EXHIBIT 2.1
EXECUTION COPY
AGREEMENT AND PLAN OF MERGER
AMONG
UNITED TECHNOLOGIES CORPORATION
HSSAIL INC.
AND
SUNDSTRAND CORPORATION
February 21, 1999
TABLE OF CONTENTS
PAGE
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ARTICLE I
THE MERGER
1.1 The Merger . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Effective Time . . . . . . . . . . . . . . . . . . . . . . . . 1
1.3 Closing of the Merger . . . . . . . . . . . . . . . . . . . . . 2
1.4 Effects of the Merger . . . . . . . . . . . . . . . . . . . . . 2
1.5 Certificate of Incorporation and Bylaws of the Surviving
Corporation . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.6 Directors and Officers of the Surviving Corporation . . . . . . 2
ARTICLE II
CONVERSION OF SECURITIES; EXCHANGE OF CERTIFICATES
2.1 Conversion of Capital Stock . . . . . . . . . . . . . . . . . . 3
2.2 Exchange Ratio; Fractional Shares; Adjustments . . . . . . . . 4
2.3 Exchange of Certificates . . . . . . . . . . . . . . . . . . . 5
2.4 Stock Options and Other Stock Awards . . . . . . . . . . . . . 8
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
3.1 Organization, Qualification, Etc. . . . . . . . . . . . . . . 10
3.2 Capitalization . . . . . . . . . . . . . . . . . . . . . . . 11
3.3 Corporate Authority Relative to this Agreement; No
Violation; Approvals . . . . . . . . . . . . . . . . . . . . 12
3.4 Reports and Financial Statements . . . . . . . . . . . . . . 13
3.5 No Undisclosed Liabilities . . . . . . . . . . . . . . . . . 14
3.6 Permits; No Violation of Law . . . . . . . . . . . . . . . . 14
3.7 Environmental Laws and Regulations . . . . . . . . . . . . . 14
3.8 Employee Benefits . . . . . . . . . . . . . . . . . . . . . . 17
3.9 Certain Contracts . . . . . . . . . . . . . . . . . . . . . . 18
3.10 Intellectual Property . . . . . . . . . . . . . . . . . . . . 19
3.11 Absence of Certain Changes or Events . . . . . . . . . . . . 20
3.12 Investigations; Litigation . . . . . . . . . . . . . . . . . 20
3.13 Proxy Statement; Registration Statement; Other
Information . . . . . . . . . . . . . . . . . . . . . . . . 20
3.14 Section 203 of DGCL; Rights Agreement . . . . . . . . . . . . 21
3.15 Board Action . . . . . . . . . . . . . . . . . . . . . . . . 21
3.16 Tax Matters . . . . . . . . . . . . . . . . . . . . . . . . . 21
3.17 Labor Matters . . . . . . . . . . . . . . . . . . . . . . . . 22
3.18 Year 2000 Compliance . . . . . . . . . . . . . . . . . . . . 22
3.19 Opinion of Financial Advisor . . . . . . . . . . . . . . . . 23
3.20 Required Vote of the Company Stockholders . . . . . . . . . . 23
3.21 Brokers . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
4.1 Organization, Qualification, Etc. . . . . . . . . . . . . . . 23
4.2 Capitalization . . . . . . . . . . . . . . . . . . . . . . . 24
4.3 Corporate Authority Relative to this Agreement; No
Violation; Approvals . . . .. . . . . . . . . . . . . . . . . 24
4.4 Reports and Financial Statements . . . . . . . . . . . . . . 25
4.5 Absence of Certain Changes or Events . . . . . . . . . . . . 26
4.6 Proxy Statement; Registration Statement; Other
Information . . . . . . . . . . . . . . . . . . . . . . . . 26
4.7 Board Action . . . . . . . . . . . . . . . . . . . . . . . . 26
4.8 Lack of Ownership of Company Common Stock . . . . . . . . . . 27
4.9 No Required Vote of Parent Stockholders . . . . . . . . . . . 27
4.10 Brokers . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
ARTICLE V
COVENANTS RELATING TO CONDUCT OF BUSINESS
5.1 Conduct of Business by the Company Prior to the
Effective Time . . . . . . . . . . . . . . . . . . . . . . . 27
5.2 Advice of Change . . . . . . . . . . . . . . . . . . . . . . 30
5.3 Conduct of Parent's Operations . . . . . . . . . . . . . . . 30
ARTICLE VI
ADDITIONAL AGREEMENTS
6.1 Regulatory Matters . . . . . . . . . . . . . . . . . . . . . 30
6.2 Access to Information . . . . . . . . . . . . . . . . . . . . 32
6.3 Company Stockholders Meeting . . . . . . . . . . . . . . . . 32
6.4 Legal and Other Conditions to Merger . . . . . . . . . . . . 32
6.5 Affiliates of the Company . . . . . . . . . . . . . . . . . . 33
6.6 Stock Exchange Listing . . . . . . . . . . . . . . . . . . . 33
6.7 Employee Benefits . . . . . . . . . . . . . . . . . . . . . . 33
6.8 Indemnification; Directors' and Officers' Insurance . . . . . 35
6.9 Additional Agreements . . . . . . . . . . . . . . . . . . . . 36
6.10 Public Announcements . . . . . . . . . . . . . . . . . . . . 36
6.11 Merger Sub . . . . . . . . . . . . . . . . . . . . . . . . . 36
6.12 Subsequent Financial Statements . . . . . . . . . . . . . . . 36
6.13 No Solicitation . . . . . . . . . . . . . . . . . . . . . . . 36
ARTICLE VII
CONDITIONS PRECEDENT
7.1 Conditions to Each Party's Obligation to Effect the Merger . 38
7.2 Conditions to Obligations of the Company . . . . . . . . . . 39
7.3 Conditions to Obligations of Parent . . . . . . . . . . . . . 40
ARTICLE VIII
TERMINATION AND AMENDMENT
8.1 Termination . . . . . . . . . . . . . . . . . . . . . . . . . 41
8.2 Effect of Termination . . . . . . . . . . . . . . . . . . . . 42
8.3 Amendment; Extension; Waiver . . . . . . . . . . . . . . . . 43
ARTICLE IX
GENERAL PROVISIONS
9.1 Nonsurvival of Representations, Warranties and Agreements . . 43
9.2 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . 43
9.3 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
9.4 Interpretation; Certain Definitions . . . . . . . . . . . . . 45
9.5 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . 46
9.6 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . 46
9.7 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . 46
9.8 Consent to Jurisdiction; Venue . . . . . . . . . . . . . . . 46
9.9 Specific Performance . . . . . . . . . . . . . . . . . . . . 46
9.10 Severability . . . . . . . . . . . . . . . . . . . . . . . . 46
9.11 Assignment; Third Party Beneficiaries . . . . . . . . . . . . 47
Exhibit A - Form of Affiliate Letter
AGREEMENT AND PLAN OF MERGER
This Agreement and Plan of Merger (this "Agreement"), dated as of
February 21, 1999, is among United Technologies Corporation, a Delaware
corporation ("Parent"), HSSail Inc., a Delaware corporation and a wholly
owned direct Subsidiary (as defined herein) of Parent ("Merger Sub"), and
Sundstrand Corporation, a Delaware corporation (the "Company").
WHEREAS, the respective Boards of Directors of Parent, Merger Sub
and the Company have determined that it is advisable and in the best
interests of their respective stockholders for the Company to merge with
and into Merger Sub (the "Merger," unless Parent makes a Cash Election (as
defined herein) pursuant to Section 2.1(e), in which case the "Merger"
shall mean the merger of Merger Sub with and into the Company) upon the
terms and subject to the conditions of this Agreement and in accordance
with the Delaware General Corporation Law (the "DGCL");
WHEREAS, for federal income tax purposes, it is intended, unless
Parent makes a Cash Election, that the Merger qualify as a reorganization
within the meaning of Section 368(a) of the Internal Revenue Code of 1986,
as amended (the "Code");
NOW, THEREFORE, in consideration of the mutual covenants,
representations, warranties and agreements contained herein, and intending
to be legally bound hereby, the parties agree as follows:
ARTICLE I
THE MERGER
1.1 THE MERGER. Upon the terms and subject to the conditions set
forth in this Agreement, and in accordance with the DGCL, at the Effective
Time (as defined herein), except as set forth below, the Company shall be
merged with and into Merger Sub and as a result of the Merger, the separate
corporate existence of the Company shall cease and Merger Sub shall
continue as the surviving corporation of the Merger (the "Surviving
Corporation") and shall succeed to and assume all the rights and
obligations of the Company in accordance with the DGCL; provided, however,
that in the event that Parent makes a Cash Election pursuant to Section
2.1(e), Merger Sub shall be merged with and into the Company and as a
result of the Merger the separate corporate existence of Merger Sub shall
cease and the Company shall continue as the Surviving Corporation and shall
succeed to and assume all the rights and obligations of Merger Sub in
accordance with the DGCL.
1.2 EFFECTIVE TIME. No later than two business days (or such other
date and time as the parties shall agree) after the satisfaction or, if
permissible, waiver of the conditions set forth in Article VII (the
"Closing Date"), the parties hereto shall cause the Merger to be
consummated by filing with the Secretary of State of the State of Delaware
(the "Delaware Secretary of State") a certificate of merger (the
"Certificate of Merger"), in such form as required by, and executed in
accordance with the relevant provisions of, the DGCL (the date and time of
such filing or, if another date and time is specified in such filing, such
specified date and time, the "Effective Time").
1.3 CLOSING OF THE MERGER. The closing of the Merger (the "Closing")
shall take place at 10:00 a.m. on the Closing Date at the offices of
Wachtell, Lipton, Xxxxx & Xxxx, 00 Xxxx 00xx Xxxxxx, Xxx Xxxx, Xxx Xxxx
unless another place, time or date is agreed to by the parties hereto.
1.4 EFFECTS OF THE MERGER . The Merger shall have the effects set
forth in Section 259 of the DGCL.
1.5 CERTIFICATE OF INCORPORATION AND BY-LAWS OF THE SURVIVING
CORPORATION. If Merger Sub continues as the Surviving Corporation of the
Merger, at the Effective Time, (i) the Certificate of Incorporation of
Merger Sub as in effect immediately prior to the Effective Time (except
that Article I of the Certificate of Incorporation of the Surviving
Corporation shall read as follows: "The name of the company is "Xxxxxxxx
Sundstrand Corporation") shall be the Certificate of Incorporation of the
Surviving Corporation, until thereafter amended in accordance with the
DGCL, and (ii) the By-laws of Merger Sub, as in effect immediately prior to
the Effective Time, shall be the By-laws of the Surviving Corporation,
until thereafter amended in accordance with the DGCL. If the Company
continues as the Surviving Corporation of the Merger, (i) the Certificate
of Incorporation of the Company shall be amended at the Effective Time to
read in its entirety as the Certificate of Incorporation of Merger Sub as
in effect immediately prior to the Effective Time (except that Article I of
the Certificate of Incorporation of the Surviving Corporation shall read as
follows: "The name of the company is "Xxxxxxxx Sundstrand Corporation"),
and shall be the Certificate of Incorporation of the Surviving Corporation,
until thereafter amended in accordance with the DGCL; and (ii) the By-laws
of Merger Sub, as in effect immediately prior to the Effective Time, shall
be the By-laws of the Surviving Corporation, until amended in accordance
with the DGCL.
1.6 DIRECTORS AND OFFICERS OF THE SURVIVING CORPORATION. The
directors of Merger Sub immediately prior to the Effective Time shall be
the initial directors of the Surviving Corporation, each to hold office in
accordance with the Certificate of Incorporation and By-laws of the
Surviving Corporation. The officers of Merger Sub immediately prior to the
Effective Time shall be the initial officers of the Surviving Corporation,
each to hold office in accordance with the Certificate of Incorporation and
the By-laws of the Surviving Corporation.
ARTICLE II
CONVERSION OF SECURITIES; EXCHANGE OF CERTIFICATES
2.1 CONVERSION OF CAPITAL STOCK. At the Effective Time, by virtue of
the Merger and without any action on the part of Parent, Merger Sub, the
Company or holders of any of the following securities:
(a) Each share of common stock, $0.01 par value, of Merger Sub
("Merger Sub Common Stock") issued and outstanding immediately prior to the
Effective Time shall be converted into one share of common stock, $0.01 par
value, of the Surviving Corporation, and the Surviving Corporation shall be
a wholly owned Subsidiary of Parent. Such newly issued shares shall
thereafter constitute all of the issued and outstanding capital stock of
the Surviving Corporation.
(b) Each share of capital stock of the Company held in the treasury
of the Company shall be cancelled and retired and no payment shall be made
in respect thereof.
(c) Subject to Section 2.1(e), each outstanding share of common
stock, $0.50 par value, of the Company ("Company Common Stock") shall be
converted into and become the right to receive (i) subject to Section 2.2,
a fraction of a share of common stock, par value $1.00 per share, of Parent
("Parent Common Stock") equal to the Exchange Ratio (as defined in Section
2.2) (the "Stock Consideration") and (ii) cash (the "Cash Consideration,"
and the Stock Consideration collectively referred to as the "Merger
Consideration") of $35.
(d) Each outstanding share of Company Common Stock the holder of
which has perfected his right to dissent under applicable law and has not
effectively withdrawn or lost such right as of the Effective Date (the
"Dissenting Shares") shall not be converted into or represent a right to
receive the Merger Consideration hereunder, and the holder thereof shall be
entitled only to such rights as are granted by applicable law. The Company
shall give Parent prompt notice upon receipt by the Company of any such
written demands for payment of the fair value of such Dissenting Shares and
of withdrawals of such notice and any other instruments provided pursuant
to applicable law (any shareholder duly making such demand, a "Dissenting
Shareholder"). Any payments made in respect of Dissenting Shares shall be
made by the Surviving Corporation.
(e) If (i) the Parent Share Price (as defined herein) is equal to or
less than $112.8938 (the "Reference Price") and (ii) Parent makes a cash
election (the "Cash Election") by providing written notice to the Company
of its exercise of its cash election right under this Section 2.1(e)
promptly after expiration of the Measurement Period (as defined below),
then the Merger Consideration to be received in respect of each share of
Company Common Stock shall consist solely of the right to receive $70.00 in
Cash Consideration.
2.2 EXCHANGE RATIO; FRACTIONAL SHARES; ADJUSTMENTS.
(a) EXCHANGE RATIO. The "Exchange Ratio" shall mean .2790; provided,
however, that in the event that:
(i) the product obtained by multiplying (X) .2790 by (Y) the
average of the closing price of shares of Parent Common Stock (the "Parent
Share Price") as reported on the New York Stock Exchange, Inc. ("NYSE")
Composite Tape (the "NYSE Composite Tape") on each of the ten consecutive
trading days immediately preceding the fifth trading day prior to the date
of the Company Stockholders Meeting (the "Measurement Period") is greater
than $39.25, then the "Exchange Ratio" shall mean the quotient (rounded to
the nearest 1/10,000) obtained by dividing (X) $39.25 by (Y) the Parent
Share Price; or
(ii) the product obtained by multiplying (X) .2790 by (Y) the
Parent Share Price is less than $35.00, then the "Exchange Ratio" shall
mean the quotient (rounded to the nearest 1/10,000) obtained by dividing
(X) $35.00 by (Y) the Parent Share Price.
(b) NO ISSUANCE OF FRACTIONAL SHARES.
(i) No certificates or scrip for fractional shares of Parent
Common Stock shall be issued as a result of the conversion provided for in
Section 2.1(c), and such fractional share interests will not entitle the
owner thereof to vote or to any rights as a stockholder of Parent.
(ii) As promptly as practicable following the Effective Time, the
Exchange Agent (as defined herein) shall determine the excess of the number
of full shares of Parent Common Stock delivered to the Exchange Agent by
Parent pursuant to Section 2.3(a) over the aggregate number of full shares
of Parent Common Stock to be distributed to the former holders of Company
Common Stock pursuant to Section 2.3(b) (such excess being herein called
the "Excess Shares"). As soon after the Effective Time as practicable, the
Exchange Agent, as agent for the holders of the Parent Common Stock, shall
sell the Excess Shares at then prevailing prices for Parent Common Stock on
the NYSE, all in the manner provided in paragraph (iii) of this Section
2.2(b).
