Exhibit 10.1
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AGREEMENT AND PLAN OF MERGER
Among
ROHM AND XXXX COMPANY
GERSHWIN ACQUISITION CORP.
and
XXXXXX INTERNATIONAL, INC.
Dated as of January 31, 1999
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TABLE OF CONTENTS
ARTICLE I THE OFFER...................................................1
SECTION 1.1 The Offer...............................................1
SECTION 1.2 Company Action..........................................3
ARTICLE II THE MERGER..................................................4
SECTION 2.1 The Merger..............................................4
SECTION 2.2 Effective Time..........................................4
SECTION 2.3 Effects of the Merger...................................4
SECTION 2.4 Articles of Incorporation; By-Laws......................4
SECTION 2.5 Directors and Officers..................................5
SECTION 2.6 Conversion of Securities................................5
SECTION 2.7 Treatment of Options; Stock Plans.......................6
SECTION 2.8 Surrender of Shares; Stock Transfer Books...............8
SECTION 2.9 Distributions with Respect to Unexchanged Shares.......10
SECTION 2.10 No Further Ownership Rights in Company Common Stock....10
SECTION 2.11 Fractional Shares......................................10
SECTION 2.12 Lost Certificates......................................10
SECTION 2.13 Withholding Rights.....................................11
SECTION 2.14 Alternative Merger Consideration.......................11
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY...............12
SECTION 3.1 Organization and Qualification.........................12
SECTION 3.2 Articles of Incorporation and By-Laws..................12
SECTION 3.3 Capitalization.........................................13
SECTION 3.4 Authority Relative to This Agreement...................14
SECTION 3.5 No Conflict; Required Filings and Consents.............15
SECTION 3.6 Compliance; Permits....................................16
SECTION 3.7 SEC Filings; Financial Statements......................17
SECTION 3.8 Absence of Certain Changes or Events...................17
SECTION 3.9 Absence of Litigation..................................18
SECTION 3.10 Employee Benefit Plans.................................18
SECTION 3.11 Tax Matters............................................20
SECTION 3.12 Offer Documents; Proxy Statement.......................21
SECTION 3.13 Environmental Matters..................................22
SECTION 3.14 Year 2000..............................................24
SECTION 3.15 Intellectual Property..................................24
SECTION 3.16 Contracts..............................................25
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SECTION 3.17 Opinion of Company Financial Adviser....................25
SECTION 3.18 Brokers.................................................25
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF PARENT AND PURCHASER......26
SECTION 4.1 Organization and Qualification..........................26
SECTION 4.2 Certificate of Incorporation and By-Laws................26
SECTION 4.3 Capitalization..........................................26
SECTION 4.4 Authority Relative to This Agreement....................28
SECTION 4.5 No Conflict; Required Filings and Consents..............29
SECTION 4.6 SEC Filings; Financial Statements.......................30
SECTION 4.7 Absence of Certain Changes or Events....................30
SECTION 4.8 Offer Documents; Proxy Statement........................31
SECTION 4.9 Brokers.................................................31
SECTION 4.10 Operations of Purchaser.................................32
SECTION 4.11 Opinion of Parent Financial Adviser.....................32
SECTION 4.12 Funds...................................................32
SECTION 4.13 Compliance; Permits.....................................32
SECTION 4.14 Absence of Litigation...................................32
SECTION 4.15 Employee Benefit Plans..................................33
SECTION 4.16 Environmental Matters...................................34
SECTION 4.17 Contracts...............................................35
ARTICLE V CONDUCT OF BUSINESS PENDING THE MERGER.....................36
SECTION 5.1 Conduct of Business of the Company Pending the Merger...36
SECTION 5.2 Conduct of Business of Parent Pending the Merger........38
SECTION 5.3 Coordination of Dividends...............................39
ARTICLE VI ADDITIONAL AGREEMENTS......................................40
SECTION 6.1 Meetings................................................40
SECTION 6.2 Proxy Statement; Registration Statement.................41
SECTION 6.3 Company Board Representation; Section 14(f).............41
SECTION 6.4 Confidentiality.........................................42
SECTION 6.5 No Solicitation of Transactions.........................43
SECTION 6.6 Employee Benefits Matters...............................44
SECTION 6.7 Directors' and Officers' Indemnification and Insurance..45
SECTION 6.8 Notification of Certain Matters.........................46
SECTION 6.9 Further Action; Reasonable Best Efforts.................47
SECTION 6.10 Public Announcements....................................48
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SECTION 6.11 Affiliates..............................................48
SECTION 6.12 Stock Exchange Listing..................................48
SECTION 6.13 Accountants' Letters....................................48
SECTION 6.14 Parent Board of Directors...............................49
SECTION 6.15 Alternative Transaction Structure.......................49
SECTION 6.16 Delivery of List of Company Plans.......................49
ARTICLE VII CONDITIONS OF MERGER.......................................50
SECTION 7.1 Conditions to Obligation of Each Party to
Effect the Merger.....................................50
SECTION 7.2 Additional Conditions to Obligation of Parent
and Purchaser to Effect the Merger....................51
SECTION 7.3 Additional Conditions to Obligation of the
Company to Effect the Merger.. .......................51
ARTICLE VIII TERMINATION, AMENDMENT AND WAIVER..... ....................52
SECTION 8.1 Termination..............................................52
SECTION 8.2 Effect of Termination....................................54
SECTION 8.3 Fees and Expenses........................................54
SECTION 8.4 Amendment................................................56
SECTION 8.5 Waiver...................................................56
ARTICLE IX GENERAL PROVISIONS.........................................56
SECTION 9.1 Non-Survival of Representations, Warranties
and Agreements.........................................56
SECTION 9.2 Notices..................................................56
SECTION 9.3 Certain Definitions......................................57
SECTION 9.4 Severability.............................................58
SECTION 9.5 Entire Agreement; Assignment.............................59
SECTION 9.6 Parties in Interest......................................59
SECTION 9.7 Governing Law; Submission to Jurisdiction................59
SECTION 9.8 Headings.................................................59
SECTION 9.9 Counterparts.............................................59
Annex A - Offer Conditions
Exhibit 2.4 - Form of Articles of Incorporation of the
Surviving Corporation
Exhibit 6.11 - Form of Affiliate Letter
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of January 31, 1999 (the
"Agreement"), among ROHM AND XXXX COMPANY, a Delaware corporation ("Parent"),
GERSHWIN ACQUISITION CORP., an Indiana corporation and a wholly owned subsidiary
of Parent ("Purchaser"), and XXXXXX INTERNATIONAL, INC., an Indiana corporation
(the "Company").
WHEREAS, the Board of Directors of the Company has determined that it is in
the best interests of the Company and the shareholders of the Company for the
Company to enter into this Agreement with Parent and Purchaser, providing for
the offer (the "Offer") by Purchaser to purchase up to 80,916,766 shares of
Company Common Stock (as defined in Section 1.1) and associated Rights (as
defined in Section 1.1) pursuant to the Offer (as defined in Section 1.1), as
described herein, and the merger (the "Merger") of Purchaser with the Company in
accordance with the Business Corporation Law of the State of Indiana ("BCL"),
upon the terms and subject to the conditions set forth herein; and
WHEREAS, the Board of Directors of Parent has approved the Offer and the
Merger of Purchaser with the Company in accordance with the General Corporation
Law of the State of Delaware (the "DGCL"), and the Board of Directors of
Purchaser has approved the Offer and the Merger of Purchaser with the Company in
accordance with the BCL, in each case, 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,
Parent, Purchaser and the Company hereby agree as follows:
ARTICLE I
THE OFFER
Section 1.1 The Offer. (a) Provided that this Agreement shall not have been
terminated in accordance with Section 8.1 and subject to the satisfaction of the
conditions set forth in Annex A hereto (the "Offer Conditions"), Purchaser
shall, as soon as reasonably practicable after the date hereof (and in any event
within five business days from the date of public announcement of the execution
hereof), commence (within the meaning of Rule 14d-2 under the Securities
Exchange Act of 1934, as amended (the "Exchange Act")) an offer (the "Offer") to
purchase for cash up to 80,916,766 of the issued and outstanding shares of
Common Stock, par value $1.00 per share ("Company Common Stock"), of the Company
and the associated Preferred Stock Purchase Rights (the "Rights") issued
pursuant to the Rights Agreement, dated as of April 24, 1997, between the
Company and First Chicago Trust Company of New York (the "Rights Agreement") at
a price of $37.125 per share of Company Common Stock, net to the seller in cash.
The obligation of Purchaser to accept for payment shares of Company Common Stock
tendered pursuant to the Offer shall be subject only to the satisfaction
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or waiver by Purchaser of the Offer Conditions. Purchaser expressly reserves the
right, in its sole discretion, to waive any such condition (other than the
Minimum Condition as defined in the Offer Conditions) and make any other changes
in the terms and conditions of the Offer; provided that, unless previously
approved by the Company in writing, no change may be made which changes the
Minimum Condition or decreases the price per share of Company Common Stock
payable in the Offer, changes the form of consideration payable in the Offer,
increases or reduces the maximum number (80,916,766 Shares) of shares of Company
Common Stock to be purchased in the Offer (the "Maximum Offer Number"), amends
the Offer Conditions or imposes conditions to the Offer in addition to the Offer
Conditions, or makes other changes to the terms or conditions to the Offer that
are adverse to the holders of Company Common Stock. Purchaser covenants and
agrees that, subject to the terms and conditions of this Agreement, including
but not limited to the Offer Conditions, it will accept for payment and pay for
shares of Company Common Stock as soon as it is permitted to do so under
applicable law. The Offer shall initially be scheduled to expire 20 business
days following the commencement thereof, provided that, unless this Agreement
has been terminated pursuant to Section 8.1 and subject to Section 1.1(b),
Purchaser shall extend the Offer from time to time in the event that, at a
then-scheduled expiration date, all of the Offer Conditions have not been
satisfied or waived as permitted pursuant to this Agreement, each such extension
not to exceed (unless otherwise consented to in writing by the Company) the
lesser of 10 additional business days or such fewer number of days that
Purchaser reasonably believes are necessary to cause the Offer Conditions to be
satisfied. It is agreed that the Offer Conditions are for the benefit of
Purchaser and may be asserted by Purchaser regardless of the circumstances
giving rise to any such condition (except for any action or inaction by
Purchaser or Parent constituting a breach of this Agreement). Except as provided
in Section 1.1(b) or 1.1(d), Purchaser shall not terminate the Offer without
purchasing shares of Company Common Stock pursuant to the Offer.
(b) If, on April 2, 1999 (subject to extension pursuant to the proviso to
this sentence, the "Final Expiration Date"), Purchaser has not consummated the
Offer in accordance with its terms, Purchaser shall thereupon terminate the
Offer without the acceptance of any Shares previously tendered and the parties
shall, upon the terms and conditions hereof, seek to consummate the Merger;
provided, however, that the Final Expiration Date may be further extended by
Parent, but in no event beyond April 17, 1999, if Parent reasonably believes
that the required regulatory approvals pursuant to the HSR Act (as defined in
Section 3.5(b)) and the notification of and approval by the European Commission
under the EU Council Regulation 4064/89, as amended (the "EU Approval"), will be
obtained during such extended period. If, at the Final Expiration Date, all
Offer Conditions have not been satisfied, Purchaser shall, unless Parent and the
Company otherwise agree, terminate the Offer, and the parties shall, subject to
the terms and conditions hereof, seek to consummate the Merger.
(c) As soon as reasonably practicable on the date the Offer is commenced,
Purchaser shall file a Tender Offer Statement on Schedule 14D-1 (the "Schedule
14D-1") with respect to the Offer with the Securities and Exchange Commission
(the "SEC"). The Schedule 14D-1 shall contain an Offer to Purchase and forms of
the related letter of transmittal (which Schedule 14D-1, Offer to Purchase and
other documents, together with any supplements or amendments thereto, are
referred to herein collectively as the "Offer Documents"). The Offer
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Documents and all amendments thereto will comply in all material respects with
the Exchange Act and the rules and regulations promulgated thereunder. Parent
and Purchaser agree that the Company and its counsel shall be given an
opportunity to review the Schedule 14D-1 before it is filed with the SEC.
Parent, Purchaser and the Company each agrees promptly to correct any
information provided by it for use in the Offer Documents that shall have become
false or misleading in any material respect, and Parent and Purchaser further
agree to take all steps necessary to cause the Schedule 14D-1 as so corrected to
be filed with the SEC and the other Offer Documents as so corrected to be
disseminated to holders of shares of Company Common Stock, in each case as and
to the extent required by applicable federal securities laws.
(d) In the event that this Agreement has been terminated pursuant to
Section 8.1, Purchaser shall, and Parent shall cause Purchaser to, promptly
terminate the Offer without accepting any shares of Company Common Stock for
payment. Parent will provide the Company with a copy of any comments Parent or
Purchaser may receive from the SEC or its staff with respect to the Offer
Documents promptly following receipt thereof.
Section 1.2 Company Action. (a) The Company shall use its reasonable best
efforts to cause Xxxxxxx, Sachs & Co. (the "COMPANY FINANCIAL ADVISER") to
permit the inclusion of the fairness opinion referred to in Section 3.17 (or a
reference thereto) in the Schedule 14D-9 referred to below and the Proxy
Statement referred to in Section 3.12 and a reference to such opinion in the
Offer Documents. Except to the extent otherwise required by the fiduciary duties
of the Board of Directors of the Company under applicable law, the Company
hereby consents to the inclusion in the Offer Documents of the recommendations
of the Company's Board of Directors described in Section 3.4.
(b) The Company shall file with the SEC, contemporaneously with the
commencement of the Offer pursuant to Section 1.1, a Solicitation/Recommendation
Statement on Schedule 14D-9 (together with all amendments and supplements
thereto, the "Schedule 14D-9"), containing the recommendations of the Company's
Board of Directors described in Section 1.2(a)(i) and shall promptly mail the
Schedule 14D-9 to the shareholders of the Company. The Schedule 14D-9 and all
amendments thereto will comply in all material respects with the Exchange Act
and the rules and regulations promulgated thereunder. The Company, Parent and
Purchaser each agrees promptly to correct any information provided by it for use
in the Schedule 14D-9 that shall have become false or misleading in any material
respect, and the Company further agrees to take all steps necessary to cause the
Schedule 14D-9 as so corrected to be filed with the SEC and disseminated to
holders of shares of Company Common Stock, in each case as and to the extent
required by applicable federal securities laws.
(c) In connection with the Offer, the Company shall promptly furnish
Purchaser with mailing labels, security position listings, any non-objecting
beneficial owner lists and any available listings or computer files containing
the names and addresses of the record holders of shares of Company Common Stock,
each as of a recent date, and shall promptly furnish Purchaser with such
additional information (including but not limited to updated lists of
shareholders, mailing labels, security position listings and non-objecting
beneficial owner lists) and such other assistance as Parent, Purchaser or their
agents may reasonably require in
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communicating the Offer to the record and beneficial holders of shares of
Company Common Stock. Subject to the requirements of applicable law, and except
for such steps as are appropriate to disseminate the Offer Documents and any
other documents necessary to consummate the Merger, Parent, Purchaser and their
affiliates, associates, agents and advisors shall use the information contained
in any such labels, listings and files only in connection with the Offer and the
Merger, and, if this Agreement shall be terminated, will deliver to the Company
all copies of such information then in their possession.
ARTICLE II
THE MERGER
SECTION 2.1 The Merger. Upon the terms and subject to the conditions of
this Agreement and in accordance with the BCL, at the Effective Time (as defined
in Section 2.2), Purchaser shall be merged with and into the Company. As a
result of the Merger, the separate corporate existence of Purchaser shall cease
and the Company shall continue as the surviving corporation of the Merger (the
"Surviving Corporation"). At Parent's election, any direct or indirect wholly
owned subsidiary of Parent other than Purchaser may be merged with and into the
Company instead of the Purchaser (provided that such election shall not delay
the consummation of the Merger or adversely affect the benefits of the Merger to
the Company and its shareholders). As a condition of such an election, the
parties (and such additional subsidiary) shall execute an appropriate amendment
to this Agreement in order to reflect such election.
SECTION 2.2 Effective Time. As soon as practicable after the satisfaction
or waiver of the conditions set forth in Article VII, the parties hereto shall
cause the Merger to be consummated by filing articles of merger (the "Articles
of Merger") with the Secretary of State of the State of Indiana, in such form as
required by and executed in accordance with the relevant provisions of the BCL
(the date and time of the filing of the Articles of Merger with the Secretary of
State of the State of Indiana (or such later time as is specified in the
Articles of Merger as agreed between Parent and the Company) being the
"Effective Time").
SECTION 2.3 Effects of the Merger. The Merger shall have the effects set
forth in the applicable provisions of the BCL. Without limiting the generality
of the foregoing and subject thereto, at the Effective Time, all the property,
rights, privileges, immunities, powers and franchises of the Company and
Purchaser shall vest in the Surviving Corporation, and all debts, liabilities
and duties of the Company and Purchaser shall become the debts, liabilities and
duties of the Surviving Corporation.
SECTION 2.4 Articles of Incorporation; By-Laws. (a) At the Effective Time
and without any further action on the part of the Company and Purchaser,
the articles of incorporation of the Company as in effect immediately prior to
the Effective Time shall be amended so as to read in their entirety as set forth
in Exhibit 2.4 hereto and, as so amended, shall be the articles of incorporation
of the Surviving Corporation until thereafter amended as provided therein and
under the BCL.
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(b) At the Effective Time and without any further action on the part of the
Company and Purchaser, the By-Laws of Purchaser shall be the By-Laws of the
Surviving Corporation and thereafter may be amended or repealed in accordance
with their terms or the Articles of Incorporation of the Surviving Corporation
and as provided by law.
SECTION 2.5 Directors and Officers. The directors of Purchaser immediately
prior to the Effective Time shall be the initial directors of the Surviving
Corporation, each to hold office in accordance with the Articles of
Incorporation and By-Laws of the Surviving Corporation, and the officers of the
Company immediately prior to the Effective Time shall be the initial officers of
the Surviving Corporation, in each case until their respective successors are
duly elected or appointed (as the case may be) and qualified.
SECTION 2.6 Conversion of Securities. At the Effective Time, by virtue of
the Merger and without any action on the part of Purchaser, the Company or the
holders of any of the following securities:
(a) Subject to Section 2.14, if Purchaser shall have purchased,
pursuant to the Offer, the Maximum Offer Number of shares of Company
Common Stock, each share of Company Common Stock (each, a "Share" and
collectively, the "Shares") issued and outstanding immediately prior
to the Effective Time (other than any Shares to be cancelled pursuant
to Section 2.6(c)) shall be cancelled, extinguished and converted into
the right to receive a number (rounded to the nearest one-millionth of
a share) of fully paid and nonassessable shares of common stock, par
value $2.50 per share ("Parent Common Stock"), of Parent equal to the
Exchange Ratio (as defined below).
(b) Subject to Section 2.14, if the Offer is terminated pursuant
to Section 1.1(b) or if Purchaser shall have purchased, pursuant to
the Offer, less than the Maximum Offer Number of shares of Company
Common Stock (the number of Shares so paid for and
purchased in the Offer being referred to herein as the "Purchased
Share Number"), each Share issued and outstanding immediately prior to
the Effective Time (other than any Shares to be cancelled pursuant to
Section 2.6(c)) shall be cancelled, extinguished and converted into
the right to receive, (i) cash, in an amount equal to the product of
Cash Proration Factor One (as defined below) multiplied by $37.125 and
(ii) a number (rounded to the nearest one-millionth of a share) of
fully paid and non-assessable shares of Parent Common Stock equal to
the product of (x) 1 minus Cash Proration Factor One multiplied by (y)
the Exchange Ratio.
(c) Each Share held in the treasury of the Company and each Share
owned by Parent or Purchaser, in each case immediately prior to the
Effective Time, shall be cancelled and retired without any conversion
thereof and no payment or distribution shall be made with respect
thereto.
(d) Each share of common stock of Purchaser issued and
outstanding immediately prior to the Effective Time shall be converted
into and become one validly
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issued, fully paid and nonassessable share of identical common stock
of the Surviving Corporation.
(e) If prior to the Effective Time, Parent or the Company, as the
case may be, should (in the case of the Company, after obtaining the
consent required by Section 5.1 hereof) split, combine or otherwise
reclassify the Parent Common Stock or the Company Common Stock, or pay
(or set a record date that is prior to the Effective Time with respect
to) a stock dividend or other stock distribution in Parent Common
Stock or Company Common Stock, or otherwise change the Parent Common
Stock or Company Common Stock into any other securities, or make any
other such stock dividend or distribution with respect to the Parent
Common Stock or the Company Common Stock in capital stock of Parent or
the Company or of their respective subsidiaries in respect of the
Parent Common Stock or the Company Common Stock, respectively, then
the Merger Consideration and the Exchange Ratio will be appropriately
adjusted to reflect such split, combination, dividend or other
distribution or change to provide the holders of Company Common Stock
the same economic effect as contemplated by this Agreement prior to
such event.
For purposes of this Agreement, "Exchange Ratio" is equal to the number
(rounded to the nearest one-millionth) obtained by dividing $37.125 by the
Parent Common Stock Price (as defined below); provided that the Exchange Ratio
shall not be less than 1.088710 or greater than 1.330645. The "Parent Common
Stock Price" is equal to the average per share closing price of the Parent
Common Stock on the New York Stock Exchange ("NYSE") Composite Transactions Tape
for the twenty trading-day period ending on the second trading day prior to the
Effective Time. "Cash Proration Factor One" shall be a fraction, of which (A)
the numerator is equal to (x) the Maximum Offer Number minus (y) the Purchased
Share Number, if any, and (B) the denominator is equal to the number of Shares
issued and outstanding immediately prior to the Effective Time (excluding Shares
to be cancelled pursuant to Section 2.6(c)) (the "Final Outstanding Number").
The consideration provided for in Sections 2.6(a) and (b), together with the
consideration provided for in Section 2.11, is referred to herein as the "Merger
Consideration;" provided, that if the Cash Alternative Structure (as defined in
Section 6.15) is required to be effected, the term "Merger Consideration" shall
instead refer to the consideration provided for in Section 2.14, together with
the consideration provided for in Section 2.11. At the Effective Time, all
Shares shall no longer be outstanding and shall be cancelled and retired and
shall cease to exist (in the case of the Shares to be cancelled pursuant to
Section 2.6(c), without the payment of any consideration therefor), and each
certificate (a "Certificate") formerly representing any of such Shares, other
than the Shares to be cancelled pursuant to Section 2.6(c), shall thereafter
represent only the right to receive the Merger Consideration and the right to
receive any distribution or dividends pursuant to Section 2.9.
SECTION 2.7 Treatment of Options; Stock Plans. As soon as practicable
following the date of this Agreement, the Board of Directors of the Company (or,
if appropriate, any committee administering the Stock Plans (as defined below))
shall adopt such resolutions or take such other actions as may be required to
effect the following:
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(a) adjust the terms of all outstanding employee or director
stock options to purchase shares of Company Common Stock and any
related stock appreciation rights ("Company Stock Options") granted
under any stock option or stock purchase plan, program or arrangement
of the Company and its subsidiaries, including without limitation, the
1989 Incentive Plan and the 1997 Incentive Plan (collectively, the
"Stock Plans"), to provide that, at the Effective Time, each Company
Stock Option outstanding immediately prior to the Effective Time shall
(except to the extent that Parent and the holder of a Company Stock
Option otherwise agree prior to the Effective Time): (i) if such
Company Stock Option is or becomes exercisable before the Merger or as
a consequence of the transactions contemplated by this Agreement and
the holder of such Company Stock Option shall have elected by written
notice to Parent prior to the date 10 business days prior to the
Effective Time to receive the payment contemplated by this clause (i),
be cancelled in exchange for a payment from the Surviving Corporation
(subject to any applicable withholding taxes) equal to the product of
(1) the total number of shares of Company Common Stock subject to such
Company Stock Option and (2) the excess of $37.125 over the exercise
price per share of Company Common Stock subject to such Company Stock
Option, payable in cash immediately following the Effective Time;
provided, however, that with respect to any person subject to Section
16(a) of the Exchange Act any such amount to be paid shall be paid as
soon as practicable after the first date payment can be made without
liability for such person under Section 16(b) of the Exchange Act; or
(ii) with respect to any Company Stock Option not cancelled pursuant
to clause (i) above, be deemed to constitute an option to acquire, on
the same terms and conditions (including, if any, related stock
appreciation rights and limited stock appreciation rights) as were
applicable under such Company Stock Option, the number of shares of
Parent Common Stock equal to the product of (1) the number of shares
of Company Common Stock issuable upon exercise of such Company Stock
Option and (2) the Exchange Ratio, at a price per share equal to (1)
the exercise price per share for the shares of Company Common Stock
otherwise purchasable pursuant to such Company Stock Option divided by
(2) the Exchange Ratio; provided, however, that in the case of any
Company Stock Option to which Sections 422 and 423 of the Internal
Revenue Code of 1986, as amended (the "Code"), applies by reason of
its qualification under any of Sections 422-424 of the Code
("qualified stock options"), Parent shall cause the exercise price,
the number of shares purchasable pursuant to such option and the terms
and conditions of exercise of such option to be determined in a good
faith effort to comply with Section 424(a) of the Code and provided,
further, that if such Company Stock Option had associated with it a
stock appreciation right and/or limited stock appreciation right, the
number and kind of shares subject to such right and the exercise price
thereof shall be adjusted in the same manner as provided above for
such Company Stock Option, and the terms and conditions thereof shall
otherwise remain the same as they were immediately before the
Effective Time;
(b) except as provided herein or as otherwise agreed to by
the parties, the Stock Plans and any other plan, program or
arrangement providing for the issuance or grant of any other interest
in respect of the capital stock of the Company or any subsidiary shall
terminate as of the Effective Time, and the Company shall ensure that
following the
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Effective Time no holder of a Company Stock Option nor any participant
in any Stock Plan shall have any right thereunder to acquire equity
securities of the Company or the Surviving Corporation; and
(c) with respect to the Company Stock Options not cancelled
pursuant to clause (a)(i) above, Parent shall, as of the Effective
Time, reserve for issuance a number of shares of Parent Common Stock
equal to the number of shares which may become issuable upon exercise
of such Company Stock Options, such number not to be reduced except to
the extent such options or related stock appreciation rights are
exercised, cancelled or terminated pursuant to their terms. Upon the
Effective Time or as soon as reasonably practicable thereafter, Parent
shall file with the SEC a Registration Statement or Registration
Statements on Form S-8 covering all shares of Parent Common Stock to
be issued pursuant to the Company Stock Options and shall cause such
Registration Statement to remain effective so long as Parent continues
to have a registration statement on Form S-8 outstanding for other
Parent Stock Options.
