<PAGE>
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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SCHEDULE 14D-1
Tender Offer Statement
Pursuant to Section 14(d)(1)
of the Securities Exchange Act of 1934
and
SCHEDULE 13D
Pursuant to Section 13(d)
of the Securities Exchange Act of 1934
----------------
International Comfort Products Corporation
(Name of Subject Company)
----------------
Titan Acquisitions, Ltd.
United Technologies Corporation
(Bidders)
----------------
Ordinary Stock, No Par Value Per Share
(Title of Class of Securities)
----------------
458978-10-3
(CUSIP Number of Class of Securities)
----------------
William H. Trachsel, Esq.
Senior Vice President, General Counsel and Secretary
United Technologies Corporation
One Financial Plaza
Hartford, CT 06101
Tel. Number (860) 728-7000
(Name, Address and Telephone Number of Persons Authorized to
Receive Notices and Communications on Behalf of Bidders)
----------------
With a copy to:
Christopher E. Austin, Esq.
Cleary, Gottlieb, Steen & Hamilton
One Liberty Plaza
New York, New York 10006
(212) 225-2000
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CALCULATION OF FILING FEE
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<TABLE>
<CAPTION>
Transaction Valuation* Amount of Filing Fee**
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<S> <C>
$503,277,504.00 $100,655.50
</TABLE>
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* Transaction valuation assumes the purchase of 42,832,128 shares of ordinary
stock at $11.75 in cash per share.
** The amount of the filing fee, calculated in accordance with Regulation
240.0-11 of the Securities Exchange Act of 1934, equals 1/50 of one percent
of the value of the shares to be purchased.
[_]Check Box if any part of the fee is offset as provided by Rule 0-11(a)(2)
and identify the filing with which the offsetting fee was previously paid.
Identify the previous filing by registration statement number, or the Form
or Schedule and the date of its filing.
Amount Previously Paid: Not applicable. Filing Party:
Form or Registration No.: Date Filed
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<PAGE>
SCHEDULE 14D-1
CUSIP No. 458978-10-3 Page 2 of 7 Pages
1.
Name of Reporting Persons:
S.S. or I.R.S. Identification Nos. of Above Person
Titan Acquisitions Ltd.
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2.
Check the Appropriate Box if a Member of a Group (a) [_]
(See Instructions) (b) [_]
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3.
SEC Use Only
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4.
Sources of Funds (see Instructions)
AF
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5.
Check if Disclosure of Legal Proceedings is Required
Pursuant to Items 2(e) or 2(f) [_]
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6.
Citizenship or Place of Organization
Province of New Brunswick, Ontario, Canada
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7.
Aggregate Amount Beneficially Owned by Each Reporting
Person
15,809,508
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8.
Check Box if the Aggregate Amount in Row (7) Excludes
Certain Shares [_]
(See Instructions)
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9.
Percent of Class Represented by Amount in Row (7)
38.7%
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10.
Type of Reporting Person (See Instructions)
CO
<PAGE>
SCHEDULE 14D-1
CUSIP No. 458978-10-3 Page 3 of 7 Pages
1.
Name of Reporting Persons:
S.S. or I.R.S. Identification Nos. of Above Person
United Technologies Corporation
060570975
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2.
Check the Appropriate Box if a Member of a Group (a) [_]
(See Instructions) (b) [_]
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3.
SEC Use Only
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4.
Sources of Funds (see Instructions)
WC & OO
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5.
Check if Disclosure of Legal Proceedings is Required
Pursuant to Items 2(e) or 2(f) [_]
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6.
Citizenship or Place of Organization
Delaware
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7.
Aggregate Amount Beneficially Owned by Each Reporting
Person
15,809,508
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8.
Check Box if the Aggregate Amount in Row (7) Excludes
Certain Shares [_]
(See Instructions)
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9.
Percent of Class Represented by Amount in Row (7)
38.7%
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10.
Type of Reporting Person (See Instructions)
CO
<PAGE>
INTRODUCTION
This Tender Offer Statement on Schedule 14D-1 relates to a tender offer by
Titan Acquisitions, Ltd., a corporation organized under the laws of the
Province of New Brunswick, Canada ("Purchaser") and a wholly owned subsidiary
of United Technologies Corporation, a Delaware corporation ("Parent"), to
purchase all of the outstanding ordinary shares (the "Shares"), of
International Comfort Products Corporation, a corporation continued under the
federal laws of Canada, at a cash purchase price of $11.75 per Share, upon the
terms and subject to the conditions set forth in the Offer to Purchase and
Circular (collectively, the "Offer to Purchase"), dated June 30, 1999, and in
the related Letter of Transmittal and the Notice of Guaranteed Delivery
(which, together with any Offer to Purchase and the amendments or supplements
thereto, collectively constitute the "Offer"), copies of which are filed as
Exhibits (a)(1), (a)(2) and (a)(3) hereto, respectively.
Item 1. Security and Subject Company.
(a) The subject company is International Comfort Products Corporation, a
Canadian corporation (the "Company"), and the principal executive offices of
the Company are located at 501 Corporate Center Drive, Suite 200, Franklin, TN
37067.
(b) The class of equity securities sought is the Company's ordinary shares,
no par value per share. The information set forth in "Introduction" of the
Offer to Purchase is incorporated herein by reference.
(c) The information regarding the principal market for, and the high and low
sales prices for, the Shares set forth in "Section 7. Price Range of the
Shares; Dividends" of the Offer to Purchase is incorporated herein by
reference.
Item 2. Identity and Background.
(a)-(d),(g) The persons filing this statement are Parent and Purchaser. The
information set forth in "Section 10. Certain Information Concerning Parent
and Purchaser" of the Offer to Purchase is incorporated herein by reference.
The names, business addresses, present principal occupations or employment,
material occupations, positions, offices or employments during the last five
years and citizenship of the directors and executive officers of Parent and
Purchaser are set forth in Annex I of the Offer to Purchase, which Annex is
incorporated herein by reference.
(e)-(f) During the last five years, none of Parent or Purchaser nor, to the
best knowledge of Parent or Purchaser, none of the persons listed in Annex I
of the Offer to Purchase, (i) has been convicted in a criminal proceeding
(excluding traffic violations or similar misdemeanors) or (ii) has been a
party to a civil proceeding of a judicial or administrative body of competent
jurisdiction and as a result of such proceeding was or is subject to a
judgment, decree or final order enjoining future violations of, or prohibiting
activities subject to, Federal or State securities laws or finding any
violation of such laws.
Item 3. Past Contacts, Transactions or Negotiations with the Subject Company.
(a)-(b) The information set forth in "Introduction", "Section 12. Background
of the Transaction" and "Section 13. Purpose of the Offer; The Pre-Acquisition
Agreement; The Lock-up Agreements" of the Offer to Purchase is incorporated
herein by reference.
Item 4. Source and Amount of Funds or Other Consideration.
(a)-(b) The information set forth in "Introduction", "Section 11. Source and
Amount of Funds" of the Offer to Purchase is incorporated herein by reference.
Item 5. Purpose of the Tender Offer and Plans or Proposals of the Bidders.
(a)-(e) The information set forth in "Introduction", "Section 8. Certain
Effects of the Transaction", "Section 12. Background of the Transaction" and
"Section 13. Purpose of the Offer; The Pre-Acquisition Agreement; The Lock-up
Agreements" of the Offer to Purchase is incorporated herein by reference.
4
<PAGE>
(f)-(g) The information set forth in "Section 8. Certain Effects of the
Transaction" of the Offer to Purchase is incorporated herein by reference.
Item 6. Interest in Securities of the Subject Company.
(a)-(b) The information set forth in "Introduction", "Section 10. Certain
Information Concerning Parent and Purchaser," "Section 12. Background of the
Transaction" and "Section 13. Purpose of the Offer; The Pre-Acquisition
Agreement; The Lock-up Agreements" of the Offer to Purchase is incorporated
herein by reference.
Item 7. Contracts, Arrangements, Understandings or Relationships with Respect
to the Subject Company's Securities.
The information set forth in "Introduction", "Section 10. Certain
Information Concerning Parent and Purchaser", "Section 12. Background of the
Transaction" and "Section 13. Purpose of the Offer; The Pre-Acquisition
Agreement; The Lock-up Agreements" of the Offer to Purchase is incorporated
herein by reference.
Item 8. Persons Retained, Employed or to be Compensated.
The information set forth in "Introduction", and "Section 16. Certain Fees
and Expenses" of the Offer to Purchase is incorporated herein by reference.
Item 9. Financial Statements of Certain Bidders.
The information set forth in "Section 10. Certain Information Concerning
Parent and Purchaser" of the Offer to Purchase is incorporated herein by
reference.
The incorporation by reference herein of the above-referenced financial
information does not constitute an admission that such information is material
to a decision by a securityholder of the Company whether to sell, tender or
hold Shares.
Item 10. Additional Information.
(a) The information set forth in "Introduction", "Section 12. Background of
the Transaction", "Section 13. Purpose of the Offer; The Pre-Acquisition
Agreement; The Lock-up Agreements" and "Section 5. Certain Conditions of the
Offer" of the Offer to Purchase is incorporated herein by reference.
(b)-(c) The information set forth in "Introduction", "Section 5. Certain
Conditions of the Offer" and "Section 15. Certain Legal Matters" of the Offer
to Purchase is incorporated herein by reference.
(d) The information set forth in "Section 8. Certain Effects of the
Transaction" of the Offer to Purchase is incorporated herein by reference.
(e) The information set forth in "Section 15. Certain Legal Matters" of the
Offer to Purchase is incorporated herein by reference.
(f) The information set forth in the Offer to Purchase, the Letter of
Transmittal, the Notice of Guaranteed Delivery, the Pre-Acquisition Agreement
dated as of June 23, 1999 among the Company, Purchaser and Parent, the Lock-Up
Agreements dated as of June 23, 1999 among Purchaser, Parent and certain
stockholders of the Company, copies of which are attached hereto as Exhibits
(a)(1), (a)(2), (a)(3), (c)(1), (c)(2) and (c)(3), respectively, is
incorporated herein by reference.
Item 11. Material to be Filed as Exhibits.
See Exhibit Index.
5
<PAGE>
SIGNATURES
After due inquiry and to the best of its knowledge and belief, each of the
undersigned certifies that the information set forth in this statement is true,
complete and correct.
United Technologies Corporation
/s/ William Trachsel
By: _________________________________
Name: William Trachsel
Title:Senior Vice President,
General Counsel & Secretary
Titan Acquisitions, Ltd.
/s/ Ari Bousbib
By: _________________________________
Name: Ari Bousbib
Title:President
Dated June 30, 1999
6
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit Page
No. Description No.
------- ----------- ----
<C> <S> <C>
(a)(1) Offer to Purchase dated June 30, 1999...........................
(a)(2) Form of Letter of Transmittal...................................
(a)(3) Form of Notice of Guaranteed Delivery...........................
(a)(4) Form of Letter from the U.S. Dealer Manager to Brokers, Dealers,
Commercial Banks, Trust Companies and Other Nominees............
(a)(5) Form of Letter to Clients from Brokers, Dealers, Commercial
Banks, Trust Companies and Other Nominees.......................
(a)(6) Summary Advertisement published June 30, 1999...................
(a)(7) Text of Press Release issued on June 24, 1999...................
(b) Not applicable..................................................
(c)(1) Pre-Acquisition Agreement dated as of June 23, 1999 among
Purchaser, Parent and the Company...............................
(c)(2) Lock-up Agreement dated as of June 23, 1999 between the Company
and Ravine Partners, Ltd........................................
(c)(3) Lock-up Agreement dated as of June 23, 1999 between the Company
and Ontario Teachers' Pension Plan Board........................
(c)(4) Confidentiality Agreement dated March 19, 1999..................
</TABLE>
7
<PAGE>
Exhibit (a)(1)
This document is important and requires your immediate attention. If you are
in doubt as to how to deal with it,
you should consult your investment dealer, broker, bank manager, lawyer or
other advisor
Offer to Purchase for Cash
All Outstanding Ordinary Shares
of
INTERNATIONAL COMFORT PRODUCTS CORPORATION
at
US$11.75 Per Share
by
TITAN ACQUISITIONS, LTD.
A Wholly Owned Subsidiary of
UNITED TECHNOLOGIES CORPORATION
THE OFFER WILL EXPIRE AT 12:00 MIDNIGHT, TORONTO TIME, ON
WEDNESDAY, JULY 28, 1999, UNLESS EXTENDED OR WITHDRAWN
The Offer (as defined herein) is subject to certain conditions, including
that there are validly tendered and not withdrawn at the Expiry Time (as
defined herein) a number of Shares (as defined herein) that, together with any
Shares held by or on behalf of United Technologies Corporation, represents not
less than 71% of the Shares outstanding (calculated on a fully diluted basis)
at the Expiry Time. See Section 5. Tendered Shares may be withdrawn at any
time prior to the Expiry Time. Titan Acquisitions, Ltd. ("Purchaser") intends
to acquire all Shares remaining untendered after the Offer, at the same price
per Share as in the Offer, through a share consolidation, compulsory
acquisition or other second stage transaction. See Section 13.
Purchaser has entered into an agreement with certain shareholders pursuant
to which, among other things, such holders have agreed, subject to terms and
conditions described in Section 13, to validly tender an aggregate of
15,809,508 Shares, constituting approximately 36.9% of the Shares on a fully
diluted basis.
The Board of Directors of International Comfort Products Corporation has, by
the unanimous vote of all Directors present, recommended that holders of
Shares accept the Offer and tender all their Shares pursuant to the Offer.