(iii) The sale of the Excess Shares by the Exchange Agent
shall be executed on the NYSE in round lots to the greatest extent
practicable. Until the net proceeds of such sale or sales have been
distributed to the former holders of Company Common Stock, the Exchange
Agent shall hold such proceeds in trust for the holders of such stock (the
"Shares Trust"). The Surviving Corporation shall pay all commissions,
transfer taxes and other out-of-pocket transaction costs, including the
expenses and compensation of the Exchange Agent incurred in connection with
such sale of the Excess Shares. The Exchange Agent shall determine the
portion of the Shares Trust to which each former holder of Company Common
Stock shall be entitled, if any, by multiplying the amount of the aggregate
net proceeds comprising the Shares Trust by a fraction, the numerator of
which is the amount of the fractional share interest to which such former
holder of Company Common Stock is entitled and the denominator of which is
the aggregate amount of fractional share interests to which all former
holders of Company Common Stock, as applicable, are entitled.
(iv) As soon as practicable after the determination of the amount
of cash, if any, to be paid to the former holders of Company Common Stock,
in lieu of fractional share interests, the Exchange Agent shall make
available such amounts to such former holders, net of any applicable
withholding tax.
(c) ADJUSTMENTS. In the event that prior to the Effective Time
Parent shall declare a stock dividend or other distribution payable in
shares of Parent Common Stock or securities convertible into shares of
Parent Common Stock, or effect a stock split, reclassification, combination
or other change with respect to shares of Parent Common Stock, the Exchange
Ratio and the Reference Price set forth in this Article II shall be
adjusted to reflect such dividend, distribution, stock split,
reclassification, combination or other change.
2.3 EXCHANGE OF CERTIFICATES
(a) EXCHANGE AGENT. Immediately prior to the Effective Time, Parent
shall deposit with Xxxxxx Bank and Trust Company, or such other bank or
trust company designated by the Company and reasonably acceptable to Parent
(the "Exchange Agent"), for the benefit of the holders of shares of Company
Common Stock (the "Company Stockholders"), for exchange in accordance with
this Section 2.3, (i) certificates representing the aggregate Stock
Consideration issuable pursuant to Section 2.1 and (ii) cash representing
the aggregate Cash Consideration issuable pursuant to Section 2.1 (such
shares of Parent Common Stock together with any dividends or distributions
with respect thereto, the Cash Consideration and the Shares Trust, the
"Exchange Fund").
(b) EXCHANGE PROCEDURES. As soon as practicable after the Effective
Time, but in no event more than three business days thereafter, the
Exchange Agent shall mail to each holder of record of a certificate or
certificates which prior thereto represented Company Common Stock (the
"Certificates") (i) a letter of transmittal (which shall specify that
delivery shall be effected, and risk of loss and title to the Certificates
shall pass, only upon delivery of the Certificates to the Exchange Agent,
and shall be in such form and have such other customary provisions as
Parent may reasonably specify) and (ii) instructions for effecting the
surrender of the Certificates in exchange for the Merger Consideration.
Upon surrender of a Certificate for cancellation to the Exchange Agent,
together with a duly executed letter of transmittal, the holder of such
Certificate shall be entitled to receive in exchange therefor (i) a
certificate or certificates representing that whole number of shares of
Parent Common Stock such Company Stockholder has the right to receive
pursuant to Section 2.1 in such denominations and registered in such names
as such holder may request and/or a check representing the Cash
Consideration that such Company Stockholder has the right to receive
pursuant to Section 2.1 plus (ii) the amount of cash in lieu of fractional
shares, if any, and unpaid dividends and distributions, if any, which such
Company Stockholder has the right to receive pursuant to the provisions of
this Article II, after giving effect to any required withholding tax. The
shares represented by the Certificate so surrendered shall forthwith be
cancelled. No interest will be paid or accrued on the Merger Consideration
or the cash in lieu of fractional shares, if any, and unpaid dividends and
distributions, if any, payable to Company Stockholders. In the event of a
transfer of ownership of shares of Company Common Stock that is not
registered on the transfer records of the Company, a certificate
representing the proper number of shares of Parent Common Stock, and/or a
check for the Cash Consideration that such Company Stockholder has the
right to receive pursuant to Section 2.1 plus the cash to be paid in lieu
of fractional shares, if any, and unpaid dividends and distributions, if
any, may be issued to such transferee if a Certificate held by such
transferee is presented to the Exchange Agent, accompanied by all documents
required to evidence and effect such transfer and to evidence that any
applicable stock transfer taxes have been paid. Until surrendered as
contemplated by this Section 2.3, each Certificate shall be deemed at any
time after the Effective Time to represent only the right to receive upon
surrender the Merger Consideration plus the cash in lieu of fractional
shares, if any, and unpaid dividends and distributions, if any, as provided
in this Article II. If any Certificate shall have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the person
claiming such Certificate to be lost, stolen or destroyed and, if required
by Parent, the posting by such person of a bond in such reasonable amount
as Parent may direct as indemnity against any claim that may be made
against it with respect to such Certificate, the Exchange Agent will
deliver in exchange for such lost, stolen or destroyed Certificate, a
certificate representing the proper number of shares of Parent Common Stock
and/or a check for the Cash Consideration that such Company Stockholder has
the right to receive pursuant to Section 2.1 plus the cash to be paid in
lieu of fractional shares, if any, with respect to the shares of Company
Common Stock formerly represented thereby, and unpaid dividends and
distributions on shares of Parent Common Stock, if any, as provided in this
Article II.
(c) DISTRIBUTIONS WITH RESPECT TO UNEXCHANGED SHARES.
Notwithstanding any other provisions of this Agreement, no dividends or
other distributions declared or made after the Effective Time with respect
to shares of Parent Common Stock having a record date after the Effective
Time shall be paid to the holder of any unsurrendered Certificate, and no
cash payment in lieu of fractional shares shall be paid to any such holder,
until the holder shall surrender such Certificate as provided in this
Section 2.3; provided that no such payments or distributions will be made
if Parent has made a Cash Election. Subject to the effect of applicable
Laws, following surrender of any such Certificate, there shall be paid to
the holder of the certificates representing whole shares of Parent Common
Stock issued in exchange therefor, without interest, (i) at the time of
such surrender, the amount of dividends or other distributions with a
record date after the Effective Time theretofore payable with respect to
such whole shares of Parent Common Stock and not paid, less the amount of
any withholding taxes that may be required thereon, and (ii) at the
appropriate payment date subsequent to surrender, the amount of dividends
or other distributions with a record date after the Effective Time but
prior to surrender and a payment date subsequent to surrender payable with
respect to such whole shares of Parent Common Stock, less the amount of any
withholding taxes that may be required thereon.
(d) NO FURTHER OWNERSHIP RIGHTS IN COMPANY COMMON STOCK. All shares
of Parent Common Stock issued and/or Cash Consideration paid upon surrender
of Certificates in accordance with the terms hereof (including any cash
paid in lieu of fractional shares) shall be deemed to have been issued and
paid in full satisfaction of all rights pertaining to such shares of
Company Common Stock represented thereby, and, as of the Effective Time,
the stock transfer books of the Company shall be closed and there shall be
no further registration of transfers on the stock transfer books of the
Company of shares of Company Common Stock outstanding immediately prior to
the Effective Time. If, after the Effective Time, Certificates are
presented to the Surviving Corporation for any reason, they shall be
cancelled and exchanged as provided in this Section 2.3.
(e) TERMINATION OF EXCHANGE FUND. Any portion of the Exchange Fund
that remains undistributed to Company Stockholders one year after the date
of the mailing required by Section 2.3(b) shall be delivered to Parent,
upon demand thereby, and holders of Certificates who have not theretofore
complied with this Section 2.3 shall thereafter look only to Parent for
payment of any claim to the Merger Consideration and cash in lieu of
fractional shares thereof, or dividends or distributions, if any, in
respect thereof.
(f) NO LIABILITY. None of Parent, the Surviving Corporation or the
Exchange Agent shall be liable to any person in respect of any shares of
Parent Common Stock (or dividends or distributions with respect thereto) or
cash from the Exchange Fund delivered to a public official pursuant to any
applicable abandoned property, escheat or similar law. If any Certificates
shall not have been surrendered prior to seven years after the Effective
Time (or immediately prior to such earlier date on which any cash, any cash
in lieu of fractional shares or any dividends or distributions with respect
to whole shares of Parent Common Stock in respect of such Certificate
would otherwise escheat to or become the property of any Governmental
Entity (as defined herein), any such cash, dividends or distributions in
respect of such Certificate shall, to the extent permitted by applicable
Laws, become the property of Parent, free and clear of all claims or
interest of any person previously entitled thereto.
(g) INVESTMENT OF EXCHANGE FUND. 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 upon termination of the Exchange Fund pursuant to Section
2.3(e). In the event the cash in the Exchange Fund shall be insufficient
to fully satisfy all of the payment obligations to be made by the Exchange
Agent hereunder, then Parent shall promptly deposit cash into the Exchange
Fund in an amount which is equal to the deficiency in the amount of cash
required to fully satisfy such payment obligations.
(h) WITHHOLDING RIGHTS. Each of the Surviving Corporation, Merger
Sub and Parent shall be entitled to deduct and withhold from the
consideration otherwise payable pursuant to this Agreement to any holder of
shares of Company Common Stock such amounts as it is required to deduct and
withhold with respect to the making of such payment under the Code and the
rules and regulations promulgated thereunder, or any provision of state,
local or foreign tax law. To the extent that amounts are so withheld by
the Surviving Corporation, Merger Sub or Parent, as the case may be, such
withheld amounts shall be treated for all purposes of this Agreement as
having been paid to the holder of the shares of Company Common Stock in
respect of which such deduction and withholding was made by the Surviving
Corporation, Merger Sub or Parent, as the case may be.
2.4 STOCK OPTIONS AND OTHER STOCK AWARDS. (a) At the Effective
Time, each employee or director option to purchase shares of Company Common
Stock (a "Company Option") that is outstanding and unexercised immediately
prior thereto shall cease to represent a right to acquire shares of Company
Common Stock and shall be converted automatically into a fully vested and
exercisable option to purchase shares of Parent Common Stock (a "Parent
Option") in an amount and at an exercise price determined as provided below
(and otherwise subject to the terms of the Company's Stock Incentive Plan,
Management Stock Performance Plan or Nonemployee Director Stock Option Plan
(collectively, the "Company Stock Plans"), as applicable, under which they
were issued and the agreements evidencing grants thereunder):
(i) the number of shares of Parent Common Stock to be subject to
a Parent Option shall be equal to the product of the number of shares of
Company Common Stock subject to the Company Option immediately prior to the
Effective Time and the "Option Exchange Ratio" (as defined below), provided
that any fractional shares of Parent Common Stock resulting from such
multiplication shall be rounded to the nearest whole share; and
(ii) the exercise price per share of Parent Common Stock under a
Parent Option shall be equal to the exercise price per share of Company
Common Stock under the original Company Option immediately prior to the
Effective Time divided by the Option Exchange Ratio, provided that such
exercise price shall be rounded to the nearest whole cent.
For purposes of this Section 2.4, the "Option Exchange Ratio" shall
mean the sum of (i) the Exchange Ratio, plus (ii) the quotient (rounded to
the nearest 1/10,000) obtained by dividing (x) $35.00 by (y) the Parent
Share Price; provided, that if the Parent makes a Cash Election, the Option
Exchange Ratio shall mean the quotient (rounded to the nearest 1/10,000)
obtained by dividing (x) $70.00 by (y) the Parent Share Price. The Company
shall use its reasonable best efforts to take all action necessary to
effectuate the above adjustment including, if applicable, making
modifications under the Company Stock Plans and obtaining consents from
holders of Company Options.
(b) If any holder of a Company Option does not consent to the
adjustment in Section 2.4(a), and a Cash Election is not made by Parent, at
the Effective Time such Company Option shall be converted automatically
into a fully vested and exercisable option (a "Hybrid Parent Option") to
acquire shares of Parent Common Stock and cash in amounts and at an
exercise price determined as provided below (and otherwise subject to the
terms of the Company Stock Plans, as applicable, under which they were
issued and the agreements evidencing grants thereunder): (i) the number of
shares of Parent Common Stock to be subject to a Hybrid Parent Option shall
be equal to the product of the number of shares of Company Common Stock
subject to the Company Option immediately prior to the Effective Time and
the Exchange Ratio, provided that any fractional shares of Parent Common
Stock resulting from such multiplication shall be rounded to the nearest
whole share; and (ii) the exercise price per share of Parent Common Stock
under a Hybrid Parent Option shall be equal to the exercise price per share
of Company Common Stock under the original Company Option immediately prior
to the Effective Time divided by the Exchange Ratio, provided that such
exercise price shall be rounded to the nearest whole cent; and (iii) upon
any exercise of a Hybrid Parent Option, in addition to the shares of Parent
Common Stock with respect to which the Hybrid Parent Option is then
exercised, the optionee shall receive a lump sum payment in cash (less any
applicable withholding) equal to $35.00 multiplied by the number of shares
of Parent Common Stock with respect to which the Hybrid Parent Option is
then being exercised and divided by the Exchange Ratio. If a Cash Election
is made by Parent and any holder of a Company Option does not consent to
the adjustment in Section 2.4(a), immediately prior to the Effective Time
such Company Option shall be cancelled automatically and, as soon as
practicable following the Effective Time, Parent or the Surviving
Corporation shall provide such holder with a lump sum cash payment (less
any applicable withholding) equal to the product of (i) the total number of
shares of Company Common Stock subject to the Company Option immediately
prior to the Effective Time and (ii) the excess of $70.00 over the exercise
price per share of Company Common Stock subject to such Company Option.
(c) The duration and other terms of a Parent Option (or a Hybrid
Parent Option or Cash Option, as applicable) shall be the same as the
original Company Option from which it was converted except that all
references to "the Company" in such original Company Option shall be deemed
to be references to Parent.
(d) At the Effective Time, each award or account (including
restricted stock units, phantom stock and stock alternatives, but excluding
Company Options) outstanding as of the date hereof (each a "Company Award")
that has been established or granted under any employee or director
incentive or benefit plan, program or arrangement maintained by the Company
on or prior to the date hereof which provides for equity accounts or grants
of equity based awards shall be amended or converted into a similar
instrument of Parent (each a "Parent Award"), in each case with such
adjustments to the terms and conditions of such Company Awards as are
appropriate to preserve the value inherent in such Company Awards. The
other terms and conditions of each Company Award, and the plans and
agreements under which they were issued, shall continue to apply in
accordance with their terms and conditions, including any provisions for
acceleration.
(e) As soon as practicable after the Effective Time, to the extent
necessary to provide for registration of shares of Parent Common Stock
subject to such substituted Parent Options, Hybrid Parent Options and
Parent Awards, Parent shall file a Registration Statement on Form S-8 (or
any successor form) with respect to such shares of Parent Common Stock and
shall use its reasonable best efforts to maintain such Registration
Statement on Form S-8 (or any successor form), including the current status
of any related prospectus or prospectuses, for so long as Parent Options,
Hybrid Parent Options and Parent Awards remain outstanding.
(f) Parent and the Company shall take all such steps as may be
required to cause the transactions contemplated by this Section 2.4 and any
other dispositions of equity securities of the Company (including
derivative securities) or acquisitions of Parent equity securities
(including derivative securities) in connection with this Agreement by each
individual who (a) is a director or officer of the Company or (b) at the
Effective Time, will become a director or officer of Parent, to be exempt
under Rule 16b-3 promulgated under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), such steps to be taken in accordance with the
No-Action Letter dated January 12, 1999, issued by the SEC to Skadden,
Arps, Slate, Xxxxxxx & Xxxx LLP.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Parent and Merger Sub
that:
3.1 ORGANIZATION, QUALIFICATION, ETC. (a) The Company is a
corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware and has the corporate power and authority and
all necessary governmental approvals to own its properties and 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 properties or the conduct of its business requires such
qualification, except for jurisdictions in which the lack of such necessary
governmental approvals or the failure to be so qualified or to be in good
standing would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect (as defined in Section 9.4(b))
on the Company. The copies of the Restated Certificate of Incorporation of
the Company (the "Company Certificate") and the By-laws of the Company (the
"Company By-laws") that have been delivered to Parent are complete and
correct and in full force and effect on the date hereof, and the Company is
not in violation of any of the provisions of the Company Certificate or the
Company By-laws.