SECTION 2.8 Surrender of Shares; Stock Transfer Books. (a) Prior to
the Effective Time, Purchaser shall designate a bank or trust company,
reasonably satisfactory to the Company, to act as agent for the holders of
Shares in connection with the Merger (the "Exchange Agent") to receive the
Merger Consideration to which holders of Shares shall become entitled pursuant
hereto. Promptly following the Effective Time, Parent or Purchaser will deposit
with the Exchange Agent certificates representing Parent Common Stock and cash
sufficient to make all payments pursuant to Section 2.6(a), 2.6(b) or 2.14 and
Section 2.11, and when and as needed, Parent or Purchaser will deposit with the
Exchange Agent cash sufficient to make all payments pursuant to Section 2.9. Any
such cash shall be invested by the Exchange Agent as directed by Purchaser or,
after the Effective Time, the Surviving Corporation, provided that such
investments shall be in obligations of or guaranteed by the United States of
America, in commercial paper obligations rated A-1 or P-1 or better by Xxxxx'x
Investors Service, Inc. or Standard & Poor's Corporation, respectively, or in
certificates of deposit, bank repurchase agreements or banker's acceptances of
commercial banks with capital exceeding $500 million. Any net profit resulting
from, or interest or income produced by, such investments will be payable to the
Surviving Corporation or Parent, as Parent directs. Any cash and certificates of
Parent Common Stock deposited with the Exchange Agent shall hereinafter be
referred to as the "Exchange Fund".
(b) Promptly after the Effective Time, the Surviving Corporation shall
cause to be mailed to each record holder (other than the Purchaser), as of the
Effective Time, a form of letter of transmittal (which shall specify that
delivery shall be effected, and risk of loss and title to the Certificates shall
pass, only upon proper delivery of the Certificates to the Exchange Agent) and
instructions for use in effecting the surrender of the Certificates for payment
of the Merger Consideration in respect thereof. Upon surrender to the Exchange
Agent of a Certificate, together with such letter of transmittal, duly completed
and validly executed in accordance with the instructions thereto, and such other
documents as may be required pursuant to such instructions, the holder of such
Certificate shall be entitled to receive in exchange therefor a certificate or
certificates representing the number of full shares of Parent Common Stock and
the
9
amount of cash, if any, into which the aggregate number of shares of Company
Common Stock previously represented by such Certificate or Certificates
surrendered shall have been converted pursuant to this Agreement, and such
Certificate or Certificates shall then be cancelled. No interest shall be paid
or accrued for the benefit of holders of the Certificates on cash payable as
Merger Consideration, whether in lieu of fractional shares or otherwise, or cash
payable pursuant to Section 2.9, upon the surrender of the Certificates. If any
certificate for Parent Common Stock is to be issued in, or if cash is to be
remitted to, a person other than the person in whose name the surrendered
Certificate is registered, it shall be a condition of such exchange that the
Certificate so surrendered shall be properly endorsed or shall be otherwise in
proper form for transfer and that the person requesting such payment shall have
paid any transfer and other taxes required by reason of the issuance of
certificates for such Parent Common Stock to a person other than the person in
whose name the surrendered Certificate is registered, or shall have established
to the satisfaction of the Surviving Corporation that such tax either has been
paid or is not applicable. In the event of a transfer of ownership of Company
Common Stock which is not registered in the transfer records of the Company, one
or more shares of Parent Common Stock evidencing, in the aggregate, the proper
number of shares of Parent Common Stock, a check in the proper amount of cash
Merger Consideration, if any, and any dividends or other distributions to which
such holder is entitled pursuant to Section 2.9, may be issued with respect to
such Company Common Stock to such a transferee if the Certificate representing
such shares of Company Common Stock is presented to the Exchange Agent,
accompanied by all documents required to evidence and effect such transfer and
to evidence any applicable stock transfer taxes have been paid.
(c) At any time following one year after the Effective Time, the
Surviving Corporation shall be entitled to require the Exchange Agent to deliver
to it any portion of the Exchange Fund (including any interest received with
respect to any cash portion thereof) which had been made available to the
Exchange Agent and which have not been disbursed to holders of Certificates, and
thereafter such holders shall be entitled to look to the Surviving Corporation
(subject to abandoned property, escheat or other similar laws) only as general
creditors thereof with respect to the Merger Consideration and any dividends or
distributions with respect to the Parent Common Stock payable upon due surrender
of their Certificates. Notwithstanding the foregoing, neither the Surviving
Corporation nor the Exchange Agent shall be liable to any holder of a
Certificate for Merger Consideration from the Exchange Fund delivered to a
public official pursuant to any applicable abandoned property, escheat or
similar law. Any portion of the Exchange Fund remaining unclaimed by holders of
shares of Company Common Stock five years after the Effective Time (or such
earlier date immediately prior to such time as such amounts would otherwise
escheat to or become property of any governmental entity) shall, to the extent
permitted by law, become the property of the Surviving Corporation free and
clear of any claims or interest of any Person previously entitled thereto. None
of Parent, Purchaser, the Company, the Surviving Corporation or the Exchange
Agent shall be liable to any person in respect of any Merger Consideration
delivered to a public official pursuant to any applicable abandoned property,
escheat or similar law.
(d) At the Effective Time, the stock transfer books of the Company
shall be closed and thereafter there shall be no further registration of
transfers of shares of Company Common Stock on the records of the Company. From
and after the Effective Time, the holders
10
of Certificates evidencing ownership of Shares outstanding immediately prior to
the Effective Time shall cease to have any rights with respect to such Shares
except as otherwise provided for herein or by applicable law.
SECTION 2.9 Distributions with Respect to Unexchanged Shares. No
dividends or other distributions declared or made with respect to shares of
Parent Common Stock with a record date after the Effective Time shall be paid to
the holder of any unsurrendered Certificate with respect to shares of Parent
Common Stock that such holder would be entitled to receive upon surrender of
such Certificate and no cash payment in lieu of fractional shares shall be paid
to any such holder pursuant to Section 2.11 until such holder shall surrender
such Certificate in accordance with Section 2.8. Subject to the effect of
applicable laws, following the surrender of any such Certificate, there shall be
paid to such holder of shares of Parent Common Stock issuable in exchange
therefor, without interest, (a) promptly after the time of such surrender, the
amount of any cash payable in lieu of fractional shares of Parent Common Stock
to which such holder is entitled pursuant to Section 2.11 and the amount of
dividends or other distributions with a record date after the Effective Time
theretofore paid with respect to such whole shares of Parent Common Stock, and
(b) at the appropriate payment date, the amount of dividends or other
distributions with a record date after the Effective Time but prior to such
surrender and a payment date subsequent to such surrender payable with respect
to such shares of Parent Common Stock.
SECTION 2.10 No Further Ownership Rights in Company Common Stock. All
shares of Parent Common Stock issued and cash paid upon the surrender for
exchange of Certificates in accordance with the terms of this Article II
(including any cash paid pursuant to Section 2.11) shall be deemed to have been
issued (and paid) in full satisfaction of all rights represented by such
Certificates.
SECTION 2.11 Fractional Shares. (a) No certificates or scrip or shares
of Parent Common Stock representing fractional shares of Parent Common Stock
shall be issued upon the surrender for exchange of Certificates and such
fractional interests will not entitle the owner thereof to vote or to have any
rights of a stockholder of Parent or a holder of shares of Parent Common Stock.
(b) Notwithstanding any other provision of this Agreement, each holder
of shares of Company Common Stock exchanged pursuant to the Merger who would
otherwise have been entitled to receive a fraction of a share of Parent Common
Stock (after taking into account all Certificates delivered by such holder)
shall receive, in lieu thereof, cash (without interest) in an amount equal to
the product of (i) such fractional part of a share of Parent Common Stock
multiplied by (ii) the average closing price of the Parent Common Stock on the
NYSE Composite Transactions Tape for the five trading days immediately prior to
the Effective Time.
SECTION 2.12 Lost Certificates. If any Certificate shall have been
lost, stolen or destroyed, upon the making of an affidavit of that fact by the
person claiming such Certificate to be lost, stolen or destroyed and, if
required by the Surviving Corporation, the posting by such person of a bond in
such reasonable amount as the Surviving Corporation may direct as
11
indemnity against any claim that may be made against it with respect to such
Certificate, the Exchange Agent will deliver in exchange for such lost, stolen
or destroyed Certificate the applicable Merger Consideration with respect to the
shares of Company Common Stock formerly represented thereby and any unpaid
dividends and distributions on shares of Parent Common Stock deliverable in
respect thereof, pursuant to this Agreement.
SECTION 2.13 Withholding Rights. Each of the Surviving Corporation
and Parent shall be entitled to deduct and withhold from the consideration
otherwise payable pursuant to this Agreement to any holder of Shares such
amounts as it is required to deduct and withhold with respect to the making of
such payment under the Code and the rules and regulations promulgated
thereunder, or any provision of state, local or foreign tax law. To the extent
that amounts are so withheld by the Surviving Corporation or Parent, as the case
may be, such withheld amounts shall be treated for all purposes of this
Agreement as having been paid to the holder of the Shares in respect of which
such deduction and withholding was made by the Surviving Corporation or Parent,
as the case may be.
SECTION 2.14 Alternative Merger Consideration. In the event that the
Cash Alternative Structure is required to be effected, then notwithstanding
anything to the contrary provided for in Section 2.6(a) or (b), at the
Effective Time, by virtue of the Merger and without any action on the part of
Purchaser, the Company or the holders of Parent Common Stock or Company Common
Stock, each Share issued and outstanding immediately prior to the Effective Time
(other than Shares canceled pursuant to Section 2.6(c)) shall be cancelled,
extinguished and converted into the right to receive:
(a) If Purchaser shall have purchased, pursuant to the Offer, the
Maximum Offer Number, (i) cash, in an amount equal to the product of (x) Cash
Proration Factor Two (as defined below), multiplied by (y) the product of the
Exchange Ratio and the Adjusted Parent Common Stock Price (as defined below);
and (ii) a number (rounded to the nearest ten-thousandth of a share) of fully
paid and non-assessable shares of Parent Common Stock equal to the product of
(x) the Exchange Ratio multiplied by (y) one minus Cash Proration Factor Two.
(b) If the Offer is terminated pursuant to Section 1.1(b) or if the
Purchased Share Number is less than the Maximum Offer Number, (i) cash, in an
amount equal to the sum of (x) the product of Cash Proration Factor One,
multiplied by $37.125 plus (y) the product of (A) Cash Proration Factor Two
minus Cash Proration Factor One, multiplied by (B) the product of the Exchange
Ratio and the Adjusted Parent Common Stock Price and (ii) a number (rounded to
the nearest ten-thousandth of a share) of fully paid and non-assessable shares
of Parent Common Stock equal to the product of (x) the Exchange Ratio multiplied
by (y) one minus Cash Proration Factor Two.
For purposes of this Section 2.14, "Cash Proration Factor Two" shall
be a fraction, of which (A) the numerator is equal to (x) the Final Outstanding
Number minus (y) the Maximum Share-for-Share Number and (B) the denominator of
which is equal to the Final Outstanding Number. The "Maximum Share-for-Share
Number" shall be equal to (A) the maximum number of shares of Parent Common
Stock that may be issued by Parent in the Merger
12
without a vote of its stockholders pursuant to the DGCL, the applicable rules of
the NYSE or otherwise (taking into account all shares of Parent Common Stock
then outstanding or reserved for issuance in connection with any securities,
options or rights convertible into, exchangeable or exercisable for Parent
Common Stock (including, without limitation, Company Stock Options not cancelled
pursuant to Section 2.7(a)(i) of this Agreement)), divided by (B) the Exchange
Ratio. The "Adjusted Parent Common Stock Price" is equal to the average per
share closing price of the Parent Common Stock on the NYSE Composite
Transactions Tape for the five trading-day period ending on the second trading
day prior to the Effective Time.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to Parent and Purchaser
that, except as set forth in the disclosure schedule delivered by the Company to
Purchaser (the "Company Disclosure Schedule") at or prior to the date of
execution of this Agreement where the relevance of such disclosure to the
applicable representation and warranty is reasonably evident from the nature of
the disclosure:
SECTION 3.1 Organization and Qualification. Each of the Company and
each of its subsidiaries is a corporation or other entity duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
formation and has the requisite power and authority to own, lease and operate
its properties and to carry on its business as it is now being conducted, except
where such failures 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 (as defined below) or prevent or materially delay the
consummation of the Offer or the Merger. Each of the Company and each of its
subsidiaries is duly qualified or licensed as a foreign entity to do business,
and is in good standing, in each jurisdiction where the character of its
properties owned, leased or operated by it or the nature of its activities makes
such qualification or licensing necessary, except for such failures to be so
duly qualified or licensed and in good standing as would not, individually or in
the aggregate, have a Material Adverse Effect or prevent or materially delay the
consummation of the Offer or the Merger. When used in connection with the
Company or any of its subsidiaries, the term "Material Adverse Effect" means any
change or effect that is or would be materially adverse to the business,
financial condition or results of operations of the Company and its
subsidiaries, taken as a whole, and when used in connection with Parent or any
of its subsidiaries, the term "Material Adverse Effect" means any change or
effect that is or would be materially adverse to the business, financial
condition or results of operations of Parent and its subsidiaries, taken as a
whole.
SECTION 3.2 Articles of Incorporation and By-Laws. The Company has
heretofore furnished to Parent a complete and correct copy of the Restated
Articles of Incorporation of the Company (the "Articles of Incorporation") and
the By-Laws of the Company as currently in effect. No other similar
organizational documents are applicable to or binding
13
upon the Company. The Company is not in violation in any material respect of any
of the provisions of its Articles of Incorporation or By-Laws.
SECTION 3.3 Capitalization. (a) The authorized capital stock of the
Company consists of 500,000,000 shares of Company Common Stock and 25,000,000
shares of preferred stock, par value $1.00 per share ("Company Preferred
Stock"). As of January 29, 1999, (i) 120,771,293 shares of Company Common Stock
were issued and outstanding, all of which were duly authorized, validly issued,
fully paid and nonassessable and were issued free of preemptive (or similar)
rights, (ii) 19,346,205 shares of Company Common Stock were held in the treasury
of the Company and (iii) an aggregate of 7,626,428 shares of Company Common
Stock were reserved for issuance and issuable upon or otherwise deliverable in
connection with the exercise of outstanding Company Stock Options issued
pursuant to the Company Plans (as defined in Section 3.10). Since January 29,
1999, no options to purchase shares of Company Common Stock have been granted
and no shares of Company Common Stock have been issued except for shares issued
pursuant to the exercise of Company Stock Options outstanding as of January 29,
1999. No shares of Company Preferred Stock are issued and outstanding. Except
(i) as set forth above, (ii) as a result of the exercise of Company Stock
Options outstanding as of January 29, 1999, (iii) with respect to no more than
50,000 options granted to Company employees since January 29, 1999 and prior to
the Effective Time consistent with past practice and (iv) Rights issued pursuant
to the Rights Plan, there are outstanding (a) no shares of capital stock or
other voting securities of the Company, (b) no securities of the Company
convertible into or exchangeable for shares of capital stock or voting
securities of the Company, (c) no options or other rights to acquire from the
Company, and no obligation of the Company to issue, deliver or sell or cause to
be issued, delivered or sold, any capital stock, voting securities or securities
convertible into or exchangeable for capital stock or voting securities of the
Company and (d) no equity equivalents, interests in the ownership or earnings of
the Company or other similar rights (collectively, "Company Securities"). Other
than the Company Plans, there are no outstanding obligations of the Company or
any of its subsidiaries to repurchase, redeem or otherwise acquire any Company
Securities or outstanding material obligations of the Company or any of its
subsidiaries to repurchase, redeem or otherwise acquire any capital stock of any
subsidiary. There are no other options, calls, warrants or other similar rights
(other than Rights issued pursuant to the Rights Plan), agreements, arrangements
or commitments relating to the issued or unissued capital stock of the Company
or any of its subsidiaries to which the Company or any of its subsidiaries is a
party. All shares of Company Common Stock subject to issuance as aforesaid, upon
issuance on the terms and conditions specified in the instruments pursuant to
which they are issuable, shall be duly authorized, validly issued, fully paid
and nonassessable and free of preemptive (or similar) rights and registration
rights. There are no outstanding contractual obligations of the Company or any
of its subsidiaries to provide funds in any material amount to or make any
material investment (in the form of a loan, capital contribution or otherwise)
in any such subsidiary or any other entity.
(b) 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 all such shares are owned by the Company or another wholly
owned subsidiary of the Company and are owned free and clear of all security
interests, liens, claims, pledges, agreements, limitations in voting
14
rights, charges or other encumbrances of any nature whatsoever, except for such
failures to own such shares free and clear as would not, individually or in the
aggregate, have a Material Adverse Effect. The Company has delivered to Parent
prior to the date hereof a chart of the subsidiaries of the Company which
evidences, among other things, the percentage of capital stock or other equity
interests owned by the Company, directly or indirectly, in such subsidiaries as
of the date hereof. No entity in which the Company owns less than a 50% interest
and which is not disclosed in such chart, is, individually or when taken
together with all such other entities, material to the business of the Company
and its subsidiaries, taken as a whole.
(c) No bonds, debentures, notes or other indebtedness of the Company
having the right to vote on any matters on which holders of capital stock of the
Company may vote ("Company Voting Debt") are issued and outstanding.
(d) There are no voting trusts, proxies or other agreements or
commitments of any character to which the Company or any of its "significant
subsidiaries" (as defined in Regulation S-X) is a party or by which the Company
or any of its significant subsidiaries is bound with respect to the voting of
any shares of capital stock of the Company or any of its significant
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 significant
subsidiaries under the Securities Act.
SECTION 3.4 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 thereunder and to consummate
the transactions contemplated hereby. The execution, delivery and performance of
this Agreement by the Company and the consummation by the Company of the
transactions contemplated hereby have been duly and validly authorized by all
necessary corporate action and no other corporate proceedings on the part of the
Company are necessary to authorize this Agreement or the Option Agreement or to
consummate the transactions so contemplated (other than, with respect to the
Merger, the approval of this Agreement by the holders of a majority of all votes
entitled to be cast by the Company Common Stock (the "Company Shareholder
Approval") and the filing of appropriate merger documents as required by the
BCL). This Agreement has been duly and validly executed and delivered by the
Company and, assuming the due authorization, execution and delivery hereof by
Parent and Purchaser, constitutes a legal, valid and binding obligation of the
Company enforceable against the Company in accordance with its terms. The Board
of Directors of the Company by resolutions duly adopted by unanimous vote of the
directors present at a meeting duly called and held on January 31, 1999 and not
subsequently rescinded or modified in any way has duly (A) approved and adopted
this Agreement and the transactions contemplated hereby (including but not
limited to the Offer and the Merger), (B) determined that this Agreement and the
transactions contemplated hereby (including but not limited to the Offer and the
Merger) are fair to and in the best interests of the Company and its
shareholders, (C) resolved to recommend that the shareholders of the Company
accept the Offer, tender their shares of Company Common Stock to Purchaser
thereunder and approve this Agreement and the transactions contemplated hereby
and (D) taken all other action necessary to render (i) the limitation on
business combinations contained in Chapter 42 and Chapter 43 of the BCL (or any
similar provision) and
15
(ii) the supermajority stockholder voting requirements of Article Eighth of the
Articles of Incorporation inapplicable to the transactions contemplated hereby,
including the Offer and the Merger (it being understood that the Company shall
not be deemed to be in breach of clauses (B) or (C) of this sentence if the
Board of Directors of the Company shall have withdrawn or modified its
recommendation in compliance with the terms and conditions of this Agreement).
As a result of the foregoing actions, the only vote required to authorize the
Merger is the affirmative vote of the holders of a majority of all votes
entitled to be cast by the holders of the Company Common Stock. The Board of
Directors of the Company has taken all action necessary to amend the Rights
Agreement (subject only to the execution of such amendment by the Rights Agent,
which execution the Company shall cause to take place prior to commencement of
the Offer) to provide that, (i) so long as this Agreement has not been
terminated pursuant to Section 8.1, a Distribution Date (as such term is defined
in the Rights Agreement) shall not occur or be deemed to occur, (ii) the Rights
shall not separate (to the extent that the Rights Agreement otherwise provides
for such separation) or become exercisable, and neither Parent nor Purchaser
shall become an Acquiring Person (as such term is defined in the Rights
Agreement) as a result of the execution, delivery or performance of this
Agreement, the announcement, making or consummation of the Offer, the
acquisition of shares of Company Common Stock pursuant to the Offer or the
Merger, the consummation of the Merger or any other transactions contemplated by
this Agreement and (iii) the Rights shall expire immediately prior to the
consummation of the Offer or, if the Offer is not consummated, the Merger. So
long as this Agreement has not been terminated pursuant to Section 8.1, no other
action is required to prevent the holders of Rights from having any rights under
the Rights Agreement as a result of the Offer, the Merger or any other
transaction contemplated by this Agreement.
SECTION 3.5 No Conflict; Required Filings And Consents. (a) The
execution, delivery and performance of this Agreement and the transactions
contemplated hereby by the Company do not and will not: (i) conflict with or
violate the Articles of Incorporation or By-Laws of the Company or the
equivalent organizational documents of any of its subsidiaries; (ii) assuming
that all consents, approvals and authorizations contemplated by clauses (i),
(ii) and (iii) of subsection (b) below have been obtained and all filings
described in such clauses have been made, conflict with or violate any law,
rule, regulation, order, judgment or decree applicable to the Company or any of
its subsidiaries or by which its or any of their respective properties are bound
or affected; or (iii) result in any breach or violation of or constitute a
default (or an event which with notice or lapse of time or both could become a
default) or result in the loss of a material benefit under, or give rise to any
right of termination, amendment, acceleration or cancellation of, or result in
the creation of a lien or encumbrance on any of the properties or assets of the
Company or any of its subsidiaries pursuant to, any note, bond, mortgage,
indenture, contract, agreement, lease, license, permit, franchise or other
instrument or obligation 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, except, in the case of clauses (ii)
and (iii), for any such conflicts, violations, breaches, defaults or other
occurrences which would not, individually or in the aggregate, have a Material
Adverse Effect or prevent or materially delay consummation of the Offer or the
Merger and except with respect to change in control or similar acceleration
rights under Company Plans as disclosed in the Company SEC
16
Reports (as defined in Section 3.7) filed with the SEC and publicly available
prior to the date hereof.
(b) The execution, delivery and performance of this Agreement by the
Company and the consummation of the Offer or the Merger or the other
transactions contemplated hereby by the Company do not and will not require any
consent, approval, authorization or permit of, action by, filing with or
notification to, any governmental or regulatory authority, domestic or foreign,
except for (i) applicable requirements of the Exchange Act and the Securities
Act and the rules and regulations promulgated thereunder, rules and regulations
of the NYSE, the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as
amended (the "HSR Act"), or foreign filings or approvals, state securities,
takeover and "blue sky" laws, (ii) the filing and recordation of appropriate
merger or other documents as required by the BCL and the filing of the Charter
Amendment (as defined in Section 4.4) under the DGCL and (iii) such consents,
approvals, authorizations, permits, actions, filings or notifications the
failure of which to make or obtain would not, individually or in the aggregate,
have a Material Adverse Effect or prevent or materially delay consummation of
the Offer or the Merger.