Shareholders who wish to tender Shares should either (1) complete and sign
the Letter of Transmittal (or a manually signed facsimile thereof) in
accordance with the instructions in the Letter of Transmittal, mail or deliver
it and any other required documents to the U.S. or Canadian Depositary (as
defined herein) and either deliver the certificates for such Shares to the
U.S. or Canadian Depositary along with the Letter of Transmittal or tender
such Shares pursuant to the procedures for book-entry transfer set forth in
Section 3 or (2) request their broker, dealer, commercial bank, trust company
or other nominee to effect the transaction for them. Any shareholder whose
Shares are registered in the name of a broker, dealer, commercial bank, trust
company or other nominee must contact such broker, dealer, commercial bank,
trust company or other nominee if such holder desires to tender such Shares.
Any shareholder who desires to tender Shares and whose certificates
representing such Shares are not immediately available, or who cannot comply
with the procedure for book-entry transfer on a timely basis, may tender such
Shares by following the procedures for guaranteed delivery set forth in
Section 3.
All payments will be made in U.S. dollars, unless the holder tenders Shares
to the Canadian Depositary and elects to receive payment in Canadian dollars
by checking the appropriate box in the Letter of Transmittal, with the amount
determined based on the market rate of exchange obtained by Purchaser (net of
any applicable commissions or exchange charges) on the business day
immediately preceding the date of the delivery of such payment by such
Depositary.
Questions and requests for assistance may be directed to the Information
Agent, either Depositary or, in the case of questions and requests from U.S.
investors only, the U.S. Dealer Manager at the addresses and telephone numbers
set forth on the back cover of this Offer to Purchase. Requests for additional
copies of this Offer to Purchase, the Letter of Transmittal, the Notice of
Guaranteed Delivery and other related materials may be directed to the
Information Agent or to brokers, dealers, commercial banks and trust
companies.
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The Dealer Manager for the Offer in the United States is:
Salomon Smith Barney
June 30, 1999
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
OFFER TO PURCHASE........................................................ 1
Introduction............................................................. 1
1.Terms of the Offer.................................................... 3
2.Acceptance for Payment and Payment for Shares......................... 4
3.Procedure for Tendering Shares........................................ 6
4.Withdrawal Rights..................................................... 8
5.Certain Conditions of the Offer....................................... 9
CIRCULAR................................................................. 12
6a.Certain U.S. Federal Income Tax Consequences......................... 12
6b.Certain Canadian Federal Income Tax Considerations................... 13
7.Price Range of the Shares; Dividends.................................. 17
8.Certain Effects of the Transaction.................................... 17
9.Certain Information Concerning the Company............................ 18
10.Certain Information Concerning Parent and Purchaser................... 21
11.Source and Amount of Funds............................................ 25
12.Background of the Transaction......................................... 25
13.Purpose of the Offer; the Pre-Acquisition Agreement; the Lock-up
Agreements.............................................................. 26
General............................................................. 26
The Pre-Acquisition Agreement....................................... 26
Lock-up Agreements with Shareholders................................ 32
Arrangements with Certain Employees of the Company.................. 33
Confidentiality Agreement........................................... 34
Acquisition of Shares Not Tendered.................................. 34
Plans for the Company............................................... 37
14.Dividends and Distributions........................................... 37
15.Certain Legal Matters................................................. 37
16.Certain Fees and Expenses............................................. 40
17.Miscellaneous......................................................... 41
CONSENTS................................................................. 42
APPROVAL AND CERTIFICATE................................................. 43
</TABLE>
Annex I--Directors And Executive Officers of Parent and Purchaser
ii
<PAGE>
To the Holders of Ordinary Shares of
INTERNATIONAL COMFORT PRODUCTS CORPORATION:
OFFER TO PURCHASE
Introduction
Titan Acquisitions, Ltd., a corporation organized under the laws of the
Province of New Brunswick, Canada ("Purchaser") and a wholly owned subsidiary
of United Technologies Corporation, a Delaware corporation ("Parent"), hereby
offers to purchase all of the outstanding ordinary shares (the "Shares") of
International Comfort Products Corporation, a corporation continued under the
federal laws of Canada (the "Company"), at a cash purchase price of US$11.75
per Share (the "Offer Price") upon the terms and subject to the conditions set
forth in this Offer to Purchase and Circular and in the related Letter of
Transmittal and Notice of Guaranteed Delivery (each of which, together with
any supplements or amendments thereto, collectively constitutes the "Offer").
Tendering shareholders will not be obligated to pay brokerage fees or
commissions or, except as set forth in the Letter of Transmittal, transfer
taxes on the purchase of Shares pursuant to the Offer. However, any tendering
shareholder or other payee who is a U.S. Holder (as defined in Section 6a) and
who fails to complete and sign the Substitute Form W-9 that is included in the
Letter of Transmittal may be subject to a required backup United States
federal income tax withholding of 31% of the gross proceeds payable to such
holder or other payee pursuant to the Offer. See Section 6a. Purchaser will
pay all charges and expenses of Salomon Smith Barney Inc., as the dealer
manager for the Offer in the United States (the "U.S. Dealer Manager"),
Citibank, NA., as the depositary in the United States (the "U.S. Depositary"),
Montreal Trust Company of Canada, as the depositary in Canada (the "Canadian
Depositary") and Georgeson & Company, Inc., as the information agent (the
"Information Agent") incurred in connection with the Offer. See Section 16.
The Offer is being made pursuant to a Pre-Acquisition Agreement, dated June
23, 1999 (the "Pre-Acquisition Agreement"), among Purchaser, Parent and the
Company. The Pre-Acquisition Agreement provides, among other things, for the
making of the Offer by Purchaser. For a description of the Pre-Acquisition
Agreement, see Section 13. Certain U.S. and Canadian tax consequences of the
sale of Shares pursuant to the Offer are described in Sections 6a and 6b.
All payments will be made in U.S. dollars, unless the holder tenders Shares
to the Canadian Depositary and elects to receive payment in Canadian dollars
by checking the appropriate box in the Letter of Transmittal, with the amount
determined based on the market rate of exchange obtained by the Purchaser (net
of applicable commissions or exchange charges) on the business day immediately
preceding the date of the delivery of such payment by such Depositary.
Concurrently with the execution of the Pre-Acquisition Agreement, Purchaser
entered into lock-up agreements (the "Lock-up Agreements") with Ravine
Partners, Ltd. ("Ravine"), the owner of 7,889,870 Shares (representing
approximately 18.4% of the Shares on a fully diluted basis), and Ontario
Teachers' Pension Plan Board ("Teachers"), the owner of 7,919,638 Shares
(representing approximately 18.5% of the outstanding Shares on a fully diluted
basis), respectively. Pursuant to the Lock-up Agreements, Ravine and Teachers
agreed to validly tender and not withdraw their Shares, unless (in the case of
Teachers only) a Superior Takeover Proposal (as defined in the Pre-Acquisition
Agreement) is made. In addition, Ravine has granted Purchaser an option to
purchase its Shares at a price of US$11.75 per Share (or any greater amount
per Share paid in the Offer). Such option is exercisable in certain
circumstances following termination of the Pre-Acquisition Agreement. For a
description of these Lock-up Agreements, see Section 13.
The Board of Directors of the Company has determined, by the unanimous vote
of all Directors present, that the Offer is fair to, and in the best interests
of, the Company's shareholders, has approved the Pre-Acquisition Agreement and
the transactions contemplated thereby and recommends that the Company's
shareholders accept the Offer and tender all of their Shares pursuant thereto.
1
<PAGE>
Credit Suisse First Boston Corporation, the Company's independent financial
advisor ("CSFB"), has delivered to the Board of Directors of the Company its
written opinion, dated June 23, 1999, that as of such date and subject to the
assumptions and qualifications therein, that the consideration to be received
by holders of the Shares pursuant to the Offer was fair to such shareholders
from a financial point of view. A copy of the opinion of CSFB is contained in
the Company's Solicitation/Recommendation Statement on Schedule 14D-9 (the
"Schedule 14D-9") filed with the U.S. Securities and Exchange Commission (the
"SEC") in connection with the Offer, a copy of which (without certain
exhibits) is being furnished to shareholders concurrently herewith.
The Offer is conditioned upon, among other things, at the Expiry Time there
being validly tendered and not withdrawn that number of Shares that, together
with the Shares held by or on behalf of Parent, represents not less than 71%
of the outstanding Shares on a fully diluted basis (the "Minimum Condition").
The Offer is also subject to certain other conditions contained in this Offer
to Purchase. See Sections 1 and 5.
The Company has advised Purchaser that as of June 25, 1999, there were
40,789,128 Shares issued and outstanding, and outstanding options and rights
to purchase 2,043,000 Shares. Parent, Purchaser and their affiliates do not
currently beneficially own any Shares or rights to acquire Shares other than
the rights to acquire Shares under the Lock-up Agreements under certain
circumstances. Accordingly, the Minimum Condition will be satisfied if
30,410,811 Shares (including the Shares subject to the Lock-up Agreements) are
validly tendered and not properly withdrawn before the Expiry Time.
Purchaser intends to acquire all Shares remaining untendered after the Offer
at the Offer Price through a share consolidation, compulsory acquisition or
other second stage transaction. See Section 13.
This Offer to Purchase and the related Letter of Transmittal and Notice of
Guaranteed Delivery contain important information which should be read
carefully by shareholders before they make any decision whether to tender
their Shares pursuant to the Offer.
2
<PAGE>
1. Terms of the Offer
Upon the terms and subject to the conditions of the Offer (including, if the
Offer is extended or amended, the terms and conditions of any such extension
or amendment), Purchaser will accept for payment and will pay for all Shares
validly tendered and not properly withdrawn. As used herein, the term "Expiry
Time" shall mean 12:00 midnight, Toronto time, on Wednesday, July 28, 1999,
unless and until Purchaser shall have extended the period of time during which
the Offer is open, in which event the term "Expiry Time" shall mean the latest
time and date at which the Offer, as so extended by Purchaser, shall expire.
If all conditions to the Offer have not been satisfied or waived at the
scheduled Expiry Time, then pursuant to the Pre-Acquisition Agreement,
Purchaser may elect (but will not be obligated) to extend such Expiry Time for
any period required by any applicable rule, regulation, interpretation or
position of a securities regulatory authority or to permit the Company to cure
a misrepresentation, breach or non-performance under the Pre-Acquisition
Agreement. In addition, the Pre-Acquisition Agreement obligates Purchaser to
extend the Expiry Time from time to time for such periods as necessary to
satisfy the conditions to the Offer, unless in the reasonable judgment of
Parent, all of such conditions cannot be satisfied or waived on or before
December 15, 1999.
Purchaser reserves the right (but will not be obligated), subject to
compliance with applicable U.S. and Canadian regulatory requirements, to waive
or reduce the Minimum Condition or to waive any other condition to the Offer.
If the Minimum Condition or any of the other conditions set forth in Section 5
have not been satisfied by the scheduled Expiry Time, Purchaser may elect (1)
subject to the terms of the Pre-Acquisition Agreement, to extend the Offer
and, subject to applicable withdrawal rights, retain all tendered Shares until
the expiration of the Offer, as extended, (2) subject to compliance with
applicable U.S. and Canadian regulatory requirements and to the terms of the
Pre-Acquisition Agreement, to waive such conditions and accept for payment all
Shares so tendered and not extend the Offer or (3) subject to applicable U.S.
and Canadian regulatory requirements and to the terms of the Pre-Acquisition
Agreement, to terminate the Offer and not accept for payment any Shares and
return all tendered Shares to the tendering stockholders.
The Offer is conditioned upon, among other things, expiration or termination
of all waiting periods imposed by the Hart-Scott-Rodino Antitrust Improvements
Act of 1976, as amended (the "HSR Act"), the satisfaction of conditions
related to competition and foreign investment regulations in Canada and other
non-U.S. jurisdictions, and the Minimum Condition being satisfied. The Offer
is also subject to certain other conditions set forth in Section 5.
Subject to the limitations set forth in the Pre-Acquisition Agreement as
described above, Purchaser reserves the right (but will not be obligated other
than as provided by the Pre-Acquisition Agreement), at any time or from time
to time in its sole discretion, to extend the period during which the Offer is
open by giving oral or written notice of such extension to the Depositaries
and, to the extent required by applicable law, notice to shareholders, and by
making a public announcement of such extension. There can be no assurance that
Purchaser will exercise its right to extend the Offer.
If all the conditions to the Offer have been satisfied or waived at any
scheduled Expiry Time, Purchaser will become obligated to accept for payment
all Shares validly tendered and not withdrawn at such time.
In the Pre-Acquisition Agreement, Purchaser has agreed that it will not,
without the consent of the Company, (1) decrease the Offer Price or change the
form of consideration, (2) decrease the number of Shares sought pursuant to
the Offer, (3) add to or modify the conditions to the Offer or (4) amend,
alter, add or waive any term of the Offer in any manner that is, in the
reasonable opinion of the Company, materially adverse to the holders of the
Shares. Purchaser's right to delay payment for any Shares or not to pay for
any Shares theretofore accepted for payment is subject to the applicable rules
and regulations of the SEC and applicable Canadian regulatory authorities,
including Rule 14e-1(c) under the U.S. Securities and Exchange Act of 1934, as
amended (the "Exchange Act"), relating to Purchaser's obligation to pay
promptly for or return tendered Shares promptly
3
<PAGE>
after the termination or withdrawal of the Offer and applicable provincial
securities laws in Canada which require that payment be made as soon as
possible following acceptance by Purchaser of the tendered Shares and in any
event not more than three days following such acceptance.
Any extension of the period during which the Offer is open, delay in
acceptance for payment or payment, or termination or amendment of the Offer
will be followed, as promptly as practicable, by public announcement thereof,
such announcement in the case of an extension to be issued not later than 9:00
a.m., New York City time, on the next business day after the previously
scheduled Expiry Time in accordance with the public announcement requirements
of Rule 14d-4(c) under the Exchange Act. Without limiting the obligation of
Purchaser under such rule or the manner in which Purchaser may choose to make
any public announcement, Purchaser currently intends to make announcements by
issuing a press release to the Dow Jones News Service and making any
appropriate filing with the SEC and applicable Canadian regulatory authorities
and stock exchanges.
