EXHIBIT 99.(d)(1)
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AGREEMENT AND PLAN OF MERGER
DATED AS OF DECEMBER 21, 2000
AMONG
NORTHROP GRUMMAN CORPORATION,
XXXXXX INDUSTRIES, INC.
AND
LII ACQUISITION CORP.
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TABLE OF CONTENTS
Page
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ARTICLE 1 THE OFFER...................................................... 1
SECTION 1.1. The Offer............................................. 1
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SECTION 1.2. Company Action........................................ 3
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SECTION 1.3. Boards of Directors and Committees; Section 14(f)..... 4
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ARTICLE 2 THE MERGER..................................................... 5
SECTION 2.1. The Merger............................................ 5
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SECTION 2.2. Effective Time........................................ 5
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SECTION 2.3. Closing of the Merger................................. 5
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SECTION 2.4. Effects of the Merger................................. 5
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SECTION 2.5. Certificate of Incorporation and Bylaws............... 5
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SECTION 2.6. Directors............................................. 6
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SECTION 2.7. Officers.............................................. 6
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SECTION 2.8. Conversion of Shares.................................. 6
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SECTION 2.9. Payment of Merger Consideration....................... 7
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SECTION 2.10. Stock Options......................................... 8
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SECTION 2.11. Dissenting Shares..................................... 9
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ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF THE COMPANY.................. 10
SECTION 3.1. Organization and Qualification; Subsidiaries.......... 10
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SECTION 3.2. Capitalization of the Company and its Subsidiaries.... 10
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SECTION 3.3. Authority Relative to this Agreement; Recommendation.. 11
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SECTION 3.4. SEC Reports; Financial Statements..................... 12
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SECTION 3.5. Information Supplied.................................. 12
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SECTION 3.6. Consents and Approvals; No Violations................. 13
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SECTION 3.7. No Default............................................ 13
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Table of Contents
(Continued)
SECTION 3.8. No Undisclosed Liabilities; Absence of Changes........ 13
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SECTION 3.9. Litigation............................................ 14
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SECTION 3.10. Compliance with Applicable Law........................ 14
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SECTION 3.11. Employee Benefit Plans; Labor Matters................. 14
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SECTION 3.12. Environmental Laws and Regulations.................... 15
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SECTION 3.13. Taxes................................................. 16
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SECTION 3.14. Intellectual Property; Software....................... 17
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SECTION 3.15. Government Contracts.................................. 17
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SECTION 3.16. Certain Business Practices............................ 18
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SECTION 3.17. Vote Required......................................... 18
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SECTION 3.18. Opinion of Financial Adviser.......................... 18
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SECTION 3.19. Brokers............................................... 18
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SECTION 3.20. Problems with Customers............................... 19
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ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF PARENT AND ACQUISITION....... 19
SECTION 4.1. Organization.......................................... 19
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SECTION 4.2. Authority Relative to this Agreement.................. 19
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SECTION 4.3. SEC Reports; Financial Statements..................... 20
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SECTION 4.4. Information Supplied.................................. 20
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SECTION 4.5. Consents and Approvals; No Violations................. 20
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SECTION 4.6. Adequate Funds........................................ 21
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SECTION 4.7. No Prior Activities................................... 21
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ARTICLE 5 COVENANTS...................................................... 21
SECTION 5.1. Conduct of Business of the Company.................... 21
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SECTION 5.2. Conduct of Business of Parent......................... 24
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Table of Contents
(Continued)
SECTION 5.3. Other Potential Acquirers....................................... 24
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SECTION 5.4. Meeting of Stockholders......................................... 26
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SECTION 5.5. Access to Information........................................... 26
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SECTION 5.6. Additional Agreements; Reasonable Efforts....................... 27
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SECTION 5.7. Indemnification................................................. 29
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SECTION 5.8. Public Announcements............................................ 29
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SECTION 5.9. Employee Matters................................................ 30
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ARTICLE 6 CONDITIONS TO CONSUMMATION OF THE MERGER................................. 31
SECTION 6.1. Conditions to Each Party's Obligations to Effect the Merger..... 31
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ARTICLE 7 TERMINATION; AMENDMENT; WAIVER........................................... 32
SECTION 7.1. Termination..................................................... 32
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SECTION 7.2. Effect of Termination........................................... 33
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SECTION 7.3. Fees and Expenses............................................... 33
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SECTION 7.4. Amendment....................................................... 34
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SECTION 7.5. Extension; Waiver............................................... 34
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ARTICLE 8 MISCELLANEOUS............................................................ 34
SECTION 8.1. Nonsurvival of Representations and Warranties................... 34
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SECTION 8.2. Entire Agreement; Assignment.................................... 34
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SECTION 8.3. Validity........................................................ 34
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SECTION 8.4. Notices......................................................... 35
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SECTION 8.5. Governing Law................................................... 35
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SECTION 8.6. Descriptive Headings............................................ 35
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SECTION 8.7. Parties in Interest............................................. 35
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SECTION 8.8. Certain Definitions............................................. 36
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SECTION 8.9. Personal Liability.............................................. 36
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Table of Contents
(Continued)
SECTION 8.10. Counterparts......................................... 36
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ANNEX A CONDITIONS OF THE OFFER......................................... 39
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TABLE OF DEFINED TERMS
Cross Reference
Term Section Page
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affiliate.............................. Section 8.8(a)......... 36
Bid.................................... Section 3.15(b)........ 18
business day........................... Section 8.8(b)......... 36
capital stock.......................... Section 8.8(c)......... 36
Certificates........................... Section 2.9(b)......... 7
Closing................................ Section 2.3............ 5
Closing Date........................... Section 2.3............ 5
Code................................... Section 8.8(d)......... 36
Company Financial Adviser.............. Section 3.18........... 18
Company Intellectual Property Rights... Section 3.14(a)........ 17
Company Material Adverse Effect........ Section 3.1(b)......... 10
Company Permits........................ Section 3.10........... 14
Company Securities..................... Section 3.2(a)......... 11
DGCL................................... Section 1.2(a) ........ 3
Effective Time......................... Section 2.2............ 5
Environmental Claim.................... Section 3.12(a)........ 15
Environmental Laws..................... Section 3.12(a)........ 15
Exchange Act........................... Section 3.2(c)......... 11
Government Contract.................... Section 3.15(b)........ 18
Governmental Entity.................... Section 3.6............ 13
HSR Act................................ Section 3.6............ 13
Indemnified Liabilities................ Section 5.7(a)......... 29
Indemnified Persons.................... Section 5.7(a)......... 29
knowledge.............................. Section 8.8(e)......... 36
known.................................. Section 8.8(e)......... 36
Lien................................... Section 3.2(b)......... 11
Merger................................. Section 2.1............ 5
Merger Certificate..................... Section 2.2............ 5
Merger Consideration................... Section 2.8(a)......... 6
Merger Fund............................ Section 2.9(a)......... 7
Notice of Superior Proposal............ Section 5.3(b)......... 25
Parent Disclosure Schedule............. Article 4.............. 19
Parent Material Adverse Effect......... Section 4.1(b)......... 19
Parent SEC Reports..................... Section 4.3(a)......... 20
Payment Agent.......................... Section 2.9(a)......... 7
person................................. Section 8.8(f)......... 36
Proxy Statement........................ Section 3.5............ 12
Rights................................. Section 3.2(a)......... 10
SEC.................................... Section 3.4(a)......... 12
Securities Act......................... Section 3.4(a)......... 12
Share.................................. Section 2.8(a)......... 6
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TABLE OF DEFINED TERMS
(Continued)
Cross Reference
Term Section Page
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subsidiaries........................... Section 8.8(g)......... 36
subsidiary............................. Section 8.8(g)......... 36
Superior Proposal...................... Section 5.3(b)......... 26
Surviving Corporation.................. Section 2.1............ 5
Tax Return............................. Section 3.13(a)(iii)... 16
Taxes.................................. Section 3.13(a)(ii).... 16
Third Party............................ Section 5.3(b)......... 25
Third Party Acquisition................ Section 5.3(b)......... 25
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AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "Agreement") dated as of December
21, 2000 is among XXXXXX INDUSTRIES, INC., a Delaware corporation (the
"Company"), NORTHROP GRUMMAN CORPORATION, a Delaware corporation ("Parent") and
LII ACQUISITION CORP., a Delaware corporation and a wholly owned subsidiary of
Parent ("Acquisition").
WHEREAS, the board of directors of the Company (the "Company Board") has,
in light of and subject to the terms and conditions set forth herein, (i)
approved this Agreement, and deem it and the Offer (as defined below) advisable,
and fair to and in the best interests of the common stockholders of the Company
and (ii) resolved to recommend acceptance of the Offer to the common
stockholders of the Company and approval and adoption by the stockholders of the
Company of this Agreement; and
WHEREAS, in furtherance thereof, it is proposed that Acquisition shall, by
January 5, 2001, commence a tender offer (the "Offer") to acquire all of the
outstanding shares of common stock, par value $1.00 per share, of the Company
(the "Shares"), together with the associated Rights (as hereafter defined), at a
price of $80.00 per Share (such amount, or any greater amount per share paid
pursuant to the Offer, being hereinafter referred to as the "Per Share Amount"),
net to the seller in cash, and to acquire all of the outstanding shares of
Series B $2 Cumulative Preferred Stock, par value $5.00 per share (the
"Preferred Shares") at a price of $35.00 per Preferred Share (such amount, or
any greater amount per share paid pursuant to the Offer, being referred to as
the "Per Preferred Share Amount"), net to the seller in cash, in accordance with
the terms and subject to the conditions provided herein
NOW THEREFORE in consideration of the premises and the representations,
warranties covenants and agreements herein contained and intending to be legally
bound hereby, the Company, Parent and Acquisition hereby agree as follows:
ARTICLE 1
THE OFFER
SECTION 1.1. The Offer .
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(a) Provided that this Agreement shall not have been terminated in
accordance with Article 7 and none of the events or conditions set forth in
Annex A shall have occurred and be existing, by January 5, 2001, Parent shall
cause Acquisition to commence, and Acquisition shall commence (within the
meaning of Rule 14d-2 under the Securities Exchange Act of 1934, as amended (the
"Exchange Act")) the Offer; and Parent and Acquisition shall use all reasonable
efforts to consummate the Offer. Parent shall cause Acquisition to accept for
payment, and Acquisition shall accept for payment, Shares and Preferred Shares
which have been validly tendered and not withdrawn pursuant to the Offer at the
earliest time following expiration of the initial offering period in the Offer
at which all conditions to the Offer shall have been satisfied or
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waived by Acquisition, and thereafter shall accept for payment additional Shares
and/or Preferred Shares validly tendered during any subsequent offering period.
The obligation of Acquisition to accept for payment, and pay for Shares and/or
Preferred Shares tendered pursuant to the Offer shall be subject only to the
condition that the sum of the number of Shares validly tendered plus the number
of Preferred Shares validly tendered shall be at least 25,562,006 shares (the
"Minimum Condition") and the other conditions set forth in Annex A hereto.
Acquisition expressly reserves the right to increase the price per Share or
price per Preferred Share payable in the Offer and to waive any condition of the
Offer, except the Minimum Condition. Without the prior written consent of the
Company, Acquisition shall not decrease the Per Share Amount or the Per
Preferred Share Amount or change the form of consideration payable in the Offer,
decrease the number of Shares or Preferred Shares sought to be purchased in the
Offer, impose additional conditions to the Offer, amend any other term of the
Offer in any manner adverse to the holders of Shares or Preferred Shares, reduce
the time period during which the Offer shall remain open or waive the Minimum
Condition. The Per Share Amount and the Per Preferred Share Amount shall be paid
net to the seller in cash, less any required withholding of taxes, upon the
terms and subject to such conditions of the Offer. The Company agrees that no
Shares or Preferred Shares held by the Company or any of its subsidiaries will
be tendered in the Offer.
(b) As soon as practicable after the date hereof, Acquisition shall file
with the Securities and Exchange Commission (the "SEC") a Tender Offer Statement
on Schedule TO with respect to the Offer, which shall include an offer to
purchase and form of transmittal letter (together with any supplements or
amendments thereto, collectively the "Offer Documents"). The Offer Documents
will comply in all material respects with the provisions of applicable federal
securities laws. The information provided and to be provided by the Company,
Parent and Acquisition for use in the Offer Documents shall not, on the date
filed with the SEC and on the date first published or sent or given to the
Company's stockholders, as the case may be, 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. Parent, Acquisition
and the Company each agrees promptly to correct any information provided by it
for use in the Offer Documents if and to the extent that it shall have become
false or misleading in any material respect and Acquisition further agrees to
take all steps necessary to cause the Offer Documents as so corrected to be
filed with the SEC and to be disseminated to holders of Shares and Preferred
Shares, in each case as and to the extent required by applicable federal
securities laws.
(c) Subject to the terms and conditions thereof, the Offer shall remain
open until at least midnight, New York City time, on the date that is twenty
(20) business days after the date the Offer is commenced (the initial
"Expiration Date," and any expiration time and date established pursuant to an
authorized extension of the Offer as so extended, also an "Expiration Date");
provided, however, that without the consent of the Company Board, Acquisition
may: (i) from time to time extend the Offer (each such individual extension not
to exceed five (5) business days after the previously scheduled Expiration
Date), if at the scheduled Expiration Date any of the conditions of the Offer
shall not have been satisfied or waived, until such time as such conditions are
satisfied or waived to the extent permitted by this Agreement; (ii) extend the
Offer for any period required by any rule, regulation, interpretation or
position of the SEC or the staff thereof applicable to the Offer; or (iii)
extend the Offer for a subsequent offering period (as provided in Rule 14d-11
under the Exchange Act) of up to twenty (20) business days in order to
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acquire over ninety percent (90%) of the outstanding Shares or Preferred Shares.
Parent agrees to cause Acquisition to extend the Offer from time to time in
accordance with this Section 1.1(c) for the shortest time periods which it
reasonably believes are necessary until consummation of the Offer if the
conditions of the Offer shall not have been satisfied or waived so long as this
Agreement shall not have been terminated in accordance with Article 7 hereof.