SECTION 3.6 Compliance; Permits. (a) Except as disclosed in the
Company SEC Reports filed and publicly available prior to the date of this
Agreement, neither the Company nor any of its subsidiaries is in conflict with,
or in default or violation of, (i) any law, rule, regulation, order, judgment or
decree applicable to the Company or any of its subsidiaries or by which its or
any of their respective properties are bound or affected, or (ii) any note,
bond, mortgage, indenture, contract, agreement, lease, license, permit,
franchise or other instrument or obligation 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, except for any
such conflicts, defaults or violations which would not, individually or in the
aggregate, have a Material Adverse Effect or prevent or materially delay
consummation of the Offer or the Merger.
(b) Except as disclosed in the Company SEC Reports filed and publicly
available prior to the date of this Agreement and except as would not,
individually or in the aggregate, have a Material Adverse Effect or prevent or
materially delay the consummation of the Offer or the Merger, the Company and
its subsidiaries hold all permits, licenses, variances, exemptions, orders and
approvals of all governmental or regulatory authorities, domestic or foreign,
which are necessary for the operation of the businesses of the Company and its
subsidiaries as presently conducted (the "Company Permits"). The Company and its
subsidiaries are in compliance with the terms of the Company Permits, except
where the failure so to comply would not, individually or in the aggregate, have
a Material Adverse Effect or prevent or materially delay the consummation of the
Offer or the Merger. Except as disclosed in the Company SEC Reports filed and
publicly available prior to the date of this Agreement, the businesses of the
Company and its subsidiaries are not being conducted in violation of, and the
Company has not received any written notices or to its knowledge, any oral
notices, of violations with respect to, any law, ordinance or regulation of any
governmental or regulatory authority, domestic or foreign, except for violations
which would not, individually or in the aggregate, have a Material Adverse
Effect or prevent or materially delay the consummation of the Offer or the
Merger.
17
SECTION 3.7 SEC Filings; Financial Statements. (a) The Company and,
to the extent applicable, each of its then or current subsidiaries, has
filed all forms, reports, statements and documents required to be filed with the
SEC since March 11, 1997 (together with any other filings on Form 8-K,
collectively, including the exhibits thereto, the "Company SEC Reports"), each
of which complied when filed in all material respects with the applicable
requirements of the Securities Act, and the rules and regulations promulgated
thereunder, or the Exchange Act, and the rules and regulations promulgated
thereunder, each as in effect on the date so filed. None of the Company SEC
Reports (including but not limited to any financial statements or schedules
included or incorporated by reference therein) contained when filed, or (except
to the extent revised or superseded by a subsequent filing with the SEC)
contains, any untrue statement of a material fact or omitted or omits to state a
material fact required to be stated or incorporated by reference therein or
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
(b) Each of the audited and unaudited consolidated financial
statements of the Company (including any related notes thereto) included in the
Company SEC Reports has been prepared in accordance with generally accepted
accounting principles applied on a consistent basis throughout the periods
involved (except as may be indicated in the notes thereto) and fairly presents
the consolidated financial position of the Company and its subsidiaries at the
respective date thereof and the consolidated results of its operations and
changes in cash flows for the periods indicated, except that the unaudited
interim consolidated financial statements are subject to normal and recurring
year-end adjustments that have not been and are not expected to be material in
amount.
(c) Except as and to the extent set forth on the consolidated balance
sheet of the Company and its subsidiaries at June 30, 1998, including the notes
thereto, neither the Company nor any of its subsidiaries has any liabilities or
obligations of any nature (whether accrued, absolute, contingent or otherwise)
which would be required to be reflected on a balance sheet or in the notes
thereto prepared in accordance with generally accepted accounting principles,
except for liabilities or obligations incurred since June 30, 1998 which would
not, individually or in the aggregate, have a Material Adverse Effect.
(d) The Company has heretofore furnished or made available to Parent a
complete and correct copy of any material amendments or modifications which have
not yet been filed with the SEC to agreements, documents or other instruments
which previously had been filed by the Company with the SEC pursuant to the
Securities Act and the rules and regulations promulgated thereunder or the
Exchange Act and the rules and regulations promulgated thereunder.
SECTION 3.8 Absence of Certain Changes or Events. Since June 30,
1998, except as disclosed in the Company SEC Reports filed and publicly
available prior to the date of this Agreement, the Company and its subsidiaries
have in all material respects conducted their businesses only in the ordinary
course and in a manner consistent with past practice and, since such date in the
case of clauses (i) and (ii) and from such date through the date of this
Agreement, in the case of clauses (iii) through (vii), there has not been: (i)
any condition, event
18
or occurrence, other than conditions, events or occurrences which have not had
or would not, individually or in the aggregate, have a Material Adverse Effect
other than changes or effects due to general economic or industry conditions;
(ii) any damage, destruction or loss (whether or not covered by insurance) with
respect to any assets of the Company or any of its subsidiaries, except for such
damage, destruction or loss as would not, individually or in the aggregate, have
a Material Adverse Effect; (iii) any change by the Company in its accounting
methods, principles or practices (except to the extent required by applicable
accounting principles and SEC rules and regulations); (iv) any material
revaluation by the Company of any of its material assets, including but not
limited to, writing down the value of inventory or writing off notes or accounts
receivable other than in the ordinary course of business; (v) any entry by the
Company or any of its subsidiaries into any commitment or transactions material
to the Company and its subsidiaries taken as a whole (other than commitments or
transactions entered into in the ordinary course of business); (vi) any
declaration, setting aside or payment of any dividends or distributions in
respect of the Shares other than the regular quarterly dividend in the amount of
$.13 per share; or (vii) any increase (in the case of directors and executive
officers of the Company) or any material increase (in the case of other
officers, directors and key employees) in or establishment of any bonus,
insurance, severance, deferred compensation, pension, retirement, profit
sharing, stock option (including without limitation the granting of stock
options, stock appreciation rights, performance awards, or restricted stock
awards), stock purchase or other employee benefit plan or agreement or
arrangement, or any other increase (in the case of directors and executive
officers of the Company) or any material increase (in the case of other
officers, directors and key employees) in the compensation payable or to become
payable to any present or former directors, officers or key employees of the
Company or any of its subsidiaries, except for increases in base compensation
and bonuses in the ordinary course of business consistent with past practice.
SECTION 3.9 Absence of Litigation. Except as disclosed in the
Company SEC Reports filed and publicly available prior to the date of this
Agreement, there are no suits, claims, actions, proceedings or investigations
(collectively, "Claims") pending or, to the knowledge of the Company, threatened
against or affecting the Company or any of its subsidiaries, or any properties
or rights of the Company or any of its subsidiaries, before any court,
arbitrator or administrative, governmental or regulatory authority or body,
domestic or foreign, except for such Claims as would not, individually or in the
aggregate, have a Material Adverse Effect. Neither the Company nor any of its
subsidiaries nor any of their respective properties is or are subject to any
order, writ, judgment, injunction, decree, determination or award (collectively,
"Orders"), except for such Orders as would not, individually or in the
aggregate, have a Material Adverse Effect.
SECTION 3.10 Employee Benefit Plans. Except as would not,
individually or in the aggregate, have a Material Adverse Effect or as disclosed
in the Company SEC Reports filed and publicly available prior to the date of
this Agreement:
(a) For purposes of this Agreement, the term "Company Plans"
shall include each "employee benefit plan" (within the meaning of
section 3(3) of the Employee Retirement Income Security Act of 1974,
as amended ("ERISA"), including, without limitation, multiemployer
plans within the meaning of ERISA section 3(37)), stock
19
purchase, stock option, severance, employment, change-in-control, fringe
benefit, collective bargaining, bonus, incentive, deferred compensation and all
other employee benefit plans, agreements, programs, policies or other
arrangements, whether or not subject to ERISA (including any funding mechanism
therefor now in effect or required in the future as a result of the transaction
contemplated by this Agreement or otherwise), whether formal or informal,
foreign or domestic, oral or written, legally binding or not, under which any
current or former employee or director of the Company or any of its
subsidiaries, has any present or future right to benefits or under which the
Company or any of its subsidiaries has any present or future liability.
(b) (i) Each Company Plan has been established and
administered in all material respects in accordance with its terms,
and in compliance with the applicable provisions of ERISA, the Code,
and other applicable laws, rules and regulations; (ii) each Company
Plan which is intended to be qualified within the meaning of Code
section 401(a) is so qualified and has received a favorable
determination letter as to its qualification, and nothing has
occurred, whether by action or failure to act, that would reasonably
be expected to cause the loss of such qualification; (iii) no event
has occurred and no condition exists that would reasonably be expected
to subject the Company or any of its subsidiaries, either directly or
by reason of their affiliation with any member of their "Controlled
Group" (defined as any organization which is a member of a controlled
group of organizations within the meaning of Code sections 414(b),
(c), (m) or (o)), to any excise tax, fine, lien or penalty imposed by
ERISA, the Code or other applicable laws, rules and regulations; (iv)
no "reportable event" (as such term is defined in ERISA section 4043),
"prohibited transaction" (as such term is defined in ERISA section 406
and Code section 4975) or "accumulated funding deficiency" (as such
term is defined in ERISA section 302 and Code section 412 (whether or
not waived)) has occurred with respect to any Company Plan; and (v)
all insurance premiums and contributions required to be paid with
respect to any Company Plan as of the Closing Date have been or will
be timely paid prior thereto and adequate reserves have been provided
for in the Company SEC Reports for any premiums or contributions (or
portions thereof) attributable to service on or prior to the Closing
Date; provided, however, that any representation or warranty made in
(i) through (v), above shall, with respect to any Company Plan that is
a multiemployer plan within the meaning of Section 4001(a)(3) of
ERISA, be limited to the knowledge of the Company.
(c) With respect to each of the Company Plans that is not a
multiemployer plan within the meaning of section 4001(a)(3) of ERISA
but is subject to Title IV of ERISA, as of the Effective Time, there
has not been an adverse change in the "amount of unfunded benefit
liabilities" (as defined in ERISA Section 4001(a)(18)) since June 30,
1998.
(d) With respect to any multiemployer plan (within the
meaning of ERISA section 4001(a)(3)): (i) none of the Company, any of
its subsidiaries or any member of their Controlled Group has incurred
any withdrawal liability under Title IV of ERISA that has not been
satisfied or, to the knowledge of the Company, would be subject to
such
20
liability if, as of the Effective Time, the Company, any of its
subsidiaries or any member of their Controlled Group were to engage in
a complete withdrawal (as defined in ERISA section 4203) or partial
withdrawal (as defined in ERISA section 4205) from any such
multiemployer plan; and (ii) to the knowledge of the Company, no
multiemployer plan to which the Company, any of its subsidiaries or
any member of their Controlled Group has any liabilities or
contributes, is in reorganization or insolvent (as those terms are
defined in ERISA sections 4241 and 4245, respectively).
(e) With respect to any Company Plan, (i) no actions, suits
or claims (other than routine claims for benefits in the ordinary
course) are pending or, to the knowledge of the Company, threatened,
(ii) no facts or circumstances exist, to the knowledge of the Company,
that could give rise to any such actions, suits or claims and (iii)
there is not any matter pending (other than routine qualification
determination filings) before the IRS, the Department of Labor or the
Pension Benefit Guaranty Corporation.
(f) No Company Plan exists that could result in the payment
to any present or former employee of the Company or any of its
subsidiaries of any money or other property or accelerate or provide
any other rights or benefits to any present or former employee of the
Company or any of its subsidiaries as a result of the transaction
contemplated by this Agreement, whether or not such payment would
constitute a parachute payment within the meaning of Code section 280G
and whether or not some other subsequent action or event in addition
to the transactions contemplated by this Agreement would be required
to trigger such payment, acceleration or provision.
SECTION 3.11 Tax Matters. (a) Except for such failures to file or
pay as would not, individually or in the aggregate, have a Materially Adverse
Effect or as disclosed in the Company SEC Reports that are publicly available
prior to the date hereof, the Company and each of its subsidiaries, and any
consolidated, combined, unitary or aggregate group for tax purposes of which the
Company or any of its subsidiaries is or has been a member has timely filed all
Tax Returns required to be filed by it in the manner provided by law and has
paid, or provided adequate reserves for the payment of (in accordance with
generally accepted accounting principles), all Taxes (including interest and
penalties) that are due and payable as of the date hereof. All such Tax Returns
were true, correct and complete in all material respects. Except (x) as has been
disclosed in Schedule 3.11 of the Company Disclosure Schedule, (y) as would not,
individually or in the aggregate, have a Material Adverse Effect or (z) as
disclosed in the Company SEC Reports that are publicly available prior to the
date hereof: (i) no claim for unpaid Taxes has been proposed in writing against
the Company and its subsidiaries or has become a lien or encumbrance of any kind
against the property of the Company or any of its subsidiaries or is being
asserted against the Company or any of its subsidiaries; (ii) as of the date
hereof no audit of any Tax Return of the Company or any of its subsidiaries is
being conducted by a Tax authority, no audit or other proceeding by any Tax
authority has formally commenced and there is no claim or assessment pending,
and, to the knowledge of the Company, no notice has been given to the Company
and its subsidiaries that such an audit or other proceeding is pending with
respect to any Taxes due from or with respect to the Company and its
subsidiaries or any Tax Return filed by or with respect to the Company and its
subsidiaries; (iii) the United
21
States federal income tax returns of the Company and its subsidiaries have been
audited or settled or are closed to assessment; (iv) no extension or waiver of
the statute of limitations on the assessment of any Taxes has been granted by
the Company or any of its subsidiaries and is currently in effect and no power
of attorney granted by or with respect to the Company and its Subsidiaries
relating to Taxes is currently in force; (v) neither the Company nor its
subsidiaries is a party to or bound by, and does not have any obligation under,
any Tax sharing agreement or similar contract or arrangement or any agreement
that obligates it to make any payment computed by reference to the Taxes,
taxable income or taxable losses of any other person; and (vi) none of the
Company nor any of its subsidiaries has been a member of an affiliated group
(other than the group to which its is currently a member) filing a consolidated
federal income Tax Return. As used herein, "Taxes" shall mean any taxes of any
kind, including but not limited to those on or measured by or referred to as
income, gross receipts, capital, sales, use, ad valorem, franchise, profits,
license, withholding, payroll, employment, excise, severance, stamp, occupation,
premium, value added, property or windfall profits taxes, customs, duties or
similar fees, assessments or charges of any kind whatsoever, together with any
interest and any penalties, additions to tax or additional amounts imposed by
any governmental authority, domestic or foreign. As used herein, "Tax Return"
shall mean any return, report or statement required to be filed with any
governmental authority with respect to Taxes.
(b) The Company received a private letter ruling (the "Ruling") from
the Internal Revenue Service ("IRS"), dated March 20, 1997 (Reference
CC:DOM:CORP:4, PLR-253482-96) as to the United States federal income tax
consequences of the Contribution and the Spinoff (each as defined in the
Distribution Agreement, dated as of April 30, 1997, between the entity formerly
known as Xxxxxx International, Inc. ("Old Company") and the Company) and the
Ruling has not been revoked. All of the representations and information provided
to the IRS with respect to Old Company, the Company or their respective
subsidiaries in connection with the Ruling, were correct and complete in all
material respects as of the date of the Ruling and, to the knowledge of the
Company, as of the date hereof, there has been no breach of such representations
or other change in circumstances that would cause the Ruling to be invalid or
revoked. No claim has been asserted against Old Company, Autoliv AB, the Company
or any of their affiliates with respect to the Contribution and Spinoff which
could result in an indemnity obligation of the Company pursuant to the Tax
Sharing Agreement dated as of April 30, 1997 by and between Old Company and the
Company, or otherwise. At the time of the Contribution and Distribution, there
was no plan or intention on the part of the Company to effect transactions that
would result in an acquisition of a 50% or greater interest in the voting power
or value of the stock of the Company.
SECTION 3.12 Offer Documents; Proxy Statement. Neither the Schedule
14D-9, nor any of the information supplied by the Company for inclusion in the
Offer Documents, shall, at the respective times such Schedule 14D-9, the Offer
Documents or any amendments or supplements thereto are filed with the SEC or are
first published, sent or given to shareholders, 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
the light of the circumstances under which they were made, not misleading. The
joint proxy statement to be sent to the shareholders of the Company and the
stockholders of Parent in connection with the
22
Company Shareholders Meeting (as defined in Section 6.1) or the Parent
Stockholders Meeting (as defined in Section 6.1), as the case may be (such joint
proxy statement, as amended or supplemented, is herein referred to as the "Proxy
Statement"), shall, at the date the Proxy Statement (or any amendment thereof or
supplement thereto) is first mailed to Company shareholders and Parent
stockholders and at the time of the Company Shareholders Meeting or the Parent
Stockholders Meeting, be false or misleading with respect to any material fact,
or omit to state any material fact required to be stated therein or necessary in
order to make the statements made therein, in the light of the circumstances
under which they are made, not misleading or necessary to correct any statement
in any earlier communication with respect to the solicitation of proxies for the
Company Shareholders Meeting or the Parent Stockholders Meeting which has become
false or misleading. The registration statement on Form S-4 of Parent with
respect to the issuance of Parent Common Stock in the Merger (the "Registration
Statement") will not, at the time the Registration Statement becomes effective
under the Securities Act, contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary to make
the statements made therein not misleading. Notwithstanding the foregoing, the
Company makes no representation or warranty with respect to any information
supplied by Parent or Purchaser or any of their respective representatives which
is contained in the Schedule 14D-9 or the Proxy Statement or the Registration
Statement. The Schedule 14D-9 and the Proxy Statement will comply in all
material respects as to form with the requirements of the Exchange Act and the
rules and regulations promulgated thereunder.
SECTION 3.13 Environmental Matters. Except as would not,
individually or in the aggregate, have a Material Adverse Effect or as disclosed
in the Company SEC Reports filed and publicly available prior to the date of
this Agreement: (a) the Company and its subsidiaries have in effect all
Environmental Permits (as hereinafter defined) required under applicable
Environmental Laws (as hereinafter defined) and necessary for it to own, lease
or operate its properties and assets and to carry on its business as now
conducted, and there has occurred no default under any such Environmental
Permit. "Environmental Permit" means any permit, license, approval or other
authorization under any applicable law, regulation and other requirement of any
country, state, municipality or other subdivision thereof relating to pollution
or protection of health or the environment, including laws, regulations or other
requirements relating to emissions, discharges, releases of pollutants,
contaminants, hazardous substances, toxic materials, or wastes into ambient air,
surface water, ground water or land, or otherwise relating to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport, or
handling of chemical substances, pollutants, contaminants or hazardous or toxic
materials or wastes.
(b) Except as would not, individually or in the aggregate, have a
Material Adverse Effect or as disclosed in the Company SEC Reports filed and
publicly available prior to the date of this Agreement, (i) each of the Company
and its subsidiaries and their respective properties, assets, businesses and
operations is, and has been, and (ii) to the knowledge of the Company, each of
the Company's former subsidiaries, while subsidiaries of the Company and their
respective properties, assets, businesses and operations, were in compliance
with all applicable Environmental Laws and Environmental Permits. The term
"Environmental Laws" means any federal, state, local or foreign statute, code,
ordinance, rule, regulation, permit, consent, approval,
23
license, judgment, order, writ, decree, injunction or other authorization,
including the requirement to register underground storage tanks, relating to:
(i) emissions, discharges, releases or threatened releases of Hazardous Material
(as hereinafter defined) into the environment, including, without limitation,
into ambient air, soil, sediments, land surface or subsurface, buildings or
facilities, surface water, groundwater, publicly-owned treatment works, septic
systems or land; or (ii) the generation, treatment, storage, disposal, use,
handling, manufacturing, transportation or shipment of Hazardous Material.
(c) Except as would not, individually or in the aggregate, have a
Material Adverse Effect or as disclosed in the Company SEC Reports filed and
publicly available prior to the date of this Agreement, (i) during the period of
ownership or operation by the Company and its subsidiaries of any of their
respective current or, to the knowledge of the Company, previously-owned
properties, there have been no Releases (as hereinafter defined) of Hazardous
Material in, on, under or from such properties, or to its knowledge any
surrounding site or any off-site location, and (ii) to its knowledge prior to
the period of ownership by the Company and its subsidiaries of any of their
respective current or previously-owned properties there were no Releases of
Hazardous Material in, on, under or affecting any such property, any surrounding
site or any off-site location. The term "Hazardous Material" means (1) hazardous
materials, pollutants or contaminants, medical, hazardous or infectious wastes,
hazardous waste constituents, hazardous chemicals, hazardous or toxic
pollutants, and hazardous or toxic substances as those terms are defined in or
regulated by any applicable Environmental Law, including without limitation, the
following statutes and their implementing regulations: the Hazardous Materials
Transportation Act, 49 U.S.C. Section 1801 et seq., the Resource Conservation
and Recovery Act, 42 U.S.C. Section 6901 et seq., the Comprehensive
Environmental Response, Compensation and Liability Act, as amended by the
Superfund Amendments and Reauthorization Act, 42 U.S.C. Section 9601 et seq.,
the Toxic Substances Control Act, 15 U.S.C. Section 2601 et seq., the Clean
Water Act, 33 U.S.C. Section 1251 et seq. and the Clean Air Act, 42 U.S.C.
Section 7401 et seq., (2) petroleum, including crude oil and any fractions
thereof, (3) natural gas, synthetic gas and any mixtures thereof, (4)
radioactive materials including, without limitation, source byproduct or special
nuclear materials and (5) pesticides. "Releases" means spills, leaks,
discharges, disposal, pumping, pouring, emissions, injection, emptying,
leaching, dumping or allowing to escape.
(d) Except as would not, individually or in the aggregate, have a
Material Adverse Effect or as disclosed in the Company SEC Reports filed and
publicly available prior to the date of this Agreement, (i) the Company and its
subsidiaries and their respective properties, assets, businesses and operations
are not subject to any Environmental Claims (direct or contingent, and whether
known or unknown) or Environmental Liabilities (as such terms are hereinafter
defined) arising from or based upon any act, omission, event, condition or
circumstance occurring or existing on or prior to the date hereof or for which
the Company and its subsidiaries are responsible, including without limitation,
any such Environmental Claims or Environmental Liabilities arising from or based
upon the ownership or operation of assets, businesses or properties of the
Company or any subsidiary or their respective predecessors, and (ii) neither the
Company nor any of its subsidiaries has received any written notice of any
violation of any Environmental Law or Environmental Permit or any Environmental
Claim in
24
connection with their respective assets, properties, businesses or operations,
or, in each case, those of their respective predecessors. The term
"Environmental Claim" means any third party (including governmental agencies,
regulatory agencies and employees) action, lawsuit, claim, proceeding (including
claims or proceedings under the Occupational Safety and Health Act or similar
laws relating to safety of employees) which seeks to impose liability for (i)
noise; (ii) pollution or contamination of the air, surface water, ground water
or land; (iii) solid, gaseous or liquid waste generation, handling, treatment,
storage, disposal or transportation; (iv) exposure to hazardous or toxic
substances; (v) the safety or health of employees; or (vi) the manufacture,
processing, distribution in commerce, use, or storage of chemical or other
hazardous substances. An "Environmental Claim" includes, but is not limited to,
a common law action, as well as a proceeding to issue, modify or terminate an
Environmental Permit of the Company or any of its subsidiaries. The term
"Environmental Liabilities" includes all costs arising from any Environmental
Claim or violation or alleged violation or circumstance or condition which would
give rise to a violation or liability under any Environmental Permit or
Environmental Law under any theory of recovery, at law or in equity, and whether
based on negligence, strict liability or otherwise, including but not limited
to: remedial, removal, response, abatement, investigative, monitoring, personal
injury and damage to property, and any other related costs, expenses, losses,
damages, penalties, fines, liabilities and obligations, including attorneys'
fees and court costs.
SECTION 3.14 Year 2000. To the knowledge of the Company, the
software, operations, systems and processes (including, to the knowledge of the
Company, software, operations, systems and processes obtained from third
parties) which, in whole or in part, are used, operated, relied upon, or
integral to, the Company's or any of its subsidiaries, conduct of their
business, are Year 2000 Compliant (as hereinafter defined), except as disclosed
in the Company SEC Reports filed and publicly available prior to the date of
this Agreement or where the failure to be Year 2000 Compliant would not,
individually or in the aggregate, have a Material Adverse Effect. For purposes
of this Agreement, "Year 2000 Compliant" means the ability to process (including
calculate, compare, sequence, display or store), transmit or receive data or
data/time data from, into and between the twentieth and twenty-first centuries,
and the years 1999 and 2000, and leap year calculations without error or
malfunction.