If Purchaser makes a material change in the terms of the Offer or the
information concerning the Offer or if it waives a material condition of the
Offer (including a waiver of the Minimum Condition), Purchaser will
disseminate additional tender offer materials and extend the Offer if and to
the extent required by Rules 14d-4(c), 14d-6(d) and 14e-1 under the Exchange
Act and applicable Canadian securities regulations. These rules generally
provide that the minimum period during which a tender offer must remain open
following a material change in the terms of the offer or information
concerning the offer, other than a change in price or a change in percentage
of securities sought, will depend upon the facts and circumstances, including
the relative materiality of the changes in the terms or information. With
respect to a change in price or a change in percentage of securities sought, a
minimum ten-business day period is generally required under U.S. securities
laws to allow for adequate dissemination to shareholders and for investor
response. In the case of other changes or other material information, an offer
is required under U.S. securities laws to remain open for a minimum of five
business days from the date a material change is first published, sent or
given to security holders, and, if material changes are made with respect to
information that approaches the significance of price and share levels, a
minimum of ten business days may be required to allow for adequate
dissemination and investor response.
The Company has provided Purchaser with the Company's shareholder list and
security position listings for the purpose of disseminating the Offer to
stockholders. This Offer to Purchase and Circular, and the related Letter of
Transmittal and Notice of Guaranteed Delivery and other relevant materials
will be mailed to record holders of Shares on the date hereof and will be
furnished to brokers, dealers, commercial banks, trust companies and similar
persons whose names, or the names of whose nominees, appear on the Company's
shareholder list or, if applicable, who are listed as participants in a
clearing agency's security position listing, for subsequent transmittal to
beneficial owners of Shares.
The Offer is not being made for any options, warrants or rights to acquire
Shares, but only for Shares outstanding at the time of their tender.
The Offer and all contracts resulting from the acceptance hereof shall be
governed by and construed in accordance with (i) the laws of the Province of
Ontario and the laws of Canada applicable therein in the case of tenders from
Canada and (ii) the laws of the State of New York in all other cases.
The Offer to Purchase, including the accompanying Circular, constitute the
take-over bid circular required under Canadian provincial securities
legislation with respect to the Offer.
2. Acceptance for Payment and Payment for Shares
Upon the terms and subject to the conditions of the Offer (including, if the
Offer is extended or amended, the terms and conditions of any such extension
or amendment), Purchaser will accept for payment, and will pay for, all Shares
validly tendered and not properly withdrawn at the Expiry Time, promptly and,
in any event, not later than the third day after acceptance by Purchaser of
the tendered Shares.
If all the conditions to the Offer have been satisfied or waived at any
scheduled Expiry Time, Purchaser will become obligated to accept for payment
all Shares validly tendered and not withdrawn at such time.
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In all cases, payment for Shares purchased pursuant to the Offer will be
made only after timely receipt by the U.S. or Canadian Depositary of (i)
certificates evidencing such Shares (or a timely Book-Entry Confirmation (as
defined in Section 3) with respect to such Shares), (ii) the Letter of
Transmittal (or a manually signed facsimile thereof), properly completed and
duly executed with all required signature guarantees from Eligible
Institutions (as described in Section 3) or an Agent's Message, as defined
below, in connection with a book-entry transfer, and (iii) all other documents
required by the Letter of Transmittal. See Section 3. The term "Agent's
Message" means a message, transmitted by a Book-Entry Transfer Facility (as
defined in Section 3) to, and received by, the Depositary and forming a part
of a Book-Entry Confirmation, which states that such Book-Entry Transfer
Facility has received an express acknowledgment from the participant in such
Book-Entry Transfer Facility tendering the Shares which are the subject of
such Book-Entry Confirmation that such participant has received and agrees to
be bound by the terms of the Letter of Transmittal and that Purchaser may
enforce such agreement against such participant.
For purposes of the Offer, Purchaser will be deemed to have accepted for
payment, and thereby purchased, Shares validly tendered and not withdrawn as,
if and when Purchaser gives oral or written notice to the relevant Depositary
of Purchaser's acceptance of such Shares for payment. In all cases, payment
for Shares purchased pursuant to the Offer will be made by deposit of the
purchase price therefor with the relevant Depositary, which will act as agent
for tendering shareholders for the purpose of receiving payment from Purchaser
and transmitting payment to tendering shareholders whose Shares have
theretofore been accepted for payment. If, for any reason, acceptance for
payment of any Shares tendered pursuant to the Offer is delayed, or Purchaser
is unable to accept for payment Shares tendered pursuant to the Offer, then,
without prejudice to Purchaser's rights under the Offer, the Depositary may,
nevertheless, on behalf of Purchaser, retain tendered Shares and such Shares
may not be withdrawn, except to the extent that the tendering shareholders are
entitled to withdrawal rights as described in Section 4 and under applicable
regulatory requirements. Under no circumstances will interest on the Offer
Price be paid by Purchaser, regardless of any delay in making such payment.
If any tendered Shares are not purchased because of an invalid tender or for
any reason or if certificates are submitted for more Shares than are tendered,
certificates for such Shares not purchased or tendered will be returned
pursuant to the instructions of the tendering stockholder without expense to
the tendering shareholder (or, in the case of Shares delivered by book-entry
transfer into U.S. or Canadian Depositary's account at a Book-Entry Transfer
Facility pursuant to the procedures set forth in Section 3, such Shares will
be credited to an account maintained at the appropriate Book-Entry Transfer
Facility) as promptly as practicable following the expiration, termination or
withdrawal of the Offer.
If, prior to the Expiry Time, Purchaser increases the consideration to be
paid per Share pursuant to the Offer, Purchaser will pay such increased
consideration for all such Shares purchased pursuant to the Offer, whether or
not such Shares were tendered prior to such increase in consideration.
Purchaser reserves the right to transfer or assign, in whole or from time to
time in part, to Parent or one or more of Parent's subsidiaries the right to
purchase Shares tendered pursuant to the Offer; provided, however, that no
such transfer or assignment will release Purchaser from its obligations under
the Offer or prejudice the rights of tendering shareholders to receive payment
for Shares validly tendered and accepted for payment pursuant to the Offer.
All payments will be made in U.S. dollars, unless the person tenders Shares
to the Canadian Depositary and elects to receive payment in Canadian dollars
by checking the appropriate box in the Letter of Transmittal. The amount
payable in Canadian dollars will be determined on the basis of the rate of
exchange obtained by Purchaser (net of any applicable commissions or exchange
charges) on the business day immediately preceding the date of the delivery of
such payment by the Depositary.
In accordance with Rule 10b-13 under the Exchange Act and applicable
provincial securities laws in Canada, Purchaser will not purchase (or arrange
to purchase) Shares otherwise than pursuant to the Offer until the Expiry
Time.
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<PAGE>
3. Procedure for Tendering Share
Valid Tender. For Shares to be validly tendered pursuant to the Offer,
either (a) a Letter of Transmittal (or a manually signed facsimile thereof),
properly completed and duly executed, with any required signature guarantees
or an Agent's Message in connection with a book-entry delivery of Shares and
any other required documents, must be received by the U.S. or Canadian
Depositary at one of its addresses set forth on the back cover of this Offer
to Purchase on or prior to the Expiry Time and either (i) certificates
representing Shares must be received by the U.S. or Canadian Depositary at any
such address on or prior to the Expiry Time or (ii) such Shares must be
delivered pursuant to the procedures for book-entry transfer set forth below
and a Book-Entry Confirmation must be received by the U.S. or Canadian
Depositary, in each case prior to the Expiry Time, or (b) the tendering
shareholder must comply with the guaranteed delivery procedures set forth
below. No alternative, conditional or contingent tenders will be accepted.
Book-Entry Transfer. The U.S. Depositary and the Canadian Depositary will
make a request to establish an account with respect to the Shares at The
Depository Trust Company and The Canadian Depository for Securities Limited
("CDS"), respectively (each, a "Book-Entry Transfer Facility" and
collectively, the "Book-Entry Transfer Facilities") for purpose of the Offer
within two business days after the date of this Offer to Purchase. Any
financial institution that is a participant in a Book-Entry Transfer
Facility's system may make book-entry delivery of Shares by causing a Book-
Entry Transfer Facility to transfer such Shares into a Depositary's account at
such Book-Entry Transfer Facility in accordance with that Book-Entry Transfer
Facility's procedure for such transfer. However, although delivery of Shares
may be effected through book-entry transfer into a Depositary's account at a
Book-Entry Transfer Facility, the Letter of Transmittal (or a manually signed
facsimile thereof), properly completed and duly executed, with any required
signature guaranteed (or an Agent's Message in connection with a book-entry
transfer) and any other required documents, must, in any case, be transmitted
to, and received by, the relevant Depositary at one of its addresses set forth
on the back cover of this Offer to Purchase on or prior to the Expiry Time, or
the tendering stockholder must comply with the guaranteed delivery procedures
described below. The confirmation of a book-entry transfer of Shares into a
Depositary's account at a Book-Entry Transfer Facility as described above is
referred to herein as a "Book-Entry Confirmation." Delivery of documents
(including an executed Letter of Transmittal) to a Book-Entry Transfer
Facility in accordance with such Book-Entry Transfer Facility's procedures
does not constitute delivery to either Depositary.
Signature Guarantees. Signatures on all Letters of Transmittal submitted to
the U.S. Depositary must be guaranteed by a member in good standing of the
Securities Transfer Agent's Medallion Program in the United States or by any
other bank, broker, dealer, credit union, savings association or other entity
that is an "eligible guarantor institution," as such term is defined in Rule
17Ad-15 under the Exchange Act, and signatures on all Letters of Transmittal
submitted to the Canadian Depositary must be guaranteed by a Schedule A
Canadian chartered bank,, a major trust company in Canada or a member in good
standing of the Securities Transfer Agent's Medallion Program in Canada (each
of the foregoing signature guarantors with respect to Letters of Transmittal
submitted to the U.S. or Canadian Depositary, as applicable, an "Eligible
Institution"), unless the Shares tendered thereby are tendered (i) by a
registered holder of Shares who has not completed either the box labeled
"Special Delivery Instructions" or the box labeled "Special Payment
Instructions" on the Letter of Transmittal or (ii) for the account of an
Eligible Institution. See Instruction 1 of the Letter of Transmittal. If the
certificates representing Shares are registered in the name of a person or
persons other than the signer of the Letter of Transmittal, or if payment is
to be made or certificates for Shares not accepted for payment or not tendered
are to be issued to a person other than the registered holder, then the
certificates representing Shares must be endorsed or accompanied by
appropriate stock powers, in each case signed exactly as the name or names of
the registered holder or holders appear on the certificates, with the
signatures on the certificates or stock powers guaranteed as described above
and as provided in the Letter of Transmittal. See the Instructions to the
Letter of Transmittal.
Guaranteed Delivery. If a shareholder desires to tender Shares pursuant to
the Offer and such shareholder's certificates are not immediately available or
the procedures for book-entry transfer cannot be completed on a timely basis
or time will not permit all required documents to reach the U.S. or Canadian
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<PAGE>
Depositary on or prior to the Expiry Time, such Shares may nevertheless be
tendered if all of the following guaranteed delivery procedures are complied
with:
(i) such tender is made by or through an Eligible Institution;
(ii) a properly completed and duly executed Notice of Guaranteed
Delivery, substantially in the form provided by Purchaser herewith, is
received by the U.S. or Canadian Depositary, as provided below, prior to
the Expiry Time; and
(iii) the certificates for all tendered Shares in proper form for
transfer, or a Book-entry Confirmation with respect to all tendered Shares,
in either case together with a properly completed and duly executed Letter
of Transmittal (or a manually signed facsimile thereof), with any requested
signature guarantees (or, in the case of a book-entry transfer, an Agent's
Message), and any other documents required by the Letter of Transmittal,
are received by the U.S. or Canadian Depositary within three trading days
after the date of execution of such Notice of Guaranteed Delivery. A
"trading day" is any day on which shares are traded on the American Stock
Exchange in the case of the U.S. Depositary or on The Toronto Stock
Exchange in the case of the Canadian Depositary.
The Notice of Guaranteed Delivery may be delivered by hand or transmitted by
facsimile to the U.S. or Canadian Depositary and must include an endorsement
by an Eligible Institution in the form set forth in such Notice of Guaranteed
Delivery.
The method of delivery of certificates for Shares, the Letter of Transmittal
and all other required documents, including delivery through any Book-Entry
Transfer Facility, is at the option and risk of the tendering shareholder. In
all cases, sufficient time should be allowed to ensure timely delivery.
Notwithstanding any other provision hereof, payment for Shares accepted for
payment pursuant to the Offer in all cases will be made only after timely
receipt by the U.S. or Canadian Depositary of certificates for (or a Book-
Entry Confirmation with respect to) such Shares, a Letter of Transmittal (or a
manually signed facsimile thereof), properly completed and duly executed, with
any required signature guarantees, or an Agent's Message, and all other
documents required by the Letter of Transmittal.
Backup U.S. Federal Income Tax Withholding. Under applicable U.S. federal
income tax laws, unless an exception applied thereunder, the relevant
Depositary will be required to withhold 31% of the amount of any payments made
to shareholders who are U.S. Holders (as defined in Section 6a) pursuant to
the Offer. To prevent backup federal income tax withholding with respect to
the purchase price of Shares purchased pursuant to the Offer, each shareholder
that is a U.S. Holder (as defined in Section 6a) and not otherwise exempt must
provide the relevant Depositary with such shareholder's correct taxpayer
identification number and certify that such U.S. Holder is not subject to
backup federal income tax withholding by completing the Substitute Form W-9
included in the Letter of Transmittal. Under certain circumstances, non-U.S.
