EXHIBIT 99(c)(1)
AGREEMENT AND PLAN OF MERGER
AMONG
UNITED TECHNOLOGIES CORPORATION,
SPHERE CORPORATION
and
XXXX INDUSTRIES, INC.
Dated as of October 21, 1999
TABLE OF CONTENTS
ARTICLE I
THE OFFER
SECTION 1.01 The Offer............................................. 1
SECTION 1.02 Company Actions....................................... 3
SECTION 1.03 Shareholder Lists..................................... 3
SECTION 1.04 Directors............................................. 4
ARTICLE II
THE MERGER
SECTION 2.01 The Merger............................................ 4
SECTION 2.02 Consummation of the Merger............................ 5
SECTION 2.03 Effects of the Merger................................. 5
SECTION 2.04 Articles of Incorporation and Bylaws.................. 5
SECTION 2.05 Directors and Officers................................ 5
SECTION 2.06 Conversion of Shares.................................. 5
SECTION 2.07 Conversion of Common Stock of Purchaser............... 5
SECTION 2.08 Shareholders' Meeting................................. 5
SECTION 2.09 Merger Without Meeting of Shareholder................. 6
SECTION 2.10 Withholding Taxes..................................... 6
ARTICLE III
DISSENTING SHARES; PAYMENT FOR SHARES; OPTIONS
SECTION 3.01 Dissenting Shares..................................... 6
SECTION 3.02 Payment for Shares.................................... 7
SECTION 3.03 Closing of the Company's Transfer Books............... 8
SECTION 3.04 Existing Stock Options................................ 8
SECTION 3.05 Other Equity Based Awards............................. 8
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
SECTION 4.01 Organization and Qualification........................ 9
SECTION 4.02 Capitalization........................................ 9
SECTION 4.03 Authority for this Agreement.......................... 10
SECTION 4.07 Consents and Approvals; No Violation.................. 11
SECTION 4.05 Reports; Financial Statements......................... 11
SECTION 4.04 Absence of Certain Changes............................ 12
SECTION 4.07 Schedule 14D-9; Offer Documents and Proxy Statement... 13
SECTION 4.08 Brokers............................................... 13
SECTION 4.09 Employee Benefit Matters.............................. 14
SECTION 4.10 Litigation, etc....................................... 17
SECTION 4.11 Tax Matters........................................... 17
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SECTION 4.12 Compliance with Law; No Default....................... 18
SECTION 4.13 Environmental Matters................................. 19
SECTION 4.14 Intellectual Property................................. 20
SECTION 4.15 Real Property......................................... 21
SECTION 4.16 Year 2000............................................. 21
SECTION 4.17 Material Contracts.................................... 21
SECTION 4.18 Related Party Transactions............................ 22
SECTION 4.19 State Takeover Statutes Inapplicable.................. 22
SECTION 4.20 Rights Agreement...................................... 23
SECTION 4.21 Required Vote of Company Shareholders................. 23
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PARENT AND PURCHASER
SECTION 5.01 Organization and Qualification........................ 23
SECTION 5.02 Authority for this Agreement.......................... 23
SECTION 5.03 Offer Documents; Proxy Statement...................... 24
SECTION 5.04 Consents and Approvals; No Violation.................. 24
SECTION 5.05 Operations of Purchaser............................... 24
SECTION 5.06 Brokers............................................... 25
ARTICLE VI
COVENANTS
SECTION 6.01 Conduct of Business of the Company.................... 25
SECTION 6.02 No Solicitation....................................... 27
SECTION 6.03 Access to Information................................. 29
SECTION 6.04 Reasonable Best Efforts............................... 29
SECTION 6.05 Indemnification and Insurance......................... 30
SECTION 6.06 Employee Matters...................................... 31
SECTION 6.07 Takeover Laws......................................... 31
SECTION 6.08 Proxy Statement....................................... 31
SECTION 6.09 Notification of Certain Matters....................... 32
SECTION 6.10 Subsequent Filings.................................... 32
SECTION 6.11 Press Releases........................................ 32
ARTICLE VII
CONDITIONS TO CONSUMMATION OF THE MERGER
SECTION 7.01 Conditions to Each Party's Obligation to Effect
the Merger........................................... 33
ARTICLE VIII
TERMINATION; AMENDMENT; WAIVER
SECTION 8.01 Termination........................................... 33
SECTION 8.02 Effect of Termination................................. 34
SECTION 8.03 Fees and Expenses..................................... 34
SECTION 8.04 Amendment............................................. 35
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SECTION 8.05 Extension; Waiver; Remedies........................... 35
ARTICLE IX
MISCELLANEOUS
SECTION 9.01 Survival of Representations and Warranties............ 36
SECTION 9.02 Entire Agreement; Assignment.......................... 36
SECTION 9.03 Jurisdiction.......................................... 36
SECTION 9.04 Validity.............................................. 36
SECTION 9.05 Notices............................................... 37
SECTION 9.06 Governing Law......................................... 38
SECTION 9.07 Descriptive Headings.................................. 38
SECTION 9.08 Parties in Interest................................... 38
SECTION 9.09 Counterparts.......................................... 38
SECTION 9.10 Certain Definitions................................... 38
EXHIBIT A...........................................................A-1
iii
Glossary of Defined Terms
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Defined Terms Defined in Section
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Acquisition Proposal Section 6.02(f)
Agreement Opening Paragraph
Authorizations Section 4.13(a)(ii)
Baird Section 1.02
Certificates Section 3.02(b)
Closing Section 2.02
Code Section 2.10
Common Stock Section 1.01(a)
Company Permits Section 4.12(a)
Company SEC Reports Section 4.05(a)
Company Securities Section 4.02(a)
Company Opening Paragraph
Company Benefits Plans Section 4.09(f)
Confidentiality Agreement Section 1.02(a)
Continuing Directors Section 1.04(b)
Copyrights Section 4.14(d)(ii)
Disclosure Letter Article IV
Dissenting Shares Section 3.01
Effective Time Section 2.02
Environmental Disclosure Requirements Section 4.13(h)
Environmental Law Section 4.13(e)
ERISA Section 4.09(f)
Exchange Act Section 1.01(a)
Existing Stock Option Section 3.04
Expenses Section 8.03(b)
Expiration Date Exhibit A
FAA Section 4.12(b)
Governmental Entity Section 4.04
Hazardous Substance Section 4.13(f)
HSR Act Section 4.04
Legal Requirements Section 4.04
Material Adverse Effect Section 9.10
Material Contract Section 4.17
Merger Agreement Exhibit A
Merger Consideration Section 2.06
Merger Section 2.01
Offer Section 1.01(a)
Offer Conditions Section 1.01(a)
Offer Documents Section 1.01(b)
Offer Price Section 1.01(a)
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Option Consideration Section 3.04
Option Recitals
Parent Opening Paragraph
Paying Agent Section 3.02(a)
Payment Fund Section 3.02(a)
Person Section 9.10
Plan Section 4.09(f)
Potential Acquiror Section 6.02(b)
Preferred Stock Section 4.02(a)
Preliminary Proxy Statement Section 6.08
Proceeding Section 4.10
Proprietary Rights Section 4.14
Proxy Statement Section 4.07(b)
Purchaser Opening Paragraph
Real Property Leases Section 4.15(b)
Release Section 4.13(g)
Rights Section 1.01(a)
Rights Agreement Section 1.01(a)
Schedule 14D-1 Section 1.01(b)
Schedule 14D-9 Section 1.02(b)
SEC Section 1.01(a)
Shares Section 1.01(a)
Shareholder Option Agreement Recitals
Special Meeting Section 2.08
Stock Awards Section 3.05
Stock Option Plans Section 3.04
Subsidiary Section 9.10
Subsidiary Securities Section 4.02(b)
Superior Proposal Section 6.02(f)
Surviving Corporation Section 2.01
Takeover Laws Section 1.02(a)
Tax Section 4.11(b)
Tax Returns Section 4.11(b)
Termination Fee Section 8.03(b)
Year 2000 Compliant Section 4.16
WBCL Recitals
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AGREEMENT AND PLAN OF MERGER
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AGREEMENT AND PLAN OF MERGER (this "Agreement"), dated as of October
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21, 1999, among United Technologies Corporation, a Delaware corporation
("Parent"), Sphere Corporation, a Wisconsin corporation and a wholly owned
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subsidiary of Parent ("Purchaser"), and Xxxx Industries, Inc., a Wisconsin
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corporation (the "Company").
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RECITALS
WHEREAS, the Boards of Directors of Purchaser and the Company have
each determined that this Agreement and the transactions contemplated hereby,
including the Merger (as defined in Section 2.01), are advisable and fair to,
and in the best interests of, their respective shareholders;
WHEREAS, the Board of Directors of the Company has unanimously adopted
resolutions approving the acquisition of the Company by Parent, this Agreement
and the transactions contemplated hereby and the Shareholder Option Agreement
(as defined below), and has agreed to recommend that the Company's shareholders
approve the plan of merger (as such term is used in Section 180.1101 of the
Wisconsin Business Corporation Law (the "WBCL")) contained in this Agreement and
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the transactions contemplated hereby and tender their Shares (as defined below)
in the Offer (as defined below);
WHEREAS, concurrently with the execution hereof and in order to induce
Parent and Purchaser to enter into this Agreement, Purchaser is entering into a
Shareholder Option Agreement dated as of the date hereof (the "Shareholder
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Option Agreement") with the shareholders of the Company named therein under
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which each such shareholder is, among other things, agreeing to tender all of
such shareholder Shares in the Offer and granting Parent an irrevocable option
(the "Option") to purchase all of such shareholder's Shares upon the terms and
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conditions specified therein; and
WHEREAS, Parent, Purchaser and the Company desire to make certain
representations, warranties, covenants and agreements in connection with this
Agreement;
NOW THEREFORE, in consideration of the mutual covenants and agreements
set forth herein, the parties hereto agree as follows:
ARTICLE I
THE OFFER
SECTION 1.01 The Offer.
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(a) (i) Provided that this Agreement shall not have been terminated
in accordance with Section 8.01 and that none of the events set forth in clause
(iii) of Exhibit A hereto shall have occurred or be existing, Purchaser shall,
and Parent shall cause Purchaser to, as promptly as practicable (but in no event
later than five business days following the public announcement of the terms of
this Agreement) commence (within the meaning of Rule 14d-2 under the Securities
Exchange Act of 1934, as amended (the "Exchange Act")) an offer to
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purchase all outstanding shares of common stock of the Company, par value $0.001
per share (the "Common Stock"), including the associated Common Stock purchase
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rights (the "Rights") issued pursuant to the Rights Agreement dated as of August
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4, 1998 (the "Rights Agreement") between the Company and Firstar Bank Milwaukee,
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N.A. (formerly named Firstar Trust Company), as Rights Agent (the Common Stock
and the Rights are hereinafter referred to as the "Shares"), at a price (such
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price, or any higher price as may be paid in the Offer, the "Offer Price") of
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$5.05 per Share, net to the seller in cash (the "Offer"). The obligation of
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Purchaser to consummate the Offer and to accept for payment and to pay for any
Shares tendered pursuant thereto shall be subject to only those conditions set
forth in Exhibit A hereto (the "Offer Conditions"), any of which may be waived
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by Purchaser in its sole discretion. The initial expiration date of the Offer
shall be the twenty first business day following the commencement of the Offer
(determined in accordance with Rule 14d-1(e)(6) under the Exchange Act).
Purchaser expressly reserves the right to modify the terms of the Offer, except
that, without the prior written consent of the Company, Purchaser shall not (A)
decrease or change the form of the consideration payable in the Offer, (B)
decrease the number of Shares sought pursuant to the Offer, (C) impose
additional conditions to the Offer, (D) change the conditions to the Offer or
(E) make any other change in the terms or conditions of the Offer which is
materially adverse to the holders of Shares.
(ii) Subject to the terms and conditions of this Agreement and to the
satisfaction or waiver of the Offer Conditions as of any scheduled expiration of
the Offer, Purchaser shall accept for payment and pay for Shares validly
tendered and not withdrawn pursuant to the Offer as soon as practicable after
such expiration. Notwithstanding the foregoing, Purchaser may, without the
consent of the Company, (A) extend the Offer if at any scheduled expiration of
the Offer any of the Offer Conditions have not been satisfied or waived, (B) if
less than 90% of the outstanding Shares have been validly tendered and not
properly withdrawn pursuant to the Offer, extend the Offer from time to time
(but in no event beyond ten business days beyond the then scheduled expiration
date of the Offer) for the shortest period of time reasonably determined by
Parent as may be necessary to obtain the valid tender of 90% of the outstanding
Shares and (C) extend the Offer for any period required by any regulation,
interpretation or position of the Securities and Exchange Commission (the "SEC")
---
or the staff thereof applicable to the Offer. In addition, the Offer Price may
be increased and the Offer may be extended to the extent required by law in
connection with such increase in each case without the consent of the Company.
(b) On the date of commencement of the Offer, Parent and Purchaser
shall file or cause to be filed with the SEC a Tender Offer Statement on
Schedule 14D-1 (together with all amendments and supplements thereto, the
"Schedule 14D-1") with respect to the Offer which shall contain the offer to
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purchase and related letter of transmittal and other ancillary Offer documents
and instruments pursuant to which the Offer will be made (collectively with any
supplements or amendments thereto, the "Offer Documents"). The Company and its
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counsel shall be given a reasonable opportunity to review and comment on the
Offer Documents prior to their filing with the SEC. Parent and Purchaser agree
to provide the Company with, and to consult with the Company regarding, any
comments that may be received from the SEC or its staff with respect to the
Offer Documents promptly after receipt thereof. Parent, Purchaser and the
Company each agrees promptly to correct any information provided by it for use
in the Offer Documents if and to the extent that it shall have become false or
misleading in any material respect and Parent and Purchaser further agree to
take all steps necessary to cause the Offer
2
Documents as so corrected to be filed with the SEC and be disseminated to
holders of Shares, in each case, as and to the extent required by applicable
law.
SECTION 1.02 Company Actions. (a) The Company hereby consents to
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the Offer and represents and warrants that (i) the making of any offer and
proposal and the taking of any other action by Parent or Purchaser in connection
with this Agreement and the Shareholder Option Agreement and the transactions
contemplated hereby and thereby have been consented to by the Board of Directors
of the Company in accordance with the terms and provisions of the
Confidentiality Agreement, dated September 22, 1999 between Parent and the
Company (the "Confidentiality Agreement"), (ii) its Board of Directors (at a
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meeting or meetings duly called and held prior to the date hereof) has
unanimously (A) determined that the Offer and the Merger (as hereinafter
defined) are advisable and fair to and in the best interests of, the
shareholders of the Company, (B) resolved to recommend acceptance of the Offer
and approval and adoption of a plan of merger (as such term is used in Section
180.1101 of the WBCL) contained in this Agreement by the shareholders of the
Company, (C) irrevocably taken, if and to the extent applicable, all necessary
steps to render Sections 180.1130 to 180.1150 of the WBCL inapplicable to the
Merger, the Shareholder Option Agreements and the acquisition of Shares pursuant
to the Offer and the Option and (D) irrevocably resolved to elect, to the extent
permitted by law, not to be subject to any "moratorium", "control share
acquisition", "business combination", "fair price" or other form of anti-
takeover laws and regulations (collectively, "Takeover Laws") of any
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jurisdiction that may purport to be applicable to this Agreement or the
Shareholder Option Agreement and (iii) Xxxxxx X. Xxxxx & Co. Incorporated
("Baird"), the Company's independent financial advisor, has advised the
Company's Board of Directors that, in its opinion, the consideration to be paid
in the Offer and the Merger to the Company's shareholders is fair, from a
financial point of view, to such shareholders.