SECTION 3.15 Intellectual Property. Except as would not,
individually or in the aggregate, have a Material Adverse Effect and except as
disclosed in the Company SEC Reports filed and publicly available prior to the
date of this Agreement: (a) the Company and each of its subsidiaries owns, is
licensed or otherwise has the right to use, all Intellectual Property (as
defined below) used in or necessary for the conduct of its business as currently
conducted; (b) the use of any Intellectual Property by the Company and its
subsidiaries does not infringe on or otherwise violate the rights of any person
and is in accordance with any applicable license pursuant to which the Company
or any subsidiary acquired the right to use any Intellectual Property; (c) to
the knowledge of the Company, no person is challenging, infringing on or
otherwise violating any right of the Company or any of its subsidiaries with
respect to any Intellectual Property owned by and/or licensed to the Company or
its subsidiaries; and (d) neither the Company nor any of its subsidiaries has
received any written notice of any pending claim with respect to any
Intellectual Property used by the Company and its subsidiaries and to its
knowledge no Intellectual Property owned and/or licensed by the Company or its
subsidiaries is
25
being used or enforced in a manner that would result in the abandonment,
cancellation or unenforceability of such Intellectual Property. For purposes of
this Agreement, "Intellectual Property" shall mean trademarks, service marks,
brand names, certification marks, trade dress and other indications of origin,
the goodwill associated with the foregoing and registrations in any jurisdiction
of, and applications in any jurisdiction to register, the foregoing, including
any extension, modification or renewal of any such registration or application;
inventions, discoveries and ideas, whether patentable or not, in any
jurisdiction; patents, applications for patents (including, without limitation,
divisions, continuations, continuations in part and renewal applications), and
any renewals, extensions or reissues thereof, in any jurisdiction; nonpublic
information, trade secrets and confidential information and rights in any
jurisdiction to limit the use or disclosure thereof by any person; proprietary
writings and other works, whether copyrightable or not, in any jurisdiction;
registrations or applications for registration of copyrights in any
jurisdiction, and any renewals or extensions thereof; any similar intellectual
property or proprietary rights; and any claims or causes of action arising out
of or relating to any infringement or misappropriation of any of the foregoing.
SECTION 3.16 Contracts. Except for employee benefit plans, contracts
disclosed in Section 6.17 of the Company Disclosure Schedule and any contracts
filed as an exhibit to any Company SEC Reports ("Filed Contracts"), Section 3.16
of the Company Disclosure Schedule lists all oral or written contracts,
agreements, arrangements, guarantees, leases and executory commitments that
exist as of the date hereof to which the Company or any of its subsidiaries is a
party or by which it is bound which are or would be required to be filed as an
exhibit to the Company SEC Reports (the listed contracts and the Filed
Contracts, the "Contracts"). All of the Contracts governed by the laws of the
United States or any state and, to the knowledge of the Company, all of the
Contracts governed by the laws of any foreign jurisdiction, are valid and
binding obligations of the Company or such subsidiary and, to the knowledge of
the Company, the valid and binding obligation of each other party thereto except
such Contracts which if not so valid and binding would not, individually or in
the aggregate, have a Material Adverse Effect. Neither the Company or such
subsidiary nor, to the knowledge of the Company, any other party thereto is in
violation of or in default in respect of, nor has there occurred an event or
condition which with the passage of time or giving of notice (or both) would
constitute a default under or permit the termination of, any such Contract
except such violations or defaults under or terminations which would not,
individually or in the aggregate, have a Material Adverse Effect.
SECTION 3.17 Opinion of Company Financial Adviser. The Company has
received the opinion of the Company Financial Adviser, dated the date of
this Agreement, to the effect that, as of such date, the consideration to be
received by the holders of Shares, other than Parent and Purchaser, pursuant to
the Offer and the Merger, taken as a unitary transaction, is fair to such
holders from a financial point of view.
SECTION 3.18 Brokers. No broker, finder or investment banker (other
than the Company Financial Adviser) is entitled to any brokerage, finder's or
other fee or commission in connection with the transactions contemplated by this
Agreement and the Option Agreement based upon arrangements made by and on behalf
of the Company. The Company has heretofore
26
furnished to Parent a complete and correct copy of all agreements between the
Company and the Company Financial Adviser pursuant to which such firm would be
entitled to any payment relating to the transactions contemplated hereby.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF
PARENT AND PURCHASER
Parent and Purchaser hereby, jointly and severally, represent and
warrant to the Company that except as set forth in the disclosure schedule
delivered by the Parent and Purchaser to the Company at or prior to the date of
execution of this Agreement (the "Parent Disclosure Schedule") where the
relevance of such disclosure to the applicable representation and warranty is
reasonably evident from the nature of the disclosure:
SECTION 4.1 Organization and Qualification. Each of Parent and each
of its subsidiaries is a corporation or other entity duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
formation and has the requisite power and authority to own, lease and operate
its properties and to carry on its business as it is 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 or prevent or materially delay the consummation of the
Offer or the Merger. Each of Parent and its subsidiaries is duly qualified or
licensed as a foreign corporation to do business, and is in good standing, in
each jurisdiction where the character of its properties owned, leased or
operated by it or the nature of its activities makes such qualification or
licensing necessary, except for such failures to be so duly qualified or
licensed and in good standing as would not, individually or in the aggregate,
have a Material Adverse Effect or prevent or materially delay the consummation
of the Offer or the Merger.
SECTION 4.2 Certificate of Incorporation and By-Laws. Parent has
heretofore furnished to the Company a complete and correct copy of the Restated
Certificate of Incorporation and the By-Laws of Parent and the Articles of
Incorporation and By-Laws of the Purchaser, in each case as currently in effect.
No other similar organizational documents are applicable to or binding upon
Parent or the Purchaser. Neither Parent nor the Purchaser is in violation in any
material respect of any of the provisions of its Restated Certificate of
Incorporation or By-Laws or Articles of Incorporation or By-Laws, respectively.
SECTION 4.3 Capitalization. (a) Prior to giving effect to the Charter
Amendment, the authorized capital stock of Parent consists of 200,000,000 shares
of Parent Common Stock and 25,000,000 shares of preferred stock, par value $1.00
per share ("Parent Preferred Stock"). As of January 27, 1999, (i) 167,587,287
shares of Parent Common Stock were issued and outstanding, all of which were
duly authorized, validly issued, fully paid and nonassessable and were issued
free of preemptive (or similar) rights, (ii) 29,369,853 shares of Parent Common
Stock were held in the treasury of Parent, (iii) an aggregate of 3,705,268
shares
27
of Parent Common Stock were reserved (x) for issuance and issuable upon or
otherwise deliverable in connection with the exercise of outstanding options
issued pursuant to Parent's stock option plans and (y) for issuance under
Parent's Non-Qualified Stock Savings Plan and the 1997 Non-Employee Director's
Stock Plan and (iv) an aggregate of 3,416,866 shares of Parent Common Stock were
reserved for issuance and issuable upon or otherwise deliverable in connection
with conversion of the Convertible Preferred Stock (as defined below). Since
January 27, 1999, no options to purchase shares of Parent Common Stock have been
granted and no shares of Parent Common Stock have been issued except for shares
issued pursuant to the exercise of options outstanding as of January 27, 1999.
As of the date hereof, 1,457,956 shares of $2.75 Cumulative Convertible
Preferred Stock (the "Convertible Preferred Stock") are issued and outstanding.
Except (i) as set forth above, (ii) as a result of options granted after January
27, 1999 to Parent employees from time to time in the ordinary course of
business and (iii) as a result of the exercise of options outstanding as of
January 27, 1999, there are outstanding (a) no shares of capital stock or other
voting securities of Parent, (b) no securities of Parent convertible into or
exchangeable for shares of capital stock or voting securities of Parent, (c) no
options or other rights to acquire from Parent, and no obligation of Parent to
issue, deliver or sell or cause to be issued, delivered or sold, any capital
stock, voting securities or securities convertible into or exchangeable for
capital stock or voting securities of Parent and (d) no equity equivalents,
interests in the ownership or earnings of Parent or other similar rights
(collectively, "Parent Securities"). Upon issuance, the shares of Parent Common
Stock to be issued in the Merger will be duly authorized, validly issued, fully
paid, nonassessable and free of preemptive (or similar) rights. Other than
Parent stock option plans or benefit plans, programs or arrangements, there are
no outstanding obligations of Parent or any of its subsidiaries to repurchase,
redeem or otherwise acquire any Parent Securities. There are no other options,
calls, warrants or other similar rights, agreements, arrangements or commitments
relating to the issued or unissued capital stock of Parent to which Parent or
any of its subsidiaries is a party. All shares of Parent Common Stock subject to
issuance as aforesaid, upon issuance on the terms and conditions specified in
the instruments pursuant to which they are issuable, shall be duly authorized,
validly issued, fully paid and nonassessable and free of preemptive (or similar)
rights and registration rights. There are no outstanding contractual obligations
of Parent or any of its subsidiaries to provide funds in any material amount to
or make any material investment (in the form of a loan, capital contribution or
otherwise) in any such subsidiary or any other entity.
(b) Each of the outstanding shares of capital stock of each of
Parent's subsidiaries (including Purchaser) is duly authorized, validly issued,
fully paid and nonassessable and all such shares are owned by Parent or another
wholly owned subsidiary of Parent and are owned free and clear of all security
interests, liens, claims, pledges, agreements, limitations in voting rights,
charges or other encumbrances of any nature whatsoever, except for such failures
to own such shares free and clear as would not, individually or in the
aggregate, have a Material Adverse Effect. Parent has delivered to the Company
prior to the date hereof a chart of the subsidiaries of Parent which evidences,
among other things, the percentage of capital stock or other equity interests
owned by Parent, directly or indirectly, in such subsidiaries. No entity in
which Parent owns less than a 50% interest and which is not disclosed in such
chart, is, individually or when taken together with all such other entities,
material to the business of Parent and its subsidiaries,
28
taken as a whole. The authorized capital stock of Purchaser consists of 1,000
shares of common stock, par value $.01 per share, all of which are solely owned
by Parent.
(c) No bonds, debentures, notes or other indebtedness of Parent having
the right to vote on any matters on which holders of capital stock of Parent may
vote are issued and outstanding.
(d) There are no voting trusts, proxies or other agreements or
commitments of any character to which Parent or any of its significant
subsidiaries is a party or by which Parent or any of its significant
subsidiaries is bound with respect to the voting of any shares of capital stock
of Parent or any of its significant subsidiaries or with respect to the
registration of the offering, sale or delivery of any shares of capital stock of
Parent or any of its significant subsidiaries under the Securities Act.
(e) As of the date hereof, Parent and its subsidiaries do not own more
than 1,000 shares of Company Common Stock.
SECTION 3.4 Authority Relative To This Agreement. Each of Parent and
Purchaser 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 by each of Parent and Purchaser and the consummation by each of
Parent and Purchaser of the transactions contemplated hereby have been duly and
validly authorized by all necessary corporate action on the part of Parent and
Purchaser and no other corporate proceedings on the part of Parent or Purchaser
are necessary to authorize this Agreement or to consummate the transactions so
contemplated (other than, in the case of Parent where the Cash Alternative
Structure is not required to be effected), (i) the issuance of the shares of
Parent Common Stock in the Merger pursuant to this Agreement requires the
approval of a majority of the votes cast at a meeting at which there is a quorum
by the holders of the Parent Common Stock and the Convertible Preferred Stock,
voting together and not as separate classes, and (ii) an amendment to the
Restated Certificate of Incorporation of Parent to increase the number of
authorized shares of Parent Common Stock to 400 million (the "Charter
Amendment") requires the approval of the holders of a majority of the
outstanding shares of (A) Parent Common Stock, voting as a class, and (B) Parent
Common Stock and Convertible Preferred Stock, voting together and not as
separate classes (collectively, the "Parent Stockholder Approval"), and, in the
case of Purchaser, the filing of appropriate merger documents as required by the
BCL). If the Cash Alternative Structure is required to be effected, no vote of
the stockholders of Parent shall be required to authorize this Agreement or to
consummate the transactions contemplated hereby, including the issuance of the
shares of Parent Common Stock in the Merger pursuant to this Agreement. Prior to
the Effective Time, the Board of Directors of Parent, or an appropriate
committee of non-employee directors thereof, will have adopted a resolution
consistent with the interpretive guidance of the SEC so that the acquisition by
any officer or director of the Company who may become a covered person of Parent
for purposes of Section 16 of the Exchange Act and the rules and regulations
thereunder ("Section 16") of shares of Parent Common Stock or options to acquire
Parent Common Stock pursuant to this Agreement and the Merger shall be an exempt
transaction for purposes of Section 16. The
29
Board of Directors of Parent by resolutions duly adopted by a unanimous vote of
the directors present at a meeting duly called and held and not subsequently
rescinded or modified in any way has duly (A) approved and adopted this
Agreement and the transactions contemplated hereby (including but not limited to
the Offer, the Merger and the Charter Amendment), (B) determined that this
Agreement and the transactions contemplated hereby (including but not limited to
the Offer, the Merger and the Charter Amendment) are fair to and in the best
interests of Parent and (C) resolved to recommend that the stockholders of
Parent vote in favor of the matters described in the second preceding sentence.
This Agreement has been duly and validly executed and delivered by Parent and
Purchaser and, assuming the due authorization, execution and delivery hereof by
the Company, constitutes a legal, valid and binding obligation of each of Parent
and Purchaser enforceable against Parent and Purchaser in accordance with its
terms.
SECTION 3.5 No Conflict; Required Filings And Consents. (a) The
execution, delivery and performance of this Agreement and the transactions
contemplated hereby by Parent and Purchaser do not and will not: (i) conflict
with or violate the certificate of incorporation or by-laws of Parent or
articles of incorporation or by-laws of Purchaser or the equivalent
organizational documents of any of its subsidiaries; (ii) assuming that all
consents, approvals and authorizations contemplated by clauses (i), (ii) and
(iii) of subsection (b) below have been obtained and all filings described in
such clauses have been made, conflict with or violate any law, rule, regulation,
order, judgment or decree applicable to Parent or any of its subsidiaries or by
which its or any of their respective properties are bound or affected; or (iii)
result in any breach or violation of or constitute a default (or an event which
with notice or lapse of time or both could become a default) or result in the
loss of a material benefit under, or give rise to any right of termination,
amendment, acceleration or cancellation of, or result in the creation of a lien
or encumbrance on any of the property or assets of Parent or any of its
subsidiaries pursuant to, any note, bond, mortgage, indenture, contract,
agreement, lease, license, permit, franchise or other instrument or obligation
to which Parent or any of its subsidiaries is a party or by which Parent or any
of its subsidiaries or any of its or any of their respective properties are
bound or affected, except, in the case of clauses (ii) and (iii), for any such
conflicts, violations, breaches, defaults or other occurrences which would not,
individually or in the aggregate, have a Material Adverse Effect or prevent or
materially delay the consummation of the Offer or the Merger.
(b) The execution, delivery and performance of this Agreement by
Parent and Purchaser and the consummation of the Offer or the Merger or the
other transactions contemplated hereby do not and will not require any consent,
approval, authorization or permit of, action by, filing with or notification to,
any governmental or regulatory authority, domestic or foreign, except for (i)
applicable requirements of the Exchange Act, the Securities Act and the rules
and regulations promulgated thereunder, rules and regulations of the NYSE, the
HSR Act or foreign filings or approvals, state securities, takeover and "blue
sky" laws, (ii) the filing and recordation of appropriate merger or other
documents as required by the BCL and the filing of the Charter Amendment under
the DGCL, and (iii) such consents, approvals, authorizations, permits, actions,
filings or notifications the failure of which to make or obtain would not,
individually or in the aggregate, have a Material Adverse Effect or prevent or
materially delay consummation of the Offer or the Merger.
30
SECTION 4.6 SEC Filings; Financial Statements. (a) Parent and, to the
extent applicable, each of its then or current subsidiaries, has filed all
forms, reports, statements and documents required to be filed with the SEC since
January 1, 1997 (together with any other filings on Form 8-K, collectively,
including the exhibits thereto, the "Parent SEC Reports"), each of which
complied when filed in all material respects with the applicable requirements of
the Securities Act, and the rules and regulations promulgated thereunder, or the
Exchange Act, and the rules and regulations promulgated thereunder, each as in
effect on the date so filed. None of the Parent SEC Reports (including but not
limited to any financial statements or schedules included or incorporated by
reference therein) contained when filed, or (except to the extent revised or
superseded by a subsequent filing with the SEC) contains, any untrue statement
of a material fact or omitted or omits to state a material fact required to be
stated or incorporated by reference therein or necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading.
(b) Each of the audited and unaudited consolidated financial
statements of Parent (including any related notes thereto) included in the
Parent SEC Reports has been prepared in accordance with generally accepted
accounting principles applied on a consistent basis throughout the periods
involved (except as may be indicated in the notes thereto) and fairly presents
the consolidated financial position of Parent and its subsidiaries at the
respective date thereof and the consolidated results of its operations and
changes in cash flows for the periods indicated, except that the unaudited
interim consolidated financial statements are subject to normal and recurring
year-end adjustments that have not been and are not expected to be material in
amount.
(c) Except as and to the extent set forth on the consolidated balance
sheet of Parent and its subsidiaries at December 31, 1997, including the notes
thereto, neither Parent nor any of its subsidiaries has any liabilities or
obligations of any nature (whether accrued, absolute, contingent or otherwise)
which would be required to be reflected on a balance sheet or in the notes
thereto prepared in accordance with generally accepted accounting principles,
except for liabilities or obligations incurred since December 31, 1997 which
would not, individually or in the aggregate, have a Material Adverse Effect.
(d) Parent has heretofore furnished or made available to the Company a
complete and correct copy of any material amendments or modifications which have
not yet been filed with the SEC to agreements, documents or other instruments
which previously had been filed by Parent with the SEC pursuant to the
Securities Act and the rules and regulations promulgated thereunder or the
Exchange Act and the rules and regulations promulgated thereunder.
SECTION 4.7 Absence of Certain Changes or Events. Since December 31,
1997, except as disclosed in the Parent SEC Reports filed and publicly available
prior to the date of this Agreement, Parent and its subsidiaries have in all
material respects conducted their businesses only in the ordinary course and in
a manner consistent with past practice and, since such date in the case of
clauses (i) and (ii) and from such date through the date of this Agreement, in
the case of clauses (iii) through (vi), there has not been: (i) any condition,
event or occurrence other than conditions, events or occurrences which have not
had or would not, individually or in the
31
aggregate, have a Material Adverse Effect other than changes or effects due to
general economic and industry conditions; or (ii) any damage, destruction or
loss (whether or not covered by insurance) with respect to any assets of Parent
or any of its subsidiaries except for such damage, destruction or loss as would
not, individually or in the aggregate, have a Material Adverse Effect; (iii) any
change by Parent in its accounting methods, principles or practices (except as
required by applicable accounting principles and SEC rules and regulations);
(iv) any material revaluation by Parent of any of its assets, including but not
limited to, writing down the value of inventory or writing off notes or accounts
receivable other than in the ordinary course of business; (v) any entry by
Parent or any of its subsidiaries into any commitment or transactions material
to Parent and its subsidiaries taken as a whole (other than commitments or
transactions entered into in the ordinary course of business); or (vi) any
declaration, setting aside or payment of any dividends or distributions in
respect of the shares of Parent Common Stock other than the regular quarterly
dividend in the amount of $.18 per share.
SECTION 4.8 Offer Documents; Proxy Statement. Neither the Offer
Documents nor any of the information supplied by Purchaser or Parent for
inclusion in the Schedule 14D-9 shall, at the respective times such Offer
Documents and Schedule 14D-9 are filed with the SEC or are first published, sent
or given to shareholders, as the case may be, contain any untrue statement of a
material fact or omit to state any material fact required to be stated or
incorporated by reference therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. The Proxy Statement shall not, at the date the Proxy Statement (or
any amendment thereof or supplement thereto) is first mailed to Company
Shareholders and Parent Stockholders and at the time of the Company Shareholders
Meeting or the Parent Stockholders Meeting, be false or misleading with respect
to any material fact, or omit to state any material fact required to be stated
therein or necessary in order to make the statements made therein, in the light
of the circumstances under which they are made, not misleading or necessary to
correct any statement in any earlier communication with respect to the
solicitation of proxies for the Company Shareholders Meeting or the Parent
Stockholders Meeting which has become false or misleading. The Registration
Statement will not, at the time the Registration Statement becomes effective
under the Securities Act, contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary to make
the statements therein not misleading. Notwithstanding the foregoing, Parent and
Purchaser make no representation or warranty with respect to any information
supplied by the Company or any of its representatives which is contained in the
Offer Documents, the Proxy Statement or the Registration Statement. The Offer
Documents, as amended and supplemented, the Proxy Statement and the Registration
Statement will comply in all material respects as to form with the requirements
of the Exchange Act and the rules and regulations promulgated thereunder and the
Securities Act and the rules and regulations promulgated thereunder, as
applicable.
SECTION 4.9 Brokers. No broker, finder or investment banker (other
than Xxxxxxxxxxx Xxxxxxx & Co., Inc.) is entitled to any brokerage, finder's or
other fee or commission in connection with the transactions contemplated by this
Agreement and the Option Agreement based upon arrangements made by and on behalf
of Parent or Purchaser.
32
SECTION 4.10 Operations of Purchaser. Purchaser (and any other wholly
owned subsidiary of Parent which may be used to effect the Offer and the Merger
pursuant to 2.1) was formed solely for the purpose of engaging in the
transactions contemplated by this Agreement, has engaged in no other business
activities and has conducted its operations only as contemplated by this
Agreement.
SECTION 4.11 Opinion of Parent Financial Adviser. The Parent has
received the opinion of Xxxxxxxxxxx Xxxxxxx & Co., Inc. (the "Parent Financial
Adviser"), dated the date of this Agreement, to the effect that, as of such
date, the consideration payable pursuant to the Merger Agreement is fair to
Parent from a financial point of view.
SECTION 4.12 Funds. Parent or Purchaser, at the expiration
date of the Offer and at the Effective Time, will have the funds necessary to
consummate the Offer and the Merger, respectively.
SECTION 4.13 Compliance; Permits. (a) Except as disclosed in
the Parent SEC Reports filed and publicly available prior to the date of this
Agreement, neither Parent nor any of its subsidiaries is in conflict with, or in
default or violation of, (i) any law, rule, regulation, order, judgment or
decree applicable to Parent or any of its subsidiaries or by which its or any of
their respective properties are bound or affected, or (ii) any note, bond,
mortgage, indenture, contract, agreement, lease, license, permit, franchise or
other instrument or obligation to which Parent or any of its subsidiaries is a
party or by which Parent or any of its subsidiaries or its or any of their
respective properties are bound or affected, except for any such conflicts,
defaults or violations which would not, individually or in the aggregate, have a
Material Adverse Effect or prevent or materially delay consummation of the Offer
or the Merger.
(b) Except as disclosed in the Parent SEC Reports filed and publicly
available prior to the date of this Agreement and except as would not,
individually or in the aggregate, have a Material Adverse Effect or prevent or
materially delay the consummation of the Offer or the Merger, Parent and its
subsidiaries hold all permits, licenses, variances, exemptions, orders and
approvals of all governmental or regulatory authorities, domestic or foreign,
which are necessary for the operation of the businesses of Parent and its
subsidiaries as presently conducted (the "Parent Permits"). Parent and its
subsidiaries are in compliance with the terms of the Parent Permits, except
where the failure so to comply would not, individually or in the aggregate, have
a Material Adverse Effect or prevent or materially delay the consummation of the
Offer or the Merger. Except as disclosed in the Parent SEC Reports filed and
publicly available prior to the date of this Agreement, the businesses of the
Parent and its subsidiaries are not being conducted in violation of, and Parent
has not received any written notices or, to its knowledge, any oral notices, of
violations with respect to, any law, ordinance or regulation of any governmental
or regulatory authority, domestic or foreign, except for violations which would
not, individually or in the aggregate, have a Material Adverse Effect or prevent
or materially delay the consummation of the Offer or the Merger.
SECTION 4.14 Absence of Litigation. Except as disclosed in the Parent
SEC Reports filed and publicly available prior to the date of this Agreement,
there are no Claims
33
pending or, to the knowledge of Parent, threatened against or affecting Parent
or any of its subsidiaries, or any properties or rights of Parent or any of its
subsidiaries, before any court, arbitrator or administrative, governmental or
regulatory authority or body, domestic or foreign, except for such Claims as
would not, individually or in the aggregate, have a Material Adverse Effect.