Parent and Acquisition shall comply with the obligations respecting prompt
payment and announcement under the Exchange Act, and, without limiting the
generality of the foregoing, Acquisition shall, and Parent shall cause
Acquisition to, accept for payment, and pay for, all Shares and Preferred Shares
validly tendered and not withdrawn pursuant to the Offer promptly following the
acceptance of such Shares and Preferred Shares for payment pursuant to the Offer
and this Agreement.
SECTION 1.2. Company Action.
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(a) The Company hereby approves of and consents to the Offer and
represents and warrants that the Company Board, at a meeting duly called and
held, has, subject to the terms and conditions set forth herein, (i) approved
this Agreement, and deem it and the Offer advisable, and fair to and in the best
interests of the common stockholders of the Company, (ii) approved this
Agreement and the transactions contemplated hereby, including the Offer and the
Merger, in all respects and such approval constitutes approval of the Offer,
this Agreement and the Merger for purposes of Section 203 of the Delaware
General Corporation Law (the "DGCL") and (iii) resolved to recommend that the
common stockholders of the Company accept the Offer, tender their Shares
thereunder to Acquisition and that the stockholders of the Company approve and
adopt this Agreement and the Merger; provided, that such recommendation may be
withdrawn, modified or amended if permitted by Sections 5.3 and 5.4. The Company
consents to the inclusion of such recommendation and approval in the Offer
Documents. The Company further represents that Xxxxxxx Xxxxx & Co. (the
"Financial Adviser") has delivered to the Company Board its written opinion that
the Merger Consideration to be received by the common stockholders of the
Company pursuant to the Offer and the Merger is fair to such stockholders from a
financial point of view.
(b) The Company hereby agrees to file with the SEC as soon as practicable
after the filing by Parent and Acquisition of the Offer Documents pursuant to
Section 1.1(b) a Solicitation/Recommendation Statement on Schedule 14D-9
pertaining to the Offer (together with any amendments or supplements thereto,
the "Schedule 14D-9") containing the recommendation described in Section 1.2(a)
and to promptly mail the Schedule 14D-9 to the stockholders of the Company. The
Schedule 14D-9 will comply in all material respects with the provisions of
applicable federal securities laws and, on the date filed with the SEC and on
the date first published, sent or given to the Company's stockholders, shall not
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, except that no representation is made by the Company with respect to
information supplied by Parent or Acquisition in writing for inclusion in the
Schedule 14D-9. The Company, Parent and Acquisition each agrees promptly to
correct any information provided by it for use in the Schedule 14D-9 if and to
the extent that it shall have become false or misleading in any material respect
and the Company further agrees to take all steps necessary to cause the Schedule
14D-9 as so corrected to be filed with the SEC and disseminated to the
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holders of Shares and Preferred Shares, in each case as and to the extent
required by applicable federal securities laws.
(c) In connection with the Offer, the Company will promptly furnish Parent
and Acquisition with mailing labels, security position listings and any
available listing or computer files containing the names and addresses of the
record holders of the Shares and Preferred Shares as of a recent date and shall
furnish Acquisition with such additional information and assistance (including,
without limitation, updated lists of stockholders, mailing labels and lists of
securities positions) as Acquisition or its agents may reasonably request in
communicating the Offer to the record and beneficial holders of Shares and
Preferred Shares. Except for such steps as are necessary to disseminate the
Offer Documents and any other documents necessary to consummate the Merger,
Parent, Acquisition and their affiliates, associates, agents and advisors shall
use the information contained in any such labels, listings and files only in
connection with the Offer and the Merger, and, if this Agreement shall be
terminated, will deliver to the Company all copies of such information then in
their possession.
SECTION 1.3. Board of Directors; Section 14(f).
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(a) Promptly upon the purchase by Acquisition of Shares pursuant to the
Offer and from time to time thereafter, and subject to the last sentence of this
Section 1.3(a), Acquisition shall be entitled to designate up to such number of
directors, rounded to the nearest whole number constituting at least a majority
of the directors, on the Company Board as will give Acquisition representation
on the Company Board equal to the product of the number of directors on the
Company Board (giving effect to any increase in the number of directors pursuant
to this Section 1.3) and the percentage that such number of Shares so purchased
bears to the total number of outstanding Shares, and the Company shall use all
reasonable efforts to, upon request by Acquisition, promptly, at the Company's
election, either increase the size of the Company Board or secure the
resignation of such number of directors as is necessary to enable Acquisition's
designees to be elected to the Company Board and to cause Acquisition's
designees to be so elected. At such times, the Company will use its best
efforts to cause persons designated by Acquisition to constitute a majority of
each committee of the Company Board, other than any committee of the Company
Board established to take action under this Agreement. Notwithstanding the
foregoing, the Company shall use all reasonable efforts to ensure that three of
the members of the Company Board as of the date hereof shall remain members of
the Company Board until the Effective Time (as defined in Section 2.2 hereof).
If the number of directors who are members of the Company Board as of the date
hereof is reduced below three prior to the Effective Time, the remaining
directors who are members of the Company Board as of the date hereof (or if
there is only one such director, that remaining director) shall be entitled to
designate a person (or persons) to fill such vacancy (or vacancies).
(b) The Company's obligation to appoint designees to the Company Board
shall be subject to Section 14(f) of the Exchange Act and Rule 14f-1 promulgated
thereunder. The Company shall promptly take all action required pursuant to
such Section and Rule in order to fulfill its obligations under this Section 1.3
and shall include in the Schedule 14D-9 such information with respect to the
Company and its officers and directors as is required under such Section and
Rule in order to fulfill its obligations under this Section 1.3. Acquisition
will supply
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to the Company in writing and be solely responsible for any information with
respect to itself and its nominees, officers, directors and affiliates required
by such Section and Rule.
(c) Following the election or appointment of Acquisition's designees
pursuant to this Section 1.3 and prior to the Effective Time, if there shall be
any directors of the Company who were directors as of the date hereof, any
amendment of this Agreement, any termination of this Agreement by the Company,
any extension by the Company of the time for the performance of any of the
obligations or other acts of Acquisition or Parent or waiver of any of the
Company's rights hereunder or other action adversely affecting the rights of
stockholders of the Company (other than Parent or Acquisition), will require the
concurrence of a majority of such directors.
ARTICLE 2
THE MERGER
SECTION 2.1. The Merger. At the Effective Time and upon the terms and
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subject to the conditions of this Agreement and in accordance with the DGCL,
Acquisition shall be merged with and into the Company (the "Merger").
Following the Merger, the Company shall continue as the surviving corporation
(the "Surviving Corporation") and the separate corporate existence of
Acquisition shall cease.
SECTION 2.2. Effective Time. Subject to the terms and conditions set
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forth in this Agreement, a Certificate of Merger (the "Merger Certificate")
shall be duly executed and acknowledged by Acquisition and the Company and
thereafter delivered to the Secretary of State of the State of Delaware for
filing pursuant to the DGCL on the Closing Date. The Merger shall become
effective at such time as a properly executed and certified copy of the Merger
Certificate is duly filed with the Secretary of State of the State of Delaware
in accordance with the DGCL or such later time as Parent and the Company may
agree upon and set forth in the Merger Certificate (the time the Merger becomes
effective being referred to herein as the "Effective Time").
SECTION 2.3. Closing of the Merger. The closing of the Merger (the
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"Closing") will take place at a time and on a date (the "Closing Date") to be
specified by the parties, which shall be no later than the second business day
after satisfaction of the latest to occur of the conditions set forth in Article
6 at the offices of Xxxxxx, Xxxx & Xxxxxxxx LLP, 000 Xxxxx Xxxxx Xxxxxx, Xxx
Xxxxxxx, Xxxxxxxxxx 00000, unless another time, date or place is agreed to in
writing by the parties hereto.
SECTION 2.4. Effects of the Merger. The Merger shall have the effects set
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forth in the DGCL. Without limiting the generality of the foregoing and subject
thereto, at the Effective Time all the properties, rights, privileges, powers
and franchises of the Company and Acquisition shall vest in the Surviving
Corporation and all debts, liabilities and duties of the Company and Acquisition
shall become the debts, liabilities and duties of the Surviving Corporation.
SECTION 2.5. Certificate of Incorporation and Bylaws. The Restated
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Certificate of Incorporation of the Company in effect at the Effective Time
shall be the Certificate of Incorporation of the Surviving Corporation until
thereafter amended in accordance with
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applicable law and such Certificate of Incorporation; provided, however, that
Article Fourth, Section 1 of the Restated Certificate of Incorporation of the
Company shall be amended in its entirety to read as follows: "The Corporation
shall be authorized to issue 3,000,000 shares of Common Stock, par value $1.00
per share, 600,000 shares of Preferred Stock, par value $5.00 per share and
1,000 shares of Preference Stock, par value $2.50 per share." The Bylaws of the
Company in effect at the Effective Time shall be the Bylaws of the Surviving
Corporation until amended in accordance with applicable law, the Certificate of
Incorporation of the Surviving Corporation and such Bylaws.
SECTION 2.6. Directors. The directors of Acquisition at the Effective
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Time shall be the initial directors of the Surviving Corporation, each to hold
office in accordance with the Certificate of Incorporation and Bylaws of the
Surviving Corporation until such director's successor is duly elected or
appointed and qualified.
SECTION 2.7. Officers. The officers of the Company at the Effective Time
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shall be the initial officers of the Surviving Corporation, each to hold office
in accordance with the Certificate of Incorporation and Bylaws of the Surviving
Corporation until such officer's successor is duly elected or appointed and
qualified.
SECTION 2.8. Conversion of Shares.
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(a) At the Effective Time, each share of common stock, par value $1.00
per share, of the Company (a "Share") issued and outstanding immediately prior
to the Effective Time (other than (i) Shares held in the Company's treasury or
by any of the Company's subsidiaries and (ii) Shares held by Parent, Acquisition
or any other subsidiary of Parent) shall, by virtue of the Merger and without
any action on the part of Acquisition, the Company or the holder thereof, be
converted into and shall become the right to receive an amount in cash equal to
the Per Share Amount, without interest (the "Merger Consideration" ). Unless the
context otherwise requires, each reference in this Agreement to the Shares shall
include the associated Rights (as such term is defined in Section 3.2(a)
hereof). Notwithstanding the foregoing if between the date of this Agreement and
the Effective Time, the Shares shall have been changed into a different number
of shares or a different class by reason of any stock dividend, subdivision,
reclassification, recapitalization, split, combination or exchange of shares
then the Merger Consideration contemplated by the Merger shall be
correspondingly adjusted to reflect such stock dividend, subdivision,
reclassification, recapitalization, split, combination or exchange of shares.
(b) At the Effective Time, each outstanding share of the common stock, par
value $0.01 per share, of Acquisition shall be converted into 3,000 shares of
common stock, par value $1.00 per share, of the Surviving Corporation.
(c) At the Effective Time, each Share held in the treasury of the Company
and each Share held by Parent, Acquisition or any subsidiary of Parent,
Acquisition or any subsidiary of the Company immediately prior to the Effective
Time shall, by virtue of the Merger and without any action on the part of
Acquisition, the Company or the holder thereof, be canceled, retired and cease
to exist and no payment shall be made with respect thereto.
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(d) At the Effective Time, each issued and outstanding share of the Series
B $2 Cumulative Preferred Stock, par value $5.00 per share, of the Company shall
remain outstanding, without any change, as a share of the Series B $2 Cumulative
Preferred Stock, par value $5.00 per share, of the Surviving Corporation.
SECTION 2.9. Payment of Merger Consideration.
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(a) From time to time following the Effective Time, as necessary to
satisfy the requirements of Section 2.9(b), Parent shall deliver to such agent
or agents as may be appointed by Parent and Acquisition and reasonably
satisfactory to the Company (the "Payment Agent") for the benefit of the
holders of Shares, in cash the aggregate amount necessary to pay the Merger
Consideration (such cash hereinafter referred to as the "Merger Fund") payable
and issuable pursuant to Section 2.8 in exchange for outstanding Shares.
(b) As soon as reasonably practicable after the Effective Time, the
Payment Agent shall mail to each holder of record of a certificate or
certificates which immediately prior to the Effective Time represented
outstanding Shares (the "Certificates") whose shares were converted into the
right to receive the Merger Consideration pursuant to Section 2.8: (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 Payment Agent and shall be in such form and have such other
provisions as Parent and the Company may reasonably specify) and (ii)
instructions for use in effecting the surrender of the Certificates in exchange
for the Merger Consideration. Upon surrender of a Certificate for cancellation
to the Payment Agent together with such letter of transmittal duly executed, the
holder of such Certificate shall be entitled to receive in exchange therefor a
check representing the Merger Consideration which such holder has the right to
receive pursuant to the provisions of this Article 2 and the Certificate so
surrendered shall forthwith be canceled. In the event of a transfer of
ownership of Shares which is not registered in the transfer records of the
Company, payment of the Merger Consideration may be made to a transferee if the
Certificate representing such Shares is presented to the Payment Agent
accompanied by all documents required to effect such transfer and by evidence
that any applicable stock transfer taxes have been paid. Until surrendered as
contemplated by this Section 2.9, each Certificate shall be deemed at any time
after the Effective Time to represent only the right to receive upon such
surrender the Merger Consideration as contemplated by this Section 2.9.
(c) In the event that any Certificate for Shares shall have been lost,
stolen or destroyed, the Payment Agent shall issue in exchange therefor, upon
the making of an affidavit of that fact by the holder thereof, such Merger
Consideration as may be required pursuant to this Agreement; provided, however,
that Parent or its Payment Agent may, in its discretion, require the delivery of
a suitable bond or indemnity.
