EXHIBIT (2)(b)
CONFORMED COPY
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AGREEMENT AND PLAN OF MERGER
By and Among
GEC Incorporated
Xxxxxx Acquisition Corp.
and
Reltec Corporation
Dated as of March 1, 1999
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TABLE OF CONTENTS
Page
ARTICLE I
The Offer
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SECTION 1.1. The Offer................................... 2
SECTION 1.2. Company Action.............................. 4
SECTION 1.3. Boards of Directors and Committees;......... 6
Section 14(f)
ARTICLE II
The Merger
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SECTION 2.1. The Merger.................................. 8
SECTION 2.2. Effective Time; Closing..................... 8
SECTION 2.3. Effects of the Merger; Subsequent........... 9
Actions
SECTION 2.4. Certificate of Incorporation and............ 9
By-Laws
SECTION 2.5. Directors................................... 10
SECTION 2.6. Officers.................................... 10
SECTION 2.7. Conversion of Shares........................ 10
SECTION 2.8. Employee Stock Options...................... 10
SECTION 2.9. Stockholders' Meeting....................... 12
ARTICLE III
Dissenting Shares; Exchange of Shares
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SECTION 3.1. Dissenting Shares........................... 13
SECTION 3.2. Exchange of Certificates.................... 14
ARTICLE IV
Representations and Warranties of the Company
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SECTION 4.1. Organization and Qualification;............. 16
Subsidiaries
SECTION 4.2. Capitalization of the Company and........... 17
its Subsidiaries
SECTION 4.3. Authority Relative to this Agreement........ 18
SECTION 4.4. Non-Contravention; Required Filings......... 20
and Consents
SECTION 4.5. Reports..................................... 21
SECTION 4.6. Absence of Certain Changes;................. 23
Derivatives
SECTION 4.7. Schedule 14D-9; Offer Documents;............ 24
Proxy Statement
SECTION 4.8. Finder's Fee................................ 25
SECTION 4.9. Absence of Litigation....................... 25
SECTION 4.10. Taxes....................................... 26
SECTION 4.11. Employee Benefits........................... 28
SECTION 4.12. Compliance; Permits......................... 31
SECTION 4.13. Environmental Matters....................... 32
SECTION 4.14. Intellectual Property....................... 35
SECTION 4.15. Significant Agreements...................... 39
SECTION 4.16. Insurance................................... 40
SECTION 4.17. Labor Matters............................... 40
SECTION 4.18. Year 2000................................... 40
ARTICLE V
Representations and Warranties of Parent.and
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Acquisition Sub
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SECTION 5.1. Organization................................ 41
SECTION 5.2. Authority Relative to this Agreement........ 41
SECTION 5.3. Non-Contravention; Required Filings......... 42
and Consents
SECTION 5.4. Offer Documents; Schedule 14D-9;............ 43
Proxy Statement
SECTION 5.5. No Prior Activities......................... 44
SECTION 5.6. Finder's Fee................................ 44
SECTION 5.7. Financing................................... 44
SECTION 5.8. Parent Not an Interested Stockholder........ 44
ARTICLE VI
Covenants
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SECTION 6.1. Conduct of Business of the Company.......... 45
SECTION 6.2. Proxy Statements............................ 48
SECTION 6.3. Access to Information; Confidentiality...... 48
Agreement
SECTION 6.4. Reasonable Best Efforts..................... 49
SECTION 6.5. Public Announcements........................ 50
SECTION 6.6. Indemnification; Insurance.................. 50
SECTION 6.7. Notification of Certain Matters............. 51
SECTION 6.8. Employee Plans.............................. 52
SECTION 6.9. No Solicitation............................. 53
SECTION 6.10. Agreements With Sellers (or their........... 54
affiliates)
ii
SECTION 6.11. Employee Matters.......................... 55
SECTION 6.12. Acquisition Sub........................... 55
SECTION 6.13. FIRPTA Affidavit.......................... 55
SECTION 6.14. Third Party Standstill Agreements;........ 55
Tortious Interference
ARTICLE VII
Conditions to Consummation of the Merger
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SECTION 7.1. Conditions to the Company's, Parent's....... 56
and Acquisition Sub's Obligation
to Effect the Merger
ARTICLE VIII
Termination; Amendment; Waiver
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SECTION 8.1. Termination................................. 57
SECTION 8.2. Effect of Termination....................... 58
SECTION 8.3. Fees and Expenses........................... 58
SECTION 8.4. Amendment................................... 58
SECTION 8.5. Extension; Waiver........................... 59
ARTICLE IX
Miscellaneous
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SECTION 9.1. Non-Survival of Representations and......... 59
Warranties
SECTION 9.2. Entire Agreement; Assignment................ 60
SECTION 9.3. Notices..................................... 60
SECTION 9.4. Governing Law............................... 62
SECTION 9.5. Parties in Interest......................... 62
SECTION 9.6. Remedies.................................... 63
SECTION 9.7. Severability................................ 63
SECTION 9.8. Interpretation.............................. 63
SECTION 9.9. Certain Definitions......................... 64
SECTION 9.10. Counterparts................................ 65
Annex A - Offer Conditions
iii
AGREEMENT AND PLAN OF MERGER, dated as of March 1,
1999, is by and among RELTEC CORPORATION, a Delaware
corporation (the "Company"), GEC Incorporated, a Delaware
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corporation ("Parent"), and XXXXXX ACQUISITION CORP., a
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Delaware corporation ("Acquisition Sub").
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WHEREAS, the Boards of Directors of Parent, Acquisition Sub, and the
Company have each approved the acquisition of the Company by Parent upon the
terms and subject to the conditions set forth in this Agreement;
WHEREAS, in furtherance thereof, it is proposed that Acquisition Sub
shall make a tender offer (as it may be amended from time to time as permitted
under this Agreement, the "Offer") to acquire all outstanding shares of common
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stock, par value $0.01 per share, of the Company (the "Shares"), for a cash
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amount of $29.50 per Share net to the selling stockholders (such amount, or any
greater amount per Share paid pursuant to the Offer, being hereinafter referred
to as the "Per Share Amount") in accordance with the terms and subject to the
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conditions provided for herein;
WHEREAS, simultaneously with the execution and delivery hereof,
Parent, Acquisition Sub, KKR Associates, L.P., KKR Partners II, L.P. and CMT
Associates, L.P. (collectively, the "Sellers"), are entering into a stockholder
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agreement and proxy (the "Stockholder Agreement") pursuant to which the Sellers
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have agreed, among other things, to tender all of the Shares held by the Sellers
(the "KKR Shares") to Acquisition Sub pursuant to the Offer and grant to
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Acquisition Sub an option to purchase the KKR Shares (the "Option");
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WHEREAS, the Board of Directors of the Company (the "Board") has (i)
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determined that this Agreement and the transactions contemplated hereby,
including the Offer and the Merger are fair to and in the best interests of the
stockholders of the Company, (ii) approved this Agreement and the transactions
contemplated hereby, including the Offer, the Merger and the transactions
contemplated by the Stockholder Agreement and (iii) recommended in satisfaction
of all applicable requirements for Board action under Section 251 of the General
Corporation Law of the State of Delaware ("Delaware Law") in order for the
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Merger to be validly approved that the stockholders of the Company accept the
Offer, tender their Shares thereunder and, to the extent required by applicable
law, approve and adopt this Agreement and the Merger; and
WHEREAS, the Boards of Directors of Parent and Acquisition Sub have
each approved the merger (the "Merger") of Acquisition Sub with and into the
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Company following the Offer in accordance with the Delaware Law upon the terms
and subject to the conditions set forth herein.
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements herein contained, and intending to be legally bound
hereby, the Company, Parent and Acquisition Sub hereby agree as follows.
ARTICLE I
The Offer
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SECTION 1.1. The Offer.
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(a) Subject to the conditions of this Agreement including those set
forth in Annex A hereto, as promptly as practicable, but in no event later
than the fifth business day following the initial public announcement of
the terms of this Agreement (which shall occur as promptly as practicable
but in no event later than 24 hours after the execution hereof),
Acquisition Sub shall commence (within the meaning of Rule 14d-2(a) of the
Exchange Act) the Offer to purchase all of the outstanding Shares at the
Per Share Amount net to the seller in cash. The obligation of Acquisition
Sub to accept for payment and pay for Shares tendered pursuant to the Offer
shall be subject to the condition that a number of Shares representing not
less than a majority of the Company's outstanding Shares (on a fully
diluted basis excluding any Employee Options (as defined in Section 2.8)
which are not exercisable as of the date of such calculation) shall have
been validly tendered and not withdrawn prior to the expiration date of the
Offer (the "Minimum Condition"), and the obligation of Acquisition Sub to
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commence the Offer and accept for payment and pay for Shares tendered
pursuant to the Offer shall be subject to the other conditions set forth in
Annex A hereto. The initial expiration date of the Offer shall be the 20th
business day following the commencement of the Offer (determined using Rule
14-1(c)(6) under the Exchange Act). If, on any scheduled expiration date of
the Offer, the conditions set forth in clauses (ii), (iii) or (iv) of Annex
A have not been satisfied or waived, at the written request of the Company,
Acquisition Sub shall, from time to time, extend the expiration date of the
Offer for the period set forth in such written requests. It is agreed that
the
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Minimum Condition and the other conditions set forth in Annex A hereto
are for the sole benefit of Acquisition Sub and may be asserted by
Acquisition Sub regardless of the circumstances giving rise to any such
condition. Acquisition Sub expressly reserves the right in its sole
discretion to waive, in whole or in part at any time or from time to time,
any such condition, to increase the price per Share payable in the Offer or
to make any other changes in the terms and conditions of the Offer,
provided that, unless previously approved by the Company in writing, no
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change may be made that decreases the price per Share payable in the Offer,
changes the form of consideration payable in the Offer, reduces the maximum
number of Shares to be purchased in the Offer, imposes conditions to the
Offer in addition to those set forth in Annex A hereto, changes the
expiration date of the Offer or otherwise amends, adds or waives any term
or condition of the Offer in any manner adverse to the holders of Shares,
and provided, further, that Acquisition Sub shall not waive the Minimum
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Condition without the prior written consent of the Company.
Notwithstanding the foregoing, Acquisition Sub may, without the consent of
the Company, (i) extend the Offer, if at the scheduled expiration date of
the Offer any of the conditions to Acquisition Sub's obligation to purchase
Shares are not satisfied, until such time as such conditions are satisfied
or waived, (ii) extend the Offer for a period of not more than 5 business
days beyond the expiration date that would otherwise be permitted under
clause (i) of this sentence, if on the date of such extension (x) less than
90% of the Shares on a fully diluted basis have been validly tendered and
not properly withdrawn pursuant to the Offer and (y) Acquisition Sub has
permanently waived all of the conditions to the Offer set forth in Annex A
(other than the conditions set forth in clause (v)(b) of Annex A) and (iii)
extend the Offer for any period required by any regulation, rule,
interpretation or position of the Securities and Exchange Commission
("SEC") or the staff thereof applicable to the Offer. On the terms and
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subject to the conditions of the Offer and this Agreement, Acquisition Sub
shall, and Parent shall cause Acquisition Sub to, pay for all Shares
validly tendered and not withdrawn pursuant to the Offer that Acquisition
Sub becomes obligated to purchase pursuant to the Offer as soon as
practicable after the expiration of the Offer and in any event no later
than the close of business on the business day following the expiration of
the Offer. Notwithstanding anything to the contrary contained in this
Agreement, Parent and Acquisition Sub shall not be required to commence the
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Offer in any jurisdiction other than the United States of America.
(b) As soon as practicable on the date of commencement of the Offer,
Parent and Acquisition Sub shall file with the SEC a Tender Offer Statement
on Schedule 14D-1 with respect to the Offer which will contain the Offer to
Purchase and the related Letter of Transmittal (collectively and together
with any supplements or amendments thereto, the "Offer Documents"). The
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Offer Documents will comply in all material respects with the provisions of
applicable federal law. Parent, Acquisition Sub 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 Parent and Acquisition Sub each
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, in each case as and to the extent required by applicable federal
securities laws. The Company and its counsel shall be given a reasonable
opportunity to review and comment on the Offer Documents prior to their
filing with the SEC and shall be provided with any comments Parent,
Acquisition Sub and their counsel may receive from the SEC or its staff
with respect to the Offer Documents promptly after receipt of such
comments.
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 Board, at a meeting duly called and held
on February 28, 1999, unanimously (i) determined that this Agreement and
the transactions contemplated hereby, including the Offer and the Merger
are fair to and in the best interests of the stockholders of the Company,
(ii) approved this Agreement and the transactions contemplated hereby,
including the Offer, the Merger and the transactions contemplated by the
Stockholder Agreement and (iii) recommended in satisfaction of all
applicable requirements for Board action under Section 251 of the Delaware
Law in order for the Merger to be validly approved that the stockholders of
the Company accept the offer, tender their Shares thereunder and, to the
extent required by applicable law, approve and adopt this Agreement and the
Merger. The Company further represents and warrants that each of Xxxxxx
Xxxxxxx & Co. Incorporated and Xxxxxxx Xxxxx Barney Inc. (collectively, the
"Company's Financial
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Advisors") has delivered to the Board its opinion dated as of February 28,
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1999 to the effect that, as of such date, the consideration to be received
by the holders of Shares (other than Parent and its affiliates) pursuant to
this Agreement and Plan of Merger is fair to such holders from a financial
point of view (the "Fairness Opinions"). As of the date hereof, the Company
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has been authorized by the Company's Financial Advisors to permit the
inclusion of the Fairness Opinions in their entirety or reference thereto
(subject to the Company's Financial Advisors prior approval of any such
reference) in the Offer to Purchase, the Schedule 14D-9, the Proxy
Statement or any other document required to be distributed to the Company's
stockholders referred to below. The Company hereby consents to the
inclusion in the Offer Documents of the recommendations of the Board
described in this Section 1.2(a).
(b) The Company shall file with the SEC and mail to holders of Shares
a Solicitation/Recommendation Statement on Schedule 14D-9 (together with
any amendments or supplements thereto, the "Schedule 14D-9") containing the
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recommendations described in Section 1.2(a), and shall mail the Schedule
14D-9 to the stockholders of the Company promptly after the commencement of
the Offer. Such Schedule 14D-9 shall be filed on the same date as the
Schedule 14D-1 is filed and mailed together with the Offer Documents. The
Schedule 14D-9 will comply in all material respects with the provisions of
applicable federal securities laws. Subject to Section 6.9(d), the
Schedule 14D-9 shall at all times contain the determinations, approvals and
recommendations described in Section 1.2(a). Parent, Acquisition Sub and
the Company 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 agrees
to take all steps necessary to cause the Schedule 14D-9 as so corrected to
be filed with the SEC and to be disseminated to holders of Shares, in each
case as and to the extent required by applicable federal securities laws.
Parent, Acquisition Sub and their counsel shall be given a reasonable
opportunity to review and comment on the Schedule 14D-9 prior to its filing
with the SEC and shall be provided with any comments the Company and its
counsel may receive from the SEC or its staff with respect to the Schedule
14D-9 promptly after receipt of such comments. Parent and Acquisition Sub
agree to provide such information necessary for the preparation of the
exhibits and
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schedules to the Schedule 14D-9 which the Company shall reasonably request.
(c) In connection with the Offer, the Company will promptly furnish
Acquisition Sub with mailing labels, security position listings and any
available listing or computer file containing the names and addresses of
the record holders of the Shares as of a recent date and shall furnish
Acquisition Sub with such additional information and assistance (including,
without limitation, updated lists of stockholders, mailing labels and lists
of securities positions) as Acquisition Sub or its agents may reasonably
request in communicating the Offer to the record and beneficial holders of
Shares. Subject to the requirements of applicable law, and except for such
steps as are necessary to disseminate the Offer Documents and any other
documents necessary to consummate the Merger, Acquisition Sub and its
affiliates and associates shall hold in confidence the information
contained in such labels, listings and files, will use such information
only in connection with the Offer or the Merger, and, if this Agreement
shall be terminated, will promptly deliver to the Company all copies of
such information then in their possession.
SECTION 1.3. Boards of Directors and Committees; Section 14(f).
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(a) Promptly upon the purchase by Acquisition Sub of a majority of the
outstanding Shares pursuant to the Offer or the purchase by Acquisition Sub
of the KKR Shares upon exercise of the Option pursuant to the stockholder
agreement, and from time to time thereafter, Acquisition Sub shall be
entitled to designate up to such number of directors, rounded up to the
next whole number, on the Board that equals the product of (i) the total
number of directors on the Board (giving effect to the election of any
additional directors pursuant to this Section) multiplied by (ii) the
percentage that the number of Shares owned by Acquisition Sub and its
affiliates (including any Shares purchased pursuant to the Offer and the
Stockholder Agreement) bears to the total number of outstanding Shares;
provided, however, that until the Effective Time there shall be at least
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two Continuing Directors (as defined herein); and the Company shall, upon
request by Acquisition Sub, promptly either increase the size of the Board
or use its best efforts to secure the resignation of such number of
directors as is necessary to enable Acquisition Sub's designees
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to be elected to the Board and shall cause Acquisition Sub's designees to
be so elected. Promptly upon request by Acquisition Sub, the Company will
use its best efforts to cause persons designated by Acquisition Sub to
constitute the same percentage as is on the Board of (i) each committee of
the Board, (ii) each board of directors of each subsidiary of the Company
designated by Acquisition Sub and (iii) each committee of each such board.