Neither Parent nor any of its subsidiaries nor any of their respective
properties is or are subject to any Orders, except for such Orders as would not,
individually or in the aggregate, have a Material Adverse Effect.
SECTION 4.15 Employee Benefit Plans. Except as would not,
individually or in the aggregate, have a Material Adverse Effect or as disclosed
in the Parent SEC Reports filed and publicly available prior to the date of this
Agreement:
(a) For purposes of this Agreement, the term "Parent Plans"
shall include each "employee benefit plan" (within the meaning of
section 3(3) of the ERISA), including, without limitation,
multiemployer plans within the meaning of ERISA section 3(37)), stock
purchase, stock option, severance, employment, change-in-control,
fringe benefit, collective bargaining, bonus, incentive, deferred
compensation and all other employee benefit plans, agreements,
programs, policies or other arrangements, whether or not subject to
ERISA (including any funding mechanism therefor now in effect or
required in the future as a result of the transaction contemplated by
this Agreement or otherwise), whether formal or informal, foreign or
domestic, oral or written, legally binding or not, under which any
current or former employee or director of Parent or any of its
subsidiaries, has any present or future right to benefits or under
which Parent or any of its subsidiaries has any present or future
liability.
(b) (i) Each Parent Plan has been established and
administered in all material respects in accordance with its terms,
and in compliance with the applicable provisions of ERISA, the Code,
and other applicable laws, rules and regulations; (ii) each Parent
Plan which is intended to be qualified within the meaning of Code
section 401(a) is so qualified and has received a favorable
determination letter as to its qualification, and nothing has
occurred, whether by action or failure to act, that would reasonably
be expected to cause the loss of such qualification; (iii) no event
has occurred and no condition exists that would reasonably be expected
to subject Parent or any of its subsidiaries, either directly or by
reason of their affiliation with any member of their "Controlled
Group" (defined as any organization which is a member of a controlled
group of organizations within the meaning of Code sections 414(b),
(c), (m) or (o)), to any excise tax, fine, lien or penalty imposed by
ERISA, the Code or other applicable laws, rules and regulations; (iv)
no "reportable event" (as such term is defined in ERISA section 4043),
"prohibited transaction" (as such term is defined in ERISA section 406
and Code section 4975) or "accumulated funding deficiency" (as such
term is defined in ERISA section 302 and Code section 412 (whether or
not waived)) has occurred with respect to any Parent Plan; and (v) all
insurance premiums and contributions required to be paid with respect
to any Parent Plan as of the Closing Date have been or will be timely
paid prior thereto and adequate reserves have been provided for in the
Parent SEC Reports for any premiums or contributions (or portions
thereof) attributable to service on or prior to
34
the Closing Date; provided, however, that any representation or
warranty made in (i) through (v), above shall, with respect to any
Parent Plan that is a multiemployer plan within the meaning of Section
4001(a)(3) of ERISA, be limited to the knowledge of Parent.
(c) With respect to each of the Parent Plans that is not a
multiemployer plan within the meaning of section 4001(a)(3) of ERISA
but is subject to Title IV of ERISA, as of the Effective Time, there
has not been an adverse change in the "amount of unfunded benefit
liabilities" (as defined in ERISA Section 4001(a)(18)) since June 30,
1998.
(d) With respect to any multiemployer plan (within the
meaning of ERISA section 4001(a)(3)): (i) none of Parent, any of its
subsidiaries or any member of their Controlled Group has incurred any
withdrawal liability under Title IV of ERISA that has not been
satisfied or, to the knowledge of Parent, would be subject to such
liability if, as of the Effective Time, Parent, any of its
subsidiaries or any member of their Controlled Group were to engage in
a complete withdrawal (as defined in ERISA section 4203) or partial
withdrawal (as defined in ERISA section 4205) from any such
multiemployer plan; and (ii) to the knowledge of Parent, no
multiemployer plan to which Parent, any of its subsidiaries or any
member of their Controlled Group has any liabilities or contributes,
is in reorganization or insolvent (as those terms are defined in ERISA
sections 4241 and 4245, respectively).
(e) With respect to any Parent Plan, (i) no actions, suits
or claims (other than routine claims for benefits in the ordinary
course) are pending or, to the knowledge of Parent, threatened, (ii)
no facts or circumstances exist, to the knowledge of Parent, that
could give rise to any such actions, suits or claims and (iii) there
is not any matter pending (other than routine qualification
determination filings) before the IRS, the Department of Labor or the
Pension Benefit Guaranty Corporation.
SECTION 4.16 Environmental Matters. Except as would not,
individually or in the aggregate, have a Material Adverse Effect or as disclosed
in the Parent SEC Reports filed and publicly available prior to the date of this
Agreement: (a) Parent and its subsidiaries have in effect all Environmental
Permits required under applicable Environmental Laws and necessary for it to
own, lease or operate its properties and assets and to carry on its business as
now conducted, and there has occurred no default under any such Environmental
Permit.
(b) Except as would not, individually or in the aggregate, have a
Material Adverse Effect or as disclosed in the Parent SEC Reports filed and
publicly available prior to the date of this Agreement, (i) each of Parent and
its subsidiaries and their respective properties, assets, businesses and
operations is, and has been, and (ii) to the knowledge of Parent, each of
Parent's former subsidiaries, while subsidiaries of Parent and their respective
properties, assets, businesses and operations, were in compliance with all
applicable Environmental Laws and Environmental Permits.
35
(c) Except as would not, individually or in the aggregate, have a
Material Adverse Effect or as disclosed in the Parent SEC Reports filed and
publicly available prior to the date of this Agreement, (i) during the period of
ownership or operation by Parent and its subsidiaries of any of their respective
current or, to the knowledge of Parent, previously-owned properties, there have
been no Releases of Hazardous Material in, on, under or from such properties, or
to its knowledge any surrounding site or any off-site location, and (ii) to its
knowledge prior to the period of ownership by Parent and its subsidiaries of any
of their respective current or previously-owned properties there were no
Releases of Hazardous Material in, on, under or affecting any such property, any
surrounding site or any off-site location.
(d) Except as would not, individually or in the aggregate, have a
Material Adverse Effect or as disclosed in the Parent SEC Reports filed and
publicly available prior to the date of this Agreement, (i) Parent and its
subsidiaries and their respective properties, assets, businesses and operations
are not subject to any Environmental Claims (direct or contingent, and whether
known or unknown) or Environmental Liabilities (as such terms are hereinafter
defined) arising from or based upon any act, omission, event, condition or
circumstance occurring or existing on or prior to the date hereof or for which
Parent and its subsidiaries are responsible, including without limitation, any
such Environmental Claims or Environmental Liabilities arising from or based
upon the ownership or operation of assets, businesses or properties of Parent or
any subsidiary or their respective predecessors, and (ii) neither Parent nor any
of its subsidiaries has received any written notice of any violation of any
Environmental Law or Environmental Permit or any Environmental Claim in
connection with their respective assets, properties, businesses or operations,
or, in each case, those of their respective predecessors.
SECTION 4.17 Contracts. Except for employee benefit plans, contracts
and any contracts filed as an exhibit to any Parent SEC Reports (the "Parent
Filed Contracts"), Section 4.17 of the Parent Disclosure Schedule lists all oral
or written contracts, agreements, arrangements, guarantees, leases and executory
commitments that exist as of the date hereof to which Parent or any of its
subsidiaries is a party or by which it is bound which are or would be required
to be filed as an exhibit to the Parent SEC Reports (the listed contracts and
the filed contracts, the "Contracts"). All of the Contracts governed by the laws
of the United States or any state and, to the knowledge of Parent, all of the
Contracts governed by the laws of any foreign jurisdiction, are valid and
binding obligations of Parent or such subsidiary and, to the knowledge of
Parent, the valid and binding obligation of each other party thereto except such
Contracts which if not so valid and binding would not, individually or in the
aggregate, have a Material Adverse Effect. Neither Parent or such subsidiary
nor, to the knowledge of Parent, any other party thereto is in violation of or
in default in respect of, nor has there occurred an event or condition which
with the passage of time or giving of notice (or both) would constitute a
default under or permit the termination of, any such Contract except such
violations or defaults under or terminations which would not, individually or in
the aggregate, have a Material Adverse Effect.
36
ARTICLE V
CONDUCT OF BUSINESS PENDING THE MERGER
SECTION 5.1 Conduct Of Business Pending The Merger. The Company
covenants and agrees that, during the period from the date hereof to the
Effective Time, unless Parent shall otherwise consent in writing (which consent
shall not be unreasonably withheld) or except as permitted by this Agreement,
the businesses of the Company and its subsidiaries shall be conducted in all
material respects only in the ordinary course of business and in substantially
the same manner as heretofore conducted; and the Company and its subsidiaries
shall each use its reasonable best efforts to preserve substantially intact the
business organization of the Company and its subsidiaries, to keep available the
services of the present officers and key employees of the Company and its
subsidiaries, to keep in full force and effect insurance and bonds comparable in
amount and scope of coverage to that currently maintained, and to preserve the
present relationships of the Company and its subsidiaries with customers,
suppliers and other persons with which the Company or any of its subsidiaries
has significant business relations, in each case in all material respects. By
way of amplification and not limitation, neither the Company nor any of its
subsidiaries shall, between the date of this Agreement and the Effective Time,
directly or indirectly do, or commit to do, any of the following without the
prior written consent of Parent, which consent shall not be unreasonably
withheld, and except as permitted by this Agreement or as set forth in Section
5.1 of the Company Disclosure Schedule:
(a) Amend or otherwise change its Articles of Incorporation
or By-Laws or the equivalent organizational documents or the Rights
Agreement;
(b) Issue, deliver, sell, pledge, dispose of or encumber, or
authorize or commit to the issuance, sale, pledge, disposition or
encumbrance of, (A) any shares of capital stock of any class, any
Company Voting Debt or any options, warrants, convertible securities
or other rights of any kind to acquire any shares of capital stock, or
any Company Voting Debt or any other ownership interest (including but
not limited to stock appreciation rights or phantom stock) of the
Company or any of its subsidiaries (except for the issuance of shares
of Company Common Stock (and the related Rights) required to be issued
pursuant to the terms of Company Stock Options outstanding as of
January 31, 1999) or (B) any assets of the Company or any of its
subsidiaries that are, individually or in the aggregate, material to
the business of the Company and its subsidiaries, taken as a whole,
except for sales of products in the ordinary course of business and in
a manner consistent with past practice;
(c) Declare, set aside, make or pay any dividend or other
distribution, payable in cash, stock, property or otherwise, with
respect to any of its capital stock (other than (1) regular quarterly
dividends with usual record and payment dates for dividends consistent
with past practice (unless otherwise required by Section 5.3), in an
amount not to exceed $.13 per share, (2) dividends by wholly owned
subsidiaries of the Company; and (3)
37
dividends required to be paid pursuant to the terms of organizational
documents of non-wholly owned subsidiaries in effect on the date
hereof;
(d) Reclassify, combine, split, subdivide or redeem,
purchase or otherwise acquire, directly or indirectly, any of its
capital stock or any securities convertible into or exercisable for
any shares of its capital stock, other than pursuant to Company Stock
Options and Stock Plans in accordance with their terms as in effect on
the date hereof;
(e) (i) Acquire (by merger, consolidation, or acquisition of
stock or assets) any corporation, partnership or other business
organization or division thereof; (ii) incur any indebtedness for
borrowed money (including by issuance of debt securities) other than
short-term borrowings under the Company's existing credit facilities
or issue any debt securities or, other than in the ordinary course of
business and in amounts that are not material, assume, guarantee or
endorse, or otherwise as an accommodation become responsible for, the
obligations of any person, or make any loans or advances (other than
loans or advances to employees of the Company and its subsidiaries in
the ordinary course of business consistent with past practice or
guarantees of obligations of subsidiaries) or make any capital
contributions to, or investments in, any other person, other than in
the ordinary course of business and in amounts that are not material;
(iii) enter into any material contract or agreement other than in the
ordinary course of business consistent with past practice; or (iv)
authorize any single capital expenditure which is in excess of $10
million or capital expenditures which are, in the aggregate, in excess
of $50 million for the Company and its subsidiaries taken as a whole
(except to the extent such expenditures are budgeted in the Company's
budget as of the date hereof, as set forth in Section 5.1 of the
Company Disclosure Schedule);
(f) Except to the extent required under existing employee
and director benefit plans, agreements or arrangements as in effect on
the date of this Agreement and except for renewals in the ordinary
course, increase the compensation or fringe benefits of any of its
directors, officers or employees, except for increases in salary or
wages or, in connection with a promotion or change in position granted
in the ordinary course, benefits received by employees of the Company
or its subsidiaries who are not one of the 50 officers of the Company
with the highest base salary in the ordinary course of business in
accordance with past practice, or grant any severance or termination
pay not currently required to be paid under existing severance plans
or contracts other than in the ordinary course of business consistent
with past practice to, or enter into any employment, consulting or
severance agreement or arrangement with any present or former
director, officer or other employee of the Company or any of its
subsidiaries (other than an agreement with an employee who is not one
of the 50 officers of the Company with the highest base salary), or,
except as is required by law, establish, adopt, enter into or amend or
terminate any collective bargaining agreement, Company Plan or
employee benefit arrangement that would have been Company Plans if
they were in effect as of the date hereof, including, but not limited
to, bonus, profit sharing, thrift, compensation, stock option,
restricted stock, pension, retirement, deferred compensation,
employment,
38
termination, severance or other plan, agreement, trust, fund, policy
or arrangement for the benefit of any directors, officers or
employees;
(g) Except as may be required as a result of a change in law
or in generally accepted accounting principles, change any of the
accounting practices or principles used by it;
(h) Except as may be required by law, make any material tax
election, make or change any method of accounting with respect to
Taxes, file any amended Tax Returns that may have a material adverse
effect on the tax position of the Company or any of its subsidiaries
or settle or compromise any material federal, state, local or foreign
Tax liability;
(i) Settle or compromise any pending or threatened suit,
action or claim which is material to the Company or any of its
subsidiaries, taken as a whole, or which relates to the transactions
contemplated hereby;
(j) Adopt a plan of complete or partial liquidation,
dissolution, merger, consolidation, restructuring, recapitalization or
other reorganization of the Company or any of its subsidiaries not
constituting an inactive subsidiary (other than the Merger);
(k) Pay, discharge or satisfy any material claims,
liabilities or obligations (absolute, accrued, asserted or unasserted,
contingent or otherwise), other than the payment, discharge or
satisfaction (1) in the ordinary course of business and consistent
with past practice or in accordance with their terms, of liabilities
reflected or reserved against in the financial statements of the
Company, (2) of liabilities incurred in the ordinary course of
business and consistent with past practice and (3) of liabilities
required to be paid, discharged or satisfied;
(l) Enter into any "non-compete" or similar agreement; or
(m) Take, or propose to take, or agree to take in writing or
otherwise, any of the actions described in Sections 5.1(a) through
5.1(l) or any action which would make any of the representations or
warranties of the Company contained in this Agreement untrue and
incorrect as of the date when made if such action had then been taken,
or would result in any of the conditions set forth in Annex A not
being satisfied.
SECTION 5.2 Conduct Of Business Of Parent Pending The Merger. Conduct
of Business Parent covenants and agrees that, during the period from the date
hereof to the Effective Time Parent shall use its reasonable best efforts to
preserve substantially intact its and its subsidiaries' current business
organizations, keep available the services of the present officers and key
employees of Parent and its subsidiaries and preserve the present relationships
of the Company and its subsidiaries with customers, suppliers and other persons
with which the Company or any of its subsidiaries has significant business
relations to the end that their goodwill and ongoing businesses shall be
materially unimpaired at the Effective Time. By way of amplification and not
39
limitation, except as set forth in Section 5.2 of the Parent Disclosure Schedule
and except as permitted by this Agreement, neither Parent nor any of its
subsidiaries shall, between the date of this Agreement and the Effective Time,
directly or indirectly do, or commit to do, any of the following without the
prior written consent of the Company, which consent shall not be unreasonably
withheld:
(a) In the case of Parent only, amend or otherwise change its
Certificate of Incorporation or By-Laws (other than the Charter Amendment);
(b) In the case of Parent only, declare, set aside, make or pay any
dividend or other distribution, payable in cash, stock, property or otherwise,
with respect to any of its capital stock (other than regular quarterly dividends
with usual record and payment dates consistent with past practice (unless
otherwise required by Section 5.3), in an amount not to exceed $.18 per share);
(c) In the case of Parent only, adopt a plan of complete or partial
liquidation or dissolution;
(d) In the case of Parent only, issue, deliver, sell, dispose of, or
authorize or commit to the issuance, sale or disposition of any shares of
capital stock of any class, any Parent Voting Debt or any options, warrants,
convertible securities or other rights of any kind to acquire any shares of
capital stock, or any Parent Voting Debt (except for the issuance of options in
the ordinary course consistent with past practice and except for issuances in
connection with acquisitions or mergers permitted hereby);
(e) In the case of Parent only, redeem, purchase or otherwise acquire,
directly or indirectly, any capital stock of Parent, other than pursuant to
options and benefit plans;
(f) Acquire (by merger, consolidation or acquisition of stock or
assets) any corporation, partnership or other business organization or division
thereof if (i) the aggregate consideration is in excess of $500 million for any
individual transaction and $750 million for all such transactions or (ii) such
acquisition would be reasonably likely to prevent or materially delay the Offer
or the Merger; or
(g) Take, or propose to take, or agree to take in writing or
otherwise, any of the actions described in Sections 5.2(a) through 5.2(f) or any
action which would be reasonably likely to prevent or materially delay the Offer
or the Merger or make any of the representations or warranties of Parent or the
Purchaser contained in this Agreement untrue and incorrect as of the date when
made if such action had then been taken.
SECTION 5.3 Coordination of Dividends. Each of the Company and Parent
shall coordinate with the other the declaration and payment of dividends in
respect of the Company Common Stock and the Parent Common Stock and the record
dates and the payment dates relating thereto, it being the intention of the
Company and Parent that holders of Company Common Stock shall not receive two
dividends, or fail to receive one dividend, for any single
40
calendar quarter with respect to their shares of Company Common Stock and/or
shares of Parent Common Stock any such holder receives in exchange therefor
pursuant to the Merger.
ARTICLE VI
ADDITIONAL AGREEMENTS
SECTION 6.1 Meetings. (a) The Company, acting through its Board of
Directors, shall in accordance with and subject to applicable law and the
Articles of Incorporation and By-Laws, (i) duly call, give notice of, convene
and hold a meeting of its shareholders as soon as practicable following
consummation of the Offer for the purpose of considering and taking action on
this Agreement and the transactions contemplated hereby (the "Company
Shareholders Meeting") and (ii) except to the extent otherwise required by the
fiduciary duties of the Board of Directors of the Company under applicable law,
(A) include in the Proxy Statement the unanimous recommendation of the Board of
Directors that the shareholders of the Company vote in favor of the approval of
this Agreement and the transactions contemplated hereby and (B) use its
reasonable best efforts to obtain the necessary approval of this Agreement and
the transactions contemplated hereby by its shareholders. Parent shall cause
Purchaser to, and Purchaser shall, be present, in person or by proxy at, and
vote all shares of Company Common Stock acquired by Purchaser pursuant to the
Offer or otherwise owned by Parent or Purchaser (the "Tendered Shares") in favor
of the approval of this Agreement at the Company Shareholders Meeting or any
adjournment thereof. Between the date of consummation of the Offer and the date
of the Company Shareholders Meeting, Parent and Purchaser shall not sell,
transfer, dispose of or encumber in any manner or otherwise subject to any
voting or other agreement with any third party any of the Tendered Shares or any
voting rights with respect thereto. Between the date hereof and the Effective
Time, neither Parent nor any of its subsidiaries shall acquire, or agree to
acquire, whether in the open market or otherwise, any rights in any equity
securities of the Company other than pursuant to the Offer or the Merger.
(b) Parent, acting through its Board of Directors, shall in accordance
with and subject to applicable law and Parent's Certificate of Incorporation and
By-Laws, (i) duly call, give notice of, convene and hold a meeting of its
stockholders as soon as practicable following the consummation of the Offer for
the purpose of considering and taking action on the issuance of the shares of
Parent Common Stock and the Charter Amendment (the "Parent Stockholders
Meeting") and (ii) (A) include in the Proxy Statement the unanimous
recommendation of the Board of Directors that the stockholders of Parent vote in
favor of the approval of the issuance of the shares of Parent Common Stock and
the Charter Amendment and the written opinion of the Parent Financial Adviser to
the effect that, as of the date of such opinion, the consideration to be paid by
Parent to the holders of shares of the Company Common Stock in the Offer and the
Merger is fair, from a financial point of view, to Parent and its stockholders
and (B) use its reasonable best efforts to obtain the necessary approval of the
issuance of the shares of Parent Common Stock and the Charter Amendment by its
stockholders.
41
(c) Parent and the Company will use their reasonable best efforts to
hold the Company Shareholders Meeting and the Parent Stockholders Meeting on the
same day.
(d) Parent covenants that it shall use its reasonable best efforts,
subject to compliance with the applicable rules and regulations under the
Exchange Act governing the solicitation of proxies, to cooperate with the
Company in obtaining the agreement of the record holders of the shares of Parent
Common Stock owned by the Xxxx family and related trusts (comprising
approximately 39% of the outstanding voting power of the Parent Common Stock as
of the date of this Agreement) to enter into a voting agreement with the Company
substantially in the form provided by the Company to Parent prior to the date
hereof.
SECTION 6.2 Proxy Statement; Registration Statement. As soon as
practicable following the date of this Agreement, the Company and Parent shall
prepare and file with the SEC under the Exchange Act and the rules and
regulations promulgated thereunder the Proxy Statement and Parent shall prepare
and file with the SEC the Registration Statement, in which the Proxy Statement
will be included as a prospectus. Each of the Company and Parent shall use its
reasonable best efforts to have the Registration Statement declared effective
under the Securities Act as promptly as practicable after such filing. Each of
the Company and Parent agrees to use its reasonable best efforts, after
consultation with the other parties hereto, to respond promptly to any comments
made by the SEC with respect to the Proxy Statement and the Registration
Statement and any preliminary version thereof filed by it. The Company and
Parent shall cause such Proxy Statement to be mailed to their respective
shareholders and stockholders as of the record date for the Company Shareholders
Meeting and the Parent Stockholders Meeting, as the case may be, at the earliest
practicable time after the Registration Statement has been declared effective by
the SEC and the Offer has been consummated. Parent shall also take any action
(other than qualifying to do business in any jurisdiction in which it is not now
so qualified) required to be taken under any applicable state securities laws in
connection with the issuance of the Parent Common Stock in the Merger.
SECTION 6.3 Company Board Representation; Section 14f). (a) Promptly
upon the purchase by Purchaser of Shares pursuant to the Offer and, from time to
time thereafter, subject to the terms of this Section, Purchaser shall be
entitled to designate up to such number of directors (the "Parent Designees"),
rounded up to the next whole number, on the Board of Directors of the Company as
shall give Purchaser representation on the Board of Directors equal to the
product of the total number of directors on such Board (giving effect to the
directors elected pursuant to this sentence) multiplied by the percentage that
the aggregate number of Shares beneficially owned by Purchaser or any affiliate
of Purchaser bears to the total number of Shares then outstanding, and the
Company shall, at such time, promptly take all action necessary to cause the
Parent Designees to be so elected, including either increasing the size of the
Board of Directors or securing the resignations of incumbent directors or both.
At such times, the Company will use its reasonable best efforts to cause persons
designated by Purchaser to constitute the same percentage as is on the board of
each committee of the Board of Directors (other than the committee formed
pursuant to Section 6.3(c)).
42
(b) The Company's obligations to appoint designees to its Board of
Directors shall be subject to Section 14(f) of the Exchange Act and Rule 14f-1
promulgated thereunder. The Company shall promptly take all actions required
pursuant to Section 14(f) and Rule 14f-1 in order to fulfill its obligations
under this Section 6.3 and shall include in the Schedule 14D-9 or a separate
Rule 14f-1 information statement provided to shareholders such information with
respect to the Company and its officers and directors as is required under
Section 14(f) and Rule 14f-1 to fulfill its obligations under this Section 6.3.
Parent or Purchaser will supply to the Company 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) Immediately following the election or appointment of the Parent
Designees pursuant to this Section 6.3 and prior to the Effective Time, the
Board of Directors of the Company shall form a committee of the Board comprised
solely of directors who are not Parent Designees (the "Continuing Director
Committee"), which committee shall be delegated sole responsibility for the
following matters: (i) any amendment, or waiver, of any term or condition of
this Agreement or the Articles of Incorporation or By-Laws of the Company;
(ii) any termination of this Agreement by the Company; (iii) any extension by
the Company of the time for performance of any of the obligations or other acts
of Purchaser or Parent under this Agreement; (iv) any waiver, assertion or
enforcement of the Company's rights under this Agreement; (v) any other consent,
agreement or action by the Company or the Company's Board of Directors with
respect to this Agreement; (vi) the declaration of quarterly dividends in an
amount not to exceed $.13 per share of Company Common Stock; and (vii) subject
to Section 5.1, changes in the composition, compensation or benefits of the
senior management of the Company and its operating divisions.