(d) All Merger Consideration paid upon the surrender for exchange of
Shares in accordance with the terms hereof shall be deemed to have been paid in
full satisfaction of all rights pertaining to such Shares; subject, however, to
the Surviving Corporation's obligation to pay any dividends or make any other
distributions with a record date prior to the Effective Time which may have been
declared or made by the Company on such Shares in accordance with the terms of
this Agreement, or prior to the date hereof and which remain unpaid at the
Effective
7
Time, and there shall be no further registration of transfers on the stock
transfer books of the Surviving Corporation of the Shares which were outstanding
immediately prior to the Effective Time. If after the Effective Time
Certificates are presented to the Surviving Corporation for any reason they
shall be canceled and exchanged as provided in this Article 2
(e) Any portion of the Merger Fund which remains undistributed to the
stockholders of the Company for six months after the Effective Time shall be
delivered to Parent upon demand and any stockholders of the Company who have not
theretofore complied with this Article 2 shall thereafter look only to Parent
for payment of their claim for the Merger Consideration.
(f) Neither Parent nor the Company shall be liable to any holder of Shares
for cash from the Merger Fund delivered to a public official pursuant to any
applicable abandoned property, escheat or similar law.
SECTION 2.10. Stock Options.
-------------
(a) As of the Effective Time, each outstanding option to purchase Shares
that has been granted by the Company (a "Company Stock Option" or collectively
"Company Stock Options") that is then vested (an "A Option") shall be converted
into the right to receive a cash payment in accordance with the terms of this
Section 2.10(a). All plans or agreements pursuant to which any Company Stock
Option or Share of restricted stock ("Restricted Stock") has been issued or may
be issued are referred to collectively as the "Company Plans." Immediately
following the Effective Time, Parent or the Surviving Corporation shall pay to
each holder of an A Option, in cancellation of such A Option, an amount of cash
equal to (x) the excess of (i) the Merger Consideration over (ii) the per-share
exercise price of such Company Stock Option times (y) the number of Shares
subject to such Company Stock Option, subject to all required tax withholding.
Notwithstanding the foregoing, the Company shall provide the holders of A
Options the opportunity to elect, before the Effective Time, to have some or all
of their A Options to be instead converted into options to acquire Parent Common
Stock pursuant to Section 2.10(b) below, as if they were B Options (as defined
in Section 2.10(b) below). Such election opportunity shall be provided in one
or more written communications jointly prepared by, and mutually satisfactory
to, the Company and Parent and furnished to the holders of A Options not less 30
days prior to the Effective Time.
(b) As of the Effective Time, each outstanding Company Stock Option that
is not an A Option (a "B Option") shall be converted into an option to purchase
shares of Parent Common Stock in accordance with the terms of this Section
2.10(b). Each B Option shall be deemed to constitute an option to acquire, on
the same terms and conditions as were applicable under such B Option, a number
of shares of Parent Common Stock equal to the number of Shares subject to such B
Option times the Ratio (as defined below) at a price per share equal to the per-
Share exercise price of the B Option divided by the Ratio; provided, however,
that in the case of any B Option to which Section 421 of the Code applies by
reason of its qualification under Section 422 of the Code ("incentive stock
options") the option price, the number of shares purchasable pursuant to such
option and the terms and conditions of exercise of such option shall be
determined in order to comply with Section 424(a) of the Code. The "Ratio" means
a fraction, the numerator of which is the Merger Consideration and the
denominator of which is the average
8
of the high and low trading prices of the Parent Common Stock on the New York
Stock Exchange during normal business hours on the day on which the Effective
Time occurs.
(c) It is acknowledged and agreed that each share of Restricted Stock that
is outstanding at the time of the consummation of the Offer will vest (and all
restrictions will lapse) upon the consummation of the Offer, and will therefore
be converted into the Merger Consideration at the Effective Time, subject to all
required tax withholding.
(d) As soon as practicable after the Effective Time, Parent shall deliver
to the holders of B Options appropriate notices setting forth such holders'
rights pursuant to the Company Plan and that the agreements evidencing the
grants of such B Options shall continue in effect on the same terms and
conditions (subject to the adjustments required by this Section 2.10 after
giving effect to the Merger). Parent shall comply with the terms of the Company
Plans and ensure, to the extent required by and subject to the provisions of
such Plans, that B Options which qualified as incentive stock options prior to
the Effective Time continue to qualify as incentive stock options of Parent
after the Effective Time.
(e) Parent shall take all corporate action necessary to reserve for
issuance a sufficient number of shares of Parent Common Stock for delivery upon
exercise of B Options assumed in accordance with Section 2.10(b). At the
Effective Time, Parent shall file a registration statement on Form S-8 (or any
successor or other appropriate forms) with respect to the shares of Parent
Common Stock subject to any options held by persons who are or were directors,
officers or employees of the Company or its subsidiaries and shall use its best
efforts to maintain the effectiveness of such registration statement or
registration statements (and maintain the current status of the prospectus or
prospectuses contained therein) for so long as such options remain outstanding.
(f) At or before the Effective Time, the Company shall cause to be
effected any necessary amendments to the Company Plans to give effect to the
foregoing provisions of this Section 2.10.
SECTION 2.11. Dissenting Shares. Shares outstanding immediately prior to
-----------------
the Effective Time and held by a holder who neither shall have voted in favor of
the Merger nor shall have consented thereto in writing and who shall have
demanded appraisal for such Shares in accordance with the DGCL ("Dissenting
Shares") shall not be converted into a right to receive the Merger
Consideration, unless such holder fails to perfect, withdraws or otherwise loses
its right to appraisal. If, after the Effective Time, such holder fails to
perfect, withdraws or loses its right to appraisal, such Shares shall be treated
as if they had been converted as of the Effective Time into a right to receive
the Merger Consideration. The Company shall give Parent prompt notice of any
demands received by the Company for appraisal of Shares. Except as required by
applicable law or with the prior written consent of Parent, the Company shall
not make any payment with respect to, or settle or offer to settle, any such
demands.
9
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as publicly disclosed by the Company in the Company SEC Reports and
except as set forth on the Disclosure Schedule (it being agreed that disclosure
of any item in such schedules shall be deemed disclosure with respect to any
section of this Agreement to which the relevance of such item is apparent)
previously delivered by the Company to Parent (the "Company Disclosure
Schedule"), the Company hereby represents and warrants to each of Parent and
Acquisition as follows:
SECTION 3.1. Organization and Qualification; Subsidiaries.
--------------------------------------------
(a) Section 3.1 of the Company Disclosure Schedule identifies each
subsidiary of the Company as of the date hereof and its respective jurisdiction
of incorporation or organization, as the case may be. Each of the Company and
its subsidiaries is duly organized, validly existing and in good standing under
the laws of the jurisdiction of its incorporation or organization and has all
requisite corporate power and authority to own, lease and operate its properties
and to carry on its businesses as now being conducted. The Company has
heretofore delivered to Acquisition or Parent accurate and complete copies of
the Certificate of Incorporation and Bylaws (or similar governing documents), as
currently in effect, of the Company and its subsidiaries.
(b) Each of the Company and its subsidiaries is duly qualified or licensed
and in good standing to do business in each jurisdiction in which the property
owned, leased or operated by it or the nature of the business conducted by it
makes such qualification or licensing necessary, except in such jurisdictions
where the failure to be so duly qualified or licensed and in good standing would
not have a Company Material Adverse Effect. The term "Company Material Adverse
Effect" means any changes or effects that, individually or in the aggregate,
are materially adverse to the business, assets, long-term earning capacity or
financial condition of the Company and its subsidiaries, taken as whole, other
than any changes or effects arising out of (i) general economic conditions, (ii)
conditions generally affecting industries in which the Company operates, (iii)
the financial markets or (iv) the entering into or the public announcement or
disclosure of this Agreement or the transactions contemplated hereby.
SECTION 3.2. Capitalization of the Company and its Subsidiaries.
--------------------------------------------------
(a) The authorized capital stock of the Company consists of (i) 120
million Shares, of which, as of November 30, 2000, 45,518,647 Shares were issued
and outstanding, excluding 2,734,083 Shares held in the Company's treasury,
(each together with a Share purchase right (the "Rights") issued pursuant to
the Stockholder Rights Plan dated as of August 17, 1994 (the "Rights Plan")
between the Company and The Bank of New York, as Rights Agent), (ii) 22 million
shares of preferred stock, par value $5.00 per share, of which, as of November
30, 2000, 410,643 shares of Series B $2 Cumulative Preferred Stock were issued
and outstanding and 150,000 shares were designated as Series A Participating
Preferred Stock and were reserved for issuance under the Rights Plan and (iii) 8
million shares of preference stock, par value $2.50 per share, no shares of
which are outstanding. All of the outstanding Shares have been validly issued
10
and are fully paid, nonassessable and free of preemptive rights. As of November
30, 2000, 5,194,720 Shares were reserved for issuance pursuant to outstanding
Company Stock Options. Between August 1, 2000 and the date hereof, no shares of
the Company's capital stock have been issued other than pursuant to Company
Stock Options already in existence on such date, and between August 1, 2000 and
the date hereof no stock options have been granted. Except as set forth above
and except for the Rights, as of November 30, 2000, there were outstanding (i)
no shares of capital stock or other voting securities of the Company, (ii) no
securities of the Company or its subsidiaries convertible into or exchangeable
for shares of capital stock or voting securities of the Company, (iii) no
options or other rights to acquire from the Company or its subsidiaries and, no
obligations of the Company or its subsidiaries to issue any capital stock,
voting securities or securities convertible into or exchangeable for capital
stock or voting securities of the Company and (iv) no equity equivalent
interests in the ownership or earnings of the Company or its subsidiaries
(collectively "Company Securities"). As of the date hereof, there are no
outstanding obligations of the Company or its subsidiaries to repurchase redeem
or otherwise acquire any Company Securities. There are no stockholder
agreements, voting trusts or other agreements or understandings to which the
Company is a party or by which it is bound relating to the voting or
registration of any shares of capital stock of the Company.
(b) All of the outstanding capital stock of the Company's subsidiaries
(other than director's qualifying shares in the case of foreign subsidiaries) is
owned by the Company, or one of its subsidiaries, directly or indirectly, free
and clear of any material Lien or any other material limitation or restriction
(including any restriction on the right to vote or sell the same except as may
be provided as a matter of law) and except for any Liens which are incurred in
the ordinary course of business. There are no securities of the Company or its
subsidiaries convertible into or exchangeable for, no options or other rights to
acquire from the Company or its subsidiaries and no other contract,
understanding, arrangement or obligation (whether or not contingent) providing
for, the issuance or sale, directly or indirectly, by the Company or any of its
subsidiaries of any capital stock or other ownership interests in or any other
securities of any subsidiary of the Company. There are no outstanding
contractual obligations of the Company or its subsidiaries to repurchase redeem
or otherwise acquire any outstanding shares of capital stock or other ownership
interests in any subsidiary of the Company. For purposes of this Agreement,
"Lien" means, with respect to any asset (including without limitation any
security), any mortgage, lien, pledge, charge, security interest or encumbrance
of any kind in respect of such asset.
(c) The Shares and the Preferred Shares constitute the only classes of
equity securities of the Company or its subsidiaries registered or required to
be registered under the Securities Exchange Act of 1934, as amended (the
"Exchange Act").
SECTION 3.3. Authority Relative to this Agreement; Recommendation.
----------------------------------------------------
(a) The Company has all necessary corporate power and authority to execute
and deliver this Agreement and to consummate the transactions contemplated
hereby. The execution and delivery of this Agreement by the Company and the
consummation by the Company of the transactions contemplated hereby have been
duly and validly authorized by the Company Board and no other corporate
proceedings on the part of the Company are necessary to authorize this Agreement
or to consummate the transactions contemplated hereby except the approval and
11
adoption of this Agreement by the holders of a majority of the outstanding
Shares and Preferred Shares, voting together as one class. This Agreement has
been duly and validly executed and delivered by the Company and, assuming due
authorization, execution and delivery by Parent and Acquisition, constitutes a
valid, legal and binding agreement of the Company enforceable, against the
Company in accordance with its terms.
(b) The Company Board has unanimously resolved to recommend that the
stockholders of the Company approve and adopt this Agreement.
SECTION 3.4. SEC Reports; Financial Statements.
---------------------------------
(a) The Company has filed all required forms, reports and documents
("Company SEC Reports") with the Securities and Exchange Commission (the "SEC")
since October 1, 1997, each of which has complied in all material respects with
all applicable requirements of the Securities Act of 1933, as amended (the
"Securities Act") and the Exchange Act, each as in effect on the dates such
forms, reports and documents were filed. None of such Company SEC Reports,
including, without limitation, any financial statements or schedules included or
incorporated by reference therein, contained when filed any untrue statement of
a material fact or omitted to state a material fact required to be stated or
incorporated by reference therein or necessary in order to make the statements
therein in light of the circumstances under which they were made not misleading.
The audited consolidated financial statements of the Company included in the
Company SEC Reports and the unaudited financial statements contained in the
Company's quarterly report on Form 10-Q for the quarter ended October 31, 2000
have been prepared in accordance with generally accepted accounting principles
applied on a consistent basis (except as may be indicated in the notes thereto),
and fairly present in all material respects the consolidated financial position
of the Company and its consolidated subsidiaries as of the dates thereof and
their consolidated results of operations and changes in financial position for
the periods then ended, except, in the case of unaudited interim financial
statements, for normal year-end audit adjustments and the fact that certain
information and notes have been condensed or omitted in accordance with the
applicable rules of the SEC.
(b) The Company has heretofore made available or promptly will make
available to Acquisition or Parent a complete and correct copy of any amendments
or modifications which are required to be filed with the SEC but have not yet
been filed with the SEC to agreements documents or other instruments which
previously had been filed by the Company with the SEC pursuant to the Exchange
Act.
SECTION 3.5. Information Supplied. None of the information supplied or to
--------------------
be supplied by the Company for inclusion or incorporation by reference in the
proxy statement relating to the meeting of the Company's stockholders to be held
in connection with the Merger (the "Proxy Statement") will, at the date the
Proxy Statement is mailed to stockholders of the Company or at the time of the
meeting of stockholders of the Company to be held in connection with the Merger,
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 are made, not misleading.
The Proxy Statement insofar as it relates to the meeting of the Company's
stockholders to vote on the Merger will comply as to form in all material
respects with the provisions of the Exchange Act and the rules and
12
regulations thereunder. None of the information supplied or to be supplied by
the Company for inclusion or incorporation by reference in the Offer Documents
or provided by the Company in the Schedule 14D-9 will, at the respective times
that the Offer Documents and the Schedule 14D-9 or any amendments or supplements
thereto are filed with the SEC and are first published or sent or given to
holders of Shares, 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.