(b) Each of the Company's Subsidiaries (as defined in Section 9.4(b))
is a corporation duly organized, validly existing and in good standing
under the laws of its jurisdiction of incorporation or organization, has
the power and authority and all necessary governmental approvals to own its
properties 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 property or the conduct of its
business requires such qualification, except for jurisdictions in which the
lack of such necessary governmental approvals or the failure to be so
qualified or to be in good standing would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect on the
Company.
3.2 CAPITALIZATION. (a) The authorized capital stock of the Company
consists of 150,000,000 shares of the Company Common Stock, and 2,216,516
shares of preferred stock, without par value, of the Company ("Company
Preferred Stock"), none of which shares of Company Preferred Stock are
designated. As of February 12, 1999, 53,955,401 shares of Company Common
Stock and no shares of Company Preferred Stock were issued and outstanding,
21,730,627 shares of Company Common Stock were held in the Company's
treasury, 2,988,529 shares of Company Common Stock were reserved for
issuance pursuant to the exercise of Company Options granted under the
Company Stock Plans, 379,784 restricted shares of Company Common Stock
(which are included in the number of outstanding shares of Company Common
Stock set forth above) pursuant to one or more of the Company Stock Plans
were outstanding and no shares of Company Common Stock were reserved for
issuance under the Second Amended and Restated Rights Agreement, as amended
and restated as of November 21, 1995, between the Company and Xxxxxx Trust
and Savings Bank, as rights agent (the "Company Rights Agreement"). All
the outstanding shares of Company Common Stock have been validly issued and
are fully paid, non-assessable and free of preemptive rights. As of
February 12, 1999, there were no outstanding subscriptions, options,
warrants, rights or other arrangements or commitments obligating the
Company to issue any shares of its capital stock other than Company Options
and Restricted Stock Units, of which, as of the date of this Agreement,
2,988,529 Company Options and 203,100 Restricted Stock Units, respectively,
were outstanding, and 787,342 of such Company Options were exercisable. In
addition to the foregoing, 4,655,481 shares of Company Common Stock,
Restricted Shares, Restricted Stock Units and/or Stock Options, in the
aggregate, remained available for grant under the Company Stock Plans.
(b) All the outstanding shares of capital stock of, or other
ownership interests in, the Company's Subsidiaries are validly issued,
fully paid and non-assessable and are owned by the Company, directly or
indirectly, free and clear of all liens, claims, charges or encumbrances.
There are no existing options, rights of first refusal, preemptive rights,
calls or commitments of any character relating to the issued or unissued
capital stock or other securities of, or other ownership interests in, any
Subsidiary of the Company. There are no bonds, debentures, notes or other
long-term indebtedness of the Company or any of its Subsidiaries ("Company
Debt") having general voting rights (or convertible into securities having
such rights) issued and outstanding. Set forth in Section 3.2(b) of the
disclosure schedule delivered by the Company to Parent concurrently with
the execution of this Agreement (the "Company Disclosure Schedule") is a
complete and correct list of (i) all Company Debt and (ii) each Subsidiary
(direct or indirect) of the Company and any joint ventures, partnerships or
similar arrangements ("Company Joint Ventures") in which the Company or any
of its Subsidiaries has an interest (and the amount and percentage of any
such interest). No entity in which the Company or any of its Subsidiaries
owns, directly or indirectly, less than a 50% equity interest is,
individually or when taken together with all other such entities, material
to the business of the Company and its Subsidiaries taken as a whole.
(c) Except as set forth in Section 3.2(c) of the Company Disclosure
Schedule, there are no outstanding contractual obligations of the Company
or any of its Subsidiaries (i) restricting the transfer of, (ii) affecting
the voting rights of, (iii) requiring the repurchase, redemption or
disposition of, (iv) requiring the registration for sale of, or (v)
granting any preemptive or antidilutive right with respect to, Company
Common Stock or any capital stock of any Subsidiary of the Company. Except
as set forth in Section 3.2(c) of the Company Disclosure Schedule, there
are no outstanding contractual obligations of the Company or any Subsidiary
of the Company or any joint venture to which any of the Company or its
Subsidiaries is a party, directly or indirectly, to provide funds to, or
make any investment (in the form of a loan, capital contribution or
otherwise) in, any Subsidiary of the Company or any other person.
(d) Except for the issuance of shares of the Company Common Stock
pursuant to Company Options, and except as provided for in Section 5.1,
since February 12, 1999, no shares of Company Common Stock or Company
Preferred Stock have been issued.
3.3 CORPORATE AUTHORITY RELATIVE TO THIS AGREEMENT; NO VIOLATION;
APPROVALS. (a) The Company has full corporate power and authority to
enter into this Agreement and to carry out its obligations hereunder and to
consummate the transactions contemplated hereby. The execution and
delivery of this Agreement and the consummation of the transactions
contemplated hereby have been duly and validly authorized by the Board of
Directors of the Company and, except for the approval and adoption of this
Agreement by the Company Stockholders, no other corporate proceedings on
the part of the Company are necessary to authorize this Agreement or to
consummate the transactions contemplated hereby. This Agreement has been
duly and validly executed and delivered by the Company and, assuming this
Agreement constitutes a valid and binding agreement of the other parties
hereto, this Agreement constitutes a valid and binding agreement of the
Company, enforceable against the Company in accordance with its terms.
(b) The execution and delivery of this Agreement by the Company do
not, and the performance of this Agreement by the Company will not, (i)
(assuming stockholder approval of this Agreement is obtained) conflict with
or violate any provision of the Company Certificate or the Company By-laws,
(ii) conflict with or violate any provision of any equivalent
organizational documents of any Subsidiary of the Company or any Company
Joint Venture, (iii) assuming that all consents, approvals, authorizations
and other actions described in Section 3.3(c) have been obtained and all
filings and obligations described in Section 3.3(c) have been made,
conflict with or violate any foreign or domestic law, statute, code,
ordinance, rule, regulation, order, judgment, writ, stipulation, award,
injunction or decree ("Law") applicable to the Company or any Subsidiary of
the Company or any Company Joint Venture, or any of their respective
properties or assets or (iv) except as set forth in Section 3.3(b) of the
Company Disclosure Schedule, result in any breach of or any loss of any
benefit or any triggering of "change of control" or additional rights under
or constitute a default (or an event that with notice or lapse of time or
both would become a default) under or require any novation or waiver of, or
give to others any right of termination, amendment, acceleration or
cancellation of, or result in the creation of a lien or other encumbrance
on any property or asset of the Company or any Subsidiary of the Company
pursuant to, any note, bond, mortgage, indenture, contract, agreement,
lease, license, permit or other instrument or obligation, including
agreements with respect to Company Joint Ventures, except, with respect to
clauses (ii), (iii) and (iv), for any such conflicts or violations that
would neither, individually or in the aggregate, (A) be reasonably expected
to have a Material Adverse Effect on the Company nor (B) prevent or
materially delay the performance of this Agreement by the Company. The
Company has provided copies of all documents regarding material matters
referred to in clause (iv) and will make all reasonable efforts to provide
copies of all other documents referred to in clause (iv), regardless of
materiality, prior to Closing.
(c) Other than in connection with or in compliance with the
provisions of the DGCL, the Securities Act of 1933, as amended (the
"Securities Act"), the Exchange Act, the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 1976, as amended (the "HSR Act"), any non-United States
competition, antitrust and investment Laws and the securities or blue sky
Laws of the various states, the rules of the NYSE, and other than any
necessary approvals of the government of the United States, the United
Kingdom, China, India or any agencies, departments or instrumentalities
thereof, which approvals are set forth on Section 3.3(c) of the Company
Disclosure Schedule (collectively, the "Company Required Approvals"), no
authorization, consent or approval of, or filing with or notification of,
any foreign or domestic governmental, administrative, judicial or
regulatory body or authority (a "Governmental Entity") or of or with any
third party is necessary for the consummation by the Company of the
transactions contemplated by this Agreement, except for such
authorizations, consents, approvals, filings or notifications, the failure
to obtain or make that would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect on the Company or
substantially impair or delay the consummation of the transactions
contemplated hereby.
3.4 REPORTS AND FINANCIAL STATEMENTS. Since December 31, 1995, the
Company has timely filed all registration statements, prospectuses, forms,
reports and documents and other filings required to be filed by it with the
SEC under the rules and regulations of the SEC (collectively, the "Company
SEC Reports"). As of their respective dates, such Company SEC reports (i)
complied as to form in all material respects with the applicable
requirements of the Securities Act, the Exchange Act and the rules and
regulations promulgated thereunder, 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 in the Company SEC Reports (including any
related notes and schedules) fairly present the financial position of the
Company and its consolidated Subsidiaries, as of the dates thereof and the
results of their operations and cash flows for the periods or as of the
dates then ended (subject, where appropriate, to normal year-end
adjustments, which would not reasonably be expected to have a Material
Adverse Effect on the Company), 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). The books and records of the
Company and its Subsidiaries have been, and are being, maintained in all
material respects in accordance with GAAP and any other applicable legal
and accounting requirements and reflect only actual transactions. None of
the Company's Subsidiaries is required to file any reports, statements,
prospectuses or other filings with the SEC.
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, in each case, that would be required
by GAAP to be reflected on a consolidated balance sheet of the Company and
its Subsidiaries (or disclosed in the notes thereto), except for (i)
liabilities or obligations that are disclosed or provided for in the
Company's Quarterly Report on Form 10-Q filed for the quarter ended
September 30, 1998, (ii) liabilities or obligations that would not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect on the Company or prevent or materially delay the
performance of this Agreement by the Company, and (iii) liabilities and
obligations set forth in Section 3.5 of the Company Disclosure Schedule.
3.6 PERMITS; NO VIOLATION OF LAW. (a) The Company and its
Subsidiaries have received such certificates, permits, licenses,
franchises, consents, approvals, orders, authorizations and clearances from
appropriate Governmental Entities (the "Company Licenses") as are necessary
to conduct their respective businesses substantially in the manner
currently conducted, and all such Company Licenses are valid and in full
force and effect, except for any such Company Licenses that the failure to
have or to be in full force and effect would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect on the
Company. The Company and its Subsidiaries are in compliance with their
respective obligations under the Company Licenses, with only such
exceptions as would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect on the Company.
(b) The businesses of the Company and its Subsidiaries have not and
are not being conducted in violation of any Law of any Governmental Entity
(provided that no representation or warranty is made in this Section 3.6
with respect to Environmental Laws (as defined herein)) except for
violations or possible violations that would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect on the
Company.
3.7 ENVIRONMENTAL LAWS AND REGULATIONS. Except as set forth in
Section 3.7 of the Company Disclosure Schedule,
(a) The operations of the Company and its Subsidiaries comply
with all applicable Environmental Laws except for such noncompliance which
would not, individually or in the aggregate, reasonably be expected to have
a Material Adverse Effect on the Company. The Company and its Subsidiaries
have obtained all Environmental Permits necessary for the operation of
their respective businesses, and all such Environmental Permits are in good
standing and the Company and its Subsidiaries are in compliance with all
material terms and conditions of such Environmental Permits, except for
such failures to obtain or comply which would not reasonably be expected,
individually or in the aggregate, to result in a Material Adverse Effect on
the Company. To the Company's knowledge, after due inquiry, neither the
Company nor any of its Subsidiaries is subject to any ongoing investigation
by order from or written claim by any person (including, without
limitation, any current or prior owner or operator of any of the Company
Property or any facilities owned, leased or operated by the Company)
respecting (i) any Environmental Law, (ii) any Remedial Action or (iii) any
claim, demand, complaint or other action arising from the Release or
threatened Release of a Hazardous Substance into the environment, except
for such investigations, orders or written claims which would not
reasonably be expected, individually or in the aggregate, to result in a
Material Adverse Effect on the Company. Neither the Company nor any of its
Subsidiaries is subject to any judicial or administrative proceeding, or
outstanding order, judgment, decree or settlement alleging or addressing a
violation of or liability under, any Environmental Law, which upon
resolution would reasonably be expected, individually or in the aggregate,
to result in a Material Adverse Effect.
(b) (i) To the Company's knowledge, after due inquiry for such
purpose, there have been no Releases by the Company or any of its
Subsidiaries of any Hazardous Substances into, on or under or from any
Company Property, and (ii) the Company has not been notified of any
Releases by the Company or any of its Subsidiaries of any Hazardous
Substances into, on or under or from any other properties, including
landfills in which Hazardous Substances have been Released or properties on
or under or from which the Company or any of its Subsidiaries has performed
services, in any case in such a way as would reasonably be expected,
individually or in the aggregate, to result in a Material Adverse Effect on
the Company. No Company Property has been used at any time as a landfill
or as a treatment, storage or disposal facility for any Hazardous
Substance. To the Company's knowledge, after due inquiry for such purpose,
there is not now, and there has not been, any underground or above ground
storage tanks, surface impoundment, landfill or waste pile on or in any
Company Property except where the existence of such underground or above
ground storage tank, surface impoundment, landfill or waste pile would not
reasonably be expected, individually or in the aggregate, to result in a
Material Adverse Effect on the Company. Neither the Company nor any of its
Subsidiaries has received notice, or has knowledge after due inquiry for
such purpose, that it is subject to any proceeding under any Environmental
Law with respect to any facility to which it has sent any Hazardous
Substance for re-use, recycling, reclamation, treatment, storage or
disposal. The Company has filed all notices required to be filed under any
Environmental Law indicating past or present treatment, storage or disposal
of a Hazardous Substance or reporting a spill or release of a Hazardous
Substance into the environment at Company Property, except for filings
relating to matters which would not reasonably be expected, individually or
in the aggregate, to result in a Material Adverse Effect on the Company.
The Company has delivered to Parent a list of all reports in its possession
or control prepared during the last five years disclosing the presence of
any Hazardous Substance on any Company Property.
(c) No Company Property or any facilities owned, leased or
operated by the Company contains any friable asbestos-containing material
except for quantities of friable asbestos material which would not
reasonably be expected, individually or in the aggregate, to result in a
Material Adverse Effect on the Company. No claims have been made, and no
suits or proceedings are pending or, to the knowledge of the Company,
threatened by any employee against the Company or any of its Subsidiaries
that are premised on exposure to asbestos or asbestos-containing material,
which would reasonably be expected, individually or in the aggregate, to
result in a Material Adverse Effect on the Company.
(d) For purposes of this Section:
(i) "Company Property" means any real property owned,
leased or operated by the Company or any of its Subsidiaries and
all appurtenances thereto and fixtures thereon.
(ii) "Environmental Law" means any law, statute, ordinance,
rule, regulation, code, license, permit, authorization, approval,
consent, legal doctrine, order, judgment, decree, injunction,
requirement or agreement of or with any governmental entity
relating to (1) the protection, preservation or restoration of
the environment (including, without limitation, air, water vapor,
surface vapor, surface water, groundwater, drinking water supply,
surface land, subsurface land, plant and animal life or any other
natural resource) or to human health or safety or (2) the
exposure to, or the use, storage, recycling, treatment,
generation, transportation, processing, handling, labeling,
production, release or disposal of Hazardous Substances.
(iii) "Environmental Permits" means all approvals,
authorizations, consents, permits, licenses, registrations and
certificates required by any applicable Environmental Law.
(iv) "Hazardous Substance" means any substance presently or
as of the Closing Date listed, defined, designated or classified
as hazardous, toxic, radioactive or dangerous, or otherwise
regulated, under any Environmental Law, whether by type or by
quantity, including any substance containing any such substance
as a component, and including, without limitation, any hazardous
waste, toxic waste, pollutant, contaminant, hazardous substance,
toxic substance, petroleum or any derivative or by-product
thereof, radon, radioactive material, asbestos, asbestos-
containing material, urea formaldehyde foam insulation, lead and
polychlorinated biphenyl.
(v) "Release" means release, spill, emission, leaking,
pumping, injection, deposit, disposal, discharge, dispersal,
leaching or migration of Hazardous Substances into the
environment.
(vi) "Remedial Action" means all actions required to (a)
clean up, remove, treat or in any other way remediate any
Hazardous Substance; (b) prevent the release of Hazardous
Substances so that they do not migrate or endanger or threaten to
endanger public health or welfare or the environment; or (c)
perform studies, investigations and care related to any such
Hazardous Substance.