(d) Prior to the Effective Time, without the consent of a majority of
the Continuing Directors, the Parent Designees shall not propose, approve or
cause any action by the Board of Directors of the Company, which action is in
violation of the terms of this Agreement, or would require the consent of Parent
pursuant to Section 5.1. In the event that Parent or Purchaser breaches its
obligations under this Agreement, or the Parent Designees breach the terms of
this Section, including by seeking to dissolve or otherwise impair the rights or
authority of the Committee described in paragraph (c) above, Parent shall cause
the Parent Designees to promptly resign from the Company Board of Directors and
shall not otherwise seek to elect directors to such Board.
(e) Parent, on behalf of the Parent Designees, acknowledges that such
designees have a "direct or indirect interest" as defined in Section 23-1-35-2
of the IBCL with respect to this Agreement and the transactions contemplated
hereby, including without limitation the matters delegated to the committee
formed pursuant to Section 6.3(c).
SECTION 6.4 Confidentiality. (a) From the date hereof to the
Effective Time, the Company shall, and shall cause its subsidiaries, officers,
directors, employees, auditors and other agents to, afford the officers,
employees, auditors and other agents of Parent, and financing sources who shall
agree to be bound by the provisions of this Section 6.4 as though a party
hereto, reasonable access, consistent with applicable law and confidentiality or
similar
43
agreements with third parties, at all reasonable times to its officers,
employees, agents, properties, offices, plants and other facilities and to all
books and records, and shall furnish Parent and such financing sources with all
financial, operating and other data and information as Parent, through its
officers, employees or agents, or such financing sources may from time to time
reasonably request. From the date hereof to the Effective Time, Parent shall,
and shall cause its officers and employees to afford the officers, employees,
financial advisor, accountants and counsel of the Company reasonable access at
all reasonable times, consistent with applicable law and confidentiality or
similar agreements with third parties and consistent with the Company's rights
under this Agreement, including to confirm compliance by Parent with its
obligations hereunder and the representations and warranties of Parent contained
herein, to officers, employees, auditors, books and records and such other
information as the Company, through its officers, employees, financial advisor,
accountants and counsel reasonably may request.
(b) Information obtained by Parent and Purchaser pursuant to
Section 6.4(a) shall be subject to the Confidentiality Agreement, dated November
24, 1998 (the "Confidentiality Agreement"), between the Company and Parent.
(c) No investigation pursuant to this Section 6.4 shall affect any
representations or warranties of the parties herein or the conditions to the
obligations of the parties hereto.
SECTION 6.5 No Solicitation of Transactions. The Company, its
affiliates and their respective officers, directors, employees, representatives
and agents shall immediately cease any existing discussions or negotiations, if
any, with any parties conducted heretofore with respect to any Business
Combination Proposal (as hereinafter defined). Prior to the purchase of Shares
pursuant to the Offer, the Company may, directly or indirectly, furnish
information and access, in each case only in response to a request for such
information or access to any person made after the date hereof which was not
encouraged, solicited or initiated by the Company or any of its affiliates or
any of its or their respective officers, directors, employees, representatives
or agents after the date hereof, pursuant to appropriate confidentiality
agreements containing terms substantially similar to those contained in the
Confidentiality Agreement, and may participate in discussions and negotiate with
such person concerning any Business Combination Proposal, if, and only to the
extent that, (i) such person has submitted a written Business Combination
Proposal to the Board of Directors of the Company relating to any such
transaction, (ii) the Board, after consultation with its independent financial
advisers, determines in good faith that (x) the person making such Business
Combination Proposal is reasonably capable of completing such Business
Combination Proposal, taking into account the legal, financial, regulatory and
other aspects of such Business Combination Proposal and the person making such
Business Combination Proposal and (y) such Business Combination Proposal would
reasonably be expected to be a Superior Proposal (as defined below) and (iii)
the Board determines in good faith, based upon the advice of outside counsel to
the Company, that, assuming such Business Combination Proposal is a Superior
Proposal, failure to take such action would violate its fiduciary duties under
applicable law. The Board shall notify Parent promptly (but in any event within
24 hours) if any such proposal is made and shall in such notice, indicate in
reasonable detail the identity of the offeror and the material terms and
conditions of any proposal and shall
44
keep Parent promptly advised of the status and material terms of any such
inquiry, offer or proposal. Except as set forth in this Section 6.5, neither the
Company or any of its affiliates, shall, and each shall use their reasonable
best efforts to cause their respective officers, directors, employees,
representatives or agents, not to, directly or indirectly, encourage, solicit,
participate in or initiate discussions or negotiations with, or provide any
information to, any corporation, partnership, person or other entity or group
(other than Parent and Purchaser, any affiliate or associate of Parent and
Purchaser or any designees of Parent or Purchaser) concerning any Business
Combination Proposal; provided, however, that nothing herein shall prevent the
Board from taking, and disclosing to the Company's shareholders, a position
contemplated by Rules 14d-9 and 14e-2 promulgated under the Exchange Act with
regard to any tender offer or from making any disclosure ("Required Disclosure")
to its shareholders if the Board shall conclude in good faith that such
disclosure is required under applicable law; provided, further, that the Board
shall not recommend that the shareholders of the Company tender their shares of
Company Common Stock in connection with any such tender offer unless the Board
shall have determined in good faith, based upon the advice of outside counsel to
the Company, that failing to take such action would constitute a breach of the
Board's fiduciary duty under applicable law. The Company agrees not to release
any third party from, or waive any provisions of, any confidentiality or
standstill agreement to which the Company is a party, unless the Board shall
have determined in good faith, based upon the advice of outside counsel, that
failing to release such third party or waive such provisions would constitute a
breach of the Board's fiduciary duty under applicable law. As used in this
Section 6.5, "Business Combination Proposal" shall mean any tender or exchange
offer, proposal for a merger, consolidation or other business combination
involving the Company or any of its material subsidiaries, or any proposal or
offer (in each case, whether or not in writing and whether or not delivered to
the stockholders of a party generally) to acquire in any manner, directly or
indirectly, a substantial equity interest in or a substantial portion of the
assets of the Company or any of its material subsidiaries, other than pursuant
to the transactions contemplated by this Agreement. A "Superior Proposal" is a
Business Combination proposal that involves payment of consideration to the
Company's shareholders and other terms and conditions that, taken as a whole,
are superior to the Offer and the Merger.
SECTION 6.6 Employee Benefits Matters. (a) On and after the Effective
Time, Parent shall cause the Surviving Corporation and its subsidiaries to
promptly pay or provide when due all compensation and benefits as provided
pursuant to the terms of, and to honor in accordance with their currently
existing terms (except to the extent amended or terminated in accordance with
such terms), all compensation arrangements, employment agreements and employee
or director benefit plans, programs and policies in existence as of the date
hereof for all employees (and former employees) and directors (and former
directors) of the Company and its subsidiaries.
(b) Parent shall cause the Surviving Corporation, for the period
commencing at the Effective Time and ending on December 31, 2000, to provide
employee benefits under plans, programs and arrangements which, in the
aggregate, will provide benefits to the employees of the Surviving Corporation
and its subsidiaries (other than employees covered by a collective bargaining
agreement) which are no less favorable in the aggregate than those provided
pursuant to the plans, programs and arrangements (other than those related to
the equity securities of the
45
Company) of the Company and its subsidiaries in effect on the date hereof;
provided, however, that nothing herein shall prevent the amendment or
termination of any specific plan, program or arrangement (except that the
Company's Separation Allowance policy will not be amended to reduce the benefits
thereunder with respect to terminations of employees occurring before January 1,
2001), require that the Surviving Corporation provide or permit investment in
the securities of Parent, the Company or the Surviving Corporation or interfere
with the Surviving Corporation's right or obligation to make such changes as are
necessary to comply with applicable law.
(c) Employees of the Surviving Corporation shall be given credit for
all service with the Company and its subsidiaries, to the same extent as such
service was credited for such purpose by the Company, under each employee
benefit plan, program, or arrangement of the Parent in which such employees are
eligible to participate for all purposes, except for purposes of benefit
accrual, under defined benefit pension plans, and, in all cases, except to the
extent such credit would result in duplication of benefits. If employees of the
Surviving Corporation and its subsidiaries become eligible to participate in a
medical, dental or health plan of Parent or its subsidiaries, Parent shall cause
such plan to (i) waive any preexisting condition limitations for conditions
covered under the applicable medical, health or dental plans of the Company and
its subsidiaries and (ii) honor any deductible and out of pocket expenses
incurred by the employees and their beneficiaries under such plans during the
portion of the calendar year prior to such participation. Notwithstanding the
foregoing, in no event shall the employees be entitled to any credit for
service, deductibles or out of pocket expenses to the extent that it would
result in a duplication of benefits with respect to the same period of service,
deductible or out of pocket expenses.
(d) Nothing in this Section 6.6 shall require the continued employment
of any person.
(e) The Company and Parent shall take all steps as are necessary or
appropriate to ensure that the provisions set forth in Appendix E to the Xxxxxx
International, Inc. Pension Plan, Appendix E to the Xxxxxx International, Inc.
Pension Plan for Collective-Bargaining Employees and Appendix C to the Xxxxxx
International, Inc. Retirement Income Plan for Collective-Bargaining Employees
(i) do not become not effective as a result of, or are rescinded with respect to
(as applicable), the consummation of any of the transactions contemplated by
this Agreement, and (ii) are terminated effective as of the Effective Time.
Within 30 days after the date of this Agreement, or such shorter period as is
necessary to accomplish the purposes hereof, the Company shall advise Parent in
writing of all necessary actions required to be taken by Parent to implement the
matters contemplated by the preceding sentence, it being understood that certain
actions may be required to be taken after the Merger.
SECTION 6.7 Directors' and Officers' Indemnification and Insurance.
(a) The Articles of Incorporation of the Surviving Corporation shall contain
provisions no less favorable with respect to indemnification than are set forth
in Article Ninth of the Articles of Incorporation of the Company, which
provisions shall not be amended, repealed or otherwise modified for a period of
six years from the Effective Time in any manner that would adversely affect the
rights
46
thereunder of individuals who at the Effective Time were directors,
officers or employees of the Company.
(b) Parent shall cause to be maintained in effect for six years from
the Effective Time the current policies of the directors' and officers'
liability insurance maintained by the Company (provided that Parent may
substitute therefor policies of at least the same coverage containing terms and
conditions which are not materially less advantageous) with respect to matters
or events occurring prior to the Effective Time to the extent available;
provided, however, that in no event shall Parent or the Company be required to
expend more than an amount per year equal to 200% of current annual premiums
paid by the Company (which amounts under current policies are set forth on
Schedule 6.7) to maintain or procure insurance coverage pursuant hereto; and,
provided, further that if the annual premiums of such insurance coverage exceed
such amount, the Surviving Corporation shall be obligated to obtain a policy
with the greatest coverage available for a cost not exceeding such amount.
(c) For six years after the Effective Time, Parent agrees that it will
or will cause the Surviving Corporation to indemnify and hold harmless each
present and former director and officer of the Company, determined as of the
Effective Time (the "Indemnified Parties"), against any costs or expenses
(including reasonable attorneys' fees), judgments, fines, losses, claims,
damages or liabilities (collectively, "Costs") incurred in connection with any
claim, action, suit, proceeding or investigation, whether civil, criminal,
administrative or investigative, arising out of or pertaining to matters
relating to their duties or actions in their capacity as officers and directors
and existing or occurring at or prior to the Effective Time, whether asserted or
claimed prior to, at or after the Effective Time, to the fullest extent
permitted under applicable law (and Parent shall, or shall cause the Surviving
Corporation to, also advance fees and expenses (including reasonable attorneys'
fees) as incurred to the fullest extent permitted under applicable law provided
the person to whom expenses are advanced provides a customary undertaking
complying with applicable law to repay such advances if it is ultimately
determined that such person is not entitled to indemnification).
(d) Nothing in this Agreement is intended to, shall be construed to or
shall release, waive or impair any rights to directors' and officers' insurance
claims under any policy that is or has been in existence with respect to the
Company or any of its officers, directors or employees, it being understood and
agreed that the indemnification provided for in this Section 6.7 is not prior to
or in substitution for any such claims under such policies.
SECTION 6.8 Notification of Certain Matters. The Company shall give
prompt notice to Parent, and Parent shall give prompt notice to the Company, of
(i) the occurrence or non-occurrence of any event the occurrence or
non-occurrence of which would, if such representation or warranty were required
to be made at such time, be likely to cause any representation or warranty
contained in this Agreement to be untrue or inaccurate in any material respect
and (ii) any failure of the Company, Parent or Purchaser, as the case may be, to
comply in all material respects with or satisfy any covenant, condition or
agreement to be complied with or satisfied by it hereunder; provided, however,
that the delivery of any notice pursuant to this
47
Section 6.8 shall not limit or otherwise affect the remedies available hereunder
to the party receiving such notice.
SECTION 6.9 Further Action; Reasonable Best Efforts. (a) Upon the
terms and subject to the conditions hereof, each of the parties hereto shall use
its reasonable best efforts to take, or cause to be taken, all appropriate
action, and to do or cause to be done, all things necessary, proper or advisable
under applicable laws and regulations to consummate and make effective the
transactions contemplated by this Agreement as soon as practicable, including
but not limited to (i) cooperating in the preparation and filing of the Offer
Documents, the Schedule 14D-9, the Proxy Statement, the Registration Statement,
any required filings under the HSR Act or other foreign filings and any
amendments to any thereof; (ii) promptly making all required regulatory filings
and applications including, without limitation, responding promptly to requests
for further information, to obtain all licenses, permits, consents, approvals,
authorizations, qualifications and orders of governmental authorities and
parties to contracts with the Company and its subsidiaries as are necessary for
the consummation of the transactions contemplated by this Agreement and to
fulfill the conditions to the Offer and the Merger; (iii) avoiding the entry of,
or having vacated or terminated, any decree, order, or judgment that would
restrain, prevent, or delay the consummation of the Offer or the Merger,
including but not limited to defending through litigation on the merits any
claim asserted in any court by an party; and (iv) taking any and all reasonable
steps necessary to avoid or eliminate each and every impediment under any
antitrust, competition, or trade regulation law that is asserted by any
governmental entity with respect to the Offer or the Merger so as to enable the
consummation of the Offer or the Merger to occur as expeditiously as possible,
including but not limited to, proposing, negotiating, committing to and
effecting, by consent decree, hold separate order or otherwise, the sale,
divestiture or disposition of such assets or businesses of the Parent or the
Company or any of their respective subsidiaries, (or otherwise taking or
committing to take any action that limits, in any material respect, the freedom
of action with respect to, or its ability to retain, any of the businesses,
product lines, or assets of Parent, the Company or their respective
subsidiaries) as may be required in order to avoid the entry of, or to effect
the dissolution of, any injunction, temporary restraining order, or other order
in any suit or proceeding, which would otherwise have the effect of preventing
or delaying the consummation of the Offer or the Merger; provided, however, that
Parent shall not be required to agree to any hold separate order, sale,
divestiture, or disposition of assets or businesses of Parent or the Company
which account, in the aggregate, for more than $160 million in sales of Parent
or the Company, as the case may be, in the most recently completed fiscal year.
At the request or Parent, the Company shall agree to divest, hold separate or
otherwise take or commit to take any action that limits its freedom of action
with respect to, or its ability to retain, any of the businesses, product lines
or assets of the Company or any of its Subsidiaries, provided that any such
action may be conditioned upon the consummation of the Merger. Notwithstanding
anything to the contrary contained in this Agreement, in connection with any
filing or submission required or action to be taken by Parent, the Company, or
any of their respective Subsidiaries to consummate the Offer and the Merger or
other transactions contemplated in this Agreement, the Company shall not,
without Parent's prior written consent, recommend, suggest, or commit to any
sale, divestiture or disposition of assets or businesses of the Company or its
Subsidiaries. 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
48
proper officers and directors of each party to this Agreement shall use their
reasonable best efforts to take all such necessary action.
(b) The Company and Parent shall keep the other apprised of the status
of matters relating to the completion of the transactions contemplated hereby
and work cooperatively in connection with obtaining the requisite approvals and
consents of governmental order, including, without limitation: (i) promptly
notifying the other of, and if in writing, furnishing the other with copies of
(or, in the case of material oral communications, advise the other orally of),
any communications from or with any governmental authority with respect to the
Offer or the Merger or any of the other transactions contemplated by this
Agreement; (ii) permitting the other party to review in advance, and considering
in good faith the views of one another in connection with, any proposed
communication with any governmental authority in connection with proceedings
under or relating to the HSR Act or any other antitrust law; and (iii) not
agreeing to participate in any meeting or discussion with any governmental
authority in connection with proceedings under or relating to the HSR Act or any
other antitrust law unless it consults with the other party in advance.
SECTION 6.10 Public Announcements. The initial press release
pertaining to the transactions contemplated by this Agreement shall be a joint
press release and thereafter Parent and the Company shall consult with each
other before issuing any press release or otherwise making any public statements
with respect to the Offer or the Merger and shall not issue any such press
release or make any such public statement prior to such consultation, except as
may be required by law or any listing agreement with its securities exchange.
SECTION 6.11 Affiliates. Not less than 30 days prior to the
Effective Time, the Company shall deliver to Parent a letter identifying all
persons who, in the opinion of the Company, may be deemed at the time this
Agreement is submitted for approval by the shareholders of the Company,
"affiliates" of the Company for purposes of Rule 145 under the Securities Act,
and such list shall be updated as necessary to reflect any changes from the date
thereof. The Company shall use reasonable best efforts to cause each person
identified on such list to deliver to Parent not less than 15 days prior to the
Effective Time, a written agreement substantially in the form attached as
Exhibit 6.11 hereto (an "Affiliate Agreement"). For so long as the shares of
Parent Common Stock issued pursuant to the Merger are subject to the resale
restrictions set forth in Rule 145 under the Securities Act, Parent will use its
reasonable best efforts to comply with the provisions of Rule 144(c) under the
Securities Act.
SECTION 6.12 Stock Exchange Listing. Parent shall use its reasonable
best efforts to cause the shares of Parent Common Stock to be issued in the
Merger and the shares of Parent Common Stock to be reserved for issuance upon
the exercise of the Company Stock Options to be approved for listing on the
NYSE, subject to official notice of issuance, prior to the Closing Date.
SECTION 6.13 Accountants' Letters. The Company shall use its
reasonable best efforts to cause to be delivered to Parent a letter of the
Company's independent public accountants, dated a date within two business days
before the date on which the Registration
49
Statement shall become effective and addressed to Parent, in form and substance
reasonably satisfactory to Parent and customary in scope and substance for
comfort letters delivered by independent public accountants in connection with
registration statements similar to the Registration Statement. Parent shall use
its reasonable best efforts to cause to be delivered to the Company a letter of
Parent's independent public accountants, dated a date within two business days
before the date on which the Registration Statement shall become effective and
addressed to the Company, in form and substance reasonably satisfactory to the
Company and customary in scope and substance for comfort letters delivered by
independent public accountants in connection with registration statements
similar to the Registration Statement.
SECTION 6.14 Parent Board of Directors. Effective at the Effective
Time, Parent shall increase the size of its Board of Directors by adding three
directorships and elect Mr. S. Xxx Xxxxxxx and two other current directors of
the Company to be mutually agreed by the Company and Parent.
SECTION 6.15 Alternative Transaction Structure. If (a) following the
consummation of the Offer, either (x) the Parent Stockholders Meeting has
occurred and at such meeting (or any adjournments thereof), the Parent
Stockholder Approval is not obtained or (y) the Parent Stockholder Approval has
not been obtained prior to the 45th day after the Registration Statement is
declared effective by the SEC (or, if there shall exist at such time any
injunction or other order (whether temporary, preliminary or permanent) which
prohibits, restrains, enjoins or restricts Parent from holding the Parent
Stockholders Meeting or a stop order suspending the effectiveness of the
Registration Statement shall have been issued by the SEC, by not later than the
30th day after such 45th day) or (b) all three of the following have occurred:
(i) the Offer is terminated pursuant to Section 1.1(b), (ii) the Parent
Stockholders Meeting has occurred and at such meeting (or any adjournments
thereof) the Parent Stockholder Approval is not obtained and (iii) the Parent
stockholders described in Section 6.1(d) shall not have voted (by proxy or in
person) the greater of (A) 95% of the shares of Parent Common Stock beneficially
owned by such entities and their affiliates as of the date hereof (which Parent
represents to be approximately 39% of the outstanding voting power as of the
date hereof) and (B) such number of shares so owned by such entities on the
record date for the Parent Stockholders Meeting in favor of the Parent
Stockholders Approval, the Parent Stockholders Approval shall not be a condition
to consummation of the Merger, and the Merger Consideration to be received in
respect of shares of Company Common Stock in the Merger pursuant to Section 2.6
shall be modified as set forth in Section 2.14 (the "Cash Alternative
Structure").
SECTION 6.16 Delivery of List of Company Plans. (a) As soon as
reasonably practicable, but except in the case of Foreign Plans (as defined
below) not more than 15 days, after the date hereof, the Company shall provide a
true and complete list of all Company Plans. The term "Foreign Plans" means all
Company Plans which provide benefits to or which are participated in by,
non-U.S. employees and former employees (other than those required by local
law).
(b) With respect to each Company Plan (other than Foreign Plans that
are required by law), as soon as reasonably practicable, but except in the case
of Foreign Plans not
50
more than 15 days, after the date hereof, the Company shall deliver or make
available to Parent a current, accurate and complete copy (or, to the extent no
such copy exists, an accurate description) thereof and, to the extent
applicable: (i) any related trust agreement or other funding instrument; (ii)
the most recent determination letter, if applicable; (iii) any summary plan
description and other material written communications by the Company or any of
its subsidiaries to their employees concerning the extent of the benefits
provided under a Company Plan; and (iv) for the three most recent years (A) the
Form 5500 and attached schedules, (B) audited financial statements and (C)
actuarial valuation reports.
(c) Notwithstanding the foregoing, the Company shall not be deemed to
be in breach of subsections (a) and (b) of this Section 6.16 unless the Company,
taking into account the totality of the circumstances and the materiality of the
omission, acted in bad faith or with gross negligence.
ARTICLE VII
CONDITIONS OF MERGER
SECTION 7.1 Conditions to Obligation of Each Party to Effect the
Merger. The respective obligations of each party to effect the Merger shall be
subject to the satisfaction at or prior to the Effective Time of the following
conditions:
(a) The Company Shareholder Approval shall have been obtained.
(b) (i) Except as provided in Section 6.15, the Parent
Stockholder Approval shall have been obtained.
(c) No statute, rule, regulation, executive order, decree,
ruling, injunction or other order (whether temporary, preliminary or
permanent) shall have been enacted, entered, promulgated or enforced
by any United States, foreign, federal or state court or governmental
authority and shall be in effect which prohibits, restrains, enjoins
or restricts the consummation of the Merger.
(d) Unless the Purchaser shall have terminated the Offer
pursuant to Section 1.1(b), Purchaser shall have purchased Shares
pursuant to the Offer.
(e) The Parent Common Stock to be issued in the Merger and
such other shares to be reserved for issuance in connection with the
Merger shall have been approved for listing on the NYSE, subject to
official notice of issuance.
(f) The Registration Statement shall have been declared
effective by the SEC under the Securities Act. No stop order
suspending the effectiveness of the Registration Statement shall have
been issued by the SEC and no proceedings for that purpose shall have
been initiated or threatened by the SEC.
51
SECTION 7.2 Additional Conditions to Obligation of Parent and
Purchaser to Effect the Merger. If the Offer is terminated pursuant
to Section 1.1(b), then the obligations of Parent and Purchaser to consummate
the Merger shall also be subject to the satisfaction at or prior to the
Effective Time of the following conditions:
(a)(i) The representations and warranties of the Company set forth in
this Agreement that are qualified as to Material Adverse Effect shall be true
and correct immediately prior to the Effective Time (except to the extent such
representations and warranties shall have been made as of an earlier date, in
which case such representations and warranties shall have been so true and
correct as of such earlier date) with the same force and effect as if then made
and (ii) the representations and warranties of the Company set forth in this
agreement that are not qualified as to Material Adverse Effect shall be true and
correct in all material respects immediately prior to the Effective Time (except
to the extent such representations and warranties shall have been made as of an
earlier date, in which case such representations and warranties shall have been
true and correct in all material respects as of such earlier date) with the same
force and effect as if then made.