SECTION 3.6. Consents and Approvals; No Violations. Except for filings,
-------------------------------------
permits, authorizations, consents and approvals as may be required under, and
other applicable requirements of, the Exchange Act, state securities or blue sky
laws, the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended (the
"HSR Act"), foreign antitrust laws and the filing and recordation of the
Merger Certificate as required by the DGCL, no filing with or notice to and no
permit, authorization, consent or approval of any court or tribunal, or
administrative governmental or regulatory body, agency or authority (a
"Governmental Entity") is necessary for the execution and delivery by the
Company of this Agreement or the consummation by the Company of the transactions
contemplated hereby, except where the failure to obtain such permits,
authorizations, consents or approvals or to make such filings or give such
notice would not have a Company Material Adverse Effect. Neither the execution,
delivery and performance of this Agreement by the Company nor the consummation
by the Company of the transactions contemplated hereby will (a) conflict with or
result in any breach of any provision of the respective Certificate of
Incorporation or Bylaws (or similar governing documents) of the Company or any
of its subsidiaries, (b) result in a violation or breach of or constitute (with
or without due notice or lapse of time or both) a default (or give rise to any
right of termination, amendment, cancellation or acceleration or Lien) under any
of the terms conditions or provisions of any note, bond, mortgage, indenture,
lease, license, contract, agreement or other instrument or obligation to which
the Company or any of its subsidiaries is a party or by which any of them or any
of their respective properties or assets may be bound or (c) except as set forth
in Section 3.6 of the Company Disclosure Schedule, violate any order, writ,
injunction, decree, law, statute, rule or regulation applicable to the Company
or any of its subsidiaries or any of their respective properties or assets
except, in the case of (b) or (c), for violations breaches or defaults which
would not have a Company Material Adverse Effect.
SECTION 3.7. No Default. None of the Company or its subsidiaries is in
----------
breach, default or violation (and no event has occurred which with notice or the
lapse of time or both would constitute a breach default or violation) of any
term, condition or provision of (a) its Certificate of Incorporation or Bylaws
(or similar governing documents), (b) any note, bond, mortgage, indenture,
lease, license, contract, agreement or other instrument or obligation to which
the Company or any of its subsidiaries is now a party or by which any of them or
any of their respective properties or assets may be bound or (c) any order,
writ, injunction, decree, law, statute, rule or regulation applicable to the
Company or any of its subsidiaries or any of their respective properties or
assets except, in the case of (b) or (c), for violations, breaches or defaults
that would not have a Company Material Adverse Effect.
SECTION 3.8. Absence of Changes. Since July 31, 2000, there have been no
------------------
events, changes or effects with respect to the Company or its subsidiaries that
would have a Company Material Adverse Effect.
13
SECTION 3.9. Litigation. There is no suit, claim, action, proceeding or
----------
investigation pending or, to the knowledge of the Company, threatened against
the Company or any of its subsidiaries or any of their respective properties or
assets before any Governmental Entity which would have a Company Material
Adverse Effect or would reasonably be expected to prevent or materially delay
the consummation of the transactions contemplated by this Agreement. None of
the Company or its subsidiaries is subject to any outstanding order, writ,
injunction or decree of any Governmental Entity that would have a Company
Material Adverse Effect or would reasonably be expected to prevent or materially
delay the consummation of the transactions contemplated hereby.
SECTION 3.10. Compliance with Applicable Law. The Company and its
------------------------------
subsidiaries hold all permits, licenses, variances, exemptions, orders and
approvals from all Governmental Entities necessary for the lawful conduct of
their respective businesses (the "Company Permits") except for failures to
hold such permits, licenses, variances, exemptions, orders and approvals which
would not have a Company Material Adverse Effect. The Company and its
subsidiaries are in compliance with the terms of the Company Permits except
where the failure so to comply would not have a Company Material Adverse Effect.
The businesses of the Company and its subsidiaries are not being conducted in
violation of any law, ordinance or regulation of any Governmental Entity, except
that no representation or warranty is made in this Section 3.10 with respect to
Environmental Laws (as defined in Section 3.12 below) or any action or
circumstance referred to in Section 3.16 and except for violations or possible
violations which would not have a Company Material Adverse Effect. To the
knowledge of the Company, no investigation or review by any Governmental Entity
with respect to the Company or its subsidiaries is pending or threatened nor has
any Governmental Entity indicated an intention to conduct the same, other than
such investigations or reviews as would not have a Company Material Adverse
Effect.
SECTION 3.11. Employee Benefit Plans; Labor Matters.
-------------------------------------
(a) Section 3.11(a) of the Company Disclosure Schedule lists all material
employee benefit plans (as defined in Section 3(3) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA")) and all material bonus, stock
option, stock purchase, incentive, deferred compensation, supplemental
retirement, severance and other similar fringe or employee benefit plans,
programs or arrangements maintained or contributed to by the Company or any of
its subsidiaries for the benefit of or relating to any employee of the Company,
or any of its subsidiaries, excluding plans, programs, agreements and
arrangements under which the Company has no remaining obligations, each
individual agreement under which the Company's future obligations and potential
obligations do not exceed $200,000 per year or $600,000 in the aggregate,
payroll practices, and any plans, programs, agreements and arrangements that are
required to be maintained by the Company or any of its subsidiaries under the
laws of any foreign jurisdiction (together the "Employee Plans"), other than
those referred to in Section 4(b)(4) of ERISA. The Company has made available
to Parent a copy of the documents and instruments governing each such Employee
Plan (other than those referred to in Section 4(b)(4) of ERISA). No event has
occurred and, to the knowledge of the Company, there currently exists no
condition or set of circumstances in connection with which the Company or any of
its subsidiaries would be subject to any material liability under the terms of
any Employee Plans, ERISA, the code or any other applicable law, including,
without limitation, any liability under Title IV of ERISA.
14
(b) Section 3.11(b) of the Company Disclosure Schedule sets forth a list
of (i) all employment agreements with executive officers of the Company
("Employment Agreements"); and (ii) all agreements with consultants who are
individuals obligating the Company to make annual cash payments in an amount
exceeding $200,000. The Company has made available to Parent copies or
descriptions of all such agreements.
(c) There will be no material payment, accrual of additional benefits,
acceleration of payments or vesting in any benefit under any Employee Plan or
any agreement or arrangement disclosed under this Section 3.11 solely by reason
of entering into or in connection with the transactions contemplated by this
Agreement.
(d) No Employee Plan that is a welfare benefit plan within the meaning of
Section 3(1) of ERISA (other than a plan covering only one individual employee
or former employee and his or her dependents) provides material benefits to
former employees of the Company or its ERISA Affiliates other than pursuant to
Section 4980B of the Code.
(e) There are no material controversies pending or, to the knowledge of
the Company, threatened between the Company or any of its subsidiaries and any
of their respective employees. Section 3.11(e) of the Company Disclosure
Schedule lists each collective bargaining agreement or other labor union
contract applicable to persons employed by the Company or its subsidiaries in
the United States. The Company does not have knowledge of any material
activities or proceedings of any labor union to organize any employees of the
Company or its subsidiaries. The Company has no knowledge of any material
strikes, slowdowns, work stoppages, lockouts or threats thereof by or with
respect to any employees of the Company or any of its subsidiaries.
SECTION 3.12. Environmental Laws and Regulations.
----------------------------------
(a) (i) Each of the Company and its subsidiaries is in compliance with all
applicable federal, state, local and foreign laws and regulations relating to
pollution or protection of human health or the environment (including, without
limitation, ambient air, surface water, ground water, land surface or subsurface
strata) (collectively "Environmental Laws"), except for non-compliance that
would not have a Company Material Adverse Effect, which compliance includes but
is not limited to, the possession by the Company and its subsidiaries of all
material permits and other material authorizations by Governmental Entities
required under applicable Environmental Laws and compliance with the terms and
conditions thereof; and (ii) none of the Company or its subsidiaries has
received written notice of or, to the knowledge of the Company, is the subject
of any action, cause of action, claim, investigation, demand or notice by any
person or entity alleging liability under or non-compliance with any
Environmental Law (an "Environmental Claim") that would have a Company
Material Adverse Effect.
(b) Except as disclosed in the Company SEC Reports, there are no
Environmental Claims that would have a Company Material Adverse Effect that are
pending or, to the knowledge of the Company, threatened against the Company or
its subsidiaries or, to the knowledge of the Company, against any person or
entity whose liability for any Environmental Claim the Company or any of its
subsidiaries has or may have retained or assumed either contractually or by
operation of law.
15
SECTION 3.13 Taxes.
-----
(a) Definitions. For purposes of this Agreement:
-----------
(i) the term "Income Tax" shall mean any federal, state, local
or foreign Tax (A) based upon, measured by, or calculated with respect to net
income or profits (including capital gains Taxes, alternative minimum Taxes and
Taxes on items of Tax preference), or (B) based upon, measured by, or calculated
with respect to multiple bases (including corporate franchise Taxes), if one or
more of the principal bases on which such Tax may be based, measured by, or
calculated with respect to is described in clause (A).
(ii) the term "Tax" (including "Taxes") means (A) all federal,
state, local, foreign and other net income, gross income, gross receipts, sales,
use, ad valorem, transfer, franchise, profits, license, lease, service, service
use, withholding, estimated, payroll, employment, excise, severance, stamp,
occupation, premium, property, windfall profits, customs, duties or other taxes,
fees, assessments or charges of any kind whatsoever, together with any interest
and any penalties, additions to tax or additional amounts with respect thereto,
(B) any liability for payment of amounts described in clause (A) whether as a
result of transferee liability, of being a member of an affiliated,
consolidated, combined or unitary group for any period, or otherwise through
operation of law, and (C) any liability for the payment of amounts described in
clauses (A) or (B) as a result of any tax sharing, tax indemnity or tax
allocation agreement or any other express or implied agreement to indemnify any
other person; and
(iii) the term "Tax Return" means any return, declaration,
report, statement, information statement and other document required to be filed
with respect to Taxes.
(b) The Company and its subsidiaries have timely filed (taking into
account extensions) all material Income Tax Returns they are required to have
filed. All Income Tax Returns filed by the Company and its subsidiaries are
accurate and correct in all material respects.
(c) Except as disclosed in the Company SEC Reports, the Company and its
subsidiaries have timely paid all material Income Taxes that have become due or
payable (other than Taxes being contested in good faith and for which adequate
reserves have been established) and have adequately reserved for in accordance
with generally accepted accounting principles all material Income Taxes (whether
or not shown on any Tax Return) that have accrued but are not yet due or
payable.
(d) Except as set forth in the Company SEC Reports, no claim for
assessment or collection of material Income Taxes is presently being asserted
against the Company or its subsidiaries and there is no presently pending audit
examination, refund claim, litigation, proceeding, proposed adjustment or matter
in controversy with respect to any material Income Taxes due and owing by the
Company or any of its subsidiaries.
(e) Neither the Company nor any subsidiary of the Company has filed any
waiver of the statute of limitations applicable to the assessment or collection
of any federal Income Tax which remains open.
16
(f) Neither the Company nor any subsidiary of the Company is a party to
any tax indemnity agreement, tax sharing agreement, or other agreement under
which it reasonably expects to become liable to another person as a result of
the imposition of a material Income Tax upon any person, or the assessment or
collection of such a Tax.
(g) The Company and each of its subsidiaries have complied in all material
respects with all rules and regulations relating to the withholding of federal
Income Taxes.
(h) The representations contained in subparagraphs (b) through (d) and
subparagraph (g) hereof are true and correct with respect to all Taxes other
than Income Taxes and all Tax Returns with respect to Taxes other than Income
Taxes, as applicable, except for such failures that would not have a Company
Material Adverse Effect.
(i) Neither the Company nor any of its subsidiaries is a party to any
agreement, contract, arrangement or plan that has resulted or would result,
separately or in the aggregate, in connection with this Agreement or any change
of control of the Company or any of its subsidiaries, in the payment of any
"excess parachute payments" within the meaning of Section 280G of the Code.
SECTION 3.14. Intellectual Property; Software.
-------------------------------
(a) Each of the Company and its subsidiaries owns or possesses adequate
licenses or other valid rights to use all existing United States and foreign
patents, trademarks, trade names, service marks, copyrights, trade secrets and
applications therefor owned or used by the Company and its subsidiaries (the
"Company Intellectual Property Rights"), except where the failure to own or
possess valid rights to use such Company Intellectual Property Rights would not
have a Company Material Adverse Effect.
(b) Except for any of the following which would not have a Company
Material Adverse Effect:
(i) the validity of the Company Intellectual Property Rights
and the title thereto of the Company or any subsidiary, as the case may be, is
not being questioned in any litigation to which the Company or any subsidiary is
a party, and
(ii) the conduct of the business of the Company and its
subsidiaries as now conducted does not, to the knowledge of the Company,
infringe any valid patents, trademarks, trade names, service marks or copyrights
of others. To the knowledge of the Company, the consummation of the transactions
contemplated by this Agreement will not result in the loss or impairment of any
Company Intellectual Property Rights.
SECTION 3.15. Government Contracts.
--------------------
(a) Except as disclosed in Section 3.9 or Section 3.15 of the Company
Disclosure Schedule, to the knowledge of the Company, with respect to Government
Contracts, there is, as of the date hereof, no (i) civil fraud or criminal
investigation by any Governmental Entity that would have a Company Material
Adverse Effect, (ii) suspension or debarment proceeding (or equivalent
proceeding) against the Company or any of its subsidiaries that would have a
17
Company Material Adverse Effect, (iii) request by the U.S. Government for a
contract price adjustment based on a claimed disallowance by the Defense
Contract Audit Agency or claim of defective pricing in excess of $40 million,
(iv) dispute between the Company or any of its subsidiaries and the U.S.
Government which, since August 1, 2000, has resulted in a government contracting
officer's determination and finding final decision where the amount in
controversy exceeds or is expected to exceed $40 million or (v) claim or
equitable adjustment by the Company or any of its subsidiaries against the U.S.