3.8 EMPLOYEE BENEFITS. (a) "Company Benefit Plans" shall mean each
employee or director benefit or compensation plan, arrangement or
agreement, including, without limitation, pension, savings, welfare,
medical or life insurance, severance, executive compensation, deferred
compensation, incentive, bonus and long-term performance plans,
arrangements or agreements, that is maintained, or contributed to, as of
the date of this Agreement by the Company or any of its Subsidiaries or by
any trade or business, whether or not incorporated (an "ERISA Affiliate"),
all of which together with the Company would be deemed a "single employer"
within the meaning of Section 4001 of the Employee Retirement Income
Security Act of 1974 ("ERISA"). Set forth in Section 3.8(a) of the Company
Disclosure Schedule is a list of the material Company Benefit Plans and the
Company shall, within fifteen (15) days following the date hereof, provide
Parent with a list of all Company Benefit Plans. The Company has
heretofore made available to Parent true and complete copies of each
material Company Benefit Plan and the following related documents: (i) the
actuarial report and Form 5500 for such Company Benefit Plan (if
applicable) for each of the last two years, (ii) the most recent
determination letter from the Internal Revenue Service (if applicable) for
such Company Benefit Plan and (iii) the most recent summary plan
description for such Company Benefit Plan. Except as set forth on Schedule
3.8(a), there is no formal arrangement or commitment, whether legally
binding or not, to create any additional Company Benefit Plans or to modify
or change any existing Company Benefit Plans.
(b) (i) Each of the Company Benefit Plans, other than any Company
Benefit Plan maintained outside the United States, has been operated and
administered in accordance with applicable Laws, including, but not limited
to, ERISA and the Code, except where the failure to so operate and
administer would not reasonably be expected to have a Material Adverse
Effect on the Company, (ii) except as set forth in Section 3.8(b) of the
Company Disclosure Schedule, each of the Company Benefit Plans intended to
be "qualified" within the meaning of Section 401(a) of the Code has
received a determination letter from the Internal Revenue Service stating
that it is so qualified, and, to the Company's knowledge, there are no
existing circumstances or any events that have occurred that would
reasonably be expected to adversely affect the qualified status of any such
Plan, (iii) with respect to each Company Benefit Plan that is subject to
Title IV of ERISA, the present value of accrued benefits under such plan,
based upon the actuarial assumptions used for funding purposes in the most
recent actuarial report prepared by such plan's actuary with respect to
such plan, did not, as of its latest valuation date, exceed the then
current value of the assets of such plan allocable to such accrued benefits
and, to the Company's knowledge no adverse change in such funded status has
occurred, (iv) except as set forth on Section 3.8(b) of the Company
Disclosure Schedule, no Company Benefit Plan provides benefits, including,
without limitation, death or medical benefits (whether or not insured),
with respect to current or former employees or directors of the Company or
its Subsidiaries beyond their retirement or other termination of service,
other than (A) coverage mandated by applicable Law, (B) death benefits or
retirement benefits under any "employee pension plan" (as such term is
defined in Section 3(2) of ERISA), (C) deferred compensation benefits
accrued as liabilities on the books of it or its Subsidiaries or (D)
benefits the full cost of which is borne by the current or former employee
or director (or his or her beneficiary), (v) no liability under Title IV of
ERISA has been incurred by the Company, its Subsidiaries or any ERISA
Affiliate that has not been satisfied in full, and no condition exists that
presents a risk to the Company, its Subsidiaries or any ERISA Affiliate of
incurring a liability thereunder, except where such liability would not
reasonably be expected to have a Material Adverse Effect on the Company,
(vi) no Company Benefit Plan is a "multiemployer pension plan" (as such
term is defined in Section 3(37) of ERISA), (vii) all contributions or
other amounts payable by the Company or its Subsidiaries as of the
Effective Time with respect to each Company Benefit Plan in respect of
current or prior plan years have been paid or accrued in accordance with
GAAP and Section 412 of the Code, (viii) neither the Company nor its
Subsidiaries has engaged in a transaction in connection with which the
Company or its Subsidiaries reasonably could be subject to either a civil
penalty assessed pursuant to Sections 409 or 502(i) of ERISA or a tax
imposed pursuant to Sections 4975 or 4976 of the Code, except where any
such penalty or tax would not reasonably be expected, individually or in
the aggregate, to have a Material Adverse Effect on the Company, (ix) to
the Company's best knowledge, there are no pending, threatened or
anticipated claims (other than routine claims for benefits) by, on behalf
of or against any of the Company Benefit Plans or any trusts related
thereto, and (x) no Company Benefit Plan maintained outside of the United
States has assets or book reserves that are less than the accrued
liabilities under such plans, and all Company Benefit Plans maintained
outside of the United States have been operated and administered in
accordance with applicable Laws, except where the failure to so fund or
provide book reserves for such plans or to so operate and administer such
plans would not, individually or in the aggregate, reasonably be expected
to have a Material Adverse Effect on the Company.
(c) Except as set forth in Section 3.8(c) of the Company Disclosure
Schedule, neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated hereby (either alone or in
conjunction with any other event) will (i) result in any payment
(including, without limitation, severance, unemployment compensation,
"excess parachute payment" (within the meaning of Section 280G of the
Code), forgiveness of indebtedness or otherwise) becoming due to any
director or any employee of the Company or any of its Subsidiaries under
any Company Benefit Plan or otherwise, (ii) increase any benefits otherwise
payable under any Company Benefit Plan or (iii) result in any acceleration
of the time of payment or vesting of any such benefits.
3.9 CERTAIN CONTRACTS. (a) Except as set forth on Section 3.9 of
the Company Disclosure Schedule, neither the Company nor any of its
Subsidiaries is a party to or is bound by any contract, arrangement,
commitment or understanding (whether written or oral) (i) that, upon the
consummation of the transactions contemplated by this Agreement, will
(either alone or upon the occurrence of any additional acts or events)
result in any payment (whether of severance pay or otherwise) becoming due
from the Company, Parent, the Surviving Corporation, or any of their
respective Subsidiaries to any officer or employee thereof, (ii) that is a
"Material Contract" (as defined in Item 601(b) (10) of Regulation S-K of
the SEC) to be performed after the date of this Agreement, (iii) that
purports to limit in any respect the manner in which, or the localities in
which, the business of the Company and its Subsidiaries is conducted
(including, for purposes of this Section 3.9, assuming the consummation of
the Merger), or (iv) any of the benefits of which will be increased, or the
vesting of the benefits of which will be accelerated, by the occurrence of
any of the transactions contemplated by this Agreement, or the value of any
of the benefits of which will be calculated on the basis of any of the
transactions contemplated by this Agreement. The Company has previously
made available to Parent true and correct copies of all employment,
severance, deferred compensation and similar agreements to which the
Company is a party. Each contract, arrangement, commitment or
understanding of the type described in this Section 3.9(a) is referred to
herein as a "Company Contract," and neither the Company nor any of its
Subsidiaries knows of, or has received notice of, any violation of the
above by any of the other parties thereto that, individually or in the
aggregate, would reasonably be expected to have a Material Adverse Effect
on the Company.
(b) (i) Each Company Contract is valid and binding on the Company or
any of its Subsidiaries, as applicable, and in full force and effect
(assuming each such Company Contract is valid and binding on the other
party or parties), (ii) the Company and each of its Subsidiaries has in all
material respects performed all obligations required to be performed by it
to date under each Company Contract, except where such noncompliance,
individually or in the aggregate, would not reasonably be expected to have
a Material Adverse Effect on the Company, and (iii) no event or condition
exists that constitutes or, after notice or lapse of time or both, would
constitute, a material default on the part of the Company or any of its
Subsidiaries under any such Company Contract, except where such default,
individually or in the aggregate, would not reasonably be expected to have
a Material Adverse Effect on the Company.
3.10 INTELLECTUAL PROPERTY. Except to the extent the inaccuracy of
any of the following, individually or in the aggregate, would not
reasonably be expected to have a Material Adverse Effect on the Company,
and, except as set forth in Section 3.10 of the Company Disclosure
Schedules, the Company and each of its Subsidiaries owns or possesses
adequate licenses or other legal rights to use all patents, trademarks,
trade names, trade dress, copyrights, service marks, trade secrets,
software, mailing lists, mask works, know-how and other proprietary rights
and information, including all applications with respect thereto
(collectively, "Proprietary Rights") used or held for use in connection
with the business of the Company and its Subsidiaries as currently
conducted or as contemplated to be conducted by the Company, and the
Company is unaware of any assertion or claim challenging the validity of
any of the foregoing. To the Company's knowledge, after due inquiry for
such purpose, except as set forth in Section 3.10 of the Company Disclosure
Schedule, the conduct of the business of the Company and its Subsidiaries
as currently conducted and as contemplated to be conducted did not, does
not and will not infringe in any way any Proprietary Rights of any third
party that, individually or in the aggregate, would reasonably be expected
to have a Material Adverse Effect on the Company. Except as set forth in
Section 3.10 of the Company Disclosure Schedule, to the Company's
knowledge, after due inquiry for such purposes, there are no infringements
of any Proprietary Rights owned by or licensed by or to the Company or any
of its Subsidiaries that, individually or in the aggregate, would
reasonably be expected to have a Material Adverse Effect on the Company.
3.11 ABSENCE OF CERTAIN CHANGES OR EVENTS. Since September 30, 1998,
the businesses of the Company and its Subsidiaries have been conducted in
all material respects in the ordinary course and in a manner consistent
with past practice, and there has not been any event, occurrence,
development or state of circumstances or facts that has had, or would
reasonably be expected to have, a Material Adverse Effect on the Company or
that would reasonably be expected to prevent or materially delay the
performance of this Agreement by the Company.
3.12 INVESTIGATIONS; LITIGATION. Except as set forth in Section 3.12
of the Company Disclosure Schedule:
(a) no investigation or review by any Governmental Entity with
respect to the Company or any of its Subsidiaries is, to the Company's
knowledge after due inquiry for such purpose, pending, nor has any
Governmental Entity notified the Company or any of its Subsidiaries of an
intention to conduct the same;
(b) there are no actions, suits, claims or proceedings ("Actions")
pending (or, to the Company's knowledge, threatened) against or affecting
the Company or any of its Subsidiaries, or any of their respective
properties at law or in equity, or before any Governmental Entity or
arbitration panel that, individually or in the aggregate, would reasonably
be expected to have a Material Adverse Effect on the Company; and
(c) neither the Company nor any of its Subsidiaries is subject to any
outstanding order, writ, injunction or decree or other similar restraint
which, individually or in the aggregate, would reasonably be expected to
have a Material Adverse Effect on the Company.
3.13 PROXY STATEMENT; REGISTRATION STATEMENT; OTHER INFORMATION. None
of the information with respect to the Company or its Subsidiaries to be
included in the Proxy Statement (as defined herein) or the Registration
Statement (as defined herein) will, in the case of the Proxy Statement or
any amendments thereof or supplements thereto, at the time of the mailing
of the Proxy Statement or any amendments or supplements thereto, and at the
time of the Company Stockholders Meeting (as defined herein), or, in the
case of the Registration Statement or any amendments thereto, at the time
it or they become effective, contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. No
representation is made by the Company with respect to information supplied
in writing by Parent or any affiliate of Parent specifically for inclusion
in the Proxy Statement. The Proxy Statement will comply as to form in all
material respects with the provisions of the Exchange Act and the rules and
regulations promulgated thereunder. The letters to stockholders, notice of
meeting, proxy statement and form of proxy to be distributed to
stockholders in connection with the Merger and any schedules required to be
filed with the SEC in connection therewith are collectively referred to
herein as the "Proxy Statement."
3.14 SECTION 203 OF DGCL; RIGHTS AGREEMENT. Prior to the date hereof,
the Board of Directors of Parent has taken all action necessary, if any, to
exempt under or make not subject to (i) the provisions of Section 203 of
the DGCL and (ii) any other state takeover law or state law that purports
to limit or restrict business combinations or the ability to acquire or
vote shares: (A) the execution of this Agreement, (B) the Merger and (C)
the transactions contemplated hereby. No "Stock Acquisition Date" or
"Distribution Date" or "Triggering Event" (as such terms are defined in the
Company Rights Agreement) will occur and neither Parent nor Merger Sub will
be deemed to be an "Acquiring Person" as a result of the execution of this
Agreement or the consummation of the Merger pursuant to this Agreement and
the Company Rights Agreement will expire immediately prior to the Effective
Time.
3.15 BOARD ACTION. The Board of Directors of the Company (at a
meeting duly called and held) has by a unanimous vote of directors (i)
determined that the Merger is advisable and fair and in the best interests
of the Company and the Company Stockholders, (ii) approved this Agreement
and the Merger in accordance with the provisions of the DGCL, and (c)
recommended the approval and adoption of this Agreement and the Merger by
the Company Stockholders (the "Company Board Recommendation") and directed
that this Agreement and the Merger be submitted for consideration by the
Company Stockholders entitled to vote thereon at the Company Stockholders
Meeting.
3.16 TAX MATTERS. (a) Each of the Company and its Subsidiaries has
duly and timely filed all Tax Returns required to be filed by it, and all
such Tax Returns are true, complete and accurate in all respects, except to
the extent that any failure to have filed or any inaccuracies in such Tax
Returns would not reasonably be expected to have a Material Adverse Effect
on the Company. The Company and each of its Subsidiaries has paid all
Taxes required to be paid by it, and has paid all Taxes that it was
required to withhold from amounts owing to any employee, creditor or third
party except to the extent that any failure to pay Taxes would not
reasonably be expected to have a Material Adverse Effect on the Company.
There are no pending or threatened audits, examinations, investigations,
deficiencies, claims or other proceedings in respect of Taxes relating to
the Company or any Subsidiary of the Company, except for those relating to
Taxes which, if adversely determined, would not reasonably be expected to
have a Material Adverse Effect on the Company. There are no liens for
Taxes upon the assets of the Company or any Subsidiary of the Company,
other than liens for current Taxes not yet due, liens for Taxes that are
being contested in good faith by appropriate proceedings, and liens for
Taxes which would not reasonably be expected to have a Material Adverse
Effect on the Company. Neither the Company nor any of its Subsidiaries has
requested any extension of time within which to file any Tax Returns in
respect of any taxable year which have not since been filed, nor made any
request for waivers of the time to assess any Taxes that are pending or
outstanding, except where such request or waiver would not reasonably be
expected to have a Material Adverse Effect on the Company. None of the
Company or any of its Subsidiaries has made an election under Section
341(f) of the Code. The consolidated federal income Tax Returns of the
Company and its Subsidiaries have been examined, or the statute of
limitations has closed, with respect to all taxable years through and
including 1992. Neither the Company nor any of its Subsidiaries has any
liability for Taxes of any person (other than the Company and its
Subsidiaries) under Treasury Regulation Section 1.1502-6 (or any comparable
provision of state, local or foreign law). Neither the Company nor any
Subsidiary of the Company is a party to any agreement (with any person
other than the Company or its Subsidiaries) relating to the allocation or
sharing of Taxes.
(b) Neither the Company nor any of its Subsidiaries knows of any fact
or has taken any action that could reasonably be expected to prevent or
impede the Merger from qualifying as a reorganization within the meaning of
Section 368(a) of the Code (unless Parent makes a Cash Election).
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 (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.
3.17 LABOR MATTERS. Except as set forth in Section 3.17 of the
Company Disclosure Schedule, there are no agreements with, or pending
petitions for recognition of, a labor union or association as the exclusive
bargaining agent for any of the employees of the Company or any of its
Subsidiaries; no such petitions have been pending at any time within two
years of the date of this Agreement and, to the knowledge of the Company,
except as set forth in Section 3.17 of the Company Disclosure Schedule,
there has not been any organizing effort by any union or other group
seeking to represent any employees of the Company or any of its
Subsidiaries as their exclusive bargaining agent at any time within two
years of the date of this Agreement. There are no labor strikes, work
stoppages or other labor troubles, other than routine grievance matters,
now pending, or, to the knowledge of the Company, threatened, against the
Company or any of its Subsidiaries and there have not been any such labor
strikes, work stoppages or other labor troubles, other than routine
grievance matters, with respect to the Company or any of its Subsidiaries
at any time within two years of the date of this Agreement.