Holders may be required to comply with certification procedures to establish
their non-U.S. status. See Instructions to the Letter of Transmittal and
Section 6a.
Determination of Validity. All questions as to the form of documents and the
validity, eligibility (including time of receipt) and acceptance for payment
of any tender of Shares pursuant to any of the procedures described above will
be determined by Purchaser in its sole discretion, which determination shall
be final and binding on all parties. Purchaser reserves the absolute right to
reject any or all tenders of Shares that are determined by it not to be in
proper form or the acceptance or payment for which, in the opinion of
Purchaser, may be unlawful. Purchaser also reserves the absolute right to
waive any defect or irregularity in any tender of Shares. Subject to the terms
of the Pre-Acquisition Agreement and applicable U.S. and Canadian regulatory
requirements, Purchaser also reserves the absolute right to waive or to amend
any of the conditions of the Offer. Purchaser's interpretation of the terms
and conditions of the Offer (including the Letter of Transmittal and the
instructions thereto) will be final and binding on all parties. No tender of
Shares will be deemed to have been validly made until all defects and
irregularities have been cured or waived. None of Purchaser, Parent, the
Depositaries, the Information Agent, the Dealer Manager or any other person
will be under any duty to give notification of any defects or irregularities
in tenders or incur any liability for failure to give any such notification.
7
<PAGE>
Appointment as Proxy. By executing a Letter of Transmittal, a tendering
shareholder irrevocably appoints designees of Purchaser as such shareholder's
attorneys-in-fact and proxies, each with full power of substitution, in the
manner set forth in the Letter of Transmittal, to the full extent of such
shareholder's rights with respect to the Shares tendered by such shareholder
and accepted for payment by Purchaser (and with respect to any and all other
Shares or other securities issued or issuable in respect of such Shares on or
after the date of the Offer). All such powers of attorney and proxies shall be
considered coupled with an interest in the tendered Shares. Such powers of
attorney and proxies shall be irrevocable and shall be effective when, and
only to the extent that, Purchaser accepts such Shares for payment. Upon such
acceptance for payment, all prior powers of attorney and proxies given by such
shareholder with respect to such Shares (and any other Shares or other
securities so issued in respect of such purchased Shares) will be revoked,
without further action, and no subsequent powers of attorney and proxies may
be given (and, if given, will not be deemed effective) by such shareholder.
The designees of Purchaser will be empowered to exercise all voting and other
rights of such shareholder with respect to such Shares (and any other Shares
or securities so issued in respect of such accepted Shares) as they in their
sole discretion may deem proper, including, without limitation, in respect of
any annual or special meeting of the Company's shareholders, or any
adjournment or postponement thereof, or in connection with any action by
written consent in lieu of any such meeting or otherwise. Purchaser reserves
the absolute right to require that, in order for Shares to be validly
tendered, immediately upon Purchaser's acceptance for payment of such Shares,
Purchaser must be able to exercise full voting and other rights with respect
to such Shares (and any other Shares or securities so issued in respect of
such accepted Shares), including voting at any meeting of shareholders then
scheduled or giving or withdrawing written consents as to which the record
date has passed.
Binding Agreement. Purchaser's acceptance for payment of Shares tendered
pursuant to the Offer will constitute a binding agreement between the
tendering shareholder and Purchaser upon the terms and conditions of the
Offer.
4. Withdrawal Rights
Except as otherwise provided in this Section 4, tenders of Shares made
pursuant to the Offer are irrevocable. Shares tendered pursuant to the Offer
may be withdrawn at any time prior to the Expiry Time and, unless theretofore
accepted for payment by Purchaser as provided herein, may also be withdrawn at
any time after August 14, 1999. If Purchaser is delayed in its purchase of or
payment for Shares or is unable to purchase or pay for Shares for any reason,
then, without prejudice to the rights of the Purchaser hereunder, tendered
Shares may be retained by the Depositaries on behalf of Purchaser and may not
be withdrawn except to the extent that tendering shareholders are entitled to
withdrawal rights as set forth in this Section 4 or as provided by applicable
U.S. or Canadian law or regulation. The reservation by Purchaser of the right
to delay the acceptance or purchase of or payment for Shares is subject to the
provisions of Rule 14e-1(c) under the Exchange Act, which requires Purchaser
to pay the consideration offered or return Shares deposited by or on behalf of
shareholders promptly after the termination or withdrawal of the Offer, and
applicable provincial securities legislation in Canada, which requires that
payment be made as soon as possible following acceptance by Purchaser of the
tendered Shares and in any event not more than three days following such
acceptance.
For a withdrawal of tendered shares to be effective, a written or facsimile
transmission notice of withdrawal must be timely received by the relevant
Depositary at one of its addresses set forth on the back cover of this Offer
to Purchase. Any such notice of withdrawal must specify the name of the person
who tendered the Shares to be withdrawn, the number of Shares to be withdrawn
and the name of the registered holder, if different from that of the person
who tendered such Shares. If certificates evidencing Shares to be withdrawn
have been delivered or otherwise identified to the relevant Depositary, then
prior to the physical release of such certificates, the tendering shareholder
must also submit the serial numbers shown on such certificates, and the
signature(s) on the notice of withdrawal must be guaranteed by an Eligible
Institution (except in the case of Shares tendered for the account of an
Eligible Institution). If Shares have been tendered pursuant to the procedure
for book-entry transfer set forth in Section 3, any notice of withdrawal with
respect to such Shares must specify the name and number of the account at the
applicable Book-Entry Transfer Facility to be credited with the withdrawn
Shares.
8
<PAGE>
All questions as to the form and validity (including time of receipt) of
notices of withdrawal will be determined by Purchaser, in its sole discretion,
whose determination shall be final and binding on all parties. No withdrawal
of Shares shall be deemed to have been properly made until all defects and
irregularities have been cured or waived. None of Purchaser, Parent, the
Depositaries, the Information Agent, the Dealer Manager or any other person
will be under any duty to give notification of any defects or irregularities
in any notice of withdrawal or incur any liability for failing to give such
notification.
Any Shares properly withdrawn will be deemed not to have been validly
tendered for purposes of the Offer, but may be retendered at any subsequent
time prior to the Expiry Time by following any of the procedures described in
Section 3.
In addition, if after the Expiry Time but before the expiry of all rights of
withdrawal in respect of the Offer, a change occurs in the information
contained in this Offer to Purchase, as amended from time to time, that would
reasonably be expected to affect the decision of a shareholder to accept or
reject the Offer, unless such change is not within the control of the
Purchaser or of any affiliate of the Purchaser, any Shares deposited under the
Offer and not accepted and paid for by the Purchaser at such time may be
withdrawn by or on behalf of the depositing shareholder, as the case may be,
at the place of deposit at any time until the expiration of ten calendar days
after the date upon which the notice of such change is mailed, delivered or
otherwise communicated, subject to abridgement of that period pursuant to such
order or orders as may be granted by Canadian courts or securities regulatory
authorities.
In addition to the foregoing rights of withdrawal, shareholders in certain
provinces of Canada are entitled to statutory rights of rescission in certain
circumstances. See Section 15.
5. Certain Conditions of the Offer
Notwithstanding any other provision of the Offer, and subject to the Pre-
Acquisition Agreement, the Purchaser shall not be required to accept for
payment or, subject to any applicable rules and regulations of the SEC,
including Rule 14c-1(c) under the Exchange Act (relating to the Purchaser's
obligation to pay for or return tendered shares promptly after termination or
withdrawal of the Offer) and applicable provisional securities laws in Canada,
pay for any Shares tendered pursuant to the Offer and may terminate or amend
the Offer and may postpone the acceptance of, and payment for, any Shares, if
the following conditions (the "Offer Conditions") are not satisfied or waived:
(a) at the Expiry Time, the number of Shares that shall have been validly
tendered under the Offer (and not properly withdrawn), together with any
Shares held by or on behalf of Parent, or any of its subsidiaries, shall
constitute at least 71.0% of the outstanding Shares (calculated on a fully
diluted basis);
(b) all material requisite governmental and regulatory approvals and
consents (including, without limitation, those of any stock exchanges or
securities regulatory authorities) required in Parent's reasonable judgment
to make lawful the purchase by, or the sale to, Purchaser of the Shares
(whether under the Offer, or a compulsory acquisition or other Second Stage
Transaction (as defined in Section 13)) shall have been obtained and all
applicable statutory or regulatory waiting periods, during the pendency of
which the purchase by, or the sale to, Purchaser of the Shares would be
illegal, shall have expired or been terminated without the imposition of
any conditions that, individually or in the aggregate, have or are
reasonably likely to have the consequences referred to in clauses (i)
through (iii) of paragraph (c) below; without limiting the foregoing: (i)
the applicable waiting periods under the HSR Act and the Competition Act
(Canada) with respect to the Offer shall have expired or been terminated;
(ii) the Offer shall have been approved or deemed to be approved or
exempted pursuant to the Investment Canada Act; and (iii) all other
consents and approvals, without which in Parent's reasonable judgment the
purchase by, or the sale to, Purchaser of the Shares (whether under the
Offer or a compulsory acquisition or other Second Stage Transaction) would
be illegal, have been obtained;
(c) no statute, rule, regulation, executive or other order shall have
been enacted, issued, promulgated or enforced by any Governmental Authority
(as defined in the Pre-Acquisition Agreement) and no
9
<PAGE>
preliminary or permanent injunction, temporary restraining order or other
legal restraint or prohibition shall have been threatened or issued by (and
no action, proceeding or counterclaim shall be pending or threatened by or
before) a court or other Governmental Authority (i) preventing or
rendering, or seeking to prevent or render, illegal the making of the
Offer, the acceptance for payment of, the payment for, or ownership,
directly or indirectly, of some or all of the Shares by Purchaser or the
completion of a compulsory acquisition or other Second Stage Transaction
(as defined in Section 13), (ii) imposing or confirming, or seeking to
impose or confirm, limitations on the ability of Parent or Purchaser,
directly or indirectly, effectively to acquire or hold or to exercise full
rights of ownership of the Shares or otherwise control the Company, in a
manner that, in the reasonable judgment of Parent, would reasonably be
expected, in the aggregate, to materially impair the overall benefits to be
realized by Parent from consummation of the Offer and the other
transactions contemplated by the Pre-Acquisition Agreement, or (iii)
requiring, or seeking to require, divestiture by Purchaser, directly or
indirectly, of any Shares or requiring Purchaser, Parent, the Company or
any of their respective subsidiaries or affiliates to dispose of or hold
separate all or any portion of their respective businesses, assets or
properties or imposing any limitations on the ability of any of such
entities to conduct their respective businesses or own such assets,
properties or the Shares or on the ability of Parent or Purchaser to
conduct the business of the Company and its subsidiaries and own the assets
and properties of the Company and its subsidiaries, in each case under this
clause (iii) in a manner that, in the reasonable judgment of Parent, would
reasonably be expected, in the aggregate, to materially impair the overall
benefits to be realized by Parent from consummation of the Offer and the
other transactions contemplated by the Pre-Acquisition Agreement;
(d)(i) the Company shall not have breached, or failed to comply with, in
any material respect, any of its covenants or other obligations under the
Pre-Acquisition Agreement, and (ii) each of the representations and
warranties of the Company contained in the Pre-Acquisition Agreement that
is qualified as to materiality shall be true and correct and any such
representation or warranty that is not so qualified shall be true and
correct, in all material respects, as of the date of the Pre-Acquisition
Agreement and as of the Expiry Time as if made on and as of the Expiry Time
(except to the extent such representations and warranties speak as of a
specific date, which shall be so true and correct as of such date);
provided that, in either case, the Company has been given notice of and ten
business days to cure any such misrepresentation, breach or non-performance
or such misrepresentation, breach or non-performance, by its timing or
nature, cannot be cured before such tenth business day;
(e) at any time after date of the Pre-Acquisition Agreement, there shall
not have occurred any event, occurrence, development or state of
circumstances that has had a Material Adverse Effect (as defined in Pre-
Acquisition Agreement);
(f) there shall not have occurred, developed or come into effect or
existence any event, action, state, condition or major financial occurrence
of national or international consequence or any law, regulation, action,
governmental regulation, inquiry or other occurrence of any nature
whatsoever which, in the reasonable judgment of Parent, materially
adversely affects or involves, the general economic, financial, currency
exchange, securities or commodity market operations in Canada or the United
States;
(g) neither the Company nor any of its subsidiaries (or the Board of
Directors, or any committee thereof, of the Company) shall have approved,
recommended, authorized, proposed, filed a document with any Securities
Authorities not opposing, or publicly announcing its intention to enter
into, any Take-Over Proposal (as defined in Pre-Acquisition Agreement)
(other than with Purchaser or any of its affiliates) and shall not have
resolved to do any of the foregoing;
(h) the Pre-Acquisition Agreement shall not have been terminated pursuant
to its terms; and
(i) the Board of Directors or any committee thereof of the Company shall
not have modified or amended in any manner adverse to Parent or Purchaser,
and shall not have withdrawn, its authorization, approval or recommendation
of the Offer or the Pre-Acquisition Agreement and shall not have resolved
to do any of the foregoing.
10
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The foregoing conditions are for the sole benefit of Parent and Purchaser
and may be asserted regardless of the circumstances (including any action or
inaction by Parent or Purchaser or any of their affiliates giving rise to any
such condition) or waived by Parent or Purchaser in whole or in part at any
time from time to time in its discretion subject to the terms and conditions
of the Pre-Acquisition Agreement. The failure of Parent or the Purchaser at
any time to exercise any of the foregoing rights shall not be deemed a waiver
of any such right and each such right shall be deemed an ongoing right which
may be asserted at any time and from time to time.