(b) Upon commencement of the Offer, the Company shall file with the
SEC a Solicitation/Recommendation Statement on Schedule 14D-9 (together with all
amendments and supplements thereto, the "Schedule 14D-9") containing the
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recommendations of its Board of Directors described in Section 1.02(a) and
hereby consents to the inclusion of such recommendations in the Offer Documents
and to the inclusion of a copy of the Schedule 14D-9 with the Offer Documents
mailed or furnished to the Company's shareholders. Parent, Purchaser and their
counsel shall be given a reasonable opportunity to review and comment on the
Schedule 14D-9 prior to its filing with the SEC. The Company agrees to provide
Parent and Purchaser with, and to consult with Parent and Purchaser regarding,
any comments that may be received from the SEC or its staff with respect to the
Schedule 14D-9 promptly upon receipt thereof. Parent, Purchaser and the Company
each agrees promptly to correct any information provided by it for use in the
Schedule 14D-9 if and to the extent that it shall have become false or
misleading in any material respect and the Company further agree to take all
steps necessary to cause the Schedule 14D-9 as so corrected to be filed with the
SEC and be disseminated to holders of Shares, in each case, as and to the extent
required by applicable law.
SECTION 1.03 Shareholder Lists. In connection with the Offer, the
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Company shall promptly furnish Parent and Purchaser with mailing labels,
security position listings and any available listing or computer file containing
the names and addresses of the record holders of the Shares as of the latest
practicable date and shall furnish Parent and Purchaser with such information
and assistance (including periodic updates of such information) as Parent or
3
Purchaser or their agents may reasonably request in communicating the Offer to
the record and beneficial holders of the Shares.
SECTION 1.04 Directors. (a) Promptly upon the purchase by Purchaser
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pursuant to the Offer or otherwise of such number of Shares as represents at
least a majority of the outstanding Shares, and from time to time thereafter,
Purchaser shall be entitled to designate such number of directors, rounded up to
the next whole number, on the Board of Directors of the Company as will give
Purchaser representation on the Board of Directors of the Company equal to the
product of the number of directors on the Board of Directors of the Company and
the percentage that such number of Shares so purchased bears to the number of
Shares outstanding, and the Company shall, upon request by Purchaser, promptly
increase the size of the Board of Directors of the Company or use its best
efforts to secure the resignations of such number of directors as is necessary
to provide Purchaser with such level of representation and shall cause
Purchaser's designees to be so elected. The Company will also use its best
efforts to cause persons designated by Purchaser to constitute the same
percentage as is on the entire Board of Directors of the Company to be on (i)
each committee of the Board of Directors of the Company and (ii) each Board of
Directors and each committee thereof of each Subsidiary of the Company. The
Company's obligations to appoint designees to its Board of Directors shall be
subject to Section 14(f) of the Exchange Act. At the request of Purchaser, the
Company shall take all actions necessary to effect any such election or
appointment of Purchaser's designees, including mailing to its shareholders the
information required by Section 14(f) of the Exchange Act and Rule 14f-l
promulgated thereunder which, unless Purchaser otherwise elects, shall be so
mailed together with the Schedule 14D-9. Parent and Purchaser will promptly
supply to the Company all information with respect to themselves and their
respective officers, directors and affiliates required by such Section and Rule.
(b) Following the election or appointment of Purchaser's designees
pursuant to Section 1.04(a) and prior to the Effective Time (as defined below),
and so long as there shall be at least one Continuing Director (as defined
below), any amendment of this Agreement requiring action by the Board of
Directors of the Company, any extension of time for the performance of any of
the obligations or other acts of Parent or Purchaser under this Agreement and
any waiver of compliance with any of the agreements or conditions under this
Agreement for the benefit of the Company will require the concurrence of a
majority of the directors of the Company then in office who are directors of the
Company on the date hereof (the "Continuing Directors").
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ARTICLE II
THE MERGER
SECTION 2.01 The Merger. Upon the terms and subject to the conditions
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hereof, and in accordance with the relevant provisions of the WBCL, Purchaser
shall be merged with and into the Company (the "Merger") as soon as practicable
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following the satisfaction or waiver, if permissible, of the conditions set
forth in Article VII hereof. The Company shall be the surviving corporation in
the Merger (the "Surviving Corporation") and shall continue its existence under
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the laws of Wisconsin. In connection with the Merger, the separate corporate
existence of Purchaser shall cease. Upon the election of Parent, the Merger may
be structured so that the Company shall be merged with and into Purchaser, with
Purchaser continuing as the
4
Surviving Corporation; provided, however, that the Company shall be deemed not
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to have breached any of its representations, warranties or covenants herein if
and to the extent such breach would have been attributable solely to such
election.
SECTION 2.02 Consummation of the Merger. Subject to the provisions of
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this Agreement, Purchaser and the Company shall cause the Merger to be
consummated by filing with the Department of Financial Institutions of the State
of Wisconsin a duly executed and verified articles of merger, as required by the
WBCL, and shall take all such other and further actions as may be required by
law to make the Merger effective. Prior to the filing referred to in this
Section, a closing (the "Closing") will be held at the offices of Xxxxxx,
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Xxxxxxxx, Xxxxx & Xxxxxxxx, Xxx Xxxxxxx Xxxxx, Xxx Xxxx, Xxx Xxxx (or such other
place as the parties may agree) for the purpose of confirming all the matters
contained herein. The time the Merger becomes effective in accordance with
applicable law is referred to as the "Effective Time."
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SECTION 2.03 Effects of the Merger. The Merger shall have the
---------------------
effects set forth herein and in the applicable provisions of the WBCL.
SECTION 2.04 Articles of Incorporation and Bylaws. The Articles of
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Incorporation and the Bylaws of Purchaser, in each case as in effect immediately
prior to the Effective Time, shall be the Articles of Incorporation and Bylaws
of the Surviving Corporation.
SECTION 2.05 Directors and Officers. The directors of Purchaser
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immediately prior to the Effective Time and the officers of the Company
immediately prior to the Effective Time shall be the directors and officers,
respectively, of the Surviving Corporation until their death, permanent
disability, resignation or removal or until their respective successors are duly
elected and qualified.
SECTION 2.06 Conversion of Shares. Each Share issued and outstanding
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immediately prior to the Effective Time (other than Shares owned by Parent,
Purchaser or any Subsidiary of Parent, Purchaser or the Company or held in the
treasury of the Company, all of which shall be canceled without consideration
being exchanged therefor, and other than Dissenting Shares, as defined in
Section 3.01 hereof) shall, by virtue of the Merger and without any action on
the part of the holder thereof, be converted at the Effective Time into the
right to receive in cash an amount per Share (subject to any applicable
withholding tax specified in Section 2.10 hereof) equal to the Offer Price,
without interest (the "Merger Consideration"), upon the surrender of the
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certificate representing such Shares as provided in Section 3.02. At the
Effective Time, each Existing Stock Option (as defined below) shall be converted
into the right to receive the Existing Stock Option Consideration (as defined
below) pursuant to Section 3.04 hereof.
SECTION 2.07 Conversion of Common Stock of Purchaser. Each share of
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common stock, $0.01 par value, of Purchaser issued and outstanding immediately
prior to the Effective Time shall, by virtue of the Merger and without any
action on the part of the holder thereof, be converted into and become one share
of common stock of the Surviving Corporation.
SECTION 2.08 Shareholders' Meeting'. Unless the Merger is
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consummated in accordance with Section 180.1104 of the WBCL as contemplated by
Section 2.09, and subject to
5
applicable law, the Company, acting through its Board of Directors, shall, in
accordance with applicable law, duly call, give notice of, convene and hold a
special meeting (the "Special Meeting") of its shareholders as soon as
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practicable following the consummation of the Offer for the purpose of adopting
the plan of merger (within the meaning of Section 180.1101 of the WBCL) set
forth in this Agreement; and include in the Proxy Statement (as defined below)
the recommendation of its Board of Directors that shareholders of the Company
vote in favor of the adoption of the plan of merger set forth in this Agreement.
Parent and Purchaser each agree that, at the Special Meeting, all of the Shares
acquired pursuant to the Offer, the Option or otherwise by Parent or Purchaser
or any of their affiliates will be voted in favor of the Merger.
SECTION 2.09 Merger Without Meeting of Shareholders. If Purchaser,
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or any other direct or indirect Subsidiary of Parent, shall hold at least 90
percent of the outstanding shares of each class of capital stock of the Company
and Parent elects, in its sole discretion, to consummate the Merger in
accordance with Section 180.1104 of the WBCL without a meeting of shareholders
of the Company, each of Parent, Purchaser and the Company shall take all
necessary and appropriate action to cause the Merger to become effective, as
soon as practicable after the consummation of the Offer, without a meeting of
shareholders of the Company, in accordance with such Section.
SECTION 2.10 Withholding Taxes. Parent, Purchaser and the Surviving
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Corporation shall be entitled to deduct and withhold from the consideration
otherwise payable to a holder of Shares pursuant to the Offer or the Merger any
stock transfer taxes and such amounts as are required to be withheld under the
Internal Revenue Code of 1986, as amended (the "Code"), or any applicable
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provision of state, local or foreign tax law. To the extent that amounts are so
withheld by Parent or Purchaser, such withheld amounts shall be treated for all
purposes of this Agreement and the Offer as having been paid to the holder of
the Shares in respect of which such deduction and withholding was made by Parent
or Purchaser.
ARTICLE III
DISSENTING SHARES; PAYMENT FOR SHARES; OPTIONS
SECTION 3.01 Dissenting Shares. Notwithstanding anything in this
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Agreement to the contrary and unless the Merger is consummated in accordance
with Section 180.1104 of the WBCL, Shares which are issued and outstanding
immediately prior to the Effective Time and which are held by shareholders
exercising appraisal rights available under Sections 180.1301 to 180.1331 of the
WBCL (the "Dissenting Shares") shall not be converted into or be exchangeable
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for the right to receive the Merger Consideration, unless and until such holders
shall have failed to perfect or shall have effectively withdrawn or lost their
rights to appraisal under the WBCL. Dissenting Shares shall be treated in
accordance with Subchapter XIII of the WBCL, if and to the extent applicable.
If any such holder shall have failed to perfect or shall have effectively
withdrawn or lost such right to appraisal, such holder's Shares shall thereupon
be converted into and become exchangeable only for the right to receive, as of
the Effective Time, the Merger Consideration without any interest thereon. The
Company shall give Parent and Purchaser (a) prompt notice of any written demands
for appraisal of any Shares, attempted withdrawals of such demands, and any
other instruments served pursuant to the WBCL and received by the Company
relating to rights to be paid the "fair value" of Dissenting Shares, as provided
in
6
Sections 180.1301 to 180.1331 of the WBCL and (b) the opportunity to direct all
negotiations and proceedings with respect to demands for appraisal under the
WBCL. The Company shall not, except with the prior written consent of Parent,
voluntarily make any payment with respect to any demands for appraisals of
capital stock of the Company, offer to settle or settle any demands or approve
any withdrawal of any such demands.
SECTION 3.02 Payment for Shares.
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(a) Prior to the Effective Time, Parent will cause Purchaser to make
available to a bank or trust company designated by Parent (the "Paying Agent")
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sufficient funds to make the payments pursuant to Section 2.06 hereof on a
timely basis to holders (other than Parent or Purchaser or any of their
respective Subsidiaries) of Shares that are issued and outstanding immediately
prior to the Effective Time (such amounts being hereinafter referred to as the
"Payment Fund"). The Paying Agent shall, pursuant to irrevocable written
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instructions, make the payments provided for in the preceding sentence out of
the Payment Fund. The Payment Fund shall not be used for any other purpose,
except as provided in this Agreement.
(b) As soon as reasonably practicable after the Effective Time, the
Surviving Corporation shall cause the Paying Agent to mail to each record
holder, as of the Effective Time, of an outstanding certificate or certificates
which immediately prior to the Effective Time represented Shares (the
"Certificates"), a form of letter of transmittal (which shall specify that
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delivery shall be effected, and risk of loss and title to the Certificates shall
pass, only upon proper delivery of the Certificates to the Paying Agent) and
instructions for use in effecting the surrender of the Certificate and receiving
payment therefor. Following surrender to the Paying Agent of a Certificate,
together with such letter of transmittal duly executed, the holder of such
Certificate shall be paid in exchange therefor cash in an amount (subject to any
applicable withholding tax as specified in Section 2.10 hereof) equal to the
product of the number of Shares represented by such Certificate multiplied by
the Merger Consideration, and such Certificate shall forthwith be canceled. No
interest will be paid or accrued on the cash payable upon the surrender of the
Certificates. If payment is to be made to a Person (as defined below) other
than the Person in whose name the Certificate surrendered is registered, it
shall be a condition of payment that the Certificate so surrendered shall be
properly endorsed or otherwise in proper form for transfer and that the Person
requesting such payment pay any transfer or other taxes required by reason of
the payment to a Person other than the registered holder of the Certificate
surrendered or establish to the satisfaction of the Surviving Corporation that
such tax has been paid or is not applicable. From and after the Effective Time
and until surrendered in accordance with the provisions of this Section 3.02,
each Certificate (other than Certificates representing Shares owned by Parent or
Purchaser or any of their respective Subsidiaries, and certificates representing
Dissenting Shares) shall represent for all purposes solely the right to receive,
in accordance with the terms hereof, the Merger Consideration in cash multiplied
by the number of Shares evidenced by such Certificate, without any interest
thereon.
(c) Any portion of the Payment Fund (including the proceeds of any
investments thereof) that remains unclaimed by the former shareholders of the
Company for six months after the Effective Time shall be repaid to the Surviving
Corporation. Any former shareholders of the Company who have not complied with
Section 3.01 hereof prior to the end of such six-month period shall thereafter
look only to the Surviving Corporation (subject to abandoned property,
7
escheat or other similar laws) but only as general creditors thereof for payment
of their claim for the Merger Consideration, without any interest thereon.
Neither Parent nor the Surviving Corporation shall be liable to any holder of
Shares for any monies delivered from the Payment Fund or otherwise to a public
official pursuant to any applicable abandoned property, escheat or similar law.
If any Certificates shall not have been surrendered prior to six years after the
Effective Time (or such earlier date as shall be immediately prior to such date
as such unclaimed funds would otherwise become subject to any abandoned
property, escheat or similar law), unclaimed funds payable with respect to such
certificates shall, to the extent permitted by applicable law, become the
property of the Surviving Corporation, free and clear of all claims or interest
of any Person previously entitled thereto.
SECTION 3.03 Closing of the Company's Transfer Books. At the
---------------------------------------
Effective Time, the stock transfer books of the Company shall be closed and no
transfer of Shares shall thereafter be made. If, after the Effective Time,
Certificates are presented to the Surviving Corporation, they shall be canceled
and exchanged for cash as provided in this Article III, subject to applicable
law in the case of Dissenting Shares.