3.18 YEAR 2000 COMPLIANCE. The Company has taken steps that are
reasonable to ensure that the occurrence of the year 2000 will not
materially and adversely affect the information and business systems of the
Company or its Subsidiaries, and it is the Company's reasonable expectation
that no material expenditures in excess of currently budgeted items will be
required in order to cause such systems to operate properly following the
change of the year 1999 to 2000.
3.19 OPINION OF FINANCIAL ADVISOR. The Board of Directors of the
Company has received the opinion of Xxxxxxx Xxxxx & Co., Inc. (the "Company
Financial Advisor"), dated the date of this Agreement, to the effect that,
as of such date, the Merger Consideration is fair to the Company
Stockholders from a financial point of view. A copy of the written opinion
of the Company Financial Advisor has been delivered to Parent.
3.20 REQUIRED VOTE OF THE COMPANY STOCKHOLDERS. The affirmative vote
of a majority of the outstanding shares of Company Common Stock is required
to approve the Merger. No other vote of the holders of any securities of
the Company is required by law, the Company Certificate or the Company By-
laws or otherwise in order for the Company to consummate the Merger and the
transactions contemplated hereby.
3.21 BROKERS. No broker, finder or investment banker (other than the
Company Financial Advisor) is entitled to any brokerage, finder's or other
fee or commission in connection with the Merger based upon arrangements
made by or on behalf of the Company or any of the Company's Subsidiaries.
The Company has heretofore made available to Parent a complete and correct
copy of all agreements (and amendments thereof) between the Company and the
Company Financial Advisor pursuant to which such firm would be entitled to
any payment relating to the Merger.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
Parent and Merger Sub represent and warrant to the Company that:
4.1 ORGANIZATION, QUALIFICATION, ETC. (a) Each of Parent and Merger
Sub is a corporation duly organized, validly existing and in good standing
under the Laws of its jurisdiction of incorporation and has the corporate
power and authority and all necessary governmental approvals to own its
properties and 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 properties or the conduct
of its business requires such qualification, except for jurisdictions in
which the lack of such necessary governmental approvals or the failure to
be so qualified or to be in good standing would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect on
Parent. The copies of the Restated Certificate of Incorporation of Parent
(the "Parent Certificate") and the By-laws of Parent (the "Parent By-laws")
and the Certificate of Incorporation and By-laws of Merger Sub which have
been made available to the Company are complete and correct and in full
force and effect on the date hereof, and neither Parent nor Merger Sub is
in violation of any of the provisions of their respective Certificate of
Incorporation or By-laws.
(b) Each of Parent's Subsidiaries is a corporation duly organized,
validly existing and in good standing under the Laws of its jurisdiction of
incorporation or organization, has the power and authority and all
necessary governmental approvals to own its properties 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
property or the conduct of its business requires such qualification, except
for jurisdictions in which the lack of such necessary governmental
approvals or the failure to be so qualified or to be in good standing would
not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect on Parent.
4.2 CAPITALIZATION. (a) The authorized capital stock of Parent
consists of 1,000,000,000 shares of the Parent Common Stock, and
250,000,000 shares of preferred stock, $1.00 par value ("Parent Preferred
Stock"), of which 20,000,000 shares of Parent Preferred Stock were
designated as Series A ESOP Convertible Preferred Stock. As of February
16, 1999, 225,557,930 shares of Parent Common Stock and 12,497,460.841
shares of Parent Preferred Stock were issued and outstanding; 68,615,769
shares of Parent Common Stock were held in the Parent's treasury. All the
outstanding shares of Parent Common Stock have been validly issued and are
fully paid, non-assessable and free of preemptive rights. As of February
17, 1999, there were no outstanding subscriptions, options, warrants,
rights or other arrangements or commitments obligating Parent to issue any
shares of its capital stock other than Parent Options, of which, as of the
date of this Agreement, 23,148,492 were outstanding, 10,864,999 were
exercisable, Parent Options for up to 2% of outstanding shares of Parent
Common Stock per year remained available for grant under Parent's Long Term
Incentive Plan, Parent Options for up to 1,000,000 shares of Parent Common
Stock remained available for grant under Parent's Employee Stock Option
Plan, and Parent Options for 2,000 shares of Parent Common Stock per year
for each of Parent's non-employee directors remained available for grant
under Parent's Non-Employee Director Stock Option Program, and other than
pursuant to Parent's Dividend Reinvestment and Stock Purchase Plan and
Parent's Employee Stock Award Program (all such Parent Option and Parent
stock arrangements collectively the "Parent Stock Plans").
(b) All of the outstanding shares of capital stock of Merger Sub are
validly issued, fully paid and non-assessable and are owned by Parent free
and clear of all liens, claims, charges or encumbrances. There are no
existing options, rights of first refusal, preemptive rights, calls or
commitments of any character relating to the issued or unissued capital
stock or other securities of, or other ownership interests in, Merger Sub.
(c) Except for the issuance of shares of the Parent Common Stock
pursuant to Parent Options or under Parent Stock Plans, since February 16,
1999, no shares of Parent Common Stock or Parent Preferred Stock have been
issued.
4.3 CORPORATE AUTHORITY RELATIVE TO THIS AGREEMENT; NO VIOLATION;
APPROVALS. (a) Each of Parent and Merger Sub has full corporate power and
authority to enter into this Agreement and to carry out its obligations
hereunder and to consummate the transactions contemplated hereby. The
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly and validly authorized by
the Boards of Directors of Parent and Merger Sub and by Parent as the sole
stockholder of Merger Sub, and no other corporate proceedings on the part
of Parent or Merger Sub are necessary to authorize this Agreement or to
consummate the transactions contemplated hereby. This Agreement has been
duly and validly executed and delivered by Parent and Merger Sub and,
assuming this Agreement constitutes a valid and binding agreement of the
Company, this Agreement constitutes a valid and binding agreement of Parent
and Merger Sub enforceable against each of them in accordance with its
terms.
(b) The execution and delivery of this Agreement by Parent and by
Merger Sub do not, and the performance of this Agreement by Parent and by
Merger Sub will not, (i) conflict with or violate any provision of the
Parent Certificate or the Parent By-laws; (ii) conflict with or violate any
provision of any equivalent organizational documents of Merger Sub; (iii)
assuming that all consents, approvals, authorizations and other actions
described in Section 4.3(c) have been obtained and all filings and
obligations described in Section 4.3(c) have been made, conflict with or
violate any Law applicable to Parent or Merger Sub or any of their
respective properties or assets; or (iv) except as set forth in Section
4.3(b) of the Parent Disclosure Schedule, result in any breach of or any
loss of any benefit or any triggering of additional rights under or
constitute a default (or an event which with notice or lapse of time or
both would become a default) under, or give to others any right of
termination, amendment, acceleration or cancellation of, or result in the
creation of a lien or other encumbrance on any property or asset of Parent
or any Subsidiary of Parent pursuant to, any note, bond, mortgage,
indenture, contract, agreement, lease, license, permit or other instrument
or obligation, except, with respect to clauses (ii), (iii) and (iv), for
any such conflicts or violations which neither, individually or in the
aggregate, (A) would reasonably be expected to have a Material Adverse
Effect on Parent nor (B) prevent or materially delay the performance of
this Agreement by Parent.
(c) Other than in connection with or in compliance with the
provisions of the DGCL, the Securities Act, the Exchange Act, the HSR Act,
Section 4043 of ERISA, any non-United States competition, antitrust and
investments Laws and the securities or blue sky Laws of the various states,
the rules of the NYSE, and other than as set forth in items 1. and 2. of
Section 3.3(c) of the Company Disclosure Schedule and any necessary
approvals of the United States government or any agencies, departments or
instrumentalities thereof (collectively, the "Parent Required Approvals"),
no authorization, consent or approval of, or filing with or notification
of, any Governmental Entity or of or with any third party is necessary for
the consummation by Parent and Merger Sub of the transactions contemplated
by this Agreement, except for such authorizations, consents, approvals,
filings, or notifications, the failure to obtain or make that would not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect on Parent or substantially impair or delay the consummation
of the transactions contemplated hereby.
4.4 REPORTS AND FINANCIAL STATEMENTS. Since December 31, 1995,
Parent has timely filed all registration statements, prospectuses, forms,
reports and documents and other filings required to be filed by it with the
SEC under the rules and regulations of the SEC (collectively, "Parent SEC
Reports"). As of their respective dates, such Parent SEC Reports (i)
complied as to form in all material respect with the applicable
requirements of the Securities Act, the Exchange Act, and the rules and
regulations promulgated thereunder, 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 in the Parent SEC Reports (including any
related notes and schedules) fairly present the financial position of
Parent and its consolidated Subsidiaries as of the dates thereof and the
results of their operations and cash flows for the periods or as of the
dates then ended (subject, where appropriate, to normal year-end
adjustments, which would not reasonably be expected to have a Material
Adverse Effect on Parent), in each case, in accordance with past practice
and GAAP consistently applied during the periods involved (except as
otherwise disclosed in the notes thereto). The books and records of Parent
and its Subsidiaries have been, and are being, maintained in all material
respects in accordance with GAAP and any other applicable legal and
accounting requirements and reflect only actual transactions.
4.5 ABSENCE OF CERTAIN CHANGES OR EVENTS. Since September 30, 1998,
the businesses of Parent and its Subsidiaries have been conducted in all
material respects in the ordinary course and in a manner consistent with
past practice and, as of the date hereof, there has not been any event,
occurrence, development or state of circumstances or facts that has had, or
would reasonably be expected to have, a Material Adverse Effect on Parent
or that would reasonably be expected to prevent or materially delay the
performance of this Agreement by Parent.
4.6 PROXY STATEMENT; REGISTRATION STATEMENT; OTHER INFORMATION. None
of the information supplied by Parent with respect to Parent or its
Subsidiaries to be included in the Proxy Statement or the Registration
Statement will, in the case of the Proxy Statement or any amendments
thereof or supplements thereto, at the time of the mailing of the Proxy
Statement or any amendments or supplements thereto, and at the time of the
Company Stockholders Meeting, or, in the case of the Registration Statement
or any amendments thereto, at the time it or they become effective, contain
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. No representation is made by Parent with respect to information
supplied in writing by the Company or any affiliate of the Company
specifically for inclusion in the Proxy Statement or Registration
Statement. The Registration Statement will comply as to form in all
material respects with the provisions of the Securities Act and the rules
and regulations promulgated thereunder.
4.7 BOARD ACTION. The Board of Directors of Parent (at a meeting
duly called and held) has by a unanimous vote of the directors in
attendance at such meeting (i) determined that the Merger is advisable and
fair and in the best interests of Parent and its stockholders and (ii)
approved the Merger and the issuance of Parent Common Stock in the Merger
in accordance with the applicable provisions of the DGCL.
4.8 LACK OF OWNERSHIP OF COMPANY COMMON STOCK. Neither Parent nor
any of its Subsidiaries owns any shares of Company Common Stock or other
securities convertible into shares of Company Common Stock (exclusive of
any shares owned by Parent's employee benefit plans).
4.9 NO REQUIRED VOTE OF PARENT STOCKHOLDERS. No vote of the holders
of any class of Parent's capital stock is necessary to approve and adopt
this Agreement or the transactions contemplated hereby.
4.10 BROKERS. No broker, finder or investment banker (other than
Xxxxxxx, Xxxxx & Co.) is entitled to any brokerage, finder's or other fee
or commission in connection with the Merger based upon arrangements made by
or on behalf of Parent or any of Parent's Subsidiaries.
ARTICLE V
COVENANTS RELATING TO CONDUCT OF BUSINESS
5.1 CONDUCT OF BUSINESS BY THE COMPANY PRIOR TO THE EFFECTIVE TIME.
Except as contemplated by this Agreement or as expressly agreed to in
writing by Parent, during the period from the date of this Agreement to the
Effective Time, the Company will, and will cause each of its Subsidiaries
to, conduct its operations according to its ordinary and usual course of
business and consistent with past practice and use its and their respective
reasonable best efforts to preserve intact their current business
organizations, keep available the services of their current officers and
employees and preserve their relationships with customers, suppliers,
licensors, licensees, advertisers, distributors and others having business
dealings with them and to preserve goodwill. Without limiting the
generality of the foregoing, and except as (A) otherwise expressly provided
in this Agreement, (B) required by Law, or (C) set forth on Section 5.1 of
the Company Disclosure Schedule, prior to the Effective Time, the Company
will not, and will cause its Subsidiaries not to, without the prior written
consent of Parent:
(a) do or effect any of the following actions with respect to its or
its Subsidiaries' securities: (i) adjust, split, combine or reclassify its
capital stock, (ii) make, declare or pay any dividend or distribution on,
or, directly or indirectly, redeem, purchase or otherwise acquire, any
shares of its capital stock or any securities or obligations convertible
into or exchangeable for any shares of its capital stock, other than
regular quarterly dividends on Company Common Stock and dividends declared
and paid by any of the Company's directly or indirectly wholly owned
Subsidiaries, (iii) grant any person any right or option to acquire any
shares of its capital stock, (iv) issue, deliver or sell or agree to issue,
deliver or sell any additional shares of its capital stock or any
securities or obligations convertible into or exchangeable or exercisable
for any shares of its capital stock or such securities, including pursuant
to any employee stock purchase plans (except pursuant to the exercise of
Company Options that are outstanding as of the date hereof and disclosed in
Section 5.1 of the Company Disclosure Schedule), (v) reprice any Company
Options, or (vi) enter into any agreement, understanding or arrangement
with respect to the sale, voting, registration or repurchase of its capital
stock;
(b) directly or indirectly sell, transfer, lease, pledge, mortgage,
encumber or otherwise dispose of any of its property or assets other than
in the ordinary course of business consistent with past practice;
(c) make or propose any changes in the Company Certificate or the
Company By-Laws;
(d) merge or consolidate with any other person;
(e) acquire an amount of assets or capital stock of any other person
in excess of $1,000,000;
(f) redeem any rights under, amend or modify, or propose to amend or
modify, the Company Rights Agreement, as amended as of the date hereof;
(g) incur, create, assume or otherwise become liable for any
indebtedness for borrowed money or assume, guarantee, endorse or otherwise
as an accommodation become responsible or liable for the obligations of any
other individual, corporation or other entity, other than in the ordinary
course of business, consistent with past practice;
(h) create any new Subsidiaries;
(i) increase the compensation or benefits payable or to become
payable to its directors, officers or, except in the ordinary course of
business consistent with past practice, other employees (whether from the
Company or any of its Subsidiaries), or pay or award or accelerate any
benefit not required by any existing plan or arrangement to any officer,
director or employee (including, without limitation, the granting of stock
options, stock appreciation rights, shares of restricted stock or
performance units pursuant to the Company Benefit Plans or otherwise), or
grant any severance or termination pay to any officer, director or other
employee of the Company or any of its Subsidiaries (other than as required
by existing agreements or policies described in Section 5.1 of the Company
Disclosure Schedule), or enter into or amend any employment or severance
agreement with, any director, officer or other employee of the Company or
any of its Subsidiaries or establish, adopt, enter into, amend, or waive
any performance or vesting criteria under any Company Benefit Plan for the
benefit or welfare of any current or former directors, officers or
employees of the Company or its Subsidiaries or their beneficiaries or
dependents, except, in each case, to the extent required by applicable Law
or regulation;
(j) change any method or principle of financial accounting in a
manner that is inconsistent with past practice except to the extent
required by GAAP as advised by the Company's regular independent
accountants, make any Tax election (unless required by law or made in the
ordinary course of business consistent with past practice), settle or
compromise any Tax liability of the Company or any of its Subsidiaries in
excess of $500,000 or any pending or threatened suit, action or claim
relating to any potential or actual Tax liability of the Company or any of
its Subsidiaries in excess of $500,000, change any method of accounting for
Tax purposes or file (other than in a manner consistent with past practice)
any Tax Return;
(k) settle any Actions, whether now pending or hereafter made or
brought involving, individually, an amount in excess of $500,000 or, in the
aggregate, an amount in excess of $1,000,000, or enter into any consent
decree, injunction or other similar restraint or form of equitable relief
in settlement of any Action;
(l) modify, amend or terminate, or waive, release or assign any
material rights or claims with respect to any confidentiality agreement to
which the Company is a party;
(m) enter into any confidentiality agreements or arrangements other
than in the ordinary course of business consistent with past practice
(other than as permitted by Section 6.13);
(n) write up, write down or write off the book value of any assets,
individually in an amount in excess of $250,000 or, in the aggregate, in an
amount in excess of $750,000, except for depreciation and amortization in
accordance with GAAP consistently applied;
(o) incur or commit to any capital expenditures unless such capital
expenditure is reflected in the budget previously provided to Parent (the
"Budget") or any other items that, individually or in the aggregate, are
not in excess of $750,000;
(p) take any action to exempt or make not subject to (i) the
provisions of Section 203 of the DGCL or (ii) any other state takeover Law
or other state Law that purports to limit or restrict business combinations
or the ability to acquire or vote shares, any person or entity (other than
Parent or its Subsidiaries) or any action taken thereby, which person,
entity or action would otherwise have been subject to the restrictive
provisions thereof and not exempt therefrom;
(q) enter into any transaction or agreement, or amend any existing
agreement between the Company or any of its Subsidiaries and any director
or executive officer of the Company;
(r) enter into or carry out any other material transaction other than
in the ordinary and usual course of business;
(s) knowingly take any action that would prevent or impede the Merger
(unless Parent makes a Cash Election) from qualifying as a "reorganization"
within the meaning of Section 368 of the Code;
(t) agree in writing or otherwise to take any of the foregoing
actions.