* * *
Dated: June 30, 1999
TITAN ACQUISITIONS, LTD.
By (Signed) Ari Bousbib
Director and President
11
<PAGE>
CIRCULAR
6a. Certain U.S. Federal Income Tax Consequences
The following is a general discussion of certain U.S. federal income tax
consequences of the receipt of cash by a holder of Shares pursuant to the
Offer and certain subsequent acquisitions by the Offeror. Except as
specifically noted, this discussion applies only to a U.S. Holder (as defined
below). It applies only to Shares held as capital assets and does not address
aspects of U.S. federal income tax that may be applicable to holders that are
subject to special tax rules, including, without limitation, banks, insurance
companies, tax-exempt organizations, financial institutions, dealers in
securities or currencies, persons who acquired Shares pursuant to an exercise
of employee stock options or rights or otherwise as compensation, persons who
hold Shares as a position in a "straddle" or as part of a "hedging" or
"conversion" transaction, persons that have a "functional currency" other than
the U.S. dollar and persons that own (or are deemed to own for U.S. federal
income tax purposes) ten percent or more (by voting power or value) of the
Shares. Also, the summary does not address state, local or foreign tax
consequences of the Offer. Consequently, each holder should consult such
holder's own tax advisor as to the specific tax consequences of the Offer to
such holder.
For purposes of this discussion, a "U.S. Holder" means a holder of Shares
that is (i) an individual who is a citizen or resident of the United States,
(ii) a corporation, partnership or other entity created or organized in or
under the laws of the United States or any political subdivision thereof or
therein, (iii) an estate the income of which is subject to United States
federal income taxation regardless of its source, or (iv) a trust if (x) a
court within the United States is able to exercise primary supervision over
the administration of the trust and (y) one or more United States persons have
the authority to control all substantial decisions of the trust.
General. The receipt of cash for Shares pursuant to the Offer or pursuant to
a compulsory acquisition (as described in Section 13) by a U.S. Holder will be
taxable transaction for United States federal income tax purposes and may also
be a taxable transaction under applicable state, local or foreign tax laws. In
general, a U.S. Holder will recognize gain or loss for United States federal
income tax purposes equal to the difference, if any, between the amount of
cash received in exchange for the Shares sold and such U.S. Holder's adjusted
tax basis in such shares. Such gain or loss will be capital gain or loss and
will be long-term capital gain or loss if such U.S. Holder has held the Shares
for more than one year at the time of the sale.
Subsequent Acquisition by Purchaser. As described in Section 13, Purchaser
may, in certain circumstances, propose a share consolidation or other form of
business combination in which holders who do not deposit their Shares under
the Offer may have such Shares exchanged for cash.
For United States federal income tax purposes, an exchange of Shares for
cash would be a taxable transaction and may also be a taxable transaction
under the applicable tax laws of various states and localities within the
United States. In general, such U.S. Holders would recognize gain or loss on
such exchange equal to the difference, if any, between (i) the amount of cash
received by such U.S. Holder on the sale and (ii) such U.S. Holder's tax basis
in the Shares exchanged therefor. Such gain or loss would be long-term capital
gain or loss, if the holding period for the Shares, as of the time of sale,
exceeds one year.
Purchaser may also propose an arrangement, reclassification, continuance or
other transaction, the tax consequences of which may differ from those
discussed above. U.S. Holders should consult their tax advisers regarding the
tax consequences of any such proposal.
United States Backup Withholding. United States backup withholding tax and
information reporting requirements generally apply to certain payments to
certain non-corporate holders. Information reporting will apply to proceeds
from the sale or redemption of Shares by a paying agent within the United
States to a U.S. Holder (other than an "exempt recipient," including a
corporation and certain other persons). As noted in Section 3, a paying agent
within the United States will be required to withhold 31% of any such payment
within
12
<PAGE>
the United States to a U.S. Holder (other than an "exempt recipient") if such
U.S. Holder fails to furnish its correct taxpayer identification number and
certifies that such U.S. Holder is not subject to backup withholding tax by
submitting a completed Substitute Form W-9 to the U.S. or Canadian Depositary
or otherwise fails to comply with such backup withholding requirements.
Accordingly, each U.S. Holder should complete, sign and submit the Substitute
Form W-9 included as part of the Letter of Transmittal, if appropriate, in
order to avoid the imposition of such backup withholding tax. Certain non-U.S.
Holders may be required to comply with certification procedures to establish
their non-U.S. status.
The United States federal income tax discussion set forth above is included
for general information only and is based upon laws, regulations, rulings and
decisions now in effect, all of which are subject to change (possibly
retroactively). U.S. Holders are urged to consult their tax advisors with
respect to the specific tax consequences of the Offer to them, including the
application and effect of the alternative minimum tax, and state, local and
foreign tax laws.
6b. Certain Canadian Federal Income Tax Considerations
In the opinion of Stikeman Elliott, Canadian counsel to the Purchaser, the
following is a summary of the principal Canadian federal income tax
considerations generally applicable to Shareholders in respect of the sale of
Shares pursuant to the Offer or pursuant to certain transactions described in
Section 13, under "Acquisition of Shares Not Tendered".
This summary is based upon the current provisions of the Canadian federal
Income Tax Act (the "Tax Act"), the regulations thereunder (the
"Regulations"), and counsel's understanding of the current administrative
practices of Revenue Canada. This summary also takes into account specific
proposals to amend the Tax Act and Regulations publicly announced by or on
behalf of the Minister of Finance (Canada) prior to the date hereof (the
"Proposed Amendments") and assumes that all proposed amendments will be
enacted substantially as proposed. However, no assurances can be given that
the Proposed Amendments will be enacted as proposed or at all. This summary
does not otherwise take into account or anticipate any changes in the law
whether by way of legislative, judicial or governmental decisions or action or
decision or in Revenue Canada's practices, nor does it take into account
provincial, territorial or foreign tax legislation or considerations. The
provisions of provincial income tax legislation vary from province to province
in Canada and in some cases differ from federal income tax legislation.
This summary is of a general nature only and is not intended to be, nor
should it be construed to be, legal or tax advice to any particular
shareholder. No representations with respect to the income tax consequences to
any particular shareholder are made. Shareholders are advised and expected to
consult with their own tax advisers for advice regarding the income tax
consequences to them of disposing of their Shares pursuant to the Offer, a
compulsory acquisition or a subsequent acquisition transaction, having regard
to their own particular circumstances and any other consequences to them of
such transactions under Canadian federal, provincial, local and foreign tax
laws.
This summary does not apply to shareholders that are "financial
institutions" for the purposes of the mark-to-market rules contained in the
Tax Act or to shareholders who are "specified financial institutions" for the
purposes of the Tax Act.
Resident Shareholders
This summary is generally applicable to shareholders who are resident or are
deemed to be resident in Canada for purposes of the Tax Act (a "Resident
Shareholder") and who, for purposes of the Tax Act, hold their Shares as
capital property, and who deal at arm's length and are not affiliated with
Purchaser and/or the Company. Shares will generally constitute capital
property to a holder thereof unless the holder holds such securities in the
course of carrying on a business, or the holder has acquired such securities
in a transaction or transactions considered to be an adventure in the nature
of trade. Certain holders whose Shares might not
13
<PAGE>
otherwise qualify as capital property may be entitled to obtain such
qualification in certain circumstances by making the election permitted by
subsection 39(4) of the Tax Act.
The Offer. A Resident Shareholder whose Shares are taken up and paid for
under the Offer will realize a capital gain (or capital loss) to the extent
that the proceeds received for such Shares, net of any reasonable cost of
disposition exceed (or are less than) the adjusted cost base to such Resident
Shareholder of such Shares. A Resident Shareholder will generally be required
to include, in computing income for the year in which the disposition occurs,
three quarters of the amount of any resulting capital (a "taxable capital
gain") and will generally be entitled to deduct three quarters of the amount
of any resulting capital loss (an "allowable capital loss") from taxable
capital gains realized by the Resident Shareholder in the year in which the
disposition occurs, in any of the three preceding taxation years or in any
future taxation year to the extent and in the circumstances described in the
Tax Act. In the case of a Resident Shareholder that is a corporation, the
amount of any capital loss otherwise determined on the disposition of its
Shares may in certain circumstances be reduced by the amount of dividends
previously received on such Shares to the extent and under the circumstances
described in the Tax Act. Similar rules may apply where a corporation, a
partnership or a trust is a member of a partnership or a beneficiary of a
trust that owns Shares.
In addition to any other tax payable by a corporation, the Tax Act imposes a
refundable tax of 6 2/3% on certain investment income, including capital
gains, earned by a Canadian controlled private corporation (as defined by the
Tax Act). This tax will be refunded when the corporation pays taxable
dividends (at a rate of one dollar for each three dollars of taxable dividends
paid). Capital gains realized by an individual or a trust, other than certain
specified trusts, may give rise to alternative minimum tax under the Tax Act.
Resident Shareholders should consult their tax own advisers with respect to
the alternative minimum tax provisions.
Compulsory Acquisition. As described in Section 13, "Acquisition of Shares
Not Tendered--Compulsory Acquisition", Purchaser may, in certain
circumstances, acquire Shares not deposited under the Offer pursuant to the
compulsory acquisition provisions of section 206 of the CBCA. A Resident
Shareholder whose Shares are acquired by the Purchaser pursuant to a
compulsory acquisition will generally realize a capital gain (or a capital
loss) calculated in the manner, and subject to the treatment, described above
under "Resident Shareholders--the Offer".
Subsequent Acquisition Transactions. As described in Section 13,
"Acquisition of Shares not Tendered--Other Second Stage Transactions", if the
compulsory acquisition provisions are not available or not utilized, Purchaser
will consider other means of acquiring, directly or indirectly, all of the
Shares of the Company not tendered under the Offer by way of a subsequent
acquisition transaction. The tax treatment of such a transaction to a Resident
Shareholder will depend upon the exact manner in which the transaction is
carried out and may be substantially the same as, or materially different
from, that described above. Resident Shareholders should consult their own tax
advisers for advice with respect to the potential income tax consequences to
them of having their Shares acquired pursuant to such a subsequent acquisition
transaction.
In particular, in such circumstances, the Purchaser currently intends to
propose a consolidation of the Shares pursuant to which shareholders who do
not deposit their Shares under the Offer would have the number of Shares they
hold changed into a number of Shares which is less than one, resulting in a
payment by the Company to the shareholders of cash equal to the purchase price
which would have been paid for such Shares had they been deposited under the
Offer.
A Resident Shareholder whose Shares are consolidated and who receives a cash
payment from the Company will be deemed to have received a taxable dividend
(subject to the potential application of subsection 55(2) of the Tax Act to
shareholders that are corporations, as discussed below) equal to the amount by
which such payment exceeds the paid-up capital for purposes of the Tax Act of
the Shares that are cancelled.
14
<PAGE>
In the case of a Resident Shareholder who is an individual, the deemed
dividend described above will be included in computing the Resident
Shareholder's income and will be subject to the gross-up and dividend tax
credit rules normally applicable to taxable dividends received from taxable
Canadian corporations. The receipt of the deemed dividend may give rise to
liability for alternative minimum tax. In the case of a Resident Shareholder
that is a corporation, the deemed dividend will be included (subject to the
potential application of subsection 55(2) of the Tax Act as discussed below)
in computing the Resident Shareholder's income and generally will be
deductible in computing taxable income.
A Resident Shareholder which is a "private corporation" as defined in the
Tax Act or any other corporation resident in Canada and controlled by or for
the benefit of an individual or a related group of individuals may be liable
to pay a refundable tax under Part IV of the Tax Act in respect of the deemed
dividend.
A Resident Shareholder whose Shares are consolidated and who receives a cash
payment from the Company will also have disposed of the Resident Shareholder's
fractional interest in a consolidated share and a capital gain or capital loss
may result. For the purpose of calculating the Resident Shareholder's capital
gain or capital loss with respect to this disposition, the proceeds of
disposition will be equal to the amount by which the cash payment received
from the Company exceeds the amount of the deemed dividend.
A Resident Shareholder will be required to include in its income the amount
of its taxable capital gain resulting from the disposition of a fractional
interest in a consolidated share, and may deduct from its income any allowable
capital loss resulting from the disposition of such interest against taxable
capital gains realized by the Resident Shareholder in the year of disposition.
Allowable capital losses in excess of taxable capital gains may be carried
back and deducted in any of the three preceding years or carried forward and
deducted in any following year against taxable capital gains realized in such
years to the extent and under the circumstances described in the Tax Act.
Taxable capital gains of a Canadian-controlled private corporation may be
subject to an additional refundable tax. Capital gains realized by an
individual, including a trust other than certain specified trusts, may give
rise to alternative minimum tax under the Tax Act.
In the case of a Resident Shareholder that is a corporation, the amount of
any capital loss otherwise determined resulting from the disposition of the
Resident Shareholder's interest may be reduced by the amount of dividends
previously received or deemed to have been received on Shares that are
consolidated in accordance with the detailed provisions of the Tax Act in that
regard. Analogous rules apply where a corporation is a member of a partnership
or a beneficiary of a trust which owns a fractional interest in a consolidated
share. Recent amendments to the Tax Act extend these rules to apply where a
trust or partnership is a member of a partnership or beneficiary of a trust
that owns a fractional interest in a consolidated share and, in certain
circumstances, where an individual, including a trust, owns a fractional
interest in a consolidated share or is a member of a partnership that owns a
fractional interest in a consolidated share in circumstances where capital
dividends have been or are deemed to have been received on Shares that have
been consolidated.
Under subsection 55(2) of the Tax Act, a Resident Shareholder that is a
corporation may be required to recognize all or a portion of the dividend
otherwise deemed to have been received upon the consolidation of the Shares as
proceeds of disposition in the computation of the capital gain or capital loss
resulting from the disposition, except to the extent the deemed dividend is
subject to tax under Part IV of the Tax Act and the tax is not refunded under
the circumstances specified in subsection 55(2) of the Tax Act.