Government in excess of $40 million.
(b) For the purposes of this Agreement, with respect to any party,
"Government Contract" means any prime contract, subcontract, teaming agreement
or arrangement, joint venture, basic ordering agreement, letter contract,
purchase order, delivery order, Bid, change order, arrangement or other
commitment of any kind relating to the business of the Company between the
Company and (i) the U.S. Government or (ii) any prime contractor to the U.S.
Government. For the purposes of this Agreement, with respect to any party,
"Bid" means any quotation, bid or proposal by the Company or any of its
affiliates which, if accepted or awarded, would lead to a Contract with the U.S.
Government or any prime contractor to the U.S. Government, for the design,
manufacture or sale of products or the provision of services by the Company.
For the purposes of this Agreement, with respect to any party, "Contracts" means
all contracts, agreements, leases (including leases or real property), licenses,
commitments, sales and purchase orders, intercompany work transfer agreements)
with respect to work by or for another or such party's businesses) and other
instruments of any kind, whether written or oral.
SECTION 3.16. Certain Business Practices. To the knowledge of the
--------------------------
Company, none of the Company, any of its subsidiaries or any directors,
officers, agents or employees of the Company or any of its subsidiaries has (i)
used any funds for unlawful contributions, gifts, entertainment or other
unlawful expenses related to political activity, (ii) made any unlawful payment
to foreign or domestic government officials or employees or to foreign or
domestic political parties or campaigns or violated any provision of the Foreign
Corrupt Practices Act of 1977, as amended, or (iii) made any other unlawful
payment, which in any event would be material to the Company.
SECTION 3.17. Vote Required. The affirmative vote of the holders of a
-------------
majority of the outstanding Shares and Preferred Shares, voting together as one
class, is the only vote of the holders of any class or series of the Company's
capital stock necessary to approve and adopt this Agreement.
SECTION 3.18. Opinion of Financial Adviser. Xxxxxxx Xxxxx & Co. (the
----------------------------
"Company Financial Adviser") has delivered to the Company Board its written
opinion dated the date of this Agreement to the effect that as of such date the
Merger Consideration is fair to the holders of Shares from a financial point of
view.
SECTION 3.19. Brokers. No broker, finder or investment banker (other than
-------
the Company Financial Adviser, a true and correct copy of whose engagement
agreement has been provided to Acquisition or Parent) is entitled to any
brokerage, finder's or other fee or commission in connection with the
transactions contemplated by this Agreement based upon arrangements made by or
on behalf of the Company.
18
SECTION 3.20. Problems with Customers. Except as provided in Schedule
-----------------------
3.20 of the Company Disclosure Schedule, from July 31, 2000 to the date hereof:
(a) no customer of the Company or any of its subsidiaries has canceled or
otherwise terminated its relationship with the Company or any of its
subsidiaries, except cancellations and terminations that would not have a
Company Material Adverse Effect; (b) to the knowledge of the Company, no
customer of the Company or any of its subsidiaries has overtly threatened to
cancel or otherwise terminate its relationship with the Company or any of its
subsidiaries or its usage of the services of the Company or any of its
subsidiaries, except cancellations and terminations that would not have a
Company Material Adverse Effect; and (c) the Company and its subsidiaries have
no direct or indirect ownership interest that is material to the Company and its
subsidiaries taken as a whole in any customer of the Company or any of its
subsidiaries.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES
OF PARENT AND ACQUISITION
Except as publicly disclosed by Parent in the Parent SEC Reports and except
as set forth on the Disclosure Schedule (it being agreed that disclosure of any
item in such schedules shall be deemed disclosure with respect to any section of
this Agreement to which the relevance of such item is apparent) previously
delivered by Parent to the Company (the "Parent Disclosure Schedule"), Parent
and Acquisition hereby represent and warrant to the Company as follows:
SECTION 4.1. Organization.
------------
(a) Each of Parent and Acquisition is duly organized, validly existing and
in good standing under the laws of the State of Delaware and has all requisite
corporate power and authority to own, lease and operate its properties and to
carry on its businesses as now being conducted. Parent has heretofore delivered
to the Company accurate and complete copies of the Certificate of Incorporation
and Bylaws as currently in effect of Parent and Acquisition.
(b) Each of Parent and Acquisition is duly qualified or licensed and in
good standing to do business in each jurisdiction in which the property owned,
leased or operated by it or the nature of the business conducted by it makes
such qualification or licensing necessary, except in such jurisdictions where
the failure to be so duly qualified or licensed and in good standing would not
have a Parent Material Adverse Effect. The term "Parent Material Adverse
Effect" means any changes or effects that, individually or in the aggregate, are
materially adverse to the business, assets, long-term earning capacity or
financial condition of Parent and its subsidiaries, taken as whole, other than
any changes or effects arising out of (i) general economic conditions, (ii)
conditions generally affecting industries in which Parent operates, (iii) the
financial markets or (iv) the entering into or the public announcement or
disclosure of this Agreement or the transactions contemplated hereby.
SECTION 4.2. Authority Relative to this Agreement. Each of Parent and
------------------------------------
Acquisition has all necessary corporate power and authority to execute and
deliver this Agreement and to consummate the transactions contemplated hereby.
The execution and delivery of this Agreement by Parent and the consummation by
Parent of the transactions contemplated hereby
19
have been duly and validly authorized by the boards of directors of Parent and
Acquisition and by Parent as the sole stockholder of Acquisition and no other
corporate proceedings on the part of Parent or Acquisition are necessary to
authorize this Agreement or to consummate the transactions contemplated hereby.
This Agreement has been duly and validly executed and delivered by each of
Parent and Acquisition and, assuming due authorization, execution and delivery
by the Company, constitutes a valid, legal and binding agreement of each of
Parent and Acquisition enforceable against each of Parent and Acquisition in
accordance with its terms.
SECTION 4.3. SEC Reports; Financial Statements.
---------------------------------
(a) Parent has filed all required forms, reports and documents (" Parent
SEC Reports") with the SEC since December 31, 1997, each of which has complied
in all material respects with all applicable requirements of the Securities Act
and the Exchange Act, each as in effect on the dates such forms reports and
documents were filed. None of such Parent SEC Reports, including, without
limitation, any financial statements or schedules included or incorporated by
reference therein, contained when filed any untrue statement of a material fact
or omitted to state a material fact required to be stated or incorporated by
reference therein, or necessary, in order to make the statements therein in
light of the circumstances under which they were made, not misleading. The
audited consolidated financial statements of Parent included in the Parent SEC
Reports have been prepared in accordance with generally accepted accounting
principles applied on a consistent basis (except as may be indicated in the
notes thereto) and fairly present in all material respects the consolidated
financial position of Parent and its consolidated subsidiaries as of the dates
thereof and their consolidated results of operations and changes in financial
position for the periods then ended.
(b) Parent has heretofore made available or promptly will make available
to the Company a complete and correct copy of any amendments or modifications
which are required to be filed with the SEC but have not yet been filed with the
SEC to agreements documents or other instruments which previously had been filed
by Parent with the SEC pursuant to the Exchange Act.
SECTION 4.4. Information Supplied. None of the information supplied by
--------------------
Parent or Acquisition in writing for inclusion in the Proxy Statement or the
Schedule 14D-9 will, at the respective times that the Proxy Statement and the
Schedule 14D-9 or any amendments or supplements thereto are filed with the SEC
and are first published or sent or given to holders of Shares, and in the case
of the Proxy Statement, at the time that it or any amendment or supplement
thereto is mailed to the Company's stockholders, at the time of the
Stockholders' Meeting or at the Effective Time, contain any untrue statement of
a material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading.
SECTION 4.5. Consents and Approvals; No Violations. Except for filings,
-------------------------------------
permits, authorizations, consents and approvals as may be required under and
other applicable requirements of the Exchange Act, the HSR Act, foreign
antitrust laws and the filing and recordation of the Merger Certificate as
required by the DGCL, no filing with or notice to, and no permit authorization,
consent or approval of, any Governmental Entity is necessary for the execution
and delivery by Parent or Acquisition of this Agreement or the consummation by
20
Parent or Acquisition of the transactions contemplated hereby, except where the
failure to obtain such permits, authorizations, consents or approvals or to make
such filings or give such notice would not have a Parent Material Adverse
Effect. Neither the execution, delivery and performance of this Agreement by
Parent or Acquisition nor the consummation by Parent or Acquisition of the
transactions contemplated hereby will (a) conflict with or result in any breach
of any provision of the respective Certificate of Incorporation or Bylaws (or
similar governing documents) of Parent or Acquisition or any of Parent's other
subsidiaries, (b) result in a violation or breach of or constitute (with or
without due notice or lapse of time or both) a default (or give rise to any
right of termination, amendment, cancellation or acceleration or Lien) under any
of the terms conditions or provisions of any note, bond, mortgage, indenture,
lease, license, contract, agreement or other instrument or obligation to which
Parent or Acquisition or any of Parent's other subsidiaries is a party or by
which any of them or any of their respective properties or assets may be bound
or (c) violate any order, writ, injunction, decree, law, statute, rule or
regulation applicable to Parent or Acquisition or any of Parent's other
subsidiaries or any of their respective properties or assets except, in the case
of (b) or (c), for violations breaches or defaults which would not have a Parent
Material Adverse Effect.
SECTION 4.6. Adequate Funds. Parent has sufficient funds or firm
--------------
commitment letters from nationally recognized lending institutions for, and will
have at the Effective Time sufficient funds, for the payment of the aggregate
Merger Consideration and to perform its obligations with respect to the
transactions contemplated by this Agreement. Parent has provided the Company
with accurate and complete copies of the commitment letters which it has
obtained to provide funds for the transactions contemplated by this Agreement.
SECTION 4.7. No Prior Activities. Except for obligations incurred in
-------------------
connection with its incorporation or organization of the negotiation and
consummation of this Agreement and the transactions contemplated hereby,
Acquisition has neither incurred any obligation or liability nor engaged in any
business or activity of any type or kind whatsoever or entered into any
agreement or arrangement with any person.
ARTICLE 5
COVENANTS
SECTION 5.1. Conduct of Business of the Company. Except as contemplated
----------------------------------
by this Agreement or as described in Section 5.1 of the Company Disclosure
Schedule, during the period from the date hereof to the Effective Time or
earlier termination of this Agreement the Company will and will cause each of
its subsidiaries to conduct its operations in the ordinary course of business
consistent with past practice and seek to (i) preserve substantially intact its
current business organizations, (ii) keep available the services of its current
officers and employees and (iii) preserve its current relationships with
customers, suppliers and others having significant business dealings with it.
Without limiting the generality of the foregoing, except as otherwise expressly
provided in this Agreement or as described in Section 5.1 of the Company
Disclosure Schedule, prior to the Effective Time or earlier termination of this
Agreement, neither the Company nor any of its subsidiaries will, without the
prior written consent of Parent and Acquisition (which consent will not
unreasonably be withheld):
21
(a) amend its Certificate of Incorporation or Bylaws (or other similar
governing instrument);
(b) authorize for issuance, issue, sell, deliver or agree or commit to
issue sell or deliver (whether through the issuance or granting of options,
warrants, commitments, subscriptions, rights to purchase or otherwise) any
shares of any class of capital stock or any other securities (except bank loans)
or equity equivalents (including, without limitation, any stock options or stock
appreciation rights) except for (i) the issuance and sale of Shares pursuant to
options previously granted, (ii) the issuance and sale of Performance Based
Restricted Stock pursuant to rights previously granted or (iii) the issuance and
sale of securities by a subsidiary of the Company to any entity which is wholly
owned by the Company;
(c) split, combine or reclassify any shares of its capital stock, declare,
set aside or pay any dividend or other distribution (whether in cash, stock or
property or any combination thereof) in respect of its capital stock, make any
other actual, constructive or deemed distribution in respect of its capital
stock or otherwise make any payments to stockholders in their capacity as such,
or redeem or otherwise acquire any of its securities or any securities of any of
its subsidiaries, except for the payment of dividends in respect of the Series B
$2 Cumulative Preferred Stock and except for the payment of dividends or
distributions by a wholly owned subsidiary of the Company to the Company or
another wholly owned subsidiary of the Company;
(d) adopt a plan of complete or partial liquidation, dissolution, merger,
consolidation, restructuring, recapitalization or other reorganization of the
Company or any of its subsidiaries (other than the Merger);
(e) alter through merger, liquidation, reorganization, restructuring or
any other fashion the corporate structure of ownership of any subsidiary (other
than as permitted by this Section 5.1);
(f) (i) incur or assume any long-term or short-term debt or issue any debt
securities except for borrowings under existing lines of credit or in connection
with existing commercial paper programs in the ordinary course of business; (ii)
assume, guarantee, endorse or otherwise become liable or responsible (whether
directly, contingently or otherwise) for the obligations of any other person
except in the ordinary course of business consistent with past practice and
except for obligations of subsidiaries of the Company incurred in the ordinary
course of business; (iii) make any loans, advances or capital contributions to
or investments in any other person (other than to subsidiaries of the Company or
customary loans or advances to employees, in each case in the ordinary course of
business consistent with past practice) (iv) pledge or otherwise encumber shares
of capital stock of the Company or its subsidiaries except in connection with
borrowings as permitted by this Section 4.1(f); or (v) mortgage or pledge any of
its material assets, tangible or intangible, or create or suffer to exist any
material Lien thereupon (other than currently existing Liens and Tax Liens for
Taxes not yet due);
(g) except as may be contemplated by a contract or written plan now in
effect or by applicable law, enter into, adopt, amend or terminate any bonus,
profit sharing, compensation, severance, termination, stock option, stock
appreciation right, restricted stock, performance unit,
22
stock equivalent, stock purchase agreement, pension, retirement, deferred
compensation, employment, severance or other employee benefit agreement, trust,
plan, fund or other arrangement for the benefit or welfare of any director,
officer or employee in any manner or increase in any manner the compensation or
fringe benefits of any director, officer or employee or pay any benefit not
contemplated by any plan and arrangement as in effect as of the date hereof
(including, without limitation, the granting of stock appreciation rights or
performance units); provided, however, that this Section 5.1 shall not prevent
the Company or its subsidiaries from (i) entering into employment agreements or
severance agreements with new employees in the ordinary course of business and
consistent with past practice; (ii) increasing the compensation and benefits of
any employees who are not officers or directors of the Company in the ordinary
course of business consistent with past practice; or (iii) paying bonuses for
any period that ends on or before the Effective Time (including where relevant
those based upon actual performance during such period) in the ordinary course
of business consistent with past practice.