5.2 ADVICE OF CHANGE. The Company shall promptly advise Parent of
any change in the normal course of the Company's or its Subsidiaries'
businesses and of any complaints, investigations or hearings (or
communications indicating that the same may be contemplated) of any
Governmental Entity if such change, complaint, investigation or hearing
would reasonably be expected to have a Material Adverse Effect on the
Company, would reasonably be expected to cause or constitute a material
breach of any of the Company's representations, warranties or covenants
contained herein, or is reasonably likely to delay or impede the ability of
the Company to consummate the transactions contemplated by this Agreement
or to fulfill its obligations set forth herein.
5.3 CONDUCT OF PARENT'S OPERATIONS. Except as set forth in Section
5.3 of the Parent Disclosure Schedule, during the period from the date of
this Agreement to the Effective Time, Parent shall use its reasonable best
efforts to preserve intact its business organization, to keep available the
services of its current officers and employees and preserve its
relationships with customers, suppliers, licensors, licensees, advertisers,
distributors and others having business dealings with it and to preserve
goodwill. During the period from the date of this Agreement to the
Effective Time, Parent shall not (i) make any amendment to the Parent
Certificate that changes the fundamental attributes of the Parent Common
Stock, (ii) make any material changes to the Certificate of Incorporation
of Merger Sub, (iii) make, declare or pay any extraordinary cash dividend,
other than extraordinary dividends between Parent and a Subsidiary of
Parent, (iv) take any action that is material and adverse to the Company
Stockholders as prospective stockholders of Parent and that affects Company
Stockholders disproportionately as compared to the current stockholders of
Parent, (v) permit or cause any Subsidiaries to do any of the foregoing or
agree or commit to any of the foregoing, or (vi) agree in writing or
otherwise to take any of the foregoing actions.
ARTICLE VI
ADDITIONAL AGREEMENTS
6.1 REGULATORY MATTERS. (a) As promptly as practicable after the
execution of this Agreement, the Company shall prepare and file with the
SEC the Proxy Statement (which shall be the same as the proxy
statement/prospectus filed by Parent with the Registration Statement), and
Parent shall promptly prepare and file with the SEC a Registration
Statement on Form S-4 to register the Parent Common Stock to be issued in
connection with the Merger (the "Registration Statement"). Each of the
Company and Parent shall use their reasonable best efforts to have the
Registration Statement declared effective under the Securities Act as
promptly as practicable after such filing, and the Company shall
thereafter, as promptly as practicable, mail or deliver the Proxy Statement
to the Company Stockholders. Parent shall also 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, and the Company shall furnish all information concerning the
Company and the holders of the Company capital stock as may be reasonably
requested by Parent in connection with any such action.
(b) Subject to Section 6.1(d), each of the Company and Parent shall
cooperate with each other and use (and shall cause their respective
Subsidiaries to use) their reasonable best efforts to file in connection
with the Merger and the transactions contemplated hereby as soon as
practicable (i) notifications under the HSR Act, and (ii) such
notifications and filings as may be required under any other Antitrust Laws
(as defined below). Subject to Section 6.1(d), the Company and Parent
shall use their reasonable best efforts to take all action necessary,
proper and advisable under applicable Antitrust Laws and regulations with
respect to the following: (x) to cause the expiration or termination of
the applicable waiting periods under the HSR Act as soon as practicable,
including, without limitation, by responding as promptly as practicable to
any inquiries received from the Federal Trade Commission (the "FTC") or the
Antitrust Division of the Department of Justice (the "Antitrust Division")
or any state or local governmental entity for additional information or
documentation, (y) with regard to the supernational and multinational
authorities to cause the expiration or termination of applicable waiting
periods, the satisfaction of such other filing requirements, or the
issuance of such approvals, consents or authorizations as may be required
with respect to the Antitrust Laws of any foreign jurisdiction, and (z) to
avoid the entry of any decree, judgment, injunction or other order, whether
temporary, preliminary or permanent, under any Antitrust Law, that would
have the effect of prohibiting, preventing or restricting consummation of
such transactions. The Company and Parent shall, in connection with the
efforts to obtain all requisite approvals and authorizations for the
transactions contemplated by this Merger Agreement under Antitrust Laws,
(i) cooperate with each other in connection with any filing or submission
and in connection with any investigation or other inquiry; (ii) promptly
inform the other party of any communication to it from any Governmental
Entity and permit the other party to review in advance any proposed
communication from it to any Governmental Entity or third party (other than
documents containing confidential business information that shall be shared
only with outside counsel to the non-filing party); and (iii) consult with
the other party in advance of arranging for or participating in any meeting
with any Governmental Entity in respect of any filings, investigation or
other inquiry. The Company shall not enter into any proposed
understanding, undertaking or agreement with any Governmental Entity in
connection with the transactions contemplated by this Merger Agreement
without the prior written consent of Parent. Without limiting the
generality of the foregoing, the Company and Parent shall make all
necessary filings in connection with any other Company Required Approvals
and Parent Required Approvals promptly following the date of this
Agreement, and shall use their reasonable best efforts to furnish or cause
to be furnished, as promptly as practicable, all information, documents and
access to knowledgeable persons requested with respect to such and shall
otherwise cooperate with the applicable Governmental Entity in order to
obtain any such approvals. Subject to Section 6.1(d), each of the Company
and Parent shall use its reasonable best efforts to resolve such
objections, if any, as any Governmental Entity may assert with respect to
this Agreement and the transactions contemplated hereby in as expeditious a
manner as possible. Subject to Section 6.1(d), in the event that a suit is
instituted by any person or Governmental Entity challenging this Agreement
and the transactions contemplated hereby as violative of applicable U.S.,
state, local or foreign antitrust, competition or other laws, each of the
Company and Parent shall use its reasonable best efforts to resist or
resolve such suit.
(c) "Antitrust Law" means the Xxxxxxx Act, as amended, the Xxxxxxx
Act, as amended, the HSR Act, the Federal Trade Commission Act, as amended,
all other federal, state, or foreign statutes, rules, regulations, orders,
decrees, administrative and judicial doctrines, and other laws that are
designed or intended to prohibit, restrict or regulate actions having the
purpose or effect of monopolization, creating or enhancing a dominant
position, restraint of trade or lessening of competition through merger or
acquisition.
(d) Notwithstanding any other provision of this Agreement, under no
circumstances shall Parent be obligated, in connection with its efforts to
obtain any required consent or approval of a Governmental Entity, to take
any action that, in the reasonable judgment of Parent, would reasonably be
expected to materially impair the overall benefits expected to be realized
by Parent from consummation of the Merger.
6.2 ACCESS TO INFORMATION. (a) Upon reasonable notice and subject
to applicable Laws relating to the exchange of information, during the
period prior to the Effective Time, the Company shall, and shall cause its
Subsidiaries to, afford to the officers, employees, accountants, counsel
and other representatives of Parent, access, during normal business hours,
to its officers, employees, agents, properties, books, contracts,
commitments and records, and, during such period, the Company shall, and
shall cause its Subsidiaries to, make available to Parent all other
information concerning its business, properties and personnel as Parent may
reasonably request.
(b) Parent shall hold all information furnished by or on behalf of
the Company or any of the Company's Subsidiaries or representatives
pursuant to Section 6.2(a) in confidence to the extent required by, and in
accordance with, the provisions of the confidentiality agreement, dated
December 10, 1998, between the Company and Parent (the "Confidentiality
Agreement").
(c) No investigation by the Parent or its representatives shall
affect the representations and warranties of the other set forth herein.
6.3 COMPANY STOCKHOLDERS MEETING. The Company shall take all action
in accordance with the federal securities laws, the DGCL and the Company
Certificate and the Company By-laws necessary to duly call, give notice of,
convene and hold a special meeting of the Company Stockholders (the
"Company Stockholders Meeting") to be held on the earliest practicable date
determined in consultation with Parent to consider and vote upon approval
of the Merger, this Agreement and the transactions contemplated hereby.
Unless the Board of Directors of the Company shall withdraw, modify or
change, in a manner adverse to Parent, the Company Board Recommendation
pursuant to Section 6.13, the Company shall solicit the approval of the
Merger, this Agreement and the transactions contemplated hereby, by the
Company Stockholders, and the Board of Directors of the Company shall make
the Company Board Recommendation.
6.4 LEGAL AND OTHER CONDITIONS TO MERGER. Subject to Section 6.1(d),
each of the Company and Parent shall, and shall cause its Subsidiaries to,
use their reasonable best efforts to take, or cause to be taken, all
appropriate actions (i) to comply promptly with all legal requirements that
may be imposed on such party or its Subsidiaries with respect to the Merger
and, subject to the conditions set forth in Article VII, to consummate the
transactions contemplated by this Agreement, (ii) to obtain (and to
cooperate with the other party to obtain) any consent, authorization, order
or approval of, or any exemption by, any Governmental Entity and any other
third party that is required to be obtained by Parent or the Company or any
of their respective Subsidiaries in connection with the Merger and the
other transactions contemplated by this Agreement and (iii) to consummate
and make effective as promptly as practicable the transactions contemplated
by this Agreement.
6.5 AFFILIATES OF THE COMPANY. The Company shall use its reasonable
best efforts to cause each such person who may be at the date of the
Company Stockholders Meeting an "affiliate" of the Company for purposes of
Rule 145 under the Securities Act to execute and deliver to Parent at or
prior to the Closing the written undertakings in the form attached hereto
as Exhibit A (a "Company Affiliate Letter"). No later than 10 days prior
to the Closing, the Company, after consultation with its outside counsel,
shall provide Parent with a letter (reasonably satisfactory to outside
counsel to Parent) specifying all of the persons or entities who, in the
Company's opinion, may be deemed to be "affiliates" of the Company under
the preceding sentence. The foregoing notwithstanding, Parent shall be
entitled to place legends as specified in the Company Affiliate Letter on
the certificates evidencing Parent Common Stock to be received by any such
"affiliate" of the Company specified in such letter pursuant to the terms
of this Agreement, and to issue appropriate stop transfer instructions to
the transfer agent for the shares of Parent Common Stock, consistent with
the terms of the Company Affiliate Letter, regardless of whether such
person has executed the Company Affiliate Letter.
6.6 STOCK EXCHANGE LISTING. Parent shall use its reasonable best
efforts to cause the shares of Parent Common Stock to be issued in the
Merger to be approved for listing on the NYSE, subject to official notice
of issuance, prior to the Effective Time.
6.7 EMPLOYEE BENEFITS. (a) (i) Parent shall, as of the Effective
Time, assume and honor or cause the Surviving Corporation to assume and
honor, all Company Benefit Plans (including, but not limited to, each
employment, consulting and severance agreement and the Company's Deferred
Compensation Plan and Supplemental Retirement Plan (the "SRP") and the
enhanced SRP benefit for the six individuals previously disclosed to
Parent), pursuant to the terms of the Company Benefit Plans.
Notwithstanding the foregoing, the Company agrees to, effective as of the
date hereof, take appropriate action and to amend the SRP to clarify that
the SRP may be terminated with respect to future benefit accruals
thereunder, which relate to post-Effective Time service.
(ii) Parent acknowledges that for purposes of the Company Benefit
Plans, the consummation of the Merger will constitute a "Change in Control"
of the Company and a "Transaction" (as such terms are defined in such
plans, agreements and arrangements), and that following the Effective Time
the employees set forth in Section 6.7(a)(ii) of the Company Disclosure
Schedule may terminate employment under their employment agreements and
receive change of control severance benefits (as described in Section
6.7(a)(ii) of the Company Disclosure Schedule) thereunder.
(b) With respect to employees who are not collectively bargained
employees of the Company immediately prior to the Effective Time ("Company
Employees"), in addition to the foregoing, except as provided herein,
Parent shall cause the Surviving Corporation to continue to maintain the
Company Benefit Plans (other than equity-based plans or arrangements) at
least through December 31, 1999. With respect to such Company Employees,
from January 1, 2000 through the second anniversary of the Effective Time,
Parent shall, provide employee benefits and incentive compensation (other
than equity-based programs) substantially equivalent in the aggregate to,
in the discretion of the Parent, either those provided to the Company
Employees immediately prior to the Effective Time or those provided to
similarly situated employees of the Parent and its Subsidiaries.
(c) For purposes of all employee benefit plans, maintained by or
contributed to by the Parent or its Subsidiaries in which Company Employees
participate, Parent shall cause each such plan to treat the prior service
with the Company and its Subsidiaries of each Company Employee as service
rendered to Parent or its Subsidiaries, as the case may be, for purposes of
eligibility to participate and vesting thereunder. In addition, Parent
shall recognize each Company Employee's service with the Company and its
Subsidiaries prior to the Effective Time for purposes of determining
benefit levels for vacation, sick time, short term disability and
severance). In the event Parent terminates, suspends or merges a Company
tax-qualified defined benefit pension plan with a "final average pay"
formula, Parent will make future adjustments to accrued benefits under such
plan based on future compensation increases, cost of living increases or
such other reasonable and appropriate method, determined by the Parent, to
prevent a material reduction in the relative value of the accrued benefit
under Company's pension plan; provided, however, that no such adjustment
shall be required if it would result in a duplication of benefits.
(d) Parent shall (i) waive all limitations as to preexisting
conditions exclusions and waiting periods with respect to participation and
coverage requirements applicable to the Company Employees under any welfare
benefits plans that such Company Employees may be eligible to participate
in after the Effective Time, except for such conditions which are pre-
existing conditions under the applicable Company Benefit Plan and (ii)
provide each Company Employee with credit for any co-payments and
deductibles paid prior to the Effective Time (in the calendar year of the
Effective Time) in satisfying any applicable deductible or out-of-pocket
requirements under any welfare plans that such employees are eligible to
participate in after the Effective Time.
(e) The Company's Officer Performance Compensation Plan and, with
respect to corporate headquarters and aerospace division employees, the
Company's Management Performance Plan (the "Performance Plans") shall be
terminated at the Effective Time. The Management Performance Plan, with
respect to employees other than corporate headquarters or aerospace
division employees, may, at the discretion of Parent, continue through
December 31, 1999, or be terminated at the Effective Time. In the event
the Management Performance Plan is continued, as soon as practicable
following the Effective Time, Parent shall equitably adjust the 1999
performance targets established for the Management Performance Plan to the
extent adjustment may be appropriate as a result of the effect of the
transaction contemplated herein on such performance targets. Adjusted
performance targets shall provide a reasonably equivalent measure of
Company business performance as a division or subsidiary of Parent relative
to the Company's business performance as an independent company. Following
termination of the Performance Plans, pro rata payments will be made under
such plans as of the Effective Time, based upon the performance of the
Company through the end of the month immediately preceding the Effective
Time.