SECTION 3.04 Existing Stock Options. Prior to the consummation of
----------------------
the Offer, the Company shall take all actions necessary or desirable (including
obtaining all required consents from optionees) to provide for the cancellation,
effective at the Effective Time, of all of the outstanding stock options (the
"Existing Stock Options") heretofore granted under any stock option, employment
-----------------------
or similar plan or arrangement of the Company or any such similar plan or
agreement which benefits any person providing services to the Company or any
Subsidiary (the "Stock Option Plans"), without any payment therefor except as
------------------
otherwise provided in this Section 3.04. At the Effective Time (or at such
earlier time as Purchaser shall designate), each holder of an Existing Stock
Option shall, in settlement thereof, be entitled to receive from the Surviving
Corporation, an amount (subject to any applicable withholding tax as specified
in Section 2.10 hereof or as may apply to payments made in connection with the
performance of services) in cash equal to the product of (i) the excess of the
Merger Consideration over the per share exercise or purchase price of such
Existing Stock Option and (ii) the number of Shares subject to such Existing
Stock Option (such amount being hereinafter referred to as the "Option
------
Consideration"). Except as otherwise agreed to by the parties, as of the
-------------
Effective Time, the Stock Option Plans shall terminate and any and all rights
under any provisions in 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 thereof shall be canceled. Notwithstanding the
foregoing, no holder of an Existing Stock Option shall be entitled to any
payment hereunder unless he or she delivers to Purchaser a consent to the
cancellation of such Existing Stock Option in a form to be prescribed by
Purchaser.
SECTION 3.05 Other Equity Based Awards. Prior to the Effective Time,
-------------------------
the Company shall take all necessary and appropriate actions (including
obtaining all applicable consents) to provide that, upon the Effective Time,
each then outstanding restricted stock award in respect of Shares and any other
stock based awards (collectively, the "Stock Awards") which is subject to any
------------
vesting requirement and which was issued pursuant to a Stock Option Plan or any
other plan or arrangement shall, whether or not then exercisable or vested,
become 100% vested. At the Effective Time, a holder of Shares underlying such
Stock Award shall be entitled to receive the Merger Consideration (subject to
any applicable withholding tax as specified in
8
Section 2.10 hereof or as may apply to payments made in connection with the
performance of services), upon the surrender of the certificate representing
such Shares as provided in Section 3.02. Notwithstanding the foregoing, no
holder of a Stock Award shall be entitled to any payment hereunder unless he or
she delivers to Purchaser a consent to the cancellation of such Stock Award in a
form to be prescribed by Purchaser.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF THE COMPANY
Except as set forth in the Company SEC Reports (as defined below)
filed and available prior to the date of this Agreement or, with respect to any
Section of this Article IV, as set forth in the section of the disclosure letter
concurrently delivered by the Company to Parent with respect to this Agreement
(the "Disclosure Letter") that specifically relates to such Section, the Company
-----------------
represents and warrants to Parent and Purchaser as follows:
SECTION 4.01 Organization and Qualification. The Company and each of
------------------------------
its Subsidiaries is a duly organized and validly existing corporation in good
standing under the laws of its jurisdiction of incorporation, with all corporate
power and authority to own its properties and conduct its business as currently
conducted and is duly qualified and in good standing as a foreign corporation
authorized to do business in each of the jurisdictions in which the character of
the properties owned or held under lease by it or the nature of the business
transacted by it makes such qualification necessary, except where the failure to
be so qualified and in good standing, individually or in the aggregate, would
not have a Material Adverse Effect. The Company has heretofore made available
to Parent and Purchaser accurate and complete copies of the Articles of
Incorporation and Bylaws (or similar governing documents) as currently in effect
of the Company and its Subsidiaries. Neither the Company nor any of its
Subsidiaries, directly or indirectly, owns any interest in any Person other than
in the Company's Subsidiaries.
SECTION 4.02 Capitalization. (a) The authorized capital stock of
--------------
the Company consists of One Hundred Million (100,000,000) shares of Common Stock
and Five Hundred (500) shares of 10% cumulative, non-voting Preferred Stock,
stated value $300 per share (the "Preferred Stock"). As of the close of
---------------
business on the day immediately preceding the date hereof: 21,606,207 Shares
were issued and outstanding, no shares of Preferred Stock were issued and
outstanding and 742,652 Shares were held in the Company's treasury. In
addition, as of such date, there were outstanding Existing Stock Options to
purchase an aggregate of 1,312,000 Shares and up to 59,745 Shares were
potentially issuable as Stock Awards. Since such date, the Company has not
issued any Shares other than upon the exercise of Existing Stock Options
outstanding on such date, has not granted any options, warrants or rights or
entered into other agreements or commitments to purchase Shares (under the Stock
Option Plans or otherwise) and has not split, combined or reclassified any of
its shares of capital stock. All of the outstanding Shares have been duly
authorized and validly issued and are fully paid and nonassessable, except as
provided in Section 180.0622 of the WBCL, and are free of preemptive rights.
Section 4.02(a) of the Disclosure Letter contains a true, accurate and complete
list, as of the date hereof, of the name of each Existing Stock Option holder,
the number of outstanding Existing Stock Options held by such holder, the grant
date of each such Existing Stock Option,
9
the number of Shares such holder is entitled to receive upon the exercise of
each Existing Stock Option and the corresponding exercise price. Except for the
Existing Stock Options and the Rights, there are no outstanding (i) securities
of the Company convertible into or exchangeable for shares of capital stock or
voting securities or ownership interests in the Company, (ii) options, warrants,
rights or other agreements or commitments to acquire from the Company, or
obligations of the Company to issue, any capital stock, voting securities or
other ownership interests in (or securities convertible into or exchangeable for
capital stock or voting securities or other ownership interests in) the Company,
(iii) obligations of the Company to grant, extend or enter into any
subscription, warrant, right, convertible or exchangeable security or other
similar agreement or commitment relating to any capital stock, voting securities
or other ownership interests in the Company (the items in clauses (i), (ii) and
(iii), together with the capital stock of the Company, being referred to
collectively as "Company Securities") or (iv) obligations by the Company or any
------------------
of its Subsidiaries to make any payments based on the price or value of the
Shares. There are no outstanding obligations of the Company or any of its
Subsidiaries to repurchase, redeem or otherwise acquire any Company Securities.
There are no voting trusts or other agreements or understandings to which the
Company or any of its Subsidiaries is a party with respect to the voting of
capital stock of the Company or any of its Subsidiaries.
(b) The Company or another Subsidiary is the record and beneficial
owner of all the outstanding shares of capital stock of each Company Subsidiary,
free and clear of any lien, mortgage, pledge, charge, security interest or
encumbrance of any kind, and there are no irrevocable proxies with respect to
any such shares. There are no outstanding (i) securities of the Company or any
of its Subsidiaries convertible into or exchangeable for shares of capital stock
or other voting securities or ownership interests in any Subsidiary of the
Company, (ii) options, warrants, rights or other agreements or commitments to
acquire from the Company or any of its Subsidiaries (or obligations of the
Company or any of its Subsidiaries to issue) any capital stock, voting
securities or other ownership interests in, or any securities convertible into
or exchangeable for any capital stock, voting securities or ownership interests
in, any of its Subsidiaries, (iii) obligations of the Company or any of its
Subsidiaries to grant, extend or enter into any subscription, warrant, right,
convertible or exchangeable security or other similar agreement or commitment
relating to any capital stock, voting securities or other ownership interests in
any of the Company's Subsidiaries (the items in clauses (i), (ii) and (iii),
together with the capital stock of such Subsidiaries, being referred to
collectively as "Subsidiary Securities") or (iv) obligations of the Company or
---------------------
any of its Subsidiaries to make any payment based on the value of any shares of
any Subsidiary. There are no outstanding obligations of the Company or any of
its Subsidiaries to repurchase, redeem or otherwise acquire any outstanding
Subsidiary Securities.
SECTION 4.03 Authority for this Agreement. The Company has all
----------------------------
necessary corporate power and authority to execute and deliver this Agreement
and to consummate the transactions contemplated hereby. The execution and
delivery of this Agreement by the Company and the consummation by the Company of
the transactions contemplated hereby have been duly and validly authorized by
the Board of Directors of the Company and no other corporate proceedings on the
part of the Company are necessary to authorize this Agreement or to consummate
the transactions so contemplated, other than, with respect to the Merger, the
approval and adoption of the plan of merger (as such term is used in Section
180.1101 of the WBCL) contained in this Agreement by the holders of a majority
of the outstanding Shares prior
10
to the consummation of the Merger (unless the Merger is consummated pursuant to
Section 180.1104 of the WBCL). This Agreement has been duly and validly executed
and delivered by the Company and constitutes a legal, valid and binding
agreement of the Company, enforceable against the Company in accordance with its
terms.
SECTION 4.04 Consents and Approvals; No Violation. Neither the
------------------------------------
execution and delivery of this Agreement by the Company nor the consummation of
the transactions contemplated hereby will (a) conflict with or result in any
breach of any provision of the respective Articles of Incorporation or Bylaws
(or other similar governing documents) of the Company or any of its
Subsidiaries, (b) require any consent, approval, authorization or permit of, or
filing with or notification to, any foreign, federal, state or local government
or subdivision thereof, or governmental, judicial, legislative, executive,
administrative or regulatory authority, agency, commission, tribunal or body (a
"Governmental Entity") except as may be required under the Xxxx-Xxxxx-Xxxxxx
-------------------
Antitrust Improvements Act of 1976, as amended (the "HSR Act"), the Exchange Act
-------
and the WBCL, (c) require any consent, waiver or approval or result in a default
(or give rise to any right of termination, cancellation, modification or
acceleration) under any of the terms, conditions or provisions of any note,
license, agreement, contract, indenture 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 any of their respective assets may be bound, (d)
result in the creation or imposition of any mortgage, lien, pledge, charge,
security interest or encumbrance of any kind on any asset of the Company or any
of its Subsidiaries or (e) violate any order, writ, injunction, judgment,
decree, law, statute, rule, ordinance or regulation ("Legal Requirements")
------------------
applicable to the Company or any of its Subsidiaries or by which any of their
respective assets are bound, except in the case of (b), (c) and (d) for any of
the foregoing that would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect or a material adverse effect on the
ability of the parties to consummate the Offer or the Merger.
SECTION 4.05 Reports; Financial Statements.
-----------------------------
(a) Since January 1, 1997 the Company has timely filed all forms,
reports and documents required to be filed by it with the SEC, all of which have
complied as of their respective filing dates in all material respects with all
applicable requirements of the Exchange Act and the rules and regulations of the
SEC promulgated thereunder. True and correct copies of all filings made by the
Company with the SEC since such date and prior to the date hereof (the "Company
-------
SEC Reports"), whether or not required under applicable laws, rules and
-----------
regulations and including any registration statement filed by the Company under
the Securities Act of 1933, as amended, have been furnished to Parent and
Purchaser. None of the SEC Reports, including any financial statements or
schedules included or incorporated by reference therein, at the time filed,
contained any untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading.
(b) The audited and unaudited consolidated financial statements of
the Company included (or incorporated by reference) in the Company SEC Reports
have been prepared in accordance with United States generally accepted
accounting principles applied on a consistent basis and fairly present the
consolidated financial position of the Company and its Subsidiaries
11
as of their respective dates, and the consolidated income, shareholders equity,
results of operations and changes in consolidated financial position or cash
flows for the periods presented therein.
(c) Except as reflected or reserved against or disclosed in the
financial statements of the Company included in the Company SEC Reports, and
except as incurred in the ordinary course of business consistent with past
practice since December 31, 1998, neither the Company nor any of its
Subsidiaries has any liabilities of any nature, whether accrued, absolute,
fixed, contingent or otherwise, whether due or to become due and whether or not
required to be recorded or reflected on a balance sheet under United States
generally accepted accounting principles. Since December 31, 1998, neither the
Company nor any of its Subsidiaries has incurred any such liabilities other than
liabilities that (i) have been incurred in the ordinary course of business
consistent with past practice and (ii) have not had and are not reasonably
likely to have, individually or in the aggregate, a Material Adverse Effect.
SECTION 4.06 Absence of Certain Changes. Since January 1, 1999, (a)
--------------------------
the Company and its Subsidiaries have not suffered any Material Adverse Effect
or any change, condition, event or development that could reasonably be expected
to have a Material Adverse Effect, (b) the Company and its Subsidiaries have
conducted their respective businesses in all material respects only in the
ordinary course consistent with past practice, except for the negotiation and
execution and delivery of this Agreement and (c) there has not been (i) any
declaration, setting aside or payment of any dividend or other distribution in
respect of the Shares or any repurchase, redemption or other acquisition by the
Company or any of its Subsidiaries of any outstanding shares of capital stock or
other securities in, or other ownership interests in, the Company or any of its
Subsidiaries or any amendment (or agreement to amend) the terms of any such
shares, securities or ownership interests, (ii) any entry into any employment,
change in control, deferred compensation or severance agreement with, or any
significant increase in the rate or terms (including any acceleration of the
right to receive payment) of compensation payable or to become payable by the
Company or any of its Subsidiaries to, their respective directors, officers or
employees, except increases to employees who are not officers or directors
occurring in the ordinary course of business, (iii) any increase in the rate or
terms (including any acceleration of the right to receive payment) of any Plan
(as defined below) or any other bonus, severance, insurance, change in control,
deferred compensation, pension or other employee benefit plan, payment or
arrangement made to, for or with any such directors, officers or employees, (iv)
any action by the Company which, if taken after the date hereof, would
constitute a breach of any of the clauses of Section 6.01 hereof, (v) any change
by the Company in accounting methods, principles or practices except as required
by changes in United States generally accepted accounting principles, (vi) any
material labor dispute or other material employment related problem, other than
routine individual grievances, or any activity or proceeding by a labor union or
representative thereof to organize any employees of the Company or any
Subsidiary, which employees were not then subject to a collective bargaining
agreement or any lockouts, strikes, slowdowns, work stoppages or threats thereof
by or with respect to such employees, (vii) any revaluation by the Company or
any of its Subsidiaries of any of their respective assets, including write-downs
of inventory or of accounts receivable other than in the ordinary course of
business consistent with past practice or (viii) except by contracts entered
into in the ordinary course of business consistent with past practice,
12
any entry into any agreement, commitment or transaction by the Company which is
material to the Company and its Subsidiaries taken as a whole.
SECTION 4.07 Schedule 14D-9; Offer Documents and Proxy Statement-.
---------------------------------------------------
(a) None of the information supplied or to be supplied by or on
behalf of the Company or any affiliate of the Company for inclusion in the Offer
Documents will, at the times such documents are filed with the SEC and are
mailed to shareholders of the Company, contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances under
which they are made, not misleading, or to correct any statement made in any
communication with respect to the Offer previously filed with the SEC or
disseminated to the shareholders of the Company. The Schedule 14D-9 will not,
at the time the Schedule 14D-9 is filed with the SEC and at all times prior to
the purchase of Shares by Purchaser pursuant to the Offer, contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they are made, not misleading, except that no
representation or warranty is made by the Company with respect to information
supplied in writing by Parent, Purchaser or an affiliate of Parent or Purchaser
expressly for inclusion therein. The Schedule 14D-9 will comply as to form in
all material respects with the provisions of the Exchange Act and the rules and
regulations of the SEC thereunder.
