant
Agreement, dated as of March 1, 1990, as amended by Amendment No. 1, dated
as of January 8, 1995, between Data Switch Corporation and First Chicago
Trust Company of New York, as successor Warrant Agent; and
(iv) 160,122 restricted Shares granted on or prior to the
date hereof pursuant to one or more of the Company Plans ("Restricted
Shares").
(b) Since July 13, 1998, there have been no increases to any of
the amounts set forth in Section 3.2(a), other than by reason of issuances
of Shares upon exercise of any of the Company Options or Company Warrants
enumerated in clauses (ii) and (iii) of Section 3.2(a) which events have
reduced the applicable number in clauses (ii) through (iv) of Section
3.2(a) by a corresponding amount, nor has the Company modified, amended or
entered into new Share Arrangements.
Section 3.3. Corporate Authority; No Violation. (a) The Company
has the corporate power and authority to enter into this Agreement and to
carry out its obligations hereunder. The execution and delivery of this
Agreement and the performance by the Company of its obligations hereunder
have been duly and validly authorized by the Board of Directors of the
Company and, except for the approval of its shareholders of this Agreement,
no other corporate proceedings on the part of the Company are necessary to
authorize this Agreement or the transactions contemplated hereby. The Board
of Directors of the Company, at a meeting duly called and held at which a
quorum was present throughout, has unanimously determined that the
transactions contemplated by this Agreement are in the best interest of the
Company and its shareholders and to recommend to such shareholders that
they vote in favor of this Agreement and the Merger (the "Company Board
Recommendation"). This Agreement has been duly and validly executed and
delivered by the Company and, assuming this
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Agreement constitutes a valid and binding agreement of the other parties hereto,
constitutes a valid and binding agreement of the Company, enforceable against
the Company in accordance with its terms (except insofar as enforceability may
be limited by applicable bankruptcy, insolvency, reorganization, moratorium or
similar Laws affecting creditors' rights generally, or by principles governing
the availability of equitable remedies).
(b) The execution, delivery and performance of this Agreement by
the Company do not, and the consummation by the Company of the Merger and
the other transactions contemplated hereby will not, constitute or result
in (i) a breach or violation of, or a default under, or the creation of any
rights in favor of any party under, the certificate of incorporation or
bylaws of the Company or the comparable governing instruments of any of its
Subsidiaries, (ii) a breach or violation of, or a default under, or an
acceleration of any obligations under, or the creation of a lien, pledge,
security interest or other encumbrance on the assets of the Company or any
of its Subsidiaries (with or without notice, lapse of time or both)
pursuant to, any agreement, lease, contract, note, mortgage, indenture,
arrangement, nongovernmental permit or license, order, decree, or other
obligation ("Contracts") binding upon the Company or any of its
Subsidiaries ("Company Contracts") or (provided, as to consummation, the
filings and notices are made, and approvals are obtained, as referred to in
Section 3.3(c)) any applicable Law or Decree (as defined in Section 3.6) or
governmental permit or license to which the Company or any of its
Subsidiaries is subject, or (iii) any change in the rights or obligations
of any party under any of the Company Contracts, except for any breach,
violation, default, acceleration, creation or change that does not,
individually or in the aggregate, have a Material Adverse Effect on the
Company.
(c) Other than in connection with or in compliance with the
provisions of the Securities Act of 1933, as amended, and the rules and
regulations promulgated thereunder (the "Securities Act"), the Securities
Exchange Act of 1934, as amended, and the rules and regulations promulgated
thereunder (the "Exchange Act"), the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 1976, as amended, and the rules and regulations
promulgated thereunder (the "HSR Act"), and the securities or blue sky Laws
of the various states and other than the filing of the Delaware Certificate
of Merger with the Delaware Secretary of State and the New York Certificate
of Merger with the New York Department of State, no authorization, consent
or approval of, or filing with, any governmental, administrative or
regulatory body or authority ("Governmental Entity") is necessary for the
consummation by the Company of the transactions contemplated by this
Agreement, except for such authorizations, consents, approvals or filings
that, if not obtained or made, would not, individually or in the aggregate,
have a Material Adverse Effect on the Company.
Section 3.4. Reports and Financial Statements. The Company has
timely filed with the SEC all forms, reports, schedules, statements and
other documents required
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to be filed by it since December 31, 1995 under the Securities Act or the
Exchange Act (such documents, as supplemented or amended since the time of
filing, the "Company SEC Reports"). As of their respective dates, the Company
SEC Reports, including without limitation, any financial statements or schedules
included or incorporated by reference therein, at the time filed (and, in the
case of registration statements and proxy statements, on the dates of
effectiveness and the dates of mailing, respectively) (i) complied in all
material respects with the applicable requirements of the Securities Act and the
Exchange Act, and (ii) did 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 therein, in light of the circumstances under which they were
made, not misleading. The audited consolidated financial statements and
unaudited consolidated interim financial statements included or incorporated by
reference in the Company SEC Reports (including any related notes and schedules)
fairly present, in all material respects, the financial position of the Company
and its consolidated Subsidiaries as of the dates thereof and the results of
their operations and their cash flows for the periods set forth therein, in each
case in accordance with past practice and generally accepted accounting
principles in the United States ("GAAP") consistently applied during the periods
involved (except as otherwise disclosed in the notes thereto and subject, where
appropriate, to normal year-end adjustments that would not be material in amount
or effect).
Section 3.5. No Undisclosed Liabilities. Neither the Company nor
any of its Subsidiaries has any liabilities or obligations of any nature,
whether or not accrued, contingent or otherwise, except (a) liabilities or
obligations disclosed or reserved against in the unaudited consolidated
interim financial statements of the Company as of and for the three months
ended March 31, 1998 included in the Company SEC Reports or disclosed in
the footnotes thereto or in the footnotes to the audited consolidated
financial statements of the Company as of and for the fiscal year ended
December 31, 1997 included in the Company SEC Reports or otherwise
disclosed in the Company's 1997 Form 10-K or in the Company's Quarterly
Report on Form 10-Q for the quarter ended March 31, 1998, and (b)
liabilities or obligations which do not, individually or in the aggregate,
have a Material Adverse Effect on the Company.
Section 3.6. Compliance with Laws. The Company and each of its
Subsidiaries each:
(a) in the conduct of its businesses, is in compliance with all
federal, state, local and foreign statutes and laws, and all regulations,
ordinances and rules promulgated thereunder (collectively, "Laws"), and all
judgments, orders, rulings, injunctions or decrees of Governmental Entities
(collectively, "Decrees"), applicable thereto or to the employees
conducting such businesses;
(b) has all permits, licenses, authorizations, orders and
approvals of, and have made all filings, applications and registrations
with, all Governmental Entities that
-17-
are required in order to permit it to conduct its businesses substantially as
presently conducted; all such permits, licenses, authorizations, orders and
approvals are in full force and effect and, to the best of the Company's
knowledge, no suspension or cancellation of any of them is threatened; and
(c) has received, since December 31, 1995, no notification or
communication from any Governmental Entity (i) asserting that it is not in
compliance with any of the Laws or Decrees which such Governmental Entity
enforces or (ii) threatening to revoke any permit, license, authorization,
order or approval;
except where the failure of any of the foregoing to be true does not,
individually or in the aggregate, have a Material Adverse Effect on the
Company.
Section 3.7. Environmental Laws. (a) To the Company's knowledge,
neither the Company nor any of its Subsidiaries is the subject of any
pending or threatened actions, causes of action, claims, investigations, or
proceedings ("Litigation") (whether civil, criminal, administrative or
arbitral) by any Governmental Entity or other person alleging liability or
damages under or non-compliance with any Environmental Law (as defined
below) which, individually or in the aggregate, has a Material Adverse
Effect on the Company; (b) neither the conduct nor the operation of the
Company or its Subsidiaries violates or has in the past violated any
applicable Environmental Law or applicable Environmental Decree (as defined
below) except as does not, individually or in the aggregate, have a
Material Adverse Effect on the Company; and (c) to the knowledge of the
Company, there is not now on, in or under any property owned, leased or
operated by the Company or any of its Subsidiaries any of the following:
(1) underground storage tanks or surface impoundments, (2)
asbestos-containing materials, (3) polychlorinated biphenyls, or (4) other
"Hazardous Substances" (as such term is defined under the Comprehensive
Environmental, Response, Compensation and Liability Act of 1980, 42 U.S.C.
ss. 9601, et seq., as amended as of the date hereof) ("Hazardous
Substances") or petroleum products, in each case which would reasonably be
expected to form the basis of liability or other obligation of the Company
or any of its Subsidiaries under any applicable Environmental Laws, except
for such liabilities or obligations which do not, individually or in the
aggregate, have a Material Adverse Effect on the Company. As used herein,
the term "Environmental Laws" means any Laws, and the term "Environmental
Decrees" means any Decrees, in each case, relating to pollution or
protection of the environment (including, without limitation, ambient air,
surface water, ground water, land surface or subsurface strata), natural
resources or occupational health and safety (including, without limitation,
those relating to the use, storage, treatment, disposal or transport of
Hazardous Substances, petroleum products, pollutants, contaminants or solid
or hazardous wastes or odors).
Section 3.8. Employee Benefit Plans. (a) Section 3.8 of the
Company Disclosure Schedule contains a complete list of all material
written bonus, vacation,
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deferred compensation, pension, retirement, profit-sharing, thrift, savings,
employee stock ownership, stock bonus, stock purchase, restricted stock and
stock option plans, employment or severance contracts, medical, dental,
disability, health and life insurance plans, and other employee benefit and
fringe benefit plans or other Contracts maintained or contributed to by the
Company 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, or pursuant to which the Company or any of its
Subsidiaries may have any liability (collectively (whether or not material), the
"Company Compensation and Benefit Plans") that are Contracts with, or plans
maintained primarily for the benefit of, individuals employed or rendering
services in the United States and are not multiemployer plans within the meaning
of Section 4001(a)(3) of ERISA (as defined in Section 3.8(c)) (the "U.S. Company
Compensation and Benefit Plans").
(b) The Company has used its reasonable best efforts to have
provided or made available to Parent copies of all Company Compensation and
Benefit Plans listed on Section 3.8 of the Company Disclosure Schedule
(excluding, however, multiemployer plans within the meaning of Section
4001(a)(3) of ERISA ("Multiemployer Plans") and Company Compensation and
Benefit Plans which have been filed with or incorporated by reference into
the Company's 1997 Form 10-K), including, but not limited to, all
amendments thereto, and all of such copies that have been delivered are
true and correct.
(c) Each of the Company Compensation and Benefit Plans has been
and is being administered in accordance with the terms thereof and all
applicable Law except where the failure to do so does not, individually or
in the aggregate, have a Material Adverse Effect on the Company. Each
"employee pension benefit plan" within the meaning of Section 3(2) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA") (each
such plan, a "Pension Plan") included in the U.S. Company Compensation and
Benefit Plans (a "Company Pension Plan") which is intended to be qualified
under Section 401(a) of the Code has received a favorable determination
letter from the Internal Revenue Service, and the Company is not aware of
any circumstances which could result in the revocation or denial of any
such favorable determination letter. To the Company's knowledge, no
material "prohibited transaction," within the meaning of Section 4975 of
the Code or Section 406 of ERISA, has occurred with respect to any U.S.
Company Compensation and Benefit Plan. There is no pending or, to the
Company's knowledge, threatened Litigation relating to any of the Company
Compensation and Benefit Plans which, individually or in the aggregate, has
a Material Adverse Effect on the Company.
(d) No material liability under Title IV of ERISA has been or is
reasonably expected to be incurred by the Company or any of its
Subsidiaries or any entity which is considered one employer with the
Company under Section 4001(a)(15) of ERISA or Section 414 of the Code (any
such entity, a "Company ERISA Affiliate"), other than such liabilities that
have previously been satisfied. No notice of a "reportable
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event," within the meaning of Section 4043 of ERISA, for which the 30-day
reporting requirement has not been waived has been required to be filed for any
Company Pension Plan or by any Company ERISA Affiliate within the past 12
months.