(f) Parent agrees to provide Company Employees severance benefits if
such employee's employment is either involuntarily terminated without cause
or constructively terminated due to relocation or a decrease in base
compensation (a "Termination Event"), in each case within one year
following the Effective Time. The amount of such severance benefits and
the provision of non-cash benefits such as outplacement services and
continuation of welfare benefit coverage shall be determined by Parent,
based upon the established severance policies and practices of the Company
and the Parent in connection with "downsizing" of employees, and upon
severance programs in similar industries and/or geographical locations and
other similar factors; provided, that the Company may establish a severance
plan, effective following the Effective Time, for approximately ninety-five
(95) corporate headquarters employees and for the office personnel of the
Company's aerospace division, which will provide severance benefits if a
Termination Event occurs on or prior to December 31, 1999. Such severance
plan will provide the level and type of benefits described in Section
6.7(f) of the Company Disclosure Schedule, the receipt of which shall be
conditioned upon the execution of a standard Parent waiver and release of
claims.
(g) Prior to the Effective Time, the Company may establish a
retention program on terms and conditions to be reasonably agreed upon by
Company and the Parent.
6.8 INDEMNIFICATION; DIRECTORS' AND OFFICERS' INSURANCE. (a) From
and after the Effective Time, Parent shall cause (including, to the extent
required, providing sufficient funding to enable the Surviving Corporation
to satisfy all of its obligations under this Section 6.8(a)), the Surviving
Corporation to indemnify, defend and hold harmless the present and former
officers and directors of the Company in respect of acts or omissions
occurring prior to the Effective Time to the fullest extent provided or
permitted under the Company Certificate, the Company By-laws, and any
indemnification agreements in effect on the date hereof and previously
disclosed in writing to Parent. The Certificate of Incorporation and By-
laws of the Surviving Corporation shall contain provisions with respect to
indemnification substantially the same as those in the Company Certificate
and the Company By-laws.
(b) Parent shall cause the individuals serving as officers and
directors of the Company and its Subsidiaries immediately prior to the
Effective Time to be covered for a period of six years from the Effective
Time (or the period of the applicable statute of limitations, if longer) by
the directors' and officers' liability insurance policy maintained by the
Company (provided that Parent may substitute therefor policies of at least
the same coverage and amounts containing terms and conditions that are not
less advantageous than such policy) with respect to acts or omissions
occurring prior to the Effective Time which were committed by such officers
and directors in their capacity as such; provided, however, that in no
event shall Parent be required to expend more than 200% of the current
amount expended by the Company (the "Insurance Amount") to maintain or
procure insurance coverage pursuant hereto and provided further that if
Parent is unable to maintain or obtain the insurance called for by this
Section 6.8(b), Parent shall use its reasonable best efforts to obtain as
much comparable insurance as available for the Insurance Amount.
6.9 ADDITIONAL AGREEMENTS. In case at any time after the Effective
Time any further action is necessary or desirable to carry out the purposes
of this Agreement or to vest the Surviving Corporation with full title to
all properties, assets, rights, approvals, immunities and franchises of the
Company, the proper officers and directors of each party to this Agreement
and their respective Subsidiaries shall take all such necessary action as
may be reasonably requested by, and at the sole expense of, Parent.
6.10 PUBLIC ANNOUNCEMENTS. Parent and the Company shall consult with
each other before issuing any press release or otherwise making any public
statements with respect to the Merger or the transactions contemplated
hereby and shall not issue any such press release or make any such public
statement without the prior consent of the other party, which shall not be
unreasonably withheld, except, if time does not permit such consultation
and obtaining such consent, as may be required by Law or the rules and
regulations of the NYSE.
6.11 MERGER SUB. Prior to the Effective Time, Merger Sub shall not
conduct any business or make any investments other than as specifically
contemplated by this Agreement and will not have any assets (other than a
de minimis amount of cash paid to Merger Sub for the issuance of its stock
to Parent) or any material liabilities.
6.12 SUBSEQUENT FINANCIAL STATEMENTS. The Company shall provide to
Parent a copy of the Company's financial statements for any period ending
after the date of this Agreement prior to making publicly available its
financial results for any such period and prior to filing any Company SEC
Documents after the date of this Agreement.
6.13 NO SOLICITATION. During the term of this Agreement, the Company
itself shall not, and it 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 any
capital stock (other than upon exercise of the Company Options that are
outstanding as of the date hereof) or all or any material portion 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 "Competing Transaction"), or negotiate, explore or otherwise
engage in discussions with any person (other than Parent, Merger Sub or
their respective directors, officers, employees, agents and
representatives) with respect to any 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 the Company will immediately cease all
existing activities, discussions and negotiations with any parties
conducted heretofore with respect to any proposal for a Competing
Transaction; provided that, at any time prior to the approval of the Merger
by the Company Stockholders, the Company may furnish information to, and
negotiate or otherwise engage in discussions with, any party who delivers a
Superior Proposal (as defined below) that was not solicited, initiated,
facilitated or encouraged by the Company, its Subsidiaries or any of their
respective representatives, directors, officers or employees after the date
of this Agreement if and so long as the Board of Directors of the Company
determines in good faith, after consultation with and receipt of advice
from its outside counsel, that such action is required to comply with its
fiduciary duties under applicable Law. As a condition to furnishing non-
public information to any party that makes a Superior Proposal, the Company
will enter into a confidentiality agreement with such party, with terms and
conditions no less favorable to the Company than the terms and provisions
contained in the Confidentiality Agreement. In the event that, prior to
the approval of the Merger by the Company Stockholders, the Board of
Directors of the Company receives a Superior Proposal that was not
solicited, initiated, facilitated or encouraged by the Company, its
Subsidiaries or any of their respective representatives, directors,
officers or employees, after the date of this Agreement, and the Board of
Directors of the Company determines in good faith after consultation with
its outside counsel that such action is required to comply with its
fiduciary duties under applicable Law, the Board of Directors of the
Company may (subject to this and the following sentences) withdraw, modify
or change, in a manner adverse to Parent, the Company Board Recommendation
and/or recommend a Superior Proposal to the Company Stockholders, provided
that it gives Parent five business days' prior written notice of its
intention to do so. From and after the execution of this Agreement, the
Company shall promptly, orally and in writing, advise Parent of the receipt
by it, any of its Subsidiaries, or any of their respective directors,
officers, employees or representatives, of any inquiries, discussions,
negotiations, or proposals relating to a Competing Transaction (including
the specific terms and conditions thereof, and any amendments or revisions
thereto, and the identity of the other party or parties involved) and
promptly furnish to Parent a copy of any such written proposal in addition
to any information provided to or by any third party relating thereto. In
addition, the Company shall immediately advise Parent, in writing, if the
Board of Directors of the Company shall make any determination as to any
Competing Transaction as contemplated by the first proviso to this Section
6.13. Nothing contained in this Section 6.13 shall prevent the Company or
its Board of Directors from complying with Rule 14e-2 promulgated under the
Exchange Act with regard to any proposal for a Competing Transaction. As
used herein, the term "Superior Proposal" means a written proposal relating
to a Competing Transaction that the Board of Directors of the Company
determines is, after consulting with and receipt of advice from the Company
Financial Advisor (or any other nationally recognized investment banking
firm), more favorable to the Company Stockholders from a financial point of
view than the transactions contemplated by this Agreement (including, and
after considering, any adjustment to the terms and conditions proposed by
Parent in response to such Competing Transaction), and (if such Competing
Transaction includes cash as consideration) that sufficient financing
commitments have been obtained with respect to such Competing Transaction
that it reasonably expects a transaction pursuant to such proposal could be
consummated and that such transaction is reasonably capable of being
consummated without material delay taking into account all legal,
accounting, regulatory and other aspects of such Competing Transaction.
Nothing in this Section 6.13 shall permit the Company or Parent to
terminate this Agreement except as specifically provided in Article VIII
hereof. The Company shall not release any third party from, or waive any
provision of, any standstill agreement to which it is a party or any
confidentiality agreement between it and another person and the Company has
previously delivered all such agreements to Parent.
ARTICLE VII
CONDITIONS PRECEDENT
7.1 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGER. The
respective obligation of each party to effect the Merger shall be subject
to the satisfaction at or prior to the Effective Time of the following
conditions:
(a) Stockholder Approval. The requisite holders of issued and
outstanding shares of Company Common Stock shall have duly approved
and adopted the Merger Agreement and the Merger.
(b) NYSE Listing. The shares of Parent Common Stock which shall
be issued to the Company Stockholders upon consummation of the Merger
shall have been authorized for listing on the NYSE, subject to
official notice of issuance.
(c) HSR Act. The waiting period (and any extension thereof)
applicable to the Merger under the HSR Act shall have expired or been
terminated.
(d) Other Approvals. (i) Approval by the European Commission
under the EU Council Regulation 4064/89, as amended, shall have been
received; (ii) all waiting periods under the Competition Act of Canada
shall have expired or been terminated; and (iii) all other Parent
Required Approvals and all other Company Required Approvals (other
than under the HSR Act which is covered by Section 7.1(c) above) with
respect to the Merger shall have been obtained except where the
failure to obtain such Parent Required Approvals and Company Required
Approvals would not reasonably be expected to have a Material Adverse
Effect on the Company or Parent or to materially impair the benefits
expected to be realized by Parent from consummation of the Merger.
(e) Registration Statement/Proxy Statement. The Registration
Statement shall have become effective under the Securities Act and no
stop order suspending the effectiveness of the Registration Statement
shall have been issued and no proceedings for that purpose shall have
been initiated or threatened by the SEC. The Proxy Statement shall
have been delivered to the Company Stockholders in accordance with the
requirements of the Securities Act and the Exchange Act.
(f) No Injunctions or Restraints; Illegality. No statute, rule,
regulation, executive or other order shall have been enacted, issued,
promulgated or enforced by any Governmental Entity and no preliminary
or permanent injunction, temporary restraining order or other legal
restraint or prohibition issued by a court or other Governmental
Entity (collectively "Restraints") preventing or rendering illegal the
consummation of the Merger shall be in effect.
(g) Tax Opinions. Unless Parent makes a Cash Election, the
Company shall have received the opinion of Skadden, Arps, Slate,
Xxxxxxx & Xxxx LLP and Parent shall have received the opinion of
Wachtell, Lipton, Xxxxx & Xxxx, which opinions shall be dated as of
the Closing Date, to the effect that the Merger will be treated for
U.S. federal income tax purposes as a reorganization within the
meaning of Section 368(a) of the Code and that Parent, Merger Sub and
the Company will each be a party to such reorganization within the
meaning of Section 368(b) of the Code. In rendering such opinions,
such firms may rely upon representations and covenants, including
those contained in certificates of officers of the Company, Merger Sub
and Parent, which representations and covenants are in form and
substance reasonably acceptable to such counsel.
7.2 CONDITIONS TO OBLIGATIONS OF THE COMPANY. The obligation of the
Company to effect the Merger is also subject to the satisfaction or waiver
by the Company at or prior to the Effective Time of the following
conditions:
(a) Representations and Warranties. The representations and
warranties of Parent set forth in this Agreement (when read without
any exception or qualification as to materiality or Material Adverse
Effect) shall be true and correct as of the date of this Agreement and
(except to the extent such representations and warranties speak as of
a specific date which shall be true and correct as of such date) as of
the Closing Date as though made on and as of the Closing Date, except
where the failure or failures to be so true and correct would not,
individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect on Parent. The Company shall have received a
certificate signed on behalf of Parent by the Chief Executive Officer,
Chief Financial Officer or an Executive Vice President of Parent to
the foregoing effect.
(b) Performance of Obligations of Parent. Parent shall have
performed or complied in all material respects with all agreements and
covenants required to be performed or complied with by it under this
Agreement at or prior to the Effective Time, and the Company shall
have received a certificate signed on behalf of Parent by the Chief
Executive Officer, Chief Financial Officer or an Executive Vice
President of Parent to such effect.
7.3 CONDITIONS TO OBLIGATIONS OF PARENT. The obligation of Parent to
effect the Merger is also subject to the satisfaction or waiver by Parent
at or prior to the Effective Time of the following conditions:
(a) Representations and Warranties. The representations and
warranties of the Company set forth in this Agreement (when read
without any exception or qualification as to materiality or Material
Adverse Effect) shall be true and correct as of the date of this
Agreement and (except to the extent such representations and
warranties speak as of a specific date which shall be true and correct
as of such date) as of the Closing Date as though made on and as of
the Closing Date, except where the failure or failures to be so true
and correct would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect on the Company. Parent
shall have received a certificate signed on behalf of the Company by
the Chief Executive Officer and the Chief Financial Officer of the
Company to the foregoing effect.
(b) Performance of Obligations of the Company. The Company
shall have performed or complied in all material respects with all
agreements and covenants required to be performed or complied with by
it under this Agreement at or prior to the Effective Time, and Parent
shall have received a certificate signed on behalf of the Company by
the Chief Executive Officer and the Chief Financial Officer of the
Company to such effect.
(c) No Material Adverse Change. At any time after the date of
this Agreement there shall not have occurred any event, occurrence,
development or state of circumstances, that has had, or would
reasonably be expected to have, a Material Adverse Effect on the
Company.
(d) Affiliate Letters. The Company shall have used its
reasonable best efforts to cause each person identified as an
affiliate pursuant to Section 6.5 to deliver to Parent, prior to the
Effective Time, a Company Affiliate Letter.
ARTICLE VIII
TERMINATION AND AMENDMENT
8.1 TERMINATION. This Agreement may be terminated at any time prior
to the Effective Time, whether before or after approval of the matters
presented in connection with the Merger by the Company Stockholders:
(a) by mutual written consent of the Company and Parent;
(b) by either the Company or Parent if (i) any Restraint
preventing or rendering illegal consummation of the Merger shall have
become final and nonappealable (unless the failure by such party to
fulfill its obligations pursuant to Section 6.1(b) shall have been the
cause of, or resulted in, such Restraint) or (ii) any Governmental
Entity shall have failed to issue an order, decree or ruling or to
take any other action necessary to fulfill the condition set forth in
Section 7.1(d) and such denial of a request to issue such order,
decree, ruling or take such other action shall have become final and
nonappealable (unless the cause of such denial was the failure by such
party to comply with Section 6.1(b));
(c) by either the Company or Parent if the Merger shall not have
been consummated on or before October 31, 1999, unless the failure of
the Closing to occur by such date shall be due to the failure of the
party seeking to terminate this Agreement to perform or observe the
covenants and agreements of such party set forth herein;
(d) by either the Company or Parent (provided that the
terminating party is not then in material breach of any
representation, warranty, covenant or other agreement contained
herein) if there shall have been a material breach of any of the
covenants or agreements or any of the representations or warranties
set forth in this Agreement on the part of the other party, which
breach is not cured within 30 days following written notice to the
party committing such breach, or which breach, by its nature or
timing, cannot be cured prior to the Closing Date;
(e) by either the Company or Parent if the approval of the
Company Stockholders required for the consummation of the Merger shall
not have been obtained by reason of the failure to obtain the required
vote at the Company Stockholders Meeting or at any adjournment or
postponement thereof;
(f) by Parent if (i) the Board of Directors of the Company
shall, or shall announce its intention to, withdraw, modify or change
the Company Board Recommendation in a manner adverse to Parent, or if
the Board of Directors of the Company shall have refused to affirm the
Company Board Recommendation as promptly as practicable (but in any
case within three business days) after receipt of any written request
from Parent or (ii) the Board of the Directors of the Company approves
or recommends a Competing Transaction; or
(g) by the Company if the Board of Directors of the Company
shall conclude in good faith, after consultation with and receipt of
advice from its outside counsel, that in light of the receipt of a
Superior Proposal that was not solicited, initiated, facilitated or
encouraged after the date of this Agreement by the Company, its
Subsidiaries or any of their respective representatives, directors,
officers or employees, such action is required to comply with its
fiduciary duties under applicable Law, the Company may (only after the
Company has made such payment as is provided for in Section 8.2(b) and
only prior to the approval of this Agreement by the Company
Stockholders) terminate this Agreement solely in order to concurrently
enter into a definitive agreement with respect to such Superior
Proposal; provided, however, the Company may not terminate this
Agreement pursuant to this clause (g) until after the fifth business
day following the delivery to Parent of written notice advising Parent
that the Board of Directors of the Company is prepared to enter into a
definitive agreement with respect to a Superior Proposal and only if,
during such five-business day period, the Company and its
representatives shall, if requested by Parent, have negotiated in good
faith with Parent to make such adjustments to the terms and conditions
of this Agreement as would enable the Company to proceed with the
Merger on such adjusted terms.