These income tax consequences are important in arriving at the after-tax
consequence to Resident Shareholders. In particular, the acquisition by the
Company of its Shares or any interest therein will give rise to a deemed
dividend which will be taxed as a taxable dividend and not as a capital gain
or loss. Some Resident Shareholders may accordingly find it preferable to sell
their Shares prior to the consolidation becoming effective instead of
participating in the consolidation.
As an alternative to the consolidation discussed above, Purchaser may
propose an arrangement, amalgamation, reclassification or other transaction,
the tax consequences of which may differ from those arising from the sale of
the Shares under the Offer. No opinion is expressed as to the tax consequences
of any such alternative transaction to a Resident Shareholder.
15
<PAGE>
Non-Resident Shareholders
The following summary is only applicable to shareholders who are neither
resident nor deemed to be resident in Canada for purposes of the Tax Act at
any time while they hold their Shares, who deal at arm's length with Purchaser
and the Company, who hold their Shares as capital property, who do not use or
hold, and are not deemed to use or hold, their Shares in connection with
carrying on a business in Canada, and whose Shares do not constitute "taxable
Canadian property" for the purposes of the Tax Act (each such shareholder
being a "Non-Resident Shareholder"). Shares of a Non-Resident Shareholder will
not constitute taxable Canadian property" unless either (a) at any time during
the period of five years immediately preceding the date such Shares are
disposed of, 25% or more of the issued Shares (and in the view of Revenue
Canada, taking into account certain rights to acquire Shares) of any class or
series of the capital stock of the Company were owned by the Non-Resident
Shareholder, by persons with whom the Non-Resident Shareholder did not deal at
arm's length or by any combination thereof, or (b) the Non-Resident
Shareholder's Shares are deemed to be "taxable Canadian property" under the
Tax Act.
The Offer and Compulsory Acquisition. No tax will be payable under the Tax
Act on any capital gain realized by a Non-Resident Shareholder on the
disposition of such Non-Resident Shareholder's Shares pursuant to the Offer or
pursuant to the Compulsory Acquisition provisions of section 206 of the CBCA
as described in Section 13 "Acquisition of Shares Not Tendered--Compulsory
Acquisition".
Subsequent Acquisition Transactions. A Non-Resident Shareholder whose Shares
are consolidated and who receives a cash payment from the Company will be
deemed to have received a taxable dividend (calculated in the manner described
above under "Residents of Canada"). Such a Non-Resident Shareholder will be
subject to Canadian non-resident withholding tax under the Tax Act at the rate
of 25% of the amount of the deemed dividend, subject to reduction under the
provisions of an applicable income tax treaty. For example, under the Canada-
United States Income Tax Convention (the "Convention"), the rate of Canadian
non-resident withholding tax is generally reduced to 15% in respect of
dividends paid to a person who is a beneficial owner thereof and who is a
resident of the United States for the purpose of the Convention.
A Non-Resident Shareholder will not be subject to any Canadian capital gains
tax with respect to the cancellation of Shares on the consolidation. However,
a Non-Resident Shareholder may realize a capital gain or loss with respect to
the disposition of the Non-Resident Shareholder's fractional interest in a
consolidated share of the Company. Because fractional interests in
consolidated shares may not be interests in shares listed on any stock
exchange, a fractional interest in a consolidated share held by a Non-Resident
Shareholder may be "taxable Canadian property" for purposes of the Tax Act,
notwithstanding that the Non-Resident Shareholder's Shares do not constitute
"taxable Canadian property". As a result, any capital gain realized by a Non-
Resident Shareholder on such disposition may be subject to tax under the Tax
Act unless such gain is exempted from Canadian tax by the application of an
applicable income tax treaty. Accordingly, unless the Non-Resident Shareholder
provides the Company with a satisfactory certificate under section 116 of the
Tax Act prior to the date cash payment is made by the Company, the Company
intends to withhold and remit as tax for the account of the Non-Resident
Shareholder 33 1/3% of the amount that the Non-Resident Shareholder is
entitled to receive (determined before Canadian non-resident withholding
taxes). This withholding under section 116 of the Tax Act will be in addition
to Canadian non-resident withholding tax on the deemed dividend referred to
above. Non-Resident Shareholders should consult their own tax advisors
concerning Section 116 of the Tax Act and their ultimate Canadian tax
liability, including the potential advantages to them of selling their Shares
prior to the effective date of the consolidation.
Dissenting Shareholders
Dissenting shareholders who receive a payment from the Company in respect of
their Shares will generally be subject to the same tax treatment as described
above for Canadian Resident Shareholders and Non-Resident
16
<PAGE>
Shareholders receiving a payment for their Shares from the Company. However, a
dissenting Non-Resident Shareholder should not be subject to any Canadian
capital gains tax or to the provisions of Section 116 of the Tax Act with
respect to the disposition of Shares, and a dissenting Non-Resident
Shareholder should not be regarded as having received and disposed of any
interest in a consolidated share. Accordingly, the only Canadian tax
consequence to a dissenting Non-Resident Shareholder should be the deemed
dividend described above.
7. Price Range of the Shares; Dividends
According to the Company's Annual Report on Form 10-K for the year ended
December 31, 1998 (the "Company 10-K"), the Company's Shares are traded on The
Toronto Stock Exchange ("TSE") and the American Stock Exchange ("AMEX") under
the symbol ICP. The following table sets forth, for the periods indicated, the
high and low trading prices of the Company's ordinary shares as reported by
the TSE and AMEX during each of the fiscal quarters of the prior two years,
the first quarter of 1999 and the second quarter of 1999 through June 29,
1999:
<TABLE>
<CAPTION>
TSE AMEX
Cdn$ US$
High Low High Low
----- ----- ----- ----
<S> <C> <C> <C> <C>
Fiscal Year Ending December 31, 1999:
First Quarter.......................................... 12.25 9.00 8.38 5.88
Second Quarter (through June 29, 1999)................. 17.00 10.50 11.50 6.63
Fiscal Year Ended December 31, 1998:
First Quarter.......................................... 12.80 10.85 9.13 7.38
Second Quarter......................................... 18.25 11.65 12.50 8.06
Third Quarter.......................................... 18.20 11.00 12.25 6.63
Fourth Quarter......................................... 14.50 10.15 9.25 6.25
Fiscal Year Ended December 31, 1997:
First Quarter.......................................... 7.35 3.90 5.38 2.88
Second Quarter......................................... 8.25 6.30 6.06 4.56
Third Quarter.......................................... 12.85 8.00 9.50 5.50
Fourth Quarter......................................... 13.35 9.60 9.50 6.31
</TABLE>
On June 23, 1999, the last full trading day before the public announcement
of the execution of the Pre-Acquisition Agreement and Purchaser's intention to
make the Offer, the closing price per share on TSE was Cdn$16.20 and on AMEX
was US$10.75. On June 29, 1999, the last full trading day before commencement
of the Offer, the closing price per share on TSE was Cdn$16.75 and on AMEX was
US$11.38. Company shareholders are encouraged to obtain current market
quotations for the shares. According to publicly available information, the
aggregate trading volumes of Shares from January 1, 1999 through June 29, 1999
on the TSE and AMEX were approximately 665,000 and 13,400,000, respectively.
8. Certain Effects of the Transaction
The purchase of Shares pursuant to the Offer will reduce the number of
Shares that might otherwise trade publicly and the number of holders of
Shares, which could adversely affect the liquidity and market value of the
remaining Company Shares held by the public. The Company 10-K indicates that,
as of December 31, 1998, there were 1,416 shareholders of record of the Shares
(not taking into account record ownership through nominees and depositaries).
The extent of the public market for the Shares and, according to the
published guidelines of TSE and AMEX, the continued trading of the Shares on
TSE and AMEX after the purchase of Shares pursuant to the Offer will depend
upon the number of holders of Shares remaining at such time, the interest in
maintaining a market in such Shares on the part of securities firms, the
possible termination of registration of such Shares under
17
<PAGE>
the Exchange Act, as described below, and other factors. If, as a result of
the purchase of Shares pursuant to the Offer or otherwise, trading of the
Shares on TSE and AMEX is discontinued, the liquidity of and market for the
Shares could be adversely affected. Purchaser cannot predict whether or to
what extent the reduction in the number of Shares that might otherwise trade
publicly would result in the suspension of trading of the Shares on TSE and
AMEX or would have an adverse or beneficial effect on the market price for or
marketability of the Shares or whether it would cause future prices to be
greater or less than the Offer Price.
The Shares are currently "margin securities," as such term is defined under
the rules of the Board of Governors of the Federal Reserve System (the
"Federal Reserve Board"), which has the effect, among other things, of
allowing brokers to extend credit on the collateral of the Shares. Depending
upon factors similar to those described above regarding listing and market
quotations, following consummation of the Offer it is possible that the Shares
might no longer constitute "margin securities" for purposes of the margin
regulations of the Federal Reserve Board, in which event such Shares could no
longer be used as collateral for loans made by brokers.
The Shares are currently registered under the Exchange Act. Registration of
the Shares under the Exchange Act may be terminated upon application of the
Company to the SEC if the Shares are not listed on a national securities
exchange or quoted on AMEX and there are fewer than 300 record holders of the
Shares in the United States. Termination of registration of the Shares under
the Exchange Act would substantially reduce the information required to be
furnished by the Company to its stockholders and to the SEC and would make
certain provisions of the Exchange Act, such as the short-swing profit
recovery provisions of Section 16(b) of the Exchange Act, the requirement of
furnishing a proxy statement in connection with stockholders' meetings
pursuant to Section 14(a) of the Exchange Act, and the requirements of Rule
13e-3 under the Exchange Act with respect to "going private" transactions, no
longer applicable to the Company. In addition, "affiliates" of the Company and
persons holding "restricted securities" of the Company may be deprived of the
ability to dispose of such securities pursuant to Rule 144 promulgated under
the U.S. Securities Act of 1933, as amended. It is the present intention of
Purchaser to seek to cause the Company to make applications for the
termination of the registration of the Shares under the Exchange Act and for
the de-listing of the Shares from AMEX and TSE as soon as possible after the
purchase of all validly tendered Shares in the Offer if the requirements for
such termination and de-listing are met. If registration of the Shares under
the Exchange Act were terminated, the Shares would no longer be "margin
securities" or be eligible for AMEX reporting. If registration of the Shares
is not terminated prior to a compulsory acquisition or any other Second Stage
Transaction (each as described in Section 13) following the Offer, the
registration of the Shares under the Exchange Act may be terminated and the
de-listing of the Shares from AMEX and TSE may occur following consummation of
such a Transaction. See Section 13.
In connection with this Offer, and as required by the Pre-Acquisition
Agreement, International Comfort Products Holdings, Inc. (the "Note Issuer"),
a wholly owned subsidiary of the Company, will be making an offer to purchase
for cash, and a solicitation of consents to proposed amendments to the
indenture relating to, the Note Issuer's 8 5/8% Senior Notes Due 2008 Series
B, with an outstanding principal amount of US$150 million (the "Senior Note
Offer"). The Senior Note Offer is conditioned upon the consummation of this
Offer; however this Offer is not contingent upon the results of the Senior
Note Offer.
9. Certain Information Concerning the Company
Except as otherwise stated in this Offer to Purchase, the information
concerning the Company contained herein has been taken from or based upon
publicly available documents and records on file with the SEC and other public
sources including, but not limited to, the Company 10-K and the Company's
Quarterly Report on Form 10-Q for the three months ended March 31, 1999 (the
"Company 10-Q"). Although neither Parent nor Purchaser has any knowledge that
any statements contained herein based on such documents and records are
untrue, neither Parent nor Purchaser takes any responsibility for the accuracy
or completeness of the information concerning the Company, furnished by the
Company or contained in such documents and records, or for any failure by the
Company to disclose events that may have occurred and may affect the
significance or accuracy of any such information.
18
<PAGE>
The Company is a corporation continued under the laws of Canada with its
principal executive offices located at 501 Corporate Center Drive, Suite 200,
Franklin, Tennessee, USA 37067. The Company designs, manufactures, sells and
distributes a complete range of central air conditioners, heat pumps and
combination gas/electric units, and gas, oil, and electric furnaces along with
related parts and accessories for the residential and light commercial
markets. The Company's products are sold primarily through a network of
approximately 400 independent heating, ventilation and air conditioning
distributors in the United States, Canada and other international markets.
These distributors are the Company's link to dealers and, in turn, to
consumers. The Company's products are also marketed through independent air
conditioning and refrigeration wholesalers, major commercial contractors and
builders.
19
<PAGE>
International Comfort Products Corporation
Selected Financial Data
(In Millions of U.S. Dollars)
Set forth below are selected historical financial data and other historical
operating data of the Company as of and for the periods that have been taken
or derived from the audited financial statements contained in the Company 10-K
and Company 10-Q (in each case prepared in accordance with Canadian GAAP).
More comprehensive financial information and other information is included in
the Company 10-K and Company 10-Q and other documents filed by the Company
with the SEC, and the following summary financial information is qualified in
its entirety by reference to such reports and other documents, including the
financial statements and related notes contained therein.