(e) All contributions, premiums and payments required to be made
under the terms of any Company Compensation and Benefit Plan have been
made, except where the failure to do so does not, individually or in the
aggregate, have a Material Adverse Effect on the Company. Neither any
Company Pension Plan nor any single-employer plan of a Company ERISA
Affiliate has an "accumulated funding deficiency" (whether or not waived)
within the meaning of Section 412 of the Code or Section 302 of ERISA.
Neither the Company nor any of its Subsidiaries has provided, or is
required to provide, security to any Company Pension Plan or to any
single-employer plan of a Company ERISA Affiliate pursuant to Section
401(a)(29) of the Code.
(f) Under each Company Pension Plan which is a defined benefit
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 such
Company Pension Plan's most recent actuarial valuation) did not exceed the
then current value of the assets of such Company Pension Plan, and there
has been no adverse change in the financial condition of such Company
Pension Plan (with respect to either assets or benefits) since the last day
of the most recent plan year.
(g) Neither the Company nor any of its Subsidiaries contributes
to or is required to contribute to any Multiemployer Plan. Neither the
Company nor any of its Subsidiaries has incurred any material withdrawal
liability (within the meaning of Section 4201 of ERISA) under any
Multiemployer Plan within the past 5 years that has not been satisfied, nor
could any such material withdrawal liability reasonably be expected to be
incurred.
(h) Except as set forth in the Company Compensation and Benefit
Plans listed in Section 3.8 of the Company Disclosure Schedule or filed
with or incorporated by reference into the Company's 1997 Form 10-K, the
execution of, and performance of the transactions contemplated in, this
Agreement will not (either alone or upon the occurrence of any additional
or subsequent events) (i) constitute an event under any Company
Compensation and Benefit Plan, trust or loan that will or may result in any
payment (whether of severance pay or otherwise), acceleration, forgiveness
of indebtedness, vesting, distribution, increase in benefits or obligation
to fund benefits with respect to any officers and directors of the Company
or (ii) result in any payment or benefit that will or may be made by the
Company, any of its Subsidiaries, Parent or any of their respective
affiliates that will be characterized as an "excess parachute payment,"
within the meaning of Section 280G(b)(1) of the Code.
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(i) The contributions of the Company and any of its Subsidiaries
to any trust described in Section 501(c)(9) of the Code have complied with
Section 419A of the Code.
Section 3.9. Absence of Certain Changes or Events. Since
December 31, 1997 the businesses of the Company and its Subsidiaries have
been conducted in all material respects in the ordinary course consistent
with past practice, the Company and its Subsidiaries have not engaged in
any transaction or series of related transactions material to the Company
and its Subsidiaries taken as a whole other than in the ordinary course
consistent with past practice, and there has not been any event, occurrence
or development, alone or taken together with all other existing facts,
that, individually or in the aggregate, has a Material Adverse Effect on
the Company.
Section 3.10. Litigation. There is no Litigation pending (or, to
the Company's knowledge, threatened) against the Company or any of its
Subsidiaries or any of their respective properties which, individually or
in the aggregate, has a Material Adverse Effect on the Company. The Company
is not subject to any Decree that, individually or in the aggregate, has a
Material Adverse Effect on the Company.
Section 3.11. Material Contracts. All of the Company Contracts
that are required to be described in the Company SEC Reports or to be filed
as exhibits thereto are described in the Company SEC Reports or filed as
exhibits thereto. Neither the Company nor any of its Subsidiaries nor any
other party is in breach of or in default under any Company Contract except
for such breaches and defaults which do not, individually or in the
aggregate, have a Material Adverse Effect on the Company.
Section 3.12. Labor Matters. As of the date of this Agreement,
the Company and its U.S. Subsidiaries (as defined in Section 8.11) do not
have any collective bargaining agreements with any persons employed by the
Company or any of its U.S. Subsidiaries or any persons otherwise performing
services primarily for the Company or any of its U.S. Subsidiaries, nor is
the Company or any of its U.S. Subsidiaries in the process of negotiating
any such agreement. There is no labor strike, dispute or stoppage pending
or, to the knowledge of the Company, threatened against the Company or any
of its Subsidiaries which, individually or in the aggregate, has a Material
Adverse Effect on the Company. None of the Company or its Subsidiaries is
the subject to a proceeding asserting that it has committed an unfair labor
practice (within the meaning of the National Labor Relations Act) or
seeking to compel it to bargain with any labor organization as to wages and
conditions of employment which proceeding, individually or in the
aggregate, has a Material Adverse Effect on the Company. As of the date of
this Agreement there are, to the knowledge of the Company, no
organizational efforts currently being made involving any of the employees
of the Company or any of its Subsidiaries.
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Section 3.13. Tax Matters. (a) The Company and each of its
Subsidiaries have (i) filed all federal, state, local and foreign Tax
Returns (as defined below) required to be filed by them (taking into
account extensions), (ii) paid or accrued all Taxes (as defined below)
shown to be due on such Returns or which are otherwise due and payable and
(iii) paid or accrued all Taxes for which a notice of assessment or
collection has been received, except in the case of clause (i), (ii) or
(iii) for any such filings, payments or accruals which do not, individually
or in the aggregate, have a Material Adverse Effect on the Company. Neither
the Internal Revenue Service nor any other taxing authority has asserted in
writing any claim for Taxes, or to the knowledge of the Company, is
threatening to assert any claims for Taxes, against the Company or any of
its Subsidiaries which claims, if determined adversely to the Company or
such Subsidiary, would, individually or in the aggregate, have a Material
Adverse Effect on the Company. The Company and each of its Subsidiaries
have withheld or collected and paid over to the appropriate Governmental
Entities (or are properly holding for such payment) all Taxes required by
Law to be withheld or collected, except for amounts which do not,
individually or in the aggregate, have a Material Adverse Effect on the
Company. There are no outstanding agreements or waivers extending the
statutory period of limitation applicable to any material Tax Return of the
Company or any of its Subsidiaries. Neither the Company nor any of its
Subsidiaries has made an election under Section 341(f) of the Code. There
are no liens for Taxes upon the assets of the Company or any of its
Subsidiaries (other than liens for Taxes that are not yet due), except for
liens which do not, individually or in the aggregate, have a Material
Adverse Effect on the Company. Neither the Company nor any of its
Subsidiaries (i) has any liability under Treasury Regulation Section
1.1502-6 or analogous state, local, or foreign law provision, except to the
extent any such liabilities, individually or in the aggregate, do not have
a Material Adverse Effect on the Company, or (ii) is a party to a Tax
sharing or Tax indemnity agreement or any other agreement of a similar
nature with any entity other than the Company or any of its Subsidiaries
that remains in effect and under which the Company or any such Subsidiary
could have any material liability for Taxes. No claim has been made in
writing by a taxing authority in a jurisdiction where the Company or any of
its Subsidiaries does not file Tax Returns that the Company or any of its
Subsidiaries is or may be subject to taxation by that jurisdiction where
such claim, if determined adversely to the Company or such Subsidiary,
would, individually or in the aggregate, have a Material Adverse Effect on
the Company. Neither the Company nor any of its Subsidiaries is the subject
of any currently ongoing audit or examination with respect to a material
amount of Taxes, nor, to the knowledge of the Company, has any such audit
been threatened or proposed, by any taxing authority.
(b) The Company does not know of any fact with respect to the
Company and its Subsidiaries that could reasonably be expected to prevent
the Merger from qualifying as a reorganization within the meaning of
Section 368(a) of the Code.
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For purposes of this Agreement: (i) "Taxes" means any and all
federal, state, local, foreign or other taxes of any kind (together with
any and all interest, penalties, additions to tax and additional amounts
imposed with respect thereto) imposed by any taxing authority, including,
without limitation, taxes or other charges on or with respect to income,
franchises, windfall or other profits, gross receipts, property, sales,
use, capital stock, payroll, employment, social security, workers'
compensation, unemployment compensation, or net worth, and taxes or other
charges in the nature of excise, withholding, ad valorem or value added,
and includes, without limitation, any liability for Taxes of another
person, as a transferee or successor, under Treas. Reg. ss. 1.1502-6 or
analogous provision of Law or otherwise; and (ii) "Tax Return" means any
return, report or similar statement (including the attached schedules)
required to be filed with respect to any Tax, including, without
limitation, any information return, claim for refund, amended return or
declaration of estimated Tax.
Section 3.14. Opinion of Financial Advisor. The Board of
Directors of the Company has received, on the date of this Agreement, the
oral opinion of Lazard Freres & Co. LLC ("Lazard"), to be confirmed in
writing, to the effect that, as of such date, the aggregate Merger
Consideration to be received by the Company's shareholders in the Merger is
fair to the Company's shareholders from a financial point of view. A copy
of the written opinion of Lazard will be delivered to Parent as soon as
practicable after the date of this Agreement.
Section 3.15. Takeover Laws; Company Rights Agreement. (a) The
Company has taken all action required to be taken by it in order to exempt
this Agreement and the transactions contemplated hereby from, and this
Agreement is exempt from, the requirements of all applicable "moratorium",
"control share", "fair price" and other anti-takeover Laws and regulations
(collectively, "Takeover Laws") of (i) the State of New York, including,
without limitation, Section 912 of the NYBCL and (ii) the State of
Connecticut, including, without limitation, Section 33-841 through Section
33-844 of the Connecticut Business Corporation Act.
(b) The Company has (i) duly entered into an appropriate
amendment to the Company Rights Agreement, a true and complete copy of
which amendment has been provided to Parent, and (ii) taken all other
action necessary or appropriate so that the entering into of this Agreement
and the consummation of the transactions contemplated hereby (including the
Merger) do not and will not result in the ability of any person to exercise
any Company Rights under the Company Rights Agreement or enable or require
the Company Rights to separate from the Shares to which they are attached
or to be triggered or become exercisable, and the Company Rights Agreement,
as so amended, has not been further amended or modified except in
accordance herewith.
(c) No "Distribution Date" or "Shares Acquisition Date" (as such
terms are defined in the Company Rights Agreement) has occurred.
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Section 3.16. Required Vote of the Company Shareholders. The
affirmative vote of the holders of two-thirds of the Shares outstanding and
entitled to vote at the Company Meeting (the "Company Shareholder
Approval") is required to approve this Agreement and the Merger. No other
vote of the shareholders of the Company is required by Law, the certificate
of incorporation or bylaws of the Company or otherwise in order for the
Company to consummate the Merger and the other transactions contemplated
hereby.
Section 3.17. Finders or Brokers. Except for Lazard, a true and
complete copy of whose engagement agreement has been provided to Parent,
neither the Company nor any of its Subsidiaries has employed any investment
banker, broker, finder or intermediary who might be entitled to any fee or
any commission in connection with or upon consummation of the Merger.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT
Parent and Merger Sub represent and warrant to the Company that
except as set forth in the corresponding sections or subsections of the
Disclosure Letter delivered to the Company by Parent concurrently with
entering into this Agreement (the "Parent Disclosure Letter"):
Section 4.1. Organization, Qualification, Etc. (a) Parent is a
corporation duly organized, validly existing and in good standing under the
Laws of the jurisdiction of its incorporation and has the corporate power
and authority to own its assets and to carry on its business as it is now
being conducted, and is duly qualified to do business and is in good
standing in each jurisdiction in which the ownership of its assets or the
conduct of its business requires such qualification, except for
jurisdictions in which such failure to be so qualified or to be in good
standing does not, individually or in the aggregate, have a Material
Adverse Effect on Parent. The copies of Parent's certificate of
incorporation and bylaws filed or incorporated by reference in Parent's
Annual Report on Form 10-K for the year ended December 31, 1997 ("Parent's
1997 Form 10-K") are complete and correct and in full force and effect on
the date hereof.