(b) The Proxy Statement, and any other schedule or document required
to be filed by the Company in connection with the Merger, will not, at the time
the Proxy Statement is first mailed and at the time of the Special Meeting,
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they are made, not misleading, or to
correct any statement made in any earlier communication with respect to the
solicitation of any proxy or approval for the Merger in connection with which
the Proxy Statement shall be mailed, except that no representation or warranty
is made by the Company with respect to information supplied in writing by
Parent, Purchaser or an affiliate of Parent or Purchaser expressly for inclusion
therein. The Proxy Statement will comply as to form in all material respects
with the provisions of the Exchange Act and the rules and regulations of the SEC
promulgated thereunder. The letter to shareholders, notice of meeting, proxy
statement and form of proxy, or the information statement, as the case may be,
that may be provided to shareholders of the Company in connection with the
Merger (including any amendments or supplements), and any schedules required to
be filed with the SEC in connection therewith, as from time to time amended or
supplemented, are collectively referred to as the "Proxy Statement."
---------------
SECTION 4.08 Brokers. No Person or entity (other than Xxxxx, a true
-------
and complete copy of whose engagement letter as in effect has been furnished to
Parent and Purchaser) is entitled to receive any brokerage, finder's or other
fee or commission in connection with this Agreement or the transactions
contemplated hereby based upon agreements made by or on behalf of the Company,
any of its Subsidiaries or any of their respective officers, directors or
employees.
13
SECTION 4.09 Labor and Employee Benefit Matters.
----------------------------------
(a) (i) The employees employed by the Company and its Subsidiaries are
not represented by any labor union or other labor representative, (ii) there are
no collective bargaining agreements or other similar arrangements in effect with
respect to such employees and (iii) there are no other Persons attempting to
represent or organize or purporting to represent for bargaining purposes any
employees employed by the Company or any of its Subsidiaries.
(b) (i) Since January 1, 1996 there has not occurred or been
threatened any strikes, slow downs, picketing, work stoppages, concerted
refusals to work or other similar labor activities with respect to employees
employed by the Company or any of its Subsidiaries and (ii) no material
grievance or arbitration or other Proceeding arising out of or under any
collective bargaining agreement relating to the Company or any of its
Subsidiaries is pending or threatened.
(c) The Company and each Subsidiary are in compliance in all material
respects with all Legal Requirements relating to the employment or termination
of employment of all former, current, and prospective employees, independent
contractors and "leased employees" (within the meaning of Section 414(n) of the
Code) of the Company and each Subsidiary.
(d) No individual has been treated by the Company or any Subsidiary as
a "leased employee" (within the meaning of Section 414(n) of the Code). There
are no material complaints, charges or claims against the Company or any
Subsidiary pending or threatened to be brought by or filed with any Governmental
Entity based on, arising out of, in connection with or otherwise relating to the
employment or termination of employment by the Company or any Subsidiary of any
individual involved in the business of the Company or any Subsidiary, including
individuals classified by the Company or any Subsidiary as independent
contractors or "leased employees" (within the meaning of Section 414(n) of the
Code), or the failure to employ any individual, including, without limitation,
any claim relating to employment discrimination, equal pay, employee safety and
health, immigration, wages and hours or workers' compensation.
(e) There are no material liabilities, whether absolute or contingent,
to any employees employed by the Company or any Subsidiary relating to workers
compensation benefits that are not fully insured against by a bona fide third-
party insurance carrier. All premiums required to have been paid to date under
the insurance policy or fund with respect to each workers' compensation
arrangement that is funded wholly or partially through an insurance policy or
public or private fund, have been paid, all premiums required to be paid under
the insurance policy or fund through the Closing will have been paid on or
before the Closing and, as of the Closing, there will be no material liability
of the Company or any Subsidiary under any such insurance policy, fund or
ancillary agreement with respect to such insurance policy or fund in the nature
of a retroactive rate adjustment, loss sharing arrangement or other actual or
contingent liability arising wholly or partially out of events occurring prior
to the Closing.
(f) "Company Benefit Plans" shall mean such employee or director
benefit or compensation plan, arrangement or agreement, including, without
limitation, pension, savings, retirement, welfare, insurance, severance,
executive compensation, profit-sharing, deferred compensation, incentive, bonus,
stock-option, stock purchase, and long-term performance plans,
14
arrangements or agreements, that are maintained, or contributed to, as of the
date of this Agreement by the Company or any of its Subsidiaries or by any trade
or business, whether or not incorporated (an "ERISA Affiliate"), all of which
---------------
together with the Company would be deemed a "single employer" within the meaning
of Section 4001 of the Employee Retirement Income Security Act of 1974 ("ERISA")
-----
or Section 414(b), (c), (m) or (o) of the Code, or to which the Company or any
Subsidiary has any obligation to contribute, or with respect to which the
Company or any Subsidiary has any liability. Set forth in Section 4.09(f) of the
Company Disclosure Letter is a list of the material Company Benefit Plans and
the Company shall, within fifteen (15) days following the date hereof, provide
Purchaser with a list of all Company Benefit Plans. The Company has heretofore
delivered or made available to Purchaser true and complete copies of each
material Company Benefit Plan and the following related documents: (i) the
actuarial report and Form 5500 for such Company Benefit Plan (if applicable) for
each of the last two years, (ii) the most recent determination letter from the
Internal Revenue Service (if applicable) for such Company Benefit Plan and (iii)
the most recent summary plan description , including financial statements and
actuarial valuations, for such Company Benefit Plan. There is no legally binding
arrangement or commitment to create any additional Company Benefit Plans or
intent to modify or change any existing Company Benefit Plans.
(g) (i) Each of the Company Benefit Plans has been operated and
administered in accordance with its terms and with applicable Legal
Requirements, including, but not limited to, ERISA and the Code, except where
the failure to so operate and administer would not individually or in the
aggregate result in a Material Adverse Effect on the Company, (ii) each of the
Company Benefit Plans intended to be "qualified" within the meaning of Section
401(a) of the Code has received a determination letter from the Internal Revenue
Service stating that it is so qualified, and, to the knowledge of the Company,
there are no existing circumstances or any events that have occurred that would
reasonably be expected to adversely affect the qualified status of any such
Company Benefit Plan, and the consummation of the transactions contemplated
hereby will not adversely affect the qualified status of any such Company
Benefit Plan (iii) with respect to each Company Benefit Plan that is subject to
Title IV of ERISA, the present value of accrued benefits under such plan, based
upon the actuarial assumptions used for funding purposes in the most recent
actuarial report prepared by such plan's actuary with respect to such plan, did
not, as of its latest valuation date, exceed the then current value of the
assets of such plan allocable to such accrued benefits and, to the knowledge of
the Company no adverse change in such funded status has occurred, (iv) no
Company Benefit Plan provides benefits, including, without limitation, death or
medical benefits (whether or not insured), with respect to current or former
employees or directors of the Company or its Subsidiaries beyond their
retirement or other termination of service, other than (A) coverage mandated by
applicable Legal Requirements, (B) death benefits or retirement benefits under
any "employee pension plan" (as such term is defined in Section 3(2) of ERISA),
(C) deferred compensation benefits accrued as liabilities on the books of it or
its Subsidiaries or (D) benefits the full cost of which is borne by the current
or former employee or director (or his or her beneficiary), (v) (A) no liability
under Title IV or ERISA or Section 412 of the Code has been incurred by the
Company, its Subsidiaries or any ERISA Affiliate that has not been satisfied in
full, and no condition exists that presents a risk to the Company, its
Subsidiaries or any ERISA Affiliate of incurring a liability thereunder, except
where such liability would not reasonably be expected to have a Material Adverse
Effect on the Company, (B) no "reportable event" (as defined in section 4043 of
ERISA) has occurred with respect to any Company Benefit Plan, (C) no Company
Benefit
15
Plan which is subject to Section 302 of ERISA or Section 412 of the Code has
incurred any "accumulated funding deficiency" (as defined in Section 302 of
ERISA and Section 412 of the Code, respectively), whether or not waived and (D)
the transactions contemplated hereby will not result in any event described in
section 4062(e) of ERISA, (vi) no Company Benefit Plan is a "multiemployer
pension plan" (as such term is defined in Section 3(37) of ERISA), (vii) all
contributions or other amounts payable by the Company or its Subsidiaries as of
the Effective Time with respect to each Company Benefit Plan in respect of
current or prior plan years have been paid or accrued in accordance with
Generally Accepted Accounting Principles in the United States and Section 412 of
the Code and have been adequately accurately reflected in the audited and
unaudited consolidated financial statements of the Company included (or
incorporated by reference) in the Company SEC Reports, (viii) neither the
Company nor its Subsidiaries has engaged in a transaction in connection with
which the Company or its Subsidiaries reasonably could be subject to either a
civil penalty assessed pursuant to Section 406, 409, 502(i), 502(l) or 4069 of
ERISA or a tax imposed pursuant to Section 4975 or 4976 of the Code, except
where any such penalty or tax would not, individually or in the aggregate, have
a Material Adverse Effect on the Company, (ix) to the knowledge of the Company,
there are no pending, threatened or anticipated claims (other than routine
claims for benefits) by, on behalf of or against the Company with any of the
Company Benefit Plans or any trusts related thereto, and neither the Company,
any Subsidiary nor any Company Benefit Plan is under audit or, to the knowledge
of the Company, is the subject of an audit or investigation by any federal or
state governmental agency (including, without limitation, by the Internal
Revenue Service, the Department of Labor or the Pension Guarantee Benefit
Corporation), nor, to the knowledge of the Company, is any such audit or
investigation pending or threatened and (x) no Company Benefit Plan maintained
outside of the United States has assets or book reserves that are less than the
accrued liabilities under such plans, and all Company Benefit Plans maintained
outside of the United States have been operated and administered in accordance
with applicable Legal Requirements, except where the failure to so fund or
provide book reserves for such plans or to so operate and administer such plans
would not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect on the Company or its Subsidiaries.
(h) Neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated hereby (either alone or in
conjunction with any other event) will (A) result in any payment (including,
without limitation, severance, unemployment compensation, "excess parachute
payment" (within the meaning of Section 280G of the Code) whether or not such
payment could be considered to be reasonable compensation for services rendered,
forgiveness of indebtedness or otherwise) becoming due to any current or former
director or employee of the Company or any of its Subsidiaries (or any group of
such current or former directors or employees) under any Company Benefit Plan or
otherwise, (B) increase any benefits otherwise payable under any Company Benefit
Plan or (C) result in any acceleration of the time of payment or vesting of any
such benefits. No deduction for U.S. Federal income tax purposes has been or
is expected by the Company or any Subsidiary to be disallowed for remuneration
paid by the Company or any of its Subsidiaries by reason of Section 162(m) of
the Code including by reason of the transactions contemplated hereby.
(i) With respect to each Company Benefit Plan, all material payments
due from the Company or any Subsidiary to the date hereof have been made and all
amounts properly accrued to the date hereof, or as of the Effective Date, as
liabilities of the Company or any
16
Subsidiary that have not been paid have been properly recorded on the books of
the Company. All liabilities with respect to any current or former employee of
the Company or any Subsidiary, whether contingent or otherwise, that the
Purchaser will assume by reason of this Agreement or by operation of law are
accurately reflected in the audited and unaudited consolidated financial
statements of the Company included (or incorporated by reference) in the Company
SEC Reports.
(j) Except as provided on Schedule 4.09(j) of the Company Disclosure
Letter, neither the Company nor any Subsidiary maintains any plan, program or
arrangement or is a party to any contract that provides any benefits or provides
for payments to any Person in, based on or measured by the value of, any equity
security of, or interest in, the Company or any Subsidiary.
SECTION 4.10 Litigation, etc. There is no claim suit, action or
---------------
legal, administrative or arbitration proceeding (including any citations,
complaints, consent orders, compliance schedules or other similar enforcement
orders) or, any governmental investigation ("Proceeding") pending or, to the
----------
knowledge of the Company, threatened against or relating to the Company or any
of its Subsidiaries that involve a claim against the Company or any of its
Subsidiaries in excess of $250,000 or that, individually or in the aggregate, if
adversely determined could reasonably be expected to have a Material Adverse
Effect or that in any manner challenges or seeks to prevent, enjoin, alter or
materially delay the Offer or the Merger or any of the other transactions
contemplated hereby. Neither the Company nor any Subsidiary of the Company is
subject to any outstanding order, writ, injunction or decree that, individually
or in the aggregate, has had or could reasonably be expected to have a Material
Adverse Effect.
SECTION 4.11 Tax Matters.
-----------
(a) Each of the Company and its Subsidiaries has duly and timely filed all
Tax Returns required to be filed by it, and all such Tax Returns are true,
complete and accurate in all respects, except to the extent that any failure to
have filed such Tax Returns or any inaccuracies in such Tax Returns would not
reasonably be expected to have a Material Adverse Effect on the Company. The
Company and each of its Subsidiaries has paid all Taxes required to be paid by
it and has paid all Taxes that it was required to withhold from amounts owing to
any employee, creditor or third party except to the extent that the failure to
pay or withhold Taxes in the aggregate would not reasonably be expected to have
a Material Adverse Effect on the Company. There are no pending or threatened
audits, examinations, investigations, deficiencies, claims or other Legal
Proceedings in respect of Taxes relating to the Company or any Subsidiary,
except for those relating to Taxes which, if adversely determined, would not in
the aggregate reasonably be expected to have a Material Adverse Effect on the
Company. There are no liens for Taxes upon the assets of the Company or any
Subsidiary other than liens for current Taxes not yet due, liens for Taxes that
are being contested in good faith by appropriate proceedings, and liens for
Taxes which in the aggregate would not reasonably be expected to have a Material
Adverse Effect on the Company. Neither the Company nor any of its Subsidiaries
has requested any extension of time within which to file any Tax Returns in
respect of any taxable year which have not since been filed, nor made any
request for waivers of the time to assess any Taxes that are pending or
outstanding, except where such requests or waivers would not reasonably be
expected to have a Material Adverse Effect on the Company. Neither the Company
nor any of its
17
Subsidiaries has made an election under Section 341(f) of the Code. The
consolidated federal income Tax Returns of the Company and its Subsidiaries have
been examined and closed, or the statute of limitations has closed, with respect
to all taxable years through and including 1992. Neither the Company nor any of
its Subsidiaries has any liability for Taxes of any person (other than the
Company and its Subsidiaries) under Treasury Regulation Section 1.1502-6 (or any
comparable provision of state, local or foreign law). Neither the Company nor
any Subsidiary of the Company is a party to any agreement (with any person other
than the Company or its Subsidiaries) relating to the allocation or sharing of
Taxes.
(b) For purposes of this Agreement: (i) "Taxes" means any and all federal,
state, local, foreign or other taxes of any kind (together with any and all
interest, penalties, additions to tax and additional amounts imposed with
respect thereto) imposed by any taxing authority, including, without limitation,
taxes or other charges on or with respect to income, franchises, windfall or
other profits, gross receipts, property, sales, use, capital stock, payroll,
employment, social security, workers' compensation, unemployment compensation,
or net worth, and taxes or other charges in the nature of excise, withholding,
ad valorem or value added, and (ii) "Tax Return" means any return, report or
similar statement (including the attached schedules) required to be filed with
respect to any Tax, including, without limitation, any information return, claim
for refund, amended return or declaration of estimated Tax.