(b) The Company shall have performed and complied in all material
respects with all agreements and covenants required to be performed or complied
with by it on or before the Effective Time.
(c) There shall not have been instituted and continuing or pending any
suit, action or proceeding brought by any U.S. governmental authority before any
federal or state court with respect to the transactions contemplated by this
Agreement which would reasonably be expected to have the effect of making
illegal or otherwise restraining or prohibiting the Merger.
(d) (i) All waiting periods under the HSR Act shall have expired or
been terminated and the EU Approval shall have been received; and (ii) any
applicable waiting periods applicable to the Merger under any laws or
regulations of any foreign jurisdiction in which either the Company or Parent
(directly or through subsidiaries, in each case) has material assets or conducts
material operations, shall have expired or been terminated, and all regulatory
approvals applicable to the Merger shall have been obtained, other than such
waiting periods and approvals the failure of which to be satisfied or obtained
would not have a Material Adverse Effect on the Company or Parent.
SECTION 7.3 Additional Conditions to Obligation of the Company to
Effect the Merger. If the Offer is terminated pursuant to Section 1.1(b), then
the obligations of the Company to consummate the Merger shall also be subject to
the satisfaction at or prior to the Effective Time of the following conditions:
(a)(i) The representations and warranties of Parent and Purchaser set
forth in this Agreement that are qualified as to Material Adverse Effect shall
be true and correct immediately prior to the Effective Time (except to the
extent such representations and warranties shall have been made as of an earlier
date, in which case such representations and warranties shall have been so true
and correct as of such earlier date) with the same force and effect as if then
made
52
and (ii) the representations and warranties of Parent and Purchaser set
forth in this Agreement that are not qualified as to Material Adverse Effect
shall be true and correct in all material respects immediately prior to the
Effective Time (except to the extent such representations and warranties shall
have been made as of an earlier date, in which case such representations and
warranties shall have been true and correct as of such earlier date) with the
same force and effect as if then made.
(b) Parent and Purchaser shall have performed and complied in all
material respects with all agreements and covenants required to be performed or
complied with by them on or before the Effective Time.
(c) (i) All waiting periods under the HSR Act shall have expired or
been terminated and the EU Approval shall have been received; and (ii) any
applicable waiting periods applicable to the Merger under any laws or
regulations of any foreign jurisdiction in which either the Company or Parent
(directly or through subsidiaries, in each case) has material assets or conducts
material operations, shall have expired or been terminated, and all regulatory
approvals applicable to the Merger shall have been obtained, other than such
waiting periods and approvals the failure of which to be satisfied or obtained
would not have a Material Adverse Effect on Parent after the Merger.
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
SECTION 8.1 Termination. This Agreement may be terminated and the
Offer and Merger contemplated hereby may be abandoned at any time prior to the
Effective Time, notwithstanding approval hereof by the shareholders of the
Company or the stockholders of Parent:
(a) By mutual written consent of Parent, Purchaser and the
Company;
(b) By Parent or the Company if any court of competent
jurisdiction or other governmental body located or having jurisdiction
within the United States or any country or economic region in which
either the Company or Parent, directly or indirectly, has material
assets or operations, shall have issued a final order, injunction,
decree, judgment or ruling or taken any other final action
restraining, enjoining or otherwise prohibiting the Offer or the
Merger and such order, injunction, decree, judgment, ruling or other
action is or shall have become final and nonappealable;
(c) Unless the Offer shall have been consummated, by the
Company if (i) there shall have been a breach of any representation or
warranty on the part of Parent or Purchaser contained in this
Agreement which would have a Material Adverse Effect with respect to
Parent, (ii) there shall have been a breach of any covenant or
agreement on the part of Parent or the Purchaser contained in this
Agreement which would have a Material
53
Adverse Effect with respect to Parent or which materially adversely
affects the consummation of the Offer (unless the Offer has been
terminated pursuant to Section 1.1(b)) or the Merger, and which, in
the case of clauses (i) and (ii), shall not have been cured prior to
the 20th business day following notice of such breach, (iii) the
Merger shall not have been consummated on or prior to November 30,
1999 (unless such failure is caused by or results from the failure of
any representation or warranty of the Company to be true and correct
in any material respect or the failure of the Company to perform in
any material respect any of its covenants or agreements contained in
this Agreement) or (iv) any person shall have made a bona fide written
offer to acquire the Company which was not solicited after the date
hereof (A) that the Board of Directors of the Company determines in
its good faith judgment is a Superior Proposal and (B) as a result of
which the Board of Directors determines in good faith, based upon the
advice of outside counsel, that failure to take such action would
violate its fiduciary duties under applicable law; provided, however,
that not less than two business days prior to such termination, the
Company shall notify Parent of its intention to terminate this
Agreement pursuant to this Section 8.1(c) (iv) and shall cause its
respective financial and legal advisers to negotiate during such
two-day period with Parent to make such adjustments in the terms and
conditions of this Agreement as would enable the Company to proceed
with the transactions contemplated herein on such adjusted terms, and
notwithstanding such negotiations and adjustments, the Board
concludes, in its good faith judgment, that the transactions
contemplated herein on such terms as adjusted, are not at least as
favorable to the shareholders of the Company as such offer; provided,
further, that such termination under clause (iv) shall not be
effective until the Company has made payment of the full fee required
by Section 8.3;
(d) Unless the Offer shall have been consummated, by Parent
if (i) there shall have been a breach of any representation or
warranty on the part of the Company contained in this Agreement which
would have a Material Adverse Effect with respect to the Company, (ii)
there shall have been a breach of any covenant or agreement on the
part of the Company contained in this Agreement which would have a
Material Adverse Effect on the Company or which materially adversely
affects the consummation of the Offer (unless the Offer has been
terminated pursuant to Section 1.1(b)) or the Merger, and which, in
the case of clauses (i) and (ii), shall not have been cured prior to
the 20th business day following notice of such breach or (iii) the
Board of Directors of the Company shall have withdrawn or modified
(including by amendment of the Schedule 14D-9) in a manner adverse to
Purchaser its approval or recommendation of the Offer, this Agreement
or the Merger, shall have recommended another Business Combination
Proposal or shall have failed to publicly affirm its approval or
recommendation of the Offer, this Agreement and the Merger within 15
days of Parent's request, which request may only be made with respect
to any Business Combination Proposal on a single occasion, after any
Business Combination Proposal shall have been disclosed to the
Company's shareholders generally, or shall have resolved to effect any
of the foregoing;
(e) If the Offer has been terminated pursuant to Section
1.1(b), by Parent if the Merger has not been consummated on or prior
to November 30, 1999 (unless such failure
54
is caused by or results from the failure of any representation or
warranty of Parent to be true and correct in any material respect or
the failure of Parent to perform in any material respect any of its
covenants or agreements contained in this Agreement);
(f) Unless the Offer shall have been consummated, by Parent
or the Company if the Company Shareholder Approval shall not have been
obtained upon a vote held at the Company Shareholders Meeting (or any
adjournment thereof); or
(g) Unless the Offer shall have been consummated or the Cash
Alternative Structure is required to be effected, by Parent or the
Company if the Parent Stockholder Approval shall not have been
obtained upon a vote held at the Parent Stockholders Meeting (or any
adjournment thereof).
SECTION 8.2 Effect of Termination. In the event of the termination
of this Agreement pursuant to Section 8.1, this Agreement shall forthwith become
void and there shall be no liability on the part of any party hereto except as
set forth in Section 8.3 and Section 9.1; provided, however, that nothing herein
shall relieve any party from liability for any breach hereof.
SECTION 8.3 Fees And Expenses.
(a) If:
(i) (x) Parent or the Company terminates this Agreement
pursuant to Section 8.1(f) hereof, (y) on or prior to the date of the
Company Stockholders Meeting any person (including the Company but not
including Parent or Purchaser) shall have made a public announcement
with respect to a Third Party Acquisition (as defined below) that
contemplates a direct or indirect consideration (or implicit
valuation) for Shares (including the value of any stub equity) in
excess of the Merger Consideration and (z) within 12 months following
such termination, the Company, directly or indirectly, enters into an
agreement with respect to a Third Party Acquisition, or a Third Party
Acquisition occurs;
(ii) (x) The Company terminates this Agreement pursuant to
Section 8.1(c)(iii) hereof at a time when Parent would have been
permitted to terminate this Agreement pursuant to Section 8.1(d)(ii)
as a result of a willful or bad faith breach of any covenant or
agreement contained in this Agreement, (y) prior to such termination,
any person (not including Parent or Purchaser) shall have disclosed
publicly or to the Company a Third Party Acquisition that contemplates
a direct or indirect consideration (implicit valuation) for Shares
(including the value of any stub equity) in excess of the Merger
Consideration and (z) within 12 months following such termination, the
Company directly or indirectly, enters into an agreement with respect
to a Third Party Acquisition, or a Third Party Acquisition occurs; or
55
(iii) (x) the Company terminates this Agreement pursuant to
8.1(c)(iv) or (y) the Company terminates this Agreement pursuant to
Section 8.1(c)(iii) hereof and at such time Parent would have been
permitted to terminate this Agreement under Section 8.1(d)(iii) hereof
or (z) Parent terminates this Agreement pursuant to Section
8.1(d)(iii) hereof;
then the Company shall pay to Parent (a) within one business day following (i)
in the case of clause 8.3(a)(i) or (a)(ii), the execution and delivery of such
agreement or such occurrence, as the case may be, or (ii) any termination by
Parent contemplated by Section 8.3(a)(iii) or (b) simultaneously with any
termination by the Company contemplated by Section 8.3(a)(iii), a fee, in cash,
of $140 million, provided, however, that the Company in no event shall be
obligated to pay more than one such fee with respect to all such agreements and
occurrences and such termination.
(b) If Parent or the Company terminates this Agreement pursuant to
Section 8.1(g) hereof, (y) on or prior to the date of the Parent Stockholders
Meeting any person (including Parent but not including the Company) shall have
made a public announcement with respect to a Parent Third Party Acquisition (as
defined below) that directly or indirectly contemplates (or by its terms would
require) the rejection by the stockholders of Parent of the Parent Stockholder
Approval contemplated herein, and (z) within 12 months following such
termination, Parent, directly or indirectly, enters into an agreement with
respect to a Parent Third Party Acquisition, or a Parent Third Party Acquisition
occurs, then Parent shall pay to the Company within one business day following
the execution and delivery of such agreement or such occurrence, as the case may
be, a fee, in cash, of $140 million.
"Third Party Acquisition" means the occurrence of any of the following
events: (i) the acquisition of the Company by merger, tender offer or otherwise
by any person or group of persons acting in concert other than Parent, Purchaser
or any affiliate thereof (a "Third Party"); (ii) the acquisition by a Third
Party of 50.0% or more of the assets of the Company and its subsidiaries, taken
as a whole, in one transaction or a related series of transactions; (iii) the
acquisition by a Third Party of beneficial ownership of 35.0% or more of the
outstanding Shares in one transaction or a related series of transactions; or
(iv) the adoption by the Company of a plan of liquidation. "Parent Third Party
Acquisition" means (i) the acquisition of Parent by merger, tender offer or
otherwise by any person or group of persons acting in concert other than the
Company or any affiliate thereof (a "Parent Third Party"); (ii) the acquisition
by a Parent Third Party of 50.0% or more of the assets of Parent and its
subsidiaries, taken as a whole, in one transaction or a related series of
transactions; or (iii) the acquisition by a Parent Third Party of beneficial
ownership of 35.0% or more of the outstanding shares of Parent Common Stock in
one transaction or a related series of transactions unless immediately following
such acquisition, the Xxxx family stockholders referred to in Section 6.1(d)
beneficially owns a greater percentage of the outstanding shares of Parent
Common Stock than such Parent Third Party.
(c) All payments made under this Section 8.3 shall be made by wire
transfer of immediately available funds to an account designated by Parent or
the Company, as the case may
56
be. No party shall be entitled to receive payments under this Section 8.3 if it
has materially breached its obligations under this Agreement.
(d) Except as otherwise specifically provided herein, each party shall
bear its own expenses in connection with this Agreement and the transactions
contemplated hereby.
SECTION 8.4 Amendment. Subject to Section 6.3, this Agreement may be
amended by the parties hereto by action taken by or on behalf of their
respective Boards of Directors at any time prior to the Effective Time;
provided, however, that, after approval of this Agreement by the shareholders of
the Company, no amendment may be made which would reduce the amount or change
the type of consideration into which each Share shall be converted upon
consummation of the Merger. This Agreement may not be amended except by an
instrument in writing signed by the parties hereto.
SECTION 8.5 Waiver. Subject to Section 6.3, at any time prior to the
Effective Time, any party hereto may (a) extend the time for the performance of
any of the obligations or other acts of the other parties hereto, (b) waive any
inaccuracies in the representations and warranties contained herein or in any
document delivered pursuant hereto and (c) waive compliance with any of the
agreements or conditions contained herein. Any such extension or waiver shall be
valid if set forth in an instrument in writing signed by the party or parties to
be bound thereby.
ARTICLE IX
GENERAL PROVISIONS
SECTION 9.1 Non-Survival of Representations, Warranties and
Agreements. The representations, warranties and agreements in this Agreement
shall terminate at the Effective Time or upon the termination of this Agreement
pursuant to Section 8.1, as the case may be, except that the agreements set
forth in Article II, Section 6.6, Section 6.7 and Article IX shall survive the
Effective Time and those set forth in Section 6.4(b), Section 8.3 and Article IX
shall survive termination of this Agreement.
SECTION 9.2 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 cable,
telecopy, telegram or telex or by registered or certified mail (postage prepaid,
return receipt requested) to the respective parties at the following addresses
(or at such other address for a party as shall be specified by like notice):
57
if to Parent or Purchaser:
Rohm and Xxxx Company
000 Xxxxxxxxxxxx Xxxx Xxxx
Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000
Attention: Corporate Secretary
Facsimile: (000) 000-0000
with an additional copy to:
Xxxxxxx Xxxxxxx & Xxxxxxxx
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxx, Esq.
Facsimile: (000) 000-0000
if to the Company:
Xxxxxx International, Inc.
000 Xxxxx Xxxxxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Corporate Secretary
Facsimile: (000) 000-0000
with a copy to:
Wachtell, Lipton, Xxxxx & Xxxx
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxx X. Xxxxxxxx, Esq.
Facsimile: (000) 000-0000
SECTION 9.3 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) "beneficial owner" with respect to any Shares means a
person who shall be deemed to be the beneficial owner of such Shares
(i) which such person or any of its affiliates or associates
beneficially owns, directly or indirectly, (ii) which such person or
any of its affiliates or associates (as such term is defined in Rule
12b-2 of the Exchange Act) has, directly or indirectly, (A) the right
to acquire (whether such right is exercisable immediately or subject
only to the passage of time), pursuant to any agreement, arrangement
or understanding or upon the exercise of consideration rights,
exchange
58
rights, warrants or options, or otherwise, or (B) the right to vote
pursuant to any agreement, arrangement or understanding or (iii) which
are beneficially owned, directly or indirectly, by any other persons
with whom such person or any of its affiliates or person with whom
such person or any of its affiliates or associates has any agreement,
arrangement or understanding for the purpose of acquiring, holding,
voting or disposing of any shares;
(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 consistent basis during the periods
involved;
(e) "knowledge" of the Company or Parent shall mean the
actual knowledge, after reasonable inquiry, of such entity's executive
officers.
(f) "person" means an individual, corporation, partnership,
association, trust, unincorporated organization, other entity or group
(as defined in Section 13(d)(3) of the Exchange Act); and
(g) "subsidiary" or "subsidiaries" of the Company, the
Surviving Corporation, Parent or any other person means any
corporation, partnership, joint venture or other legal entity of which
the Company, the Surviving Corporation, Parent or such other person,
as the case may be (either alone or through or together with any other
subsidiary), owns, directly or indirectly, 50% or more of the 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 or other legal entity.
SECTION 9.4 Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of law
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
adverse to any party. Upon such determination that any term or other provision
is invalid, illegal or incapable of being enforced, the parties hereto shall
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible in an acceptable manner to the end
that the transactions contemplated hereby are fulfilled to the fullest extent
possible.
59
SECTION 9.5 Entire Agreement; Assignment. This Agreement, the Option
Agreement and the Confidentiality Agreement constitute the entire agreement
among the parties with respect to the subject matter hereof and supersede all
prior agreements and undertakings, both written and oral, among the parties, or
any of them, with respect to the subject matter hereof. This Agreement shall not
be assigned by operation of law or otherwise, except that Parent and Purchaser
may assign all or any of their respective rights and obligations hereunder to
any direct or indirect wholly owned subsidiary or subsidiaries of Parent,
provided that no such assignment shall relieve the assigning party of its
obligations hereunder if such assignee does not perform such obligations.
SECTION 9.6 Parties in Interest. This Agreement shall be binding upon
and inure solely to the benefit of each party hereto, and nothing in this
Agreement, express or implied, except for the provisions of Section 6.7 (which
provisions are also intended to be for the benefit of the persons described
therein), is intended to or shall confer upon any other person any rights,
benefits or remedies of any nature whatsoever under or by reason of this
Agreement.
SECTION 9.7 Governing Law; Submission to Jurisdiction. This Agreement
shall be governed by, and construed in accordance with, the laws of the State of
Indiana, regardless of the laws that might otherwise govern under applicable
principles of conflicts of laws thereof. The Company, Parent and Purchaser
hereby (w) submit to the jurisdiction of any State and Federal courts sitting in
Indiana with respect to matters arising out of or relating hereto, (x) agree
that all claims with respect to such matters may be heard and determined in an
action or proceeding in such Indiana State or Federal court, and (y) agree that
a final judgment in any such action or proceeding will be conclusive and may be
enforced in other jurisdictions by suit on the judgment or in any other manner
provided by law.
SECTION 9.8 Headings. The descriptive headings contained in this
Agreement are included for convenience of reference only and shall not affect in
any way the meaning or interpretation of this Agreement.
SECTION 9.9 Counterparts. This Agreement may be executed in one or
more counterparts, and by the different parties hereto in separate counterparts,
each of which when executed shall be deemed to be an original but all of which
taken together shall constitute one and the same agreement.
60
IN WITNESS WHEREOF, Parent, Purchaser and the Company have caused this
Agreement to be executed as of the date first written above by their respective
officers thereunto duly authorized.
ROHM AND XXXX COMPANY
By: J. Xxxxxxxx Xxxxxx
Title: Chairman of the Board and
Chief Executive Officer
GERSHWIN ACQUISITION CORP.
By: Xxxxx X. Xxxxx
Title: President
XXXXXX INTERNATIONAL, INC.
By: S. Xxx Xxxxxxx
Title: Chairman and Chief
Executive Officer
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 and subject to the
terms of the Merger Agreement, Purchaser shall not be required to accept for
payment or, subject to any applicable rules and regulations of the Commission,
including Rule 14e-1(c) under the Exchange Act (relating to Purchaser's
obligation to pay for or return tendered Shares promptly after termination or
withdrawal of the Offer), 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 amend
or, not prior to the Final Expiration Date, terminate the Offer (whether or not
any Shares have theretofore been purchased or paid for) if, prior to the
expiration of the Offer, (i) a number of shares of Company Common Stock which,
together with any Shares owned by Parent or Purchaser, constitutes at least a
majority of the voting power (determined on a fully-diluted basis), on the date
of purchase, of all the securities of the Company entitled to vote generally in
the election of directors or on a merger shall not have been validly tendered
and not properly withdrawn prior to the expiration of the Offer (the "Minimum
Condition") or (ii) 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 and continues to exist:
(a) there shall have been instituted and pending any suit,
action, investigation or proceeding brought by any governmental
authority before any federal or state court or any order or
preliminary or permanent injunction shall have been entered in any
action or proceeding before any federal or state court or
governmental, administrative or regulatory authority or agency, or any
other action shall have been taken, or statute, rule, regulation,
legislation, judgment or order enacted, entered, enforced,
promulgated, amended, issued or deemed applicable to Parent,
Purchaser, the Company or any subsidiary or affiliate of Purchaser or
the Company or the Offer or the Merger, by any legislative body,
court, government or governmental, administrative or regulatory
authority or agency which would reasonably be expected to have the
effect of: (i) making illegal, materially delaying or otherwise
restraining or prohibiting or making materially more costly the making
of the Offer, the acceptance for payment of, or payment for, some of
or all the Shares by Purchaser or any of its affiliates, the
consummation of the Merger or materially delaying the Merger; (ii)
prohibiting or materially limiting the ownership or operation by the
Company or any of its subsidiaries or Parent, Purchaser or any of
Parent's affiliates of all or any material portion of the business or
assets of the Company and its subsidiaries, taken as a whole, or
Parent and any of its subsidiaries, taken as a whole, or compelling
Parent, Purchaser or any of Parent's subsidiaries to dispose of or
hold separate all or any material portion of the business or assets of
the Company and any of its subsidiaries, taken as a whole, or Parent
and its subsidiaries, taken as a whole, as a result of the
transactions contemplated by the Offer or the Merger Agreement; (iii)
imposing or
confirming material limitations on the ability of Parent, Purchaser or
any of Parent's affiliates effectively to acquire or hold or to
exercise full rights of ownership of Shares, including but not limited
to the right to vote any Shares acquired or owned by Parent or
Purchaser or any of its affiliates on all matters properly presented
to the shareholders of the Company, including but not limited to the
adoption and approval of the Merger Agreement and the Merger or the
right to vote any shares of capital stock of any subsidiary directly
or indirectly owned by the Company; or (iv) requiring divestiture by
Parent or Purchaser or any of their affiliates of any Shares, except,
in the case of clauses (i) through (iv), where such events are
consistent with or result from Parent's and the Company's obligations
under Section 6.9;
(b) any of the representations and warranties of the Company
set forth in the Merger Agreement that are qualified as to Material
Adverse Effect shall not be true and correct, or any such
representations and warranties 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 (other than to the extent such representations and
warranties are made as of a specified date, in which case, such
representations and warranties shall not be so true and correct as of
such date);
(c) the Company shall have failed to perform in any material
respect any obligation or to comply in any material respect with any
agreement or covenant of the Company to be performed or complied with
by it under the Merger Agreement;
(d) the Merger Agreement shall have been terminated in
accordance with its terms or the Offer shall have been amended or
terminated with the consent of the Company; or
(e) (i) any waiting periods under the HSR Act and the EU
Approval applicable to the purchase of Shares pursuant to the Offer;
and (ii) any applicable waiting periods applicable to the purchase of
Shares pursuant to the Offer under any laws or regulations of any
foreign jurisdiction in which either the Company or Parent (directly
or through subsidiaries, in each case) has material assets or conducts
material operations, shall not have expired or been terminated, or any
regulatory approval applicable to the purchase of Shares pursuant to
the Offer shall not have been obtained, other than such failures to
obtain, expire, terminate or receive as would not have a Material
Adverse Effect on Parent or the Company.
which, in the reasonable judgment of Purchaser with respect to each and every
matter referred to above and regardless of the circumstances (including any
action or inaction by Purchaser or any of its affiliates but subject to the
terms of the Merger Agreement) giving rise to any such condition, makes it
inadvisable to proceed with the Offer or with such acceptance for payment of or
payment for Shares or to proceed with the Merger.
The foregoing conditions are for the benefit of Purchaser and may be
asserted by Purchaser regardless of the circumstances giving rise to any such
condition or may be waived by
Purchaser in whole or in part at any time and from time to time in its sole
discretion (subject to the terms of the Merger Agreement). The failure by
Purchaser 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 and other circumstances shall not be deemed a waiver with
respect to any other facts and circumstances, and each such right shall be
deemed an ongoing right that may be asserted at any time and from time to time.
EXHIBIT 2.4
RESTATED ARTICLES OF INCORPORATION
OF
XXXXXX INTERNATIONAL, INC.
(originally incorporated as Gershwin Acquisition Corp. on January 28, 1999)
ARTICLE I
Name
The name of the Corporation is Xxxxxx International, Inc.
ARTICLE II
Purpose and Powers
Section 2.1. Purposes of the Corporation. The purpose for which the
Corporation is formed is to engage in the transaction of any or all lawful
business for which corporations may now or hereafter be incorporated under the
Corporation Law.
Section 2.2. Powers of the Corporation. The Corporation shall have
(a) all powers now or hereafter authorized by or vested in corporations pursuant
to the provisions of the Corporation Law, (b) all powers now or hereafter vested
in corporations by common law or any other statute or act, and (c) all powers
authorized by or vested in the Corporation by the provisions of these Articles
of Incorporation or by the provisions of its By-Laws as from time to time in
effect.
ARTICLE III
Term of Existence
The period during which the Corporation shall continue is perpetual.
ARTICLE IV
Registered Office and Agent
The street address of the Corporation's registered office is 0 Xxxxx
Xxxxxxx Xxxxxx, Xxxxxxxxxxxx, XX 00000 and the name of its registered agent at
such office is CT Corporation System.