Notwithstanding the foregoing, until the time Acquisition Sub purchases
Shares representing a majority of the Company's voting power on a fully-
diluted basis, the Company shall use its best efforts to ensure that all of
the members of the Board and such boards and committees as of the date
hereof who are not employees of the Company or affiliates of the Sellers
shall remain members of the Board and such boards and committees until the
Effective Time (as defined in Section 2.2).
(b) The Company's obligations to appoint designees to the Board shall
be subject to Section 14(f) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), and Rule 14f-1 promulgated thereunder. The
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Company shall promptly take all actions required pursuant to Section 14(f)
and Rule l4f-1 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 Section
14(f) and Rule 14f-1. Parent or Acquisition Sub will supply to the Company
in writing and be solely responsible for any information with respect to
either of them and their nominees, officers, directors and affiliates
required by Section 14(f) and Rule 14f-1.
(c) After the time that Acquisition Sub's designees constitute at
least a majority of the Board and until the Effective Time, any action by
the Company with respect to this Agreement and the transactions
contemplated hereby which materially and adversely affects the interests of
the stockholders of the Company other than Parent and its affiliates, shall
require the approval of a majority of the then serving directors, if any,
who are directors as of the date hereof (the "Continuing Directors"). If
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there is more than one Continuing Director and, prior to the Effective
Time, the number of Continuing Directors is reduced for any reason, the
remaining Continuing Director shall be entitled to designate a person to
fill such vacancies, who shall be deemed a Continuing Director for purposes
of this Agreement. In the event
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there is only one Continuing Director and he or she resigns or is removed
or if all Continuing Directors resign or are removed, he, she or they, as
applicable, shall be entitled to designate his, her or their successors, as
the case may be, each of whom shall be deemed a Continuing Director for
purposes of this Agreement. The Board shall not delegate any matter set
forth in this Section 1.3 to any committee of the Board.
ARTICLE II
The Merger
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SECTION 2.1. The Merger. At the Effective Time and upon the terms
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and subject to the conditions of this Agreement and Delaware Law, Acquisition
Sub shall be merged with and into the Company, whereupon the separate corporate
existence of Acquisition Sub shall cease and the Company shall continue as the
surviving corporation (the "Surviving Corporation"). At Acquisition Sub's
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option, subject to Section 9.2 hereof, the Merger may be structured so that any
direct or indirect wholly owned subsidiary of The General Electric Company,
p.l.c. ("GEC, p.l.c.") (or the successor to the non-defense business of GEC,
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p.l.c.) other than Acquisition Sub is merged with and into the Company; provided
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that Parent shall continue to be responsible for its and Acquisition Sub's
obligations hereunder. In the event of such election, the parties agree to
execute an appropriate amendment to this Agreement in order to reflect such
election.
SECTION 2.2. Effective Time; Closing. As soon as practicable after
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the satisfaction or waiver of the conditions set forth in Article VII, the
parties hereto will file a certificate of merger or, in the event Acquisition
Sub holds 90% or more of the outstanding Shares, a Certificate of Ownership and
Merger, in either case, in form and substance satisfactory to Parent and the
Company, with the Secretary of State of the State of Delaware and make all other
filings or recordings required by Delaware Law in connection with the Merger
(the "Certificate of Merger"). The Merger shall become effective at such time as
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the Certificate of Merger is duly filed with the Secretary of State of the State
of Delaware (the "Effective Time"). Prior to such filing, a closing (the
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"Closing") shall be held at the place designated by Parent in New York, New York
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for the purpose of confirming the satisfaction or waiver of the conditions set
forth in Article VII. The date on which the Closing occurs is referred to
herein as the "Closing Date".
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SECTION 2.3. Effects of the Merger; Subsequent Actions.
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(a) The Merger shall have the effects set forth in Delaware Law.
Without limiting the generality of the foregoing, and subject thereto and
any other applicable laws, at the Effective Time, all the properties,
rights, privileges, powers and franchises of the Company and Acquisition
Sub shall vest in the Surviving Corporation, and all debts liabilities,
restrictions, disabilities and duties of the Company and Acquisition Sub
shall become the debts, liabilities, restrictions, disabilities and duties
of the Surviving Corporation.
(b) If, at any time after the Effective Time, the Surviving
Corporation shall consider or be advised that any deeds, bills of sale,
assignments, assurances or any other actions or things are necessary or
desirable to vest, perfect or confirm of record or otherwise in the
Surviving Corporation its right, title or interest in, to or under any of
the rights, properties or assets of the Company or Acquisition Sub acquired
or to be acquired by the Surviving Corporation as a result of or in
connection with the Merger, or otherwise to carry out this Agreement, the
officers and directors of the Surviving Corporation shall be authorized to
execute and deliver, in the name and on behalf of the Company or
Acquisition Sub, all such deeds, bills of sale, assignments, assumption
agreements and assurances and to take and do, in the name and on behalf of
each of such corporations or otherwise, all such other actions and things
as may be necessary or desirable to vest, perfect or confirm any and all
right, title and interest in, to and under such rights, properties or
assets of the Surviving Corporation or otherwise to carry out this
Agreement.
SECTION 2.4. Certificate of Incorporation and By-Laws.
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(a) The Certificate of Incorporation of Acquisition Sub in effect
immediately prior to the Effective Time shall be the Certificate of
Incorporation of the Surviving Corporation until amended in accordance with
applicable law; provided that the name of the Surviving Corporation as set
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forth in its Certificate of Incorporation shall be changed at the Effective
Time to reflect RELTEC CORPORATION as the name of the Surviving
Corporation.
(b) The By-Laws of Acquisition Sub in effect at the Effective Time
shall be the By-Laws of the
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Surviving Corporation until amended in accordance with applicable law.
SECTION 2.5. Directors. The directors of Acquisition Sub at the
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Effective Time shall be the initial directors of the Surviving Corporation, each
to hold office in accordance with the Certificate of Incorporation and By-laws
of the Surviving Corporation and until his or her successor is duly elected and
qualified.
SECTION 2.6. Officers. The officers of Acquisition Sub at the
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Effective Time, and/or any individuals designated by Parent, shall be the
initial officers of the Surviving Corporation, each to hold office in accordance
with the Certificate of Incorporation and By-Laws of the Surviving Corporation
and until his or her successor is duly appointed and qualified.
SECTION 2.7. Conversion of Shares. At the Effective Time, by virtue
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of the Merger and without any action on the part of Parent, Acquisition Sub, the
Company or the holder of any of the following securities:
(a) Subject to Section 2.7(b), each Share issued and outstanding
immediately prior to the Effective Time (other than Shares referred to in
Section 2.7(b) hereof and Dissenting Shares (as hereinafter defined)),
shall by virtue of the Merger and without any action on the part of the
holder thereof be converted into the right to receive an amount equal to
the Per Share Amount in cash, without interest (the "Merger
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Consideration").
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(b) Each Share that is owned by the Company or by any wholly owned
subsidiary of the Company and each Share that is owned by Parent,
Acquisition Sub or any other wholly owned subsidiary of Parent shall
continue to be outstanding and shall not be cancelled or retired and no
consideration shall be delivered in exchange therefor.
(c) Each share of Common Stock, par value $0.01 per share, of
Acquisition Sub issued and outstanding immediately prior to the Effective
Time shall be converted into and become one validly issued, fully paid and
nonassessable share of Common Stock, par value $0.01 per share, of the
Surviving Corporation.
SECTION 2.8. Employee Stock Options. (a) Each unvested, outstanding
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option to purchase Shares (including any time options or performance options)
("Employee Options") issued pursuant to the Amended and Restated 1995 Stock
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Purchase and Option Plan for Employees of Reltec
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Holdings, Inc. (the "1995 Plan") and Subsidiaries and The 1998 Equity
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Participation Plan of Reltec Corporation (collectively, the "Company Stock
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Plans") may be accelerated in connection with any change of control (as defined
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in the applicable Company Stock Plans) that results from the Offer or the
Merger, except for the following:
(i) Employee Options issued under the 1995 Plan to former employees
of Rainford Group, plc that vest based upon performance will not be
accelerated but shall be converted as of the Effective Time into options
that vest in equal installments over the performance measurement period
remaining after the Effective Time;
(ii) Employee Options issued to former employees of Positron Fiber
Systems Corporation that by their current terms terminate upon a change of
control will terminate;
(iii) Employee Options issued since the Company's initial public
offering in March 1998 will not be accelerated (other than so-called "Stock
in the Future" options which will accelerate).
(b) At the Effective Time, each outstanding vested Employee Option
(including any such option which has vested as a result of acceleration as set
forth in Section 2.8(a)) shall, subject to Section 2.8(d), be cancelled by the
Company, and each holder of any such cancelled vested Employee Option shall be
entitled to receive from the Company or, at Parent's option, any subsidiary of
the Company (in each case, with funds provided, directly or indirectly, by GEC,
p.l.c. (or any successor to the non-defense business)) in consideration for
cancellation an amount in cash (less applicable withholding Taxes (as defined in
Section 4.10 hereof)) equal to the product of (i) the number of Shares subject
to such vested Employee Option multiplied by (ii) the excess, if any, of the
Merger Consideration over the exercise price per Share previously subject to
such vested Employee Option.
(c) At the Effective Time, each outstanding unvested Employee Option
(other than options that by their terms are cancelled or terminated) shall not
be cancelled or exercised but shall be amended and converted into phantom stock
units equivalent to a number of ordinary shares of GEC, p.l.c. ("GEC Shares")
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(rounded down to the nearest whole share) determined by multiplying the number
of Shares subject to such unvested Employee Option by the Conversion Ratio (as
defined below), at a price per GEC Share equivalent (rounded up to the nearest
whole xxxxx) equal to (A) the exercise price for the Shares previously
purchasable
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pursuant to such unvested Employee Option converted into pounds sterling at the
Noon Buying Rate (as defined below) divided by (B) the Conversion Ratio (each,
as so adjusted, a "Substitute Phantom Unit"). The value of each Substitute
-----------------------
Phantom Unit will be payable upon exercise (less applicable withholding Taxes),
at Parent's election, in cash or GEC Shares (provided that such GEC Shares are
--------
publicly traded on the London Stock Exchange or a U.S. stock exchange) valued at
the closing sales price for a GEC Share on the London Stock Exchange (the "LSE")
---
on the date of exercise and shall have other terms and conditions comparable to
those of the unvested Employee Option replaced by such Substitute Phantom Unit.
The "Conversion Ratio" shall be equal to the Merger Consideration converted into
----------------
pounds sterling at the noon buying rate in New York City for cable transfers in
pounds sterling as certified for customs purposes by the Federal Reserve Bank of
New York on the date of the Effective Time (the "Noon Buying Rate") divided by
-----------------
an amount equal to the average of the closing price for a GEC Share on the LSE
for the twenty trading days preceding the Effective Time and weighted for
trading volumes of GEC Shares on each such day. In the event another company
becomes the successor ultimate parent of Parent, the shares of such successor
will be substituted for GEC Shares on an equitable basis.
(d) Subject to the need to comply with applicable legal requirements,
Parent shall provide to each holder of a vested Employee Option that is to be
cancelled at the Effective Time in lieu of the positive cash payment pursuant to
Section 2.8(b), an alternative of converting such vested Employee Option into
Substitute Phantom Units on the same basis described in Section 2.8(c).
SECTION 2.9. Stockholders' Meeting. (a) If the adoption of this
---------------------
Agreement by the stockholders of the Company is required by Delaware Law, the
Company, acting through the Board, shall as soon as practicable after the
purchase of Shares by Acquisition Sub pursuant to the Offer or the Stockholder
Agreement:
(i) duly call, give notice of, convene and hold a meeting of its
stockholders for the purpose of considering and taking action upon this
Agreement and the Merger (the "Stockholders Meeting"). Without limiting
--------------------
the generality of the foregoing, the Company agrees that its obligations
pursuant to this Section 2.9(a)(i) shall not be affected by the
commencement, public proposal, public disclosure or communication to the
Company of any Acquisition Proposal (as defined herein).
12
(ii) include in the Proxy Statement (as defined in Section 4.7) the
recommendation of the Board sufficient to satisfy all applicable
requirements for Board action under Section 251 of the Delaware Law in
order for the Merger to be validly approved.
(iii) use its reasonable best efforts to obtain the necessary
approvals by its stockholders of this Agreement and the transactions
contemplated hereby.
(b) At the Stockholders' Meeting, each of Parent and Acquisition Sub
will vote (and will cause each of their respective affiliates to vote) all
Shares owned by it (or their respective affiliates) in favor of adoption of this
Agreement and the transactions contemplated hereby.
(c) Notwithstanding the foregoing, (i) if GEC, p.l.c., Acquisition Sub
or any other Subsidiary of Parent shall own, in the aggregate, at least 90% of
the outstanding Shares, the parties shall take all necessary and appropriate
action to cause the Merger to become effective as soon as practicable after the
expiration of the Offer without the Stockholders Meeting in accordance with
Section 253 of the Delaware Law and (ii) the parties shall, at the request of
Parent, take all necessary and appropriate action to effect the Merger through a
written consent in lieu of the Stockholders Meeting to the extent permitted by,
and in accordance with, applicable law.
ARTICLE III
Dissenting Shares; Exchange of Shares
-------------------------------------
SECTION 3.1. Dissenting Shares. Notwithstanding anything in this
-----------------
Agreement to the contrary, Shares outstanding immediately prior to the Effective
Time and held by a holder who has not voted in favor of the Merger or consented
thereto in writing and who has demanded appraisal for such Shares in accordance
with Section 262 of Delaware Law ("Dissenting Shares") shall not be converted
-----------------
into a right to receive the Merger Consideration unless such holder fails to
perfect or withdraws or otherwise loses his right to appraisal. If, after the
Effective Time, such holder fails to perfect or withdraws or loses his 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 without interest
thereon. The Company shall give Acquisition Sub prompt notice of any demands
received by the Company for appraisal of Shares, and, prior to the Effective
Time, Acquisition Sub shall have the right to participate in all negotiations
and proceedings
13
with respect to such demands. Prior to the Effective Time, the Company shall
not, except with the prior written consent of Acquisition Sub, make any payment
with respect to, or settle or offer to settle, any such demands.
SECTION 3.2. Exchange of Certificates.
------------------------
(a) Prior to the Effective Time, Parent shall designate a bank or
trust company reasonably acceptable to the Company to act as paying agent
(the "Paying Agent") in effecting the payment of the Merger Consideration
------------
upon surrender of certificates (the "Certificates") that, prior to the
------------
Effective Time, represented Shares. Upon the surrender of each such
Certificate formerly representing Shares, together with a properly
completed letter of transmittal, the Paying Agent shall pay the holder of
such Certificate the Merger Consideration multiplied by the number of
Shares formerly represented by such Certificate, in exchange therefor, and
such Certificate shall forthwith be cancelled. Until so surrendered and
exchanged, each such Certificate (other than Certificates representing
Dissenting Shares or Shares held by Parent, Acquisition Sub or the Company,
or any direct or indirect subsidiary thereof) shall represent solely the
right to receive the Merger Consideration. No interest shall be paid or
accrue to the holders of Shares in respect of the Merger Consideration. If
the Merger Consideration (or any portion thereof) is to be delivered to any
person other than the person in whose name the Certificate formerly
representing Shares surrendered in exchange therefor is registered, it
shall be a condition to such exchange that the Certificate so surrendered
shall be properly endorsed or otherwise be in proper form for transfer and
that the person requesting such exchange shall pay to the Paying Agent any
transfer or other Taxes required by reason of the payment of the Merger
Consideration to a person other than the registered holder of the
Certificate surrendered, or shall establish to the satisfaction of the
Paying Agent that such tax has been paid or is not applicable.
(b) Parent or Acquisition Sub shall deposit, or cause to be deposited
on a timely basis, as and when the Paying Agent requires after the
Effective Time, in trust with the Paying Agent the Merger Consideration to
which holders of Shares shall be entitled at the Effective Time pursuant to
Section 2.7(a) hereof, provided that no such deposit shall relieve Parent
--------
of its obligation to pay the Merger Consideration pursuant to Section
2.7(a). Subject to Section 3.2(c) and
14
3.2(e), Parent shall cause the Paying Agent to hold the amounts deposited
with it for the benefit of the holders of Shares.
(c) The Merger Consideration shall be invested by the Paying Agent, as
directed by Parent, on a timely basis. Any interest and other income
resulting from such investments shall be paid to Parent.
(d) Promptly after the Effective Time, the Paying Agent shall mail to
each record holder of Certificates that immediately prior to the Effective
Time represented Shares a form of letter of transmittal and instructions
reasonably acceptable to the Company for use in surrendering such
Certificates and receiving the Merger Consideration in exchange therefor.
(e) Promptly following the date that is six months after the Effective
Time, the Paying Agent shall deliver to Parent all cash and documents in
its possession relating to the transactions described in this Agreement,
and the Paying Agent's duties shall terminate. Thereafter, each holder of
a Certificate formerly representing a Share may surrender such Certificate
to the Surviving Corporation and (subject to applicable abandoned property,
escheat and similar laws) receive in exchange therefor the Merger
Consideration, without any interest thereon.
(f) After the Effective Time, there shall be no transfers on the stock
transfer books of the Surviving Corporation of any Shares. If, after the
Effective Time, Certificates formerly representing Shares are presented to
the Surviving Corporation or the Paying Agent, they shall be cancelled and
exchanged for the Merger Consideration, as provided in this Article III,
subject to applicable law in the case of Dissenting Shares.
(g) Parent or any of its affiliates shall be entitled to deduct and
withhold from the consideration otherwise payable pursuant to this
Agreement to any former holder of Shares such amounts as Parent (or any
affiliate thereof) is required to deduct and withhold with respect to the
making of such payment under the Internal Revenue Code of 1986 (the
"Code"), or any provision of state, local or foreign tax law. To the
----
extent that amounts are so withheld by Parent (or any affiliate thereof)
and paid by Parent (or any affiliate thereof) to the applicable taxing
authority, such withheld amounts shall be treated for all purposes of this
Agreement as having been paid to the former holder
15
of Shares in respect of which such deduction and withholding was made by
Parent (or any affiliate thereof).
ARTICLE IV
Representations and Warranties of the Company
---------------------------------------------
The Company represents and warrants to Parent and Acquisition Sub as
follows:
SECTION 4.1. Organization and Qualification; Subsidiaries.
--------------------------------------------
(a) Each of the Company and its subsidiaries is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation and has all requisite corporate power and
authority to own, lease and operate its properties and to carry on its
business as now being conducted except where the failure to be so
organized, existing and in good standing or to have such power and
authority would not, individually or in the aggregate, have a material
adverse effect on the business, properties, assets, condition (financial or
otherwise) or results of operations of the Company and its subsidiaries,
taken as a whole (a "Material Adverse Effect") or a material adverse effect
-----------------------
on the ability of the Company to perform its obligations hereunder.
Notwithstanding anything to the contrary, the term "Material Adverse
Effect" shall not include (i) any change, circumstance, event or effect
that relates to or results primarily from the announcement or other
disclosure or consummation of the transactions contemplated by this
Agreement, or (ii) changes in general economic conditions, financial
markets (including fluctuations in the price of shares of Company Common
Stock or shares of capital stock of GEC, p.l.c.) or conditions in the
telecommunications or technology sectors generally.
(b) Each of the Company and its subsidiaries is duly qualified or
licensed and in good standing to do business in each jurisdiction
(including any foreign country) 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 where the failure to be so
duly qualified or licensed and in good standing would not, individually or
in the aggregate, have a Material Adverse Effect.
16
(c) The Company has heretofore furnished or made available to Parent
complete and correct copies of the Company's Restated Certificate of
Incorporation and By-Laws and the equivalent organizational documents of
each of its subsidiaries listed in Schedule 4.1(c) (the "Material
--------
Subsidiaries"), each as amended to the date hereof, as requested by Parent,
------------
except for certain organizational documents of non-U.S. subsidiaries that
will be furnished or made available in English prior to the Effective Time.
Such Restated Certificate of Incorporation, By-Laws and equivalent
organizational documents are in full force and effect and no other
organizational documents are applicable to or binding upon the Company or
its Material Subsidiaries. The Company is not in violation of any of the
provisions of its Restated Certificate of Incorporation or By-Laws and no
Material Subsidiary of the Company is in violation of any of the provisions
of such subsidiary's equivalent organizational documents.
(d) The Company has heretofore furnished or made available to Parent a
complete and correct list of the subsidiaries of the Company, which list
sets forth the percentage of total capital stock of or other equity
interests in such subsidiaries owned by the Company, directly or
indirectly. No subsidiary of the Company that is not a Material Subsidiary
is, individually or when taken together with all other subsidiaries of the
Company that are not Material Subsidiaries, material to the business of the
Company and its subsidiaries taken as a whole. Except as set forth in
Schedule 4.1(d), no entity in which the Company owns, directly or
indirectly, less than a 50% equity interest is, individually or when taken
together with all other such entities, material to the business of the
Company and its subsidiaries, taken as a whole. No subsidiary of the
Company that is not a Material Subsidiary has any material liabilities.
SECTION 4.2. Capitalization of the Company and its Subsidiaries. The
--------------------------------------------------
authorized capital stock of the Company consists of (i) 150,000,000 Shares of
which, as of February 19, 1999, 56,419,890 Shares were issued and outstanding
and (ii) 20,000,000 shares of Preferred Stock, par value of $0.01 per share, of
which, as of February 19, 1999, no shares were issued and outstanding. All
outstanding shares of capital stock of the Company have been validly issued, and
are fully paid, nonassessable and free of preemptive rights. As of February 19,
1999, Employee Options to purchase an aggregate of 6,569,342 Shares were
outstanding and the weighted average exercise price of such Employee Options was
$14.21 per Share. Except
17
as set forth above or in Schedule 4.2, and except as a result of the exercise of
Employee Options outstanding as of February 26, 1999, there are outstanding (i)
no shares of capital stock or other voting securities of the Company, (ii) no
securities of the Company convertible into or exchangeable for shares of capital
stock or voting securities of the Company, (iii) no options, subscriptions,
warrants, convertible securities, calls or other rights to acquire from the
Company, and no obligation of the Company to issue, deliver or sell any capital
stock, voting securities or securities convertible into or exchangeable for
capital stock or voting securities of the Company and (iv) no equity
equivalents, "phantom" stock rights, stock appreciation rights, performance
shares, interests in the ownership or earnings of the Company or other similar
rights issued by the Company (collectively, "Company Securities"). Except as set
-------------------
forth in Schedule 4.2 or as contemplated by this Agreement or the Stockholders
Agreement, there are no outstanding obligations of the Company or any of its
subsidiaries to repurchase, redeem or otherwise acquire any Company Securities.
Except as set forth in Schedule 4.2, each of the outstanding shares of capital
stock of each of the Company's subsidiaries is duly authorized, validly issued,
fully paid and nonassessable and is directly or indirectly owned by the Company,
free and clear of all security interests, liens, claims, pledges, charges,
voting agreements or other encumbrances of any nature whatsoever (collectively,
"Liens"). Except as set forth in Schedule 4.2, there are no existing options,
-----
calls or commitments of any character relating to the issued or unissued capital
stock or other securities of any subsidiary of the Company. Except as set forth
in Schedule 4.2, and the Stockholders Agreement, there are no voting trusts,
proxies or other agreements, commitments or understandings of any character to
which the Company or any of its subsidiaries is a party or by which the Company
or any of its subsidiaries is bound with respect to the voting of any shares of
capital stock of the Company or any of its subsidiaries or with respect to the
registration of the offering, sale or delivery of any shares of capital stock of
the Company or any of its subsidiaries under the Securities Act. There are not
any bonds, debentures, notes or other indebtedness of the Company or its
subsidiaries having the right to vote (or convertible into, or exchangeable for,
securities having the right to vote) on any matters on which stockholders of the
Company may vote ("Voting Company Debt").
-------------------
SECTION 4.3. Authority Relative to this Agreement. The Company has
------------------------------------
all necessary corporate power and authority to execute and deliver this
Agreement, to perform its obligations hereunder and to consummate the
18
transactions contemplated hereby, subject in the case of the Merger, to the
adoption of this Agreement and approval of the Merger by the stockholders of the
Company to the extent so required by the Delaware Law. The Board, at a meeting
duly called and held on February 28, 1999, (i) determined that this Agreement
and the transactions contemplated hereby, including the Offer and the Merger,
are fair to and in the best interests of the stockholders of the Company, (ii)
approved this Agreement and the transactions contemplated hereby, including the
Offer, the Merger and the transactions contemplated by the Stockholder Agreement
and (iii) recommended in satisfaction of all applicable requirements for Board
action under Section 251 of the Delaware Law in order for the Merger to be
validly approved that the stockholders of the Company accept the Offer, tender
their Shares thereunder and, to the extent required by applicable law, approve
and adopt this Agreement and the Merger. Such approvals constitute all Board
action required to be taken in connection with this Agreement, the Merger and
the other transactions contemplated hereby by Section 251 of the Delaware Law in
order for the Merger to be validly approved. The execution, delivery and
performance of this Agreement and the consummation of the transactions
contemplated hereby have been duly and validly authorized by the Board and no
other corporate proceedings on the part of the Company are necessary to
authorize this Agreement or to consummate the transactions so contemplated
(other than and only to the extent required by Delaware Law, with respect to the
Merger, the approval and adoption of this Agreement by the holders of a majority
of the outstanding Shares and the filing of the Certificate of Merger). The
Board has taken all action necessary with respect to the transactions
contemplated hereby and by the Stockholder Agreement so as to render
inapplicable to such transactions, including, without limitation, the Merger and
the purchase of Shares pursuant to the Stockholder Agreement, the restrictions
on business combinations contained in Section 203 of the Delaware Law. This
Agreement has been duly and validly executed and delivered by the Company and,
assuming it constitutes a valid and binding agreement of the other parties
hereto, constitutes a legal, valid and binding obligation of the Company
enforceable against the Company in accordance with its terms, except as such
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium and other similar laws relating to or affecting creditors generally,
or by general equity principles (regardless of whether such enforceability is
considered in a proceeding in equity or at law).
19
SECTION 4.4. Non-Contravention; Required Filings and Consents.
------------------------------------------------
(a) Except as set forth in Schedule 4.4, the execution, delivery and
performance by the Company of this Agreement and the consummation of the
transactions contemplated hereby (including the Merger) do not and will not
(i) contravene or conflict with the Restated Certificate of Incorporation
or By-Laws of the Company or the equivalent organizational documents of any
of its Material Subsidiaries; (ii) assuming that all consents,
authorizations and approvals contemplated by subsection (b) below have been
obtained and all filings described therein have been properly made,
contravene or conflict with or constitute a violation of any provision of
any law, regulation, judgment, injunction, order or decree binding upon or
applicable to the Company, any of its subsidiaries or any of their
respective properties; (iii) conflict with, or result in the breach or
termination of any provision of or constitute a default (with or without
the giving of notice or the lapse of time or both) under, or give rise to
any right of termination, cancellation, or loss of any benefit to which the
Company or any of its subsidiaries is entitled under any provision of any
agreement, contract, license or other instrument binding upon the Company,
any of its subsidiaries or any of their respective properties, or allow the
acceleration of the performance of, any obligation of the Company or any of
its subsidiaries under any indenture, mortgage, deed of trust, lease,
license, contract, instrument or other agreement to which the Company or
any of its subsidiaries is a party or by which the Company or any of its
subsidiaries or any of their respective assets or properties is subject or
bound; or (iv) result in the creation or imposition of any Lien on any
asset of the Company or any of its subsidiaries, except in the case of
clauses (ii), (iii) and (iv) for any such contraventions, conflicts,
violations, breaches, terminations, defaults, cancellations, losses,
accelerations and Liens which would not individually or in the aggregate
have a Material Adverse Effect or be reasonably expected to prevent or
materially delay the consummation by the Company of the transactions
contemplated by this Agreement or otherwise have a material adverse effect
on the ability of the Company to perform its other obligations hereunder.
(b) The execution, delivery and performance by the Company of this
Agreement and the consummation of the transactions contemplated hereby
(including the
20
Merger) by the Company require no filings, notices, declarations, consents
or other actions to be made by the Company with, nor are any approvals or
other confirmations or consents required to be obtained by the Company
from, any governmental or regulatory (including Stock exchange) authority,
agency, court, commission, body or other governmental entity (including the
U.K. Panel on Takeovers and Mergers) ("Governmental Entity") (except those
---------------------
the failure of which to make, give or obtain, individually or in the
aggregate, would not reasonably be expected to have a Material Adverse
Effect or prevent or materially delay the Company's ability to consummate
the transactions contemplated hereby or otherwise have a material adverse
effect on the ability of the Company to perform its other obligations
hereunder), other than filings, notices, approvals, confirmations,
consents, declarations or decisions (i) relating to the filing of the
Certificate of Merger in accordance with Delaware Law; (ii) required by the
Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended (the "HSR
---
Act"); (iii) required by the Exchange Act and state securities, takeover
---
and Blue Sky laws; (iv) required by the Canadian Competition Act; (v) from
the Italian Autorita Garante della Concorrenza e del Mercato that it does
not intend to initiate a second stage investigation of the transactions
contemplated hereby (including the Merger) or any matters arising therefrom
under Article 16 of Law no.287 of October 10, 1990; (vi) from the German
Federal Cartel Office, during the one month time limit referred to in
Section 40 paragraph 1 of the Act against Restraints on Competition, that
the conditions for a prohibition in Section 36 paragraph 1 of the Act
against Restraints on Competition are not fulfilled, or, if no such
confirmation is received, this one month time limit having expired without
the parties having been notified by the Federal Cartel Office that it has
entered into the examination of the proposed concentration; and (vii) from
the U.K. Office of Fair Trading that it is not the intention of the U.K.
Secretary of State for Trade and Industry ("U.K. Secretary of State") to
-----------------------
refer the transactions contemplated hereby or any matters arising therefrom
to the U.K. Monopoly and Mergers Commission ("MMC") (collectively clauses
---
(i) through (vii) are the "Company Governmental Approvals").
------------------------------
SECTION 4.5. Reports.
-------
(a) The Company has filed all required forms, reports and documents
with the Securities and Exchange Commission (the "SEC") since March 12,
---
1998. The
21
Company has made available to Parent, in the form filed with the
SEC, the Company's (i) Registration Statement on Form S-1 and the
Prospectus dated March 12, 1998, included therein relating to the initial
public offering of the Shares, (ii) Quarterly Reports on Form 10-Q for the
quarters ended March 31, 1998, June 30, 1998 and September 30, 1998 and
(iii) all other reports or registration statements filed by the Company
with the SEC since March 12, 1998 (collectively, the "SEC Reports"). The
-----------
Company also has made available to Parent, a draft dated February 24, 1999
of the Company's financial statements for the year ended December 31, 1998
and the related draft of Management's Discussion and Analysis of Results of
Operations (the "1998 Draft Report"). The SEC Reports were prepared in
-----------------
accordance with all applicable requirements of the Securities Act of 1933,
as amended (the "Securities Act"), and the Exchange Act and the 1998 Draft
--------------
Report has been prepared on a consistent basis with the SEC Reports. As of
their respective dates, none of the SEC Reports including, without
limitation, any financial statements or schedules included therein,
contained any untrue statement of a material fact or omitted to state a
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. As of its date, the financial statements contained
in the 1998 Draft Report fairly present, in conformity with generally
accepted accounting principles applied on a consistent basis, the
consolidated financial position of the Company and its consolidated
subsidiaries and their consolidated results of operations (subject to the
lack of complete footnote disclosure). The audited consolidated financial
statements and unaudited condensed consolidated interim financial
statements of the Company included in the SEC Reports fairly present, in
conformity with generally accepted accounting principles applied on a
consistent basis (except as may be indicated in the notes thereto), the
consolidated financial position of the Company and its consolidated
subsidiaries as of the dates thereof and their consolidated results of
operations and cash flows for the periods then ended (subject to normal
year-end adjustments and the lack of footnote disclosure (to the extent
permitted by SEC rules in the case of the SEC Reports) in the case of any
unaudited interim financial statements).
(b) Except as disclosed in the SEC Reports filed prior to the date of
this Agreement or as set forth in
22
Schedule 4.5(b), the Company and its subsidiaries have no liabilities of
any nature (whether accrued, absolute, contingent or otherwise) which would
be required to be reflected, reserved for or disclosed under generally
accepted accounting principles in consolidated financial statements of the
Company (including the notes thereto), except for liabilities incurred in
the ordinary course of business since December 31, 1997 or liabilities
which would not, individually or in the aggregate, have a Material Adverse
Effect or a material adverse effect on the ability of the Company to
perform its obligations hereunder.
SECTION 4.6. Absence of Certain Changes; Derivatives.
---------------------------------------
(a) Since December 31, 1997 to the date hereof, except as disclosed in
the SEC Reports filed prior to the date of this Agreement or as set forth
in Schedule 4.6(a), neither the Company nor any of its Material
Subsidiaries has (i) declared, set aside or paid any dividend or other
distribution (whether in cash, stock, or property or any combination
thereof) in respect of its capital stock (other than to the Company or to
any wholly owned subsidiary of the Company) (ii) entered into, adopted or
amended or materially increased the benefits paid or payable under any
severance, termination or deferred compensation agreement or arrangement
with any director, officer or employee, (iii) changed any of the accounting
principles or practices used by the Company, except as required as a result
of a change in law, SEC guidelines or generally accepted accounting
principles, (iv) settled or compromised, or agreed to settle or compromise,
any litigation, or agreed to assign any claims, which involve a payment or
waiver by the Company or any subsidiary of the Company of amounts in excess
of $3 million in the aggregate, or (v) entered into any transaction, or
conducted its business or operations, except in the ordinary course of
business or where such transactions or conduct would not, individually or
in the aggregate, have a Material Adverse Effect or a material adverse
effect on the ability of the Company to perform its obligations hereunder.
Since December 31, 1997, except as set forth in Schedule 4.6(a) or as
disclosed in the SEC Reports filed prior to the date of this Agreement,
there has not been any event, change, effect or development that,
individually or in the aggregate, has had or would reasonably be expected
to have a Material Adverse Effect or a material adverse effect on the
23
ability of the Company to perform its obligations hereunder.
(b) Schedule 4.6(b) sets forth a complete and correct list of all
Derivative Financial Instruments (including the face, contract or notional
amount of and any open position relating to such Derivative Financial
Instruments and a brief summary of the nature and terms thereof) as of
December 31, 1998 which the Company or any of its subsidiaries is a party
or by which the Company or any of its subsidiaries or any of their
respective assets or properties is subject or bound (including, without
limitation, funds of the Company or any of its subsidiaries invested by any
other person). For purposes of this Agreement "Derivative Financial
--------------------
Instrument" means any option, futures, forward, swap option or swap
----------
contract, or any other financial instrument with similar characteristics
and/or generally characterized as a "derivative product".
SECTION 4.7. Schedule 14D-9; Offer Documents, Proxy Statement.
------------------------------------------------
(a) Neither the Schedule 14D-9, nor any of the information provided or
to be provided by the Company or by its auditors, attorneys, financial
advisors or other consultants or advisers specifically for use in the Offer
Documents and any other documents to be filed with the SEC in connection
with the transactions contemplated hereby, including any amendment or
supplement to such documents, shall, on the respective dates the Schedule
14D-9, the Offer Documents and any other documents to be filed with the SEC
in connection with the transactions contemplated hereby or any supplements
or amendments thereto are filed with the SEC or on the date first
published, 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
24
light of the circumstances under which they were made, not misleading. The
proxy or information statement or similar materials distributed, if any, to
the Company's stockholders in connection with the Merger, including any
amendments or supplements thereto (the "Proxy Statement"), shall not, at
the time filed with the SEC, at the time mailed to the Company's
stockholders, at the time of the Stockholders Meeting, if any, 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 are made, not misleading. Notwithstanding the foregoing, the Company
makes no representation or warranty with respect to any information
provided by Parent, Acquisition Sub or their auditors, attorneys, financial
advisors or other consultants or advisors specifically for use in the
Schedule 14D-9 or the Proxy Statement. The Schedule 14D-9 and the Proxy
Statement will comply as to form in all material respects with the
provisions of the Exchange Act and the rules and regulations thereunder.
SECTION 4.8. Finder's Fee. Neither any broker, finder, investment
------------
banker or other intermediary (other than the Company's Financial Advisors and
Kohlberg Kravis Xxxxxxx & Co., L.P., the fees of which collectively shall not
exceed the amount set forth in Schedule 4.8) is entitled to any brokerage,
finder's or other fee (including any exit or management fee) or commission in
connection with the transactions contemplated by this Agreement or by the
Stockholder Agreement based upon arrangements made by and on behalf of the
Company.
SECTION 4.9. Absence of Litigation. Except as disclosed in the SEC
---------------------
Reports filed prior to the date hereof, the 1998 Draft Report or in Schedule
4.9, there is no action, suit, claim, investigation or proceeding pending
against, or to the knowledge of the Company, threatened against, the Company or
any of its subsidiaries or any of their respective properties before any court
or arbitrator or any administrative, regulatory or governmental body, or any
agency or official which, individually or in the aggregate, would reasonably be
expected to have a Material Adverse Effect or a material adverse effect on the
ability of the Company to perform its obligations hereunder (other than
litigation related to, challenging or seeking to prevent, enjoin, alter or delay
the Offer, the Merger or the other transactions contemplated hereby or by the
Stockholder Agreement). Except as disclosed in the SEC Reports filed prior to
the date of this Agreement, the Draft 1998 Report or in Schedule 4.9, there is
no action, suit, claim, investigation or proceeding pending against, or to the
knowledge of the Company, threatened against, the Company or any of its
subsidiaries or any of their respective properties before any court or
arbitrator or any administrative, regulatory or governmental body, or any agency
or official which alleges criminal action or inaction which, if proved, would
have a Material Adverse Effect. Except as disclosed in the SEC Reports filed
prior to the date of this Agreement, the Draft Annual Report or in Schedule 4.9,
neither the Company nor any of its subsidiaries nor any of their respective
properties is
25
subject to any order, writ, judgment, injunction, consent agreement, decree,
determination or award having, or which would reasonably be expected to have, a
Material Adverse Effect or which would prevent or materially delay the
consummation of the transactions contemplated hereby or otherwise have a
material adverse effect on the ability of the Company to perform its other
obligations hereunder.
SECTION 4.10. Taxes. Except as set forth in the SEC Reports filed
-----
prior to the date of this Agreement, the 1998 Draft Report or in Schedule 4.10,
(a) the Company and its subsidiaries have filed, been included in or sent, all
material returns, material declarations and reports and information returns and
statements required to be filed or sent by or relating to any of them relating
to any Taxes (as defined below) with respect to any material income, properties
or operations of the Company or any of its subsidiaries (collectively,
"Returns"); (b) as of the time of filing, the Returns correctly reflected in all
-------
material respects the facts regarding the income, business, assets, operations,
activities and status of the Company and its subsidiaries and any other material
information required to be shown therein; (c) the Company and its subsidiaries
have timely paid or made provision for all material Taxes due and payable; (d)
the Company and its subsidiaries have made or will make provision for all
material Taxes payable for any periods that end before the Effective Time for
which no Returns have yet been filed and for any periods that begin before the
Effective Time and end after the Effective Time to the extent such Taxes are
attributable to the portion of any such period ending at the Effective Time; (e)
the charges, accruals and reserves for taxes reflected on the books of the
Company and its subsidiaries are adequate under generally accepted accounting
principles to cover the Tax liabilities accruing or payable by the Company and
its subsidiaries in respect of periods prior to the date hereof; (f) neither the
Company nor any of its subsidiaries is delinquent in the payment of any material
Taxes or has requested any extension of time within which to file or send any
material Return (other than extensions granted to the Company for the filing of
its Returns as set forth in Schedule 4.10), which Return has not since been
filed or sent; (g) no material deficiency for any Taxes has been proposed,
26
asserted or assessed in writing against the Company or any of its subsidiaries
(or any member of any affiliated or combined group of which the Company or any
of its subsidiaries is or has been a member for which either the Company or any
of its subsidiaries could be liable) other than those asserted deficiencies
being contested in good faith by appropriate proceedings and set forth in
Schedule 4.10 (which shall set forth the nature of the proceeding, the type of
return, the deficiencies proposed, asserted or assessed and the amount thereof,
and the taxable year in question); (h) neither the Company nor any of its
subsidiaries has granted any extension of the limitation period applicable to
any material Tax claims other than those Taxes being contested in good faith by
appropriate proceedings and set forth in Schedule 4.10; (i) neither the
Company nor any of its subsidiaries is subject to liability for Taxes of any
person (other than the Company or its subsidiaries), including, without
limitation, liability arising from the application of U.S. Treasury Regulation
Section 1.1502-6 or any analogous provision of state, local or foreign law; (j)
neither the Company nor any of its subsidiaries is or has been a party to any
material tax sharing agreement with any corporation which is not currently a
member of the affiliated group of which the Company is currently a member, other
than such tax indemnification agreements set forth in Schedule 4.10; (k) to the
best of the Company's knowledge and as of the date hereof, no person who holds
five percent (5%) or more of the stock of the Company is a "foreign person" as
defined in Section 1445 of the Code; and (l) all Taxes that the Company and each
of its subsidiaries are required by law to withhold or collect, including
without limitation, sales and use taxes, and amounts required to be withheld for
Taxes of employees and other withholding taxes, have been duly withheld or
collected and, to the extent required, have been paid over to the proper
governmental agencies or are held in separate bank accounts for such purpose,
except for Taxes the failure of which to withhold or collect would not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect or a material adverse effect on the ability of the Company to
perform its obligations hereunder.
"Tax" or "Taxes" shall mean all Federal, state, local, foreign and
--- -----
other taxes, charges, fees, duties (including customs duties), levies or other
assessments, including without limitation, income, gross receipts, net proceeds,
alternative or add-on minimum, ad valorem, value added, turnover, real and
personal property (tangible and intangible), sales, use, franchise, excise,
value added, stamp, leasing, lease, user, transfer, fuel, excess profits,
occupational, interest equalization, windfall profits, severance, license,
payroll, environmental, capital stock, disability, employee's income
withholding, other withholding, unemployment and Social Security taxes, which
are imposed by any governmental authority (domestic or foreign), and such term
shall include any interest, penalties or additions to tax attributable thereto.
27
SECTION 4.11. Employee Benefits.
-----------------
(a) Schedule 4.11 (a) contains a true and complete list of each
material employment contract, bonus, deferred compensation, incentive
compensation, stock purchase, stock option, severance or termination pay,
hospitalization or other medical, dental, life, disability or other
insurance, supplemental unemployment benefits, profit-sharing, pension,
savings or retirement plan, program, agreement or arrangement, and each
other employee benefit plan, program, agreement or arrangement, sponsored,
maintained or contributed to or required to be contributed to by the
Company or by any trade or business, whether or not incorporated (an "ERISA
-----
Affiliate"), that together with the Company would be deemed a "single
---------
employer" within the meaning of Section 4001 of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"), for the benefit of any
-----
employee, terminated employee or non-employee director of the Company or
any ERISA Affiliate (the "Plans"). Schedule 4.11(a) identifies each of the
-----
Plans that is an "employee benefit plan," as that term is defined in
Section 3(3) of ERISA (the "ERISA Plans").
-----------
(b) With respect to each Plan, the Company has heretofore delivered or
made available to Parent true and complete copies of each of the following
documents (to the extent applicable):
(i) a copy thereof;
(ii) a copy of the most recent annual report and actuarial
report, if required under ERISA, and the most recent report prepared
with respect thereto in accordance with Statement of Financial
Accounting Standards No. 87, Employer's Accounting for Pensions;
(iii) a copy of the most recent actuarial report prepared with
respect thereto in accordance with Statement of Financial Accounting
Standards No. 106, Employer's Accounting for Non-Pension Post
Retirement Benefits.
(iv) a copy of the most recent actuarial report prepared with
respect thereto in accordance with the Statement of Financial
Accounting Standards NO. 106 Employers Accounting for Post-Retirement
Benefits;
28
(v) a copy of the most recent Summary Plan Description;
(vi) if the Plan is funded through a trust or any third party
funding vehicle, a copy of the trust or other funding agreement and
the latest financial statements thereof; and
(vii) the most recent determination letter received from the
Internal Revenue Service with respect to each Plan intended to qualify
under section 401(a) of the Code.
(c) With respect to each ERISA Plan subject to Title IV of ERISA, no
material liability (other than liabilities for premiums due the Pension
Benefit Guaranty Corporation ("PBGC") (which premiums have been paid when
----
due)) under Title IV of ERISA has been incurred by the Company or any ERISA
Affiliate that has not been satisfied in full, and, to the knowledge of the
Company, no condition exists that presents a material risk to the Company
or any ERISA Affiliate of incurring a material liability under such Title.
To the extent this representation applies to Sections 4041, 4064, 4069 or
4204 of Title IV of ERISA, it is made not only with respect to each ERISA
Plan but also with respect to any employee benefit plan, program, agreement
or arrangement subject to Title IV of ERISA to which the Company or any
ERISA Affiliate made, or was required to make, contributions during the
five year period ending on the Effective Time.
(d) To the Company's knowledge, the PBGC has not instituted
proceedings to terminate any ERISA Plan and, to the knowledge of the
Company, no condition exists that presents a material risk that such
proceedings will be instituted.
(e) Neither the Company nor any ERISA Affiliate, nor, to the knowledge
of the Company, any ERISA Plan, nor any trust created thereunder, nor any
trustee or administrator thereof has engaged in a transaction in connection
with which the Company or any ERISA Affiliate, any ERISA Plan, any such
trust, or any trustee or administrator thereof, or any party dealing with
any ERISA Plan or any such trust could be subject to either a civil penalty
assessed pursuant to Section 409 or 502(i) of ERISA or a Tax imposed
pursuant to section 4975 or 4976 of the Code, except for such penalties and
Taxes which would not, individually or in the aggregate, have a Material
Adverse Effect or a material adverse effect on the
29
ability of the Company to perform its obligations hereunder.
(f) To the Company's knowledge, no ERISA Plan or any trust established
thereunder has incurred any "accumulated funding deficiency" (as defined in
------------------------------
Section 302 of ERISA and Section 412 of the Code), whether or not waived,
as of the last day of the most recent fiscal year of each ERISA Plan ended
prior to the Effective Time and all contributions required to be made with
respect thereto (whether pursuant to the terms of any ERISA Plan or
otherwise) on or prior to the Effective Time have been timely made.
(g) No ERISA Plan is a "multiemployer pension plan", as defined in
--------------------------
Section 3(37) of ERISA, nor is any ERISA Plan a plan described in Section
4063(a) of ERISA.
(h) To the knowledge of the Company, each Plan has been operated and
administered in all material respects in accordance with its terms and
applicable law, including but not limited to ERISA and the Code.
(i) Except as set forth on Schedule 4.11(i), each ERISA Plan intended
to be "qualified" within the meaning of Section 401(a) of the Code has been
---------
drafted with the intention to be so qualified and has been or will be
submitted to the Internal Revenue Service along with a request for a
favorable determination letter on or before the date hereof, and it is
anticipated that each such plan will be modified so as to incorporate any
conforming amendments requested or required by the Internal Revenue Service
as a condition to the issuance of such favorable determination letter.
(j) To the Company's knowledge, except as reasonably estimated and as
set forth on Schedule 4.11(j), no amounts payable by the Company or its
subsidiaries could fail to be deductible for federal income tax purposes by
application of Section 280G of the Code.
(k) Except as set forth in Schedule 4.11(k), no Plan provides
benefits, including without limitation, death or medical benefits (whether
or not insured), with respect to current or former employees of the Company
or any ERISA Affiliate beyond their retirement, disability or other
termination of service (other than (i) coverage mandated by applicable law
or (ii) death benefits or retirement benefits under any "employee
30
pension plan," as that term is defined in Section 3(2) of ERISA).
(l) Except as provided in Schedule 4.11(l), the consummation of the
transactions contemplated by this Agreement will not (i) entitle any
current or former employee or officer or non-employee director of the
Company or any ERISA Affiliate to severance pay, unemployment compensation
or any other payment, except as expressly provided in this Agreement or
(ii) accelerate the time of payment or vesting, or increase the amount of
compensation due any such employee or officer or non-employee director.
(m) There are no pending or, to the knowledge of the Company,
threatened claims by or on behalf of any Plan, by any employee or
beneficiary covered under any such Plan, or otherwise involving any such
Plan (other than routine claims for benefits).
(n) The Company has reserved the right to amend or terminate any Plan
which is an employee benefit plan, as that term is defined in Section 3(3)
of ERISA.
(o) Except as set forth in Schedule 4.11(o), the Merger will not
constitute a "Change in Control" under the terms of any Plan.
-----------------
SECTION 4.12. Compliance; Permits. (a) Neither the Company nor any
-------------------
of its subsidiaries is in violation of, or has violated, any applicable
provisions of (i) any laws, rules, statutes, orders, ordinances or regulations
or (ii) any note, bond, mortgage, indenture, contract, agreement, lease,
license, permit, franchise, or other instrument or obligations to which the
Company or any of its subsidiaries is a party or by which the Company or any of
its subsidiaries or its or any of their respective properties are bound or
affected, which individually or in the aggregate, would have or be reasonably
expected to result in a Material Adverse Effect or a material adverse effect on
the ability of the Company to perform its obligations hereunder.
(b) The Company and its subsidiaries hold all permits, licenses,
easements, variances, exceptions, consents, certificates, orders and approvals
from Governmental Entities that are material to the operation of the business of
the Company and its subsidiaries, taken as a whole (collectively, the "Company
-------
Permits"), except where the failure to hold or maintain any of the foregoing
-------
would not, in the aggregate, have a Material Adverse Effect. The Company and
its subsidiaries are in compliance with the
31
terms of the Company Permits, except where the failure to so comply would not,
in the aggregate, have a Material Adverse Effect or a material adverse effect on
the ability of the Company to perform its obligations hereunder.
SECTION 4.13. Environmental Matters. (a) Except as disclosed in the
---------------------
SEC Reports filed prior to the date hereof, the 1998 Draft Report or in Schedule
4.13:
(i) the Company and its subsidiaries are in compliance with all
applicable Environmental Laws (as defined below) (which compliance
includes, but is not limited to, the possession by the Company and its
subsidiaries of all permits and other governmental authorizations required
under applicable Environmental Laws (collectively, "Environmental
-------------
Permits"), and compliance with the terms and conditions thereof), except
for any noncompliance that individually or in the aggregate could not
reasonably be expected to have a Material Adverse Effect or a material
adverse effect on the ability of the Company to perform its obligations
hereunder. Except as set forth in Schedule 4.13, neither the Company nor
any of its subsidiaries has received any written communication, whether
from a governmental authority that alleges that the Company is not in such
compliance, and there are no past or present actions, activities,
circumstances, conditions, events or incidents that may prevent or
interfere with such compliance in the future, except, in each case, for any
actions, activities, circumstances, conditions, events or incidents that,
individually or in the aggregate would not reasonably be expected to have a
Material Adverse Effect or a material adverse effect on the ability of the
Company to perform its obligations hereunder;
(ii) there is no Environmental Claim (as defined below) pending or,
to the knowledge of the Company, threatened against the Company or any of
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 retained or assumed either contractually or by
operation of law, which individually or in the aggregate would reasonably
be expected to have a Material Adverse Effect or a material adverse effect
on the ability of the Company to perform its obligations hereunder;
(iii) there are no past or present actions, activities,
circumstances, conditions, events or incidents (including, without
limitation, the release,
32
emission, discharge, presence or disposal of any Hazardous Material) (as
defined below) which could form the basis of any Environmental Claim
against the Company or any of 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, which individually or
in the aggregate would reasonably be expected to have a Material Adverse
Effect or a material adverse effect on the ability of the Company to
perform its obligations hereunder;
(iv) neither the Company nor any of its subsidiaries has, and to the
knowledge of Company, no other person has Released (as defined below),
placed, stored, buried or dumped Hazardous Materials on, beneath or
adjacent to any property owned, operated or leased or formerly owned,
operated or leased by the Company or any of its subsidiaries and neither
the Company nor any of its subsidiaries has received notice that it is a
potentially responsible party for the Cleanup (as defined below) of any
property, whether or not owned or operated by the Company or any of its
subsidiaries, which individually or in the aggregate would reasonably be
expected to have a Material Adverse Effect or a material adverse effect on
the ability of the Company to perform its obligations hereunder;
(v) the Company and its subsidiaries have delivered or otherwise made
available for inspection to Parent true, complete and correct copies and
results of any material reports, studies, analyses, tests or monitoring
possessed or initiated by the Company or any of its subsidiaries within the
last three years pertaining to Hazardous Materials on, beneath or adjacent
to the property owned or leased by the Company or any of its subsidiaries
or regarding the Company's and its subsidiaries' compliance with applicable
Environmental Laws;
(vi) no transfers of permits or other governmental authorizations
under Environmental Laws, and no additional permits or other governmental
authorizations under Environmental Laws, will be required to permit the
Company and its subsidiaries or the Surviving Corporation and its
subsidiaries, as the case may be, to be in full compliance all applicable
Environmental Laws for the period immediately following the transactions
contemplated hereby, as conducted by the Company and its subsidiaries
immediately prior to the date hereof; and to the extent
33
that such transfers or additional permits and other governmental
authorizations are required, the Company and its subsidiaries agree to use
best efforts to effect such transfers and obtain such permits and other
governmental authorizations at the time such transfers, permits and other
governmental authorizations are required by law, except for any of the
foregoing that would not, individually or in the aggregate, have a Material
Adverse Effect; and
(vii) neither the Company nor any of its subsidiaries will be
required by any Governmental Entity or Environmental Law to make any
expenditure, whether for emission control, waste materials or wastewater
treatment, or otherwise, to assure the compliance of the Company and its
subsidiaries with all applicable Environmental Laws and Environmental
Permits as of the Closing Date, except for any of the foregoing that would
not, individually or in the aggregate, have a Material Adverse Effect.
(b) The following terms as used in this Section shall have the
following meanings:
"Cleanup" means all actions required by governmental entities or
-------
Environmental Laws to: (1) clean-up, remove, treat or remediate Hazardous
Materials in the indoor or outdoor environment; (2) prevent the Release of
Hazardous Materials so that they do not migrate, endanger or threaten to
endanger public health or welfare or the indoor or outdoor environment; (3)
perform pre-remedial studies and investigations and post-remedial monitoring and
care; or (4) respond to any government requests for information or documents in
any way relating to cleanup, removal, treatment or remediation or potential
cleanup, removal, treatment or remediation or Hazardous Materials in the indoor
or outdoor environment.
"Environmental Claim" means any claim, action, cause of action,
-------------------
investigation or written notice by any person or entity alleging potential
liability (including, without limitation, potential liability for investigatory
costs, cleanup costs, monitoring costs, governmental response costs, natural
resources damages, property damages, personal injuries, or penalties) arising
out of, based on or resulting from (a) the presence, or Release into the indoor
or outdoor environment, of any Hazardous Materials at any location, whether or
not owned or operated by the Company or any of its subsidiaries or (b)
circumstances forming the basis of any violation, or alleged violation, of any
Environmental Law.
34
"Environmental Laws" means all federal, state, local and foreign laws
------------------
and regulations relating to pollution or protection of human health or the
environment, including without limitation, laws relating to Releases or
threatened Releases of Hazardous Materials into the indoor or outdoor
environment (including, without limitation, ambient air, surface water,
groundwater, land surface or subsurface strata) or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage, Release,
disposal, transport or handling of Hazardous Materials and all laws and
regulations with regard to record keeping, notification, disclosure and
reporting requirements respecting Hazardous Materials.
"Hazardous Materials" means all substances defined as Hazardous
-------------------
Substances, Oils, Pollutants or Contaminants in the National Oil and Hazardous
Substances Pollution Contingency Plan, 40 C.F.R. (S) 300.5, or defined as such
by, or regulated as such by, or regulated as such under any Environmental Law.
"Release" means any release, spill, emission, discharge, leaking,
-------
pumping, injection, deposit, disposal, discharge, dispersal, leaching or
migration into the indoor or outdoor environment (including, without limitation,
ambient air, surface water, groundwater and surface or subsurface strata) or
into or out of any property, including the movement of Hazardous Materials
through or in the air, soil, surface water, groundwater or property.
SECTION 4.14. Intellectual Property. Schedule 4.14 of the Agreement
---------------------
contains a complete list of all Patents and Trademarks (each as defined herein)
(completed or in process), including all registered rights, which are owned by
the Company for use in or necessary for the conduct of the business of the
Company as such business is currently conducted and presently contemplated to be
conducted. The Company and each of its Subsidiaries has used its reasonable
efforts to protect the proprietary nature of each item of Intellectual Property
(as defined below) that it considers confidential, and to maintain in confidence
all trade secrets and confidential information that it presently owns or uses.
Except as set forth in Schedule 4.14 and except to the extent that the
inaccuracy of any of the following (or the circumstances giving rise to such
inaccuracy) would not individually or in the aggregate reasonably be expected to
have a Material Adverse Effect or a material adverse effect on the ability of
the Company to perform its obligations hereunder:
(a) The rights of the Company in and to each item of Intellectual
Property are owned or licensed by the
35
Company, free and clear of any Liens or other restrictions (except, in the
case of licensed Intellectual Property, as set forth in the license
therefor). All of the Company's rights in and to such Intellectual Property
are freely assignable in its own name, including the right to create
derivative works, and the Company is under no obligation to pay any royalty
or other compensation to any third party or to obtain any approval or
consent for use of any of the Intellectual Property (except, in the case of
licensed Intellectual Property, as set forth in the license therefor). None
of the Intellectual Property is subject to any outstanding judgment, order,
decree, stipulation, injunction or charge; no charge, complaint, action,
suit, proceeding, hearing, investigation, claim, or demand is pending or,
to the knowledge of the Company, threatened, which challenges the legality,
validity, enforceability, the Company's use or ownership of any of the
Intellectual Property.
(b) No material breach or default (or event which with notice or lapse
of time or both would result in an event of default) by the Company exists
or has occurred under any License-In (as defined below) or other agreement
pursuant to which the Company uses any Intellectual Property, and the
consummation of the transactions contemplated by this Agreement will not
violate or conflict with or constitute a default (or an event which, with
notice or lapse of time or both, would constitute a default) or result in a
forfeiture under, or constitute a basis for termination of, any such
License-In or other agreement.
(c) The Company owns or has the right to use all the Intellectual
Property necessary to provide, produce, sell and license the services and
products currently provided, produced, sold and licensed by the Company,
and to conduct the Company's business as presently conducted and
contemplated to be conducted, and the consummation of the transactions
contemplated hereby will not alter or impair any such rights, including any
right of the Company to use or sublicense any Intellectual Property owned
by others. To the knowledge of the Company, the Intellectual Property
covers all rights which are necessary to operate the business of the
Company as it is presently conducted and currently contemplated to be
conducted and to satisfy and perform the contracts, commitments,
arrangements and understandings with customers of the Company. The Company
has no knowledge of any reason the Company will not be able to continue to
own, possess or have access to, and to use, license and sub-
36
license on reasonable terms, all Intellectual Property and other
proprietary rights necessary for the lawful conduct of its business as
presently conducted and currently contemplated to be conducted, without any
infringement with the rights of others.
(d) To the knowledge of the Company, no Intellectual Property owned or
used by the Company, and no Intellectual Property, product or service
practiced, offered, licensed by, sold or under development by the Company,
infringes any trademark, trade name, copyright, trade secret, patent, right
of publicity, right of privacy or other proprietary right of any Person or
would give rise to an obligation to render an accounting to any Person as a
result of co-authorship, co-invention or an express or implied contract for
any use or transfer. The Company has received no written notice of any
adversely held patent, invention, trademark, copyright, service xxxx, trade
name or trade secret of any other Person alleging or threatening to assert
that the Company's use of any of the Intellectual Property infringes upon
or is in conflict with any intellectual property or proprietary rights of
any third party. The Company has no knowledge of any basis for any charge
or claim, threatened claim or any suit or action asserting any such
infringement or asserting that the Company does not have the legal right to
own, enforce, sell, license, lease or otherwise use any such Intellectual
Property, process, product or service.
(e) All the Company's Patents and Trademarks (each, as defined below)
listed in Schedule 4.14 and material registered Copyrights as having been
issued by, registered with or filed with the United States Patent and
Trademark Office or Register of Copyrights or the corresponding offices of
other countries have been so duly registered, filed in or issued, as the
case may be, and have been properly maintained and renewed in accordance
with all applicable provisions of law and administrative regulations in the
United States and each such other country. The Company has used its
reasonable efforts to diligently protect its rights in the Intellectual
Property and any related apparatus or processes and there have been no acts
or omissions by the Company, the result of which would be to compromise the
rights of the Company to apply for or enforce appropriate legal protection
of such Intellectual Property.
(f) Each of the Company's employees and those independent contractors
retained by the Company who,
37
either alone or in concert with others, created or creates, developed or
develops, invented or invents, discovered or discovers, derived or derives,
programmed or programs or designed or designs any of the Intellectual
Property, has entered into a written agreement with the Company providing,
in substance, that all such Intellectual Property and information is
proprietary to the Company and is not to be divulged or misused and
obligating the disclosure and transfer to the Company, in consideration for
normal salary and continued employment or consultant fees, as the case may
be, of all inventions, developments and discoveries and work-product which
during the period of his or her employment or consultancy with the Company,
as the case may be, such employee and independent contractor made or makes
or conceived or conceives of either solely or jointly with others, that
related or relate to any subject matter with which such employee's or
independent contractor's work for the Company was concerned, or related or
relates to or were or are connected with the business, products or projects
of the Company, or involved or involve the use of the Company's time,
material or facilities. To the knowledge of the Company, no former
employees or independent contractors of the Company have any claim or right
to any of the Intellectual Property necessary for the lawful conduct of the
Company's business as now conducted and currently contemplated to be
conducted. To the knowledge of the Company, no employee of the Company is a
party to or otherwise bound by any agreement with or obligated to any other
Person (including, any former employer) which in any respect conflicts with
any obligation or commitment of such employee to the Company under any
agreement to which currently he or she is a party or otherwise.
For purposes of this Agreement, "Intellectual Property" means all of the
---------------------
following which is owned by, licensed by, licensed to, used or held for use by
the Company (including all copies and embodiments thereof, in whatever media):
(i) all registered and unregistered trademarks, trade dress, service marks,
logos, trade names, corporate names and other indications of origin, the
goodwill associated with the foregoing and registrations in any jurisdiction,
and applications in any jurisdiction to register (the "Trademarks"); (ii) all
----------
issued U.S. and foreign patents and pending patent applications (including,
without limitation, divisionals, continuation, continuation in part, continuing
and renewal applications), patent disclosures and improvements thereto (the
"Patents"); (iii) all registered and unregistered copyrights and all
--------
applications to register the same (the "Copyrights"), (iv) all computer software
----------
and
38
databases owned by the Company or under development for the Company (the
"Software"); (v) all licenses and agreements pursuant to which the Company has
---------
acquired rights in or to the Trademarks, Patents, Copyrights or Software
(excluding software and databases licensed to the Company under standard (except
for immaterial deviations), nonexclusive software licenses granted to end-user
customers by third parties in the ordinary course of such third parties'
business) ("Licenses-In"), (vi) all licenses and agreements pursuant to which
-----------
the Company has licensed or transferred the rights in and to Company
Intellectual Property ("Licenses Out"'); and (vii) all categories of trade
------------
secrets, know-how, inventions (whether or not patentable and whether or not
reduced to practice), processes, procedures, drawings, specifications, designs,
plans, proposals, technical data, copyrightable works and other proprietary
technical information ("Proprietary Rights").
------------------
SECTION 4.15. Significant Agreements. Schedule 4.15 sets forth a
----------------------
complete and correct list of all written and, to the Company's knowledge, oral
contracts, agreements and commitments to which the Company or any of its
subsidiaries is a party which would be listed as an exhibit to the Company's
Annual Report on Form 10-K if filed on the date of this Agreement (the
"Significant Agreements"). The Company has heretofore furnished or made
-----------------------
available to Parent complete and correct copies of the Significant Agreements,
each as amended or modified to the date hereof (including any waivers with
respect thereto). Except as set forth on Schedule 4.4 or Schedule 4.15, each of
the Significant Agreements is in full force and effect and enforceable in
accordance with its terms; neither the Company nor any of its subsidiaries has
received any written notice of cancellation or termination of, or any expression
or indication of an intention or desire to cancel or terminate, any of the
Significant Agreements; no Significant Agreement is the subject of, or, to the
knowledge of the Company, has been threatened to be made the subject of, any
arbitration, suit or other legal proceeding; with respect to any Significant
Agreement which by its terms will terminate as of a certain date unless renewed
or unless an option to extend such Significant Agreement is exercised neither
the Company nor any of its subsidiaries has received any notice (written or
oral), or otherwise has any knowledge, that any such Significant Agreement will
not be so renewed or that any such extension option will not be exercised; and
there exists no event of default or occurrence, condition or act on the part of
the Company or any of its subsidiaries or, to the knowledge of the Company, on
the part of the other parties to the Significant Agreements which constitutes or
would constitute (with notice or lapse of time or both) a breach of or default
under any of the Significant
39
Agreements, except to the extent that the inaccuracy of the foregoing would not,
individually or in the aggregate, have a Material Adverse Effect and would not,
individually or in the aggregate, have a material adverse effect on the ability
of the Company to perform its obligations hereunder.
SECTION 4.16. Insurance. The Company and its subsidiaries maintain
---------
policies of fire and casualty, liability and other forms of insurance in such
amounts, with such deductibles and against such risks and losses as are in the
Company's judgment, reasonable for the assets and properties of the Company and
its subsidiaries and as are customary in the Company's industry and, as of the
date of this Agreement, except (i) as set forth in Schedule 4.16 or (ii) as
would not have, individually or in the aggregate, a Material Adverse Effect or a
material adverse effect on the ability of the Company to perform its obligations
hereunder, all such policies are in full force and effect, all premiums due and
payable thereon have been paid, and no notice of cancellation or termination has
been received with respect to any such policy.
SECTION 4.17. Labor Matters. Except as set forth in Schedule 4.17,
-------------
and except for normal and customary labor arrangements outside of North America,
neither the Company nor any of its subsidiaries is a party to any collective
bargaining or other labor union contract applicable to persons employed by the
Company or any of its Material Subsidiaries, no collective bargaining agreement
is being negotiated by the Company or any of its Material Subsidiaries and the
Company has no knowledge of any activities or proceedings of any labor union to
organize any of their respective employees. There is no labor dispute, strike or
work stoppage against the Company or any of its subsidiaries pending or, to the
Company's knowledge, threatened which may interfere with the respective business
activities of the Company or any of its subsidiaries, except where such dispute,
strike or work stoppage would not reasonably be expected to have a Material
Adverse Effect or a material adverse effect on the ability of the Company to
perform its obligations hereunder.
SECTION 4.18. Year 2000. The computer software and hardware operated
---------
by the Company and its subsidiaries that is used in the conduct of their
business is capable of providing or being adapted to provide uninterrupted
millennium functionality to record, store, process and present calendar dates
falling on or after January 1, 2000 in substantially the same manner and with
the same functionality as such software and hardware records, stores, processes
and presents such calendar dates falling on or before December 31, 1999 other
than such interruptions in
40
millennium functionality that would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect or a material adverse
effect on the ability of the Company to perform its obligations hereunder.
ARTICLE V
Representations and Warranties of Parent and
--------------------------------------------
Acquisition Sub
---------------
Each of Parent and Acquisition Sub represents and warrants to the
Company as follows:
SECTION 5.1. Organization. Each of Parent and Acquisition Sub is a
------------
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware. Each of Parent and Acquisition Sub has all requisite
corporate power and authority to own, lease and operate its properties and to
carry on its business as now being conducted, except where the failure to have
such power and authority would not, individually or in the aggregate, have a
material adverse effect on the business, properties, assets, condition
(financial or otherwise) or results of operations of Parent and its
subsidiaries, taken as a whole, (a "Parent Material Adverse Effect") or on the
------------------------------
ability of the Parent or Acquisition Sub to perform its obligations hereunder.
Parent owns, directly or indirectly, all the capital stock of Acquisition Sub.
GEC, p.l.c. owns, directly or indirectly, all the capital stock of Parent.