SECTION 4.12 Compliance with Law; No Default. (a) Neither the
-------------------------------
Company nor any of its Subsidiaries is in conflict with, in default with respect
to or in violation of, (i) any Legal Requirement applicable to the Company or
any of its Subsidiaries or by which any property or asset of the Company or any
of its Subsidiaries is 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 any property or
asset of the Company or any of its Subsidiaries, is bound or affected, in each
case except for any such conflicts, defaults or violations that have not had and
are not reasonably expected to have a Material Adverse Effect or a material
adverse effect on the ability of the parties to consummate the Offer or the
Merger. The Company and its Subsidiaries have all permits, licenses,
authorizations, consents, approvals and franchises from Governmental Entities
required to conduct their businesses as currently conducted (the "Company
-------
Permits"), except for such permits, licenses, authorizations, consents,
-------
approvals and franchises the absence of which, individually or in the aggregate,
have not had and are not reasonably expected to have a Material Adverse Effect
or a material adverse effect on the ability of the parties to consummate the
Offer or the Merger. The Company and its Subsidiaries are in compliance with the
terms of the Company Permits, except where the failure so to comply in the
aggregate has not had and is not reasonably expected to have a Material Adverse
Effect or a material adverse effect on the ability of the parties to consummate
the Offer or the Merger.
(b) Without limiting the generality of the foregoing Section 4.12(a),
the Company and its Subsidiaries are in compliance with, and have received no
notice of non-compliance with, the applicable regulations of any applicable
aviation authorities (including the FAA). The Company and its Subsidiaries
have, and the Surviving Corporation and the Subsidiaries will at the Effective
Time have, all permits currently required by any applicable rule or regulation
of any applicable aviation authorities (including the FAA). "FAA" means the U.S.
---
Federal Aviation Administration (and any successor thereof).
18
SECTION 4.13 Environmental Matters.
---------------------
(a) (i) The Company and each of its Subsidiaries have been at all
times and are in compliance in all material respects with all applicable
Environmental Laws (as defined below).
(ii) The Company and each of its Subsidiaries have obtained all
permits, licenses, consents, approvals, waivers, variances and other
authorizations ("Authorizations") that are required with respect to the
--------------
operation of its business, property and assets under the Environmental Laws
and all such Authorizations are in full force and effect.
(iii) None of Company nor any of its Subsidiaries has received any
notice, request for information, complaint or administrative or judicial
order, and there is no investigation, action, suit or proceeding pending
nor to the knowledge of the Company, threatened, alleging or asserting
material liability or potential material liability against the Company or
any of its Subsidiaries under any Environmental Law or arising from or
related to a Release or threatened Release.
(iv) To the knowledge of the Company and each of its Subsidiaries,
there are no past or present conditions or circumstances at, or arising out
of, the operations of the Company or any of its Subsidiaries, including but
not limited to on-site or off-site Release, which are reasonably likely to
result in: (A) material liabilities or obligations for any cleanup,
remediation or corrective action under any Environmental Law, (B) material
claims arising under any Environmental Law for personal injury, property
damage, or damage to natural resources, or (C) material fines or penalties
arising under any Environmental Law.
(b) The Company has given Parent and Purchaser access to all records
and files in its possession at both its corporate headquarters and its
facilities currently owned, operated, leased, managed, used or controlled by the
Company, or any of its Subsidiaries, including all reports, studies, analyses,
tests or monitoring results, pertaining to Hazardous Substances, any Release or
any environmental concerns relating to facilities or real property owned or
operated (including leased) by the Company or any of its Subsidiaries or
concerning compliance with or liability under any Environmental Laws.
(c) For purposes of this Section 4.13, the definition of the Company
shall include, to the knowledge of the Company, all of the Company's former
Subsidiaries.
(d) Prior to the Effective Time, the Company has made all
notifications, registrations, and filings required under and have taken all
other necessary steps to effect the timely transfer of all Authorizations and to
comply with all Environmental Disclosure Requirements (as defined below)
applicable to its assets and the assets of its Subsidiaries and will provide a
copy of any such notification, registration, or filing to Purchaser prior to the
Effective Time.
(e) For purposes of this Agreement, "Environmental Law" means any
-----------------
statute, law (including common law), ordinance, rule, regulation, order,
judgment or decree applicable to the Company or any of its Subsidiaries relating
to (i) the protection or preservation of the
19
environment, worker health and safety, human health as it relates to the
environment or natural resources, (ii) Releases or threatened Releases, (iii)
the management (including use, treatment, handling, storage, disposal,
transportation, recycling or remediation) of any Hazardous Substance; and (iv)
the physical structure or condition, or appropriate use of a building, facility,
fixture or other structure.
(f) For purposes of this Agreement, "Hazardous Substance" means any
-------------------
substance, pollutant, contaminant, chemical or other material (including
petroleum or any fraction thereof, asbestos or asbestos-containing-material,
polychlorinated biphenyls, urea formaldehyde foam insulation) or waste that is
identified or regulated under any Environmental Law.
(g) For purposes of this Agreement, "Release" means any spill,
-------
discharge, leak, emission, disposal, injection, escape, dumping, leaching,
dispersal, emanation, migration or release of any kind whatsoever of any
Hazardous Substance or noxious noise or odor, at, in, on, into or onto the
environment.
(h) For the purposes of this Agreement, "Environmental Disclosure
------------------------
Requirements" means any laws requiring notification of the buyer of real
------------
property, or notification, registration, or filing with any governmental agency,
prior to the sale of any real property or transfer of control of an
establishment, of the actual or threatened presence or Release into the
environment, or the use, disposal, or handling of Hazardous Substance on, at,
under, or near the real property to be sold or the establishment for which
control is to be transferred.
SECTION 4.14 Intellectual Property.
---------------------
Except to the extent the inaccuracy of any of the following, individually
or in the aggregate, would not reasonably be expected to have a Material Adverse
Effect on the Company, the Company and each of its Subsidiaries owns or
possesses adequate licenses or other legal rights to use all patents,
trademarks, trade names, trade dress, copyrights, service marks, trade secrets,
software, mailing lists, mask works, know-how and other proprietary rights and
information, including all applications with respect thereto (collectively,
"Proprietary Rights") used or held for use in connection with the business of
------------------
the Company and its Subsidiaries as currently conducted or as contemplated to be
conducted by the Company, and the Company is unaware of any assertion or claim
challenging the validity or enforceability of or the Company's and its
Subsidiaries' right to use any of the foregoing. To the knowledge of the
Company, after due inquiry for such purpose, the conduct of the business of the
Company and its Subsidiaries as currently conducted and as contemplated to be
conducted did not, does not and will not infringe or violate in any way any
Proprietary Rights of any third party that, individually or in the aggregate,
would reasonably be expected to have a Material Adverse Effect on the Company.
To the knowledge of the Company, after due inquiry for such purposes, there are
no infringements or violations of any Proprietary Rights owned by or licensed by
or to the Company or any of its Subsidiaries that, individually or in the
aggregate, would reasonably be expected to have a Material Adverse Effect on the
Company.
20
SECTION 4.15 Real Property.
-------------
(a) Section 4.15(a) of the Disclosure Letter sets forth a true,
correct and complete list of all of the real property owned in fee by the
Company and its Subsidiaries. Each of the Company and its Subsidiaries has good
and marketable title to each parcel of real property owned by it free and clear
of all mortgages, pledges, liens, encumbrances and security interests, except
(i) those reflected or reserved against in the balance sheet of the Company
dated as of June 30, 1999 and included in the SEC Reports, (ii) Taxes and
general and special assessments not in default and payable without penalty and
interest and (iii) other liens, mortgages, pledges, encumbrances and security
interests which do not materially interfere with the Company's or such
Subsidiary's use and enjoyment of such real property.
(b) Section 4.15(b) of the Disclosure Letter sets forth a true,
correct and complete list of all leases, subleases and other agreements under
which the Company or any of its Subsidiaries uses or occupies or has the right
to use or occupy, now or in the future, any real property (the "Real Property
-------------
Leases"). The Company has heretofore delivered to Parent and Purchaser true,
------
correct and complete copies of all Real Property Leases (including all
modifications, amendments, supplements, waivers and side letters thereto). Each
Real Property Lease is valid, binding and in full force and effect, all rent and
other sums and charges payable by the Company and its Subsidiaries as tenants
thereunder are current, and no termination event or condition or uncured default
of a material nature on the part of the Company or any such Subsidiary exists
under any Real Property Lease. Each of the Company and its Subsidiaries has a
good and valid leasehold interest in each parcel of real property leased by it
free and clear of all mortgages, pledges, liens, encumbrances and security
interests, except (i) those reflected or reserved against in the balance sheet
of the Company dated as of September 30, 1999, (ii) Taxes and general and
special assessments not in default and payable without penalty and interest, and
(iii) other liens, mortgages, pledges, encumbrances and security interests which
do not materially interfere with the Company's use and enjoyment of such real
property or materially detract from or diminish the value thereof.
SECTION 4.16 Year 2000. As of December 31, 1999, all internal
---------
computer systems that are material to the business, finances or operations of
the Company will be (a) able to receive, record, store, process, calculate,
manipulate and output dates from and after January 1, 2000, time periods that
include January 1, 2000 and information that is dependent on or relates to such
dates or time periods, in the same manner and with the same accuracy,
functionality, data integrity and performance as when dates or time periods
prior to January 1, 2000 are involved and (b) able to store and output date
information in a manner that is unambiguous as to century ("Year 2000
---------
Compliant"). To the knowledge of the Company and its Subsidiaries and upon
reasonable investigation, as of the Effective Time the systems of the Company's
and its Subsidiaries' material suppliers are Year 2000 Compliant.
SECTION 4.17 Material Contracts. The Company has made available to
------------------
Parent and Purchaser true, correct and complete copies of all contracts,
agreements, commitments, arrangements, leases (including with respect to
personal property) and other instruments to which the Company or any of its
Subsidiaries is a party or by which the Company, any of its Subsidiaries or any
of their respective assets is bound which (a) involves or could involve
aggregate payments of more than $500,000, (b) involves or could involve
aggregate revenues of
21
more than $500,000 and which contains provisions relating to change of control
or restrictions on assignment, (c) is with any of the Company's officers,
directors or affiliates, (d) is or could reasonably be expected to be material
to the Company and its Subsidiaries taken as a whole, (e) is a confidentiality,
standstill or similar agreement or (f) contains covenants limiting the freedom
to engage in any line of business or compete with any Person or operate at any
location (each, a "Material Contract"). Neither the Company nor any of its
-----------------
Subsidiaries is, or has received any notice or has any knowledge that any other
party is, in default in any material respect under any Material Contract, and
there has not occurred any event that with the lapse of time or the giving of
notice or both would constitute such a material default, except for such
defaults, individually or in the aggregate, that have not had and are not
reasonably expected to have a Material Adverse Effect or a material adverse
effect on the ability of the parties to consummate the Offer or the Merger.
SECTION 4.18 Related Party Transactions. No director, officer,
--------------------------
partner, employee, affiliate or associate of the Company or any of its
Subsidiaries (a) has borrowed any monies from or has outstanding any
indebtedness or other similar obligations to the Company or any of its
Subsidiaries, (b) owns any direct or indirect interest of any kind (other than
the ownership of less than 5% of the stock of a publicly traded company) in, or
is a director, officer, employee, partner, affiliate or associate of, or
consultant or lender to, or borrower from, or has the right to participate in
the management, operations or profits of, any Person or entity which is (i) a
competitor, supplier, customer, distributor, lessor, tenant, creditor or debtor
of the Company of any of its Subsidiaries, (ii) engaged in a business related to
the business of the Company or any of its Subsidiaries or (iii) participated in
any transaction to which the Company or any of its Subsidiaries is a party; or
(c) is otherwise a party to any contract, arrangement or understanding with the
Company or any of its Subsidiaries.
SECTION 4.19 State Takeover Statutes Inapplicable. (a) Sections
------------------------------------
180.1140 to 180.1145 of the WBCL are inapplicable to the Offer, the Merger, this
Agreement and the Shareholder Option Agreement and the transactions contemplated
hereby and thereby.
(b) Upon Purchaser's acquisition of at least seventy-five percent (75%) of
the outstanding Shares, Purchaser will (i) possess a majority of all the votes
entitled to be cast at such time on the plan of merger (as such term is defined
in Section 180.1103 of the WBCL) and (ii) have the sole power to approve such
plan of merger without the vote of any other shareholder of the Company,
provided, that, in the case of clause (ii), Purchaser complies with Sections
180.1104(3) and (4) and 180.1132(1) of the WBCL, as applicable.
(c) No vote by the Company shareholders under Section 180.1131 of the WBCL
will be required to approve the Merger except for the vote generally required
under Section 180.1103 of the WBCL, provided that this Agreement, the Offer and
the Shareholder Option Agreement are first publicly announced and the Offer is
commenced (within the meaning of Rule 14d-2 promulgated under the Exchange Act)
on the same day.
(d) The Company is not a "target company" which has "substantial assets
located in Wisconsin", as determined under Section 552.01(6)(b) of the Wisconsin
Statutes.
22
SECTION 4.20 Rights Agreement. The Company has irrevocably taken all
----------------
necessary action, including, without limitation, amending the Rights Agreement
with respect to all of the outstanding Rights issued pursuant to the Rights
Agreement, (a) to render the Rights Agreement inapplicable to this Agreement,
the Shareholder Option Agreement, the Offer, the Merger and the specific
transactions contemplated hereby and thereby, (b) to ensure that (i) Parent and
Purchaser, or either of them, are not deemed to be an Acquiring Person (as
defined in the Rights Agreement) pursuant to the Rights Agreement and (ii) no
Triggering Event (as such term is defined in the Rights Agreement) occur by
reason of the execution and delivery of this Agreement, the Shareholder Option
Agreement or the consummation of the Offer, the Merger or transactions
contemplated by this Agreement or the Shareholder Option Agreement and (c) so
that the Company will have no obligations under the Rights or the Rights
Agreement in connection with the Offer and the Merger and the holders of Shares
will have no rights under the Rights or the Rights Agreement in connection with
the Offer and the Merger. The Rights Agreement, as so amended to comply with
this Section, has not been further amended or modified. Copies of all such
amendments to the Rights Agreement have been previously provided to Purchaser.
SECTION 4.21 Required Vote of Company Shareholders. Unless the
-------------------------------------
Merger is consummated in accordance with Section 180.1104 of the WBCL as
contemplated by Section 2.09, the only vote of the shareholders of the Company
required to adopt the plan of merger contained in this Agreement and approve the
Merger is the affirmative vote of the holders of not less than a majority of the
outstanding Shares. No other vote of the shareholders of the Company is
required by law, the Articles of Incorporation or Bylaws of the Company as
currently in effect or otherwise to adopt the plan of merger contained in this
Agreement and approve the Merger. Purchaser will have full voting power with
respect to any Shares purchased pursuant to the Offer or the Options to the
extent allowed under Section 180.1150 of the WBCL.
ARTICLE V
REPRESENTATIONS AND
WARRANTIES OF PARENT AND PURCHASER
Parent and Purchaser represent and warrant to the Company as follows:
SECTION 5.01 Organization and Qualification. Each of Parent and
------------------------------
Purchaser is a duly organized and validly existing corporation in good standing
under the laws of the jurisdiction of its organization. All of the issued and
outstanding capital stock of Purchaser is owned directly or indirectly by
Parent.
SECTION 5.02 Authority for this Agreement. Each of Parent and
----------------------------
Purchaser has all requisite corporate power and authority to execute and deliver
this Agreement and to consummate the transactions contemplated hereby. The
execution and delivery of this Agreement by Parent and Purchaser and the
consummation of the transactions contemplated hereby have been duly and validly
authorized by all necessary corporate proceedings on the part of Parent and
Purchaser. This Agreement has been duly and validly executed and delivered by
Parent and Purchaser and constitutes a legal, valid and binding agreement of
each of Parent and Purchaser, enforceable against each of Parent and Purchaser
in accordance with its terms.