8.2 EFFECT OF TERMINATION. (a) Except as provided in Section
8.2(b), in the event of termination of this Agreement by either the Company
or Parent as provided in Section 8.1, this Agreement shall forthwith become
void and have no effect, and none of the Company, Parent, any of their
respective Subsidiaries or any of the officers or directors of any of them
shall have any liability of any nature whatsoever hereunder, or in
connection with the transactions contemplated hereby, except that
notwithstanding anything to the contrary contained in this Agreement,
neither the Company nor Parent shall be relieved or released from any
liabilities or damages arising out of its willful breach of any provision
of this Agreement and the agreements and covenants set forth in Section 9.1
shall survive termination.
(b) In the event of termination of this Agreement without
consummation of the transactions contemplated hereby:
(i) by Parent pursuant to Section 8.1(f);
(ii) by the Company pursuant to Section 8.1(g); or
(iii) by either party pursuant to Sections 8.1(c) or 8.1(e)
or by Parent pursuant to Section 8.1(d), in each case with respect to this
clause (iii), in circumstances where within 16 months after the termination
of this Agreement the Company enters into a definitive agreement in respect
of, or approves or recommends a Competing Transaction or redeems any rights
under, or modifies or agrees to modify, the Company Rights Agreement (or
any replacement thereof) to facilitate, any Competing Transaction with any
person (other than Parent or any Subsidiary of Parent), then the Company
shall make payment to Parent by wire transfer of immediately available
funds of a fee in the amount of $160,000,000 (the "Breakup Fee"), in the
case of a termination by Parent pursuant to clause (i) above, within two
business days following such termination or, in the case of a termination
by the Company pursuant to clause (ii) above, concurrently with such
termination, or, in the case of clause (iii) above, not later than the
earliest of the date of such definitive agreement, approval,
recommendation, redemption, modification or agreement to modify.
Acceptance by Parent of the payment referred to in the foregoing sentence
shall constitute conclusive evidence that this Agreement has been validly
terminated. Termination by the Company pursuant to Section 8.1(g) shall
not be effective until payment of the Breakup Fee required by this Section
8.2(b).
8.3 AMENDMENT; EXTENSION; WAIVER. Subject to compliance with
applicable Law, at any time prior to the Effective Time, this Agreement may
be amended by the parties hereto, and the parties hereto may, to the extent
legally allowed, (i) extend the time for the performance of any of the
obligations or other acts of the other parties hereto, (ii) waive any
inaccuracies in the representations and warranties contained herein or in
any document delivered pursuant hereto and (iii) waive compliance with any
of the agreements or conditions contained herein; in each case, by action
taken or authorized by their respective Boards of Directors; provided,
however, that, after any approval of the transactions contemplated by this
Agreement by the Company Stockholders, there may not be, without further
approval of such stockholders, any amendment, extension or waiver of this
Agreement or any portion thereof which changes the amount or the form of
the consideration to be delivered to the Company Stockholders hereunder
other than as contemplated by this Agreement. Any amendment or agreement
on the part of the parties hereto to any such extension or waiver shall be
valid only if set forth in a written instrument signed on behalf of such
party, but such extension or waiver or failure to insist on strict
compliance with an obligation, covenant, agreement or condition shall not
operate as a waiver of, or estoppel with respect to, any subsequent or
other failure.
ARTICLE IX
GENERAL PROVISIONS
9.1 NONSURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS. None
of the representations, warranties, covenants and agreements in this
Agreement or in any instrument delivered pursuant to this Agreement shall
survive the Effective Time, except for those covenants and agreements
contained herein and therein that by their terms apply, in whole or in
part, after the Effective Time, including the agreements contained in this
Section 9.1 and Sections 6.2(b) (access to information), 6.7 (employee
benefits), 6.8 (indemnification, directors' and officers' insurance), 6.9
(additional agreements), 8.2 (effect of termination) and 9.2 (expenses).
9.2 EXPENSES. Subject to the provisions of Article VIII, including
Section 8.2, all costs and expenses incurred in connection with this
Agreement and the transactions contemplated hereby shall be paid by the
party incurring such expense; provided, however, that the costs and
expenses of printing and mailing the Proxy Statement, and all filing and
other fees paid to the SEC in connection with the Merger, shall be borne
equally by the Company and Parent.
9.3 NOTICES. All notices and other communications given or made
pursuant hereto shall be in writing and shall be deemed to have been duly
given or made as of the date delivered, mailed or transmitted, and shall be
effective upon receipt, if delivered personally, mailed by registered or
certified mail (postage prepaid, return receipt requested) to the parties
at the following addresses (or at such other address for a party as shall
be specified by like means) or sent by electronic transmission to the
telecopier number specified below:
(a) if to the Company, to:
Sundstrand Corporation
Corporate Headquarters
0000 Xxxxxxxx Xxxxxx
Xxxxxxxx, Xxxxxxxx 00000-0000
Attention: General Counsel
Telecopy: (000) 000-0000
with a copy to:
Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx X. Xxxxx, Esq.
Xxxx X. Xxxxx, Esq.
Telecopy No.: (000) 000-0000
(b) if to Parent or Merger Sub, to:
United Technologies Corporation
United Technologies Building
0 Xxxxxxxxx Xxxxx
Xxxxxxxx, Xxxxxxxxxxx 00000
Attention: General Counsel
Telecopy: (000) 000-0000
with a copy to
Wachtell, Lipton, Xxxxx & Xxxx
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx X. Xxxxx, Esq.
Telecopy No.: (000) 000-0000
9.4 INTERPRETATION; CERTAIN DEFINITIONS. (a) When a reference is
made in this Agreement to Articles, Sections or Exhibits, such reference
shall be to an Article, a Section of or an Exhibit to this Agreement unless
otherwise indicated. The table of contents and headings contained in this
Agreement are for reference purposes only and shall not affect in any way
the meaning or interpretation of this Agreement.
(b) (i) References in this Agreement (except as specifically
otherwise defined) to "affiliates" shall mean, as to any person, any other
person that, 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.
(ii) 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 has had a material adverse effect on
the business, assets, properties, results of operations or condition
(financial or otherwise) of the Company and its Subsidiaries or Parent and
its Subsidiaries, in either case, taken as a whole, provided that Material
Adverse Effect shall not include changes or effects relating to general
U.S. or global economic conditions.
(iii) 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.
(iv) 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
Entity.
(v) Use of the word "including" shall mean "including, without
limitation."
(vi) 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.
9.5 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement
and shall become effective when counterparts have been signed by each of
the parties and delivered to the other parties, it being understood that
all parties need not sign the same counterpart.
9.6 ENTIRE AGREEMENT. This Agreement (and the Exhibits, Disclosure
Schedules and other documents delivered pursuant hereto) and the
Confidentiality Agreement constitute the entire agreement and supersedes
all prior agreements and understandings, both written and oral, among the
parties with respect to the subject matter hereof.
9.7 GOVERNING LAW. This Agreement shall be governed and construed in
accordance with the Laws of the State of Delaware, without regard to any
applicable conflicts of Law.
9.8 CONSENT TO JURISDICTION; VENUE. (a) Each of the parties hereto
irrevocably submits to the exclusive jurisdiction of the state courts of
Delaware and to the jurisdiction of the United States District Court for
the District of Delaware, for the purpose of any action or proceeding
arising out of or relating to this Agreement and each of the parties hereto
irrevocably agrees that all claims in respect to such action or proceeding
may be heard and determined exclusively in any Delaware state or federal
court sitting in the City of Wilmington, Delaware. Each of the parties
hereto agrees that a final judgment in any action or proceeding shall be
conclusive and may be enforced in other jurisdictions by suit on the
judgment or in any other manner provided by law.
(b) Each of the parties hereto irrevocably consents to the service of
any summons and complaint and any other process in any other Action or
proceeding relating to the Merger, on behalf of itself or its property, by
the personal delivery of copies of such process to such party. Nothing in
this Section 9.8 shall affect the right of any party hereto to serve legal
process in any other manner permitted by law.
9.9 SPECIFIC PERFORMANCE. The transactions contemplated by this
Agreement are unique. Accordingly, each of the parties acknowledges and
agrees that, in addition to all other remedies to which it may be entitled,
each of the parties hereto is entitled to a decree of specific performance,
provided that such party is not in material default hereunder.
9.10 SEVERABILITY. If any term or other provision of this Agreement
is invalid, illegal or incapable of being enforced by any rule of Law or
public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or
legal substance of the transactions contemplated hereby is not affected in
any manner materially adverse to any party. Upon such determination that
any term or other provision is invalid, illegal or incapable of being
enforced, the parties hereto shall negotiate in good faith to modify this
Agreement so as to effect the original intent of the parties as closely as
possible in an acceptable manner to the end that transactions contemplated
hereby are fulfilled to the extent possible.
9.11 ASSIGNMENT; THIRD PARTY BENEFICIARIES. Neither this Agreement
nor any of the rights, interests or obligations 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. Subject to the preceding
sentence, this Agreement will be binding upon, inure to the benefit of and
be enforceable by the parties and their respective successors and assigns.
Except for Section 6.8, this Agreement (including the documents and
instruments referred to herein) is not intended to confer upon any person
other than the parties hereto any rights or remedies hereunder.
IN WITNESS WHEREOF, the Company, Parent and Merger Sub have
caused this Agreement to be executed by their respective officers thereunto
duly authorized as of the date first above written.
SUNDSTRAND CORPORATION
By: /s/ Xxxxxx X. Xxxxxxx
-----------------------------------
Name: Xxxxxx X. Xxxxxxx
Title: Chairman, President and Chief
Executive Officer
UNITED TECHNOLOGIES CORPORATION
By: /s/ Xxxxxx Xxxxx
-----------------------------------
Name: Xxxxxx Xxxxx
Title: Chairman, President and Chief
Executive Officer
HSSAIL INC.
By: /s/ Xxx Xxxxxxx
-----------------------------------
Name: Xxx Xxxxxxx
Title: President
Exhibit A
__________, 1999
United Technologies Corporation
United Technologies Building
0 Xxxxxxxxx Xxxxx
Xxxxxxxx, Xxxxxxxxxxx 00000
Gentlemen:
The undersigned acknowledges that, as of the date hereof, the
undersigned may be deemed to be an "affiliate" of Sundstrand Corporation, a
Delaware corporation (the "Company"), as the term "affiliate" is used in
and for purposes of paragraphs (c) and (d) of Rule 145 ("Rule 145")
promulgated by the Securities and Exchange Commission (the "Commission")
under the Securities Act of 1933, as amended (the "Securities Act"),
although nothing contained herein shall be construed as an admission of
such fact. Pursuant to the terms and subject to the conditions of the
Agreement and Plan of Merger dated as of February __, 1999 (the
"Agreement"), among the Company, United Technologies Corporation, a
Delaware corporation ("Parent"), and HSSail Inc., a Delaware corporation
and a wholly owned Subsidiary of Parent ("Merger Sub"), the Company will be
merged with and into Merger Sub (the "Merger") and all of the outstanding
shares of common stock of the Company, par value $.50 per share ("Company
Common Stock"), will be converted into the right to receive shares of
common stock par value $1.00 per share, of Parent ("Parent Common Stock")
and/or the Cash Consideration (as defined in the Agreement). In, or as a
result of, the Merger, the undersigned may receive shares of Parent Common
Stock in exchange for the shares of the Company Common Stock owned by the
undersigned immediately prior to the time of the effectiveness of the
Merger (the "Effective Time").
The undersigned acknowledges that if the undersigned is an
"affiliate," as the term is used in and for the purposes of Rule 145 under
the Securities Act, the undersigned's ability to sell, assign or transfer
shares of Parent Common Stock beneficially owned by the undersigned as a
result of the Merger may be restricted unless such transaction is
registered under the Securities Act or an exemption from such registration
is available. The undersigned understands that such exemptions are limited
and the undersigned has obtained advice of counsel as to the nature and
conditions of such exemptions, including information with respect to the
applicability to the sale, assignment or transfer of such securities of
Rule 144 and 145(d) promulgated under the Securities Act.
The undersigned further acknowledges and agrees with Parent that
the undersigned will not offer to sell, transfer or otherwise dispose of
any of the shares of Parent Common Stock beneficially owned by the
undersigned as a result of the Merger except (a) in compliance with the
applicable provisions of Rule 145 or (b) pursuant to a registration
statement under the Securities Act or (c) in a transaction that, in the
opinion of counsel reasonably satisfactory to Parent or as described in a
"no-action" or interpretive letter from the Staff of the Commission, is not
required to be registered under the Securities Act; provided, however,
that, for so long as the undersigned holds any shares of Parent Common
Stock as to which the undersigned is subject to the limitations of Rule
145, Parent will use its reasonable efforts to file all reports required to
be filed by it pursuant to the Securities Exchange Act of 1934, as amended,
and the rules and regulations thereunder, as the same shall be in effect at
the time, so as to satisfy the requirements of paragraph (c) of Rule 144
under the Securities Act that there be available current public information
with respect to Parent, and to that extent to make available to the
undersigned the exemption afforded by Rule 145 with respect to the sale,
transfer or other disposition of the shares of Parent Common Stock.
In the event of a sale or other disposition by the undersigned of
shares of Parent Common Stock pursuant to Rule 145(d)(1), the undersigned
will supply Parent with evidence of compliance with such Rule, in the form
of a letter in the form of Annex I hereto. The undersigned understands
that Parent may instruct its transfer agent to withhold the transfer of any
shares of Parent Common Stock owned by the undersigned, but that upon
receipt of such evidence of compliance or the availability of an exemption
from registration under the Securities Act, the transfer agent shall
effectuate the transfer of shares of Parent Common Stock sold as indicated
in the letter.
The undersigned acknowledges and agrees that appropriate legends
will be placed on certificates representing shares of Parent Common Stock
received by the undersigned in the Merger or held by a transferee thereof
which legends will be removed by delivery of substitute certificates, and
the related transfer restrictions will be lifted forthwith, upon receipt of
an opinion in form and substance reasonably satisfactory to Parent from
independent counsel reasonably satisfactory to Parent to the effect that
such legends are no longer required for purposes of the Securities Act.
Notwithstanding the foregoing, any such legends will be removed by delivery
of substitute certificates upon written request of the undersigned if at
the time of making such request the undersigned would otherwise be
permitted to dispose of the shares of Parent Common Stock represented by
such certificates pursuant to Rule 145(d)(2) or Rule 145(d)(3).
The undersigned acknowledges that (i) the undersigned has
carefully read this letter and understands the requirements hereof and the
limitations imposed upon the distribution, sale, transfer or other
disposition of shares of Parent Common Stock and Company Common Stock and
(ii) the receipt by Parent of this letter agreement is an inducement to
Parent's obligations to consummate the Merger. This letter agreement shall
expire and be of no force or effect upon termination of the Agreement prior
to the Effective Time.
Very truly yours,
Name: ____________________________
Accepted and agreed this
___ day of ___________, 1999
UNITED TECHNOLOGIES CORPORATION
By:______________________________
Name: ________________________
Title: _________________________
Annex I to
Exhibit A
__________ __, ____
United Technologies Corporation
United Technologies Building
0 Xxxxxxxxx Xxxxx
Xxxxxxxx, Xxxxxxxxxxx 00000
On ______ __, ____, the undersigned sold the securities of United
Technologies Corporation (the "Parent") described below in the space
provided for that purpose (the "Securities"). The Securities were acquired
by the undersigned in connection with the merger of Sundstrand Corporation
with HSSail Inc.
Based upon the most recent report or statement filed by Parent
with the Securities and Exchange Commission, the Securities sold by the
undersigned were within the prescribed limitations set forth in paragraph
(e) of Rule 144 promulgated under the Securities Act of 1933, as amended
(the "Act").
The undersigned hereby represents to Parent that the Securities
were sold in "brokers' transactions" within the meaning of Section 4(4) of
the Act or in transactions directly with a "market maker" as that term is
defined in Section 3(a)(38) of the Securities Exchange Act of 1934, as
amended. The undersigned further represents to Parent that the undersigned
has not solicited or arranged for the solicitation of orders to buy the
Securities, and that the undersigned has not made any payment in connection
with the offer or sale of the Securities to any person other than to the
broker who executed the order in respect of such sale.
Very truly yours,
DESCRIPTION OF SECURITIES SOLD:
