EXECUTION COPY
AGREEMENT AND PLAN OF MERGER
AMONG
UNITED TECHNOLOGIES CORPORATION
HSSAIL INC.
AND
SUNDSTRAND CORPORATION
February 21, 1999
TABLE OF CONTENTS
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Page
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ARTICLE I
THE MERGER
1.1 The Merger....................................................... 1
1.2 Effective Time................................................... 1
1.3 Closing of the Merger............................................ 2
1.4 Effects of the Merger............................................ 2
1.5 Certificate of Incorporation and By-laws of the
Surviving Corporation ....................................... 2
1.6 Directors and Officers of the Surviving Corporation.............. 2
ARTICLE II
CONVERSION OF SECURITIES; EXCHANGE OF CERTIFICATES
2.1 Conversion of Capital Stock...................................... 2
2.2 Exchange Ratio; Fractional Shares; Adjustments................... 3
2.3 Exchange of Certificates......................................... 5
(a) Exchange Agent .............................................. 5
(b) Exchange Procedures.......................................... 5
(c) Distributions with Respect to Unexchanged Shares............. 6
(d) No Further Ownership Rights in Company Common Stock.......... 6
(e) Termination of Exchange Fund................................. 6
(f) No Liability................................................. 6
(g) Investment of Exchange Fund.................................. 7
(h) Withholding Rights........................................... 7
2.4 Stock Options and Other Stock Awards............................. 7
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
3.1 Organization, Qualification, Etc................................. 9
3.2 Capitalization................................................... 10
3.3 Corporate Authority Relative to this Agreement; No Violation;
Approvals ................................................... 11
3.4 Reports and Financial Statements................................. 12
3.5 No Undisclosed Liabilities....................................... 13
3.6 Permits; No Violation of Law..................................... 13
3.7 Environmental Laws and Regulations............................... 13
3.8 Employee Benefits ............................................... 16
3.9 Certain Contracts................................................ 17
3.10 Intellectual Property............................................ 18
3.11 Absence of Certain Changes or Events............................. 18
3.12 Investigations; Litigation....................................... 19
3.13 Proxy Statement; Registration Statement; Other Information....... 19
3.14 Section 203 of DGCL; Rights Agreement............................ 19
3.15 Board Action..................................................... 20
3.16 Tax Matters...................................................... 20
3.17 Labor Matters.................................................... 21
3.18 Year 2000 Compliance............................................. 21
3.19 Opinion of Financial Advisor..................................... 21
3.20 Required Vote of the Company Stockholders........................ 21
3.21 Brokers.......................................................... 21
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
4.1 Organization, Qualification, Etc................................. 22
4.2 Capitalization................................................... 22
4.3 Corporate Authority Relative to this Agreement; No
Violation; Approvals ........................................ 23
4.4 Reports and Financial Statements................................. 24
4.5 Absence of Certain Changes or Events............................. 24
4.6 Proxy Statement; Registration Statement; Other Information....... 24
4.7 Board Action..................................................... 25
4.8 Lack of Ownership of Company Common Stock........................ 25
4.9 No Required Vote of Parent Stockholders.......................... 25
4.10 Brokers.......................................................... 25
ARTICLE V
COVENANTS RELATING TO CONDUCT OF BUSINESS
5.1 Conduct of Business by the Company Prior to the Effective Time... 25
5.2 Advice of Changes................................................ 28
5.3 Conduct of Parent's Operations................................... 28
ARTICLE VI
ADDITIONAL AGREEMENTS
6.1 Regulatory Matters............................................... 28
6.2 Access to Information............................................ 30
6.3 Company Stockholders Meeting..................................... 30
6.4 Legal and Other Conditions to Merger............................. 31
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6.5 Affiliates of the Company........................................ 31
6.6 Stock Exchange Listing........................................... 31
6.7 Employee Benefits................................................ 31
6.8 Indemnification; Directors' and Officers' Insurance.............. 33
6.9 Additional Agreements............................................ 34
6.10 Public Announcements............................................. 34
6.11 Merger Sub....................................................... 34
6.12 Subsequent Financial Statements.................................. 34
6.13 No Solicitation.................................................. 34
ARTICLE VII
CONDITIONS PRECEDENT
7.1 Conditions to Each Party's Obligation to Effect the Merger....... 36
7.2 Conditions to Obligations of the Company......................... 37
7.3 Conditions to Obligations of Parent.............................. 37
ARTICLE VIII
TERMINATION AND AMENDMENT
8.1 Termination...................................................... 38
8.2 Effect of Termination............................................ 39
8.3 Amendment; Extension; Waiver..................................... 40
ARTICLE IX
GENERAL PROVISIONS
9.1 Nonsurvival of Representations, Warranties and Agreements........ 41
9.2 Expenses......................................................... 41
9.3 Notices.......................................................... 41
9.4 Interpretation; Certain Definitions.............................. 42
9.5 Counterparts..................................................... 43
9.6 Entire Agreement................................................. 43
9.7 Governing Law.................................................... 43
9.8 Consent to Jurisdiction; Venue................................... 43
9.9 Specific Performance............................................. 43
9.10 Severability..................................................... 44
9.11 Assignment; Third Party Beneficiaries............................ 44
Exhibit A - Form of Affiliate Letter
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AGREEMENT AND PLAN OF MERGER
This Agreement and Plan of Merger (this "Agreement"), dated as of
February 21, 1999, is among United Technologies Corporation, a Delaware
corporation ("Parent"), HSSail Inc., a Delaware corporation and a wholly owned
direct Subsidiary (as defined herein) of Parent ("Merger Sub"), and Sundstrand
Corporation, a Delaware corporation (the "Company").
WHEREAS, the respective Boards of Directors of Parent, Merger Sub and
the Company have determined that it is advisable and in the best interests of
their respective stockholders for the Company to merge with and into Merger Sub
(the "Merger," unless Parent makes a Cash Election (as defined herein) pursuant
to Section 2.1(e), in which case the "Merger" shall mean the merger of Merger
Sub with and into the Company) upon the terms and subject to the conditions of
this Agreement and in accordance with the Delaware General Corporation Law (the
"DGCL");
WHEREAS, for federal income tax purposes, it is intended, unless
Parent makes a Cash Election, that the Merger qualify as a reorganization within
the meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended
(the "Code");
NOW, THEREFORE, in consideration of the mutual covenants,
representations, warranties and agreements contained herein, and intending to be
legally bound hereby, the parties agree as follows:
ARTICLE I
THE MERGER
1.1 THE MERGER. Upon the terms and subject to the conditions set forth in
this Agreement, and in accordance with the DGCL, at the Effective Time (as
defined herein), except as set forth below, the Company shall be merged with and
into Merger Sub and as a result of the Merger, the separate corporate existence
of the Company shall cease and Merger Sub shall continue as the surviving
corporation of the Merger (the "Surviving Corporation") and shall succeed to and
assume all the rights and obligations of the Company in accordance with the
DGCL; provided, however, that in the event that Parent makes a Cash Election
pursuant to Section 2.1(e), Merger Sub shall be merged with and into the Company
and as a result of the Merger the separate corporate existence of Merger Sub
shall cease and the Company shall continue as the Surviving Corporation and
shall succeed to and assume all the rights and obligations of Merger Sub in
accordance with the DGCL.
1.2 EFFECTIVE TIME. No later than two business days (or such other date and
time as the parties shall agree) after the satisfaction or, if permissible,
waiver of the conditions set forth in Article VII (the "Closing Date"), the
parties hereto shall cause the Merger to be consummated by filing with the
Secretary of State of the State of Delaware (the "Delaware Secretary of State")
a certificate of merger (the "Certificate of Merger"), in such form as required
by, and executed in accordance with the relevant provisions of, the DGCL (the
date and time of such filing or, if
another date and time is specified in such filing, such specified date and time,
the "Effective Time").
1.3 CLOSING OF THE MERGER. The closing of the Merger (the "Closing") shall
take place at 10:00 a.m. on the Closing Date at the offices of Wachtell, Lipton,
Xxxxx & Xxxx, 00 Xxxx 00xx Xxxxxx, Xxx Xxxx, Xxx Xxxx unless another place, time
or date is agreed to by the parties hereto.
1.4 EFFECTS OF THE MERGER. The Merger shall have the effects set forth in
Section 259 of the DGCL.
1.5 CERTIFICATE OF INCORPORATION AND BY-LAWS OF THE SURVIVING CORPORATION.
If Merger Sub continues as the Surviving Corporation of the Merger, at the
Effective Time, (i) the Certificate of Incorporation of Merger Sub as in effect
immediately prior to the Effective Time (except that Article I of the
Certificate of Incorporation of the Surviving Corporation shall read as follows:
"The name of the company is "Xxxxxxxx Sundstrand Corporation") shall be the
Certificate of Incorporation of the Surviving Corporation, until thereafter
amended in accordance with the DGCL, and (ii) the By-laws of Merger Sub, as in
effect immediately prior to the Effective Time, shall be the By-laws of the
Surviving Corporation, until thereafter amended in accordance with the DGCL. If
the Company continues as the Surviving Corporation of the Merger, (i) the
Certificate of Incorporation of the Company shall be amended at the Effective
Time to read in its entirety as the Certificate of Incorporation of Merger Sub
as in effect immediately prior to the Effective Time (except that Article I of
the Certificate of Incorporation of the Surviving Corporation shall read as
follows: "The name of the company is "Xxxxxxxx Sundstrand Corporation"), and
shall be the Certificate of Incorporation of the Surviving Corporation, until
thereafter amended in accordance with the DGCL; and (ii) the By-laws of Merger
Sub, as in effect immediately prior to the Effective Time, shall be the By-laws
of the Surviving Corporation, until amended in accordance with the DGCL.
1.6 DIRECTORS AND OFFICERS OF THE SURVIVING CORPORATION. The directors of
Merger Sub immediately prior to the Effective Time shall be the initial
directors of the Surviving Corporation, each to hold office in accordance with
the Certificate of Incorporation and By-laws of the Surviving Corporation. The
officers of Merger Sub immediately prior to the Effective Time shall be the
initial officers of the Surviving Corporation, each to hold office in accordance
with the Certificate of Incorporation and the By-laws of the Surviving
Corporation.
ARTICLE II
CONVERSION OF SECURITIES; EXCHANGE OF CERTIFICATES
2.1 CONVERSION OF CAPITAL STOCK. At the Effective Time, by virtue of the
Merger and without any action on the part of Parent, Merger Sub, the Company or
holders of any of the following securities:
(a) Each share of common stock, $0.01 par value, of Merger Sub ("Merger Sub
Common Stock") issued and outstanding immediately prior to the Effective Time
shall be
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converted into one share of common stock, $0.01 par value, of the Surviving
Corporation, and the Surviving Corporation shall be a wholly owned Subsidiary of
Parent. Such newly issued shares shall thereafter constitute all of the issued
and outstanding capital stock of the Surviving Corporation.
(b) Each share of capital stock of the Company held in the treasury of the
Company shall be cancelled and retired and no payment shall be made in respect
thereof.
(c) Subject to Section 2.1(e), each outstanding share of common stock,
$0.50 par value, of the Company ("Company Common Stock") shall be converted into
and become the right to receive (i) subject to Section 2.2, a fraction of a
share of common stock, par value $1.00 per share, of Parent ("Parent Common
Stock") equal to the Exchange Ratio (as defined in Section 2.2) (the "Stock
Consideration") and (ii) cash (the "Cash Consideration," and the Stock
Consideration collectively referred to as the "Merger Consideration") of $35.
(d) Each outstanding share of Company Common Stock the holder of which has
perfected his right to dissent under applicable law and has not effectively
withdrawn or lost such right as of the Effective Date (the "Dissenting Shares")
shall not be converted into or represent a right to receive the Merger
Consideration hereunder, and the holder thereof shall be entitled only to such
rights as are granted by applicable law. The Company shall give Parent prompt
notice upon receipt by the Company of any such written demands for payment of
the fair value of such Dissenting Shares and of withdrawals of such notice and
any other instruments provided pursuant to applicable law (any shareholder duly
making such demand, a "Dissenting Shareholder"). Any payments made in respect of
Dissenting Shares shall be made by the Surviving Corporation.
(e) If (i) the Parent Share Price (as defined herein) is equal to or less
than $112.8938 (the "Reference Price") and (ii) Parent makes a cash election
(the "Cash Election") by providing written notice to the Company of its exercise
of its cash election right under this Section 2.1(e) promptly after expiration
of the Measurement Period (as defined below), then the Merger Consideration to
be received in respect of each share of Company Common Stock shall consist
solely of the right to receive $70.00 in Cash Consideration.
2.2 EXCHANGE RATIO; FRACTIONAL SHARES; ADJUSTMENTS.
(a) EXCHANGE RATIO. The "Exchange Ratio" shall mean .2790; provided,
however, that in the event that:
(i) the product obtained by multiplying (X) .2790 by (Y) the average
of the closing price of shares of Parent Common Stock (the "Parent Share Price")
as reported on the New York Stock Exchange, Inc. ("NYSE") Composite Tape (the
"NYSE Composite Tape") on each of the ten consecutive trading days immediately
preceding the fifth trading day prior to the date of the Company Stockholders
Meeting (the "Measurement Period") is greater than $39.25, then the "Exchange
Ratio" shall mean the quotient (rounded to the nearest 1/10,000) obtained by
dividing (X) $39.25 by (Y) the Parent Share Price; or
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(ii) the product obtained by multiplying (X) .2790 by (Y) the Parent
Share Price is less than $35.00, then the "Exchange Ratio" shall mean the
quotient (rounded to the nearest 1/10,000) obtained by dividing (X) $35.00 by
(Y) the Parent Share Price.
(b) NO ISSUANCE OF FRACTIONAL SHARES.
(i) No certificates or scrip for fractional shares of Parent Common
Stock shall be issued as a result of the conversion provided for in Section
2.1(c), and such fractional share interests will not entitle the owner thereof
to vote or to any rights as a stockholder of Parent.
(ii) As promptly as practicable following the Effective Time, the
Exchange Agent (as defined herein) shall determine the excess of the number of
full shares of Parent Common Stock delivered to the Exchange Agent by Parent
pursuant to Section 2.3(a) over the aggregate number of full shares of Parent
Common Stock to be distributed to the former holders of Company Common Stock
pursuant to Section 2.3(b) (such excess being herein called the "Excess
Shares"). As soon after the Effective Time as practicable, the Exchange Agent,
as agent for the holders of the Parent Common Stock, shall sell the Excess
Shares at then prevailing prices for Parent Common Stock on the NYSE, all in the
manner provided in paragraph (iii) of this Section 2.2(b).
(iii) The sale of the Excess Shares by the Exchange Agent shall be
executed on the NYSE in round lots to the greatest extent practicable. Until the
net proceeds of such sale or sales have been distributed to the former holders
of Company Common Stock, the Exchange Agent shall hold such proceeds in trust
for the holders of such stock (the "Shares Trust"). The Surviving Corporation
shall pay all commissions, transfer taxes and other out-of-pocket transaction
costs, including the expenses and compensation of the Exchange Agent incurred in
connection with such sale of the Excess Shares. The Exchange Agent shall
determine the portion of the Shares Trust to which each former holder of Company
Common Stock shall be entitled, if any, by multiplying the amount of the
aggregate net proceeds comprising the Shares Trust by a fraction, the numerator
of which is the amount of the fractional share interest to which such former
holder of Company Common Stock is entitled and the denominator of which is the
aggregate amount of fractional share interests to which all former holders of
Company Common Stock, as applicable, are entitled.
(iv) As soon as practicable after the determination of the amount of
cash, if any, to be paid to the former holders of Company Common Stock, in lieu
of fractional share interests, the Exchange Agent shall make available such
amounts to such former holders, net of any applicable withholding tax.
(c) ADJUSTMENTS. In the event that prior to the Effective Time Parent shall
declare a stock dividend or other distribution payable in shares of Parent
Common Stock or securities convertible into shares of Parent Common Stock, or
effect a stock split, reclassification, combination or other change with respect
to shares of Parent Common Stock, the Exchange Ratio and the Reference Price set
forth in this Article II shall be adjusted to reflect such dividend,
distribution, stock split, reclassification, combination or other change.
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2.3 EXCHANGE OF CERTIFICATES.
(a) EXCHANGE AGENT. Immediately prior to the Effective Time, Parent shall
deposit with Xxxxxx Bank and Trust Company, or such other bank or trust company
designated by the Company and reasonably acceptable to Parent (the "Exchange
Agent"), for the benefit of the holders of shares of Company Common Stock (the
"Company Stockholders"), for exchange in accordance with this Section 2.3, (i)
certificates representing the aggregate Stock Consideration issuable pursuant to
Section 2.1 and (ii) cash representing the aggregate Cash Consideration issuable
pursuant to Section 2.1 (such shares of Parent Common Stock together with any
dividends or distributions with respect thereto, the Cash Consideration and the
Shares Trust, the "Exchange Fund").
(b) EXCHANGE PROCEDURES. As soon as practicable after the Effective Time,
but in no event more than three business days thereafter, the Exchange Agent
shall mail to each holder of record of a certificate or certificates which prior
thereto represented Company Common Stock (the "Certificates") (i) a letter of
transmittal (which shall specify that delivery shall be effected, and risk of
loss and title to the Certificates shall pass, only upon delivery of the
Certificates to the Exchange Agent, and shall be in such form and have such
other customary provisions as Parent may reasonably specify) and (ii)
instructions for effecting the surrender of the Certificates in exchange for the
Merger Consideration. Upon surrender of a Certificate for cancellation to the
Exchange Agent, together with a duly executed letter of transmittal, the holder
of such Certificate shall be entitled to receive in exchange therefor (i) a
certificate or certificates representing that whole number of shares of Parent
Common Stock such Company Stockholder has the right to receive pursuant to
Section 2.1 in such denominations and registered in such names as such holder
may request and/or a check representing the Cash Consideration that such Company
Stockholder has the right to receive pursuant to Section 2.1 plus (ii) the
amount of cash in lieu of fractional shares, if any, and unpaid dividends and
distributions, if any, which such Company Stockholder has the right to receive
pursuant to the provisions of this Article II, after giving effect to any
required withholding tax. The shares represented by the Certificate so
surrendered shall forthwith be cancelled. No interest will be paid or accrued on
the Merger Consideration or the cash in lieu of fractional shares, if any, and
unpaid dividends and distributions, if any, payable to Company Stockholders. In
the event of a transfer of ownership of shares of Company Common Stock that is
not registered on the transfer records of the Company, a certificate
representing the proper number of shares of Parent Common Stock, and/or a check
for the Cash Consideration that such Company Stockholder has the right to
receive pursuant to Section 2.1 plus the cash to be paid in lieu of fractional
shares, if any, and unpaid dividends and distributions, if any, may be issued to
such transferee if a Certificate held by such transferee is presented to the
Exchange Agent, accompanied by all documents required to evidence and effect
such transfer and to evidence that any applicable stock transfer taxes have been
paid. Until surrendered as contemplated by this Section 2.3, each Certificate
shall be deemed at any time after the Effective Time to represent only the right
to receive upon surrender the Merger Consideration plus the cash in lieu of
fractional shares, if any, and unpaid dividends and distributions, if any, as
provided in this Article II. If any Certificate shall have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the person claiming
such Certificate to be lost, stolen or destroyed and, if required by Parent, the
posting by such person of a bond in
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such reasonable amount as Parent may direct as indemnity against any claim that
may be made against it with respect to such Certificate, the Exchange Agent will
deliver in exchange for such lost, stolen or destroyed Certificate, a
certificate representing the proper number of shares of Parent Common Stock
and/or a check for the Cash Consideration that such Company Stockholder has the
right to receive pursuant to Section 2.1 plus the cash to be paid in lieu of
fractional shares, if any, with respect to the shares of Company Common Stock
formerly represented thereby, and unpaid dividends and distributions on shares
of Parent Common Stock, if any, as provided in this Article II.
(c) DISTRIBUTIONS WITH RESPECT TO UNEXCHANGED SHARES. Notwithstanding any
other provisions of this Agreement, no dividends or other distributions declared
or made after the Effective Time with respect to shares of Parent Common Stock
having a record date after the Effective Time shall be paid to the holder of any
unsurrendered Certificate, and no cash payment in lieu of fractional shares
shall be paid to any such holder, until the holder shall surrender such
Certificate as provided in this Section 2.3; provided that no such payments or
distributions will be made if Parent has made a Cash Election. Subject to the
effect of applicable Laws, following surrender of any such Certificate, there
shall be paid to the holder of the certificates representing whole shares of
Parent Common Stock issued in exchange therefor, without interest, (i) at the
time of such surrender, the amount of dividends or other distributions with a
record date after the Effective Time theretofore payable with respect to such
whole shares of Parent Common Stock and not paid, less the amount of any
withholding taxes that may be required thereon, and (ii) at the appropriate
payment date subsequent to surrender, the amount of dividends or other
distributions with a record date after the Effective Time but prior to surrender
and a payment date subsequent to surrender payable with respect to such whole
shares of Parent Common Stock, less the amount of any withholding taxes that may
be required thereon.
(d) NO FURTHER OWNERSHIP RIGHTS IN COMPANY COMMON STOCK. All shares of
Parent Common Stock issued and/or Cash Consideration paid upon surrender of
Certificates in accordance with the terms hereof (including any cash paid in
lieu of fractional shares) shall be deemed to have been issued and paid in full
satisfaction of all rights pertaining to such shares of Company Common Stock
represented thereby, and, as of the Effective Time, the stock transfer books of
the Company shall be closed and there shall be no further registration of
transfers on the stock transfer books of the Company of shares of Company Common
Stock outstanding immediately prior to the Effective Time. If, after the
Effective Time, Certificates are presented to the Surviving Corporation for any
reason, they shall be cancelled and exchanged as provided in this Section 2.3.
(e) TERMINATION OF EXCHANGE FUND. Any portion of the Exchange Fund that
remains undistributed to Company Stockholders one year after the date of the
mailing required by Section 2.3(b) shall be delivered to Parent, upon demand
thereby, and holders of Certificates who have not theretofore complied with this
Section 2.3 shall thereafter look only to Parent for payment of any claim to the
Merger Consideration and cash in lieu of fractional shares thereof, or dividends
or distributions, if any, in respect thereof.
(f) NO LIABILITY. None of Parent, the Surviving Corporation or the Exchange
Agent shall be liable to any person in respect of any shares of Parent Common
Stock (or dividends or
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distributions with respect thereto) or cash from the Exchange Fund delivered to
a public official pursuant to any applicable abandoned property, escheat or
similar law. If any Certificates shall not have been surrendered prior to seven
years after the Effective Time (or immediately prior to such earlier date on
which any cash, any cash in lieu of fractional shares or any dividends or
distributions with respect to whole shares of Parent Common Stock in respect of
such Certificate would otherwise escheat to or become the property of any
Governmental Entity (as defined herein), any such cash, dividends or
distributions in respect of such Certificate shall, to the extent permitted by
applicable Laws, become the property of Parent, free and clear of all claims or
interest of any person previously entitled thereto.
(g) INVESTMENT OF EXCHANGE FUND. The Exchange Agent shall invest any cash
included in the Exchange Fund, as directed by Parent, on a daily basis. Any
interest and other income resulting from such investments shall be paid to
Parent upon termination of the Exchange Fund pursuant to Section 2.3(e). In the
event the cash in the Exchange Fund shall be insufficient to fully satisfy all
of the payment obligations to be made by the Exchange Agent hereunder, then
Parent shall promptly deposit cash into the Exchange Fund in an amount which is
equal to the deficiency in the amount of cash required to fully satisfy such
payment obligations.
(h) WITHHOLDING RIGHTS. Each of the Surviving Corporation, Merger Sub and
Parent shall be entitled to deduct and withhold from the consideration otherwise
payable pursuant to this Agreement to any holder of shares of Company Common
Stock such amounts as it is required to deduct and withhold with respect to the
making of such payment under the Code and the rules and regulations promulgated
thereunder, or any provision of state, local or foreign tax law. To the extent
that amounts are so withheld by the Surviving Corporation, Merger Sub or Parent,
as the case may be, such withheld amounts shall be treated for all purposes of
this Agreement as having been paid to the holder of the shares of Company Common
Stock in respect of which such deduction and withholding was made by the
Surviving Corporation, Merger Sub or Parent, as the case may be.
2.4 STOCK OPTIONS AND OTHER STOCK AWARDS. (a) At the Effective Time, each
employee or director option to purchase shares of Company Common Stock (a
"Company Option") that is outstanding and unexercised immediately prior thereto
shall cease to represent a right to acquire shares of Company Common Stock and
shall be converted automatically into a fully vested and exercisable option to
purchase shares of Parent Common Stock (a "Parent Option") in an amount and at
an exercise price determined as provided below (and otherwise subject to the
terms of the Company's Stock Incentive Plan, Management Stock Performance Plan
or Nonemployee Director Stock Option Plan (collectively, the "Company Stock
Plans"), as applicable, under which they were issued and the agreements
evidencing grants thereunder):
(i) the number of shares of Parent Common Stock to be subject to a
Parent Option shall be equal to the product of the number of shares of Company
Common Stock subject to the Company Option immediately prior to the Effective
Time and the "Option Exchange Ratio" (as defined below), provided that any
fractional shares of Parent Common Stock resulting from such multiplication
shall be rounded to the nearest whole share; and
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(ii) the exercise price per share of Parent Common Stock under a
Parent Option shall be equal to the exercise price per share of Company Common
Stock under the original Company Option immediately prior to the Effective Time
divided by the Option Exchange Ratio, provided that such exercise price shall be
rounded to the nearest whole cent.
For purposes of this Section 2.4, the "Option Exchange Ratio" shall
mean the sum of (i) the Exchange Ratio, plus (ii) the quotient (rounded to the
nearest 1/10,000) obtained by dividing (x) $35.00 by (y) the Parent Share Price;
provided, that if the Parent makes a Cash Election, the Option Exchange Ratio
shall mean the quotient (rounded to the nearest 1/10,000) obtained by dividing
(x) $70.00 by (y) the Parent Share Price. The Company shall use its reasonable
best efforts to take all action necessary to effectuate the above adjustment
including, if applicable, making modifications under the Company Stock Plans and
obtaining consents from holders of Company Options.
(b) If any holder of a Company Option does not consent to the adjustment in
Section 2.4(a), and a Cash Election is not made by Parent, at the Effective Time
such Company Option shall be converted automatically into a fully vested and
exercisable option (a "Hybrid Parent Option") to acquire shares of Parent Common
Stock and cash in amounts and at an exercise price determined as provided below
(and otherwise subject to the terms of the Company Stock Plans, as applicable,
under which they were issued and the agreements evidencing grants thereunder):
(i) the number of shares of Parent Common Stock to be subject to a Hybrid Parent
Option shall be equal to the product of the number of shares of Company Common
Stock subject to the Company Option immediately prior to the Effective Time and
the Exchange Ratio, provided that any fractional shares of Parent Common Stock
resulting from such multiplication shall be rounded to the nearest whole share;
and (ii) the exercise price per share of Parent Common Stock under a Hybrid
Parent Option shall be equal to the exercise price per share of Company Common
Stock under the original Company Option immediately prior to the Effective Time
divided by the Exchange Ratio, provided that such exercise price shall be
rounded to the nearest whole cent; and (iii) upon any exercise of a Hybrid
Parent Option, in addition to the shares of Parent Common Stock with respect to
which the Hybrid Parent Option is then exercised, the optionee shall receive a
lump sum payment in cash (less any applicable withholding) equal to $35.00
multiplied by the number of shares of Parent Common Stock with respect to which
the Hybrid Parent Option is then being exercised and divided by the Exchange
Ratio. If a Cash Election is made by Parent and any holder of a Company Option
does not consent to the adjustment in Section 2.4(a), immediately prior to the
Effective Time such Company Option shall be cancelled automatically and, as soon
as practicable following the Effective Time, Parent or the Surviving Corporation
shall provide such holder with a lump sum cash payment (less any applicable
withholding) equal to the product of (i) the total number of shares of Company
Common Stock subject to the Company Option immediately prior to the Effective
Time and (ii) the excess of $70.00 over the exercise price per share of Company
Common Stock subject to such Company Option.
(c) The duration and other terms of a Parent Option (or a Hybrid Parent
Option or Cash Option, as applicable) shall be the same as the original Company
Option from which it was converted except that all references to "the Company"
in such original Company Option shall be deemed to be references to Parent.
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(d) At the Effective Time, each award or account (including restricted
stock units, phantom stock and stock alternatives, but excluding Company
Options) outstanding as of the date hereof (each a "Company Award") that has
been established or granted under any employee or director incentive or benefit
plan, program or arrangement maintained by the Company on or prior to the date
hereof which provides for equity accounts or grants of equity based awards shall
be amended or converted into a similar instrument of Parent (each a "Parent
Award"), in each case with such adjustments to the terms and conditions of such
Company Awards as are appropriate to preserve the value inherent in such Company
Awards. The other terms and conditions of each Company Award, and the plans and
agreements under which they were issued, shall continue to apply in accordance
with their terms and conditions, including any provisions for acceleration.
(e) As soon as practicable after the Effective Time, to the extent
necessary to provide for registration of shares of Parent Common Stock subject
to such substituted Parent Options, Hybrid Parent Options and Parent Awards,
Parent shall file a Registration Statement on Form S-8 (or any successor form)
with respect to such shares of Parent Common Stock and shall use its reasonable
best efforts to maintain such Registration Statement on Form S-8 (or any
successor form), including the current status of any related prospectus or
prospectuses, for so long as Parent Options, Hybrid Parent Options and Parent
Awards remain outstanding.
(f) Parent and the Company shall take all such steps as may be required to
cause the transactions contemplated by this Section 2.4 and any other
dispositions of equity securities of the Company (including derivative
securities) or acquisitions of Parent equity securities (including derivative
securities) in connection with this Agreement by each individual who (a) is a
director or officer of the Company or (b) at the Effective Time, will become a
director or officer of Parent, to be exempt under Rule 16b-3 promulgated under
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), such steps
to be taken in accordance with the No-Action Letter dated January 12, 1999,
issued by the SEC to Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP.
ARTICLE III
-----------
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
---------------------------------------------
The Company represents and warrants to Parent and Merger Sub that:
3.1 ORGANIZATION, QUALIFICATION, ETC. (a) The Company is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware and has the corporate power and authority and all necessary
governmental approvals to own its properties and assets and to carry on its
business as it is now being conducted and is duly qualified to do business and
is in good standing in each jurisdiction in which the ownership of its
properties or the conduct of its business requires such qualification, except
for jurisdictions in which the lack of such necessary governmental approvals or
the failure to be so qualified or to be in good standing would not, individually
or in the aggregate, reasonably be expected to have a Material Adverse Effect
(as defined in Section 9.4(b)) on the Company. The copies of the Restated
Certificate of Incorporation of the Company (the "Company Certificate") and the
By-laws of the
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Company (the "Company By-laws") that have been delivered to Parent are complete
and correct and in full force and effect on the date hereof, and the Company is
not in violation of any of the provisions of the Company Certificate or the
Company By-laws.
(b) Each of the Company's Subsidiaries (as defined in Section 9.4(b)) is a
corporation duly organized, validly existing and in good standing under the laws
of its jurisdiction of incorporation or organization, has the power and
authority and all necessary governmental approvals to own its properties and to
carry on its business as it is now being conducted, and is duly qualified to do
business and is in good standing in each jurisdiction in which the ownership of
its property or the conduct of its business requires such qualification, except
for jurisdictions in which the lack of such necessary governmental approvals or
the failure to be so qualified or to be in good standing would not, individually
or in the aggregate, reasonably be expected to have a Material Adverse Effect on
the Company.
3.2 CAPITALIZATION. (a) The authorized capital stock of the Company
consists of 150,000,000 shares of the Company Common Stock, and 2,216,516 shares
of preferred stock, without par value, of the Company ("Company Preferred
Stock"), none of which shares of Company Preferred Stock are designated. As of
February 12, 1999, 53,955,401 shares of Company Common Stock and no shares of
Company Preferred Stock were issued and outstanding, 21,730,627 shares of
Company Common Stock were held in the Company's treasury, 2,988,529 shares of
Company Common Stock were reserved for issuance pursuant to the exercise of
Company Options granted under the Company Stock Plans, 379,784 restricted shares
of Company Common Stock (which are included in the number of outstanding shares
of Company Common Stock set forth above) pursuant to one or more of the Company
Stock Plans were outstanding and no shares of Company Common Stock were reserved
for issuance under the Second Amended and Restated Rights Agreement, as amended
and restated as of November 21, 1995, between the Company and Xxxxxx Trust and
Savings Bank, as rights agent (the "Company Rights Agreement"). All the
outstanding shares of Company Common Stock have been validly issued and are
fully paid, non-assessable and free of preemptive rights. As of February 12,
1999, there were no outstanding subscriptions, options, warrants, rights or
other arrangements or commitments obligating the Company to issue any shares of
its capital stock other than Company Options and Restricted Stock Units, of
which, as of the date of this Agreement, 2,988,529 Company Options and 203,100
Restricted Stock Units, respectively, were outstanding, and 787,342 of such
Company Options were exercisable. In addition to the foregoing, 4,655,481 shares
of Company Common Stock, Restricted Shares, Restricted Stock Units and/or Stock
Options, in the aggregate, remained available for grant under the Company Stock
Plans.
(b) All the outstanding shares of capital stock of, or other ownership
interests in, the Company's Subsidiaries are validly issued, fully paid and
non-assessable and are owned by the Company, directly or indirectly, free and
clear of all liens, claims, charges or encumbrances. There are no existing
options, rights of first refusal, preemptive rights, calls or commitments of any
character relating to the issued or unissued capital stock or other securities
of, or other ownership interests in, any Subsidiary of the Company. There are no
bonds, debentures, notes or other long-term indebtedness of the Company or any
of its Subsidiaries ("Company Debt") having general voting rights (or
convertible into securities having such rights) issued and
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outstanding. Set forth in Section 3.2(b) of the disclosure schedule delivered by
the Company to Parent concurrently with the execution of this Agreement (the
"Company Disclosure Schedule") is a complete and correct list of (i) all Company
Debt and (ii) each Subsidiary (direct or indirect) of the Company and any joint
ventures, partnerships or similar arrangements ("Company Joint Ventures") in
which the Company or any of its Subsidiaries has an interest (and the amount and
percentage of any such interest). No entity in which the Company or any of its
Subsidiaries owns, directly or indirectly, less than a 50% equity interest is,
individually or when taken together with all other such entities, material to
the business of the Company and its Subsidiaries taken as a whole.
(c) Except as set forth in Section 3.2(c) of the Company Disclosure
Schedule, there are no outstanding contractual obligations of the Company or any
of its Subsidiaries (i) restricting the transfer of, (ii) affecting the voting
rights of, (iii) requiring the repurchase, redemption or disposition of, (iv)
requiring the registration for sale of, or (v) granting any preemptive or
antidilutive right with respect to, Company Common Stock or any capital stock of
any Subsidiary of the Company. Except as set forth in Section 3.2(c) of the
Company Disclosure Schedule, there are no outstanding contractual obligations of
the Company or any Subsidiary of the Company or any joint venture to which any
of the Company or its Subsidiaries is a party, directly or indirectly, to
provide funds to, or make any investment (in the form of a loan, capital
contribution or otherwise) in, any Subsidiary of the Company or any other
person.
(d) Except for the issuance of shares of the Company Common Stock pursuant
to Company Options, and except as provided for in Section 5.1, since February
12, 1999, no shares of Company Common Stock or Company Preferred Stock have been
issued.
3.3 CORPORATE AUTHORITY RELATIVE TO THIS AGREEMENT; NO VIOLATION;
APPROVALS. (a) The Company has full corporate power and authority to enter into
this Agreement and to carry out its obligations hereunder and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby have been duly and
validly authorized by the Board of Directors of the Company and, except for the
approval and adoption of this Agreement by the Company Stockholders, no other
corporate proceedings on the part of the Company are necessary to authorize this
Agreement or to consummate the transactions contemplated hereby. This Agreement
has been duly and validly executed and delivered by the Company and, assuming
this Agreement constitutes a valid and binding agreement of the other parties
hereto, this Agreement constitutes a valid and binding agreement of the Company,
enforceable against the Company in accordance with its terms.
(b) The execution and delivery of this Agreement by the Company do not, and
the performance of this Agreement by the Company will not, (i) (assuming
stockholder approval of this Agreement is obtained) conflict with or violate any
provision of the Company Certificate or the Company By-laws, (ii) conflict with
or violate any provision of any equivalent organizational documents of any
Subsidiary of the Company or any Company Joint Venture, (iii) assuming that all
consents, approvals, authorizations and other actions described in Section
3.3(c) have been obtained and all filings and obligations described in Section
3.3(c) have been made, conflict with or violate any foreign or domestic law,
statute, code, ordinance, rule, regulation, order, judgment,
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writ, stipulation, award, injunction or decree ("Law") applicable to the Company
or any Subsidiary of the Company or any Company Joint Venture, or any of their
respective properties or assets or (iv) except as set forth in Section 3.3(b) of
the Company Disclosure Schedule, result in any breach of or any loss of any
benefit or any triggering of "change of control" or additional rights under or
constitute a default (or an event that with notice or lapse of time or both
would become a default) under or require any novation or waiver of, or give to
others any right of termination, amendment, acceleration or cancellation of, or
result in the creation of a lien or other encumbrance on any property or asset
of the Company or any Subsidiary of the Company pursuant to, any note, bond,
mortgage, indenture, contract, agreement, lease, license, permit or other
instrument or obligation, including agreements with respect to Company Joint
Ventures, except, with respect to clauses (ii), (iii) and (iv), for any such
conflicts or violations that would neither, individually or in the aggregate,
(A) be reasonably expected to have a Material Adverse Effect on the Company nor
(B) prevent or materially delay the performance of this Agreement by the
Company. The Company has provided copies of all documents regarding material
matters referred to in clause (iv) and will make all reasonable efforts to
provide copies of all other documents referred to in clause (iv), regardless of
materiality, prior to Closing.
(c) Other than in connection with or in compliance with the provisions of
the DGCL, the Securities Act of 1933, as amended (the "Securities Act"), the
Exchange Act, the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as
amended (the "HSR Act"), any non-United States competition, antitrust and
investment Laws and the securities or blue sky Laws of the various states, the
rules of the NYSE, and other than any necessary approvals of the government of
the United States, the United Kingdom, China, India or any agencies, departments
or instrumentalities thereof, which approvals are set forth on Section 3.3(c) of
the Company Disclosure Schedule (collectively, the "Company Required
Approvals"), no authorization, consent or approval of, or filing with or
notification of, any foreign or domestic governmental, administrative, judicial
or regulatory body or authority (a "Governmental Entity") or of or with any
third party is necessary for the consummation by the Company of the transactions
contemplated by this Agreement, except for such authorizations, consents,
approvals, filings or notifications, the failure to obtain or make that would
not, individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect on the Company or substantially impair or delay the consummation
of the transactions contemplated hereby.
3.4 REPORTS AND FINANCIAL STATEMENTS. (a) Since December 31, 1995, the
Company has timely filed all registration statements, prospectuses, forms,
reports and documents and other filings required to be filed by it with the SEC
under the rules and regulations of the SEC (collectively, the "Company SEC
Reports"). As of their respective dates, such Company SEC reports (i) complied
as to form in all material respects with the applicable requirements of the
Securities Act, the Exchange Act and the rules and regulations promulgated
thereunder, and (ii) did not contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances under which they were
made, not misleading. The audited consolidated financial statements and
unaudited consolidated interim financial statements included in the Company SEC
Reports (including any related notes and schedules) fairly present the financial
position of the Company and its consolidated Subsidiaries, as of the dates
thereof and the results of their operations and
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cash flows for the periods or as of the dates then ended (subject, where
appropriate, to normal year-end adjustments, which would not reasonably be
expected to have a Material Adverse Effect on the Company), in each case, in
accordance with past practice and generally accepted accounting principles in
the United States ("GAAP") consistently applied during the periods involved
(except as otherwise disclosed in the notes thereto). The books and records of
the Company and its Subsidiaries have been, and are being, maintained in all
material respects in accordance with GAAP and any other applicable legal and
accounting requirements and reflect only actual transactions. None of the
Company's Subsidiaries is required to file any reports, statements, prospectuses
or other filings with the SEC.
3.5 NO UNDISCLOSED LIABILITIES. Neither the Company nor any of its
Subsidiaries has any liabilities or obligations of any nature, whether or not
accrued, contingent or otherwise, in each case, that would be required by GAAP
to be reflected on a consolidated balance sheet of the Company and its
Subsidiaries (or disclosed in the notes thereto), except for (i) liabilities or
obligations that are disclosed or provided for in the Company's Quarterly Report
on Form 10-Q filed for the quarter ended September 30, 1998, (ii) liabilities or
obligations that would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect on the Company or prevent or
materially delay the performance of this Agreement by the Company, and (iii)
liabilities and obligations set forth in Section 3.5 of the Company Disclosure
Schedule.
3.6 PERMITS; NO VIOLATION OF LAW. (a) The Company and its Subsidiaries have
received such certificates, permits, licenses, franchises, consents, approvals,
orders, authorizations and clearances from appropriate Governmental Entities
(the "Company Licenses") as are necessary to conduct their respective businesses
substantially in the manner currently conducted, and all such Company Licenses
are valid and in full force and effect, except for any such Company Licenses
that the failure to have or to be in full force and effect would not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect on the Company. The Company and its Subsidiaries are in
compliance with their respective obligations under the Company Licenses, with
only such exceptions as would not, individually or in the aggregate, reasonably
be expected to have a Material Adverse Effect on the Company.
(b) The businesses of the Company and its Subsidiaries have not and are not
being conducted in violation of any Law of any Governmental Entity (provided
that no representation or warranty is made in this Section 3.6 with respect to
Environmental Laws (as defined herein)) except for violations or possible
violations that would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect on the Company.
3.7 ENVIRONMENTAL LAWS AND REGULATIONS. Except as set forth in Section 3.7
of the Company Disclosure Schedule,
(a) The operations of the Company and its Subsidiaries comply with all
applicable Environmental Laws except for such noncompliance which would not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect on the Company. The Company and its Subsidiaries have obtained
all Environmental Permits necessary for the operation of their respective
businesses, and all such Environmental Permits are in good standing and the
Company and its Subsidiaries are in compliance with all material terms and
conditions of
-13-
such Environmental Permits, except for such failures to obtain or comply which
would not reasonably be expected, individually or in the aggregate, to result in
a Material Adverse Effect on the Company. To the Company's knowledge, after due
inquiry, neither the Company nor any of its Subsidiaries is subject to any
ongoing investigation by order from or written claim by any person (including,
without limitation, any current or prior owner or operator of any of the Company
Property or any facilities owned, leased or operated by the Company) respecting
(i) any Environmental Law, (ii) any Remedial Action or (iii) any claim, demand,
complaint or other action arising from the Release or threatened Release of a
Hazardous Substance into the environment, except for such investigations, orders
or written claims which would not reasonably be expected, individually or in the
aggregate, to result in a Material Adverse Effect on the Company. Neither the
Company nor any of its Subsidiaries is subject to any judicial or administrative
proceeding, or outstanding order, judgment, decree or settlement alleging or
addressing a violation of or liability under, any Environmental Law, which upon
resolution would reasonably be expected, individually or in the aggregate, to
result in a Material Adverse Effect.
(b) (i) To the Company's knowledge, after due inquiry for such
purpose, there have been no Releases by the Company or any of its Subsidiaries
of any Hazardous Substances into, on or under or from any Company Property, and
(ii) the Company has not been notified of any Releases by the Company or any of
its Subsidiaries of any Hazardous Substances into, on or under or from any other
properties, including landfills in which Hazardous Substances have been Released
or properties on or under or from which the Company or any of its Subsidiaries
has performed services, in any case in such a way as would reasonably be
expected, individually or in the aggregate, to result in a Material Adverse
Effect on the Company. No Company Property has been used at any time as a
landfill or as a treatment, storage or disposal facility for any Hazardous
Substance. To the Company's knowledge, after due inquiry for such purpose, there
is not now, and there has not been, any underground or above ground storage
tanks, surface impoundment, landfill or waste pile on or in any Company Property
except where the existence of such underground or above ground storage tank,
surface impoundment, landfill or waste pile would not reasonably be expected,
individually or in the aggregate, to result in a Material Adverse Effect on the
Company. Neither the Company nor any of its Subsidiaries has received notice, or
has knowledge after due inquiry for such purpose, that it is subject to any
proceeding under any Environmental Law with respect to any facility to which it
has sent any Hazardous Substance for re-use, recycling, reclamation, treatment,
storage or disposal. The Company has filed all notices required to be filed
under any Environmental Law indicating past or present treatment, storage or
disposal of a Hazardous Substance or reporting a spill or release of a Hazardous
Substance into the environment at Company Property, except for filings relating
to matters which would not reasonably be expected, individually or in the
aggregate, to result in a Material Adverse Effect on the Company. The Company
has delivered to Parent a list of all reports in its possession or control
prepared during the last five years disclosing the presence of any Hazardous
Substance on any Company Property.
(c) No Company Property or any facilities owned, leased or operated by
the Company contains any friable asbestos-containing material except for
quantities of friable asbestos material which would not reasonably be expected,
individually or in the aggregate, to
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result in a Material Adverse Effect on the Company. No claims have been made,
and no suits or proceedings are pending or, to the knowledge of the Company,
threatened by any employee against the Company or any of its Subsidiaries that
are premised on exposure to asbestos or asbestos-containing material, which
would reasonably be expected, individually or in the aggregate, to result in a
Material Adverse Effect on the Company.
(d) For purposes of this Section:
(i) "Company Property" means any real property owned, leased or
operated by the Company or any of its Subsidiaries and all
appurtenances thereto and fixtures thereon.
(ii) "Environmental Law" means any law, statute, ordinance, rule,
regulation, code, license, permit, authorization, approval, consent,
legal doctrine, order, judgment, decree, injunction, requirement or
agreement of or with any governmental entity relating to (1) the
protection, preservation or restoration of the environment (including,
without limitation, air, water vapor, surface vapor, surface water,
groundwater, drinking water supply, surface land, subsurface land,
plant and animal life or any other natural resource) or to human
health or safety or (2) the exposure to, or the use, storage,
recycling, treatment, generation, transportation, processing,
handling, labeling, production, release or disposal of Hazardous
Substances.
(iii) "Environmental Permits" means all approvals,
authorizations, consents, permits, licenses, registrations and
certificates required by any applicable Environmental Law.
(iv) "Hazardous Substance" means any substance presently or as of
the Closing Date listed, defined, designated or classified as
hazardous, toxic, radioactive or dangerous, or otherwise regulated,
under any Environmental Law, whether by type or by quantity, including
any substance containing any such substance as a component, and
including, without limitation, any hazardous waste, toxic waste,
pollutant, contaminant, hazardous substance, toxic substance,
petroleum or any derivative or by-product thereof, radon, radioactive
material, asbestos, asbestos-containing material, urea formaldehyde
foam insulation, lead and polychlorinated biphenyl.
(v) "Release" means release, spill, emission, leaking, pumping,
injection, deposit, disposal, discharge, dispersal, leaching or
migration of Hazardous Substances into the environment.
(vi) "Remedial Action" means all actions required to (a) clean
up, remove, treat or in any other way remediate any Hazardous
Substance; (b) prevent the release of Hazardous Substances so that
they do not migrate or endanger or threaten to endanger public health
or welfare or the environment; or (c) perform studies, investigations
and care related to any such Hazardous Substance.
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3.8 EMPLOYEE BENEFITS. (a) "Company Benefit Plans" shall mean each employee
or director benefit or compensation plan, arrangement or agreement, including,
without limitation, pension, savings, welfare, medical or life insurance,
severance, executive compensation, deferred compensation, incentive, bonus and
long-term performance plans, arrangements or agreements, that is maintained, or
contributed to, as of the date of this Agreement by the Company or any of its
Subsidiaries or by any trade or business, whether or not incorporated (an "ERISA
Affiliate"), all of which together with the Company would be deemed a "single
employer" within the meaning of Section 4001 of the Employee Retirement Income
Security Act of 1974 ("ERISA"). Set forth in Section 3.8(a) of the Company
Disclosure Schedule is a list of the material Company Benefit Plans and the
Company shall, within fifteen (15) days following the date hereof, provide
Parent with a list of all Company Benefit Plans. The Company has heretofore made
available to Parent true and complete copies of each material Company Benefit
Plan and the following related documents: (i) the actuarial report and Form 5500
for such Company Benefit Plan (if applicable) for each of the last two years,
(ii) the most recent determination letter from the Internal Revenue Service (if
applicable) for such Company Benefit Plan and (iii) the most recent summary plan
description for such Company Benefit Plan. Except as set forth on Schedule
3.8(a), there is no formal arrangement or commitment, whether legally binding or
not, to create any additional Company Benefit Plans or to modify or change any
existing Company Benefit Plans.
(b) (i) Each of the Company Benefit Plans, other than any Company Benefit
Plan maintained outside the United States, has been operated and administered in
accordance with applicable Laws, including, but not limited to, ERISA and the
Code, except where the failure to so operate and administer would not reasonably
be expected to have a Material Adverse Effect on the Company, (ii) except as set
forth in Section 3.8(b) of the Company Disclosure Schedule, each of the Company
Benefit Plans intended to be "qualified" within the meaning of Section 401(a) of
the Code has received a determination letter from the Internal Revenue Service
stating that it is so qualified, and, to the Company's knowledge, there are no
existing circumstances or any events that have occurred that would reasonably be
expected to adversely affect the qualified status of any such Plan, (iii) with
respect to each Company Benefit Plan that is subject to Title IV of ERISA, the
present value of accrued benefits under such plan, based upon the actuarial
assumptions used for funding purposes in the most recent actuarial report
prepared by such plan's actuary with respect to such plan, did not, as of its
latest valuation date, exceed the then current value of the assets of such plan
allocable to such accrued benefits and, to the Company's knowledge no adverse
change in such funded status has occurred, (iv) except as set forth on Section
3.8(b) of the Company Disclosure Schedule, no Company Benefit Plan provides
benefits, including, without limitation, death or medical benefits (whether or
not insured), with respect to current or former employees or directors of the
Company or its Subsidiaries beyond their retirement or other termination of
service, other than (A) coverage mandated by applicable Law, (B) death benefits
or retirement benefits under any "employee pension plan" (as such term is
defined in Section 3(2) of ERISA), (C) deferred compensation benefits accrued as
liabilities on the books of it or its Subsidiaries or (D) benefits the full cost
of which is borne by the current or former employee or director (or his or her
beneficiary), (v) no liability under Title IV of ERISA has been incurred by the
Company, its Subsidiaries or any ERISA Affiliate that has not been satisfied in
full, and no condition exists that presents a risk to the Company, its
Subsidiaries or
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any ERISA Affiliate of incurring a liability thereunder, except where such
liability would not reasonably be expected to have a Material Adverse Effect on
the Company, (vi) no Company Benefit Plan is a "multiemployer pension plan" (as
such term is defined in Section 3(37) of ERISA), (vii) all contributions or
other amounts payable by the Company or its Subsidiaries as of the Effective
Time with respect to each Company Benefit Plan in respect of current or prior
plan years have been paid or accrued in accordance with GAAP and Section 412 of
the Code, (viii) neither the Company nor its Subsidiaries has engaged in a
transaction in connection with which the Company or its Subsidiaries reasonably
could be subject to either a civil penalty assessed pursuant to Sections 409 or
502(i) of ERISA or a tax imposed pursuant to Sections 4975 or 4976 of the Code,
except where any such penalty or tax would not reasonably be expected,
individually or in the aggregate, to have a Material Adverse Effect on the
Company, (ix) to the Company's best knowledge, there are no pending, threatened
or anticipated claims (other than routine claims for benefits) by, on behalf of
or against any of the Company Benefit Plans or any trusts related thereto, and
(x) no Company Benefit Plan maintained outside of the United States has assets
or book reserves that are less than the accrued liabilities under such plans,
and all Company Benefit Plans maintained outside of the United States have been
operated and administered in accordance with applicable Laws, except where the
failure to so fund or provide book reserves for such plans or to so operate and
administer such plans would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect on the Company.
(c) Except as set forth in Section 3.8(c) of the Company Disclosure
Schedule, neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated hereby (either alone or in
conjunction with any other event) will (i) result in any payment (including,
without limitation, severance, unemployment compensation, "excess parachute
payment" (within the meaning of Section 280G of the Code), forgiveness of
indebtedness or otherwise) becoming due to any director or any employee of the
Company or any of its Subsidiaries under any Company Benefit Plan or otherwise,
(ii) increase any benefits otherwise payable under any Company Benefit Plan or
(iii) result in any acceleration of the time of payment or vesting of any such
benefits.
3.9 CERTAIN CONTRACTS. (a) Except as set forth on Section 3.9 of the
Company Disclosure Schedule, neither the Company nor any of its Subsidiaries is
a party to or is bound by any contract, arrangement, commitment or understanding
(whether written or oral) (i) that, upon the consummation of the transactions
contemplated by this Agreement, will (either alone or upon the occurrence of any
additional acts or events) result in any payment (whether of severance pay or
otherwise) becoming due from the Company, Parent, the Surviving Corporation, or
any of their respective Subsidiaries to any officer or employee thereof, (ii)
that is a "Material Contract" (as defined in Item 601(b)(10) of Regulation S-K
of the SEC) to be performed after the date of this Agreement, (iii) that
purports to limit in any respect the manner in which, or the localities in
which, the business of the Company and its Subsidiaries is conducted (including,
for purposes of this Section 3.9, assuming the consummation of the Merger), or
(iv) any of the benefits of which will be increased, or the vesting of the
benefits of which will be accelerated, by the occurrence of any of the
transactions contemplated by this Agreement, or the value of any of the benefits
of which will be calculated on the basis of any of the transactions contemplated
by this Agreement. The Company has previously made available to Parent true and
correct copies of all employment,
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severance, deferred compensation and similar agreements to which the Company is
a party. Each contract, arrangement, commitment or understanding of the type
described in this Section 3.9(a) is referred to herein as a "Company Contract,"
and neither the Company nor any of its Subsidiaries knows of, or has received
notice of, any violation of the above by any of the other parties thereto that,
individually or in the aggregate, would reasonably be expected to have a
Material Adverse Effect on the Company.
(b) (i) Each Company Contract is valid and binding on the Company or any of
its Subsidiaries, as applicable, and in full force and effect (assuming each
such Company Contract is valid and binding on the other party or parties), (ii)
the Company and each of its Subsidiaries has in all material respects performed
all obligations required to be performed by it to date under each Company
Contract, except where such noncompliance, individually or in the aggregate,
would not reasonably be expected to have a Material Adverse Effect on the
Company, and (iii) no event or condition exists that constitutes or, after
notice or lapse of time or both, would constitute, a material default on the
part of the Company or any of its Subsidiaries under any such Company Contract,
except where such default, individually or in the aggregate, would not
reasonably be expected to have a Material Adverse Effect on the Company.
3.10 INTELLECTUAL PROPERTY. Except to the extent the inaccuracy of any of
the following, individually or in the aggregate, would not reasonably be
expected to have a Material Adverse Effect on the Company, and, except as set
forth in Section 3.10 of the Company Disclosure Schedules, the Company and each
of its Subsidiaries owns or possesses adequate licenses or other legal rights to
use all patents, trademarks, trade names, trade dress, copyrights, service
marks, trade secrets, software, mailing lists, mask works, know-how and other
proprietary rights and information, including all applications with respect
thereto (collectively, "Proprietary Rights") used or held for use in connection
with the business of the Company and its Subsidiaries as currently conducted or
as contemplated to be conducted by the Company, and the Company is unaware of
any assertion or claim challenging the validity of any of the foregoing. To the
Company's knowledge, after due inquiry for such purpose, except as set forth in
Section 3.10 of the Company Disclosure Schedule, the conduct of the business of
the Company and its Subsidiaries as currently conducted and as contemplated to
be conducted did not, does not and will not infringe in any way any Proprietary
Rights of any third party that, individually or in the aggregate, would
reasonably be expected to have a Material Adverse Effect on the Company. Except
as set forth in Section 3.10 of the Company Disclosure Schedule, to the
Company's knowledge, after due inquiry for such purposes, there are no
infringements of any Proprietary Rights owned by or licensed by or to the
Company or any of its Subsidiaries that, individually or in the aggregate, would
reasonably be expected to have a Material Adverse Effect on the Company.
3.11 ABSENCE OF CERTAIN CHANGES OR EVENTS. Since September 30, 1998, the
businesses of the Company and its Subsidiaries have been conducted in all
material respects in the ordinary course and in a manner consistent with past
practice, and there has not been any event, occurrence, development or state of
circumstances or facts that has had, or would reasonably be expected to have, a
Material Adverse Effect on the Company or that would reasonably be expected to
prevent or materially delay the performance of this Agreement by the Company.
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3.12 INVESTIGATIONS; LITIGATION. Except as set forth in Section 3.12 of the
Company Disclosure Schedule:
(a) no investigation or review by any Governmental Entity with respect to
the Company or any of its Subsidiaries is, to the Company's knowledge after due
inquiry for such purpose, pending, nor has any Governmental Entity notified the
Company or any of its Subsidiaries of an intention to conduct the same;
(b) there are no actions, suits, claims or proceedings ("Actions") pending
(or, to the Company's knowledge, threatened) against or affecting the Company or
any of its Subsidiaries, or any of their respective properties at law or in
equity, or before any Governmental Entity or arbitration panel that,
individually or in the aggregate, would reasonably be expected to have a
Material Adverse Effect on the Company; and
(c) neither the Company nor any of its Subsidiaries is subject to any
outstanding order, writ, injunction or decree or other similar restraint which,
individually or in the aggregate, would reasonably be expected to have a
Material Adverse Effect on the Company.
3.13 PROXY STATEMENT; REGISTRATION STATEMENT; OTHER INFORMATION. None of
the information with respect to the Company or its Subsidiaries to be included
in the Proxy Statement (as defined herein) or the Registration Statement (as
defined herein) will, in the case of the Proxy Statement or any amendments
thereof or supplements thereto, at the time of the mailing of the Proxy
Statement or any amendments or supplements thereto, and at the time of the
Company Stockholders Meeting (as defined herein), or, in the case of the
Registration Statement or any amendments thereto, at the time it or they become
effective, contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading. No representation is made by the Company with respect to
information supplied in writing by Parent or any affiliate of Parent
specifically for inclusion in the Proxy Statement. The Proxy Statement will
comply as to form in all material respects with the provisions of the Exchange
Act and the rules and regulations promulgated thereunder. The letters to
stockholders, notice of meeting, proxy statement and form of proxy to be
distributed to stockholders in connection with the Merger and any schedules
required to be filed with the SEC in connection therewith are collectively
referred to herein as the "Proxy Statement."
3.14 SECTION 203 OF DGCL; RIGHTS AGREEMENT. Prior to the date hereof, the
Board of Directors of Parent has taken all action necessary, if any, to exempt
under or make not subject to (i) the provisions of Section 203 of the DGCL and
(ii) any other state takeover law or state law that purports to limit or
restrict business combinations or the ability to acquire or vote shares: (A) the
execution of this Agreement, (B) the Merger and (C) the transactions
contemplated hereby. No "Stock Acquisition Date" or "Distribution Date" or
"Triggering Event" (as such terms are defined in the Company Rights Agreement)
will occur and neither Parent nor Merger Sub will be deemed to be an "Acquiring
Person" as a result of the execution of this Agreement or the consummation of
the Merger pursuant to this Agreement and the Company Rights Agreement will
expire immediately prior to the Effective Time.
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3.15 BOARD ACTION. The Board of Directors of the Company (at a meeting duly
called and held) has by a unanimous vote of directors (i) determined that the
Merger is advisable and fair and in the best interests of the Company and the
Company Stockholders, (ii) approved this Agreement and the Merger in accordance
with the provisions of the DGCL, and (c) recommended the approval and adoption
of this Agreement and the Merger by the Company Stockholders (the "Company Board
Recommendation") and directed that this Agreement and the Merger be submitted
for consideration by the Company Stockholders entitled to vote thereon at the
Company Stockholders Meeting.
3.16 TAX MATTERS. (a) Each of the Company and its Subsidiaries has duly and
timely filed all Tax Returns required to be filed by it, and all such Tax
Returns are true, complete and accurate in all respects, except to the extent
that any failure to have filed or any inaccuracies in such Tax Returns would not
reasonably be expected to have a Material Adverse Effect on the Company. The
Company and each of its Subsidiaries has paid all Taxes required to be paid by
it, and has paid all Taxes that it was required to withhold from amounts owing
to any employee, creditor or third party except to the extent that any failure
to pay Taxes would not reasonably be expected to have a Material Adverse Effect
on the Company. There are no pending or threatened audits, examinations,
investigations, deficiencies, claims or other proceedings in respect of Taxes
relating to the Company or any Subsidiary of the Company, except for those
relating to Taxes which, if adversely determined, would not reasonably be
expected to have a Material Adverse Effect on the Company. There are no liens
for Taxes upon the assets of the Company or any Subsidiary of the Company, other
than liens for current Taxes not yet due, liens for Taxes that are being
contested in good faith by appropriate proceedings, and liens for Taxes which
would not reasonably be expected to have a Material Adverse Effect on the
Company. Neither the Company nor any of its Subsidiaries has requested any
extension of time within which to file any Tax Returns in respect of any taxable
year which have not since been filed, nor made any request for waivers of the
time to assess any Taxes that are pending or outstanding, except where such
request or waiver would not reasonably be expected to have a Material Adverse
Effect on the Company. None of the Company or any of its Subsidiaries has made
an election under Section 341(f) of the Code. The consolidated federal income
Tax Returns of the Company and its Subsidiaries have been examined, or the
statute of limitations has closed, with respect to all taxable years through and
including 1992. Neither the Company nor any of its Subsidiaries has any
liability for Taxes of any person (other than the Company and its Subsidiaries)
under Treasury Regulation Section 1.1502-6 (or any comparable provision of
state, local or foreign law). Neither the Company nor any Subsidiary of the
Company is a party to any agreement (with any person other than the Company or
its Subsidiaries) relating to the allocation or sharing of Taxes.
(b) Neither the Company nor any of its Subsidiaries knows of any fact or
has taken any action that could reasonably be expected to prevent or impede the
Merger from qualifying as a reorganization within the meaning of Section 368(a)
of the Code (unless Parent makes a Cash Election).
For purposes of this Agreement: (i) "Taxes" means any and all federal,
state, local, foreign or other taxes of any kind (together with any and all
interest, penalties, additions to tax and additional amounts imposed with
respect thereto) imposed by any taxing authority,
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including, without limitation, taxes or other charges on or with respect to
income, franchises, windfall or other profits, gross receipts, property, sales,
use, capital stock, payroll, employment, social security, workers' compensation,
unemployment compensation, or net worth, and taxes or other charges in the
nature of excise, withholding, ad valorem or value added, and (ii) "Tax Return"
means any return, report or similar statement (including the attached schedules)
required to be filed with respect to any Tax, including, without limitation, any
information return, claim for refund, amended return or declaration of estimated
Tax.
3.17 LABOR MATTERS. Except as set forth in Section 3.17 of the Company
Disclosure Schedule, there are no agreements with, or pending petitions for
recognition of, a labor union or association as the exclusive bargaining agent
for any of the employees of the Company or any of its Subsidiaries; no such
petitions have been pending at any time within two years of the date of this
Agreement and, to the knowledge of the Company, except as set forth in Section
3.17 of the Company Disclosure Schedule, there has not been any organizing
effort by any union or other group seeking to represent any employees of the
Company or any of its Subsidiaries as their exclusive bargaining agent at any
time within two years of the date of this Agreement. There are no labor strikes,
work stoppages or other labor troubles, other than routine grievance matters,
now pending, or, to the knowledge of the Company, threatened, against the
Company or any of its Subsidiaries and there have not been any such labor
strikes, work stoppages or other labor troubles, other than routine grievance
matters, with respect to the Company or any of its Subsidiaries at any time
within two years of the date of this Agreement.
3.18 YEAR 2000 COMPLIANCE. The Company has taken steps that are reasonable
to ensure that the occurrence of the year 2000 will not materially and adversely
affect the information and business systems of the Company or its Subsidiaries,
and it is the Company's reasonable expectation that no material expenditures in
excess of currently budgeted items will be required in order to cause such
systems to operate properly following the change of the year 1999 to 2000.
3.19 OPINION OF FINANCIAL ADVISOR. The Board of Directors of the Company
has received the opinion of Xxxxxxx Xxxxx & Co., Inc. (the "Company Financial
Advisor"), dated the date of this Agreement, to the effect that, as of such
date, the Merger Consideration is fair to the Company Stockholders from a
financial point of view. A copy of the written opinion of the Company Financial
Advisor has been delivered to Parent.
3.20 REQUIRED VOTE OF THE COMPANY STOCKHOLDERS. The affirmative vote of a
majority of the outstanding shares of Company Common Stock is required to
approve the Merger. No other vote of the holders of any securities of the
Company is required by law, the Company Certificate or the Company By-laws or
otherwise in order for the Company to consummate the Merger and the transactions
contemplated hereby.
3.21 BROKERS. No broker, finder or investment banker (other than the
Company Financial Advisor) is entitled to any brokerage, finder's or other fee
or commission in connection with the Merger based upon arrangements made by or
on behalf of the Company or any of the Company's Subsidiaries. The Company has
heretofore made available to Parent a complete and correct copy of all
agreements (and amendments thereof) between the Company and the
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Company Financial Advisor pursuant to which such firm would be entitled to any
payment relating to the Merger.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
Parent and Merger Sub represent and warrant to the Company that:
4.1 ORGANIZATION, QUALIFICATION, ETC. (a) Each of Parent and Merger Sub is
a corporation duly organized, validly existing and in good standing under the
Laws of its jurisdiction of incorporation and has the corporate power and
authority and all necessary governmental approvals to own its properties and
assets and to carry on its business as it is now being conducted and is duly
qualified to do business and is in good standing in each jurisdiction in which
the ownership of its properties or the conduct of its business requires such
qualification, except for jurisdictions in which the lack of such necessary
governmental approvals or the failure to be so qualified or to be in good
standing would not, individually or in the aggregate, reasonably be expected to
have a Material Adverse Effect on Parent. The copies of the Restated Certificate
of Incorporation of Parent (the "Parent Certificate") and the By-laws of Parent
(the "Parent By-laws") and the Certificate of Incorporation and By-laws of
Merger Sub which have been made available to the Company are complete and
correct and in full force and effect on the date hereof, and neither Parent nor
Merger Sub is in violation of any of the provisions of their respective
Certificate of Incorporation or By-laws.
(b) Each of Parent's Subsidiaries is a corporation duly organized, validly
existing and in good standing under the Laws of its jurisdiction of
incorporation or organization, has the power and authority and all necessary
governmental approvals to own its properties and to carry on its business as it
is now being conducted, and is duly qualified to do business and is in good
standing in each jurisdiction in which the ownership of its property or the
conduct of its business requires such qualification, except for jurisdictions in
which the lack of such necessary governmental approvals or the failure to be so
qualified or to be in good standing would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect on Parent.
4.2 CAPITALIZATION. (a) The authorized capital stock of Parent consists of
1,000,000,000 shares of the Parent Common Stock, and 250,000,000 shares of
preferred stock, $1.00 par value ("Parent Preferred Stock"), of which 20,000,000
shares of Parent Preferred Stock were designated as Series A ESOP Convertible
Preferred Stock. As of February 16, 1999, 225,557,930 shares of Parent Common
Stock and 12,497,460.841 shares of Parent Preferred Stock were issued and
outstanding; 68,615,769 shares of Parent Common Stock were held in the Parent's
treasury. All the outstanding shares of Parent Common Stock have been validly
issued and are fully paid, non-assessable and free of preemptive rights. As of
February 17, 1999, there were no outstanding subscriptions, options, warrants,
rights or other arrangements or commitments obligating Parent to issue any
shares of its capital stock other than Parent Options, of which, as of the date
of this Agreement, 23,148,492 were outstanding, 10,864,999 were exercisable,
Parent Options for up to 2% of outstanding shares of Parent Common Stock per
year
-22-
remained available for grant under Parent's Long Term Incentive Plan, Parent
Options for up to 1,000,000 shares of Parent Common Stock remained available for
grant under Parent's Employee Stock Option Plan, and Parent Options for 2,000
shares of Parent Common Stock per year for each of Parent's non-employee
directors remained available for grant under Parent's Non-Employee Director
Stock Option Program, and other than pursuant to Parent's Dividend Reinvestment
and Stock Purchase Plan and Parent's Employee Stock Award Program (all such
Parent Option and Parent stock arrangements collectively the "Parent Stock
Plans").
(b) All of the outstanding shares of capital stock of Merger Sub are
validly issued, fully paid and non-assessable and are owned by Parent free and
clear of all liens, claims, charges or encumbrances. There are no existing
options, rights of first refusal, preemptive rights, calls or commitments of any
character relating to the issued or unissued capital stock or other securities
of, or other ownership interests in, Merger Sub.
(c) Except for the issuance of shares of the Parent Common Stock pursuant
to Parent Options or under Parent Stock Plans, since February 16, 1999, no
shares of Parent Common Stock or Parent Preferred Stock have been issued.
4.3 CORPORATE AUTHORITY RELATIVE TO THIS AGREEMENT; NO VIOLATION;
APPROVALS. (a) Each of Parent and Merger Sub has full corporate power and
authority to enter into this Agreement and to carry out its obligations
hereunder and to consummate the transactions contemplated hereby. The execution
and delivery of this Agreement and the consummation of the transactions
contemplated hereby have been duly and validly authorized by the Boards of
Directors of Parent and Merger Sub and by Parent as the sole stockholder of
Merger Sub, and no other corporate proceedings on the part of Parent or Merger
Sub are necessary to authorize this Agreement or to consummate the transactions
contemplated hereby. This Agreement has been duly and validly executed and
delivered by Parent and Merger Sub and, assuming this Agreement constitutes a
valid and binding agreement of the Company, this Agreement constitutes a valid
and binding agreement of Parent and Merger Sub enforceable against each of them
in accordance with its terms.
(b) The execution and delivery of this Agreement by Parent and by Merger
Sub do not, and the performance of this Agreement by Parent and by Merger Sub
will not, (i) conflict with or violate any provision of the Parent Certificate
or the Parent By-laws; (ii) conflict with or violate any provision of any
equivalent organizational documents of Merger Sub; (iii) assuming that all
consents, approvals, authorizations and other actions described in Section
4.3(c) have been obtained and all filings and obligations described in Section
4.3(c) have been made, conflict with or violate any Law applicable to Parent or
Merger Sub or any of their respective properties or assets; or (iv) except as
set forth in Section 4.3(b) of the Parent Disclosure Schedule, result in any
breach of or any loss of any benefit or any triggering of additional rights
under or constitute a default (or an event which with notice or lapse of time or
both would become a default) under, or give to others any right of termination,
amendment, acceleration or cancellation of, or result in the creation of a lien
or other encumbrance on any property or asset of Parent or any Subsidiary of
Parent pursuant to, any note, bond, mortgage, indenture, contract, agreement,
lease, license, permit or other instrument or obligation, except, with respect
to clauses (ii), (iii) and (iv), for any such conflicts or violations which
neither, individually or in the aggregate, (A) would reasonably
-23-
be expected to have a Material Adverse Effect on Parent nor (B) prevent or
materially delay the performance of this Agreement by Parent.
(c) Other than in connection with or in compliance with the provisions of
the DGCL, the Securities Act, the Exchange Act, the HSR Act, Section 4043 of
ERISA, any non-United States competition, antitrust and investments Laws and the
securities or blue sky Laws of the various states, the rules of the NYSE, and
other than as set forth in items 1. and 2. of Section 3.3(c) of the Company
Disclosure Schedule and any necessary approvals of the United States government
or any agencies, departments or instrumentalities thereof (collectively, the
"Parent Required Approvals"), no authorization, consent or approval of, or
filing with or notification of, any Governmental Entity or of or with any third
party is necessary for the consummation by Parent and Merger Sub of the
transactions contemplated by this Agreement, except for such authorizations,
consents, approvals, filings, or notifications, the failure to obtain or make
that would not, individually or in the aggregate, reasonably be expected to have
a Material Adverse Effect on Parent or substantially impair or delay the
consummation of the transactions contemplated hereby.
4.4 REPORTS AND FINANCIAL STATEMENTS. Since December 31, 1995, Parent has
timely filed all registration statements, prospectuses, forms, reports and
documents and other filings required to be filed by it with the SEC under the
rules and regulations of the SEC (collectively, "Parent SEC Reports"). As of
their respective dates, such Parent SEC Reports (i) complied as to form in all
material respects with the applicable requirements of the Securities Act, the
Exchange Act, and the rules and regulations promulgated thereunder, and (ii) did
not contain any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading. The
audited consolidated financial statements and unaudited consolidated interim
financial statements included in the Parent SEC Reports (including any related
notes and schedules) fairly present the financial position of Parent and its
consolidated Subsidiaries as of the dates thereof and the results of their
operations and cash flows for the periods or as of the dates then ended
(subject, where appropriate, to normal year-end adjustments, which would not
reasonably be expected to have a Material Adverse Effect on Parent), in each
case, in accordance with past practice and GAAP consistently applied during the
periods involved (except as otherwise disclosed in the notes thereto). The books
and records of Parent and its Subsidiaries have been, and are being, maintained
in all material respects in accordance with GAAP and any other applicable legal
and accounting requirements and reflect only actual transactions.
4.5 ABSENCE OF CERTAIN CHANGES OR EVENTS. Since September 30, 1998, the
businesses of Parent and its Subsidiaries have been conducted in all material
respects in the ordinary course and in a manner consistent with past practice
and, as of the date hereof, there has not been any event, occurrence,
development or state of circumstances or facts that has had, or would reasonably
be expected to have, a Material Adverse Effect on Parent or that would
reasonably be expected to prevent or materially delay the performance of this
Agreement by Parent.
4.6 PROXY STATEMENT; REGISTRATION STATEMENT; OTHER INFORMATION. None of the
information supplied by Parent with respect to Parent or its Subsidiaries to be
included in the
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Proxy Statement or the Registration Statement will, in the case of the Proxy
Statement or any amendments thereof or supplements thereto, at the time of the
mailing of the Proxy Statement or any amendments or supplements thereto, and at
the time of the Company Stockholders Meeting, or, in the case of the
Registration Statement or any amendments thereto, at the time it or they become
effective, contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading. No representation is made by Parent with respect to information
supplied in writing by the Company or any affiliate of the Company specifically
for inclusion in the Proxy Statement or Registration Statement. The Registration
Statement will comply as to form in all material respects with the provisions of
the Securities Act and the rules and regulations promulgated thereunder.
4.7 BOARD ACTION. The Board of Directors of Parent (at a meeting duly
called and held) has by a unanimous vote of the directors in attendance at such
meeting (i) determined that the Merger is advisable and fair and in the best
interests of Parent and its stockholders and (ii) approved the Merger and the
issuance of Parent Common Stock in the Merger in accordance with the applicable
provisions of the DGCL.
4.8 LACK OF OWNERSHIP OF COMPANY COMMON STOCK. Neither Parent nor any of
its Subsidiaries owns any shares of Company Common Stock or other securities
convertible into shares of Company Common Stock (exclusive of any shares owned
by Parent's employee benefit plans).
4.9 NO REQUIRED VOTE OF PARENT STOCKHOLDERS. No vote of the holders of any
class of Parent's capital stock is necessary to approve and adopt this Agreement
or the transactions contemplated hereby.
4.10 BROKERS. No broker, finder or investment banker (other than Xxxxxxx,
Xxxxx & Co.) is entitled to any brokerage, finder's or other fee or commission
in connection with the Merger based upon arrangements made by or on behalf of
Parent or any of Parent's Subsidiaries.
ARTICLE V
COVENANTS RELATING TO CONDUCT OF BUSINESS
5.1 CONDUCT OF BUSINESS BY THE COMPANY PRIOR TO THE EFFECTIVE TIME. Except
as contemplated by this Agreement or as expressly agreed to in writing by
Parent, during the period from the date of this Agreement to the Effective Time,
the Company will, and will cause each of its Subsidiaries to, conduct its
operations according to its ordinary and usual course of business and consistent
with past practice and use its and their respective reasonable best efforts to
preserve intact their current business organizations, keep available the
services of their current officers and employees and preserve their
relationships with customers, suppliers, licensors, licensees, advertisers,
distributors and others having business dealings with them and to preserve
goodwill. Without limiting the generality of the foregoing, and except as (A)
otherwise expressly provided in this Agreement, (B) required by Law, or (C) set
forth on Section 5.1 of the
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Company Disclosure Schedule, prior to the Effective Time, the Company will not,
and will cause its Subsidiaries not to, without the prior written consent of
Parent:
(a) do or effect any of the following actions with respect to its or its
Subsidiaries' securities: (i) adjust, split, combine or reclassify its capital
stock, (ii) make, declare or pay any dividend or distribution on, or, directly
or indirectly, redeem, purchase or otherwise acquire, any shares of its capital
stock or any securities or obligations convertible into or exchangeable for any
shares of its capital stock, other than regular quarterly dividends on Company
Common Stock and dividends declared and paid by any of the Company's directly or
indirectly wholly owned Subsidiaries, (iii) grant any person any right or option
to acquire any shares of its capital stock, (iv) issue, deliver or sell or agree
to issue, deliver or sell any additional shares of its capital stock or any
securities or obligations convertible into or exchangeable or exercisable for
any shares of its capital stock or such securities, including pursuant to any
employee stock purchase plans (except pursuant to the exercise of Company
Options that are outstanding as of the date hereof and disclosed in Section 5.1
of the Company Disclosure Schedule), (v) reprice any Company Options, or (vi)
enter into any agreement, understanding or arrangement with respect to the sale,
voting, registration or repurchase of its capital stock;
(b) directly or indirectly sell, transfer, lease, pledge, mortgage,
encumber or otherwise dispose of any of its property or assets other than in the
ordinary course of business consistent with past practice;
(c) make or propose any changes in the Company Certificate or the Company
By-Laws;
(d) merge or consolidate with any other person;
(e) acquire an amount of assets or capital stock of any other person in
excess of $1,000,000;
(f) redeem any rights under, amend or modify, or propose to amend or
modify, the Company Rights Agreement, as amended as of the date hereof;
(g) incur, create, assume or otherwise become liable for any indebtedness
for borrowed money or assume, guarantee, endorse or otherwise as an
accommodation become responsible or liable for the obligations of any other
individual, corporation or other entity, other than in the ordinary course of
business, consistent with past practice;
(h) create any new Subsidiaries;
(i) increase the compensation or benefits payable or to become payable to
its directors, officers or, except in the ordinary course of business consistent
with past practice, other employees (whether from the Company or any of its
Subsidiaries), or pay or award or accelerate any benefit not required by any
existing plan or arrangement to any officer, director or employee (including,
without limitation, the granting of stock options, stock appreciation rights,
shares of restricted stock or performance units pursuant to the Company Benefit
Plans or otherwise), or grant any severance or termination pay to any officer,
director or other employee of the Company
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or any of its Subsidiaries (other than as required by existing agreements or
policies described in Section 5.1 of the Company Disclosure Schedule), or enter
into or amend any employment or severance agreement with, any director, officer
or other employee of the Company or any of its Subsidiaries or establish, adopt,
enter into, amend, or waive any performance or vesting criteria under any
Company Benefit Plan for the benefit or welfare of any current or former
directors, officers or employees of the Company or its Subsidiaries or their
beneficiaries or dependents, except, in each case, to the extent required by
applicable Law or regulation;
(j) change any method or principle of financial accounting in a manner that
is inconsistent with past practice except to the extent required by GAAP as
advised by the Company's regular independent accountants, make any Tax election
(unless required by law or made in the ordinary course of business consistent
with past practice), settle or compromise any Tax liability of the Company or
any of its Subsidiaries in excess of $500,000 or any pending or threatened suit,
action or claim relating to any potential or actual Tax liability of the Company
or any of its Subsidiaries in excess of $500,000, change any method of
accounting for Tax purposes or file (other than in a manner consistent with past
practice) any Tax Return;
(k) settle any Actions, whether now pending or hereafter made or brought
involving, individually, an amount in excess of $500,000 or, in the aggregate,
an amount in excess of $1,000,000, or enter into any consent decree, injunction
or other similar restraint or form of equitable relief in settlement of any
Action;
(l) modify, amend or terminate, or waive, release or assign any material
rights or claims with respect to any confidentiality agreement to which the
Company is a party;
(m) enter into any confidentiality agreements or arrangements other than in
the ordinary course of business consistent with past practice (other than as
permitted by Section 6.13);
(n) write up, write down or write off the book value of any assets,
individually in an amount in excess of $250,000 or, in the aggregate, in an
amount in excess of $750,000, except for depreciation and amortization in
accordance with GAAP consistently applied;
(o) incur or commit to any capital expenditures unless such capital
expenditure is reflected in the budget previously provided to Parent (the
"Budget") or any other items that, individually or in the aggregate, are not in
excess of $750,000;
(p) take any action to exempt or make not subject to (i) the provisions of
Section 203 of the DGCL or (ii) any other state takeover Law or other state Law
that purports to limit or restrict business combinations or the ability to
acquire or vote shares, any person or entity (other than Parent or its
Subsidiaries) or any action taken thereby, which person, entity or action would
otherwise have been subject to the restrictive provisions thereof and not exempt
therefrom;
(q) enter into any transaction or agreement, or amend any existing
agreement between the Company or any of its Subsidiaries and any director or
executive officer of the Company;
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(r) enter into or carry out any other material transaction other than in
the ordinary and usual course of business;
(s) knowingly take any action that would prevent or impede the Merger
(unless Parent makes a Cash Election) from qualifying as a "reorganization"
within the meaning of Section 368 of the Code;
(t) agree in writing or otherwise to take any of the foregoing actions.
5.2 ADVICE OF CHANGES. The Company shall promptly advise Parent of any
change in the normal course of the Company's or its Subsidiaries' businesses and
of any complaints, investigations or hearings (or communications indicating that
the same may be contemplated) of any Governmental Entity if such change,
complaint, investigation or hearing would reasonably be expected to have a
Material Adverse Effect on the Company, would reasonably be expected to cause or
constitute a material breach of any of the Company's representations, warranties
or covenants contained herein, or is reasonably likely to delay or impede the
ability of the Company to consummate the transactions contemplated by this
Agreement or to fulfill its obligations set forth herein.
5.3 CONDUCT OF PARENT'S OPERATIONS. Except as set forth in Section 5.3 of
the Parent Disclosure Schedule, during the period from the date of this
Agreement to the Effective Time, Parent shall use its reasonable best efforts to
preserve intact its business organization, to keep available the services of its
current officers and employees and preserve its relationships with customers,
suppliers, licensors, licensees, advertisers, distributors and others having
business dealings with it and to preserve goodwill. During the period from the
date of this Agreement to the Effective Time, Parent shall not (i) make any
amendment to the Parent Certificate that changes the fundamental attributes of
the Parent Common Stock, (ii) make any material changes to the Certificate of
Incorporation of Merger Sub, (iii) make, declare or pay any extraordinary cash
dividend, other than extraordinary dividends between Parent and a Subsidiary of
Parent, (iv) take any action that is material and adverse to the Company
Stockholders as prospective stockholders of Parent and that affects Company
Stockholders disproportionately as compared to the current stockholders of
Parent, (v) permit or cause any Subsidiaries to do any of the foregoing or agree
or commit to any of the foregoing, or (vi) agree in writing or otherwise to take
any of the foregoing actions.
ARTICLE VI
ADDITIONAL AGREEMENTS
6.1 REGULATORY MATTERS. (a) As promptly as practicable after the execution
of this Agreement, the Company shall prepare and file with the SEC the Proxy
Statement (which shall be the same as the proxy statement/prospectus filed by
Parent with the Registration Statement), and Parent shall promptly prepare and
file with the SEC a Registration Statement on Form S-4 to register the Parent
Common Stock to be issued in connection with the Merger (the "Registration
Statement"). Each of the Company and Parent shall use their reasonable best
efforts to have the Registration Statement declared effective under the
Securities Act as promptly as practicable
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after such filing, and the Company shall thereafter, as promptly as practicable,
mail or deliver the Proxy Statement to the Company Stockholders. Parent shall
also use its reasonable best efforts to obtain all necessary state securities
Law or blue sky permits and approvals required to carry out the transactions
contemplated by this Agreement, and the Company shall furnish all information
concerning the Company and the holders of the Company capital stock as may be
reasonably requested by Parent in connection with any such action.
(b) Subject to Section 6.1(d), each of the Company and Parent shall
cooperate with each other and use (and shall cause their respective Subsidiaries
to use) their reasonable best efforts to file in connection with the Merger and
the transactions contemplated hereby as soon as practicable (i) notifications
under the HSR Act, and (ii) such notifications and filings as may be required
under any other Antitrust Laws (as defined below). Subject to Section 6.1(d),
the Company and Parent shall use their reasonable best efforts to take all
action necessary, proper and advisable under applicable Antitrust Laws and
regulations with respect to the following: (x) to cause the expiration or
termination of the applicable waiting periods under the HSR Act as soon as
practicable, including, without limitation, by responding as promptly as
practicable to any inquiries received from the Federal Trade Commission (the
"FTC") or the Antitrust Division of the Department of Justice (the "Antitrust
Division") or any state or local governmental entity for additional information
or documentation, (y) with regard to the supernational and multinational
authorities to cause the expiration or termination of applicable waiting
periods, the satisfaction of such other filing requirements, or the issuance of
such approvals, consents or authorizations as may be required with respect to
the Antitrust Laws of any foreign jurisdiction, and (z) to avoid the entry of
any decree, judgment, injunction or other order, whether temporary, preliminary
or permanent, under any Antitrust Law, that would have the effect of
prohibiting, preventing or restricting consummation of such transactions. The
Company and Parent shall, in connection with the efforts to obtain all requisite
approvals and authorizations for the transactions contemplated by this Merger
Agreement under Antitrust Laws, (i) cooperate with each other in connection with
any filing or submission and in connection with any investigation or other
inquiry; (ii) promptly inform the other party of any communication to it from
any Governmental Entity and permit the other party to review in advance any
proposed communication from it to any Governmental Entity or third party (other
than documents containing confidential business information that shall be shared
only with outside counsel to the non-filing party); and (iii) consult with the
other party in advance of arranging for or participating in any meeting with any
Governmental Entity in respect of any filings, investigation or other inquiry.
The Company shall not enter into any proposed understanding, undertaking or
agreement with any Governmental Entity in connection with the transactions
contemplated by this Merger Agreement without the prior written consent of
Parent. Without limiting the generality of the foregoing, the Company and Parent
shall make all necessary filings in connection with any other Company Required
Approvals and Parent Required Approvals promptly following the date of this
Agreement, and shall use their reasonable best efforts to furnish or cause to be
furnished, as promptly as practicable, all information, documents and access to
knowledgeable persons requested with respect to such and shall otherwise
cooperate with the applicable Governmental Entity in order to obtain any such
approvals. Subject to Section 6.1(d), each of the Company and Parent shall use
its reasonable best efforts to resolve such objections, if any, as any
Governmental Entity may assert with respect to this Agreement
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and the transactions contemplated hereby in as expeditious a manner as possible.
Subject to Section 6.1(d), in the event that a suit is instituted by any person
or Governmental Entity challenging this Agreement and the transactions
contemplated hereby as violative of applicable U.S., state, local or foreign
antitrust, competition or other laws, each of the Company and Parent shall use
its reasonable best efforts to resist or resolve such suit.
(c) "Antitrust Law" means the Xxxxxxx Act, as amended, the Xxxxxxx Act, as
amended, the HSR Act, the Federal Trade Commission Act, as amended, all other
federal, state, or foreign statutes, rules, regulations, orders, decrees,
administrative and judicial doctrines, and other laws that are designed or
intended to prohibit, restrict or regulate actions having the purpose or effect
of monopolization, creating or enhancing a dominant position, restraint of trade
or lessening of competition through merger or acquisition.
(d) Notwithstanding any other provision of this Agreement, under no
circumstances shall Parent be obligated, in connection with its efforts to
obtain any required consent or approval of a Governmental Entity, to take any
action that, in the reasonable judgment of Parent, would reasonably be expected
to materially impair the overall benefits expected to be realized by Parent from
consummation of the Merger.
6.2 ACCESS TO INFORMATION. (a) Upon reasonable notice and subject to
applicable Laws relating to the exchange of information, during the period prior
to the Effective Time, the Company shall, and shall cause its Subsidiaries to,
afford to the officers, employees, accountants, counsel and other
representatives of Parent, access, during normal business hours, to its
officers, employees, agents, properties, books, contracts, commitments and
records, and, during such period, the Company shall, and shall cause its
Subsidiaries to, make available to Parent all other information concerning its
business, properties and personnel as Parent may reasonably request.
(b) Parent shall hold all information furnished by or on behalf of the
Company or any of the Company's Subsidiaries or representatives pursuant to
Section 6.2(a) in confidence to the extent required by, and in accordance with,
the provisions of the confidentiality agreement, dated December 10, 1998,
between the Company and Parent (the "Confidentiality Agreement").
(c) No investigation by the Parent or its representatives shall affect the
representations and warranties of the other set forth herein.
6.3 COMPANY STOCKHOLDERS MEETING. The Company shall take all action in
accordance with the federal securities laws, the DGCL and the Company
Certificate and the Company By-laws necessary to duly call, give notice of,
convene and hold a special meeting of the Company Stockholders (the "Company
Stockholders Meeting") to be held on the earliest practicable date determined in
consultation with Parent to consider and vote upon approval of the Merger, this
Agreement and the transactions contemplated hereby. Unless the Board of
Directors of the Company shall withdraw, modify or change, in a manner adverse
to Parent, the Company Board Recommendation pursuant to Section 6.13, the
Company shall solicit the approval of the Merger, this Agreement and the
transactions contemplated hereby, by the Company Stockholders, and the Board of
Directors of the Company shall make the Company Board Recommendation.
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6.4 LEGAL AND OTHER CONDITIONS TO MERGER. Subject to Section 6.1(d), each
of the Company and Parent shall, and shall cause its Subsidiaries to, use their
reasonable best efforts to take, or cause to be taken, all appropriate actions
(i) to comply promptly with all legal requirements that may be imposed on such
party or its Subsidiaries with respect to the Merger and, subject to the
conditions set forth in Article VII, to consummate the transactions contemplated
by this Agreement, (ii) to obtain (and to cooperate with the other party to
obtain) any consent, authorization, order or approval of, or any exemption by,
any Governmental Entity and any other third party that is required to be
obtained by Parent or the Company or any of their respective Subsidiaries in
connection with the Merger and the other transactions contemplated by this
Agreement and (iii) to consummate and make effective as promptly as practicable
the transactions contemplated by this Agreement.
6.5 AFFILIATES OF THE COMPANY. The Company shall use its reasonable best
efforts to cause each such person who may be at the date of the Company
Stockholders Meeting an "affiliate" of the Company for purposes of Rule 145
under the Securities Act to execute and deliver to Parent at or prior to the
Closing the written undertakings in the form attached hereto as Exhibit A (a
"Company Affiliate Letter"). No later than 10 days prior to the Closing, the
Company, after consultation with its outside counsel, shall provide Parent with
a letter (reasonably satisfactory to outside counsel to Parent) specifying all
of the persons or entities who, in the Company's opinion, may be deemed to be
"affiliates" of the Company under the preceding sentence. The foregoing
notwithstanding, Parent shall be entitled to place legends as specified in the
Company Affiliate Letter on the certificates evidencing Parent Common Stock to
be received by any such "affiliate" of the Company specified in such letter
pursuant to the terms of this Agreement, and to issue appropriate stop transfer
instructions to the transfer agent for the shares of Parent Common Stock,
consistent with the terms of the Company Affiliate Letter, regardless of whether
such person has executed the Company Affiliate Letter.
6.6 STOCK EXCHANGE LISTING. Parent shall use its reasonable best efforts to
cause the shares of Parent Common Stock to be issued in the Merger to be
approved for listing on the NYSE, subject to official notice of issuance, prior
to the Effective Time.
6.7 EMPLOYEE BENEFITS. (a) (i) Parent shall, as of the Effective Time,
assume and honor or cause the Surviving Corporation to assume and honor, all
Company Benefit Plans (including, but not limited to, each employment,
consulting and severance agreement and the Company's Deferred Compensation Plan
and Supplemental Retirement Plan (the "SRP") and the enhanced SRP benefit for
the six individuals previously disclosed to Parent), pursuant to the terms of
the Company Benefit Plans. Notwithstanding the foregoing, the Company agrees to,
effective as of the date hereof, take appropriate action and to amend the SRP to
clarify that the SRP may be terminated with respect to future benefit accruals
thereunder, which relate to post-Effective Time service.
(ii) Parent acknowledges that for purposes of the Company Benefit
Plans, the consummation of the Merger will constitute a "Change in Control" of
the Company and a "Transaction" (as such terms are defined in such plans,
agreements and arrangements), and that following the Effective Time the
employees set forth in Section 6.7(a)(ii) of the Company Disclosure Schedule may
terminate employment under their employment agreements and receive
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change of control severance benefits (as described in Section 6.7(a)(ii) of the
Company Disclosure Schedule) thereunder.
(b) With respect to employees who are not collectively bargained employees
of the Company immediately prior to the Effective Time ("Company Employees"), in
addition to the foregoing, except as provided herein, Parent shall cause the
Surviving Corporation to continue to maintain the Company Benefit Plans (other
than equity-based plans or arrangements) at least through December 31, 1999.
With respect to such Company Employees, from January 1, 2000 through the second
anniversary of the Effective Time, Parent shall, provide employee benefits and
incentive compensation (other than equity-based programs) substantially
equivalent in the aggregate to, in the discretion of the Parent, either those
provided to the Company Employees immediately prior to the Effective Time or
those provided to similarly situated employees of the Parent and its
Subsidiaries.
(c) For purposes of all employee benefit plans, maintained by or
contributed to by the Parent or its Subsidiaries in which Company Employees
participate, Parent shall cause each such plan to treat the prior service with
the Company and its Subsidiaries of each Company Employee as service rendered to
Parent or its Subsidiaries, as the case may be, for purposes of eligibility to
participate and vesting thereunder. In addition, Parent shall recognize each
Company Employee's service with the Company and its Subsidiaries prior to the
Effective Time for purposes of determining benefit levels for vacation, sick
time, short term disability and severance). In the event Parent terminates,
suspends or merges a Company tax-qualified defined benefit pension plan with a
"final average pay" formula, Parent will make future adjustments to accrued
benefits under such plan based on future compensation increases, cost of living
increases or such other reasonable and appropriate method, determined by the
Parent, to prevent a material reduction in the relative value of the accrued
benefit under Company's pension plan; provided, however, that no such adjustment
shall be required if it would result in a duplication of benefits.
(d) Parent shall (i) waive all limitations as to preexisting conditions
exclusions and waiting periods with respect to participation and coverage
requirements applicable to the Company Employees under any welfare benefits
plans that such Company Employees may be eligible to participate in after the
Effective Time, except for such conditions which are pre-existing conditions
under the applicable Company Benefit Plan and (ii) provide each Company Employee
with credit for any co-payments and deductibles paid prior to the Effective Time
(in the calendar year of the Effective Time) in satisfying any applicable
deductible or out-of-pocket requirements under any welfare plans that such
employees are eligible to participate in after the Effective Time.
(e) The Company's Officer Performance Compensation Plan and, with respect
to corporate headquarters and aerospace division employees, the Company's
Management Performance Plan (the "Performance Plans") shall be terminated at the
Effective Time. The Management Performance Plan, with respect to employees other
than corporate headquarters or aerospace division employees, may, at the
discretion of Parent, continue through December 31, 1999, or be terminated at
the Effective Time. In the event the Management Performance Plan is continued,
as soon as practicable following the Effective Time, Parent shall equitably
adjust the 1999 performance targets established for the Management Performance
Plan to the extent
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adjustment may be appropriate as a result of the effect of the transaction
contemplated herein on such performance targets. Adjusted performance targets
shall provide a reasonably equivalent measure of Company business performance as
a division or subsidiary of Parent relative to the Company's business
performance as an independent company. Following termination of the Performance
Plans, pro rata payments will be made under such plans as of the Effective Time,
based upon the performance of the Company through the end of the month
immediately preceding the Effective Time.
(f) Parent agrees to provide Company Employees severance benefits if such
employee's employment is either involuntarily terminated without cause or
constructively terminated due to relocation or a decrease in base compensation
(a "Termination Event"), in each case within one year following the Effective
Time. The amount of such severance benefits and the provision of non-cash
benefits such as outplacement services and continuation of welfare benefit
coverage shall be determined by Parent, based upon the established severance
policies and practices of the Company and the Parent in connection with
"downsizing" of employees, and upon severance programs in similar industries
and/or geographical locations and other similar factors; provided, that the
Company may establish a severance plan, effective following the Effective Time,
for approximately ninety-five (95) corporate headquarters employees and for the
office personnel of the Company's aerospace division, which will provide
severance benefits if a Termination Event occurs on or prior to December 31,
1999. Such severance plan will provide the level and type of benefits described
in Section 6.7(f) of the Company Disclosure Schedule, the receipt of which shall
be conditioned upon the execution of a standard Parent waiver and release of
claims.
(g) Prior to the Effective Time, the Company may establish a retention
program on terms and conditions to be reasonably agreed upon by Company and the
Parent.
6.8 INDEMNIFICATION; DIRECTORS' AND OFFICERS' INSURANCE. (a) From
and after the Effective Time, Parent shall cause (including, to the extent
required, providing sufficient funding to enable the Surviving Corporation to
satisfy all of its obligations under this Section 6.8(a)), the Surviving
Corporation to indemnify, defend and hold harmless the present and former
officers and directors of the Company in respect of acts or omissions
occurring prior to the Effective Time to the fullest extent provided or
permitted under the Company Certificate, the Company By-laws, and any
indemnification agreements in effect on the date hereof and previously
disclosed in writing to Parent. The Certificate of Incorporation and By-laws
of the Surviving Corporation shall contain provisions with respect to
indemnification substantially the same as those in the Company Certificate
and the Company By-laws.