Statement of Operations Data:
<TABLE>
<CAPTION>
Quarter Ended Year Ended
<S> <C> <C> <C> <C> <C>
------------------ ----------------------------------
<CAPTION>
March 31, March December 31, December 31, December 31,
1999 31, 1998 1998 1997 1996
--------- -------- ------------ ------------ ------------
(unaudited)
<S> <C> <C> <C> <C> <C>
Net Sales............ US$158.1 US$132.8 US$733.5 US$630.7 US$641.9
Gross Profit......... 31.9 28.5 155.2 127.0 124.1
Operating Profit..... 4.9 8.3 58.8 41.5 33.4
Net Income........... -- 3.5 35.2 22.0 8.5
</TABLE>
Balance Sheet Data:
<TABLE>
<CAPTION>
March 31, December 31, December 31,
----------- ------------ ------------
1999 1998 1997
----------- ------------ ------------
(unaudited)
<S> <C> <C> <C>
Total Assets.............................. US$ 475.6 US$ 427.8 US$ 352.0
Total Liabilities......................... 381.7 331.5 300.5
Stockholders' Equity...................... 93.9 96.3 51.5
</TABLE>
Certain Company Projections. During the course of discussions between Parent
and the Company that led to the execution of the Pre-Acquisition Agreement
(see Section 12), the Company provided Parent with certain information
relating to the Company that Parent and Purchaser believes is not publicly
available. This information included projections of the operating performance
of the Company for the years ended December 31, 1999 through 2001, based on
financial projections developed by the Company. The projections do not reflect
consummation of the Offer, any Second Stage Transaction (as defined in Section
13) between Purchaser and the Company or any future possible acquisitions or
divestitures by the Company.
The projections include the following estimates regarding the Company's
anticipated results of operations for the years ended 1999, 2000 and 2001:
<TABLE>
<CAPTION>
Year ended December 31
------------------------------
Statement of Operations 2001 2000 1999
----------------------- ---------- --------- ---------
<S> <C> <C> <C>
Sales...................................... US$ 1056.1 US$ 972.9 US$ 870.3
Gross Profit............................... 257.5 231.8 196.1
Net Income................................. 63.4 51.5 36.7
</TABLE>
These projections are based on a variety of estimates and assumptions,
including but not limited to those listed below, which involve judgments with
respect to future economic and competitive conditions, inflation rates and
technology trends, including the following major economic, financial market
and operations assumptions:
. There is no recession (the last two recessions have generally resulted
in a 10% decline in industry sales);
20
<PAGE>
. U.S. GDP growth rates of 2.0% to 3.0% per year;
. Industry growth rates beyond 1999 of 5.0% to 6.0% per year;
. Constant U.S./Canadian exchange rates of Cnd$1.47 per US$1.00;
. No new facilities are built by the Company; and
. The Company's programs will increase sales growth above the projected
industry growth rate.
The Company does not as a matter of course make public any projections as to
future performance or earnings, and the projections set forth above are
included in this Offer to Purchase only because the information was made
available to Parent and Purchaser by the Company. Parent and Purchaser
understand that the projections were not prepared with a view to public
disclosure or compliance with the published guidelines of the SEC, the
applicable requirements of the various provincial securities legislation in
Canada or the guidelines established by the American Institute of Certified
Public Accountants regarding projections or forecasts. Projected information
of this type is based on estimates and assumptions that are inherently subject
to significant economic and competitive uncertainties and contingencies, all
of which are difficult to predict and many of which are beyond the control of
the Company, Parent and Purchaser. Accordingly, actual results may vary
materially from such projections and none of the Company, Parent or Purchaser
assumes any responsibility for the accuracy or validity of any of the
projections. The inclusion of the foregoing projections should not be regarded
as an indication that the Company, Parent or Purchaser or any other person who
received such information considers it an accurate prediction of future
events, and Parent and Purchaser have not relied on them as such.
Available Information. The Company is subject to the informational filing
requirements of the Exchange Act. In accordance therewith, the Company files
periodic reports, proxy statements and other information with the SEC under
the Exchange Act relating to its business, financial condition and other
matters. The Company is required to disclose in such proxy statements certain
information, as of particular dates, concerning the Company's directors and
officers, their remuneration, stock options granted to them, the principal
holders of the Company's securities and any material interest of such persons
in transactions with the Company. Such reports, proxy statements and other
information may be inspected at the Commission's office at 450 Fifth Street,
N.W., Washington, D.C. 20549, and also should be available for inspection and
copying at the regional offices of the Commission located at Northwestern
Atrium Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661-
2511; and 7 World Trade Center, 13th Floor, New York, New York 10048. Copies
of such reports, proxy statements and other information should be obtainable
upon payment of the Commission's prescribed fees by writing to the
Commission's principal office at 450 Fifth Street, N.W., Washington, D.C..
20549.
10. Certain Information Concerning Parent and Purchaser
Parent and the Purchaser. Purchaser is a corporation incorporated under and
governed by the laws of the Province of New Brunswick, Canada, with its
principal executive offices located at One Financial Plaza, Hartford,
Connecticut 06101. The Purchaser is a wholly-owned subsidiary of Parent, which
was organized for the purpose of acquiring the Company and has not conducted
any unrelated activities since its organization. Parent is a Delaware
corporation with its principal executive offices located at One Financial
Plaza, Hartford, Connecticut 06101.
Parent and its consolidated subsidiaries provide high technology products to
aerospace and building systems customers throughout the world. Parent and its
consolidated subsidiaries conduct their business within four principal
operating segments. The operating units of Parent and its consolidated
subsidiaries are grouped based upon the operating segment in which they
participate. The units participating in each operating segment and their
respective principal products are as follows:
. Otis offers a wide range of elevators, escalators, moving walks and
shuttle systems and related installation, maintenance and repair
services; and modernization products and services for elevators and
escalators.
21
<PAGE>
. Carrier provides heating, ventilating and air conditioning (HVAC)
equipment for commercial, industrial and residential buildings; HVAC
replacement parts and services; building controls; commercial,
industrial and transport refrigeration equipment; and aftermarket
service and components.
. Pratt & Whitney provides large and small commercial and military
turbofan (jet) and turboprop engines, spare parts and product support;
specialized engine maintenance and overhaul and repair services for
airlines, government and private fleets; and rocket engines and space
propulsion systems and industrial gas turbines.
. Flight Systems is made up of Sikorsky and Hamilton Standard. Sikorsky
offers military and commercial helicopters and maintenance services.
Hamilton Standard offers engine and flight controls; propellers;
environmental controls systems; space life support systems; electrical,
mechanical and power systems products for aircraft; rotary screw
compressors; power transmission equipment; pumps and other industrial
products.
Until recently, Parent conducted its business through a fifth operating
segment. The business of this segment, which was conducted through UT
Automotive, manufactured automotive electrical and electronic components,
automotive trim systems and insulation and acoustical materials and systems.
On May 4, 1999, Parent completed the sale of its UT Automotive unit to Lear
Corporation. Parent's financial statements for the three year period ending
December 31, 1998, have been restated to reflect UT Automotive as a
discontinued operation. These restated financial statements have been filed in
Parent's Current Report on Form 8-K filed on June 11, 1999.
On June 10, 1999, Parent completed the acquisition of Sundstrand
Corporation. Sundstrand Corporation was merged with a wholly owned subsidiary
of Parent, which was renamed Hamilton Sundstrand Corporation. Hamilton
Sundstrand Corporation is a leader in the design and manufacture of
proprietary, technology based components and subsystems for aerospace and
industrial markets. Hamilton Sundstrand Corporation and Parent's Hamilton
Standard division are part of the Flight Systems operating segment.
Selected Financial Information. The following tables contain selected
consolidated historical financial information included in Quarterly Report on
Form 10-Q for the three months ended March 31, 1999 and in Parent's Annual
Report on Form 10-K for the year ended December 31, 1998 as restated by its
Current Report on Form 8-K filed on June 11, 1999 to reflect UT Automotive as
a discontinued operation. More comprehensive financial and other information
is included in such reports (including management's discussion and analysis of
financial condition and results of operations) and in other reports and
documents filed by Parent with the SEC. The financial information set forth
below is qualified in its entirety by reference to such reports and documents
filed with the SEC and the financial statements and related notes contained
therein. These reports and other documents may be examined and copies thereof
may be obtained as described below under "Available Information."
22
<PAGE>
Statement of Operations Data
<TABLE>
<CAPTION>
Years Ended December 31,
-----------------------------
In Millions of Dollars 1998 1997 1996
- ---------------------- --------- --------- ---------
<S> <C> <C> <C>
Revenues........................................ US$22,809 US$21,288 US$19,872
Research and development........................ 1,168 1,069 1,014
Income from continuing operations before
interest, taxes and minority interests......... 2,007 1,762 1,530
Interest expense................................ 197 188 213
Income taxes.................................... 568 514 430
Income from:
Continuing Operations......................... 1,157 962 788
Discontinued Operation........................ 98 110 118
Net income...................................... US$ 1,255 US$ 1,072 US$ 906
</TABLE>
- --------
<TABLE>
<CAPTION>
Quarter Ended
In Millions of Dollars March 31,
- ---------------------- -----------------
1999 1998
-------- --------
(Unaudited)
<S> <C> <C>
Revenues.................................................... US$5,442 US$5,308
Research and development.................................... 274 277
Income from continuing operations before interests, taxes
and minority interests..................................... 490 409
Interest expense............................................ 55 47
Income taxes................................................ 136 114
Income from:
Continuing operations..................................... 278 229
Discontinued operations................................... 30 31
Net income.................................................. US$ 308 US$ 260
</TABLE>
Balance Sheet Data
<TABLE>
<CAPTION>
As of March 31, As of December 31,
--------------- --------------------
In Millions of Dollars
(except ratio data) 1999 1998 1997 1996
- ---------------------- --------------- ------ ------ ------
(Unaudited)
<S> <C> <C> <C> <C>
Cash..................................... US$657 US$550 US$655 US$998
Working capital (excluding net investment
and discontinued operation)............. 1,422 1,359 1,712 2,168
Total assets............................. 17,912 17,768 15,697 15,566
Long-term debt (including current
portion)................................ 1,653 1,669 1,389 1,506
Total debt............................... 2,194 2,173 1,567 1,709
Shareowners' equity...................... 4,499 4,378 4,073 4,306
</TABLE>
- --------
23
<PAGE>
Operating Segment Data
<TABLE>
<CAPTION>
Years Ended December 31,
--------------------------------------------------------------
Revenues Operating Profit
------------------------------- -----------------------------
In Millions of Dollars 1998 1997 1996 1998 1997 1996
- ---------------------- --------- --------- --------- -------- -------- ---------
<S> <C> <C> <C> <C> <C> <C>
Otis.................... US$5,572 US$ 5,548 US$ 5,595 US$ 533 US$ 465 US$ 524
Carrier................. 6,922 6,056 5,958 495 458 422
Pratt & Whitney......... 7,876 7,402 6,201 1,024 816 637
Flight Systems.......... 2,891 2,804 2,596 287 301 244
UT Automotive........... 2,962 2,987 3,233 169 173 196
--------- --------- --------- -------- -------- ---------
Total segment........... US$26,223 US$24,797 US$23,583 US$2,508 US$2,213 US$ 2,023
Eliminations and other.. (452) (522) (478) (89) (56) (109)
Discontinued operation.. (2,962) (2,987) (3,233) (169) (173) (196)
General corporate
expenses............... -- -- -- (243) (222) (188)
--------- --------- --------- -------- -------- ---------
Consolidated............ US$22,809 US$21,288 US$19,872 US$2,007 US$1,762 US $1,530
========= ========= ========= ======== ======== =========
</TABLE>
Available Information. Parent is subject to the information reporting
requirements of the Exchange Act and, in accordance therewith, files reports
relating to its business, financial condition and other matters. Information,
as of particular dates, concerning Parent's directors and officers, their
remuneration, stock options and other matters, the principal holders of the
Parent's securities and any material interest of such persons in transactions
with the Parent is required to be disclosed in proxy statements distributed to
Parent's shareholders and filed with the SEC. These reports, proxy statements
and other information are available for inspection at the public reference
facilities maintained by the SEC at 450 Fifth Street, N.W., Washington, D.C.
20549, and at the regional offices of the SEC located at Seven World Trade
Center, 13th Floor, New York, NY 10048 and Citicorp Center, 500 West Madison
Street (Suite 1400), Chicago, IL 60661. Copies of such information are
obtainable from the Public Reference Section of the SEC at 450 Fifth Street,
N.W., Washington, D.C. 20549 at prescribed rates.
Directors and Officers. The name, business address, citizenship, present
principal occupation or employment and five-year employment history of each of
the executive officers of the Parent and Purchaser are set forth in Schedule I
hereto.
Neither Parent nor Purchaser nor, to the best of the Purchaser's and
Parent's knowledge, any of the persons listed in Schedule I hereto or any
associate or majority owned subsidiary of the Parent, beneficially owns or has
a right to acquire any securities of the Company or has any contract,
arrangement, understanding or relationship with any other person with respect
to any securities of the Company, including, but not limited to, any contract,
arrangement, understanding or relationship concerning the transfer or the
voting of any securities of the Company, joint ventures, loan or option
arrangements, puts or calls, guaranties of loans, guaranties against loss, or
the giving or withholding of proxies, or has effected any transaction in the
securities of the Company during the past 6 months.
From time to time Parent and its subsidiaries have purchased from the
Company or its subsidiaries, and the Company and its subsidiaries have
purchased from Parent or its subsidiaries, certain products in the ordinary
course of business of the respective companies, but the aggregate amount of
all such transactions is not material to the Company and is below the levels
at which the relevant regulations of the SEC would require disclosure in
connection with this Offer. Except as set forth in this Offer to Purchase,
since January 1, 1996, neither the Parent, Purchaser, any person acting
jointly or in concert with the Purchaser nor, to the best of the Parent's and
Purchaser's knowledge, any of the persons listed on Schedule I hereto nor any
associate of a person listed on Schedule I hereto, has had any transaction
with the Company or any of its executive officers, directors or affiliates
that is required to be reported under the rules and regulations of the SEC
applicable to the Offer. Except as set forth in this Offer to Purchase, since
January 1, 1996, there had been no contracts, negotiations or transactions
between the Parent, any of its subsidiaries or, to the best of the Parent's
and Purchaser's knowledge, any of the persons listed in Schedule I to this
Offer to Purchase, on the one hand, and the Company or its
24
<PAGE>
affiliates, on the other hand, concerning a merger, consolidation or
acquisition; a tender offer for or other acquisition of securities of any
class of the Company, an election of directors of the Company; or a sale or
other transfer of a material amount of assets of the Company or any of its
subsidiaries.