(b) Each of Parent's Subsidiaries is an entity duly organized,
validly existing and in good standing (where applicable) under the Laws of
its jurisdiction of incorporation or organization, has the corporate power
and authority to own its assets and to carry on its business as it is now
being conducted, and is duly qualified to do business and is in good
standing in each jurisdiction in which the ownership of its assets or the
conduct of its business requires such qualification, except where the
failure to be so organized, existing, qualified or in good standing does
not, individually or in the aggregate, have a Material Adverse Effect on
Parent. All the outstanding shares of capital
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stock of, or other ownership interests in, Parent's Significant Subsidiaries are
validly issued, fully paid and non-assessable and, other than directors'
qualifying shares, are owned by Parent, directly or indirectly, free and clear
of all Encumbrances, except for Encumbrances which individually or in the
aggregate do not have a Material Adverse Effect on Parent. There are no existing
Share Arrangements relating to the issued or unissued capital stock or other
securities of, or other ownership interests in, any Significant Subsidiary of
Parent, other than directors' qualifying shares. None of the certificates of
incorporation or bylaws or other organizational documents of any of Parent's
Significant Subsidiaries purport to grant rights to any person other than (1)
customary rights given to all stockholders pro rata in accordance with their
holdings and (2) customary rights with respect to corporate governance
(including rights to notices) and rights of indemnification of directors and
officers. Parent has delivered to the Company complete and correct copies of the
certificate of incorporation and bylaws or other organizational documents of
each of Parent's Significant Subsidiaries which is not wholly owned by Parent
and/or another of its wholly owned Subsidiaries (ignoring for this purpose
directors' qualifying shares).
A complete listing of Parent's Subsidiaries is set forth in
Section 4.1(b) of the Parent Disclosure Letter. Except for Parent's
Subsidiaries listed in Section 4.1(b) of the Parent Disclosure Letter,
Parent does not directly or indirectly own any equity or similar interest
in, or any interest convertible into or exchangeable or exercisable for any
equity or similar interest in, any corporation, partnership, joint venture
or other business association or entity that directly or indirectly
conducts any activity which is material to Parent and its Subsidiaries
taken as a whole.
Neither Parent nor any of its Subsidiaries is the beneficial
owner of any Shares.
Section 4.2. Capital Stock. The authorized stock of Parent
consists of 100,000,000 shares of Parent Common Stock, and 3,000,000 shares
of preferred stock, no par value ("Parent Preferred Stock"). The shares of
Parent Common Stock to be issued in the Merger will, when issued, be
validly issued fully paid and non-assessable. As of June 30, 1998,
12,324,240 shares of Parent Common Stock and no shares of Parent Preferred
Stock were issued and outstanding and 4,553,723 shares of Parent Common
Stock were held in treasury. All of the outstanding shares of Parent Common
Stock have been validly issued and are fully paid and non-assessable. As of
June 30, 1998, there were no outstanding Share Arrangements to which Parent
is a party relating to the issued or unissued capital stock or other
securities of, or other ownership interests in Parent other than:
(i) rights ("Parent Rights") to acquire shares of Parent
Preferred Stock pursuant to the Rights Agreement, dated as of June 25,
1996, as amended, between Parent and The Bank of New York (the "Parent
Rights Agreement"); and
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(ii) options and other rights to receive or acquire
2,296,410 shares of Parent Common Stock granted on or prior to June 30,
1998 pursuant to employee incentive or benefit plans, programs and
arrangements and non-employee director plans.
(b) Since June 30, 1998, there have been no increases to any of
the amounts set forth in Section 4.2(a), other than by reason of issuances
of shares of Parent Common Stock upon exercise of any of the options or
rights enumerated in clause (ii) of Section 4.2(a), which issuances have
reduced the applicable number in clause (ii) of Section 4.2(a) by a
corresponding amount, nor has Parent modified, amended or entered into new
Share Arrangements.
Section 4.3. Corporate Authority; No Violation. (a) Parent has
the corporate power and authority to enter into this Agreement and to carry
out its obligations hereunder. The execution and delivery of this Agreement
and the performance by Parent of its obligations hereunder have been duly
and validly authorized by the Board of Directors of Parent and, except for
the Parent Stockholder Approval (as defined in Section 4.16), no other
corporate proceedings on the part of Parent are necessary to authorize this
Agreement or the transactions contemplated hereby. The Board of Directors
of Parent, at a meeting duly called and held at which a quorum was present
throughout, has unanimously determined that the transactions contemplated
by this Agreement are in the best interest of Parent and its stockholders
and to recommend to such stockholders that they vote in favor of the Parent
Stockholder Proposal (as defined in Section 5.3) (the "Parent Board
Recommendation"). This Agreement has been duly and validly executed and
delivered by Parent and, assuming this Agreement constitutes a valid and
binding agreement of the other parties hereto, constitutes a valid and
binding agreement of Parent, enforceable against Parent in accordance with
its terms (except insofar as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar Laws
affecting creditors' rights generally, or by principles governing the
availability of equitable remedies).
(b) The execution, delivery and performance of this Agreement by
Parent do not, and the consummation by Parent of the Merger and the other
transactions contemplated hereby will not, constitute or result in (i) a
breach or violation of, or a default under, or the creation of any rights
in favor of any party under, the certificate of incorporation or bylaws of
Parent or the comparable governing instruments of any of its Subsidiaries,
(ii) a breach or violation of, or a default under, or an acceleration of
any obligations under, or the creation of a lien, pledge, security interest
or other encumbrance on the assets of Parent or any of its Subsidiaries
(with or without notice, lapse of time or both) pursuant to, any Contract
binding upon Parent or any of its Subsidiaries ("Parent Contracts") or
(provided, as to consummation, the filings and notices are made, and
approvals are obtained, as referred to in Section 4.3(c)) any applicable
Law or Decree or governmental permit or license to which Parent or any of
its Subsidiaries is subject, or (iii) any change in the rights or
obligations of any party under any of the Parent
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Contracts, except for any breach, violation, default, acceleration, creation or
change that does not, individually or in the aggregate, have a Material Adverse
Effect on Parent.
(c) Other than in connection with or in compliance with the
provisions of the Securities Act, the Exchange Act, the HSR Act, and the
securities or blue sky Laws of the various states and other than the filing
of the Delaware Certificate of Merger with the Delaware Secretary of State
and the New York Certificate of Merger with the New York Department of
State, no authorization, consent or approval of, or filing with, any
Governmental Entity is necessary for the consummation by Parent of the
transactions contemplated by this Agreement, except for such
authorizations, consents, approvals or filings that, if not obtained or
made, would not, individually or in the aggregate, have a Material Adverse
Effect on Parent.
Section 4.4. Reports and Financial Statements. Parent has timely
filed with the SEC all forms, reports, schedules, statements and other
documents required to be filed by it since December 31, 1995 under the
Securities Act or the Exchange Act (such documents, as supplemented or
amended since the time of filing, the "Parent SEC Reports"). As of their
respective dates, Parent SEC Reports, including without limitation, any
financial statements or schedules included or incorporated by reference
therein, at the time filed (and, in the case of registration statements and
proxy statements, on the dates of effectiveness and the dates of mailing,
respectively) (i) complied in all material respects with the applicable
requirements of the Securities Act and the Exchange Act, and (ii) did 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
therein, in light of the circumstances under which they were made, not
misleading. The audited consolidated financial statements and unaudited
consolidated interim financial statements included or incorporated by
reference in Parent SEC Reports (including any related notes and schedules)
fairly present, in all material respects, the financial position of Parent
and its consolidated Subsidiaries as of the dates thereof and the results
of their operations and their cash flows for the periods set forth therein,
in each case in accordance with past practice and GAAP consistently applied
during the periods involved (except as otherwise disclosed in the notes
thereto and subject, where appropriate, to normal year-end adjustments that
would not be material in amount or effect).
Section 4.5. No Undisclosed Liabilities. Neither Parent nor any
of its Subsidiaries has any liabilities or obligations of any nature,
whether or not accrued, contingent or otherwise, except (a) liabilities or
obligations disclosed or reserved against in the unaudited consolidated
interim financial statements of Parent as of and for the three months ended
March 31, 1998 included in Parent SEC Reports or disclosed in the footnotes
thereto or in the footnotes to the audited consolidated financial
statements of Parent as of and for the fiscal year ended December 31, 1997
included in Parent SEC Reports or otherwise disclosed in Parent's 1997 Form
10-K or in Parent's Quarterly Report on Form 10-Q for the quarter ended
March 31, 1998, and (b) liabilities or
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obligations which do not, individually or in the aggregate, have a Material
Adverse Effect on Parent.
Section 4.6. Compliance with Laws. Parent and each of its
Subsidiaries each:
(a) in the conduct of its businesses is in compliance with all
Laws and Decrees applicable thereto or to the employees conducting such
businesses;
(b) 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 it to
conduct its businesses substantially as presently conducted; all such
permits, licenses, authorizations, orders and approvals are in full force
and effect and, to the best of Parent's knowledge, no suspension or
cancellation of any of them is threatened; and
(c) has received, since December 31, 1995, no notification or
communication from any Governmental Entity (i) asserting that it is not in
compliance with any of the Laws or Decrees which such Governmental Entity
enforces, or (ii) threatening to revoke any permit, license, authorization,
order or approval; except where the failure of any of the foregoing to be
true does not, individually or in the aggregate, have a Material Adverse
Effect on Parent.
Section 4.7. Environmental Laws. (a) To Parent's knowledge,
neither Parent nor any of its Subsidiaries is the subject of any pending or
threatened Litigation (whether civil, criminal, administrative or arbitral)
by any Governmental Entity or other person alleging liability or damages
under or non-compliance with any Environmental Law which, individually or
in the aggregate, has a Material Adverse Effect on Parent; (b) neither the
conduct nor the operation of Parent or its Subsidiaries violates or has in
the past violated any applicable Environmental Law or applicable
Environmental Decree except as does not, individually or in the aggregate,
have a Material Adverse Effect on Parent; and (c) to the knowledge of
Parent, there is not now on, in or under any property owned, leased or
operated by Parent or any of its Subsidiaries any of the following: (1)
underground storage tanks or surface impoundments, (2) asbestos-containing
materials, (3) polychlorinated biphenyls, or (4) other Hazardous Substances
or petroleum products, in each case which would reasonably be expected to
form the basis of liability or other obligation of Parent or any of its
Subsidiaries under any applicable Environmental Laws, except for such
liabilities or obligations which do not, individually or in the aggregate,
have a Material Adverse Effect on Parent.
Section 4.8. Employee Benefit Plans. (a) Section 4.8 of the
Parent 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,
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employment or severance contracts, medical, dental, disability, health and life
insurance plans, and other employee benefit and fringe benefit plans, or other
Contracts maintained or contributed to by Parent 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 or
pursuant to which Parent or any of its Subsidiaries may have any liability
(collectively (whether or not material), the "Parent Compensation and Benefit
Plans") that are Contracts with, or plans maintained primarily for the benefit
of, individuals employed or rendering services in the United States and are not
Multiemployer Plans (the "U.S. Parent Compensation and Benefit Plans").
(b) Parent has used its reasonable best efforts to have provided
or made available to the Company copies of all Parent Compensation and
Benefit Plans listed on Section 4.8 of the Parent Disclosure Schedule
(excluding, however, Multiemployer Plans and Parent Compensation and
Benefit Plans which have been filed with or incorporated by reference into
Parent's 1997 Form 10-K), including, but not limited to, all amendments
thereto, and all of such copies that have been delivered are true and
correct.
(c) Each of the Parent Compensation and Benefit Plans has been
and is being administered in accordance with the terms thereof and all
applicable Law except where the failure to do so does not, individually or
in the aggregate, have a Material Adverse Effect on Parent. Each Pension
Plan included in the U.S. Parent Compensation and Benefit Plans (a "Parent
Pension Plan") which is intended to be qualified under Section 401(a) of
the Code has received a favorable determination letter from the Internal
Revenue Service, and Parent is not aware of any circumstances which could
result in the revocation or denial of any such favorable determination
letter. To Parent's knowledge, no material "prohibited transaction," within
the meaning of Section 4975 of the Code or Section 406 of ERISA, has
occurred with respect to any U.S. Parent Compensation and Benefit Plan.