23
SECTION 5.03 Offer Documents; Proxy Statement.
--------------------------------
(a) None of the Offer Documents will, at the times such documents are
filed with the SEC and are mailed to the shareholders of the Company, contain
any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary in order to make the statements made
therein, in light of the circumstances under which they are made, not
misleading, except that no representation is made by Parent or Purchaser with
respect to information supplied in writing by the Company or an affiliate of the
Company expressly for inclusion therein. The Offer Documents will comply as to
form in all material respects with the provisions of the Exchange Act and the
rules and regulations of the SEC thereunder.
(b) None of the information supplied by Parent, Purchaser or any
affiliate of Parent or Purchaser specifically for inclusion in the Proxy
Statement or the Schedule 14D-9 will, at the date of filing with the SEC, and,
in the case of the Proxy Statement, at the time the Proxy Statement is mailed
and at the time of the Special Meeting, contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading.
SECTION 5.04 Consents and Approvals; No Violation. Neither the
------------------------------------
execution and delivery of this Agreement by Parent or Purchaser nor the
consummation of the transactions contemplated hereby will (a) conflict with or
result in any breach of any provision of the respective Certificates of
Incorporation or Bylaws (or other similar governing documents) of Parent or
Purchaser, (b) require any consent, approval, authorization or permit of, or
filing with or notification to, any Governmental Entity, except (i) as may be
required under the HSR Act, any non-United States competition, antitrust and
investment laws, the Exchange Act, the WBCL, Chapter 552 of the Wisconsin
Statute and the "takeover" or "blue sky" laws of various states or (ii) where
the failure to obtain such consent, approval, authorization or permit, or to
make such filing or notification, would not, individually or in the aggregate,
have a material adverse effect on the ability of Parent or Purchaser to
consummate the transactions contemplated hereby, (c) require any consent, waiver
or approval or result in a default (or give rise to any right of termination,
cancellation, modification or acceleration) under any of the terms, conditions
or provisions of any note, license, agreement, contract, indenture or other
instrument or obligation to which Parent or Purchaser or any of their respective
Subsidiaries is a party or by which Parent or any of its Subsidiaries or any of
their respective assets may be bound, except for such defaults (or rights of
termination, cancellation, modification or acceleration) as to which requisite
waivers or consents have been obtained or which would not in the aggregate have
a material adverse effect on the ability of Parent or Purchaser to consummate
the transactions contemplated hereby or (d) violate any Legal Requirement
applicable to Parent, Purchaser or any of their respective Subsidiaries or by
which any of their respective assets are bound, except for violations which
would not, individually or in the aggregate, have a material adverse effect on
the ability of Parent or Purchaser to consummate the transactions contemplated
hereby.
SECTION 5.05 Operations of Purchaser. Purchaser was formed solely
-----------------------
for the purpose of engaging in the transactions contemplated hereby, has engaged
in no other business activities and has conducted and will conduct its
operations only as contemplated hereby.
24
SECTION 5.06 Brokers. No Person or entity is entitled to receive any
-------
brokerage, finder's or other fee or commission in connection with this Agreement
or the transactions contemplated hereby based upon agreements made by or on
behalf of Parent, Purchaser or any of their Subsidiaries or any of their
respective officers, directors or employees.
ARTICLE VI
COVENANTS
SECTION 6.01 Conduct of Business of the Company. Except as expressly
----------------------------------
contemplated by this Agreement, during the period from the date of this
Agreement to the date on which a majority of the Company's directors are
designees of Parent or Purchaser, the Company will conduct and will cause each
of its Subsidiaries to conduct its operations according to its ordinary and
usual course of business and consistent with past practice, and the Company will
use and will cause each of its Subsidiaries to use its commercially reasonable
efforts to preserve intact its business organization, to keep available the
services of its current officers and employees and to preserve the goodwill of
and maintain satisfactory relationships with those Persons and entities having
business relationships with the Company and its Subsidiaries, and the Company
will promptly advise Parent and Purchaser in writing of any material change in
the Company's or any of its Subsidiaries' condition (financial or otherwise),
properties, customer or supplier relationships, assets, liabilities, business
prospects or results of operations. Without limiting the generality of the
foregoing and except as otherwise expressly provided in or contemplated by this
Agreement or the Disclosure Letter, during the period specified in the preceding
sentence, without the prior written consent of Parent which shall not be
unreasonably withheld, the Company will not and will not permit any of its
Subsidiaries to:
(a) issue, sell, grant options, restricted shares or rights to
purchase, pledge, or authorize or propose the issuance, sale, grant of
options, restricted shares or rights to purchase or pledge of (i) any
Company Securities (including any Existing Stock Option or Stock Award) or
Subsidiary Securities, or grant or accelerate any right to convert or
exchange any Company Securities or Subsidiary Securities, other than Shares
issuable upon exercise of the Existing Stock Options or Stock Award or (ii)
any other securities in respect of, in lieu of or in substitution for
Shares outstanding on the date hereof or any other right the value of which
is based on the value of Company Securities or Subsidiary Securities;
(b) acquire or redeem, directly or indirectly, or amend any Company
Securities or Subsidiary Securities;
(c) split, combine or reclassify its capital stock or declare, set
aside, make or pay any dividend or distribution (whether in cash, stock or
property) on any shares of its capital stock (other than cash dividends
paid to the Company by its wholly-owned Subsidiaries with regard to their
capital stock);
(d) (i) make or offer to make any acquisition, by means of a merger or
otherwise, of assets or securities, or any sale, lease, encumbrance or
other disposition of assets or securities, in each case involving the
payment or receipt of consideration of $250,000 or
25
more, except for purchases of inventory made in the ordinary course of
business and consistent with past practice or (ii) except in the ordinary
course consistent with past practice, enter into a Material Contract or
amend any Material Contract or grant any release or relinquishment of any
rights under any Material Contract;
(e) incur or assume any long-term debt or short-term debt except for
short-term debt incurred in the ordinary course of business consistent with
past practice;
(f) assume, guarantee, endorse or otherwise become liable or
responsible (whether directly, contingently or otherwise) for the
obligations of any other Person except wholly-owned Subsidiaries of the
Company;
(g) make any loans, advances or capital contributions to, or
investments in, any other Person (other than wholly-owned Subsidiaries of
the Company);
(h) change any of the accounting principles or practices used by it;
(i) make any Tax election or settle or compromise any material federal,
state or local income Tax liability;
(j) propose or adopt any amendments to its Articles of Incorporation or
Bylaws (or similar documents);
(k) grant any stock-related, performance or similar awards or bonuses;
(l) forgive any loans to employees, officers, consultants or directors
or any of their respective affiliates or associates;
(m) enter into any new, or amend any existing, employment, severance,
consulting, retention, change in control, deferred compensation or salary
continuation agreements with or for the benefit of any current or former
officers, directors, employees or consultants, or grant any increases in
the compensation, wages, salaries, fringe benefits, perquisites or benefits
to any current or former officers, directors and employees (other than
normal increases to persons who are not officers or directors in the
ordinary course of business consistent with past practices and that do not
result in a material increase in benefits or compensation expense of the
Company);
(n) make any deposits or contributions of cash or other property to or
take any other action to fund or in any other way secure the payment of
compensation or benefits under the Plans or agreements subject to the Plans
or any other plan, agreement, contract or arrangement of the Company
(except for any matching contributions to the Company's 401(k) plan which
are consistent with past practice);
(o) enter into, amend, or extend any collective bargaining or other
labor agreement;
(p) adopt, amend or terminate any Plan or any other bonus, severance,
insurance pension or other employee benefit plan or arrangement;
26
(q) settle or agree to settle any suit, action, claim, proceeding or
investigation (including any suit, action, claim, proceeding or
investigation relating to this Agreement or the transactions contemplated
hereby) or pay, discharge or satisfy or agree to pay, discharge or satisfy
any claim, liability or obligation (absolute or accrued, asserted or
unasserted, contingent or otherwise) other than the payment, discharge or
satisfaction of liabilities reflected or reserved against in full in the
financial statements as at June 30, 1999, incurred in the ordinary course
of business subsequent to June 30, 1999 or are less than $25,000 in the
aggregate;
(r) except as specifically permitted by Section 6.02, take, or agree to
commit to take, or fail to take any action that would result or is
reasonably likely to result in any of the Offer Conditions or any of the
conditions to the Merger set forth in Article VII not being satisfied, or
would make any representation or warranty of the Company contained herein
inaccurate in any material respect at, or as of any time prior to, the
Effective Time, or that would impair the ability to consummate the Offer or
the Merger in accordance with the terms hereof or materially delay such
consummation;
(s) convene any regular or special meeting (or any adjournment thereof)
of the shareholders of the Company other than the meeting contemplated by
Section 2.08 of this Agreement; or
(t) except as provided above, agree in writing or otherwise to take any
of the foregoing actions.
SECTION 6.02 No Solicitation. (a) The Company shall not, and shall
---------------
cause its Subsidiaries and its and their respective officers, directors,
employees, representatives (including investment bankers, attorneys and
accountants), agents or affiliates not to, directly or indirectly, encourage,
solicit, initiate or participate in any way in any discussions or negotiations
with, or provide any information to, or afford any access to the properties,
books or records of the Company or any of its Subsidiaries to, or otherwise take
any other action to assist or facilitate, any Person or group (other than Parent
or Purchaser or any affiliate or associate of Parent or Purchaser) concerning
any Acquisition Proposal (as defined below) or the possible making of an
Acquisition Proposal. Notwithstanding the foregoing and subject to compliance
with Section 6.02(b) and the prior execution by such Person or group of a
confidentiality agreement substantially in the form of the Confidentiality
Agreement, the Company may furnish information to or enter into discussions or
negotiations with any Person or entity that has made an unsolicited bona fide
Acquisition Proposal that the Board of Directors of the Company determines is a
Superior Proposal (as defined below) if, and only to the extent that, the Board
of Directors of the Company, after consultation with outside legal counsel to
the Company, determines in good faith that failure to do so would result in a
breach of the fiduciary duty of the Board of Directors of the Company to the
shareholders of the Company under applicable law.
(b) The Company will promptly (and in any event within 48 hours)
notify Parent and Purchaser, orally and in writing, if any such information is
requested or any such negotiations or discussions are sought to be initiated and
will promptly communicate to Parent and Purchaser the identity of the Person or
group making such request or inquiry (the "Potential Acquiror") and any other
------------------
terms of such request, inquiry or Acquisition Proposal. Such
27
notification shall include copies of any written communications received from
the Potential Acquiror. If the Company (or any of its Subsidiaries or its or
their respective officers, directors, employees, representatives, agents or
affiliates) participates in discussions or negotiation with, or provides
information to, a Potential Acquiror, the Company will keep Parent advised on a
current basis of any developments with respect thereto.
(c) The Company will, and will cause its Subsidiaries and its and
their respective officers, directors, employees, representatives, agents and
affiliates to, immediately cease and cause to be terminated any existing
activities, discussions or negotiations with any Persons other than Parent,
Purchaser or any of their respective affiliates or associates conducted prior to
the date hereof with respect to any Acquisition Proposal.
(d) Unless and until this Agreement has been terminated in accordance
with Section 8.01, the Company shall not (i) withdraw or modify, or propose
publicly to withdraw or modify, in a manner adverse to Parent or Purchaser, the
approval or recommendation of the Offer or the Merger as set forth in Section
1.02(a), (ii) approve or recommend, or propose publicly to approve or recommend,
any Acquisition Proposal, (iii) release any third party from any confidentiality
or standstill agreement to which the Company is a party or fail to enforce to
the fullest extent possible, or grant any waiver or request or consent to any
Acquisition Proposal under any such agreement, (iv) redeem the Rights or amend,
or take any other action with respect to, the Rights Agreement to facilitate any
Acquisition Proposal or (v) enter into any letter of intent, agreement in
principle, acquisition agreement or other agreement related to any Acquisition
Proposal. Without limiting any other rights of Parent and Purchaser under this
Agreement in respect of any such action, any withdrawal or modification by the
Company of the approval or recommendation of the Offer or the Merger shall not
have any effect on the approvals of, and other actions referred to herein for
the purpose causing Takeover Laws and the Rights Agreement to be inapplicable
to, this Agreement and the Shareholder Option Agreement and the transactions
contemplated hereby and thereby, which approvals and actions are irrevocable.
(e) Nothing contained in this Section 6.02 shall prohibit the Company
or its Board of Directors from taking and disclosing to the Company's
Shareholders a position with respect to a tender offer by a third party pursuant
to Rules 14d-9 and 14e-2(a) promulgated under the Exchange Act.
(f) For purposes of this Agreement, (i) "Acquisition Proposal" means
--------------------
any offer or proposal, or any indication of interest in making an offer or
proposal, made by a Person or group at any time which is structured to permit
such Person or group to acquire beneficial ownership of any material portion of
the assets of, or at least 5% of the equity interest in, or businesses of, the
Company pursuant to a merger, consolidation or other business combination, sale
of shares of capital stock, sale of assets, tender offer or exchange offer or
similar transaction, including any single or multi-step transaction or series of
related transactions, in each case other than the Offer and the Merger and (ii)
"Superior Proposal" means any unsolicited, bona fide Acquisition Proposal made
-----------------
in writing in respect of which the Board of Directors of the Company has
reasonably determined in good faith (A) after consulting with and receiving the
advice of its independent financial advisors to such effect, that the Potential
Acquiror has the financial wherewithal to consummate such Acquisition Proposal
without having to obtain new financing,
28
(B) after receiving the advice of its independent financial advisors to such
effect, that such Acquisition Proposal would involve consideration that is
superior to the consideration under the Offer and the Merger and (C) after
consulting with and receiving the advice of its outside counsel and independent
financial advisors to such effect, that such Acquisition Proposal is reasonably
likely to be consummated without undue delay.
SECTION 6.03 Access to Information.
---------------------
(a) From and after the date of this Agreement, the Company will (i)
give Parent and Purchaser and their authorized accountants, investment bankers,
counsel and other representatives complete access (during regular business hours
upon reasonable notice) to all employees, plants, offices, warehouses and other
facilities and to all books, contracts, commitments and records (including Tax
returns) of the Company and its Subsidiaries and cause the Company's and its
Subsidiaries' independent public accountants to provide access to their work
papers and such other information as Parent or Purchaser may reasonably request,
(ii) permit Parent and Purchaser to make such inspections as they may require,
(iii) cause its officers and those of its Subsidiaries to furnish Parent and
Purchaser with such financial and operating data and other information with
respect to the business, properties and personnel of the Company and its
Subsidiaries as Parent or Purchaser may from time to time request and (iv)
furnish promptly to Parent and Purchaser a copy of each report, schedule and
other document filed or received by the Company during such period pursuant to
the requirements of the federal or state securities laws.
(b) Information obtained by Parent or Purchaser pursuant to Section
6.03(a) shall be subject to the provisions of the Confidentiality Agreement, the
terms of which are incorporated herein by reference.
SECTION 6.04 Reasonable Best Efforts.