(b) Parent shall cause the individuals serving as officers and
directors of the Company and its Subsidiaries immediately prior to the Effective
Time to be covered for a period of six years from the Effective Time (or the
period of the applicable statute of limitations, if longer) by the directors'
and officers' liability insurance policy maintained by the Company (provided
that Parent may substitute therefor policies of at least the same coverage and
amounts containing terms and conditions that are not less advantageous than such
policy) with respect to acts or omissions occurring prior to the Effective Time
which were committed by such officers and directors in their capacity as such;
provided, however, that in no event shall Parent be required to
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expend more than 200% of the current amount expended by the Company (the
"Insurance Amount") to maintain or procure insurance coverage pursuant hereto
and provided further that if Parent is unable to maintain or obtain the
insurance called for by this Section 6.8(b), Parent shall use its reasonable
best efforts to obtain as much comparable insurance as available for the
Insurance Amount.
6.9 ADDITIONAL AGREEMENTS. In case at any time after the Effective Time any
further action is necessary or desirable to carry out the purposes of this
Agreement or to vest the Surviving Corporation with full title to all
properties, assets, rights, approvals, immunities and franchises of the Company,
the proper officers and directors of each party to this Agreement and their
respective Subsidiaries shall take all such necessary action as may be
reasonably requested by, and at the sole expense of, Parent.
6.10 PUBLIC ANNOUNCEMENTS. Parent and the Company shall consult with each
other before issuing any press release or otherwise making any public statements
with respect to the Merger or the transactions contemplated hereby and shall not
issue any such press release or make any such public statement without the prior
consent of the other party, which shall not be unreasonably withheld, except, if
time does not permit such consultation and obtaining such consent, as may be
required by Law or the rules and regulations of the NYSE.
6.11 MERGER SUB. Prior to the Effective Time, Merger Sub shall not conduct
any business or make any investments other than as specifically contemplated by
this Agreement and will not have any assets (other than a de minimis amount of
cash paid to Merger Sub for the issuance of its stock to Parent) or any material
liabilities.
6.12 SUBSEQUENT FINANCIAL STATEMENTS. The Company shall provide to Parent a
copy of the Company's financial statements for any period ending after the date
of this Agreement prior to making publicly available its financial results for
any such period and prior to filing any Company SEC Documents after the date of
this Agreement.
6.13 NO SOLICITATION. During the term of this Agreement, the Company itself
shall not, and it shall not authorize or permit any of its Subsidiaries, or any
of its or its Subsidiaries' directors, officers, employees, agents or
representatives, directly or indirectly, to solicit, initiate, encourage or
facilitate, or furnish or disclose non-public information in furtherance of, any
inquiries or the making of any proposal with respect to any recapitalization,
merger, consolidation or other business combination involving the Company, or
the acquisition of any capital stock (other than upon exercise of the Company
Options that are outstanding as of the date hereof) or all or any material
portion of the assets of the Company and its Subsidiaries, taken as a whole, in
a single transaction or a series of related transactions, or any combination of
the foregoing (a "Competing Transaction"), or negotiate, explore or otherwise
engage in discussions with any person (other than Parent, Merger Sub or their
respective directors, officers, employees, agents and representatives) with
respect to any Competing Transaction or enter into any agreement, arrangement or
understanding requiring it to abandon, terminate or fail to consummate the
Merger or any other transactions contemplated by this Agreement and the Company
will immediately cease all existing activities, discussions and negotiations
with any parties conducted heretofore with respect to any proposal for a
Competing Transaction; provided
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that, at any time prior to the approval of the Merger by the Company
Stockholders, the Company may furnish information to, and negotiate or otherwise
engage in discussions with, any party who delivers a Superior Proposal (as
defined below) that was not solicited, initiated, facilitated or encouraged by
the Company, its Subsidiaries or any of their respective representatives,
directors, officers or employees after the date of this Agreement if and so long
as the Board of Directors of the Company determines in good faith, after
consultation with and receipt of advice from its outside counsel, that such
action is required to comply with its fiduciary duties under applicable Law. As
a condition to furnishing non-public information to any party that makes a
Superior Proposal, the Company will enter into a confidentiality agreement with
such party, with terms and conditions no less favorable to the Company than the
terms and provisions contained in the Confidentiality Agreement. In the event
that, prior to the approval of the Merger by the Company Stockholders, the Board
of Directors of the Company receives a Superior Proposal that was not solicited,
initiated, facilitated or encouraged by the Company, its Subsidiaries or any of
their respective representatives, directors, officers or employees, after the
date of this Agreement, and the Board of Directors of the Company determines in
good faith after consultation with its outside counsel that such action is
required to comply with its fiduciary duties under applicable Law, the Board of
Directors of the Company may (subject to this and the following sentences)
withdraw, modify or change, in a manner adverse to Parent, the Company Board
Recommendation and/or recommend a Superior Proposal to the Company Stockholders,
provided that it gives Parent five business days' prior written notice of its
intention to do so. From and after the execution of this Agreement, the Company
shall promptly, orally and in writing, advise Parent of the receipt by it, any
of its Subsidiaries, or any of their respective directors, officers, employees
or representatives, of any inquiries, discussions, negotiations, or proposals
relating to a Competing Transaction (including the specific terms and conditions
thereof, and any amendments or revisions thereto, and the identity of the other
party or parties involved) and promptly furnish to Parent a copy of any such
written proposal in addition to any information provided to or by any third
party relating thereto. In addition, the Company shall immediately advise
Parent, in writing, if the Board of Directors of the Company shall make any
determination as to any Competing Transaction as contemplated by the first
proviso to this Section 6.13. Nothing contained in this Section 6.13 shall
prevent the Company or its Board of Directors from complying with Rule 14e-2
promulgated under the Exchange Act with regard to any proposal for a Competing
Transaction. As used herein, the term "Superior Proposal" means a written
proposal relating to a Competing Transaction that the Board of Directors of the
Company determines is, after consulting with and receipt of advice from the
Company Financial Advisor (or any other nationally recognized investment banking
firm), more favorable to the Company Stockholders from a financial point of view
than the transactions contemplated by this Agreement (including, and after
considering, any adjustment to the terms and conditions proposed by Parent in
response to such Competing Transaction), and (if such Competing Transaction
includes cash as consideration) that sufficient financing commitments have been
obtained with respect to such Competing Transaction that it reasonably expects a
transaction pursuant to such proposal could be consummated and that such
transaction is reasonably capable of being consummated without material delay
taking into account all legal, accounting, regulatory and other aspects of such
Competing Transaction. Nothing in this Section 6.13 shall permit the Company or
Parent to terminate this Agreement except as specifically provided in Article
VIII hereof. The Company shall not release any third party from, or waive any
provision
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of, any standstill agreement to which it is a party or any confidentiality
agreement between it and another person and the Company has previously delivered
all such agreements to Parent.
ARTICLE VII
CONDITIONS PRECEDENT
7.1 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGER. The
respective obligation of each party to effect the Merger shall be subject to the
satisfaction at or prior to the Effective Time of the following conditions:
(a) Stockholder Approval. The requisite holders of issued and
outstanding shares of Company Common Stock shall have duly approved and
adopted the Merger Agreement and the Merger.
(b) NYSE Listing. The shares of Parent Common Stock which shall be
issued to the Company Stockholders upon consummation of the Merger shall
have been authorized for listing on the NYSE, subject to official notice of
issuance.
(c) HSR Act. The waiting period (and any extension thereof) applicable
to the Merger under the HSR Act shall have expired or been terminated.
(d) Other Approvals. (i) Approval by the European Commission under the
EU Council Regulation 4064/89, as amended, shall have been received; (ii)
all waiting periods under the Competition Act of Canada shall have expired
or been terminated; and (iii) all other Parent Required Approvals and all
other Company Required Approvals (other than under the HSR Act which is
covered by Section 7.1(c) above) with respect to the Merger shall have been
obtained except where the failure to obtain such Parent Required Approvals
and Company Required Approvals would not reasonably be expected to have a
Material Adverse Effect on the Company or Parent or to materially impair
the benefits expected to be realized by Parent from consummation of the
Merger.
(e) Registration Statement/Proxy Statement. The Registration Statement
shall have become effective under the Securities Act and no stop order
suspending the effectiveness of the Registration Statement shall have been
issued and no proceedings for that purpose shall have been initiated or
threatened by the SEC. The Proxy Statement shall have been delivered to the
Company Stockholders in accordance with the requirements of the Securities
Act and the Exchange Act.
(f) No Injunctions or Restraints; Illegality. No statute, rule,
regulation, executive or other order shall have been enacted, issued,
promulgated or enforced by any Governmental Entity and no preliminary or
permanent injunction, temporary restraining order or other legal restraint
or prohibition issued by a court or other Governmental Entity (collectively
"Restraints") preventing or rendering illegal the consummation of the
Merger shall be in effect.
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(g) Tax Opinions. Unless Parent makes a Cash Election, the Company
shall have received the opinion of Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
and Parent shall have received the opinion of Wachtell, Lipton, Xxxxx &
Xxxx, which opinions shall be dated as of the Closing Date, to the effect
that the Merger will be treated for U.S. federal income tax purposes as a
reorganization within the meaning of Section 368(a) of the Code and that
Parent, Merger Sub and the Company will each be a party to such
reorganization within the meaning of Section 368(b) of the Code. In
rendering such opinions, such firms may rely upon representations and
covenants, including those contained in certificates of officers of the
Company, Merger Sub and Parent, which representations and covenants are in
form and substance reasonably acceptable to such counsel.
7.2 CONDITIONS TO OBLIGATIONS OF THE COMPANY. The obligation of the Company
to effect the Merger is also subject to the satisfaction or waiver by the
Company at or prior to the Effective Time of the following conditions:
(a) Representations and Warranties. The representations and warranties
of Parent set forth in this Agreement (when read without any exception or
qualification as to materiality or Material Adverse Effect) shall be true
and correct as of the date of this Agreement and (except to the extent such
representations and warranties speak as of a specific date which shall be
true and correct as of such date) as of the Closing Date as though made on
and as of the Closing Date, except where the failure or failures to be so
true and correct would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect on Parent. The Company shall
have received a certificate signed on behalf of Parent by the Chief
Executive Officer, Chief Financial Officer or an Executive Vice President
of Parent to the foregoing effect.
(b) Performance of Obligations of Parent. Parent shall have performed
or complied in all material respects with all agreements and covenants
required to be performed or complied with by it under this Agreement at or
prior to the Effective Time, and the Company shall have received a
certificate signed on behalf of Parent by the Chief Executive Officer,
Chief Financial Officer or an Executive Vice President of Parent to such
effect.
7.3 CONDITIONS TO OBLIGATIONS OF PARENT. The obligation of Parent to effect
the Merger is also subject to the satisfaction or waiver by Parent at or prior
to the Effective Time of the following conditions:
(a) Representations and Warranties. The representations and warranties
of the Company set forth in this Agreement (when read without any exception
or qualification as to materiality or Material Adverse Effect) shall be
true and correct as of the date of this Agreement and (except to the extent
such representations and warranties speak as of a specific date which shall
be true and correct as of such date) as of the Closing Date as though made
on and as of the Closing Date, except where the failure or failures to be
so true and correct would not, individually or in the aggregate, reasonably
be expected to have a Material Adverse Effect on the Company. Parent shall
have
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received a certificate signed on behalf of the Company by the Chief
Executive Officer and the Chief Financial Officer of the Company to the
foregoing effect.
(b) Performance of Obligations of the Company. The Company shall have
performed or complied in all material respects with all agreements and
covenants required to be performed or complied with by it under this
Agreement at or prior to the Effective Time, and Parent shall have received
a certificate signed on behalf of the Company by the Chief Executive
Officer and the Chief Financial Officer of the Company to such effect.
(c) No Material Adverse Change. At any time after the date of this
Agreement there shall not have occurred any event, occurrence, development
or state of circumstances, that has had, or would reasonably be expected to
have, a Material Adverse Effect on the Company.
(d) Affiliate Letters. The Company shall have used its reasonable best
efforts to cause each person identified as an affiliate pursuant to Section
6.5 to deliver to Parent, prior to the Effective Time, a Company Affiliate
Letter.
ARTICLE VIII
TERMINATION AND AMENDMENT
8.1 TERMINATION. This Agreement may be terminated at any time prior to the
Effective Time, whether before or after approval of the matters presented in
connection with the Merger by the Company Stockholders:
(a) by mutual written consent of the Company and Parent;
(b) by either the Company or Parent if (i) any Restraint preventing or
rendering illegal consummation of the Merger shall have become final and
nonappealable (unless the failure by such party to fulfill its obligations
pursuant to Section 6.1(b) shall have been the cause of, or resulted in,
such Restraint) or (ii) any Governmental Entity shall have failed to issue
an order, decree or ruling or to take any other action necessary to fulfill
the condition set forth in Section 7.1(d) and such denial of a request to
issue such order, decree, ruling or take such other action shall have
become final and nonappealable (unless the cause of such denial was the
failure by such party to comply with Section 6.1(b));
(c) by either the Company or Parent if the Merger shall not have been
consummated on or before October 31, 1999, unless the failure of the
Closing to occur by such date shall be due to the failure of the party
seeking to terminate this Agreement to perform or observe the covenants and
agreements of such party set forth herein;
(d) by either the Company or Parent (provided that the terminating
party is not then in material breach of any representation, warranty,
covenant or other agreement
-38-
contained herein) if there shall have been a material breach of any of the
covenants or agreements or any of the representations or warranties set
forth in this Agreement on the part of the other party, which breach is not
cured within 30 days following written notice to the party committing such
breach, or which breach, by its nature or timing, cannot be cured prior to
the Closing Date;
(e) by either the Company or Parent if the approval of the Company
Stockholders required for the consummation of the Merger shall not have
been obtained by reason of the failure to obtain the required vote at the
Company Stockholders Meeting or at any adjournment or postponement thereof;
(f) by Parent if (i) the Board of Directors of the Company shall, or
shall announce its intention to, withdraw, modify or change the Company
Board Recommendation in a manner adverse to Parent, or if the Board of
Directors of the Company shall have refused to affirm the Company Board
Recommendation as promptly as practicable (but in any case within three
business days) after receipt of any written request from Parent or (ii) the
Board of the Directors of the Company approves or recommends a Competing
Transaction; or
(g) by the Company if the Board of Directors of the Company shall
conclude in good faith, after consultation with and receipt of advice from
its outside counsel, that in light of the receipt of a Superior Proposal
that was not solicited, initiated, facilitated or encouraged after the date
of this Agreement by the Company, its Subsidiaries or any of their
respective representatives, directors, officers or employees, such action
is required to comply with its fiduciary duties under applicable Law, the
Company may (only after the Company has made such payment as is provided
for in Section 8.2(b) and only prior to the approval of this Agreement by
the Company Stockholders) terminate this Agreement solely in order to
concurrently enter into a definitive agreement with respect to such
Superior Proposal; provided, however, the Company may not terminate this
Agreement pursuant to this clause (g) until after the fifth business day
following the delivery to Parent of written notice advising Parent that the
Board of Directors of the Company is prepared to enter into a definitive
agreement with respect to a Superior Proposal and only if, during such
five-business day period, the Company and its representatives shall, if
requested by Parent, have negotiated in good faith with Parent to make such
adjustments to the terms and conditions of this Agreement as would enable
the Company to proceed with the Merger on such adjusted terms.
8.2 EFFECT OF TERMINATION. (a) Except as provided in Section 8.2(b), in the
event of termination of this Agreement by either the Company or Parent as
provided in Section 8.1, this Agreement shall forthwith become void and have no
effect, and none of the Company, Parent, any of their respective Subsidiaries or
any of the officers or directors of any of them shall have any liability of any
nature whatsoever hereunder, or in connection with the transactions contemplated
hereby, except that notwithstanding anything to the contrary contained in this
Agreement, neither the Company nor Parent shall be relieved or released from any
liabilities or damages arising out of its willful breach of any provision of
this Agreement and the agreements and covenants set forth in Section 9.1 shall
survive termination.
-39-
(b) In the event of termination of this Agreement without consummation of
the transactions contemplated hereby:
(i) by Parent pursuant to Section 8.1(f);
(ii) by the Company pursuant to Section 8.1(g); or
(iii) by either party pursuant to Sections 8.1(c) or 8.1(e) or by
Parent pursuant to Section 8.1(d), in each case with respect to this clause
(iii), in circumstances where within 16 months after the termination of this
Agreement the Company enters into a definitive agreement in respect of, or
approves or recommends a Competing Transaction or redeems any rights under, or
modifies or agrees to modify, the Company Rights Agreement (or any replacement
thereof) to facilitate, any Competing Transaction with any person (other than
Parent or any Subsidiary of Parent), then the Company shall make payment to
Parent by wire transfer of immediately available funds of a fee in the amount of
$160,000,000 (the "Breakup Fee"), in the case of a termination by Parent
pursuant to clause (i) above, within two business days following such
termination or, in the case of a termination by the Company pursuant to clause
(ii) above, concurrently with such termination, or, in the case of clause (iii)
above, not later than the earliest of the date of such definitive agreement,
approval, recommendation, redemption, modification or agreement to modify.
Acceptance by Parent of the payment referred to in the foregoing sentence shall
constitute conclusive evidence that this Agreement has been validly terminated.
Termination by the Company pursuant to Section 8.1(g) shall not be effective
until payment of the Breakup Fee required by this Section 8.2(b).
8.3 AMENDMENT; EXTENSION; WAIVER. Subject to compliance with applicable
Law, at any time prior to the Effective Time, this Agreement may be amended by
the parties hereto, and the parties hereto may, to the extent legally allowed,
(i) extend the time for the performance of any of the obligations or other acts
of the other parties hereto, (ii) waive any inaccuracies in the representations
and warranties contained herein or in any document delivered pursuant hereto and
(iii) waive compliance with any of the agreements or conditions contained
herein; in each case, by action taken or authorized by their respective Boards
of Directors; provided, however, that, after any approval of the transactions
contemplated by this Agreement by the Company Stockholders, there may not be,
without further approval of such stockholders, any amendment, extension or
waiver of this Agreement or any portion thereof which changes the amount or the
form of the consideration to be delivered to the Company Stockholders hereunder
other than as contemplated by this Agreement. Any amendment or agreement on the
part of the parties hereto to any such extension or waiver shall be valid only
if set forth in a written instrument signed on behalf of such party, but such
extension or waiver or failure to insist on strict compliance with an
obligation, covenant, agreement or condition shall not operate as a waiver of,
or estoppel with respect to, any subsequent or other failure.
-40-
ARTICLE IX
GENERAL PROVISIONS
9.1 NONSURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS. None of the
representations, warranties, covenants and agreements in this Agreement or in
any instrument delivered pursuant to this Agreement shall survive the Effective
Time, except for those covenants and agreements contained herein and therein
that by their terms apply, in whole or in part, after the Effective Time,
including the agreements contained in this Section 9.1 and Sections 6.2(b)
(access to information), 6.7 (employee benefits), 6.8 (indemnification,
directors' and officers' insurance), 6.9 (additional agreements), 8.2 (effect of
termination) and 9.2 (expenses).
9.2 EXPENSES. Subject to the provisions of Article VIII, including Section
8.2, all costs and expenses incurred in connection with this Agreement and the
transactions contemplated hereby shall be paid by the party incurring such
expense; provided, however, that the costs and expenses of printing and mailing
the Proxy Statement, and all filing and other fees paid to the SEC in connection
with the Merger, shall be borne equally by the Company and Parent.
9.3 NOTICES. All notices and other communications given or made pursuant
hereto shall be in writing and shall be deemed to have been duly given or made
as of the date delivered, mailed or transmitted, and shall be effective upon
receipt, if delivered personally, mailed by registered or certified mail
(postage prepaid, return receipt requested) to the parties at the following
addresses (or at such other address for a party as shall be specified by like
means) or sent by electronic transmission to the telecopier number specified
below:
(a) if to the Company, to:
Sundstrand Corporation
Corporate Headquarters
0000 Xxxxxxxx Xxxxxx
Xxxxxxxx, Xxxxxxxx 00000-0000
Attention: General Counsel
Telecopy: (000) 000-0000
with a copy to:
Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx X. Xxxxx, Esq.
Xxxx X. Xxxxx, Esq.
Telecopy No.: (000) 000-0000
(b) if to Parent or Merger Sub, to:
United Technologies Corporation
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United Technologies Building
0 Xxxxxxxxx Xxxxx
Xxxxxxxx, Xxxxxxxxxxx 00000
Attention: General Counsel
Telecopy: (000) 000-0000
with a copy to
Wachtell, Lipton, Xxxxx & Xxxx
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx X. Xxxxx, Esq.
Telecopy No.: (000) 000-0000
9.4 INTERPRETATION; CERTAIN DEFINITIONS. (a) When a reference is made in
this Agreement to Articles, Sections or Exhibits, such reference shall be to an
Article, a Section of or an Exhibit to this Agreement unless otherwise
indicated. The table of contents and headings contained in this Agreement are
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
(b) (i) References in this Agreement (except as specifically otherwise
defined) to "affiliates" shall mean, as to any person, any other person that,
directly or indirectly, controls, or is controlled by, or is under common
control with, such person. As used in this definition, "control" (including,
with its correlative meanings, "controlled by" and "under common control with")
shall mean the possession, directly or indirectly, of the power to direct or
cause the direction of management or policies of a person, whether through the
ownership of securities or partnership of other ownership interests, by contract
or otherwise.
(ii) As used in this Agreement, any reference to any state of facts,
event, change or effect having a "Material Adverse Effect" on or with respect to
the Company or Parent, as the case may be, means such state of facts, event,
change or effect that has had a material adverse effect on the business, assets,
properties, results of operations or condition (financial or otherwise) of the
Company and its Subsidiaries or Parent and its Subsidiaries, in either case,
taken as a whole, provided that Material Adverse Effect shall not include
changes or effects relating to general U.S. or global economic conditions.
(iii) References in this Agreement to "Subsidiaries" of the Company or
Parent shall mean any corporation or other form of legal entity of which more
than 50% of the outstanding voting securities are on the date hereof, directly
or indirectly, owned by the Company or Parent, as the case may be.
-42-
(iv) References in the Agreement to "person" shall mean an individual,
a corporation, a partnership, an association, a trust or any other entity or
organization, including, without limitation, a Governmental Entity.
(v) Use of the word "including" shall mean "including, without
limitation."
(vi) Reference to the "knowledge" of any person that is not an
individual shall be to the knowledge of the executive officers of such person
and, with respect to representations and warranties made or deemed to be made as
of the Closing Date, unless expressly limited to a specified date of this
Agreement, shall include knowledge obtained at any time after the date hereof
and prior to the Closing Date.
9.5 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when counterparts have been signed by each of the parties
and delivered to the other parties, it being understood that all parties need
not sign the same counterpart.
9.6 ENTIRE AGREEMENT. This Agreement (and the Exhibits, Disclosure
Schedules and other documents delivered pursuant hereto) and the Confidentiality
Agreement constitute the entire agreement and supersedes all prior agreements
and understandings, both written and oral, among the parties with respect to the
subject matter hereof.
9.7 GOVERNING LAW. This Agreement shall be governed and construed in
accordance with the Laws of the State of Delaware, without regard to any
applicable conflicts of Law.
9.8 CONSENT TO JURISDICTION; VENUE. (a) Each of the parties hereto
irrevocably submits to the exclusive jurisdiction of the state courts of
Delaware and to the jurisdiction of the United States District Court for the
District of Delaware, for the purpose of any action or proceeding arising out of
or relating to this Agreement and each of the parties hereto irrevocably agrees
that all claims in respect to such action or proceeding may be heard and
determined exclusively in any Delaware state or federal court sitting in the
City of Wilmington, Delaware. Each of the parties hereto agrees that a final
judgment in any action or proceeding shall be conclusive and may be enforced in
other jurisdictions by suit on the judgment or in any other manner provided by
law.
(b) Each of the parties hereto irrevocably consents to the service of any
summons and complaint and any other process in any other Action or proceeding
relating to the Merger, on behalf of itself or its property, by the personal
delivery of copies of such process to such party. Nothing in this Section 9.8
shall affect the right of any party hereto to serve legal process in any other
manner permitted by law.
9.9 SPECIFIC PERFORMANCE. The transactions contemplated by this Agreement
are unique. Accordingly, each of the parties acknowledges and agrees that, in
addition to all other remedies to which it may be entitled, each of the parties
hereto is entitled to a decree of specific performance, provided that such party
is not in material default hereunder.
-43-
9.10 SEVERABILITY. If any term or other provision of this Agreement is
invalid, illegal or incapable of being enforced by any rule of Law or public
policy, all other conditions and provisions of this Agreement shall nevertheless
remain in full force and effect so long as the economic or legal substance of
the transactions contemplated hereby is not affected in any manner materially
adverse to any party. Upon such determination that any term or other provision
is invalid, illegal or incapable of being enforced, the parties hereto shall
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible in an acceptable manner to the end
that transactions contemplated hereby are fulfilled to the extent possible.
9.11 ASSIGNMENT; THIRD PARTY BENEFICIARIES. Neither this Agreement nor any
of the rights, interests or obligations shall be assigned by any of the parties
hereto (whether by operation of Law or otherwise) without the prior written
consent of the other parties. Subject to the preceding sentence, this Agreement
will be binding upon, inure to the benefit of and be enforceable by the parties
and their respective successors and assigns. Except for Section 6.8, this
Agreement (including the documents and instruments referred to herein) is not
intended to confer upon any person other than the parties hereto any rights or
remedies hereunder.
-44-
IN WITNESS WHEREOF, the Company, Parent and Merger Sub have caused
this Agreement to be executed by their respective officers thereunto duly
authorized as of the date first above written.
SUNDSTRAND CORPORATION
By: /s/ Xxxxxx X. Xxxxxxx
Name: Xxxxxx X. Xxxxxxx
Title: Chairman, President and
Chief Executive Officer
UNITED TECHNOLOGIES CORPORATION
By: /s/ Xxxxxx Xxxxx
Name: Xxxxxx Xxxxx
Title: Chairman, President and
Chief Executive Officer
HSSAIL INC.
By: /s/ Xxx Xxxxxxx
Name: Xxx Xxxxxxx
Title: President
-45-
Exhibit A
____________. 1999
United Technologies Corporation
United Technologies Building
0 Xxxxxxxxx Xxxxx
Xxxxxxxx, Xxxxxxxxxxx 00000
Gentlemen:
The undersigned acknowledges that, as of the date hereof, the
undersigned may be deemed to be an "affiliate" of Sundstrand Corporation, a
Delaware corporation (the "Company"), as the term "affiliate" is used in and for
purposes of paragraphs (c) and (d) of Rule 145 ("Rule 145") promulgated by the
Securities and Exchange Commission (the "Commission") under the Securities Act
of 1933, as amended (the "Securities Act"), although nothing contained herein
shall be construed as an admission of such fact. Pursuant to the terms and
subject to the conditions of the Agreement and Plan of Merger dated as of
February __, 1999 (the "Agreement"), among the Company, United Technologies
Corporation, a Delaware corporation ("Parent"), and HSSail Inc., a Delaware
corporation and a wholly owned Subsidiary of Parent ("Merger Sub"), the Company
will be merged with and into Merger Sub (the "Merger") and all of the
outstanding shares of common stock of the Company, par value $.50 per share
("Company Common Stock"), will be converted into the right to receive shares of
common stock par value $1.00 per share, of Parent ("Parent Common Stock") and/or
the Cash Consideration (as defined in the Agreement). In, or as a result of, the
Merger, the undersigned may receive shares of Parent Common Stock in exchange
for the shares of the Company Common Stock owned by the undersigned immediately
prior to the time of the effectiveness of the Merger (the "Effective Time").
The undersigned acknowledges that if the undersigned is an
"affiliate," as the term is used in and for the purposes of Rule 145 under the
Securities Act, the undersigned's ability to sell, assign or transfer shares of
Parent Common Stock beneficially owned by the undersigned as a result of the
Merger may be restricted unless such transaction is registered under the
Securities Act or an exemption from such registration is available. The
undersigned understands that such exemptions are limited and the undersigned has
obtained advice of counsel as to the nature and conditions of such exemptions,
including information with respect to the applicability to the sale, assignment
or transfer of such securities of Rule 144 and 145(d) promulgated under the
Securities Act.
The undersigned further acknowledges and agrees with Parent that the
undersigned will not offer to sell, transfer or otherwise dispose of any of the
shares of Parent Common Stock beneficially owned by the undersigned as a result
of the Merger except (a) in compliance with the applicable provisions of Rule
145 or (b) pursuant to a registration statement under the Securities Act or (c)
in a transaction that, in the opinion of counsel reasonably satisfactory to
Parent or as described in a "no-action" or interpretive letter from the Staff of
the Commission, is not required to be registered under the Securities Act;
provided, however, that,
A-1
for so long as the undersigned holds any shares of Parent Common Stock as to
which the undersigned is subject to the limitations of Rule 145, Parent will use
its reasonable efforts to file all reports required to be filed by it pursuant
to the Securities Exchange Act of 1934, as amended, and the rules and
regulations thereunder, as the same shall be in effect at the time, so as to
satisfy the requirements of paragraph (c) of Rule 144 under the Securities Act
that there be available current public information with respect to Parent, and
to that extent to make available to the undersigned the exemption afforded by
Rule 145 with respect to the sale, transfer or other disposition of the shares
of Parent Common Stock.
In the event of a sale or other disposition by the undersigned of
shares of Parent Common Stock pursuant to Rule 145(d)(1), the undersigned will
supply Parent with evidence of compliance with such Rule, in the form of a
letter in the form of Annex I hereto. The undersigned understands that Parent
may instruct its transfer agent to withhold the transfer of any shares of Parent
Common Stock owned by the undersigned, but that upon receipt of such evidence of
compliance or the availability of an exemption from registration under the
Securities Act, the transfer agent shall effectuate the transfer of shares of
Parent Common Stock sold as indicated in the letter.
The undersigned acknowledges and agrees that appropriate legends will
be placed on certificates representing shares of Parent Common Stock received by
the undersigned in the Merger or held by a transferee thereof which legends will
be removed by delivery of substitute certificates, and the related transfer
restrictions will be lifted forthwith, upon receipt of an opinion in form and
substance reasonably satisfactory to Parent from independent counsel reasonably
satisfactory to Parent to the effect that such legends are no longer required
for purposes of the Securities Act. Notwithstanding the foregoing, any such
legends will be removed by delivery of substitute certificates upon written
request of the undersigned if at the time of making such request the undersigned
would otherwise be permitted to dispose of the shares of Parent Common Stock
represented by such certificates pursuant to Rule 145(d)(2) or Rule 145(d)(3).
A-2
The undersigned acknowledges that (i) the undersigned has
carefully read this letter and understands the requirements hereof and the
limitations imposed upon the distribution, sale, transfer or other
disposition of shares of Parent Common Stock and Company Common Stock and
(ii) the receipt by Parent of this letter agreement is an inducement to
Parent's obligations to consummate the Merger. This letter agreement shall
expire and be of no force or effect upon termination of the Agreement prior
to the Effective Time.
Very truly yours,
---------------------------------
Name:
Accepted and agreed this
___ day of ___________, 1999
UNITED TECHNOLOGIES CORPORATION
By:______________________________
Name: ________________________
Title: _______________________
A-3
Annex I to
Exhibit A
_______________ ___, _____
United Technologies Corporation
United Technologies Building
0 Xxxxxxxxx Xxxxx
Xxxxxxxx, Xxxxxxxxxxx 00000
On __________ __, ____, the undersigned sold the securities of United
Technologies Corporation (the "Parent") described below in the space provided
for that purpose (the "Securities"). The Securities were acquired by the
undersigned in connection with the merger of Sundstrand Corporation with HSSail
Inc.
Based upon the most recent report or statement filed by Parent with
the Securities and Exchange Commission, the Securities sold by the undersigned
were within the prescribed limitations set forth in paragraph (e) of Rule 144
promulgated under the Securities Act of 1933, as amended (the "Act").
The undersigned hereby represents to Parent that the Securities were
sold in "brokers' transactions" within the meaning of Section 4(4) of the Act or
in transactions directly with a "market maker" as that term is defined in
Section 3(a)(38) of the Securities Exchange Act of 1934, as amended. The
undersigned further represents to Parent that the undersigned has not solicited
or arranged for the solicitation of orders to buy the Securities, and that the
undersigned has not made any payment in connection with the offer or sale of the
Securities to any person other than to the broker who executed the order in
respect of such sale.
Very truly yours,
DESCRIPTION OF SECURITIES SOLD:
A-4