SECTION 5.2. Authority Relative to this Agreement. Each of Parent and
------------------------------------
Acquisition Sub has all necessary corporate power and authority to execute and
deliver this Agreement, to perform its obligations hereunder and to consummate
the transactions contemplated hereby. The execution, delivery and performance of
this Agreement and the consummation of the transactions contemplated hereby have
been duly and validly authorized by the board of directors of Acquisition Sub
and Parent and by Parent as the sole stockholder of Acquisition Sub, and no
other corporate proceedings on the part of Parent, Acquisition Sub, GEC, p.l.c.
or any of its subsidiaries are necessary to authorize this Agreement or to
consummate the transactions so contemplated. This Agreement has been duly and
validly executed and delivered by each of Parent and Acquisition Sub and,
assuming it constitutes a valid and binding agreement of each of the other
parties hereto, constitutes a legal, valid and binding agreement of each of
Parent and Acquisition Sub, enforceable against each of Parent and Acquisition
Sub in accordance with its terms , except as such enforceability may be limited
by bankruptcy,
41
insolvency, reorganization, moratorium and other similar laws relating to or
affecting creditors generally, or by general equity principles (regardless of
whether such enforceability is considered in a proceeding in equity or at law).
SECTION 5.3. Non-Contravention, Required Filings and Consents.
------------------------------------------------
(a) The execution, delivery and performance by Parent and Acquisition
Sub of this Agreement and the consummation of the transactions contemplated
hereby (including the Merger) do not and will not (i) contravene or
conflict with the Certificate of Incorporation or By-Laws of Parent or
Acquisition Sub, (ii) assuming that all consents, authorizations and
approvals contemplated by subsection (b) below have been obtained and all
filings described therein have been properly made, contravene or conflict
with or constitute a violation of any provision of any law, regulation,
judgment, injunction, order or decree binding upon or applicable to Parent
or Acquisition Sub or any of their respective properties; (iii) conflict
with, or result in the breach or termination of any provision of or
constitute a default (with or without the giving of notice or the lapse of
time or both) under, or give rise to any right of termination,
cancellation, or loss of any benefit to which Parent or Acquisition Sub is
entitled under any provision of any agreement, contract, license or other
instrument binding upon Parent, Acquisition Sub or any of their respective
properties, or allow the acceleration of the performance of, any obligation
of Parent or Acquisition Sub under any indenture, mortgage, deed of trust,
lease, license, contract, instrument or other agreement to which Parent or
Acquisition Sub is a party or by which Parent or Acquisition Sub or any of
their respective assets or properties is subject or bound; or (iv) result
in the creation or imposition of any Lien on any asset of Parent or
Acquisition Sub, except in the case of clauses (ii), (iii) and (iv) for any
such contraventions, conflicts, violations, breaches, terminations,
defaults, cancellations, losses, accelerations and Liens which,
individually or in the aggregate, would not reasonably be expected to
prevent, or materially delay the consummation of the Offer or the Merger.
(b) The execution, delivery and performance by Parent and Acquisition
Sub of this Agreement and the consummation of the transactions contemplated
hereby (including the Merger) by Parent and Acquisition Sub
42
require no filings, notices, declarations, consents or other actions to be
made by Parent or Acquisition Sub with, nor are any approvals or other
confirmations or consents required to be obtained by Parent or Acquisition
Sub from, any Governmental Entity (except those the failure of which to
make, give or obtain, individually or in the aggregate, would not
reasonably be expected to prevent or materially delay Parent's or
Acquisition Sub's ability to consummate the transactions contemplated
hereby), other than filings, notices, approvals, confirmations, consents,
declarations or decisions (i) relating to the filing of the Certificate of
Merger in accordance with Delaware Law; (ii) required by the HSR Act; (iii)
required by the Exchange Act and state securities, takeover and Blue Sky
laws; (iv) required by the Canadian Competition Act; (v) from the Italian
Autorita Garante della Concorrenza e del Mercato that it does not intend to
initiate a second stage investigation of the transactions contemplated
hereby (including the Merger) or any matters arising therefrom under
Article 16 of Law no.287 of October 10, 1990; (vi) from the German Federal
Cartel Office, during the one month time limit referred to in Section 40
paragraph 1 of the Act against Restraints on Competition, that the
conditions for a prohibition in Section 36 paragraph 1 of the Act against
Restraints on Competition are not fulfilled, or, if no such confirmation is
received, this one month time limit having expired without the parties
having been notified by the Federal Cartel Office that it has entered into
the examination of the proposed concentration; and (vii) from the U.K.
Office of Fair Trading that it is not the intention of the U.K. Secretary
of State to refer the transactions contemplated hereby or any matters
arising therefrom to the MMC (clauses (i) through (vii) are referred to
herein as the "Parent Governmental Approvals").
-----------------------------
SECTION 5.4. Offer Documents; Schedule 14D-9; Proxy Statement.
------------------------------------------------
Neither the Offer Documents, nor any of the information provided or to be
provided by Parent or Acquisition Sub or their auditors, attorneys, financial
advisors or other consultants or advisors specifically for use in the Schedule
14D-9 and any other documents to be filed with the SEC in connection with the
transactions contemplated hereby, including any amendment or supplement to such
documents, shall, on the respective dates the Offer Documents, the Schedule 14D-
9 and any other documents to be filed with the SEC in connection with the
transactions contemplated hereby or any supplements or amendments thereto are
filed with the SEC or on the date first published, sent or given to the
Company's stockholders, as the case may be,
43
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. Notwithstanding the foregoing, neither Parent nor Acquisition Sub
makes any representation or warranty with respect to any information provided by
the Company or by its auditors, attorneys, financial advisors or other
consultants or advisors specifically for use in the Offer Documents. None of the
information provided by Parent or Acquisition Sub or by their auditors,
attorneys, financial advisors or other consultants or advisors specifically for
use in the Proxy Statement shall, at the time filed with the SEC, at the time
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 are made, not misleading. The Offer Documents will comply as to form in all
material respects with the provisions of the Exchange Act and the rules and
regulations thereunder.
SECTION 5.5. No Prior Activities. Since the date of its
-------------------
incorporation, Acquisition Sub has not engaged in any activities other than in
connection with or as contemplated by this Agreement or in connection with
arranging any financing required to consummate the transactions contemplated
hereby.
SECTION 5.6. Finder's Fee. No Broker, finder, investment banker or
------------
other intermediary (other than Credit Suisse First Boston) is entitled to any
brokerage, finder's or other fee or commission in connection with the
transactions contemplated by this Agreement or by the Stockholder Agreement
based upon arrangements made by and on behalf of Parent or Acquisition Sub.
SECTION 5.7. Financing. Parent has available, and will make
---------
available to Acquisition Sub, sufficient funds to consummate the Offer and the
Merger on the terms contemplated by this Agreement.
SECTION 5.8. Parent Not an Interested Stockholder. As of the date
------------------------------------
hereof, (i) neither Parent nor any of its affiliates is, with respect to the
Company, an "Interested Stockholder", as such term is defined in Section 203 of
Delaware Law and (ii) except to the extent that Parent and its affiliates may be
deemed to hold Shares as a result of this Agreement or the Stockholder
Agreement, Parent and its affiliates collectively do not hold directly
44
or indirectly five percent (5%) or more of the outstanding voting securities of
the Company.
ARTICLE VI
Covenants
---------
SECTION 6.1. Conduct of Business of the Company. Except as otherwise
----------------------------------
expressly provided in this Agreement or consented to by Parent, during the
period from the date hereof to the Effective Time, the Company and its
subsidiaries will each conduct its operations according to its ordinary course
of business and the Company and its subsidiaries will each use its reasonable
best efforts to preserve intact its business organization, to keep available the
services of its officers and employees and to maintain existing relationships
with licensors, licensees, suppliers, bankers, insurers, contractors,
distributors, customers and others having business relationships with it.
Without limiting the generality of the foregoing, and except as specifically
contemplated by this Agreement or disclosed in the SEC Reports filed prior to
the date of this Agreement, the 1998 Draft Report or as set forth in Schedule
6.1, prior to the Effective Time, neither the Company nor any of its
subsidiaries will, without the prior written consent of Parent:
(a) amend or propose to amend its certificate or articles of
incorporation or by-laws or equivalent organizational documents,
(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 stock of any class or any other securities or equity
equivalents (including, without limitation, stock appreciation rights and
Voting Company Debt), except as required by option agreements as in effect
as of the date hereof, or except as contemplated by Section 2.8, amend any
of the terms of any such securities or agreements outstanding as of the
date hereof,
(c) effect any reorganization or recapitalization or 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 or redeem, repurchase
or otherwise
45
acquire any of its securities or any securities of its subsidiaries;
(d) (i) incur any indebtedness for borrowed money (except for short
term indebtedness incurred in the ordinary course of business pursuant to
existing lines of credit) or issue any debt securities or, except in the
ordinary course of business, assume, guarantee or endorse the obligations
of any other person, except for intercompany indebtedness between the
Company and its wholly owned subsidiaries or between any of the Company's
wholly owned subsidiaries; (ii) make any loans, advances or capital
contributions to, or investments in, any other person (other than to wholly
owned subsidiaries of the Company) except in the ordinary course of
business; (iii) pledge or otherwise encumber shares of capital stock of the
Company or any of its subsidiaries except in the ordinary course of
business; (iv) enter into or invest in any Derivative Financial Instruments
except in the ordinary course of business consistent with the Company's
current investment and risk management policies (it being understood that
the Company shall continue its current investment and risk management
policies); or (v) mortgage or pledge any of its assets, tangible or
intangible, or except in the ordinary course of business, create or suffer
to exist any Lien thereupon, provided that, notwithstanding anything to the
-------- ----
contrary and without limiting the generality of the foregoing, no
transaction described in clauses (iv) and (v) shall be permitted without
Parent's consent for any such transaction (or series of related
transactions) the value of which is in excess of $20 million;
(e) enter into, adopt or (except as may be required by law) amend or
terminate any bonus, profit sharing, compensation, severance, termination,
stock option, stock appreciation right, restricted stock, performance unit,
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, or (except, in the case of employees who are
not officers or directors, for normal compensation increases in the
ordinary course of business that, in the aggregate, do not result in a
material increase in benefits or compensation expense to the Company)
increase in any manner the compensation or benefits of any director,
officer or employee or pay any benefit not required by any plan or
arrangement as in effect as of the date hereof (including, without
limitation, the
46
granting of stock options, restricted stock, stock appreciation rights,
"phantom" stock rights or performance units);
(f) sell, lease or otherwise dispose of, or grant any Lien with
respect to any assets (including technology assets) or properties of the
Company and its subsidiaries, or enter into any contract, agreement,
commitment or transaction with respect to the foregoing that are,
individually or in the aggregate, material to any of the Company and its
subsidiaries, taken as a whole, except for dispositions of excess or
obsolete assets and sales of inventories in the ordinary course of
business;
(g) change any of the accounting principles or practices used by it,
except as may be required as a result of a change in law, SEC guidelines or
generally accepted accounting principles;
(h) (i) acquire (by merger, consolidation, acquisition of stock or
assets (including technology assets) or otherwise) any corporation,
partnership or other business organization or division thereof, (ii)
authorize any new capital expenditure or expenditures which, individually,
is in excess of $2,500,000 or, in the aggregate, are in excess of
$10,000,000; (iv) settle any litigation for amounts in excess of the
greater of $200,000 individually or $1,000,000 in the aggregate or, with
respect to any litigation as to which reserves have been recorded on the
books of the Company, the amount reserved for such litigation; or (v) enter
into or amend any contract, agreement, commitment or arrangement with
respect to any of the foregoing;
(i) make any Tax election or settle or compromise any Tax liability,
other than in the ordinary course of business;
(j) pay, discharge or satisfy any claims, liabilities or obligations
(absolute, accrued, asserted or unasserted, contingent or otherwise), other
than the payment, discharge or satisfaction in the ordinary course of
business or in accordance with their terms, or reflected or reserved
against in the consolidated financial statements (or the notes thereto) of
the Company and its consolidated subsidiaries or incurred in the ordinary
course of business;
(k) (i) terminate, modify, amend or waive compliance with any material
provision of any of the
47
Significant Agreements, or fail to take any reasonable action necessary to
preserve the material benefits of any Significant Agreement to the Company
or any of its subsidiaries or (ii) enter into any agreement which, if such
agreement is entered into, would be a Significant Agreement;
(1) enter into any new agreements with, or commitments to, insurance
brokers or advisers extending beyond one year or extend any insurance
policy beyond one year (including, for the avoidance of doubt, the
directors' and officers' liability insurance policies referred to in
Section 6.6); or
(m) take, or agree in writing or otherwise to take, any of the actions
described above in Section 6.1.
SECTION 6.2. Proxy Statements.
----------------
To the extent that the Company is required by Section 2.9 hereof to
hold the Stockholders Meeting, the Company shall, as promptly as practicable
following the date hereof, prepare and file the Proxy Statement with the SEC
under the Exchange Act. As soon as practicable following completion of review
of the Proxy Statement by the SEC, the Company shall mail the Proxy Statement to
its stockholders who are entitled to vote at the Stockholders' Meeting. The
Proxy Statement shall contain the recommendation of the Board sufficient to
satisfy all applicable requirements for Board action under Section 251 of the
Delaware Law in order for the Merger to be validly approved.
SECTION 6.3. Access to Information; Confidential ity Agreement.
-------------------------------------------------
(a) Between the date hereof and the Effective Time, the Company will
give each of Parent and Acquisition Sub and their counsel, financial
advisors, auditors, and other authorized representatives reasonable access
during normal business hours to all management employees, plants, offices,
warehouses and other facilities and to all books and records of the Company
and its subsidiaries, will permit each of Parent and Acquisition Sub and
their respective counsel, financial advisors, auditors and other authorized
representatives to make such inspections as Parent or Acquisition Sub may
reasonably require and will cause the Company's officers and those of its
subsidiaries to furnish Parent or Acquisition Sub or their representatives
with such financial and operating data and other information with respect
to the business
48
and properties of the Company and any of its subsidiaries as Parent or
Acquisition Sub may from time to time reasonably request, in all such
cases, however, subject to existing confidentiality and similar non-
disclosure obligations and preservation of attorney client work product
privileges. Without limiting the generality of the foregoing but subject to
the limitations contained therein, the Company shall provide to Parent all
information in respect of the Company and its business that Parent shall
from time to time reasonably request to enable Parent or its affiliates to
comply with all U.K. statutory and other legal and regulatory provisions
(including the U.K. Companies Xxx 0000, the U.K. Financial Services Xxx
0000 and the rules and regulations promulgated thereunder, and the rules
and requirements of the London Stock Exchange, and including in respect of
any documentation or information that Parent or its affiliates is required
to issue or file from time to time, whether or not such documentation or
information is issued or filed as a result of, or in connection with, the
Offer or Merger).
(b) The parties agree that the provisions of the Confidentiality
Agreement dated as of February 4, 1999 (the "Confidentiality Agreement")
-------------------------
shall remain binding and in full force and effect and that the terms of the
Confidentiality Agreement are incorporated herein by reference and that all
information provided by the Company pursuant to this Section 6.3 shall be
subject to such agreement; provided, however, that any consents from the
-------- -------
Company necessary under the Confidentiality Agreement for Parent and
Acquisition Sub to consummate the transactions contemplated by this
Agreement and the Stockholders Agreement shall be deemed to have been made.
The parties shall comply with, and shall cause their respective
Representatives (as defined below) to comply with, all of their respective
obligations under the Confidentiality Agreement until Acquisition Sub
purchases a majority of the outstanding Shares pursuant to the Offer.
SECTION 6.4. Reasonable Best Efforts. Subject to the terms and
-----------------------
conditions herein provided, each of the parties hereto agrees to use its
reasonable best efforts to take, or cause to be taken, all actions, and to do,
or cause to be done, all things reasonably necessary, proper or advisable on
their part under this Agreement or laws and regulations to consummate and make
effective the transactions contemplated by this Agreement and the Stockholder
Agreement. Without limiting the generality of the foregoing, Parent,
Acquisition Sub, Sellers and the
49
Company shall cooperate with one another (i) in the preparation and filing of
the Offer Documents, the Schedule 14D-9, the Proxy Statement and any required
filings in connection with the Company Governmental Approvals, the Parent
Governmental Approvals and any other applicable laws; (ii) in determining
whether action by or in respect of, or filing with, any Governmental Entity is
required, proper or advisable or any actions, consents, waivers or approvals are
required to be obtained from parties to any contracts, in connection with the
transactions contemplated by this Agreement and the Stockholder Agreement; (iii)
in taking all action reasonably necessary, proper or advisable to secure any
necessary consents, approvals or waivers from third parties, including under
existing debt obligations of the Company and its subsidiaries or to amend the
notes, indentures or agreements relating to such existing debt obligations to
the extent required by such notes, indentures or agreements, or to redeem or
repurchase such debt obligations; (iv) in contesting any pending legal
proceeding, whether judicial or administrative, relating to the Offer or the
Merger including seeking to have any stay or temporary restraining order entered
by any court or other Governmental Entity vacated or reversed; (v) executing any
additional instruments necessary to consummate the transactions contemplated
hereby and (vi) in seeking timely to obtain any such actions, consents and
waivers and to make any such filings. In case at any time after the Effective
Time any further action is necessary or desirable to carry out the purposes of
this Agreement, the proper officers and directors of each party hereto shall
take all such necessary action.