-----------------------
(a) Subject to the terms and conditions herein provided for, each of
the parties hereto agrees to use its commercially reasonable 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, in the most expeditious manner practicable, the
transactions contemplated by this Agreement; provided, however, that nothing in
-------- -------
this Agreement (other than as expressly provided for in Section 1.01) shall
obligate Parent or Purchaser to keep the Offer open beyond the expiration date
set forth in the Offer (as it may be extended from time to time). Without
limiting the foregoing, (i) each of the Company, Parent and Purchaser shall use
its commercially reasonable efforts to make promptly any required submissions
under the HSR Act which the Company or Parent determines should be made, in each
case, with respect to the Offer, the Merger, this Agreement or the Shareholder
Option Agreement and the transactions contemplated hereby and thereby and (ii)
Parent, Purchaser and the Company shall cooperate with one another (A) in
promptly determining whether any filings are required to be or should be made or
consents, approvals, permits or authorizations are required to be or should be
obtained under any other federal, state or foreign law or regulation or whether
any consents, approvals or waivers are required to be or should be obtained from
other parties to loan agreements or other contracts or instruments material to
the Company's business in connection with the consummation of the transactions
contemplated by
29
this Agreement and (B) in promptly making any such filings, furnishing
information required in connection therewith and seeking to obtain timely any
such consents, permits, authorizations, approvals or waivers. In case at any
time after the Effective Time any further action is necessary or desirable to
carry out the purposes of this Agreement, the proper officers and directors of
each party to this Agreement shall take all such necessary action.
(b) In the event that any action, suit, proceeding or investigation
relating hereto or to the transactions contemplated hereby is commenced, whether
before or after the Effective Time, the parties hereto agree to cooperate and
use their commercially reasonable efforts to defend vigorously against it and
respond thereto.
(c) Nothing in this Agreement shall obligate Parent, Purchaser or any
of their respective Subsidiaries or affiliates to agree (i) to limit in any
manner whatsoever or not to exercise any rights of ownership of any securities
(including the Shares), or to divest, dispose of or hold separate any securities
or all or a material portion of their respective businesses, assets or
properties or of the business, assets or properties of the Company or any of its
Subsidiaries or (ii) to limit in any material manner whatsoever the ability of
such entities (A) to conduct their respective businesses or own such assets or
properties or to conduct the businesses or own the properties or assets of the
Company and its Subsidiaries or (B) to control their respective businesses or
operations or the businesses or operations of the Company and its Subsidiaries.
SECTION 6.05 Indemnification and Insurance.
-----------------------------
(a) Parent and Purchaser agree that all rights to indemnification
existing in favor of the present or former directors, officers and employees of
the Company or any of its Subsidiaries as provided in the Company's Articles of
Incorporation or Bylaws, or the articles of organization, bylaws or similar
documents of any of the Company's Subsidiaries as in effect as of the date
hereof with respect to matters occurring prior to the Effective Time shall
survive the Merger and shall continue in full force and effect for a period of
not less than the statutes of limitations applicable to such matters, and Parent
agrees to cause the Surviving Corporation to comply fully with its obligations
hereunder and thereunder.
(b) The Surviving Corporation will cause to be maintained in effect
for a period of six years after the Effective Time, in respect of acts or
omissions occurring prior to the Effective Time (but only in respect thereof),
policies of directors' and officers' liability insurance covering the persons
currently covered by the Company's existing directors' and officers' liability
insurance policies and providing substantially similar coverage to such existing
policies; provided, however, that the Surviving Corporation will not be required
-------- -------
in order to maintain such directors' and officers' liability insurance policies
to pay an annual premium in excess of 200% of the aggregate annual amounts
currently paid by the Company to maintain the existing policies (which amount is
not more than $50,000); and provided further that, if equivalent coverage cannot
----------------
be obtained, or can be obtained only by paying an annual premium in excess of
200% of such amount, the Surviving Corporation shall only be required to obtain
as much coverage as can be obtained by paying an annual premium equal to 200% of
such amount.
30
(c) This Section 6.05 shall survive the consummation of the Merger
and is intended to benefit, and shall be enforceable, by any Person or entity
entitled to be indemnified hereunder (whether or not parties to this Agreement).
SECTION 6.06 Employee Matters
----------------
(a) Prior to the Effective Time, except as set forth below, the
Company will, and will cause its Subsidiaries to, and from and after the
Effective Time, Parent will, and will cause the Surviving Corporation to, honor,
in accordance with their terms all existing employment and severance agreements
between the Company or any of its Subsidiaries and any officer, director or
employee of the Company or any of its Subsidiaries specified in Section 4.09(f)
of the Disclosure Letter.
(b) The Company shall take, or cause to be taken, all action
necessary, as promptly hereafter as reasonably practicable, to amend any plan
maintained by the Company or any of its Subsidiaries to eliminate, as of the
date hereof, all provisions for the purchase of Shares directly from the Company
or any of its Subsidiaries or securities of any Subsidiary.
(c) Parent will, and will cause the Surviving Corporation to, cause
service rendered by employees of the Company and its Subsidiaries prior to the
Effective Time to be taken into account for vesting and eligibility purposes
under employee benefit plans of Parent, the Surviving Corporation and its
Subsidiaries, to the same extent as such service was taken into account under
the corresponding plans of the Company and its Subsidiaries for those purposes.
Employees of the Company and its Subsidiaries will not be subject to any pre-
existing condition limitation under any health plan of Parent, the Surviving
Corporation or its Subsidiaries for any condition for which they would have been
entitled to coverage under the corresponding plan of the Company or its
Subsidiaries in which they participated prior to the Effective Time. Parent
will, and will cause the Surviving Corporation and its Subsidiaries, to give
such employees credit under such plans for co-payments made and deductibles
satisfied prior to the Effective Time.
(d) No later than two business days prior to its distribution, the
Company and its Subsidiaries shall provide Parent and Purchaser with a copy of
any communication intended to be made to any of their respective employees
relating to the transactions contemplated hereby, and will provide an
opportunity for Parent and Purchaser to make reasonable revisions thereto.
SECTION 6.07 Takeover Laws. The Company shall, upon the request of
-------------
Parent or Purchaser, take all reasonable steps to exclude the applicability of,
or to assist in any challenge by Parent or Purchaser to the validity, or
applicability to the Offer, the Merger or any other transaction contemplated by
this Agreement or the Shareholder Option Agreement of, any Takeover Laws.
SECTION 6.08 Proxy Statement. Unless the Merger is consummated in
---------------
accordance with Section 180.1104 of the WBCL as contemplated by Section 2.09,
the Company shall prepare and file with the SEC, subject to the prior review and
approval of Parent and Purchaser (which approval shall not be unreasonably
withheld), as soon as practicable after the consummation of the Offer, a
preliminary proxy or information statement (the "Preliminary Proxy Statement")
---------------------------
relating to the Merger as required by the Exchange Act and the rules and
31
regulations thereunder, with respect to the transactions contemplated hereby.
The Company shall obtain and furnish the information required to be included in
the Preliminary Proxy Statement, shall provide Parent and Purchaser with, and
consult with Parent and Purchaser regarding, any comments that may be received
from the SEC or its staff with respect thereto, shall, subject to the prior
review and approval of Parent and Purchaser (which approval shall not be
unreasonably withheld), respond promptly to any such comments made by the SEC or
its staff with respect to the Preliminary Proxy Statement, shall cause the Proxy
Statement to be mailed to the Company's shareholders at the earliest practicable
date and shall use its commercially reasonable efforts to obtain the necessary
approval of the Merger by its shareholders.
SECTION 6.09 Notification of Certain Matters. The Company shall give
-------------------------------
prompt notice to Parent and Purchaser, and Parent or Purchaser, as the case may
be, shall give prompt notice to the Company, of the occurrence, or non-
occurrence, of any event the occurrence, or non-occurrence, of which is likely
(a) to cause any representation or warranty of such party contained in this
Agreement (disregarding any materiality qualification contained therein) to be
untrue or inaccurate in any material respect at or prior to the Effective Time
and (b) to result in any material failure of such party to comply with or
satisfy any covenant, condition or agreement to be complied with or satisfied
hereunder (including the conditions set forth in Exhibit A); provided, however,
-------- -------
that the delivery of any notice pursuant to this Section 6.09 shall not limit or
otherwise affect the remedies available hereunder to any of the parties
receiving such notice.
SECTION 6.10 Subsequent Filings. Until the Effective Time, the
------------------
Company will timely file with the SEC each form, report and document required to
be filed by the Company under the Exchange Act and will promptly deliver to
Parent and Purchaser copies of each such report filed with the SEC. As of their
respective dates, none of such reports shall contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading. The audited consolidated financial
statements and unaudited interim financial statements of the Company included in
such reports shall be prepared in accordance with generally accepted accounting
principles in the United States applied on a consistent basis (except as may be
indicated in the notes thereto) and shall fairly present the financial position
of the Company and its consolidated Subsidiaries as at the dates thereof and the
results of their operations and changes in financial position for the periods
then ended.
SECTION 6.11 Press Releases. Parent, Purchaser and the Company will
--------------
consult with each other before issuing any press release or otherwise making any
public statements with respect to the Offer or the Merger or this Agreement and
shall not issue any such press release or make any such public statement prior
to such consultation (and affording the other party or parties an opportunity to
comment thereon), except as may be required by applicable law or the rules and
regulations of The Nasdaq Stock Market, the New York Stock Exchange or other
securities stock exchange or other quotation system on which the securities of
Parent or the Company are listed or quoted as the case may be.
32
ARTICLE VII
CONDITIONS TO CONSUMMATION OF THE MERGER
SECTION 7.01 Conditions to Each Party's Obligation to Effect the
---------------------------------------------------
Merger'. The respective obligations of each party to effect the Merger are
------
subject to the satisfaction or waiver, where permissible, prior to the proposed
Effective Time, of the following conditions:
(a) unless the Merger is consummated pursuant to Section 180.1104 of
the WBCL as contemplated by Section 2.09, the plan of merger (as such term
is used in Section 180.1101 of the WBCL) contained in this Agreement shall
have been adopted by the affirmative vote of the shareholders of the
Company required by and in accordance with applicable law;
(b) all necessary waiting periods under (i) the HSR Act applicable to
the Merger and (ii) any non-United States competition or antitrust laws
which Purchaser determines, in its reasonable discretion, are applicable to
this Agreement and the transactions contemplated hereby, shall have expired
or been terminated;
(c) no statute, rule, regulation, executive order, judgment, decree
or injunction shall have been enacted, entered, issued, promulgated or
enforced by any court or Governmental Entity against Parent, Purchaser or
the Company and be in effect that prohibits or restricts the consummation
of the Merger or makes such consummation illegal (each party agreeing to
use all commercially reasonable efforts to have such prohibition lifted);
and
(d) Purchaser shall have accepted for purchase and paid for the
Shares tendered pursuant to the Offer in accordance with the terms of this
Agreement (as the same may be amended from time to time).
ARTICLE VIII
TERMINATION; AMENDMENT; WAIVER
SECTION 8.01 Termination. This Agreement may be terminated and the
-----------
Merger may be abandoned at any time (notwithstanding approval thereof by the
shareholders of the Company) prior to the Effective Time (with any termination
by Parent also being an effective termination by Purchaser):
(a) by mutual written consent of the Company and Parent;
(b) by Parent or the Company if any court of competent jurisdiction
or other Governmental Entity shall have issued an order, decree or ruling,
or taken any other action restraining, enjoining or otherwise prohibiting
any of the transactions contemplated by this Agreement or the Shareholder
Option Agreement and such order, decree, ruling or other action shall have
become final and non-appealable;
33
(c) by the Company if (i) Purchaser fails to commence the Offer in
violation of Section 1.01 hereof, (ii) Purchaser shall not have accepted
for payment and paid for Shares pursuant to the Offer in accordance with
the terms thereof on or before January 10, 2000 or (iii) Purchaser fails to
purchase validly tendered Shares in violation of the terms of this
Agreement;
(d) by Parent if due to an occurrence or circumstance which would
result in a failure to satisfy any of the Offer Conditions, Purchaser shall
have (i) not commenced the Offer within the time required by Regulation 14D
under the Exchange Act, (ii) terminated the Offer without purchasing any
Shares pursuant to the Offer or (iii) failed to accept for payment Shares
pursuant to the Offer prior to January 10, 2000;
(e) by the Company, prior to the purchase of Shares pursuant to the
Offer, if (i) the Company has complied with its obligations under Section
6.02, (ii) the Company has given Parent and Purchaser at least three
business days advance notice of its intention to accept or recommend a
Superior Proposal and of all of the terms and conditions of such Superior
Proposal, (iii) the Company's Board of Directors, after taking into account
any modifications to the terms of the Offer and the Merger proposed by
Parent and Purchaser after receipt of such notice, continues to believe
such Acquisition Proposal constitutes a Superior Proposal and (iv) the
Board of Directors of the Company, after consultation with outside legal
counsel to the Company, determines in good faith that failure to do so
would result in a breach of the fiduciary duty of the Board of Directors of
the Company to the shareholders of the Company under applicable law;
provided that the termination described in this Section 8.01(e) shall not
--------
be effective unless and until the Company shall have paid to Parent all of
the fees and expenses described in Section 8.02 including, without
limitation, the Termination Fee; or
(f) by Parent, prior to the purchase of Shares pursuant to the Offer,
if the Company breaches any of its covenants in Sections 6.02 or the Board
of Directors shall have resolved to effect any of the actions referred to
in Section 6.02(d).
SECTION 8.02 Effect of Termination. If this Agreement is terminated
---------------------
and the Merger is abandoned pursuant to Section 8.01 hereof, this Agreement,
except for the provisions of Sections 6.03(b), 8.02, 8.03 and Article IX hereof,
shall forthwith become void and have no effect, without any liability on the
part of any party or its directors, officers, employees or shareholders.
Nothing in this Section 8.02 shall relieve any party to this Agreement of
liability for any breach of this Agreement.
SECTION 8.03 Fees and Expenses. (a) Whether or not the Merger is
-----------------
consummated, except as otherwise specifically provided herein, all costs and
expenses incurred in connection with the Offer, this Agreement and the
transactions contemplated by this Agreement shall be paid by the party incurring
such expenses.
(b) In the event that this Agreement is terminated pursuant to (i)
Section 8.01(e) or 8.01(f) or (ii) Section 8.01(b), 8.01(c)(ii) or 8.01(d) and
(in the case of clause (ii) only) either (A) prior to such termination an
Acquisition Proposal shall have been made or publicly announced or (B) within 12
months thereafter an Acquisition Proposal shall have been
34
consummated, then the Company shall reimburse Parent for the out-of-pocket fees
and expenses of Parent and the Purchaser (including printing fees, filing fees
and fees and expenses of its legal and financial advisors) related to the Offer,
this Agreement, the transactions contemplated hereby and any related financing
up to a maximum of $750,000 (seven hundred and fifty thousand dollars)
(collectively "Expenses") and pay Parent a termination fee of $4,000,000 million
--------
(four million dollars) (the "Termination Fee") in immediately available funds by
---------------
wire transfer to an account designated by Parent. If such amounts become payable
pursuant to clause (i) or (ii)(A) of this Section 8.03(b), they shall be payable
simultaneously with such termination (in the case of a termination by the
Company) or within one business day thereafter (in the case of a termination by
Parent). If such amounts become payable pursuant to clause (ii)(B) of this
Section 8.03(b), they shall be payable simultaneously with completion of such
Acquisition Proposal.