(h) other than in the ordinary course of business, acquire, sell, lease or
dispose of any assets in any single transaction or series of related
transactions having a fair market value in excess of $10,000,000 in the
aggregate (other than in connection with outsourcing agreements entered into
with customers of the Company or its subsidiaries);
(i) except as may be required as a result of a change in law or in
generally accepted accounting principles, change any of the accounting
principles or practices used by it (other than immaterial changes);
(j) revalue in any material respect any of its assets including without
limitation writing down the value of inventory or writing-off notes or accounts
receivable other than in the ordinary course of business or as required by
generally accepted accounting principles;
(k) (i) acquire (by merger, consolidation or acquisition of stock or
assets) any corporation, partnership or other business organization or division
thereof or any equity interest therein (other than in connection with
outsourcing agreements entered into with customers of the Company or its
subsidiaries); (ii) enter into any contract or agreement other than in the
ordinary course of business consistent with past practice which would be
material to the Company and its subsidiaries, taken as a whole; (iii) authorize
any new (not within the Company's existing capital expenditure budget) capital
expenditure or expenditures which individually is in excess of $10,000,000 or
capital expenditures in the aggregate are in excess of $210,000,000; provided
that none of the foregoing shall limit any capital expenditure required pursuant
to existing customer contracts or pursuant to the Company's existing capital
expenditures budget, a copy of which has been provided by the Company to Parent;
(l) make any material tax election or settle or compromise any income tax
liability material to the Company and its subsidiaries taken as a whole (in each
case, other than in the ordinary course of business consistent with past
practice);
(m) settle or compromise any pending or threatened suit, action or claim
which (i) relates to the transactions contemplated hereby or (ii) the settlement
or compromise of which would have a Company Material Adverse Effect;
23
(n) commence any material research and/or development project or terminate
any material research and/or development project that is currently ongoing, in
either case except pursuant to the terms of existing contracts or except as
contemplated by the Company's project development budget previously provided to
Parent;
(o) amend the Company Rights Agreement in any manner that would permit any
person other than Parent or its affiliates to acquire more than 15% of the
Shares, or redeem the Company Rights; or
(p) take or agree in writing or otherwise to take any of the actions
described in Sections 5.1(a) through 5.1(o).
SECTION 5.2. Conduct of Business of Parent. Except as contemplated by
-----------------------------
this Agreement, during the period from the date hereof to the Effective Time or
earlier termination of this Agreement, neither Parent nor any of its
subsidiaries, without the prior written consent of the Company (which consent
will not unreasonably be withheld), shall
(a) acquire or agree to acquire, by merging or consolidating with, or by
purchasing an equity interest in or the assets of or by any other manner, any
business or corporation, partnership or other business organization or division
thereof, or otherwise acquire or agree to acquire any assets of any other entity
(other than the purchase of assets from suppliers, clients or vendors in the
ordinary course of business and consistent with past practice) if such
transaction would prevent or materially delay the consummation of the
transactions contemplated by this Agreement;
(b) adopt or propose to adopt any amendments to its charter documents
which would have a material adverse impact on the consummation of the
transactions contemplated by this Agreement; or
(c) take or agree in writing or otherwise to take any of the actions
described in Sections 5.2(a) or 5.2(b).
SECTION 5.3. Other Potential Acquirers.
-------------------------
(a) The Company, its subsidiaries and their respective officers,
directors, employees, representatives and agents shall immediately cease any
discussions or negotiations with any parties with respect to any Third Party
Acquisition. Neither the Company nor any of its subsidiaries shall, nor shall
the Company authorize or permit any of its or their respective officers,
directors, employees, representatives or agents to, directly or indirectly,
encourage, solicit, participate in or initiate discussions or negotiations with
or provide any non-public information to any person or group (other than Parent
and Acquisition or any designees of Parent and Acquisition) concerning any Third
Party Acquisition; provided, however, that (i) nothing herein shall prevent the
Company Board from taking and disclosing to the Company's stockholders a
position contemplated by Rules 14d-9 and 14e-2 promulgated under the Exchange
Act with regard to any tender offer; (ii) if the Company receives an unsolicited
written proposal for a Third Party Acquisition from a Third Party, nothing
herein shall prevent the Company or its representatives from making such
inquiries or conducting such discussions as the Company Board, after
consultation with and based upon the advice of, legal counsel, may deem
necessary
24
to inform itself for the purpose of exercising its fiduciary duties, and (iii)
if the Company receives an unsolicited written proposal for a Third Party
Acquisition from a Third Party that the Company Board by a majority vote
determines in its good faith judgment (after receiving the advice of a financial
adviser of nationally recognized reputation) is reasonably likely to constitute
a Superior Proposal, the Company and its representatives may conduct such
additional discussions or provide such information as the Company Board shall
determine, but only if, prior to such provision of information or additional
discussion (A) such Third Party shall have entered into a confidentiality and
standstill agreement substantially in the form of that certain Confidentiality
Agreement entered into between the Company and Parent dated June 23, 2000 (and
containing additional provisions that expressly permit the Company to comply
with the provisions of this Section 5.3) and (B) the Company Board by a majority
vote determines in its good faith judgment, after consultation with and based
upon the advice of, legal counsel that it is required to do so in order to
comply with its fiduciary duties. The Company shall promptly notify the Parent
in the event it receives any proposal or inquiry concerning a Third Party
Acquisition including the terms and conditions thereof and the identity of the
party submitting such proposal; and the Company shall advise the Parent from
time to time of the status and any material developments concerning the same.
(b) Except as set forth in this Section 5.3(b), the Company Board shall
not withdraw, change or modify its recommendation of the transactions
contemplated hereby or approve or recommend, or cause the Company to enter into
any agreement with respect to, any Third Party Acquisition. Notwithstanding the
foregoing, if the Company Board by a majority vote determines in its good faith
judgment, after consultation with and based upon the advice of, legal counsel
that it is required to do so in order to comply with its fiduciary duties, the
Company Board may withdraw its recommendation of the transactions contemplated
hereby or approve or recommend a Superior Proposal, but in each case only (i)
after providing written notice to Parent (a "Notice of Superior Proposal")
advising Parent that the Company Board has received a Superior Proposal,
specifying the material terms and conditions of such Superior Proposal and
identifying the person making such Superior Proposal and (ii) if Parent does
not, within five business days of Parent's receipt of the Notice of Superior
Proposal, make an offer which the Company Board by a majority vote determines in
its good faith judgment (after receiving the advice of a financial adviser of
nationally recognized reputation) to be as favorable to the Company's
stockholders as such Superior Proposal; provided, however, the Company shall not
be entitled to enter into any agreement with respect to a Superior Proposal
(excluding a confidentiality agreement pursuant to Section 5.3(a)) unless and
until this Agreement is terminated by its terms pursuant to Section 7.1 and the
Company has paid all amounts due to Acquisition pursuant to Section 7.3. For
the purposes of this Agreement, "Third Party Acquisition" means the occurrence
of any of the following events: (i) the acquisition of the Company by merger or
otherwise by any person (which includes a "person" as such term is defined in
Section 13(d)(3) of the Exchange Act) other than Parent, Acquisition or any
affiliate thereof (a "Third Party"); (ii) the acquisition by a Third Party of
all or a major part of any of the Company's business segments, as identified in
the Company's SEC Reports or more than 20% of the total assets of the Company
and its subsidiaries taken as a whole; (iii) the acquisition by a Third Party of
20% or more of the outstanding Shares; (iv) the adoption by the Company of a
plan of liquidation or the declaration or payment of an extraordinary dividend;
(v) the repurchase by the Company or any of its subsidiaries of more than 20% of
the outstanding Shares; or (vi) the acquisition by the Company or any subsidiary
by merger, purchase of stock or assets, joint
25
venture or otherwise of a direct or indirect ownership interest or investment in
any business whose annual revenues, net income or assets is equal or greater
than 20% of the annual revenues, net income or assets of the Company. For
purposes of this Agreement a "Superior Proposal " means any bona fide proposal
to acquire directly or indirectly for consideration consisting of cash and/or
securities more than 50% of the Shares then outstanding or all or substantially
all the assets of the Company and otherwise on terms which the Company Board by
a majority vote determines in its good faith judgment (after receiving the
advice of a financial adviser of nationally recognized reputation) to be more
favorable, from a financial point of view, to the Company's stockholders than
the Merger.
SECTION 5.4. Meeting of Stockholders. The Company shall take all action
-----------------------
necessary in accordance with the DGCL and its Certificate of Incorporation and
Bylaws to duly call, give notice of, convene and hold a meeting of its
stockholders (the "Stockholders' Meeting") as promptly as practicable (provided
that Acquisition shall have purchased Shares pursuant to the Offer) to consider
and vote upon the adoption and approval of this Agreement and the transactions
contemplated hereby. At the Stockholders' Meeting, Parent, Acquisition and
their subsidiaries will vote all Shares and all Preferred Shares owned by them
in favor of approval and adoption of this Agreement. The stockholder votes
required for the adoption and approval of the transactions contemplated by this
Agreement shall be the vote required by the DGCL and the Company's Certificate
of Incorporation and Bylaws. The Company will, through its Board of Directors,
recommend to its stockholders approval of such matters as described in Section
1.2(a); provided, however, that subject to the provisions of Section 7.3, the
Company Board may withdraw, modify or amend its recommendation if (i) the
Company receives a Superior Proposal and (ii) after complying with the
provisions of Section 5.3(b) the Company Board by a majority vote determines in
its good faith judgment after consultation with and based upon the advice of
legal counsel that it is required in order to comply with its fiduciary duties
to recommend the Superior Proposal. The Company will use all reasonable efforts
(i) to obtain and furnish the information required to be included by it in the
Proxy Statement and, after consultation with Parent and Acquisition, respond
promptly to any comments made by the SEC with respect to the Proxy Statement and
any preliminary version thereof and cause the Proxy Statement to be mailed to
its stockholders at the earliest practicable time following the expiration or
termination of the Offer and (ii) to obtain the necessary approvals by its
stockholders of this Agreement.
SECTION 5.5. Access to Information.
---------------------
(a) Between the date hereof and the Effective Time, the Company will give
Parent and its authorized representatives reasonable access during normal
business hours to all employees, plants, offices, warehouses and other
facilities and to all books and records of itself and its subsidiaries, will
permit the Parent to make such inspections as the Parent may reasonably require
and will cause its officers and those of its subsidiaries to furnish the Parent
with such financial and operating data and other information with respect to the
business and properties of the Company and its subsidiaries as Parent may from
time to time reasonably request.
(b) Between the date hereof and the Effective Time, the Company shall
furnish to Parent within 25 business days after the end of each fiscal quarter
(commencing with the first fiscal quarter ending after the date hereof) an
unaudited balance sheet of the Company as of the end of the such fiscal quarter
and the related statements of earnings, stockholders' equity (deficit)
26
and cash flows for the quarter then ended, each prepared in conformity with the
accounting practices consistently applied by the Company with respect to its
quarterly financial statements.
(c) Notwithstanding the foregoing, the Company shall not be required to
provide any information which it reasonably believes it may not provide by
reason of any applicable law, rules or regulations, which constitutes
information protected by attorney/client privilege, or which it or any of its
subsidiaries is required to keep confidential by reason of contract, agreement
or understanding with third parties.
(d) Each of the parties hereto will hold and will cause its consultants
and advisers to hold in confidence all documents and information furnished to it
in connection with the transactions contemplated by this Agreement pursuant to
the terms of that certain Confidentiality Agreement entered into between the
Company and Parent dated June 23, 2000 and each of the parties shall comply with
all agreements, covenants, and restrictions contained therein.
SECTION 5.6. Additional Agreements; Reasonable Efforts.
-----------------------------------------
(a) Subject to the terms and conditions herein, Company, Parent and
Acquisition each agrees to use all reasonable efforts to take, or cause to be
taken, all reasonable actions necessary, proper or advisable to consummate and
make effective as promptly as practicable the transactions contemplated by this
Agreement and to reasonably cooperate with the other in connection with the
foregoing, including using all reasonable efforts (i) to obtain all necessary
waivers, consents and approvals from other parties to material loan agreements,
leases and other contracts, (ii) to obtain all consents, approvals and
authorizations that are required to be obtained under any federal, state, local
or foreign law or regulation, (iii) to lift or rescind any injunction or
restraining order or other order adversely affecting the ability of the parties
hereto to consummate the transactions contemplated hereby, (iv) to effect all
necessary registrations and filings including, but not limited to, filings and
submissions of information requested or required by any domestic or foreign
government or governmental or multinational authority, including, without
limitation, the Antitrust Division of the United States Department of Justice,
the Federal Trade Commission, any State Attorney General, or the European
Commission ("Governmental Antitrust Authority"), and (v) to fulfill all
conditions to this Agreement. Company, Parent and Acquisition further covenant
and agree, with respect to a threatened or pending preliminary or permanent
injunction or other order, decree or ruling or statute, rule, regulation or
executive order that would adversely affect the ability of the parties hereto to
consummate the transactions contemplated hereby, to use all reasonable efforts
to prevent the entry, enactment or promulgation thereof, as the case may be.