SECTION 6.5. Public Announcements. Parent and Acquisition Sub, on
--------------------
the one hand, and the Company, on the other hand, will consult with each other
before issuing any press release with respect to the transactions contemplated
by this Agreement and the Stockholder Agreement, and shall not issue any such
press release or make any such public statement prior to such consultation (and
affording the other party or parties an opportunity to comment thereon), except
as may be required by applicable law or by applicable rules of any securities
exchange.
SECTION 6.6. Indemnification, Insurance.
--------------------------
(a) From and after the Effective Time, Parent and Acquisition Sub
shall indemnify and hold harmless each person who is, or has been at any
time prior to the date hereof or who becomes prior to the Effective Time,
an officer, director or employee of the Company or any of its subsidiaries
(collectively, the "Indemnified Parties" and individually, the "Indemnified
------------------- -----------
Party")
-----
50
against all losses, liabilities, expenses, claims or damages in
connection with any claim, suit, action, proceeding or investigation based
in whole or in part on the fact that such Indemnified Party is or was a
director, officer or employee of the Company or any of its subsidiaries or
as trustee or fiduciaries of any plan for the benefit of employees and
arising out of acts or omissions occurring prior to and including the
Effective Time (including but not limited to the transactions contemplated
by this Agreement) to the fullest extent permitted by applicable law, for a
period of not less than six years following the Effective Time; provided
--------
that in the event any claim or claims are asserted or made within such six-
year period, all rights to indemnification in respect of any such claim or
claims shall continue until final disposition of any and all such claims.
(b) Parent shall cause the Certificate of Incorporation and By-Laws of
the Surviving Corporation and its subsidiaries to include provisions for
the limitation of liability of directors and indemnification of the
Indemnified Parties to the fullest extent permitted under Delaware Law and
shall not permit the amendment of such provisions in any manner adverse to
the Indemnified Parties, as the case may be, without the prior written
consent of such persons, for a period of six years from and after the date
hereof.
(c) For six years after the Effective Time, the Surviving Corporation
shall cause to be maintained the current policies of directors' and
officers' liability insurance maintained by the Company (provided that the
Surviving Corporation may substitute therefor policies of at least the same
coverage containing terms and conditions which are substantially
equivalent) with respect to matters occurring prior to the Effective Time,
to the extent such policies are available; provided, that in no event shall
the Surviving Corporation be required to expend, in order to maintain or
procure insurance coverage pursuant to this Section 6.6(c), any amount per
annum greater than 150% of the current annual premiums paid by the Company
for such insurance (which the Company represents and warrants to be not
more than $305,375.
SECTION 6.7. Notification of Certain Matters. The Company shall give
-------------------------------
prompt notice to Parent or Acquisition Sub, and Parent or Acquisition Sub shall
give prompt notice to the Company, upon becoming aware of (i) the occurrence or
nonoccurrence of any event, the occurrence or
51
nonoccurrence of which has resulted in, or could reasonably be expected to
result in, any condition to the Offer set forth in Annex A, or any condition to
the Merger set forth in Article VII, not being satisfied, (ii) the failure of
such party to comply with any covenant or agreement to be complied with by it
pursuant to this Agreement which has resulted in, or could reasonably be
expected to result in, any condition to the Offer set forth in Annex A, or any
condition to the Merger set forth in Article VII, not being satisfied and (iii)
the occurrence, or nonoccurrence, of any event the occurrence, or nonoccurrence,
of which would cause any representation or warranty contained in this Agreement
to be untrue or inaccurate, which has resulted in, or could be reasonably
expected to result in any condition to the Offer set forth in Annex A not to be
satisfied. The delivery of any notice pursuant to this Section 6.7 shall not
limit or otherwise affect the remedies available hereunder to the party
receiving such notice.
SECTION 6.8. Employee Plans.
--------------
(a) Except as may be otherwise agreed to by Parent and the Company,
the Company Stock Plans shall terminate as of the Effective Time. Prior to
the purchase by Parent, Acquisition Sub and their affiliates of Shares
pursuant to the Offer or the KKR Shares upon the exercise of the Option
pursuant to the Stockholder Agreement, the Board (or, if appropriate, any
committee thereof) shall adopt such resolutions or take such other actions
as are required to (i) effect the transactions contemplated by Section 2.8
hereof and (ii) with respect to any stock option, stock appreciation or
other stock benefit plan of the Company or any of its subsidiaries not
addressed by the preceding clause, ensure that the Company or any duly
appointed committee will not use its discretion to accelerate the vesting
of any award under any such Plan and following the Effective Time, no
participant therein shall have any right thereunder to acquire any capital
stock of the Surviving Corporation or any subsidiary thereof.
(b) Between the date of this Agreement and the Effective Time, the
Company shall reasonably cooperate with Parent and Acquisition Sub in
structuring transactions (including those described in Section 2.8 with
respect to Employee Options) so as to optimize the
52
tax treatment of the Company, Parent and Acquisition Sub in connection
therewith.
SECTION 6.9. No Solicitation.
---------------
(a) The Company will immediately cease any existing discussions or
negotiations with any third parties conducted prior to the date hereof with
respect to any Acquisition Proposal (as defined below). The Company shall
not directly or indirectly, through any officer, director, employee,
representative, agent or affiliates, including any investment banker,
attorney, or accountant (collectively, "Representatives") retained by the
---------------
Company or any of its Subsidiaries or affiliates, (i) solicit, initiate,
encourage or otherwise facilitate (including by way of furnishing
information) any inquiries or proposals that constitute, or could
reasonably be expected to lead to, a proposal or offer for a merger,
consolidation, business combination, sale of substantial assets, sale of
15% or more of shares of capital stock (including, without limitation, by
way of a tender offer) or similar transactions involving the Company or any
of its subsidiaries, other than the transactions contemplated by this
Agreement or the Stockholders Agreement (any of the foregoing inquiries or
proposals being referred to in this Agreement as an "Acquisition
-----------
Proposal"), or (ii) engage in negotiations or discussions concerning, or
provide any non-public information to any person or entity relating to, any
Acquisition Proposal.
(b) Neither the Board nor any committee thereof shall (i) subject to
Section 6.9(d), withdraw or modify, or propose to withdraw or modify, in a
manner adverse to Parent or Acquisition Sub, the approval or recommendation
by the Board or such committee of the Offer, the Agreement; (ii) approve
or recommend, or propose to approve or recommend, any Acquisition Proposal;
or (iii) cause or permit the Company or any of its subsidiaries to enter
into any agreement, including an agreement in principle or letter of intent
relating to an Acquisition Proposal (an "Acquisition Agreement").
---------------------
(c) The Company shall notify Parent immediately (and no later than 24
hours) after receipt by the Company of any Acquisition Proposal or any
request for non-public information in connection with an Acquisition
Proposal or for access to the properties, books or records of the Company
by any person or entity that informs the Company that it is considering
making,
53
or has made, an Acquisition Proposal. Such notice shall be made orally and
in writing and shall indicate in reasonable detail the identity of the
offeror and the terms and conditions of such proposal, inquiry or contact.
(d) Nothing contained in this Section 6.9 shall prohibit the Company
from taking and disclosing to its stockholders a position contemplated by
Rule 14e-2(a) promulgated under the Exchange Act or from making any legally
required disclosure to the stockholders of the Company. Notwithstanding
anything else to the contrary, neither the Company nor the Board shall take
any action that would (x) prevent, impede or delay the Offer, the
Stockholder Meeting or the ability of the stockholders to hold a meeting to
vote on the Merger or adopt this Agreement, (y) prevent, impede or delay
(i) the ability of the stockholders of the Company (A) to tender or sell
their Shares in the Offer and (B) to approve and adopt this Agreement, the
Merger and the other transactions contemplated hereby, or (ii) the ability
of the Company, Parent or Acquisition Sub from effecting the Offer or,
after the stockholders of the Company have voted in favor of the Merger and
adopted the Merger Agreement, from effecting the Merger in accordance with
Delaware Law or (z) result in the Board not having taken all Board action
required to satisfy all applicable requirements of Delaware Law in
connection with this Agreement, the Merger and the other transactions
contemplated hereby. Notwithstanding anything to the contrary, the Company
will duly call, give notice and hold the Stockholders Meeting, if required
by the Delaware Law, for the purpose of considering and taking action upon
this Agreement and the Merger whether or not the Board has determined at
any time after the date hereof it is no longer advisable for the
stockholders of the Company to adopt this Agreement. It is understood that
any violation of the restrictions set forth in this Section 6.9 by any
Representative of the Company or any of its subsidiaries, whether or not
such person is purporting to act on behalf of the Company or otherwise,
shall be deemed to be a breach of this Section 6.9 by the Company.
SECTION 6.10. Agreements With Sellers (or their affiliates).
---------------------------------------------
Notwithstanding anything to the contrary contained in any contract, agreement or
commitment between the Company or any of its subsidiaries, on the one hand, and
Sellers or any of their affiliates (other than the Company and its
subsidiaries), on the other hand (the "Sellers' Agreements"), the Sellers'
-------------------
Agreements set forth on
54
Schedule 6.10 shall terminate as of the Effective Time without liability on the
part of any of the parties thereto.
SECTION 6.11. Employee Matters.
----------------
(a) For a period of at least two years after the Effective Time,
Parent shall cause the Surviving Corporation to provide compensation and
benefit plans (other than any stock-based plans, programs or arrangements)
that are in the aggregate substantially as favorable as the Company's
existing compensation, welfare and pension benefit plans, programs and
arrangements for the benefit of current and former employees and directors
of the Company (subject to such modification as may be required by
applicable law).
(b) If any employee of the Company or any of its subsidiaries becomes
a participant in any employee benefit or compensation plan, arrangement,
practice or policy of Parent or any affiliate of Parent, such employee
shall be given credit for eligibility and vesting under such plan
arrangement, practice or policy for all service prior to the Effective Time
with the Company, any of its subsidiaries, affiliates or any predecessors
for which the employee would have been credited in the Company's plans
immediately prior to the Effective Time.
SECTION 6.12. Acquisition Sub . Parent will take all action
----------------
necessary to cause Acquisition Sub to perform its obligations hereunder and to
consummate the Offer and the Merger on the terms and conditions set forth
herein.
SECTION 6.13. FIRPTA Affidavit. The Company will use its best
----------------
efforts to cause each person who holds five percent (5%) or more of the stock of
the Company to deliver an affidavit stating, under penalties of perjury, such
person's U.S. taxpayer identification number and that such person is not a
"foreign person" as defined in Section 1445 of the Code.
SECTION 6.14. Third Party Standstill Agreements; Tortious
-------------------------------------------
Interference. During the period from the date of this Agreement through the
------------
Effective Time, the Company shall not terminate, amend, modify or waive any
provision of any confidentiality or standstill or similar agreement to which the
Company or any of its subsidiaries is a party (other than any involving Parent).
Subject to the foregoing, during such period, the Company agrees to enforce, to
the fullest extent permitted under applicable law, the provisions of any such
agreements, including obtaining injunctions to prevent any breaches of such
agreements and
55
to enforce specifically the terms and provisions thereof in any court having
jurisdiction.
ARTICLE VII
Conditions to Consummation of the Merger
----------------------------------------
SECTION 7.1. Conditions to the Company's, Parent's and Acquisition
-----------------------------------------------------
Sub's Obligation to Effect the Merger. The respective obligations of Company,
-------------------------------------
Parent and Acquisition Sub to effect the Merger are subject to the satisfaction
at or prior to the Effective Time of the following conditions:
(a) if required by Delaware Law, this Agreement shall have been
adopted by the affirmative vote of the stockholders of the Company by the
requisite vote in accordance with Delaware Law;
(b) any waiting period applicable to the Merger under the HSR Act
shall have terminated or expired and the other Company Governmental
Approvals and Parent Governmental Approvals, the failure of which to obtain
would be reasonably expected to have a Material Adverse Effect or a Parent
Material Adverse Effect ("Required Approvals"), shall have been obtained or
------------------
satisfied, as the case may be, on terms satisfactory to Parent in its
reasonable discretion; provided that this condition may not be asserted by
--------
the Company with respect to any Required Approval if the potential penalty
for any failure to receive such Required Approval will be borne only by
Parent or Acquisition Sub;
(c) no statute, rule, regulation, executive order, decree, ruling,
injunction or other order shall have been enacted, entered, promulgated or
enforced by any court or other Governmental Authority of competent
jurisdiction that prohibits the Merger or makes the Merger illegal; and
(d) Acquisition Sub, Parent or their affiliates shall have accepted
for payment and purchased Shares pursuant to and subject to the conditions
of the Offer or the KKR Shares upon the exercise of the Option pursuant to
the Stockholder Agreement.
56
ARTICLE VIII
Termination; Amendment; Waiver
------------------------------
SECTION 8.1. Termination. This Agreement may be terminated and the
-----------
Merger may be abandoned at any time prior to the Effective Time, notwithstanding
approval thereof by the stockholders of the Company:
(a) by mutual written consent of Parent, Acquisition Sub and the
Company;
(b) by Parent or the Company if any court or other Governmental Entity
of competent jurisdiction shall have issued an order, decree or ruling or
taken any other action permanently restraining, enjoining or otherwise
prohibiting the Merger and such order, decree, ruling or other action shall
have become final and nonappealable;
(c) by Parent or the Company, if Acquisition Sub shall have (i) failed
to commence the Offer as provided in Section 1.1, (ii) terminated or
withdrawn the Offer without purchasing any Shares pursuant to the Offer or
(iii) failed to pay for Shares pursuant to the Offer by July 1, 1999 (the
"Termination Date"); provided, that the right to terminate this Agreement
----------------- --------
under this subparagraph (c) shall not be available (x) to any party
(including Acquisition Sub's failure in the case of Parent) whose failure
to fulfill any obligation under this Agreement has been the cause or
resulted in one of the circumstances described in clause (i), (ii) or
(iii), (y) to the Company if any of the events specified in Section 6.2(d)
of the Stockholder Agreement shall have occurred, or a breach of the
Stockholder Agreement by any Seller has been the cause or resulted in one
of the circumstances described in clause (i), (ii), or (iii) or (z) to any
party if Acquisition Sub, Parent or their affiliates shall have exercised
the Option unless such exercise subsequently is voided under the terms of
the Stockholder's Agreement;
(d) by Parent or Acquisition Sub, at any time prior to the purchase by
Acquisition Sub, Parent or their affiliates of Shares pursuant to and
subject to the conditions of the Offer or the purchase of the KKR Shares
upon the exercise of the Option pursuant to the Stockholder Agreement, if
(i) any representation or warranty of the Company contained herein or of
the Sellers contained in the Stockholder Agreement that is qualified as to
materiality shall not be true and
57
correct or any representation or warranty of the Company contained herein
or of the Sellers contained in the Stockholder Agreement that are not so
qualified shall not be true and correct in any material respect, (ii) there
shall have been a breach of any covenant or agreement (including Section
6.9) of the Company contained herein or of the Sellers contained in the
Stockholder Agreement (including Section 8 thereof) which would materially
adversely affect (or materially delay) the consummation of the Offer or the
Merger or the transactions contemplated by the Stockholder Agreement, which
shall not have been cured prior to the earlier of 10 business days
following notice of such breach and two business days prior to the date the
Offer expires, provided, however, the Company will have no right to cure a
------- --------
breach of Section 6.9; or
(e) by the Company prior to the purchase by Acquisition Sub, Parent or
their affiliates of Shares pursuant to and subject to the conditions of the
Offer or the purchase of any KKR Shares upon exercise of the Option
pursuant to the Stockholders Agreement, if (i) there shall have been a
material breach of any representation or warranty in this Agreement or the
Stockholders Agreement on the part of Parent or Acquisition Sub which
adversely affects (or materially delays) the consummation of the Offer or
(ii) there shall have been a material breach of any covenant or agreement
in this Agreement or the Stockholders Agreement on the part of Parent or
Acquisition Sub which adversely affects (or materially delays) the
consummation of the Offer which shall not have been cured prior to the
earlier of (A) 10 business days following notice of such breach and (B) two
business days prior to the date on which the Offer expires.
SECTION 8.2. Effect of Termination. In the event of the termination
---------------------
and abandonment of this Agreement pursuant to Section 8.1, this Agreement shall
forthwith become void and have no effect, without any liability on the part of
any party hereto, other than the provisions of this Section 8.2 and Sections
4.8, 5.6, 6.3(b) and 8.3 and Article IX. The termination of this Agreement shall
not relieve any party from liability for any willful breach of any covenant
contained in this Agreement.
SECTION 8.3. Fees and Expenses. Each party shall bear its own
-----------------
expenses and costs in connection with this Agreement and the transactions
contemplated hereby.
SECTION 8.4. Amendment. Subject to Section 1.3(c), this Agreement
---------
may be amended by action
58
taken by the Company, Parent and Acquisition Sub at any time before or after
adoption of the Merger by the stockholders of the Company (if required by
applicable law) but, after any such approval, no amendment shall be made that
requires the approval by the Company's stockholders without obtaining such
approval. This Agreement may not be amended except by an instrument in writing
signed on behalf of each of the parties hereto.
SECTION 8.5. Extension; Waiver. Subject to Section 1.3(c), at any
-----------------
time prior to the Effective Time, the Company, on the one hand, and Parent and
Acquisition Sub, on the other hand, 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.