There is no pending or, to the Parent's knowledge, threatened Litigation
relating to any of the U.S. Parent Compensation and Benefit Plans which,
individually or in the aggregate, has a Material Adverse Effect on Parent.
(d) No material liability under Title IV of ERISA has been or is
reasonably expected to be incurred by Parent or any of its Subsidiaries or
any entity which is considered one employer with Parent under Section
4001(a)(15) of ERISA or Section 414 of the Code (any such entity, a "Parent
ERISA Affiliate"), other than such liabilities that have previously been
satisfied. 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 Parent Pension Plan or by any
Parent ERISA Affiliate within the past 12 months.
(e) All contributions, premiums and payments required to be made
under the terms of any Parent Compensation and Benefit Plan have been made,
except where the failure to do so does not, individually or in the aggregate,
have a Material
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Adverse Effect on Parent. Neither any Parent Pension Plan nor any
single-employer plan of a Parent ERISA Affiliate has an "accumulated funding
deficiency" (whether or not waived) within the meaning of Section 412 of the
Code or Section 302 of ERISA. Neither Parent nor any of its Subsidiaries has
provided, or is required to provide, security to any Parent Pension Plan or to
any single-employer plan of a Parent ERISA Affiliate pursuant to Section
401(a)(29) of the Code.
(f) Under each Parent Pension Plan which is a defined benefit
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 such
Parent Pension Plan's most recent actuarial valuation) did not exceed the
then current value of the assets of such Parent Pension Plan, and there has
been no adverse change in the financial condition of such Parent Pension
Plan (with respect to either assets or benefits) since the last day of the
most recent plan year.
(g) Neither Parent nor any of its Subsidiaries contributes to or
is required to contribute to any Multiemployer Plan. Neither Parent nor any
of its Subsidiaries has incurred any material withdrawal liability (within
the meaning of Section 4201 of ERISA) under any Multiemployer Plan within
the past 5 years that has not been satisfied, nor could any such material
withdrawal liability reasonably be expected to be incurred.
(h) Except as set forth in the Parent Compensation and Benefit
Plans listed in Section 4.8 of the Parent Disclosure Schedule or filed with
or incorporated by reference into Parent's 1997 Form 10-K, the execution
of, and performance of the transactions contemplated in, this Agreement
will not (either alone or upon the occurrence of any additional or
subsequent events) (i) constitute a Parent Change in Control Event with
respect to officers and directors of Parent, or (ii) result in any payment
or benefit that will or may be made by Parent or any of its Subsidiaries or
any of their respective affiliates that will be characterized as an "excess
parachute payment," within the meaning of Section 280G(b)(1) of the Code.
"Parent Change in Control Event" shall mean an event under any Parent
Compensation and Benefit Plan, trust or loan that will or may result in any
payment (whether of severance pay or otherwise), acceleration, forgiveness
of indebtedness, vesting, distribution, increase in benefits or obligation
to fund benefits with respect to any employee.
(i) The contributions of Parent and any of its Subsidiaries to
any trust described in Section 501(c)(9) of the Code have complied with
Section 419A of the Code.
Section 4.9. Absence of Certain Changes or Events. Since
December 31, 1997 the businesses of Parent and its Subsidiaries have been
conducted in all material
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respects in the ordinary course consistent with past practice, Parent and its
Subsidiaries have not engaged in any transaction or series of related
transactions material to Parent and its Subsidiaries taken as a whole other than
in the ordinary course consistent with past practice, and there has not been any
event, occurrence or development, alone or taken together with all other
existing facts, that, individually or in the aggregate, has a Material Adverse
Effect on Parent.
Section 4.10. Litigation. There is no Litigation pending (or, to
Parent's knowledge, threatened) against Parent or any of its Subsidiaries
or any of their respective properties which, individually or in the
aggregate, has a Material Adverse Effect on Parent. Parent is not subject
to any Decree that, individually or in the aggregate, has a Material
Adverse Effect on Parent.
Section 4.11. Material Contracts. All of the Parent Contracts
that are required to be described in the Parent SEC Reports or to be filed
as exhibits thereto are described in the Parent SEC Reports or filed as
exhibits thereto. Neither Parent nor any of its Subsidiaries nor any other
party is in breach of or in default under any Parent Contract except for
such breaches and defaults which do not, individually or in the aggregate,
have a Material Adverse Effect on Parent.
Section 4.12. Labor Matters. As of the date of this Agreement,
Parent and its U.S. Subsidiaries do not have any collective bargaining
agreements with any persons employed by Parent or any of its U.S.
Subsidiaries or any persons otherwise performing services primarily for
Parent or any of its U.S. Subsidiaries, nor is Parent or any of its U.S.
Subsidiaries in the process of negotiating any such agreement. There is no
labor strike, dispute or stoppage pending or, to the knowledge of Parent,
threatened against Parent or any of its Subsidiaries which, individually or
in the aggregate, has a Material Adverse Effect on Parent. None of Parent
or its Subsidiaries is the subject to a proceeding asserting that it has
committed an unfair labor practice (within the meaning of the National
Labor Relations Act) or seeking to compel it to bargain with any labor
organization as to wages and conditions of employment, which proceeding,
individually or in the aggregate, has a Material Adverse Effect on Parent.
As of the date of this Agreement, there are, to the knowledge of Parent, no
organizational efforts currently being made involving any of the employees
of Parent or any of its Subsidiaries.
Section 4.13. Tax Matters. (a) Parent and each of its
Subsidiaries have (i) filed all federal, state, local and foreign Tax
Returns required to be filed by them (taking into account extensions), (ii)
paid or accrued all Taxes shown to be due on such Returns or which are
otherwise due and payable and (iii) paid or accrued all Taxes for which a
notice of assessment or collection has been received, except in the case of
clause (i), (ii) or (iii) for any such filings, payments or accruals which
do not, individually or in the aggregate, have a Material Adverse Effect on
Parent. Neither the Internal Revenue Service nor any other taxing authority
has asserted in writing any claim for
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Taxes, or to the knowledge of Parent, is threatening to assert any claims for
Taxes, against Parent or any of its Subsidiaries which claims, if determined
adversely to Parent or such Subsidiary, would, individually or in the aggregate,
have a Material Adverse Effect on Parent. Parent and each of its Subsidiaries
have withheld or collected and paid over to the appropriate Governmental
Entities (or are properly holding for such payment) all Taxes required by Law to
be withheld or collected, except for amounts which do not, individually or in
the aggregate, have a Material Adverse Effect on Parent. There are no
outstanding agreements or waivers extending the statutory period of limitation
applicable to any material Tax Return of Parent or any of its Subsidiaries.
Neither Parent nor any of its Subsidiaries has made an election under Section
341(f) of the Code. There are no liens for Taxes upon the assets of Parent or
any of its Subsidiaries (other than liens for Taxes that are not yet due),
except for liens which do not, individually or in the aggregate, have a Material
Adverse Effect on Parent. Neither Parent nor any of its Subsidiaries (i) has any
liability under Treasury Regulation Section 1.1502-6 or analogous state, local,
or foreign law provision, except to the extent any such liabilities,
individually or in the aggregate, do not have a Material Adverse Effect on the
Parent, or (ii) is a party to a Tax sharing or Tax indemnity agreement or any
other agreement of a similar nature with any entity other than Parent or any of
its Subsidiaries that remains in effect and under which the Parent or any such
Subsidiary could have any material liability for Taxes. No claim has been made
in writing by a taxing authority in a jurisdiction where Parent or any of its
Subsidiaries does not file Tax Returns that Parent or any of its Subsidiaries is
or may be subject to taxation by that jurisdiction where such claim, if
determined adversely to Parent or such Subsidiary, would, individually or in the
aggregate have a Material Adverse Effect on Parent. Neither Parent nor any of
its Subsidiaries is the subject of any currently ongoing audit or examination
with respect to a material amount of Taxes, nor, to the knowledge of Parent, has
any such audit been threatened or proposed by any taxing authority.
(b) Parent does not know of any fact with respect to Parent and
its Subsidiaries that could reasonably be expected to prevent the Merger
from qualifying as a reorganization within the meaning of Section 368(a) of
the Code.
Section 4.14. Opinion of Financial Advisor. The Board of
Directors of Parent has received, on the date of this Agreement, the oral
opinion of Xxxxx Xxxxxxx & Company, to be confirmed in writing, to the
effect that, as of such date, the aggregate Merger Consideration is fair to
Parent from a financial point of view. A copy of the written opinion of
Xxxxx Xxxxxxx & Company will be delivered to the Company as soon as
practicable after the date of this Agreement.
Section 4.15. Takeover Laws; Parent Rights Agreement. (a) Parent
has taken all action required to be taken by it in order to exempt this
Agreement and the transactions contemplated hereby from, and this Agreement
is exempt from, the requirements of all applicable "moratorium", "control
share", "fair price" and other
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anti-takeover Laws and regulations of (i) the State of Delaware, including
without limitation Section 203 of the DGCL and (ii) the State of Michigan,
including without limitation Sections 450.1775 to 450.1784 and Sections 450.1790
to 450.1799.
(b) Parent's entering into of this Agreement and the consummation
of the transactions contemplated hereby (including the Merger) do not and
will not result in the ability of any person to exercise any Parent Rights
under the Parent Rights Agreement or enable or require the Parent Rights to
separate from the shares of Parent Common Stock to which they are attached
or to be triggered or become exercisable.
(c) No "Distribution Date" or "Shares Acquisition Date" (as such
terms are defined in the Parent Rights Agreement) has occurred.
Section 4.16. Required Vote of Parent Stockholders. The
affirmative vote of the holders of a majority of the total number of shares
of Parent Common Stock present in person or by proxy and entitled to vote
at the Parent Meeting is required to approve the Parent Stockholder
Proposal (such affirmative vote, or such other affirmative vote as may be
required pursuant to applicable Law, NYSE rule or regulation or Parent's
certificate of incorporation or bylaws in connection with an Alternative
Transaction adopted pursuant to Section 1.7, the "Parent Stockholder
Approval"). Other than the Parent Stockholder Approval, no other vote of
the stockholders of Parent is required by Law, the certificate of
incorporation or bylaws of Parent or otherwise in order for Parent to
consummate the Merger and the other transactions contemplated hereby.
Section 4.17. Finders or Brokers. Except for Xxxxx Xxxxxxx &
Company, a true and complete copy of whose engagement agreement has been
provided to the Company, and Chase Securities Inc., neither Parent nor any
of its Subsidiaries has employed any investment banker, broker, finder or
intermediary who might be entitled to any fee or any commission in
connection with or upon consummation of the Merger.
Section 4.18. Financing. Parent has received written commitments
dated the date hereof (the "Financing Commitments") to obtain the funds
necessary for the consummation of transactions contemplated hereby,
including payment of the aggregate cash to be paid in respect of Shares
converted into the right to receive cash in the Merger and all related
costs (the "Financing Funds"), true and complete copies of which have been
delivered to the Company.
ARTICLE V
COVENANTS AND AGREEMENTS
Parent, Merger Sub and the Company hereby covenant and agree with
one another as follows:
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Section 5.1. Conduct of Business by the Company and Parent.
During the period between the date hereof and the Effective Time, except as
may otherwise be consented to in writing by the other parties hereto (which
consent shall not be unreasonably withheld) or as may be expressly
permitted pursuant to this Agreement or as set forth in Section 5.1 of the
Company Disclosure Letter or Section 5.1 of the Parent Disclosure Letter,
as applicable:
(a) The Company shall, and shall cause each of its Subsidiaries
to, conduct its operations in the ordinary and usual course of business in
substantially the same manner as heretofore conducted and use its
reasonable best efforts to preserve intact its business organization and
goodwill in all material respects, keep available the services of its
officers and employees as a group, subject to changes in the ordinary
course, and maintain its existing relationships with suppliers,
distributors, customers and others having business relationships with it.
Without limiting the generality of the foregoing, the Company shall not,
and shall cause its Subsidiaries not to (i) authorize, declare, set aside
or pay any dividends on or make any distribution with respect to its
outstanding shares of stock, except that (1) wholly owned U.S. Subsidiaries
of the Company may pay dividends on or make distributions of cash to the
Company or another wholly owned U.S. Subsidiary of the Company and (2)
wholly owned (except for directors' qualifying shares) non-U.S.
Subsidiaries of the Company may pay dividends to other wholly owned (except
for directors' qualifying shares) Subsidiaries of the Company so long as
such dividends do not have adverse tax consequences to the Company or any
of its Subsidiaries; (ii) except in the ordinary course of business
consistent with past practice, enter into or amend any employment,
severance or similar agreements or arrangements with, or grant any bonus or
salary increases or otherwise increase the compensation or benefits
provided to, any of their respective employees; provided, however, that,
except as otherwise provided in Section 2.4(c), (A) any of the foregoing
actions with respect to any director or executive officer and (B) any new
change-of-control agreement or amendment of any existing change-of-control
agreement with any person shall in all cases require Parent's consent;
(iii) except as expressly permitted by Section 5.8, authorize or publicly
announce an intention to authorize, or enter into an agreement with respect
to, or take any action to consummate any agreement or arrangement with
respect to (1) any merger, consolidation or business combination (other
than the Merger), (2) any liquidation, dissolution, restructuring,
recapitalization or other reorganization or (3) any acquisition or
disposition of a material amount of assets (other than purchases and sales
of raw materials, supplies, inventory, products or services in the ordinary
course of business consistent with past practice) or securities, or any
release or relinquishment of any material rights under any material
Contracts; (iv) propose or adopt any amendments to its certificate of
incorporation, bylaws or the Company Rights Agreement or take any action
with respect to, or make any determination under, the Company Rights
Agreement (including redeeming the Company Rights or declaring the Company
Rights Agreement or the Company Rights inapplicable to a third party); (v)
issue, sell, pledge or otherwise dispose of or encumber any capital stock
owned by it in any of its Subsidiaries or any
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interests in the EGS Electrical Group LLC; (vi) except, in the case of the
Company, upon exercise of Company Options or Company Warrants outstanding on the
date hereof and set forth in Section 3.2, issue, sell or otherwise permit to
become outstanding any shares of its capital stock, or effect any stock split or
reverse stock split or otherwise change its equity capitalization as it existed
on July 13, 1998, or redeem, repurchase or otherwise acquire any shares of its
capital stock; (vii) grant or award any options, warrants, conversion rights or
other rights to acquire any shares of capital stock of the Company or its
Subsidiaries, or enter into any other Share Arrangement relating to its capital
stock; (viii) except as required by applicable Law or an existing Contract
disclosed to Parent, amend the terms of any Company Compensation or Benefit
Plan, including the Company Plans (except as provided in Section 2.4(b)) or
adopt any new employee benefit or compensation plan; (ix) except pursuant to
existing credit agreements or other agreements of the type disclosed in Section
5.1 of the Company Disclosure Letter and entered into in the ordinary course
consistent with past practice, incur, create, assume or otherwise become liable
for any indebtedness for borrowed money; (x) except in the ordinary course of
business, consistent with past practice, transfer, lease, license, mortgage,
pledge or encumber any material asset or material amount of assets; (xi) make
any material Tax election or settle or compromise any material Tax liability or
take any action which could reasonably be expected to cause the Merger to fail
to qualify as a reorganization within the meaning of Section 368(a) of the Code;
(xii) incur or commit to any capital expenditure; (xiii) implement or adopt any
change in its accounting principles, practices or methods, other than as may be
required by GAAP or Regulation S-X promulgated under the Exchange Act; or (xiv)
agree or commit to do anything prohibited by this Section 5.1(a).
(b) Parent shall, and shall cause each of its Subsidiaries to,
conduct its operations in the ordinary and usual course of business in
substantially the same manner as heretofore conducted and use its
reasonable best efforts to preserve intact its business organization and
goodwill in all material respects, keep available the services of its
officers and employees as a group, subject to changes in the ordinary
course, and maintain satisfactory relationships with suppliers,
distributors, customers and others having business relationships with it.
Without limiting the generality of the foregoing, Parent shall not, and in
the case of clauses (ii), (v), (vi), (vii), (viii), (ix), (x) and (xi)
shall cause its Subsidiaries not to, (i) authorize, declare, set aside or
pay any dividends on, or make any distribution with respect to, its
outstanding shares of stock, other than a dividend or distribution of stock
for which there would be an adjustment in the Per Share Stock Amount
pursuant to Section 2.1(d); (ii) authorize, or publicly announce an
intention to authorize, or enter into an agreement with respect to (1)
mergers, consolidations, acquisitions of a business, an operation, a
product line or all or substantially all of the assets of an entity, or
other business combinations, involving aggregate consideration in excess of
$75 million (of which not more that $50 million shall be in cash and not
more than $25 million shall be in Parent Common Stock); or (2) any
liquidation, dissolution, restructuring, recapitalization or other
reorganization,
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other than any stock dividend, subdivision, split or combination of shares for
which there would be an adjustment in the Per Share Stock Amount pursuant to
Section 2.1(d); (iii) propose or adopt any amendments to its certificate of
incorporation, or any amendments to its bylaws that would adversely affect in
any material respect the rights and preferences of the holders of shares of
Parent Common Stock; (iv) propose or adopt any amendment to the Parent Rights
Agreement or take any action with respect to, or make any determination under,
the Parent Rights Agreement (including redeeming the Parent Rights or declaring
the Parent Rights Agreement or Parent Rights inapplicable to any third party;
(v) take any action which could reasonably be expected to cause the Merger to
fail to qualify as a reorganization within the meaning of 368(a) of the Code;
(vi) issue, sell or otherwise permit to become outstanding any shares of its
capital stock except (x) upon exercise of options or other rights to acquire
Parent Common Stock or (y) issuances or sales of up to $25 million of Parent
Common Stock in connection with an acquisition; (vii) other than acquisitions of
shares of Parent Common Stock held by employees of Parent or its Subsidiaries in
the ordinary course, redeem, repurchase or otherwise acquire any shares of
Parent Common Stock other than acquisitions of up to 200,000 shares of Parent
Common Stock in transactions complying with Rule 10b-18 of the Exchange Act;
(viii) grant or award any options, warrants, conversion rights or other rights
to acquire any shares of capital stock of Parent or any of its Subsidiaries, or
enter into any other Share Arrangement relating to such capital stock, except in
the ordinary course of business; (ix) implement or adopt any change in its
accounting principles, practices or methods, other than as may be required by
GAAP or Regulation S-X promulgated under the Exchange Act; (x) incur or commit
to any capital expenditures in excess of $40 million, in the aggregate; or (xi)
agree or commit to do anything prohibited to it by this Section 5.1(b).
Section 5.2. Investigation. During the period between the date
hereof and the Effective Time, except as set forth in the Company
Disclosure Schedule or the Parent Disclosure Schedule each of the Company
and Parent shall afford to one another and to one another's officers,
employees, accountants, counsel and other authorized representatives
reasonable access, during normal business hours, to its and its
Subsidiaries' (a) plants, properties, Contracts, books and records
(including but not limited to (i) Tax Returns, (ii) audits, assessments,
reports, studies, monitoring results and any other information or documents
relevant to the environment or occupational health and safety and (iii)
accountants work papers), (b) any report, schedule or other document filed
or received by it pursuant to the requirements of federal or state
securities Laws and (c) any other information concerning its business,
properties and personnel as the other may reasonably request; provided,
however, that no investigation pursuant to this Section 5.2 shall affect or
be deemed to modify any representation or warranty made by the Company,
Parent or Merger Sub. The parties hereby agree that each of them will treat
any such information in accordance with the applicable Confidentiality
Agreement between the Company and Parent (each, a "Confidentiality
Agreement"). Notwithstanding any provision of this Agreement to the contrary, no
party shall be
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obligated to make any disclosure in violation
of applicable Laws or if disclosure would cause a forfeiture of
attorney-client privilege. The Company and Parent will make appropriate
substitute disclosure arrangements if the circumstances of the preceding
sentence apply.
Section 5.3. Stockholder Approval; Filings. (a) Subject to the
terms and conditions contained herein, (i) the Company shall submit this
Agreement and the Merger for approval to the holders of Shares at a meeting
to be duly held for this purpose by the Company (the "Company Meeting"),
and (ii) Parent shall submit the proposed issuance of Parent Common Stock
in connection with the Merger (or shall submit this Agreement and the
Merger, if required because an Alternative Transaction has been adopted
pursuant to Section 1.7) (the matter submitted, the "Parent Stockholder
Proposal") for the Parent Stockholder Approval to the holders of shares of
Parent Common Stock at a meeting to be duly held for this purpose by Parent
(the "Parent Meeting"). The Company and Parent shall take all action in
accordance with the federal securities Laws, the NYBCL, the DGCL and their
respective certificates of incorporation and bylaws necessary to duly
convene the Company Meeting and the Parent Meeting. The Company and Parent
shall coordinate and cooperate with respect to the timing of such meetings
and shall use their reasonable best efforts to hold such meetings on the
same day and as soon as reasonably practicable after the date hereof.
Subject to the fiduciary duties of the respective Boards of Directors under
applicable Law as advised by counsel in connection with a Company Competing
Transaction or a Parent Business Combination, as applicable, the Boards of
Directors of the Company and Parent shall recommend that their respective
stockholders approve such matters, which recommendation shall be contained
in the Joint Proxy Statement (as defined below), and use their reasonable
best efforts to take all lawful action to solicit such approval by its
respective stockholders.
(b) Each of Parent and the Company agrees to cooperate in the
preparation of a registration statement on Form S-4 (the "Registration
Statement") to be filed by Parent with the SEC in connection with the
issuance of Parent Common Stock in the Merger (including the joint proxy
statement and other proxy solicitation materials of Parent and the Company
constituting a part thereof (the "Joint Proxy Statement") and all related
documents). Provided the Company has cooperated as required above, Parent
agrees to file the Registration Statement with the SEC as promptly as
practicable. Each of the Company and Parent agrees to use its reasonable
best efforts to cause the Registration Statement to be declared effective
under the Securities Act as promptly as practicable after filing thereof,
and to cause the Joint Proxy Statement to be mailed as promptly as
practicable to the shareholders of the Company and the stockholders of
Parent. Parent also agrees to use its 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. Parent and
the Company each agrees to furnish to the other all information concerning
itself and its Subsidiaries, officers, directors and shareholders as may be
reasonably requested by the other in connection with the
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foregoing.
(c) Each of the Company and Parent 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, is filed with the SEC and at the time the
Registration Statement becomes effective under the Securities Act, and at
the times of the Company Meeting and the Parent 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, 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 Parent Meeting and the Company Meeting, contain any untrue
statement of a material fact or omit to state any material fact necessary
in order to make the statements made therein, in light of the circumstances
under which such statements are made, not misleading. Each of the Company
and Parent further agrees that if it shall become aware prior to the times
of the Company Meeting and the Parent Meeting of any information that would
cause any of the statements in the Joint Proxy Statement or in the
Registration Statement to be false or misleading with respect to any
material fact, or to omit to state any material fact necessary in order to
make the statements made therein not false or misleading, to promptly
inform the other party thereof and to take the necessary steps to correct
the Joint Proxy Statement.
(d) Parent will advise the Company, promptly after Parent
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
Parent Common 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.
(e) Promptly after the execution of this Agreement, Parent shall
prepare and file with the NYSE, and such other stock exchanges as shall be
agreed upon, listing applications covering the shares of Parent Common
Stock issuable in the Merger or upon exercise of the Company Options, and
use its reasonable best efforts to obtain, prior to the Effective Time,
approval for the listing of such shares of Parent Common Stock, subject
only to official notice of issuance. The Company shall as promptly as
practicable furnish Parent with all information concerning the Company and
its Subsidiaries as may be required for inclusion in such listing
applications.
(f) Parent and the Company shall cooperate with one another in
obtaining opinions of Wachtell, Lipton, Xxxxx & Xxxx, counsel to the
Company, and Fried, Frank, Harris, Xxxxxxx & Xxxxxxxx, counsel to Parent,
each dated as of the Closing Date, (i) in the form of Exhibits B and C,
respectively, or (ii) if the form of combination
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of Parent and the Company is changed pursuant to Section 1.7, such other legal
opinions as are customary for the Alternative Transaction and are reasonably
acceptable to the Company or Parent, as applicable ("Alternate Legal Opinions")
(and, in connection therewith, each of the Company and Parent shall deliver to
Wachtell, Lipton, Xxxxx & Xxxx, and Fried, Frank, Harris, Xxxxxxx & Xxxxxxxx
certificates of officers of the Company, Parent and Merger Sub in form and
substance reasonably satisfactory to such counsel).
Section 5.4. Additional Reports. The Company and Parent shall
each furnish to the other copies of any Company SEC Reports or Parent SEC
Reports, as the case may be, which it files with the SEC on or after the
date hereof, and the Company and Parent, as the case may be, represents and
warrants that as of the respective dates thereof, such reports 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 statement
therein, in light of the circumstances under which they were made, not
misleading. Any unaudited consolidated interim financial statements
included in such reports (including any related notes and schedules) will
fairly present, in all material respects, the financial position of the
Company and its consolidated Subsidiaries or Parent and its consolidated
Subsidiaries, as the case may be, as of the dates thereof and the results
of operations and changes in financial position or other information
included therein for the periods or as of the dates then ended, in each
case in accordance with past practice and GAAP consistently applied during
the periods involved (except as otherwise disclosed in the notes thereto
and subject, where appropriate, to normal year-end adjustments).
Section 5.5. Reasonable Best Efforts. Each of the parties shall
use its reasonable best efforts to take, or cause to be taken, all actions,
and to do, or cause to be done, and to assist and cooperate with the other
parties in doing, all things necessary, proper or advisable to consummate
and make effective, in the most expeditious manner practicable, the Merger
and the other transactions contemplated by this Agreement, including (A)
the obtaining of (and cooperating with the other parties to obtain)
waivers, consents, exemptions, licenses, permits, authorizations, orders
and approvals from, and the making of all other necessary registrations and
filings with, Governmental Entities (including, without limitation, filings
required to be made pursuant to the HSR Act), (B) the obtaining of (and
cooperating with the other parties to obtain) all waivers, consents,
exemptions, licenses, authorizations and approvals from third parties which
may be necessary or desirable to be obtained by reason of the Merger or in
order to consummate the transactions contemplated by, and to fully carry
out the purposes of and realize the benefits of, this Agreement, and (C)
the execution and delivery of any additional instruments necessary to
consummate the transaction contemplated by, and to fully carry out the
purposes of and realize the benefits of, this Agreement.
Section 5.6. Accountants' "Comfort" Letters. The Company and
Parent will each use its reasonable best efforts to cause to be delivered
to each other letters from
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its respective independent accountants, dated a date within two business days
before the effective date of the Registration Statement, in form reasonably
satisfactory to the recipient and customary in scope for comfort letters
delivered by independent accountants in connection with registration statements
on Form S-4 under the Securities Act.
Section 5.7. Takeover Statutes. None of the parties shall take
any action that would cause the transactions contemplated by this Agreement
to be subject to the requirements of any Takeover Law. If any Takeover Law
shall become applicable to the transactions contemplated by this Agreement,
each of the Company and Parent and the members of their respective Boards
of Directors shall grant such approvals and take such actions as are
necessary so that the transactions contemplated hereby may be consummated
as promptly as practicable on the terms contemplated hereby, and otherwise
act to eliminate or minimize the effects of such Takeover Law on the
transactions contemplated hereby.
Section 5.8. No Solicitation. (a) During the term of this
Agreement, the Company shall not, and shall not authorize or permit any of
its Subsidiaries or any of its or its Subsidiaries' directors, officers,
employees, agents or representatives, directly or indirectly, to solicit,
initiate, encourage or facilitate, or furnish or disclose non-public
information in furtherance of, any inquiries or the making of any proposal
with respect to any recapitalization, merger, consolidation or other
business combination involving the Company, or the acquisition of 10% or
more of the outstanding capital stock of the Company (other than upon
exercise of Company Options and Company Warrants which are outstanding as
of the date hereof) or any Significant Subsidiary of the Company or, except
as permitted under Section 5.1 of the Company Disclosure Letter, the
acquisition of 15% or more of the assets of the Company and its
Subsidiaries, taken as a whole, in a single transaction or a series of
related transactions, or any combination of the foregoing (a "Company
Competing Transaction"), or negotiate or otherwise engage in discussions
with any person (other than Parent, Merger Sub or their respective
directors, officers, employees, agents or representatives) with respect to
any Company Competing Transaction or enter into any agreement, arrangement
or understanding requiring it to abandon, terminate or fail to consummate
the Merger or any other transactions contemplated by this Agreement, and
will immediately cease all existing activities, discussions and
negotiations with any parties conducted heretofore with respect to any
proposal for a Company Competing Transaction; provided that, at any time
prior to the approval of the Merger by the shareholders of the Company, the
Company may furnish information to, and negotiate or otherwise engage in
discussions with, any party (a "Company Third Party") who (x) delivers a
bona fide written proposal for a Company Competing Transaction which was
not solicited, initiated, encouraged or facilitated by the Company,
directly or indirectly, after the date of this Agreement and (y) enters
into an appropriate confidentiality agreement with the Company (which
agreement shall be no less favorable to the Company than the
Confidentiality Agreement, and a copy of which will be delivered to Parent
promptly after the execution thereof), if, but only if, the Board
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of Directors of the Company determines in good faith by a majority vote, (i)
after consultation with and receipt of advice from its outside legal counsel,
that failing to take such action would constitute a breach of the fiduciary
duties of the Board of Directors of the Company under applicable Law, and (ii)
after consultation with the Company's independent financial advisors, that such
proposal could reasonably be expected to lead to a Superior Transaction (as
defined in Section 5.8(d)).
(b) From and after the execution of this Agreement, the Company
shall promptly advise Parent in writing of the receipt, directly or
indirectly, of any inquiries or proposals relating to a Company Competing
Transaction (including the specific terms thereof and the identity of the
third party), shall keep Parent reasonably informed of the status of any
such inquiries or proposals, of the furnishing of information to the
Company Third Party, and of any negotiations or discussions relating
thereto (including any changes or adjustments to the material terms of such
Company Competing Transaction as a result of negotiations or otherwise).
(c) If, prior to the approval of the Merger by the shareholders
of the Company, the Board of Directors of the Company determines in good
faith by a majority vote, with respect to any written proposal from a
Company Third Party for a Company Competing Transaction received after the
date hereof that was not solicited, initiated, encouraged or facilitated by
the Company, directly or indirectly, after the date of this Agreement, that
such Company Competing Transaction is a Superior Transaction and is in the
best interest of the Company and its shareholders and that failure to enter
into such Company Competing Transaction would constitute a breach of the
fiduciary duties of the Board of Directors of the Company under applicable
Law, and the Board of Directors of the Company has received (x) a written
opinion (a copy of which shall have been delivered to Parent) from the
Company's independent financial advisors that the Company Competing
Transaction is a Superior Transaction and (y) the advice of its outside
legal counsel that failure to enter into such a Company Competing
Transaction would constitute a breach of the Board of Directors' fiduciary
duties under applicable Law, then the Company may terminate this Agreement
and enter into an acquisition agreement for the Superior Transaction;
provided that, prior to any such termination, and in order for such
termination to be effective, (i) the Company shall provide Parent two
business days' written notice that it intends to terminate this Agreement
pursuant to this Section 5.8(c), identifying the Superior Transaction and
the parties thereto and delivering an accurate description of all material
terms of the Superior Transaction to be entered into and (ii) on the date
of termination (provided that the opinion and advice referred to in clauses
(x) and (y) above shall continue in effect without revocation, revision or
modification), the Company shall deliver to Parent (A) a written notice of
termination of this Agreement pursuant to this Section 5.8(c), (B) a wire
transfer of immediately available funds in the amount of the Company
Termination Fee and the Commitment Expenses (each as defined in Section
7.3), and (C) a written acknowledgment from the
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Company and each other party to the Superior Transaction that it will not
contest the payment of the Company Termination Fee and Commitment Expenses.
(d) "Superior Transaction" shall mean a Company Competing
Transaction which the Board of Directors of the Company reasonably
determines is more favorable to the Company and its shareholders than the
Merger and which is not subject to any financing condition. Reference in
the foregoing definition to the "Merger" shall include any proposed
alteration of the terms of this Agreement committed to in writing by Parent
in response to such Company Competing Transaction.
(e) During the term of this Agreement, Parent shall not, and
shall not authorize or permit any of its Subsidiaries or any of its or its
Subsidiaries' directors, officers, employees, agents or representatives,
directly or indirectly, to solicit or initiate any inquiries or the making
of any proposal with respect to any Parent Business Combination; provided
that nothing herein shall prohibit any of the foregoing persons from
responding to unsolicited inquiries or proposals, including by furnishing
non-public information.
Section 5.9. Public Announcements. Each of the parties agrees
that it shall not, nor shall any of their respective affiliates, issue or
cause the publication of any press release or other public announcement
with respect to the Merger, this Agreement or the transactions contemplated
hereby without the prior approval of the other party, except such
disclosure as may be required by Law or by any listing agreement with a
national securities exchange; provided, if such disclosure is required by
Law or any such listing agreement, such disclosure shall not be made
without prior consultation of the other parties.
Section 5.10. Indemnification and Insurance. (a) Parent and
Merger Sub agree that all rights to exculpation and indemnification for
acts or omissions occurring at or prior to the Effective Time now existing
in favor of the current or former directors or officers of the Company or
any of its Subsidiaries (the "Indemnified Parties") as provided in its
certificate of incorporation or bylaws or in any agreement shall survive
the Merger and shall continue in full force and effect in accordance with
their terms.
(b) For six years from the Effective Time, Parent shall
indemnify, defend and hold harmless each of the Indemnified Parties for
acts or omissions occurring at 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.
(c) Parent shall use its reasonable best efforts to obtain and
maintain in effect, or cause the Surviving Corporation to obtain and
maintain in effect, for six years from the Effective Time, the Company's
current directors' and officers' liability insurance covering those persons
who are currently covered by the Company's directors'
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and officers' liability insurance policy (a copy of which has been heretofore
delivered to Parent); provided, however, that in no event shall Parent or the
Surviving Corporation be required to expend in any year an amount in excess of
200% of the annual premiums currently paid by the Company for such insurance,
and, provided, further, that if the annual premiums of such insurance coverage
exceed such amount, Parent shall or shall cause the Surviving Corporation to
obtain a policy with the greatest coverage available for a cost not exceeding
such amount.
(d) The provisions of this Section 5.10 are intended to be for
the benefit of, and shall be enforceable by, each Indemnified Party and his
or her heirs and representatives.
Section 5.11. Notification of Certain Matters. Each of the
Company and Parent 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.
Section 5.12. Board of Directors and Officers of Parent. The
Board of Directors of Parent shall take all action necessary to elect as of
the Effective Time the following persons to the Board of Directors of
Parent: (i) Xxxxxxx X. Xxxxxxxx, who shall be assigned to the class of
directors whose term of office expires at Parent's first annual meeting of
stockholders after the Effective Time and (ii) H. Xxxx Xxxxx, who shall be
assigned to the class of directors whose term of office expires at Parent's
second annual meeting of stockholders after the Effective Time.
Section 5.13. Employee Plans and Benefit Arrangements. (a) From
and after the Effective Time, subject to applicable Law, Parent shall cause
the Surviving Corporation and its Subsidiaries to honor the obligations of
the Company and its Subsidiaries under all existing Company Compensation
and Benefit Plans.