(b) In furtherance and not in limitation of the foregoing, the Company,
Parent and Acquisition shall use their respective best efforts to resolve such
objections, if any, as may be asserted with respect to the transactions
contemplated hereby under any antitrust, competition or trade regulatory laws of
any domestic or foreign government or governmental authority or any
multinational authority, or any regulations issued thereunder ("Antitrust
Laws"). Without limiting the generality of the foregoing, the Company, Parent
and Acquisition shall (i) use their respective best efforts to avoid the entry
of, or to have vacated or terminated, any decree, order, or judgment that would
restrain, prevent, or unreasonably delay the consummation of the transactions
contemplated hereby, including, without limitation, defending through litigation
on
27
the merits and through any available appeals any claim asserted in any court
by any party, and (ii) take any and all steps necessary to avoid (or eliminate)
any impediment (including the institution of proceedings) under any Antitrust
Laws that may be asserted by any Governmental Antitrust Authority with respect
to the transactions contemplated hereby so as to enable the consummation of such
transactions to occur reasonably expeditiously. The steps described in clause
(ii) of the preceding sentence shall include, without limitation, proposing,
negotiating, committing to and effecting (by consent decree, hold separate order
or otherwise) the sale, divestiture or disposition of such assets or businesses
of Parent or its subsidiaries, the Company or its subsidiaries -- or otherwise
taking or committing to take any action that limits its freedom of action with
respect to any of the businesses, product lines or assets of Parent or its
affiliates, the Company or its affiliates -- as may be required in order to
avoid the entry of, or to effect the dissolution of, any injunction, temporary
restraining order, or other order in any suit or proceeding, which would
otherwise have the effect of preventing or unreasonably delaying the
consummation of the transactions contemplated hereby. Notwithstanding anything
to the contrary contained in this Agreement, neither Parent nor Acquisition
shall be required to take any action pursuant to Sections 5.6(a) or (b) if the
taking of such action would have a material adverse effect on the business,
assets, long-term earning capacity or financial condition of Parent and the
Company (and their subsidiaries), taken as a whole.
(c) The Company, Parent and Acquisition shall keep the other party
apprised of the status of matters relating to the completion of the transactions
contemplated hereby and shall reasonably cooperate in connection with obtaining
the requisite approvals, consents or orders of any Governmental Antitrust
Authority, including, without limitation: (i) cooperating with the other party
in connection with filings under the HSR Act or any other Antitrust Laws,
including, with respect to the party making a filing, (A) providing copies of
all such documents to the non-filing party and its advisers prior to filing
(other than documents containing confidential business information that shall be
shared only with outside counsel to the non-filing party), and (B) if requested,
to accept all reasonable additions, deletions or changes suggested in connection
with any such filing; (ii) furnishing to each other all information required for
any application or other filing to be made pursuant to the HSR Act or any other
Antitrust Laws in connection with the transactions contemplated by this
Agreement; (iii) promptly notifying the other of, and if in writing furnishing
the other with copies of, any communications from or with any Governmental
Antitrust Authority with respect to the transactions contemplated by this
Agreement; (iv) permitting the other party to review in advance and considering
in good faith the views of one another in connection with any proposed
communication with any Governmental Antitrust Authority in connection with
proceedings under or relating to the HSR Act or any other Antitrust Laws; (v)
not agreeing to participate in any meeting or discussion with any Governmental
Antitrust Authority in connection with proceedings under or relating to the HSR
Act or any other Antitrust Laws unless it consults with the other party in
advance, and, to the extent permitted by such Governmental Antitrust Authority,
gives the other party the opportunity to attend and participate thereat; and
(vi) consulting and cooperating with one another in connection with any
analyses, appearances, presentations, memoranda, briefs, arguments, opinions and
proposals made or submitted by or on behalf of any party hereto in connection
with proceedings under or relating to the HSR Act or any other Antitrust Laws.
If either party or any affiliate thereof receives a request for additional
information or documentary material from any such Governmental Antitrust
Authority with respect to the transactions contemplated hereby, then such party
will endeavor in good faith to make, or cause to be made, as soon as practicable
and
28
after consultation with the other party, an appropriate response in compliance
with such request. Parent and Acquisition will advise the Company promptly in
respect of any understandings, undertakings or agreements (oral or written)
which Parent and Acquisition propose to make or enter into with any Governmental
Antitrust Authority in connection with the transactions contemplated hereby.
SECTION 5.7. Indemnification.
---------------
(a) After the Effective Time, Parent and the Surviving Corporation shall
jointly and severally indemnify and hold harmless (and shall also advance
expenses as incurred to the fullest extent permitted under applicable law to)
each person who is now or has been prior to the date hereof or who becomes prior
to the Effective Time an officer or director of the Company or any of the
Company's subsidiaries (the "Indemnified Persons") against (i) all losses,
claims, damages, costs, expenses (including, without limitation, counsel fees
and expenses), settlement payments or liabilities arising out of or in
connection with any claim, demand, action, suit, proceeding or investigation
based in whole or in part on or arising in whole or in part out of the fact that
such person is or was an officer or director of the Company or any of its
subsidiaries whether or not pertaining to any matter existing or occurring at or
prior to the Effective Time and whether or not asserted or claimed prior to or
at or after the Effective Time ("Indemnified Liabilities") and (ii) all
Indemnified Liabilities based in whole or in part on or arising in whole or in
part out of or pertaining to this Agreement or the transactions contemplated
hereby, in each case to the fullest extent required or permitted under
applicable law or under the Surviving Corporation's Certificate of Incorporation
or Bylaws, it being agreed that the provisions thereof relating to
indemnification and exoneration from liability shall be at least as favorable to
the Indemnified Persons as the current provisions of the Company's Certificate
of Incorporation and Bylaws. The parties hereto intend, to the extent not
prohibited by applicable law, that the indemnification provided for in this
Section 5.7 shall apply without limitation to negligent acts or omissions by an
Indemnified Person. Each Indemnified Person is intended to be a third party
beneficiary of this Section 5.7 and may specifically enforce its terms. This
Section 5.7 shall not limit or otherwise adversely affect any rights any
Indemnified Person may have under any agreement with the Company or under the
Company's Certificate of Incorporation or Bylaws.
(b) For six years after the Effective Time, the Surviving Corporation
shall provide directors' and officers' liability insurance in respect of acts or
omissions occurring prior to the Effective Time covering each such Indemnified
Person covered as of the date hereof or hereafter by the Company's directors'
and officers' liability insurance policy on terms with respect to coverage and
amounts no less favorable than those of such policy in effect on the date
hereof; provided, that if the aggregate annual premiums for such insurance at
any time during such period shall exceed 300% of the per annum rate of premium
paid by the Company as of the date hereof for such insurance, then the Surviving
Corporation shall provide only such coverage as shall then be available at an
annual premium equal to 300% of such current rate.
SECTION 5.8. Public Announcements. Parent, Acquisition and the Company,
--------------------
as the case may be, will consult with one another before issuing any press
release or otherwise making any public statements with respect to the
transactions contemplated by this Agreement, including, without limitation, the
Merger, and shall not issue any such press release or make any
29
such public statement prior to such consultation except as may be required by
applicable law or by obligations pursuant to any listing agreement with the
NYSE.
SECTION 5.9. Employee Matters.
----------------
(a) From and after the Effective Time, Parent shall assume and honor, and
shall cause the Company to honor, all Employee Plans and all Employment
Agreements in accordance with their terms as in effect immediately before the
Effective Time, subject to any amendment or termination thereof that may be
permitted by such terms. It is acknowledged and agreed that the consummation of
the Offer will constitute a "change of control" for purposes of those Employee
Plans and Employment Agreements containing "change of control" provisions.
(b) For a period of not less than two years following the Effective Time,
Parent shall provide, or shall cause to be provided, to current and former
employees of the Company and its subsidiaries (the "Company Employees")
compensation and employee benefits that are, in the aggregate, not less
favorable than those provided to Company Employees immediately before the
Effective Time. The foregoing shall not be construed to prevent (i) the
amendment or termination of any particular Employee Plan or Employment Agreement
to the extent permitted by, and in accordance with, its terms as in effect
immediately before the Effective Time, or (ii) the termination of employment or
the reduction of, or other change in, the compensation or employee benefits of
any individual Company Employee.
(c) For all purposes under the employee benefit plans of Parent and its
subsidiaries providing benefits to any Company Employees after the Effective
Time (the "New Plans"), each Company Employee shall be credited with all years
of service for which such Company Employee was credited before the Effective
Time under any similar Company Employee Plans, except to the extent such credit
would result in a duplication of benefits. In addition, and without limiting
the generality of the foregoing: (i) each Company Employee shall be immediately
eligible to participate, without any waiting time, in any and all New Plans to
the extent coverage under such New Plan replaces coverage under a comparable
Company Employee Plan in which such Company Employee participated immediately
before the Effective Time (such plans, collectively, the "Old Plans"); and (ii)
for purposes of each New Plan providing medical, dental, pharmaceutical and/or
vision benefits to any Company Employee, Parent shall cause all pre-existing
condition exclusions and actively-at-work requirements of such New Plan to be
waived for such employee and his or her covered dependents, and Parent shall
cause any eligible expenses incurred by such employee and his or her covered
dependents during the portion of the plan year of the Old Plan ending on the
date such employee's participation in the corresponding New Plan begins to be
taken into account under such New Plan for purposes of satisfying all
deductible, coinsurance and maximum out-of-pocket requirements applicable to
such employee and his or her covered dependents for the applicable plan year as
if such amounts had been paid in accordance with such New Plan.
(d) Without limiting the generality of the foregoing, from and after the
Effective Time, Parent shall assume and honor, and shall cause the Surviving
Corporation to honor, the obligations of the Company to provide lifetime
benefits under the Company's Supplemental Medical Insurance Plan to the
individuals listed on Schedule 5.9(d). In addition, Parent agrees not to
demand, and to cause the Surviving Corporation not to demand, repayment of the
loans
30
currently outstanding under the Company's Incentive Loan Program before December
31, 2001. Finally, Parent shall continue, or shall cause the Company to
continue, the executive life insurance policies listed in Section 5.9(d) of the
Company Disclosure Schedule in effect for the remaining lifetime of the retired
executives covered thereby, on the terms and conditions now in effect.
(e) On or before January 31, 2001, Company shall cause Parent to be
provided with:
(i) except to the extent already listed on Schedule 3.11(a) of the
Company Disclosure Schedule a list of all employee benefit plans (as defined in
Section(3) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA")) and all bonus, stock option, stock purchase, incentive, deferred
compensation, supplemental retirement, severance and other similar fringe or
employee benefit plans, programs or arrangements maintained or contributed to by
the Company or any of its subsidiaries for the benefit of or relating to any
employee of the Company, or any of its subsidiaries, excluding plans, programs,
agreements and arrangements under which the Company has no remaining
obligations, payroll practices, and any plans, programs, agreements and
arrangements that are required to be maintained by the Company or any of its
subsidiaries under the laws of any foreign jurisdiction;
(ii) a copy of the documents and instruments governing each such
plan and the most recent Form 5500 filed with the Internal Revenue Service
except to the extent already provided;
(iii) except to the extent already listed in Schedule 3.11(b) of the
Company Disclosure Schedule, (A) all employment agreements with officers of the
Company; and (B) all agreements with consultants who are individuals obligating
the Company to make annual cash payments in an amount exceeding $30,000. The
Company shall make available to Parent copies (or descriptions in detail
reasonably satisfactory to Parent) of all such agreements, plans, programs and
other arrangements; and
(iv) except to the extent already listed in Section 3.11(d) of the
Company Disclosure Schedule, a list of any Employee Plan that is a welfare plan
within the meaning of Section 3(1) of ERISA providing benefits to former
employees of the Company or its ERISA Affiliates other than pursuant to Section
4980B of the Code.
ARTICLE 6
CONDITIONS TO CONSUMMATION OF THE MERGER
SECTION 6.1. Conditions to Each Party's Obligations to Effect the Merger.
-----------------------------------------------------------
The respective obligations of each party hereto to effect the Merger are subject
to the satisfaction at or prior to the Effective Time of the following
conditions:
(a) this Agreement shall have been approved and adopted, if required, by
the requisite vote of the stockholders of the Company;
(b) no statute, rule, regulation, executive, order, decree, ruling or
injunction shall have been enacted, entered, promulgated or enforced by any
United States court or United States
31
or European Union Governmental Entity which prohibits, restrains or enjoins the
consummation of the Merger;
(c) any waiting period applicable to the Merger under the HSR Act shall
have terminated or expired and to the extent required, the Commission of the
European Union shall have approved the Merger under Regulation (EEC) No. 4064/89
of the Council of the European Union, or such approval shall have been deemed to
have been granted; and
(d) Acquisition shall have purchased Shares pursuant to the Offer.
ARTICLE 7
TERMINATION; AMENDMENT; WAIVER
SECTION 7.1. Termination. This Agreement may be terminated and the Merger
-----------
may be abandoned at any time prior to the purchase of Shares pursuant to the
Offer:
(a) by mutual written consent of Parent, Acquisition and the Company;
(b) by Parent and Acquisition or the Company if (i) any court of competent
jurisdiction in the United States or other United States or European Union
Governmental Entity shall have issued a final order, decree or ruling or taken
any other final action restraining, enjoining or otherwise prohibiting the Offer
or the Merger and such order, decree, ruling or other action is or shall have
become final and nonappealable or (ii) the purchase of the Shares pursuant to
the Offer has not been consummated by September 15, 2001; provided that no party
may terminate this Agreement pursuant to this clause (ii) if such party's
failure to fulfill any of its obligations under this Agreement shall have been
the reason that the purchase of Shares pursuant to the Offer shall not have
occurred on or before said date;
(c) by the Company if (i) there shall have been a breach of any
representation or warranty on the part of Parent or Acquisition set forth in
this Agreement or if any representation or warranty of Parent or Acquisition
shall have become untrue or (ii) there shall have been a breach by Parent or
Acquisition of any of their respective covenants or agreements hereunder, where
such breaches under clauses (i) or (ii) would have a Parent Material Adverse
Effect or materially adversely affecting (or materially delaying) the
consummation of the Offer or the Merger, and Parent or Acquisition, as the case
may be, has not cured such breach within twenty business days after notice by
the Company thereof; provided that the Company has not breached any of its
obligations hereunder; or
(d) by Parent and Acquisition if (i) there shall have been a breach of any
representation or warranty on the part of the Company set forth in this
Agreement or if any representation or warranty of the Company shall have become
untrue in either case such that the condition set forth in paragraph (e) of
Annex A would be incapable of being satisfied by September 15, 2001, (ii) there
shall have been a breach or breaches by the Company of its covenants or
agreements hereunder that would have a Company Material Adverse Effect or would
materially adversely affect (or materially delay) the consummation of the Offer
or the Merger, and the Company has not cured such breach within twenty business
days after notice by Parent or Acquisition thereof provided that neither Parent
nor Acquisition has breached any of
32
their respective obligations hereunder, (iii) the Company Board shall have
entered into, or recommended to the Company's stockholders, a Superior Proposal,
(iv) the Company Board shall have withdrawn, modified or changed its approval or
recommendation of this Agreement or the Offer or the Merger or shall have
adopted any resolution to effect any of the foregoing or (v) a Third Party
Acquisition shall have occurred after the date hereof, provided that for
purposes of Article 7, the Third Party Acquisition described in clause (iii) of
the definition of such term shall be deemed to occur only upon the acquisition
by a Third Party of 50% or more of the outstanding Shares.