2
ARTICLE V
Shares
Section 5.1. Authorized Class and Number of Shares. The capital stock
of the Corporation shall be of one class and kind, which may be referred to as
common shares. The total number of shares which the Corporation has authority to
issue shall be 1,000 shares. The Corporation's shares shall have a par or stated
value of $1.00 per share.
Section 5.2. Voting Rights of Shares. Except as otherwise provided by
the Corporation Law and subject to such shareholder disclosure and recognition
procedures (which may include voting prohibition sanctions) as the Corporation
may by action of its Board of Directors establish, the Corporation's shares have
unlimited voting rights and each outstanding share shall, when validly issued by
the Corporation, entitle the record holder thereof to one vote at all
shareholders' meetings on all matters submitted to a vote of the shareholders of
the Corporation.
Section 5.3. Other Terms of Shares. The Corporation's shares shall be
equal in every respect insofar as their relationship to the Corporation is
concerned (but such equality of rights shall not imply equality of treatment as
to redemption or other acquisition of shares by the Corporation). The holders of
shares shall be entitled to share ratably in such dividends or other
distributions (other than purchases, redemptions or other acquisitions of shares
by the Corporation), if any, as are declared and paid from time to time on the
shares at the discretion of the Board of Directors. In the event of any
liquidation, dissolution or winding up of the Corporation, either voluntary or
involuntary, the holders of shares shall be entitled to share, ratably according
to the number of shares held by them, in all remaining assets of the Corporation
available for distribution to its shareholders.
When the Corporation receives the consideration specified in a
subscription agreement entered into before incorporation, or for which the Board
of Directors authorized the issuance of shares, as the case may be, the shares
issued therefor shall be fully paid and nonassessable.
The Corporation shall have the power to declare and pay dividends or
other distributions upon the issued and outstanding shares of the Corporation,
subject to the limitation that a dividend or other distribution may not be made
if, after giving it effect, the Corporation would not be able to pay its debts
as they become due in the usual course of business or the Corporation's total
assets would be less than its total liabilities. The Corporation shall have the
power to issue shares as a share dividend or other distribution in respect of
issued and outstanding shares.
The Corporation shall have the power to acquire (by purchase, redemption or
otherwise), hold, own, pledge, sell, transfer, assign, reissue, cancel or
otherwise dispose of the shares of the Corporation in the manner and to the
extent now or hereafter permitted by the laws of the State of Indiana (but such
power shall not imply an obligation on the part of the owner or holder of any
share to sell or otherwise transfer such share to the Corporation), including
the
3
power to purchase, redeem or otherwise acquire the Corporation's own shares,
directly or indirectly, and without pro rata treatment of the owners or holders
thereof, unless, after giving effect thereto, the Corporation would not be able
to pay its debts as they become due in the usual course of business or the
Corporation's total assets would be less than its total liabilities. Shares of
the Corporation purchased, redeemed or otherwise acquired by it shall constitute
authorized but unissued shares, unless the Board of Directors adopts a
resolution providing that such shares constitute authorized and issued but not
outstanding shares.
The Board of Directors of the Corporation may dispose of, issue and
sell shares in accordance with, and in such amounts as may be permitted by, the
laws of the State of Indiana and the provisions of these Articles of
Incorporation and for such consideration, at such price or prices, at such time
or times and upon such terms and conditions (including the privilege of
selectively repurchasing the same) as the Board of Directors of the Corporation
shall determine, without the authorization or approval by any shareholders of
the Corporation. Shares may be disposed of, issued and sold to such persons,
firms or corporations as the Board of Directors may determine, without any
preemptive or other right on the part of the owners or holders of other shares
of the Corporation to acquire such shares by reason of their ownership of such
other shares.
ARTICLE VI
Directors
Section 6.1. Number. The initial Board of Directors shall be comprised
of three (3) members, which number may be changed by amendment to the By-Laws.
Section 6.2. Qualifications. Directors need not be shareholders of the
Corporation or residents of this or any other state in the United States.
Section 6.3. Vacancies. Vacancies occurring in the Board of Directors
shall be filled in the manner provided in the By-Laws or, if the By-Laws do not
provide for the filling of vacancies, in the manner provided by the Corporation
Law. The By-Laws may also provide that in certain circumstances specified
therein, vacancies occurring in the Board of Directors may be filled by vote of
the shareholders at a special meeting called for that purpose or at the next
annual meeting of shareholders.
Section 6.4. Liability Of Directors. A Director's responsibility to
the Corporation shall be limited to discharging his or her duties as a Director,
including his duties as a member of any committee of the Board of Directors upon
which he or she may serve, in good faith, with the care an ordinarily prudent
person in a like position would exercise under similar circumstances, and in a
manner the Director reasonably believes to be in the best interests of the
Corporation, all based on the facts then known to the Director.
In discharging his or her duties, a Director is entitled to rely on
information, opinions, reports, or statements, including financial statements
and other financial data, if prepared or presented by:
4
(i) One (1) or more officers or employees of the Corporation
whom the Director reasonably believes to be reliable and competent in
the matters presented;
(ii) Legal counsel, public accountants, or other persons as
to matters the Director reasonably believes are within such person's
professional or expert competence; or
(iii) A committee of the Board of which the Director is not
a member if the Director reasonably believes the Committee merits
confidence;
but a Director is not acting in good faith if the Director has knowledge
concerning the matter in question that makes reliance otherwise permitted by
this Section 6.4 unwarranted. A Director may, in considering the best interests
of the Corporation, consider the effects of any action on shareholders,
employees, suppliers and customers of the Corporation, and communities in which
offices or other facilities of the Corporation are located, and any other
factors the Director considers pertinent.
A Director shall not be liable for any action taken as a Director, or
any failure to take any action, unless (a) the Director has breached or failed
to perform the duties of the Director's office in compliance with this Section
6.4, and (b) the breach or failure to perform constitutes willful misconduct or
recklessness.
Section 6.5. Removal of Directors. Any one or more of the members of
the Board of Directors may be removed, with or without cause, only at a meeting
of the shareholders called expressly for that purpose, by the affirmative vote
of the holders of outstanding shares representing at least a majority of all the
votes then entitled to be cast at an election of Directors. No Director may be
removed except as provided in this Section 6.5.
ARTICLE VII
Provisions for Regulation of Business
and Conduct of Affairs of Corporation
Section 7.1. Meetings of Shareholders. Meetings of the shareholders of
the Corporation shall be held at such time and at such place, either within or
without the State of Indiana, as may be stated in or fixed in accordance with
the By-Laws of the Corporation and specified in the respective notices or
waivers of notice of any such meetings.
Section 7.2. Special Meetings of Shareholders. Special meetings of the
shareholders, for any purpose or purposes, unless otherwise prescribed by the
Corporation Law, may be called at any time by the Board of Directors or the
person or persons authorized to do so by the By-Laws and shall be called by the
Board of Directors if the Secretary of the Corporation receives one (1) or more
written, dated and signed demands for a special meeting, describing in
reasonable detail the purpose or purposes for which it is to be held, from the
holders of shares representing at least twenty-five percent (25%) of all the
votes entitled to be cast on any issue
5
proposed to be considered at the proposed special meeting. If the Secretary
receives one (1) or more proper written demands for a special meeting of
shareholders, the Board of Directors may set a record date for determining
shareholders entitled to make such demand.
Section 7.3. Meetings of Directors. Meetings of the Board of Directors
of the Corporation shall be held at such place, either within or without the
State of Indiana, as may be authorized by the By-Laws and specified in the
respective notices or waivers of notice of any such meetings or otherwise
specified by the Board of Directors. Unless the By-Laws provide otherwise
(a) regular meetings of the Board of Directors may be held without notice of the
date, time, place, or purpose of the meeting and (b) the notice for a special
meeting need not describe the purpose or purposes of the special meeting.
Section 7.4. Action Without Meeting. Any action required or permitted
to be taken at any meeting of the Board of Directors or shareholders, or of any
committee of such Board, may be taken without a meeting, if the action is taken
by all members of the Board or all shareholders entitled to vote on the action,
or by all members of such committee, as the case may be. The action must be
evidenced by one (1) or more written consents describing the action taken,
signed by each Director, or all the shareholders entitled to vote on the action,
or by each member of such committee, as the case may be, and, in the case of
action by the Board of Directors or a committee thereof, included in the minutes
or filed with the corporate records reflecting the action taken or, in the case
of action by the shareholders, delivered to the Corporation for inclusion in the
minutes or filing with the corporate records. Action taken under this
Section 7.4 is effective when the last director, shareholder or committee
member, as the case may be, signs the consent, unless the consent specifies a
different prior or subsequent effective date, in which case the action is
effective on or as of the specified date. Such consent shall have the same
effect as a unanimous vote of all members of the Board, or all shareholders, or
all members of the committee, as the case may be, and may be described as such
in any document.
Section 7.5. By-Laws. The Board of Directors shall have the exclusive
power to make, alter, amend or repeal, or to waive provisions of, the By-Laws of
the Corporation by the affirmative vote of a majority of the entire number of
Directors at the time, except as expressly provided by the Corporation Law. Any
provisions for the regulation of the business and management of the affairs of
the Corporation not stated in these Articles of Incorporation may be stated in
the By-Laws. The Board of Directors may adopt Emergency By-Laws of the
Corporation and shall have the exclusive power (except as may otherwise be
provided therein) to make, alter, amend or repeal, or to waive provisions of,
the Emergency By-Laws by the affirmative vote of a majority of the entire number
of Directors at such time.
Section 7.6. Interest of Directors.
(a) A conflict of interest transaction is a transaction with
the Corporation in which a Director of the Corporation has a direct or
indirect interest. A conflict of interest transaction is not voidable
by the Corporation solely because of the Director's interest in the
transaction if any one (1) of the following is true:
(1) The material facts of the transaction and the
Director's interest were disclosed or known to the Board of
Directors or a committee
6
of the Board of Directors and the Board of Directors or
committee authorized, approved, or ratified the transaction.
(2) The material facts of the transaction and the
Director's interest were disclosed or known to the
shareholders entitled to vote and they authorized, approved,
or ratified the transaction.
(3) The transaction was fair to the Corporation.
(b) For purposes of this Section 7.6, a Director of the
Corporation has an indirect interest in a transaction if:
(1) Another entity in which the Director has a
material financial interest or in which the Director is a
general partner is a party to the transaction; or
(2) Another entity of which the Director is a
director, officer, or trustee is a party to the transaction
and the transaction is, or is required to be, considered by
the Board of Directors of the Corporation.
(c) For purposes of Section 7.6(a)(1) a conflict of interest
transaction is authorized, approved, or ratified if it receives the
affirmative vote of a majority of the Directors on the Board of
Directors (or on the committee) who have no direct or indirect
interest in the transaction, but a transaction may not be authorized,
approved, or ratified under this section by a single Director. If a
majority of the Directors who have no direct or indirect interest in
the transaction vote to authorize, approve, or ratify the transaction,
a quorum shall be deemed present for the purpose of taking action
under this Section 7.6. The presence of, or a vote cast by, a Director
with a direct or indirect interest in the transaction does not affect
the validity of any action taken under Section 7.6(a)(1), if the
transaction is otherwise authorized, approved, or ratified as provided
in such subsection.
(d) For purposes of Section 7.6(a)(2), shares owned by or
voted under the control of a Director who has a direct or indirect
interest in the transaction, and shares owned by or voted under the
control of an entity described in Section 7.6(b), may be counted in
such a vote of shareholders to determine whether to authorize, approve
or ratify a conflict of interest transaction.
Section 7.7. Nonliability of Shareholders. Shareholders of the
Corporation are not personally liable for the acts or debts of the Corporation,
nor is private property of shareholders subject to the payment of corporate
debts.
Section 7.8. Indemnification of Officers, Directors and Other Eligible
Persons.
(a) The following provisions apply with respect to liability
on the part of a director, a member of any committee of the Board of
Directors, officer,
7
employee or agent of the Corporation (collectively, "Corporate
Persons," and individually, a "Corporate Person") for any loss or
damage suffered on account of any action taken or omitted to be taken
by a Corporate Person:
(1) No Corporate Person shall be liable for any
loss or damage if, in taking or omitting to take any action
causing such loss or damage, either (i) such Corporate
Person acted (x) in good faith, (y) with the care an
ordinarily prudent person in a like position would have
exercised under similar circumstances, and (z) in a manner
such Corporate Person reasonably believed was in the best
interests of the Corporation, or (ii) such Corporate
Person's breach of or failure to act in accordance with the
standards of conduct set forth in clause (a)(1)(i) above
(the "Standards of Conduct") did not constitute willful
misconduct or recklessness.
(2) Any Corporate Person shall be fully protected,
and shall be deemed to have complied with the Standards of
Conduct, in relying in good faith, with respect to any
information contained therein, upon (i) corporate records,
or (ii) information, opinions, reports or statements
(including financial statements and other financial data)
prepared or presented by (w) one or more other Corporate
Persons whom such Corporate Person reasonably believes to be
competent in the matters presented, (x) legal counsel,
public accountants or other persons as to matters that such
Corporate Person reasonably believes are within such
person's professional or expert competence, (y) a committee
of the Board of Directors, of which such Corporate Person is
not a member, if such Corporate Person reasonably believes
such committee of the Board of Directors merits confidence,
or (z) the Board of Directors, if such Corporate Person is
not a Director and reasonably believes that the Board of
Directors merits confidence.
(b) The following provisions apply to the indemnification by
the Corporation of Corporate Persons and matters related thereto:
(1) The Corporation shall indemnify any person who
was or is a party to any threatened, pending or completed
action, suit or proceeding, whether civil or criminal,
administrative or investigative, formal or informal (an
"Action"), by reason of the fact that he is or was a
Corporate Person of the Corporation or is or was serving at
the request of the Corporation as a Corporate Person,
partner, trustee or member in another authorized capacity
(collectively, an "Authorized Capacity") of or for another
corporation, unincorporated association, business trust,
estate, partnership, trust, joint venture, individual or
other legal entity, whether or not organized or formed for
profit (collectively, "Another Entity"), against expenses
(including attorneys' fees) ("Expenses") and judgments,
penalties, fines and amounts paid in settlement actually and
reasonably incurred by him in connection with such Action,
if such person (i) acted in good faith, (ii) acted in a
manner he reasonably believed (x) with respect to actions as
a Corporate Person of the Corporation, to be in the best
interests of the Corporation, or (y) with respect to actions
in an Authorized Capacity of or for Another Entity, was not
opposed to the best interests of the Corporation, and (iii)
with respect to
8
any criminal Action, either (x) had reasonable cause to
believe his conduct was lawful, or (y) had no reasonable
cause to believe his conduct was unlawful. The termination
of any Action by judgment, order, settlement, conviction, or
upon a plea of nolo contendere of its equivalent, shall not,
of itself, be determinative that the person did not meet the
standards for indemnification set forth in this Section
7.8(b)(1) (the "Indemnification Standards").
(2) To the extent that a person who is or was a
Corporate Person of the Corporation, or is or was serving at
the request of the Corporation in an Authorized Capacity of
or for Another Entity, has been successful on the merits or
otherwise in the defense of any Action referred to in
Section 7.8(b)(1), or in the defense of any claim, issue or
matter in any such Action, the Corporation shall indemnify
him against Expenses actually and reasonably incurred by him
in connection therewith.
(3) Unless ordered by a court, any indemnification
of any person under Section 7.8(b)(1) shall be made by the
Corporation only as authorized in the specific case upon a
determination that indemnification of such person is proper
in the circumstances because he met the Indemnification
Standards. Such determination shall be made (i) by the Board
of Directors, by a majority vote of a quorum consisting of
directors who are not at the time parties to the Action
involved ("Parties"); or (ii) if a quorum cannot be obtained
under the preceding clause (i), by a majority vote of a
committee duly designated by the Board of Directors (in
which designation directors who are Parties may
participate), consisting solely of two or more directors who
are not at the time Parties; or (iii) by written opinion of
independent legal counsel (x) selected by the Board of
Directors or committee in the manner prescribed in the
preceding clauses (i) or (ii), respectively, or (y) if a
quorum cannot be obtained and a committee cannotbe
designated under the preceding clauses (i) and (ii),
respectively, selected by a majority of the full Board of
Directors, in which selection directors who are Parties may
participate; or (iv) by the shareholders who are not at the
time Parties, voting together as a single class.
(4) Expenses reasonably incurred in defending an
Action by any person who may be entitled to indemnification
under Section 7.8(b)(1) may be paid by the Corporation in
advance of the final disposition of such Action if (i) such
person furnishes the Corporation with (x) a written
affirmation of his good faith belief that he has met, and
(y) a written undertaking, executed personally or on his
behalf, to repay the advance (an "Undertaking") if it is
ultimately determined that he did not meet the
Indemnification Standards; and (ii) a determination is made,
under the procedure set forth in Section 7.8(b)(3), that the
facts then known to those making the determination would not
preclude indemnification under Section 7.8(b)(1) above. An
Undertaking must be an unlimited general obligation of the
person making it, but need not be secured and may be
accepted by the Corporation without reference to such
person's financial ability to make repayment.
9
(5) The indemnification provided in these Articles
(i) shall not be deemed exclusive of any other rights to
which a person seeking indemnification may be entitled under
(v) any law, (w) the By-Laws, (x) any resolution of the
Board of Directors or of the shareholders, (y) any other
authorization, whenever adopted, after notice, by a majority
vote of all Voting Stock, or (z) the articles of
incorporation, code of by-laws or other governing documents,
or any resolution of or other authorization by the
directors, shareholders, partners, trustees, members, owners
or governing body, of Another Entity; (ii) shall inure to
the benefit of the heirs, executors and administrators of
such person; and (iii) shall continue as to any such person
who has ceased to be a Corporate Person of the Corporation
or to be serving in an Authorized Capacity for Another
Entity.
(6) The Corporation shall have power to purchase
and maintain insurance on behalf of any person who is or was
a Corporate Person of the Corporation, or is or was serving
at the request of the Corporation in an Authorized Capacity
of or for Another Entity, against any liability asserted
against and incurred by him in any such capacity, or arising
out of his status as such, whether or not the Corporation
would have the power to indemnify him against such liability
under the provisions of this Section 7.8(b).
(7) For the purposes of this Section 7.8(b),
references to "the Corporation" include any constituent
corporation absorbed in a consolidation or merger (a
"Constituent") as well as the resulting or surviving
corporation (the "Survivor"), such that any person who is or
was a Corporate Person of such a Constituent, or is or was
serving at the request of such Constituent in an Authorized
Capacity of or for Another Entity, shall stand in the same
position under the provisions of this Section 7.8(b) with
respect to the Survivor as he would if he had served the
Survivor, or at its request, in the same capacity.
ARTICLE VIII
MISCELLANEOUS PROVISIONS
Section 8.1. Amendment or Repeal. Except as otherwise expressly
provided for in these Articles of Incorporation, the Corporation shall be
deemed, for all purposes, to have reserved the right to amend, alter, change or
repeal any provision contained in these Articles of Incorporation to the extent
and in the manner now or hereafter permitted or prescribed by statute, and all
rights herein conferred upon shareholders are granted subject to such
reservation.
Section 8.2. Headings. The headings of the Articles and Sections of
these Articles of Incorporation have been inserted for convenience of reference
only and do not in any way define, limit, construe or describe the scope or
intent of any Article or Section hereof.
EXHIBIT 6.11
Form of Company Affiliate Letter
Gentlemen:
The undersigned, a holder of shares of Common Stock, par value $1.00
per share ("Company Stock"), of Target Inc., an Indiana corporation (the
"Company"), will be entitled to receive in connection with the merger (the
"Merger") of the Company with Parent Acquisition Company, an Indiana
corporation, securities (the "Parent Securities") of Parent Company ("Parent")
into which the shares of Company Common Stock owned by the undersigned are
converted at the effective time of the Merger. The undersigned acknowledges that
the undersigned may be deemed an "affiliate" of the Company within the meaning
of Rule 145 ("Rule 145") promulgated under the Securities Act of 1933 (the
"Act"), although nothing contained herein should be construed as an admission of
such fact.
If in fact the undersigned were an affiliate under the Act, the
undersigned's ability to sell, assign or transfer the Parent Securities received
by the undersigned in exchange for any shares of Company Stock pursuant to the
Merger may be restricted unless such transaction is registered under the Act or
an exemption from such registration is available. The undersigned understands
that such exemptions are limited and the undersigned has obtained advice of
counsel as to the nature and conditions of such exemptions, including
information with respect to the applicability to the sale of such securities of
Rules 144 and 145(d) promulgated under the Act.
The undersigned hereby represents to and covenants with the Company
that the undersigned will not sell, assign or transfer any of the Parent
Securities received by the undersigned in exchange for any shares of Company
Stock pursuant to the Merger except (i) pursuant to an effective registration
statement under the Act, (ii) in conformity with the volume and other
limitations of Rule 145 or (iii) in a transaction which, in the opinion of
counsel reasonably satisfactory to Parent or as described in a "no-action" or
interpretive letter from the Staff of the Securities and Exchange Commission
(the "SEC"), is not required to be registered under the Act.
In the event of a sale or other disposition by the undersigned of
Parent Securities pursuant to Rule 145, the undersigned will supply Parent with
evidence of compliance with such Rule, in the form of a letter in the form of
Annex I hereto. The undersigned understands that Parent may instruct its
transfer agent to withhold the transfer of any Parent Securities disposed of by
the undersigned, but that upon receipt of such evidence of compliance the
transfer agent shall effectuate the transfer of the Parent Securities sold as
indicated in the letter.
The undersigned acknowledges and agrees that the following legend will
be placed on certificates representing Parent Securities received by the
undersigned in the Merger:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN
ISSUED IN A TRANSACTION TO WHICH RULE 145 PROMULGATED UNDER
THE SECURITIES ACT OF
2
1933 APPLIES AND MAY BE SOLD OR OTHERWISE TRANSFERRED ONLY
IN COMPLIANCE WITH THE REQUIREMENTS OF RULE 145 OR PURSUANT
TO A REGISTRATION STATEMENT UNDER SAID ACT OR AN EXEMPTION
FROM SUCH REGISTRATION."
The undersigned also acknowledged and agrees that unless a sale or
transfer of the Parent Securities received by the undersigned in connection with
the Merger is made in conformity with the provisions of Rule 145 or pursuant to
a registration statement, Parent reserves the right to put the following legend
(or other appropriate legend) on the certificates issued to any transferee:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 AND WERE
ACQUIRED FROM A PERSON WHO RECEIVED SUCH SHARES IN A
TRANSACTION TO WHICH RULE 145 PROMULGATED UNDER THE
SECURITIES ACT OF 1933 APPLIES. THE SHARES HAVE BEEN
ACQUIRED BY THE HOLDER NOT WITH A VIEW TO, OR FOR RESALE IN
CONNECTION WITH, ANY DISTRIBUTION THEREOF WITHIN THE MEANING
OF THE SECURITIES ACT OF 1933 AND MAY NOT BE SOLD, PLEDGED
OR OTHERWISE TRANSFERRED EXCEPT IN ACCORDANCE WITH AN
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT OF 1933."
It is understood and agreed that such legends will be removed by delivery of
substitute certificates upon receipt of an opinion in form and substance
reasonably satisfactory to Parent from independent counsel reasonably
satisfactory to Parent or a "no-action" or interpretive letter from the Staff of
the SEC to the effect that such legends are not required for purposes of the
Act.
The undersigned acknowledges that (i) the undersigned has carefully
read this letter and understands the requirements hereof and the limitations
imposed upon the distribution, sale, transfer or other disposition of Parent
Securities and (ii) the receipt by Parent of this letter is an inducement and a
condition to Parent's obligations to consummate the Merger.
Very truly yours,
Dated:
ANNEX I
TO EXHIBIT 6.11
[Name] [Date]
On __________________ the undersigned sold the securities
("Securities") of Parent Company (the "Company") described below in the space
provided for that purpose (the "Securities"). The Securities were received by
the undersigned in connection with the merger of Parent Acquisition Company with
Target Inc.
Based upon the most recent report or statement filed by the Company
with the Securities and Exchange Commission, the Securities sold by the
undersigned were within the prescribed limitations set forth in paragraph (e) of
Rule 144 promulgated under the Securities Act of 1933, as amended (the "Act").
The undersigned hereby represents that the Securities were sold in
"brokers' transactions" within the meaning of Section 4(4) of the Act or in
transactions directly with a "market maker" as that term is defined in Section
3(a)(38) of the Securities Exchange Act of 1934, as amended. The undersigned
further represents that the undersigned has not solicited or arranged for the
solicitation of orders to buy the Securities, and that the undersigned has not
made any payment in connection with the offer or sale of the Securities to any
person other than to the broker who executed the order in respect of such sale.
Very truly yours,
[Space to be provided for description of securities]