(b) Parent agrees that, for at least one year from the Effective
Time, subject to applicable Law, the Surviving Corporation and its
Subsidiaries shall provide benefits to the individuals who, as of the
Effective Time, were employees of the Company or any of its Subsidiaries
which will, in the aggregate, be comparable to those currently provided by
the Company and its Subsidiaries to their employees (excluding, however,
any stock option or any other equity-based compensation plans and any
individual employment, severance, change in control or other similar
agreement currently maintained by the Company or its Subsidiaries). Nothing
herein shall be construed to prevent the termination of employment of any
employee or any amendment or termination of any Company Compensation and
Benefit Plan to the extent permitted by the terms and conditions thereof as
in effect on the date hereof.
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(c) After the Effective Time, Parent shall grant (if applicable),
and shall cause the Surviving Corporation and its Subsidiaries to grant, to
all individuals who are, as of the Effective Time, employees of the Company
or any of its Subsidiaries credit for all service with the Company, any of
its present and former Subsidiaries, any other affiliate of the Company and
their respective predecessors (collectively, the "Company Affiliated
Group") prior to the Effective Time for purposes of eligibility and vesting
(but not benefit accrual) to the extent that prior service with Parent or
its Subsidiaries is recognized in respect of employees other than the
employees of the Company Affiliated Group. Any employee benefit plan which
provides medical, dental or life insurance benefits after the Effective
Time to any individual who is a current or former employee of the Company
Affiliated Group as of the Effective Time or a dependent thereof shall,
with respect to such individuals, waive any waiting periods and any
pre-existing conditions and actively-at-work exclusions to the extent so
waived under present policy of the Company Affiliated Group and shall
provide that any expenses incurred on or before the Effective Time by such
individuals shall be taken into account under such plans for purposes of
satisfying applicable deductible or coinsurance provisions to the extent
taken into account under present policy of the Company Affiliated Group.
(d) The Company shall amend all trusts and other funding
arrangements (including but not limited to the Change in Control Benefits
Trust Agreement entered into by the Company and The Chase Manhattan Bank)
to the extent necessary to provide that no event which occurs in connection
with the transactions contemplated by this Agreement shall require the
Company, the Surviving Corporation, or any of their affiliates to make any
payment of cash or other property to any such trust or funding arrangement.
ARTICLE VI
CONDITIONS TO THE MERGER
Section 6.1. Conditions to Each Party's Obligation to Effect the
Merger. The respective obligations of each party to effect the Merger
shall be subject to the fulfillment at or prior to the Closing Date (or
waiver by the party for whose benefit the applicable condition exists) of
the following conditions:
(a) The holders of the issued and outstanding Shares shall have
duly approved this Agreement and the Merger, and the holders of the issued
and outstanding shares of Parent Common Stock shall have duly approved the
Parent Stockholder Proposal, all in accordance with applicable Law, the
respective certificates of incorporation and bylaws of the Company and
Parent, and the rules of the NYSE.
(b) The Registration Statement shall have become effective in
accordance with the provisions of the Securities Act and no stop order
suspending such
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effectiveness shall have been issued and remain in effect and no proceedings for
that purpose shall have been initiated or threatened by the SEC or any other
Governmental Entity.
(c) The shares of Parent Common Stock issuable in the Merger
shall have been approved for listing on the NYSE, subject only to official
notice of issuance.
(d) All regulatory approvals required to consummate the
transactions contemplated hereby shall have been obtained and shall be in
full force and effect and all statutory waiting periods in respect thereof
shall have expired or been terminated, 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 on the
Company (in the case of Parent's obligation to close) or on Parent (in the
case of the Company's obligation to close).
(e) No Law or Decree shall have been enacted, entered,
promulgated, or enforced by any court or other tribunal or Governmental
Entity which prohibits or makes illegal the consummation of any of the
transactions contemplated hereby. In the event any such Decree shall have
been issued, each party shall use its reasonable efforts to remove any such
Decree.
(f) The Company shall have received from Wachtell, Lipton, Xxxxx
& Xxxx (in the case of the Company's obligation to close) and Parent shall
have received from Fried, Frank, Harris, Xxxxxxx & Xxxxxxxx (in the case of
Parent's obligation to close), dated the Closing Date, (i) opinions in the
form of Exhibit B (in the case of the Company) and Exhibit C (in the case
of Parent) or (ii) if applicable, an Alternate Legal Opinion. In rendering
such opinions, Wachtell, Lipton Xxxxx & Xxxx and Fried, Frank, Harris,
Xxxxxxx & Xxxxxxxx may require and rely upon representations and covenants,
including those contained in certificates of officers of the Company,
Parent and Merger Sub, which representations and covenants are in form and
substance reasonably satisfactory to such counsel.
Section 6.2. Conditions to Obligations of the Company to Effect
the Merger. The obligation of the Company to effect the Merger is further
subject to the conditions that (a) the representations and warranties of
Parent contained herein (which for purposes of this clause (a) shall be
read as though none of them contained any Material Adverse Effect or
materiality qualification) shall be true and correct in all respects as of
the Closing Date with the same effect as though made as of the Closing Date
(provided that any representations and warranties made as of a specified
date shall be required only to continue on the Closing Date to be true and
correct as of such specified date) except (i) for changes specifically
permitted by the terms of this Agreement and (ii) where the failure of the
representations and warranties to be true and
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correct in all respects would not in the aggregate have a Material Adverse
Effect on Parent; (b) Parent shall have in all material respects performed all
obligations and complied with all covenants required by this Agreement to be
performed or complied with by it at or prior to the Closing Date, (c) each of
the representations and warranties of Parent contained in Sections 4.15(b) and
(c) shall be true and correct as of the Closing Date in all respects with the
same effect as though such representations and warranties had been made at the
Closing Date; and (d) Parent shall have delivered to the Company a certificate,
dated the Closing Date and signed by its Chief Executive Officer or a Vice
President, certifying the satisfaction of the conditions set forth in the
foregoing clauses (a) through (c).
Section 6.3. Conditions to Obligations of Parent to Effect the
Merger. The obligation of Parent to effect the Merger is further subject
to the conditions that (a) the representations and warranties of the
Company contained herein (which for purposes of this clause (a) shall be
read as though none of them contained any Material Adverse Effect or
materiality qualification) shall be true and correct in all respects as of
the Closing Date with the same effect as though made as of the Closing Date
(provided that any representations and warranties made as of a specified
date shall be required only to continue on the Closing Date to be true and
correct as of such specified date) except (i) for changes specifically
permitted by the terms of this Agreement and (ii) where the failure of the
representations and warranties to be true and correct in all respects would
not in the aggregate have a Material Adverse Effect on the Company; (b) the
Company shall have in all material respects performed all obligations and
complied with all covenants required by this Agreement to be performed or
complied with by it at or prior to the Closing Date; (c) each of the
representations and warranties of the Company contained in Section 3.15(b)
and (c) shall be true and correct as of the Closing Date in all respects
with the same effect as though such representations and warranties had been
made at the Closing Date; and (d) the Company shall have delivered to
Parent a certificate, dated the Closing Date and signed by its Chief
Executive Officer and President or a Vice President, certifying the
satisfaction of the conditions set forth in the foregoing clauses (a)
through (c).
ARTICLE VII
TERMINATION, WAIVER, AMENDMENT AND CLOSING
Section 7.1. Termination or Abandonment. This Agreement may be
terminated and the Merger may be abandoned at any time prior to the
Effective Time (notwithstanding any approval of this Agreement by the
shareholders of the Company or any Parent Stockholder Approval):
(a) by mutual written consent of Parent and the Company;
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(b) by either Parent or the Company if the Merger shall not
have been consummated before December 31, 1998; provided, however, that the
right to terminate this Agreement under this Section 7.1(b) shall not be
available to any party whose failure to perform any covenant or obligation
under this Agreement has been the cause of or resulted in the failure of
the Merger to occur on or before such date;
(c) by Parent if (i) the Board of Directors of the Company
shall or shall resolve to (A) withdraw the Company Board Recommendation,
(B) modify such recommendation in a manner adverse to Parent or Merger Sub
or refuse to affirm the Company Board Recommendation as promptly as
practicable (but in any case within 10 business days) after receipt of any
written request from Parent which request was made on a reasonable basis,
or (C) approve or recommend any proposed Company Business Combination (as
defined in Section 7.3(e)), or (ii) the Company has failed, as promptly as
practicable after the Registration Statement is declared effective by the
SEC, to call the Company Meeting or to mail the Joint Proxy Statement to
its shareholders, or failed to include in such statement the Company Board
Recommendation;
(d) by the Company if (i) the Board of Directors of Parent
shall or shall resolve to (A) withdraw the Parent Board Recommendation, (B)
modify such recommendation in a manner adverse to the Company or refuse to
affirm the Parent Board Recommendation as promptly as practicable (but in
any case within 10 business days) after receipt of any written request from
the Company which request was made on a reasonable basis, or (C) approve or
recommend any proposed Parent Business Combination (as defined in Section
7.3(f)), or (ii) Parent has failed, as promptly as practicable after the
Registration Statement is declared effective by the SEC, to call the Parent
Meeting or to mail the Joint Proxy Statement to its shareholders, or failed
to include in such statement the Parent Board Recommendation;
(e) by Parent or the Company if at the Company Meeting
(including any adjournment or postponement thereof) the requisite vote of
the shareholders of the Company to approve this Agreement and the Merger
shall not have been obtained;
(f) by Parent or the Company if at the Parent Meeting
(including any adjournment or postponement thereof) the Parent Stockholder
Approval shall not have been obtained;
(g) by either the Company or Parent, if there shall be any
Law or Decree that prohibits or makes illegal consummation of the Merger or
if any Decree enjoining Parent or the Company from consummating the Merger
is entered and such Decree shall become final and nonappealable;
(h) by Parent or the Company if there shall have been a
material breach by the other of any of its representations, warranties,
covenants or agreements
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contained in this Agreement, which breach would result in the failure to satisfy
one or more of the conditions set forth in Section 6.2 (in the case of a breach
by Parent) or Section 6.3 (in the case of a breach by the Company), and such
breach shall be incapable of being cured or, if capable of being cured, shall
not have been cured within 30 days after written notice thereof shall have been
received by the party alleged to be in breach; or
(i) by the Company pursuant to, but only in compliance with,
Section 5.8.
Section 7.2. Effect of Termination. In the event of the
termination of this Agreement pursuant to Section 7.1, this Agreement,
except for the provisions of the second sentence of Section 5.2, this
Section 7.2 and Sections 7.3, 8.2 and 8.4 shall become void and have no
effect, without any liability on the part of any party or any of its
affiliates. Notwithstanding the foregoing, nothing in this Section 7.2
shall relieve any party to this Agreement of liability for any willful
breach of any provision of this Agreement.
Section 7.3. Termination Payments. (a) Upon the happening of a
Company Triggering Event, the Company shall pay to Parent (or to any
Subsidiary of Parent designated in writing by Parent to the Company) the
amount of $60 million (the "Company Termination Fee") (less any Expense Fee
that may previously have been paid or is payable in the same
circumstances), by wire transfer of immediately available funds (1) on the
second business day after such termination in the case of clause (i) of the
definition of Company Triggering Event, (2) on or prior to the date of such
termination, in the case of clause (iii) of the definition of Company
Triggering Event, or (3) on the earlier of the date an agreement is entered
into with respect to a Company Business Combination or a Company Business
Combination is consummated, in the case of clauses (ii) or (iv) of the
definition of Company Triggering Event. In no event shall more than one
Company Termination Fee be payable under this Agreement. "Company
Triggering Event" means any one of the following:
(i) a termination of this Agreement by Parent pursuant
to Section 7.1(c);
(ii) a termination of this Agreement by Parent or the
Company pursuant to Section 7.1(e), if (A) any Company Business
Combination is publicly proposed or announced on or after the date
hereof and prior to the Company Meeting and (B) any Company Business
Combination is entered into, agreed to or consummated by the Company
or any of its Subsidiaries within 12 months of such termination of
this Agreement;
(iii) a termination of this Agreement by the Company
pursuant to Section 7.1(i); or
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(iv) a termination of this Agreement by Parent or the
Company pursuant to Section 7.1(e) or by Parent pursuant to Section
7.1(h) (but only if the breach of warranty, representation, covenant
or agreement that gives rise to such termination arises out of bad
faith or willful misconduct of the Company), if any Company Business
Combination is entered into, agreed to or consummated by the Company
within 3 months of such termination of this Agreement.