(c) Without limiting other remedies available to Parent or Purchaser
under this Agreement or otherwise, in the event this Agreement is terminated
pursuant to Section 8.01(c)(ii) or Section 8.01(d) as a result of the failure to
satisfy the conditions set forth in paragraph (f) of Exhibit A, then the Company
shall promptly (and in any event with one business day after such termination)
reimburse Parent for Expenses in immediately available funds by wire transfer to
an account designated by Parent.
(d) The prevailing party in any legal action undertaken to enforce
this Agreement or any provision hereof shall be entitled to recover from the
other party the costs and expenses (including attorneys' and expert witness
fees) incurred in connection with such action.
SECTION 8.04 Amendment. To the extent permitted by applicable law,
---------
this Agreement may be amended by action taken by or on behalf of the Boards of
Directors of the Company, Parent and Purchaser, subject in the case of the
Company to Section 1.04(b), at any time before or after adoption of this
Agreement by the shareholders of the Company but, after any such shareholder
approval, no amendment shall be made which decreases the Merger Consideration or
which adversely affects the rights of the Company's shareholders hereunder
without the approval of the shareholders of the Company. This Agreement may not
be amended, changed, supplemented or otherwise modified except by an instrument
in writing signed on behalf of all of the parties.
SECTION 8.05 Extension; Waiver; Remedies. (a) At any time prior to
---------------------------
the Effective Time, the parties hereto, by action taken by or on behalf of the
respective Boards of Directors of the Company, Parent and Purchaser, subject in
the case of the Company to Section 1.04(b), may (i) extend the time for the
performance of any of the obligations or other acts of the other parties hereto,
(ii) waive any inaccuracies in the representations and warranties contained
herein by any other applicable party or in any document, certificate or writing
delivered pursuant hereto by any other applicable party or (iii) waive
compliance with any of the agreements or conditions contained herein. Any
agreement on the part of any party to any such extension or waiver shall be
valid only if set forth in an instrument in writing signed on behalf of such
party.
(b) All rights, powers and remedies provided under this Agreement or
otherwise available in respect hereof at law or in equity shall be cumulative
and not alternative, and the exercise of any thereof by any party shall not
preclude the simultaneous or later exercise of any
35
other such right, power or remedy by such party. The failure of any party hereto
to exercise any rights, power or remedy provided under this Agreement or
otherwise available in respect hereof at law or in equity, or to insist upon
compliance by any other party hereto with its obligations hereunder, and any
custom or practice of the parties at variance with the terms hereof, shall not
constitute a waiver by such party of its right to exercise any such or other
right, power or remedy or to demand such compliance.
ARTICLE IX
MISCELLANEOUS
SECTION 9.01 Survival of Representations and Warranties. The
------------------------------------------
representations and warranties made in Articles IV and V shall not survive
beyond the Effective Time. This Section 9.01 shall not limit any covenant or
agreement of the parties hereto which by its terms contemplates performance
after the Effective Time.
SECTION 9.02 Entire Agreement; Assignment. This Agreement, together
----------------------------
with the Disclosure Letter and the Confidentiality Agreement, constitutes the
entire agreement between the parties with respect to subject matter hereof and
supersedes all other prior agreements and understandings, both written and oral,
between the parties with respect to subject matter hereof. The Agreement shall
not be assigned by any party by operation of law or otherwise without the prior
written consent of the other parties, provided, that Parent or Purchaser may
--------
assign any of their respective rights and obligations to any direct or indirect
Subsidiary of Parent, but no such assignment shall relieve Parent or Purchaser,
as the case may be, of its obligations hereunder.
SECTION 9.03 Jurisdiction. Each of the parties hereto (a) consents
------------
to submit itself to the personal jurisdiction of any New York state court
located in the Borough of Manhattan, City of New York or any Federal court
located in such Borough in the event any dispute arises out of this Agreement or
any transaction contemplated by this Agreement, (b) agrees that it will not
attempt to deny or defeat such personal jurisdiction by motion or other request
for leave from any such court, (c) agrees that it will not bring any action
relating to this Agreement or any transaction contemplated by this Agreement in
any court other than any such court and (d) waives any right to trial by jury
with respect to any action related to or arising out of this Agreement or any
transaction contemplated by this Agreement. The parties irrevocably and
unconditionally waive any objection to the laying of venue of any action, suit
or proceeding arising out of this Agreement or the transactions contemplated
hereby in the courts of the State of New York located in the Borough of
Manhattan, City of New York or in any Federal court located in such Borough, and
hereby further irrevocably and unconditionally waive and agree not to plead or
claim in any such court that any such action, suit or proceeding brought in any
such court has been brought in an inconvenient forum.
SECTION 9.04 Validity. Whenever possible, each provision or portion
--------
of any provision of this Agreement will be interpreted in such manner as to be
effective and valid under applicable law but if any provision or portion of any
provision of this Agreement is held to be invalid, illegal or unenforceable in
any respect under any applicable law or rule in any jurisdiction such
invalidity, illegality or unenforceability will not affect any other provision
or
36
portion of any provision in such jurisdiction, and this Agreement will be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision or portion of any provision had never been
contained herein.
SECTION 9.05 Notices. All notices, requests, claims, demands and
-------
other communications hereunder shall be given (and shall be deemed to have been
duly received if given) by hand delivery in writing or by facsimile transmission
with confirmation of receipt, as follows:
if to Parent or Purchaser:
United Technologies Corporation
United Technologies Building
0 Xxxxxxxxx Xxxxx
Xxxxxxxx, Xxxxxxxxxxx 00000
Attention: General Counsel
Facsimile: 000-000-0000
and to:
Cleary, Gottlieb, Xxxxx & Xxxxxxxx
Xxx Xxxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxxxxxx X. Xxxxxx
Facsimile: 212-225-3999
if to the Company:
Xxxx Industries, Inc.
0000 Xxxxxxxx Xxxxx, Xxxxx 000
Xxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxx
Facsimile: 000-000-0000
With a copy to:
Xxxxxxx & Xxxxx LLP
000 X. Xxxxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000-0000
Attention: Xxxxxx X. Xxxxxxxx
Facsimile: 414-271-3552
or to such other address as the person to whom notice is given may have
previously furnished to the others in writing in the manner set forth above.
37
SECTION 9.06 Governing Law. This Agreement shall be governed by and
-------------
construed in accordance with the laws of the State of New York, except in so far
as mandatory provisions of the WBCL apply to the Merger.
SECTION 9.07 Descriptive Headings. The descriptive headings herein
--------------------
are inserted for convenience of reference only and are not intended to be part
of or to affect the meaning or interpretation of this Agreement.
SECTION 9.08 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, is intended to confer upon any other Person any
rights or remedies of any nature whatsoever under or by reason of this Agreement
except for Section 6.05 (which is intended to be for the benefit of the Persons
referred to therein, and may be enforced by any such Persons).
SECTION 9.09 Counterparts. This Agreement may be executed in
------------
counterparts (by facsimile or otherwise), each of which shall be deemed to be an
original, but all of which, taken together, shall constitute one and the same
agreement.
SECTION 9.10 Certain Definitions.
-------------------
(a) "beneficially owned" or "beneficial ownership" with respect to
------------------ --------------------
any securities shall mean having "beneficial ownership" of such securities as
determined pursuant to Rule 13d-3 under the Exchange Act.
(b) "Material Adverse Effect" shall mean any material and adverse
-----------------------
effect on any of the condition (financial or otherwise), business, properties,
assets, liabilities, results of operations or prospects of the Company and its
Subsidiaries taken as a whole.
(c) "Person" shall mean any individual, corporation, limited
------
liability company, partnership, association, trust, estate or other entity or
organization.
(d) "Subsidiary" shall mean, when used with reference to an entity,
----------
any other entity of which securities or other ownership interests having
ordinary voting power to elect a majority of the board of directors or other
persons performing similar functions, or a majority of the outstanding voting
securities of which, are owned directly or indirectly by such entity.
(e) The term "affiliate" shall have the meaning given to such term in
---------
Rule 12b-2 under the Exchange Act.
(f) The term "associate" shall have the meaning given to such term in
---------
Rule 12b-2 under the Exchange Act.
(g) The term "hereby" shall be deemed to refer to this Agreement in
------
its entirety, rather than to any Article, Section, or other portion of this
Agreement.
(h) The term "including" shall be deemed to be followed by the phrase
---------
"without limitation."
38
(i) The term "the transactions contemplated hereby" shall include the
------------------------------------
making and consummation of the Offer, the execution of the Shareholder Option
Agreement and the exercise by Parent and Purchaser of the Option and the
acquisition of Shares pursuant thereto and the exercise by Parent or Purchaser
of any other rights thereunder, and consummation of the Merger.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]
39
IN WITNESS WHEREOF, each of the parties has caused this Agreement to
be executed on its behalf by its officers thereunto duly authorized, all at or
on the day and year first above written.
UNITED TECHNOLOGIES CORPORATION
By: /s/ XXXX X. XXXXXX
----------------------------
Name: Xxxx X. Xxxxxx
Title: President & Chief Operating Officer
SPHERE CORPORATION
By: /s/ XXX XXXXXXX
----------------------------
Name: Xxx Xxxxxxx
Title: President and Director
XXXX INDUSTRIES, INC.
By: /s/ XXXXXXX X. XXXX
----------------------------
Name: Xxxxxxx X. Xxxx
Title: President and Chief Executive Officer
40
EXHIBIT A
---------
CONDITIONS TO THE OFFER
-----------------------
Capitalized terms used in this Exhibit A and not otherwise defined
herein shall have the meanings assigned to them in the Agreement to which it is
attached (the "Merger Agreement").
----------------
Notwithstanding any other provision of the Offer, Purchaser shall not
be required to accept for payment, purchase or pay for any Shares tendered in
connection with the Offer and may terminate or, subject to the terms of the
Merger Agreement, amend the Offer, if (i) there shall not be validly tendered
and not properly withdrawn prior to the expiration date for the Offer (the
"Expiration Date") that number of Shares which, together with any Shares
----------------
beneficially owned by Purchaser or Parent (including Shares which Purchaser has
the immediate right to acquire under the Shareholder Option Agreement),
represents at least 75% of the total number of outstanding Shares on a fully
diluted basis, (ii) any applicable waiting period under the HSR Act shall not
have expired or been terminated, or (iii) at any time on or after the date of
the Merger Agreement and prior to the Expiration Date, any of the following
conditions exist:
(a) there shall have been any action taken, or any statute, rule,
regulation, legislation, interpretation, judgment, order or injunction,
proposed, sought, promulgated, enacted, entered, enforced, issued, amended
or deemed applicable to Parent, Purchaser, the Company, any other affiliate
of Parent or the Company, the Offer or the Merger, that is reasonably
likely, directly or indirectly, to (1) make the acceptance for payment of,
or payment for or purchase of some or all of the Shares pursuant to the
Offer illegal, or otherwise restrict or prohibit or make materially more
costly the consummation of the Offer or the Merger, (2) result in a
significant delay in or restrict the ability of Purchaser to accept for
payment, pay for or purchase some or all of the Shares pursuant to the
Offer or to effect the Merger, (3) render Purchaser unable to accept for
payment or pay for or purchase some or all of the Shares pursuant to the
Offer, (4) impose material limitations on the ability of Parent, Purchaser
or any of their respective Subsidiaries or affiliates to acquire or hold,
transfer or dispose of, or effectively to exercise all rights of ownership
of, some or all of the Shares including the right to vote the Shares
purchased by it pursuant to the Offer on an equal basis with all other
Shares on all matters properly presented to the Shareholders of the
Company, (5) require the divestiture by Parent, Purchaser or any of their
respective Subsidiaries or affiliates of any Shares, or require Purchaser,
Parent, the Company, or any of their respective Subsidiaries or affiliates
to dispose of or hold separate all or any material portion of their
respective businesses, assets or properties or impose any material
limitations on the ability of any of such entities to conduct their
respective businesses or own such assets, properties or Shares or on the
ability of Parent or Purchaser to conduct the business of the Company and
its Subsidiaries and own the assets and properties of the Company and its
Subsidiaries, (6) impose any material limitations on the ability of Parent,
Purchaser or any of their respective Subsidiaries or affiliates effectively
to control the business or operations of the Company, Parent, Purchaser or
any of their respective Subsidiaries or affiliates or (7) otherwise
materially adversely affect Parent, Purchaser, the Company or any of their
respective Subsidiaries or affiliates, or their business, assets,
liabilities, condition (financial or otherwise), results of operations or
A-1
prospects, or the value of the Shares or otherwise make consummation of the
Offer or the Merger unduly burdensome;
(b) there shall have been threatened, instituted or pending any
action, proceeding or counterclaim by or before any Governmental Entity,
challenging the making of the Offer or the acquisition by Purchaser of the
Shares pursuant to the Offer or the consummation of the Merger, or seeking
to obtain any material damages, or seeking to, directly or indirectly,
result in any of the consequences referred to in clauses (1) through (7) of
paragraph (a) above;
(c) there shall have occurred (1) any general suspension of, or
limitation on prices for, trading in securities on any national securities
exchange or in the over-the-counter market in the United States, (2) the
declaration of any banking moratorium or any suspension of payments in
respect of banks or any limitation (whether or not mandatory) on the
extension of credit by lending institutions in the United States, (3) the
commencement of a war, armed hostilities or any other international or
national calamity involving the United States or (4) in the case of any of
the foregoing existing at the time of the execution of the Merger
Agreement, a material acceleration or worsening thereof;
(d) any Person or "group" (as such term is used in Section 13(d)(3)
of the Exchange Act) other than Parent, Purchaser or the Option Grantors or
any of their respective affiliates shall have become the beneficial owner
(as that term is used in Rule 13d-3 under the Exchange Act) of more than
25% of the outstanding Shares;
(e) there shall have occurred any change, condition, event or
development that, individually or in the aggregate, has had or is
reasonably likely to have, a Material Adverse Effect;
(f) the Company shall have breached or failed to comply in any
material respect with any of its obligations, covenants, or agreements
under the Merger Agreement or any representation or warranty of the Company
contained in the Merger Agreement that is qualified as to materiality shall
not be true and correct, or any such representation or warranty that is not
so qualified shall not be true and correct and has had or is reasonably
likely to have a Material Adverse Effect, in each case either as of when
made or at and as of any time thereafter; or
(g) the Merger Agreement shall have been terminated pursuant to its
terms or shall have been amended pursuant to its terms to provide for such
termination or amendment of the Offer;
which, in the good faith judgment of Parent or Purchaser, in any case, and
regardless of the circumstances (excluding any direct action or inaction by
Parent or Purchaser or any of their affiliates which to Parent's and Purchaser's
knowledge is reasonably likely to cause any of the above conditions to exist)
giving rise to any such condition, makes it inadvisable to proceed with the
Offer or with acceptance for payment or payment for Shares.
The foregoing conditions are for the sole benefit of Parent and
Purchaser and may be asserted regardless of the circumstances (excluding any
direct action or inaction by Parent or
A-2
Purchaser or any of their affiliates which to Parent's or Purchaser's knowledge
is reasonably likely to cause such condition to exist) or waived by Parent or
Purchaser in whole or in part at any time or from time to time in its reasonable
discretion subject to the terms and conditions of the Merger Agreement. The
failure of Parent or Purchaser at any time to exercise any of the foregoing
rights shall not be deemed a waiver of any such right and each such right shall
be deemed an ongoing right which may be asserted at any time and from time to
time. Any determination by Parent or Purchaser concerning the events described
above will be final and binding on all parties.
A-3