(e) by the Company if the Company receives a Superior Proposal and
resolves to accept such Superior Proposal, but only if (i) the Company has acted
in accordance with, and has otherwise complied with the terms of, Section 5.3
hereof, including the notice provisions therein, and (ii) the Company has paid
all amounts due to Acquisition pursuant to Section 7.3.
SECTION 7.2. Effect of Termination. In the event of the termination and
---------------------
abandonment of this Agreement pursuant to Section 7.1, this Agreement shall
forthwith become void and have no effect without any liability on the part of
any party hereto or its affiliates, directors, officers or stockholders other
than the provisions of this Section 7.2 and Sections 5.5(d) and 7.3 hereof.
Nothing contained in this Section 7.2 shall relieve any party from liability for
any breach of its covenants, agreements or obligations set forth in this
Agreement.
SECTION 7.3. Fees and Expenses.
-----------------
(a) In the event that this Agreement shall be terminated pursuant to:
(i) Sections 7.1(d)(iii), (iv), (v) or 7.1(e);
(ii) Section 7.1(d)(ii) and within twelve months thereafter the
Company enters into an agreement with respect to a Third Party Acquisition or a
Third Party Acquisition occurs involving any party (or any affiliate thereof)
(x) with whom the Company (or its agents) had negotiations with a view to a
Third Party Acquisition, (y) to whom the Company (or its agents) furnished
information with a view to a Third Party Acquisition or (z) who had submitted a
proposal for a Third Party Acquisition, in the case of each of clauses (x), (y)
and (z), after the date hereof and prior to such termination; or
(iii) Section 7.1(b)(ii) at a time when (i) the Minimum
Condition is not satisfied, (ii) there shall be outstanding a publicly announced
offer by a Third Party to consummate a Third Party Acquisition, and (iii) no
other condition to the Offer is unsatisfied, and within twelve months thereafter
the Company enters into an agreement with respect to a Third Party Acquisition
or a Third Party Acquisition occurs, in either case involving the Third Party
referred to above;
Parent and Acquisition would suffer direct and substantial damages, which
damages cannot be determined with reasonable certainty. To compensate Parent
and Acquisition for such damages the Company shall pay to Parent the amount of
$110,000,000 as liquidated damages within three business days following (x) a
termination referred to in Section 7.3(a)(i) (except as provided in Section
7.1(e), which payment shall be made simultaneously with such termination), or
(y) the entering into of the agreement for a Third Party Acquisition or the
occurrence of the Third Party
33
Acquisition which triggers the obligation to make the payment pursuant to
Section 7.3(a)(ii) or (iii). In no event shall the Company be obligated to make
more than one payment referred to in this Section 7.3(a). It is specifically
agreed that the amount to be paid pursuant to this Section 7.3(a) represents
liquidated damages and not a penalty.
(b) Except as specifically provided in this Section 7.3, each party shall
bear its own expenses in connection with this Agreement and the transactions
contemplated hereby.
SECTION 7.4. Amendment. This Agreement may be amended by action taken by
---------
the Company, Parent and Acquisition at any time before or after approval of the
Merger by the stockholders of the Company but, after any such approval, no
amendment shall be made which requires the approval of such stockholders under
applicable law without such approval. This Agreement (including the Company
Disclosure Schedule) may be amended only by an instrument in writing signed on
behalf of the parties hereto.
SECTION 7.5. Extension; Waiver. At any time prior to the Effective Time,
-----------------
each party hereto may (i) extend the time for the performance of any of the
obligations or other acts of the other party, (ii) waive any inaccuracies in the
representations and warranties of the other party contained herein or in any
document certificate or writing delivered pursuant hereto or (iii) waive
compliance by the other party with any of the agreements or conditions contained
herein. Any agreement on the part of any party hereto to any such extension or
waiver shall be valid only if set forth in an instrument, in writing, signed on
behalf of such party. The failure of any party hereto to assert any of its
rights hereunder shall not constitute a waiver of such rights.
ARTICLE 8
MISCELLANEOUS
SECTION 8.1. Nonsurvival of Representations and Warranties. The
---------------------------------------------
representations and warranties made herein shall not survive beyond the
Effective Time or a termination of this Agreement. This Section 8.1 shall not
limit any covenant or agreement of the parties hereto which by its terms
requires performance after the Effective Time.
SECTION 8.2. Entire Agreement; Assignment. (a) This Agreement (including
----------------------------
the Company Disclosure Schedule) and the Confidentiality Agreement referred to
in Section 5.5(b) constitute the entire agreement between the parties hereto
with respect to the subject matter hereof and supersede all other prior and
contemporaneous agreements and understandings both written and oral between the
parties with respect to the subject matter hereof and (b) this Agreement shall
not be assigned by operation of law or otherwise; provided, however, that
Acquisition may assign any or all of its rights and obligations under this
Agreement to any subsidiary of Parent, but no such assignment shall relieve
Acquisition of its obligations hereunder if such assignee does not perform such
obligations.
SECTION 8.3. Validity. If any provision of this Agreement or the
--------
application thereof to any person or circumstance is held invalid or
unenforceable the remainder of this Agreement and the application of such
provision to other persons or circumstances shall not be affected thereby and to
such end the provisions of this Agreement are agreed to be severable.
34
SECTION 8.4. Notices. All notices, requests, claims, demands and other
-------
communications hereunder shall be in writing and shall be given (and shall be
deemed to have been duly given upon receipt) by delivery in person, by facsimile
or by registered or certified mail (postage prepaid, return receipt requested)
to each other party as follows:
if to Parent or Acquisition: NORTHROP GRUMMAN CORPORATION
0000 Xxxxxxx Xxxx Xxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Telecopier: (000) 000-0000
Attention: W. Xxxxx Xxxxx
with a copy to: Xxxxxx Xxxx & Xxxxxxxx LLP
000 Xxxxx Xxxxx Xxxxxx
Xxx Xxxxxxx XX 00000
Telecopier: (000) 000-0000
Attention: Xxxxxx X. Xxxxx, Esq.
if to the Company to: XXXXXX INDUSTRIES, INC.
00000 Xxxxxxx Xxxxxxxxx
Xxxxxxxx Xxxxx, Xxxxxxxxxx 00000
Telecopier: (000) 000-0000
Attention: Xxxx X. Xxxxxxx
with a copy to: Wachtell, Lipton, Xxxxx & Xxxx
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopier: (000) 000-0000
Attention: Xxxxxx X. Xxxx, Esq.
or to such other address or facsimile as the person to whom notice is given may
hereinafter furnish to the others in writing in the manner set forth above.
SECTION 8.5. Governing Law. This Agreement shall be governed by and
-------------
construed in accordance with the laws of the State of Delaware without regard to
the principles of conflicts of law thereof.
SECTION 8.6. Descriptive Headings. The descriptive headings herein are
--------------------
inserted for convenience of reference only and are not intended to be part of or
to affect the meaning or interpretation of this Agreement.
SECTION 8.7. Parties in Interest. This Agreement shall be binding upon
-------------------
and inure solely to the benefit of each party hereto and its successors and
permitted assigns and, except as provided in Sections 5.7, 5.9(d) and 8.2,
nothing in this Agreement express or implied is intended to or shall confer upon
any other person any rights, benefits or remedies of any nature whatsoever under
or by reason of this Agreement.
35
SECTION 8.8. Certain Definitions. For the purposes of this Agreement the
-------------------
term:
(a) "affiliate" means a person that, directly or indirectly, through one
or more intermediaries controls, is controlled by or is under common control
with the first-mentioned person, provided, that Unitrin, Inc. and its
subsidiaries shall not be considered affiliates of the Company for any purpose
under this Agreement;
(b) "business day" means any day other than a day on which the New York
Stock Exchange is closed;
(c) "capital stock" means common stock, preferred stock, partnership
interests, limited liability company interests or other ownership interests
entitling the holder thereof to vote with respect to matters involving the
issuer thereof;
(d) "Code" means the Internal Revenue Code of 1986, as amended;
(e) "knowledge" or "known" means, with respect to any matter in question,
the actual knowledge of an executive officer of the Company or Parent, as the
case may be;
(f) "person" means an individual, corporation, partnership, limited
liability company, association, trust, unincorporated organization or other
legal entity; and
(g) "subsidiary" or "subsidiaries" of the Company, Parent, the Surviving
Corporation or any other person means any corporation, partnership, limited
liability company, association, trust, unincorporated association or other legal
entity of which the Company, Parent, the Surviving Corporation or any such other
person, as the case may be, (either alone or through or together with any other
subsidiary) owns, directly or indirectly, 50% or more of the capital stock the
holders of which are generally entitled to vote for the election of the board of
directors or other governing body of such corporation or other legal entity.
SECTION 8.9. Personal Liability. This Agreement shall not create or be
------------------
deemed to create or permit any personal liability or obligation on the part of
any direct or indirect stockholder of the Company or Parent or any officer,
director, employee, agent, representative or investor of any party hereto.
SECTION 8.10. Counterparts. This Agreement may be executed in one or more
------------
counterparts, each of which shall be deemed to be an original but all of which
shall constitute one and the same agreement.
36
IN WITNESS WHEREOF, each of the parties has caused this Agreement and Plan
of Merger to be duly executed on its behalf as of the day and year first above
written.
NORTHROP GRUMMAN CORPORATION
By:________________________________
Name:______________________________
Title:_____________________________
XXXXXX INDUSTRIES, INC.
By:________________________________
Name:______________________________
Title:_____________________________
LII ACQUISITION CORP.
By:________________________________
Name:______________________________
Title:_____________________________
37
ANNEX A
CONDITIONS OF THE OFFER
THE CAPITALIZED TERMS USED HEREIN HAVE THE MEANINGS SET FORTH IN THE AGREEMENT
AND PLAN OF MERGER TO WHICH THIS ANNEX A IS ATTACHED
Notwithstanding any other provisions of the Offer (subject to the terms and
conditions of the Merger Agreement and any applicable rules and regulations of
the SEC, including Rules 14e-1(c) under the Exchange Act), Acquisition shall not
be required to accept for payment or pay for, and may delay the acceptance for
payment of, any Shares, if (i) any applicable waiting period under the HSR Act
or Regulation (EEC) No. 4064/89 of the Council of the European Union shall not
have expired or been terminated prior to the expiration of the Offer, (ii) the
Minimum Condition is not satisfied or (iii) at any time on or after the date
hereof and prior to the acceptance for payment of Shares, any of the following
conditions shall have occurred and continued to exist:
(a) there shall have been any statute, rule, regulation, judgment, order
or injunction enacted or entered and which shall remain in effect by any state
or U.S. government or governmental authority or by any state, U.S. or European
Union court or any agency or authority of the European Union, other than the
routine application to the Offer, the Merger or other subsequent business
combination of waiting periods under the HSR Act or Regulation (EEC) No. 4064/89
of the Council of the European Union, that has the effect of (1) making the
acceptance for payment of, or the payment for, some or all of the Shares illegal
or otherwise prohibiting consummation of the Offer, (2) imposing limitations on
the ability of Acquisition or Parent to acquire or hold or to exercise
effectively all rights of ownership of the Shares, or effectively to control the
business, assets or operations of Parent, the Company and their subsidiaries, of
such magnitude as would have a material adverse effect on the business, assets,
long-term earning capacity or financial condition of Parent, the Company and
their subsidiaries, taken as a whole.
(b) a Company Material Adverse Effect shall have occurred and continued to
exist; or
(c) there shall have occurred and continued to exist (i) any general
suspension of trading in, or limitation on prices for, securities on the New
York Stock Exchange (excluding any coordinated trading halt triggered solely as
a result of a specified decrease in a market index and suspensions or
limitations resulting from physical damage to or interference with such exchange
not related to market conditions), (ii) the declaration of a banking moratorium
or any suspension of payments in respect of banks in the United States (whether
or not mandatory), (iii) the commencement of a war, armed hostilities or other
international or national calamity directly or indirectly involving the United
States and having a Company Material Adverse Effect, (iv) any material
limitation (whether or not mandatory) by any U.S. governmental authority or
agency on the extension of credit by banks or other financial institutions, (v)
from the date of the Merger Agreement through the date of termination or
expiration of the Offer, a decline of at least 27.5% in the Standard & Poor's
500 Index or (vi) in the case of any of the situations described in clauses (i)
through (v) inclusive, existing at the date of the commencement of the Offer, a
material acceleration or worsening thereof; or
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(d) the Merger Agreement shall have been terminated in accordance with its
terms; or
(e) (i) the representations of the Company contained in the Merger
Agreement shall not be true and correct at and as of consummation of the Offer
with the same effect as if made at and as of such date or if such
representations speak as of an earlier date, as of such earlier date, except, in
either such case to the extent that the breach thereof would not have a Company
Material Adverse Effect, or (ii) the Company shall have failed to comply with
its covenants and agreements contained in the Merger Agreement in all material
respects;
(f) prior to the purchase of Shares pursuant to the Offer, the Company
Board shall have withdrawn or modified (including by amendment of the Schedule
14D-9) in a manner adverse to Acquisition its approval or recommendation of the
Offer, this Agreement or the Merger or shall have recommended another offer, or
shall have adopted any resolution to effect any of the foregoing.
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