(b) Upon the happening of a Parent Triggering Event, Parent
shall pay to the Company (or to any Subsidiary of the Company designated in
writing by the Company to Parent) the amount of $25 million (the "Parent
Termination Fee") (less any Expense Fee that may previously have been paid
or is payable in the same circumstances) by wire transfer of immediately
available funds, (1) on the second business day following such termination,
in the case of clause (i) of the definition of Parent Triggering Event, or
(2) on the earlier of the date an agreement is entered into with respect to
a Parent Business Combination or a Parent Business Combination is
consummated, in the case of clause (ii) of the definition of Parent
Triggering Event. In no event shall more than one Parent Termination Fee be
payable under this Agreement. "Parent Triggering Event" means either of the
following:
(i) a termination of this Agreement by the Company
pursuant to Section 7.1(d); or
(ii) a termination of this Agreement by Parent or the
Company pursuant to Section 7.1(f), if (A) any Parent Business
Combination with a person other than the Company is publicly proposed
or announced on or after the date hereof and prior to the Parent
Meeting and (B) a Parent Business Combination is entered into, agreed
to or consummated by Parent or any of its Subsidiaries with such
person or an affiliate thereof within 12 months of the termination of
this Agreement.
(c) Notwithstanding Section 8.2:
(i) If this Agreement is terminated by Parent or the
Company pursuant to Section 7.1(e), then the Company shall pay to
Parent, and if this Agreement is terminated by Parent or the Company
pursuant to Section 7.1(f), then Parent shall pay to the Company (or,
in each case, to any Subsidiary thereof designated in writing to the
payor), on the second business day after such termination, by wire
transfer of immediately available funds, the amount of $5 million (the
"Expense Fee") representing the cash amount necessary to compensate
the payee for all fees and expenses incurred at any time prior to such
termination by it or on its behalf in connection with the Merger, the
preparation of this Agreement and the transactions contemplated by
this Agreement.
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(ii) The Company shall pay to Parent (or to any
Subsidiary of Parent designated in writing to the Company), on the
second business day after the Company receives a reasonably documented
statement therefor (a letter from the lenders being conclusive in the
absence of manifest error), by wire transfer of immediately available
funds, all amounts incurred by Parent and Merger Sub in respect of
underwriting, placement, commitment and other fees and payments
(including any payment based on a percentage of the Company
Termination Fee, if any, required to be paid by the Company) not to
exceed the amounts set forth in that certain fee letter dated the date
hereof with respect to the Financing Commitments, and related expenses
of the lenders (including fees and expenses of lenders' counsel)
required to be paid by Parent or Merger Sub in connection with the
obtaining of the Financing Commitments (the "Commitment Expenses"), if
this Agreement is terminated:
(A) by Parent pursuant to Section 7.1(c) or
7.1(h);
(B) by Parent or the Company pursuant to Section
7.1(e); or
(C) by the Company pursuant to Section 7.1(i).
(iii) The Company shall pay to Parent (or to any
Subsidiary of Parent designated in writing to the Company), on the
second business day after the Company receives a reasonably documented
statement therefor (a letter from the lenders being conclusive in the
absence of manifest error), by wire transfer of immediately available
funds, the lesser of (x) one-half of the Commitment Expenses or (y) $5
million, if this Agreement is terminated by Parent or the Company
pursuant to Section 7.1(b) or 7.1(g).
(d) The parties acknowledge that the agreements contained in
paragraphs (a) through (c) of this Section 7.3 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
either of the Company or Parent fails to pay promptly any fee payable by it
pursuant to this Section 7.3, then the party owing such fee shall pay to
the party owed such fee its costs and expenses (including attorneys' fees)
in connection with such suit, together with interest on the amount of the
fee at the prime or base rate of The Chase Manhattan Bank from the date
such payment was due under this Agreement until the date of payment.
(e) "Company Business Combination" shall mean:
(i) any merger, consolidation or other business
combination as a result of which the shareholders of the Company would
hold less than 50% of the voting securities outstanding following that
transaction;
(ii) the acquisition of 50% or more of the outstanding
capital stock of the Company; or
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(iii) the acquisition of 50% or more of the assets of
the Company and its Subsidiaries taken as a whole (including capital
stock of any Subsidiary);
provided that solely for purposes of clause (ii)(A) of Section 7.3(a), the
percentage in clause (i) of this definition shall be deemed to be 75% and
the percentage in clauses (ii) and (iii) of this definition shall be deemed
to be 25%.
(f) "Parent Business Combination" shall mean:
(i) any merger, consolidation or other business
combination as a result of which the stockholders of Parent would hold
less than 50% of the voting securities outstanding following that
transaction;
(ii) the acquisition of 50% or more of the outstanding
capital stock of Parent; or
(iii) the acquisition of 50% or more of the assets of
Parent and its Subsidiaries taken as a whole (including capital stock
of any Subsidiary);
provided that solely for purposes of clause (ii)(A) of Section 7.3(b), the
percentage in clause (i) of this definition shall be deemed to be 75% and
the percentage in clauses (ii) and (iii) of this definition shall be deemed
to be 25%.
ARTICLE VIII
MISCELLANEOUS
Section 8.1. No Survival of Representations and Warranties. None
of the representations, warranties and agreements in this Agreement or in
any instrument delivered pursuant to this Agreement shall survive the
Merger, except for the agreements set forth in Article II, the provisions
of Section 5.10, Section 5.13 and this Section 8.1.
Section 8.2. Expenses. Subject to the provisions of Section 7.3,
(a) whether or not the Merger is consummated, all costs and expenses
incurred in connection with this Agreement and the transactions
contemplated hereby and thereby shall be paid by the party incurring such
expenses, except that the expenses incurred in connection with the filing,
printing and mailing of the Registration Statement and the Joint Proxy
Statement (including registration and filing fees relating thereto) shall
be shared equally by the Company and Parent and (b) if the Merger is
consummated, all transfer taxes shall be paid by the Company.
Section 8.3. Counterparts; Effectiveness. This Agreement may be
executed in two or more consecutive counterparts, each of which shall be an
original,
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with the same effect as if the signatures thereto and hereto were upon the same
instrument, and shall become effective when one or more counterparts have been
signed by each of the parties and delivered (by telecopy or otherwise) to the
other parties.
Section 8.4. Governing Law. This Agreement shall be governed by
and construed in accordance with the Laws of the State of New York, except
that New York Law and Delaware Law shall apply to the Merger, in each case,
without regard to the principles of conflicts of Laws thereof.
Section 8.5. Notices. All notices and other communications
hereunder shall be in writing (including telecopy or similar writing) and
shall be effective (a) if given by telecopy, when such telecopy is
transmitted to the telecopy number specified in this Section 8.5 and the
appropriate telecopy confirmation is received or (b) if given by any other
means, when delivered at the address specified in this Section 8.5:
To the Company or Merger Sub:
General Signal Corporation
Xxx Xxxx Xxxxx Xxxx
X.X. Xxx 00000
Xxxxxxxx, Xxxxxxxxxxx 00000-0000
Attention: Xxxxxx X. Xxxxx
Senior Vice President, General Counsel and Secretary
Telecopier: (000) 000-0000
copy to:
Wachtell, Lipton, Xxxxx & Xxxx
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Attention: Xxxx X. Xxxxxxxx, Esq.
Telecopier: (000) 000-0000
To Parent:
SPX Corporation
000 Xxxxxxx Xxxxx Xxxxx
X.X. Xxx 0000
Xxxxxxxx, Xxxxxxxx 00000-0000
Attention: Xxxxxxxxxxx X. Xxxxxxx
Senior Vice President, General Counsel and Secretary
Telecopier: (000) 000-0000
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copy to:
Fried, Frank, Harris, Xxxxxxx & Xxxxxxxx
Xxx Xxx Xxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Attention: Xxxxx Xxxxxxx, Esq.
Telecopier: (000) 000-0000
Section 8.6. Assignment; Binding Effect. Except as may be
required by any Alternative Transaction adopted pursuant to Section 1.7,
neither this Agreement nor any of the rights, interests or obligations
hereunder shall be assigned by any of the parties hereto (whether by
operation of Law or otherwise) without the prior written consent of the
other parties; provided however, that Merger Sub may assign all of its
rights and obligations under this Agreement and the transactions
contemplated hereby to any other wholly owned Subsidiary of Parent. Subject
to the preceding sentence, this Agreement shall be binding upon and shall
inure to the benefit of the parties hereto and their respective successors
and assigns.
Section 8.7. Severability. Any term or provision of this
Agreement which is invalid or unenforceable in any jurisdiction shall, as
to that jurisdiction, be ineffective to the extent of such invalidity or
unenforceability without rendering invalid or unenforceable the remaining
terms and provisions of this Agreement in any other jurisdiction. If any
provision of this Agreement is so broad as to be unenforceable, such
provision shall be interpreted to be only so broad as is enforceable.
Section 8.8. Enforcement of Agreement. The parties hereto agree
that money damages or other remedy at Law would not be sufficient or
adequate remedy for any breach or violation of, or a default under, this
Agreement by them and that in addition to all other remedies available to
them, each of them shall be entitled to the fullest extent permitted by Law
to an injunction restraining such breach, violation or default or
threatened breach, violation or default and to any other equitable relief,
including, without limitation, specific performance, without bond or other
security being required.
Section 8.9. Miscellaneous. This Agreement:
(a) along with the Confidentiality Agreements, Exhibits and
Disclosure Letters hereto, constitutes the entire agreement, and supersedes
all other prior agreements and understandings, both written and oral,
between the parties, or any of them, with respect to the subject matter
hereof and thereof; and
(b) except for the provisions of Section 5.10, is not intended to
and shall not confer upon any person other than the parties hereto any
rights or remedies hereunder.
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Section 8.10. Headings. Headings of the Articles and Sections of
this Agreement are for convenience of the parties only, and shall be given
no substantive or interpretive effect whatsoever.
Section 8.11. Certain Definitions. References in this Agreement
to "Subsidiaries" of the Company or Parent shall mean any corporation or
other form of legal entity of which more than 50% of the outstanding voting
securities are on the date hereof directly or indirectly owned by the
Company or Parent, as the case may be. References in this Agreement (except
as specifically otherwise defined) to "affiliates" shall mean, as to any
person, any other person which, directly or indirectly, controls, or is
controlled by, or is under common control with, such person. As used in
this definition, "control" (including, with its correlative meanings,
"controlled by" and "under common control with") shall mean the possession,
directly or indirectly, of the power to direct or cause the direction of
management or policies of a person, whether through the ownership of
securities or partnership of other ownership interests, by contract or
otherwise. References in the Agreement to "person" shall mean an
individual, a corporation, a partnership, an association, a trust or any
other entity or organization, including, without limitation, a governmental
body or authority. "U.S. Subsidiary" shall mean a Subsidiary organized
under the laws of any state of the United States or the District of
Columbia.
Section 8.12. Knowledge. Reference to the "knowledge" of any
person that is not an individual shall be to the knowledge of the executive
officers of such person and, with respect to representations and warranties
made or deemed to be made as of the Closing Date, unless expressly limited
to a specified date of this Agreement, shall include knowledge obtained at
any time after the date hereof and prior to the Closing Date.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be duly executed and delivered as of the date first above written.
SPX CORPORATION
By: /s/ Xxxxxxxxxxx X. Xxxxxxx
--------------------------------------
Name: Xxxxxxxxxxx X. Xxxxxxx
Title: Vice President, Secretary
and General Counsel
SAC CORP.
By: /s/ Xxxxxxxxxxx X. Xxxxxxx
--------------------------------------
Name: Xxxxxxxxxxx X. Xxxxxxx
Title: Vice President and Secretary
GENERAL SIGNAL CORPORATION
By: /s/ Xxxxxxx X. Xxxxxxxx
--------------------------------------
Name: Xxxxxxx X. Xxxxxxxx
Title: Chairman, President and
Chief Executive Officer
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