No delay on the part of any party hereto in exercising any right, power or
privilege hereunder shall operate as a waiver thereof, nor shall any waiver on
the part of any party hereto of any right, power or privilege hereunder operate
as a waiver of any other right, power or privilege hereunder, nor shall any
single or partial exercise of any right, power or privilege hereunder preclude
any other or further exercise thereof or the exercise of any other right, power
or privilege hereunder. Unless otherwise provided, the rights and remedies
herein provided are cumulative and are not exclusive of any rights or remedies
which the parties hereto may otherwise have at law or in equity.
ARTICLE IX
Miscellaneous
-------------
SECTION 9.1. Non-Survival of Representations and Warranties. None of
----------------------------------------------
the representations, warranties, covenants and other agreements in this
Agreement or in any instrument delivered pursuant to this Agreement, including
any rights arising out of any breach of such representations, warranties,
covenants and other agreements, shall survive the Effective Time, except for
those covenants and agreements contained herein and therein that by their terms
apply or are to be performed in whole or in part after the Effective Time and
this Article IX. Each party hereto
59
agrees that, except for the representations and warranties contained in this
Agreement and the Stockholder Agreement, (i) none of the Company, Parent or
Acquisition Sub or any of their respective officers, directors, employees,
affiliates, agents, financial or legal advisors or other representatives makes
any other representations or warranties, whatsoever, oral or written, express or
implied, and each hereby disclaims any other representations and warranties made
by itself or any of its officers, directors, employees, affiliates, agents,
financial and legal advisors or other representatives, with respect to the
execution and delivery of this Agreement, the documents and the instruments
referred to herein, or the transactions contemplated hereby or thereby,
notwithstanding the delivery or disclosure to the other party or the other
party's representatives of any documentation or other information with respect
to any one or more of the foregoing, and (ii) none of the parties hereto is
relying on any disclosure, statement, representation or warranty, oral or
written, express or implied, made by any other party hereto or such party's
officers, directors, employees, affiliates, agents, financial or legal advisors
or other representatives.
SECTION 9.2. Entire Agreement; Assignment. This Agreement (including
----------------------------
the Schedules hereto), the Confidentiality Agreement and the Stockholder
Agreement (i) constitute the entire agreement among the parties hereto with
respect to the subject matter hereof and supersede all other prior agreements
and understandings, both written and oral, among the parties with respect to the
subject matter hereof and (ii) shall not be assigned by operation of law or
otherwise; provided that Acquisition Sub may assign its rights and obligations
--------
(including the right to purchase Shares in the Offer) in whole or in part to any
direct or indirect subsidiary of GEC, p.l.c. (or the successor to the non-
defense business of GEC, p.l.c.) (provided that such transferee agrees in
writing to be bound by this Agreement), but no such assignment shall relieve
Parent or Acquisition Sub of its obligations hereunder if such assignee does not
perform such obligations.
SECTION 9.3. 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, overnight courier or by registered or certified
60
mail (postage prepaid, return receipt requested), to the other party as follows:
if to Parent or Acquisition Sub:
GEC Incorporated and
Xxxxxx Acquisition Corp.
c/o Videojet Systems International, Inc.
0000 Xxxxxx Xxxxxxxxx
Xxxx Xxxx, Xxxxxxxx 00000-0000
Attention: Xxxxxxxx X. Xxxxxxx, Secretary
Facsimile: (000) 000-0000
with copies to:
Xxxxx, Xxxxx & Xxxxx
Xxxxxxxxxxxx Xxxxx
0, Xxxxx Xxxxxxxx Street
London, EC4N 8EL, ENGLAND
Attention: Xxxxxxx X. Xxxxxx
Facsimile: 011-44-171-329-4455
and
Cravath, Swaine & Xxxxx
Worldwide Plaza
000 Xxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx, 00000
Attention: Xxxxxx X. Xxxxxxx
Facsimile: (000) 000-0000
if to the Company:
Reltec Corporation
0000 Xxxxxxxxxxx Xxxxx, Xxxxx 000
Xxxxxxxxx, Xxxx 00000-0000
Attention: Xxxxxxx Xxxxxxx Xxxxx,
Vice President and General Counsel
Facsimile: (000) 000-0000
with copies to:
Xxxxxx & Xxxxxxx
000 Xxxxxxxxxxxx Xxxxx
Xxxxx Xxxx, Xxxxxxxxxx 00000
Attention: Xxxxx X. Xxxxxx
Facsimile: (000) 000-0000
61
Attention: Xxxxx X. Xxxxxx
Facsimile: (000) 000-0000
or to such other address as the person to whom notice is given may have
previously furnished to the other in writing in the manner set forth above.
SECTION 9.4. Governing Law. This Agreement shall be governed by and
-------------
cons irrevocably and unconditionally consents to submit to the exclusive
jurisdiction of the courts of the States of Delaware and of the United States of
America located in the State of Delaware or any appellate court thereof (the
"Delaware Courts") for any litigation arising out of or relation to this
-------- ------
Agreement and the transactions contemplated hereby (and agrees not to commence
any litigation relating thereto except in such Delaware Courts), waives any
objection to the laying of venue of any such litigation in the Delaware Court
that such litigation brought therein has been brought in an inconvenient forum.
Each of the parties hereto agrees that a final judgment in any such action or
proceeding shall be conclusive and may be enforced in other jurisdictions by
suit on the judgment or in any other manner provided by law. Each party to this
Agreement irrevocably consents to service of process in the manner provided for
notices in Section 9.3. Nothing in this Agreement will affect the right of any
party to this Agreement to serve process in any other manner permitted by law.
EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY
ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT
ISSUES, AND THEREFORE IT HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT
IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR
INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT AND ANY OF THE
AGREEMENTS DELIVERED IN CONNECTION HEREWITH OR THE TRANSACTIONS CONTEMPLATED
HEREBY OR THEREBY. EACH PARTY CERTIFIES AND ACKNOWLEDGES THAT (i) NO
REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY
OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK
TO ENFORCE EITHER OF SUCH WAIVERS, (ii) IT UNDERSTANDS AND HAS CONSIDERED THE
IMPLICATIONS OF SUCH WAIVERS, (iii) IT MAKES SUCH WAIVERS VOLUNTARILY, AND (iv)
IT HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE
MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 9.4.
SECTION 9.5. Parties in Interest. This Agreement shall be binding
-------------------
upon and inure solely to the benefit of each party hereto and its successors and
62
permitted assigns, and, except as provided in Article II (other than Section
2.8), Section 1.3(c) and Section 6.6 nothing in this Agreement, express or
implied, is intended to or shall confer upon any other person any rights,
benefits or remedies or any nature whatsoever under or by reason of this
Agreement.
SECTION 9.6. Remedies. The parties hereto agree that irreparable
--------
damage would occur in the event any provision of this agreement was not
performed in accordance with the terms hereof or otherwise breached and that the
parties shall be entitled to specific performance of the terms hereof or to an
injunction to prevent such breach, in addition to any other remedy at law or in
equity.
SECTION 9.7. Severability. The provisions of this Agreement shall be
------------
deemed severable and the invalidity or unenforceability of any provision shall
not affect the validity and enforceability of the other provisions hereof. If
any provision of this Agreement, or the application thereof to any person or
entity or any circumstance, is invalid or unenforceable, (a) a suitable and
equitable provision shall be substituted therefor in order to carry out, so far
as may be valid and enforceable, the intent and purpose of such invalid and
unenforceable provision and (b) the remainder of this Agreement and the
application of such provision to other persons, entities or circumstances shall
not be affected by such invalidity or unenforceability, nor shall such
invalidity or unenforceability affect the validity or enforceability of such
provision, or the application thereof, in any other jurisdiction.
SECTION 9.8. Interpretation. 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. When a reference is
made in this Agreement to Sections, Exhibits or Schedules, such reference shall
be to a Section of or Exhibit or Schedule to this Agreement unless otherwise
indicated. It is understood and agreed that neither the specifications of any
dollar amount in this Agreement nor the inclusion of any specific item in the
Schedules or Exhibits is intended to imply that such amounts or higher or lower
amounts, or the items so included or other items, are or are not material, and
neither party shall use the fact or setting or such amounts or the fact of the
inclusion of such item in the Schedules or Exhibits in any dispute or
controversy between the parties as to whether any obligation, item or matter is
or is not material for purposes hereof.
63
SECTION 9.9. Certain Definitions. For purposes of this Agreement,
-------------------
the term:
(a) "affiliate" of a person 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;
(b) "business day" shall mean any day other than a Saturday, Sunday or
------------
federal holiday;
(c) "control" (including the terms "controlled by" and "under common
-------
control with") means the possession, directly or indirectly or as trustee
or executor, of the power to direct or cause the direction of the
management policies of a person, whether through the ownership of stock, as
trustee or executor, by contract or credit arrangement or otherwise;
(d) "generally accepted accounting principles" shall mean the
----------------------------------------
generally accepted accounting principles set forth in the opinions and
pronouncements of the Accounting Principles Board of the American institute
of Certified Public Accountants and statements and pronouncements of the
Financial Accounting Standards Board or in such other statements by such
other entity as may be approved by a significant segment of the accounting
profession in the United States, in each case applied on a basis consistent
with the manner in which the audited financial statements for the fiscal
year of the Company ended December 31, 1997 were prepared;
(e) "including" means including, without limitation;
---------
(f) "person" means an individual, corporation, partnership,
------
association, trust, unincorporated organization, Governmental Entity, other
entity or group (as defined in Section 13(d)(3) of the Exchange Act), and
(g) "subsidiary" or "subsidiaries" of any person means any
---------- ------------
corporation, partnership, joint venture or other legal entity of which such
person (either alone or through or together with any other subsidiary),
owns, directly or indirectly, 50% or more of the stock or other equity
interests the holder of which is generally entitled to vote for the
election of the board of directors or other governing body of such
corporation, partnership, joint venture or other legal entity.
64
SECTION 9.10. Counterparts. This Agreement may be executed in two or
------------
more counterparts, each of which shall be deemed to be an original, but all of
which shall constitute one and the same agreement.
65
IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
executed on its behalf by its representatives thereunto duly authorized, all as
of the day and year first above written.
RELTEC CORPORATION
By: /s/ Xxxxx X. Fine
-----------------
Name:Xxxxx X. Fine
Title:Vice President
GEC INCORPORATED
By: /s/ Xxxxxxx Xxxxxx
------------------
Name:Xxxxxxx Xxxxxx
Title:Director
XXXXXX ACQUISITION CORP.
By: /s/ Xxxx Xxxx
-------------
Name:Xxxx Xxxx
Title:Director
ANNEX A
OFFER CONDITIONS
The capitalized terms used in this Annex A have the meanings set forth
in the attached Agreement, except that the term "Merger Agreement" shall be
----------------
deemed to refer to the attached Agreement and the term "Commission" shall be
----------
deemed to refer to the SEC.
Notwithstanding any other provision of the Offer, Acquisition Sub
shall not be required to accept for payment or, subject to any applicable rules
and regulations of the Commission, including Rule 14e-l(c) under the Exchange
Act (relating to Acquisition Sub's obligation to pay for or return Shares
promptly after termination or withdrawal of the Offer), to pay for any Shares
tendered pursuant to the Offer, and may postpone the acceptance for payment or,
subject to the restriction referred to above, payment for any Shares tendered
pursuant to the Offer, and may terminate the Offer and not accept for payment
any Shares, if (i) upon expiration of the Offer as determined in accordance with
the Merger Agreement the Minimum Condition shall not have been satisfied, (ii)
upon expiration of the Offer as determined in accordance with the Merger
Agreement any applicable waiting period under the HSR Act shall not have expired
or been terminated, (iii) Parent, Acquisition Sub and the Company shall not
have obtained, on terms satisfactory to Parent in its reasonable discretion,
from (A) the German Federal Cartel Office, during the one month time limit
referred to in Section 40 paragraph 1 of the Act against Restraints on
Competition, confirmation that the conditions for a prohibition in Section 36
paragraph 1 of the Act against Restraints on Competition are not fulfilled, or,
if no such confirmation is received, the one month time limit having expired
without the parties having been notified by the Federal Cartel Office that it
has entered into the examination of the proposed concentration, (B) the
consents, authorizations and approvals required by the Canadian Competition Act;
(C) confirmation from the Italian Autorita Garante della Concorrenza e del
Mercato that it does not intend to initiate a second stage investigation of the
transactions contemplated hereby (including the Merger) or any matters arising
therefrom under Article 16 of Law no.287 of October 10, 1990; and (D)
confirmation from the U.K. Office of Fair Trading that it is not the intention
of the U.K. Secretary of State to refer the transactions contemplated hereby or
any matters arising therefrom to the MMC, (iv) any other authorizations,
consents, orders or approvals of, or declarations or filing with, or expirations
of waiting periods imposed by, any Governmental Entity, the failure of which to
obtain would reasonably be expected to have a Material Adverse
Effect, a Parent Material Adverse Effect or a material adverse effect on the
ability of the Company, Parent or Acquisition Sub to perform its obligations
under the Merger Agreement, shall not have been obtained or satisfied on terms
satisfactory to Parent in its reasonable discretion or (v) at any time on or
after the date of the Merger Agreement and prior to the acceptance for payment
of Shares, any of the following conditions occurs or has occurred:
(a) there shall be pending any suit, action or proceeding by any
Governmental Entity, that has a reasonable likelihood of success, (A)
challenging the acquisition by Parent or Acquisition Sub of any Shares,
seeking to restrain or prohibit the making or consummation of the Offer or
the Merger, or seeking to obtain from the Company, Parent or any of their
respective subsidiaries or affiliates any damages that are material in
relation to the Company and its subsidiaries taken as a whole, (B) seeking
to prohibit or limit the ownership or operation by the Company, Parent or
any of their respective subsidiaries or affiliates of any material portion
of the business or assets of the Company, Parent or any of their respective
subsidiaries or affiliates, or to compel the Company, Parent or any of
their respective Subsidiaries or affiliates to dispose of or hold separate
any material portion of the business or assets of the Company, Parent or
any of their respective Subsidiaries or affiliates which are material to
Parent and its subsidiaries, taken as a whole, or the Company and its
subsidiaries, taken as a whole, as the case may be, as a result of the
Offer, the Merger or any of the other transactions contemplated by the
Agreement or (C) which otherwise is reasonably likely to have a Material
Adverse Effect or a material adverse effect on the ability of the Company
to perform its obligations hereunder;
(b) there shall be any statute, rule, regulation, legislation,
interpretation, judgment, order or injunction enacted, entered, enforced,
promulgated, amended or issued with respect to, or deemed applicable to (A)
Parent, the Company or any of their respective Subsidiaries or affiliates
or (B) the Offer or the Merger by any Governmental Authority that has or is
reasonably likely to result, directly or indirectly, in any of the
consequences referred to in paragraph (a) above;
(c) there shall have occurred (A) any general suspension of trading
in, or limitation on prices for, securities on any securities exchange or
in the over-
2
the-counter market in the United States or the United Kingdom for a period
of 5 or more business days, (B) the declaration of a banking moratorium or
any suspension of payments in respect of banks in the United States or
United Kingdom (whether or not mandatory) or (C) any material and mandatory
limitation, by any United States or United Kingdom governmental authority
or agency on the extension of credit by banks or other financial
institutions generally; or
(d) since the date of the Merger Agreement, there shall have occurred
any event, change, effect or development that, individually or in the
aggregate, has had or would reasonably likely have a Material Adverse
Effect or a material adverse effect on the ability of the Company to
perform its obligations hereunder; or
(e) the Company shall have breached or failed to perform in any
material respect any of its covenants or agreements under the Merger
Agreement (including Section 6.9 thereof), or any Seller shall have
breached or failed to perform in any material respect any of its covenants
or agreements under the Stockholder Agreement which shall not have been
cured prior to the earlier of 10 business days prior to the date the Offer
expires; provided, however, the Company will have no right to cure a breach
of Section 6.9 of the Merger Agreement and no Seller shall have any right
to cure a breach of Section 8 of the Stockholder Agreement; or
(f) any of the representations and warranties of the Company set
forth in the Merger Agreement or of any Seller set forth in the Stockholder
Agreement that are qualified as to materiality shall not be true and
correct or any of the representations and warranties of the Company set
forth in the Merger Agreement or of any Seller set forth in the Stockholder
Agreement that are not so qualified shall not be true and correct in any
material respect, in each case as if such representations and warranties
were made at the time of such determination (or, in the case of any
representation and warranty made as of a specified date, as of such date)
and which inaccuracy shall not have been cured prior to the earlier of 10
business days following the notice of such inaccuracy and two business days
prior to the date the Offer expires; or
(g) the Merger Agreement shall have been terminated in accordance
with its terms;
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which, in the sole judgment of Parent or Acquisition Sub in any such case, and
regardless of the circumstances (including any action or omission by Acquisition
Sub) giving rise to any such condition makes it inadvisable to proceed with such
acceptance for payment or payments.
The foregoing conditions are for the sole benefit of Parent and
Acquisition Sub and may be asserted by Parent or Acquisition Sub regardless of
the circumstances giving rise to any such condition or may be waived, subject to
Section 1.1 of the Merger Agreement that the Minimum Condition may not be waived
without the written consent of the Company, by Acquisition Sub in whole or in
part at any time or from time to time in their sole discretion. The failure by
Parent or Acquisition Sub at any time to exercise any of the foregoing rights
shall not be deemed a waiver of any such right, the waiver of any such right
with respect to particular facts or circumstances shall not be deemed a waiver
with respect to any other facts or circumstances, and each such right shall be
deemed an ongoing right that may be asserted at any time or from time to time.
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