11. Source and Amount of Funds
The total amount of funds required by Purchaser to purchase the Shares and
pay related expenses will be approximately U.S.$500 million. Purchaser will
obtain all such funds from Parent or its affiliates in the form of capital
contributions or advances. Parent anticipates funding the capital
contributions or advances through one or more of a combination of cash on hand
and other internally generated funds, commercial paper, privately placed
notes, and arranged bank credit facilities. In addition, Parent has a shelf
registration statement on file, pursuant to which it might elect to issue debt
securities prior to, or following, the consummation of the Offer. The proceeds
of any such issuance might be used to finance or refinance all or a part of
the consideration of the Offer. The Offer is not conditioned upon any
financing arrangements.
12. Background of the Transaction
In March 1999, Credit Suisse First Boston Corporation ("CSFB"), the
Company's financial advisor, contacted Parent to notify Parent that it had
been retained by the Board of Directors of the Company to conduct a selective
sale process and was contacting potentially interested parties. Parent was
informed that a Special Committee of the Company's Board of Directors was
formed to monitor the sale process. CSFB wanted to ascertain whether Parent
had any preliminary interest in an acquisition of the Company. Parent
indicated that it was preliminarily interested. Parent and the Company entered
into a confidentiality and standstill agreement. Following the receipt by
Parent of a confidential information memorandum relating to the Company and
its business, Parent confirmed its potential interest in an acquisition of the
Company on April 23, 1999. Parent was then invited to attend a confidential
management presentation on the Company and its businesses and to conduct due
diligence.
During the week of May 24, 1999, Parent received a formal request from CSFB
for a written offer to acquire all outstanding shares, which offer was to be
made by June 15, 1999. Accompanying the bid request was a draft of the Pre-
Acquisition Agreement which Parent was asked to review, and to indicate any
proposed changes to, for purposes of any offer.
On June 15, 1999, Parent's Finance Committee and Board of Directors
authorized management to proceed to make a bid for the Company. On June 16,
1999, representatives of Parent and the Company held a meeting at which the
proposed terms and conditions of a bid by Parent were discussed. Subsequently
that day Parent submitted a written bid to the Company to proceed with an
offer to Company shareholders to purchase all outstanding Shares. In
connection with such bid, Parent proposed changes to the Pre-Acquisition
Agreement. Parent also indicated that its bid was conditioned on entering into
lock-up agreements with Ravine and Teachers. Following discussions between
representatives of Parent and the Company on June 17 and 18, 1999, the parties
agreed on the principal economic terms of the proposed Pre-Acquisition
Agreement (the Offer Price of U.S. $11.75 per share, the amounts of the
termination fees payable by the Company to Parent or Parent to the Company
under certain circumstances if the Offer is not consummated, and the treatment
of the outstanding Company stock options), subject to satisfactory resolution
of all other outstanding issues with respect to the Pre-Acquisition Agreement
and the requested Lock-up Agreements. Between June 21 and June 23,
representatives of Parent and the Company negotiated the final terms of the
Pre-Acquisition Agreement and representatives of Parent separately negotiated
the terms of the Lock-up Agreements with Ravine and Teachers.
After the close of trading on June 23, 1999, the respective parties entered
into the Pre-Acquisition Agreement and the Lock-up Agreements. Before the
opening of trading on June 24, 1999, Parent and the Company issued a press
release announcing the execution of the Pre-Acquisition Agreement and the
Lock-up Agreements. On June 30, 1999 the Offer was commenced.
25
<PAGE>
13. Purpose of the Offer; the Pre-Acquisition Agreement; the Lock-up
Agreements
General
The purpose of the Offer and the Pre-Acquisition Agreement is to enable
Purchaser to acquire, in one or more transactions, control of, and to acquire
the entire equity interest in, the Company.
The Pre-Acquisition Agreement
The following is a summary of the material terms of the Pre-Acquisition
Agreement. This summary is not a complete description of the terms and
conditions thereof and is qualified in its entirety by reference to the full
text thereof, which is incorporated herein by reference and a copy of which
has been filed with the SEC as an exhibit to the Schedule 14D-1. The Pre-
Acquisition Agreement may be examined, and copies thereof may be obtained, as
set forth in Section 17.
The Offer. The Pre-Acquisition Agreement provides for the commencement of
the Offer, in connection with which Purchaser has expressly reserved the right
to waive the conditions to the Offer (the "Offer Conditions") (as described in
Section 5) and expressly reserved the right, subject to compliance with
applicable U.S. and Canadian securities laws (the "Securities Laws"), to
modify the terms of the Offer, except that without prior written consent of
the Company, Purchaser has agreed that it will not (i) reduce the number of
Company Shares subject to the Offer, (ii) reduce the Offer Price, (iii) add to
or modify the Offer Conditions, (iv) except as provided in the next sentence,
change the time for the expiration of the Offer, (v) change the form of
consideration payable in the Offer or (vi) amend, alter, add or waive any term
of the Offer in any manner that is, in the opinion of the Company, acting
reasonably, materially adverse to the holders of the Shares. Notwithstanding
the foregoing, (A) if on any scheduled expiration date of the Offer, which
shall initially be the twentieth business day from and including the day that
the Offer Documents (as described in the Pre-Acquisition Agreement) are filed
with the appropriate securities authorities and mailed to shareholders of the
Company, all of the Offer Conditions have not been satisfied or waived,
Purchaser shall, unless in the reasonable judgment of Purchaser all of the
Offer Conditions cannot be satisfied or waived on or prior to December 15,
1999, from time to time, extend the expiration time for such period of time as
is necessary to satisfy or fulfill such Offer Conditions, (B) Purchaser may
extend the Offer for any period required by any rule, regulation,
interpretation or position of any of the securities authorities applicable to
the Offer, or to permit the Company to cure certain misrepresentations,
breaches or instances of non-performance under the Pre-Acquisition Agreement,
and (C) Purchaser may extend the Offer for up to ten business days (but not
beyond December 15, 1999) if there have been validly tendered (and not
properly withdrawn) prior to the expiration of the Offer such number of the
Shares that would constitute at least 80%, but less than 90%, of the issued
and outstanding Company Shares as of the date of determination.
Board Representation. Promptly upon the purchase by Purchaser of the
outstanding Shares pursuant to the Offer, and from time to time thereafter,
Parent shall be entitled to designate up to such number of directors, rounded
up to the next whole number, on the Board of Directors of the Company as shall
give Parent representation on the Board of Directors of the Company equal to
the product of the total number of directors on the Board of Directors (giving
effect to the directors appointed pursuant to this sentence) multiplied by the
percentage that the aggregate number of the Shares beneficially owned by
Parent or any affiliate of Parent following such purchase bears to the total
number of Shares then outstanding, and the Company shall, at such time,
immediately take all actions necessary to cause Parent's designees to be
appointed as directors of the Company, including increasing the size of the
Board of Directors of the Company or securing the resignations of incumbent
directors or both.
The Company is obligated to promptly take all actions required pursuant to
Section 14(f) of the Exchange Act and Rule 14f-1 promulgated thereunder in
order to fulfill such obligations (including mailing to its stockholders the
information required by such Section and Rule) and shall include in the
Schedule 14D-9 such information with respect to the Company and its officers
and directors as is required under Section 14(f) and
26
<PAGE>
Rule 14f-1. Parent shall supply to the Company and be solely responsible for
any information with respect to Parent and its nominees, officers, directors
and affiliates required by such Section 14(f) and Rule 14f-1.
Following the appointment of designees of Parent and prior to consummation
of a compulsory acquisition or Second Stage Transaction (as described below),
any amendment of the Pre-Acquisition Agreement or the Company's Certificate
and Articles of Continuance or By-Laws (collectively, the "the Company
Governing Documents"), any termination of the Pre-Acquisition Agreement by the
Company, any extension by the Company of the time for the performance of any
of the obligations or other acts of Parent or waiver thereof, any waiver of
any condition to the obligations of the Company or waiver of any of the
Company's rights under the Pre-Acquisition Agreement or other action by the
Company shall require the concurrence of a majority of the directors of the
Company then in office who were not designated by Parent, which action shall
be deemed to constitute the action of the full Board of Directors of the
Company even if such majority does not constitute a majority of all directors
then in office.
Termination of Stock Options. Pursuant to the Pre-Acquisition Agreement, the
Company shall cause the vesting of option entitlements under the Company's
stock option plans to accelerate prior to or concurrent with the time of the
consummation of the Offer (the "Effective Time"), such that all outstanding
Company options to acquire Shares are exercisable prior to or concurrent with
the Effective Time. At the Effective Time, each holder of a then outstanding
Company option shall, in settlement thereof, be entitled to receive from the
Company, and shall be paid in full satisfaction for each Share subject to such
Company option an amount (subject to any applicable withholding tax) in cash
equal to the product of (i) the excess of the Offer price over the per share
exercise or purchase price of such the Company option and (ii) the number of
Shares subject to such Company option. Upon receipt of such consideration,
each such Company option shall be cancelled. The surrender of a Company option
to the Company in exchange for such consideration shall be deemed a release of
any and all rights the holder had or may have had in respect of such Company
option. The Company's stock option plans shall terminate as of the Effective
Time and any and all rights under any provisions in any other plan, program or
arrangement providing for the issuance or grant of any other interest in
respect of the capital stock of the Company or any subsidiary thereof shall be
cancelled by the Company as of the Effective Time.
Representations and Warranties. The Pre-Acquisition Agreement contains
various representations and warranties of the parties thereto. These include
representations and warranties by the Company with respect to corporate
existence and good standing, capital structure, subsidiaries, indebtedness,
corporate authorization, absence of changes, securities laws filings, consents
and approvals, no violations of other agreements, employee benefits,
litigation, taxes, compliance with applicable laws, environmental matters,
Year 2000 compliance, insurance, financial statements, undisclosed liabilities
and other matters. The Company has also represented that it has not retained
(nor will it retain) any financial advisor, broker, agent or finder or paid or
agreed to pay any financial advisor, broker, agent or finder on account of the
Pre-Acquisition Agreement, any transaction contemplated thereby or any
transaction presently ongoing or contemplated, except that Credit Suisse First
Boston Corporation has been retained as the Company's financial advisor in
connection with certain matters including the transactions contemplated
thereby. Parent has also made certain representations and warranties with
respect to corporate existence, corporate authorization, securities laws
filings, consents and approvals, no violations of other agreements, the
availability of cash or financing to consummate the Offer and the Second Stage
Transaction, litigation and other matters.
Conduct of Business and Other Covenants Prior to the Termination of the Pre-
Acquisition Agreement. The Company has agreed that, except as otherwise agreed
in writing by Parent or as expressly contemplated or permitted by the Pre-
Acquisition Agreement, during the period from the date of the Pre-Acquisition
Agreement until the Pre-Acquisition Agreement is terminated, (A) the business
of the Company and its subsidiaries shall be conducted only in, and the
Company and its subsidiaries shall not take any action except in, the usual
and ordinary course of business and consistent with past practice, and the
Company shall use all commercially reasonable efforts to maintain and preserve
its and its subsidiaries' business organization, assets, employees and
advantageous business relationships; (B) it shall not directly or indirectly:
(i) amend the Company Governing Documents; (ii) declare, set aside or pay any
dividend or other distribution or payment in respect of its share
27
<PAGE>
capital; (iii) issue, grant, sell or pledge or agree to issue, grant, sell or
pledge any shares of the Company or its subsidiaries, other than Shares
issuable pursuant to the terms of the Company options outstanding on the date
hereof; (iv) redeem, purchase or otherwise acquire any of its outstanding
shares or other securities; (v) split, combine or reclassify any of its
shares; (vi) adopt a plan of liquidation or resolutions providing for the
liquidation, dissolution, merger, consolidation or reorganization of the
Company or any of its subsidiaries; or (vii) enter into or modify any
contract, agreement, commitment or arrangement with respect to any of the
foregoing, except as permitted above; (C) other than pursuant to commitments
entered into prior to the date of the Pre-Acquisition Agreement as disclosed
in the disclosure schedule to the Pre-Acquisition Agreement (the "Disclosure
Schedule") or the Company's reports filed with the Commission (the "SEC
Reports"), neither the Company nor any of its subsidiaries shall directly or
indirectly: (i) sell, pledge, dispose of or encumber any assets except in the
ordinary course of business; (ii) acquire (by merger, amalgamation,
consolidation or acquisition of shares or assets) any corporation, partnership
or other business organization or division thereof, or, except for investments
in securities made in the ordinary course of business, make any investment
either by purchase of shares or securities, contributions of capital (other
than to subsidiaries), property transfer, or, except in the ordinary course of
business, purchase of any property or assets of any other individual or
entity; (iii) incur any indebtedness for borrowed money or any other material
liability or obligation or issue any debt securities or assume, guarantee,
endorse or otherwise as an accommodation become responsible for, the
obligations of any other individual or entity, or make any loans or advances,
except in the ordinary course of business; (iv) except for certain previously
disclosed obligations to officers, pay, discharge or satisfy any material
claims, liabilities or obligations other than the payment, discharge or
satisfaction in the ordinary course of business consistent with past practice
of liabilities reflected or reserved against in its financial statements or
incurred in the ordinary course of business consistent with past practice; (v)
authorize, recommend or propose any release or relinquishment of any material
contract right other than in the ordinary course of business consistent with
past practice; (vi) waive, release, grant or transfer any rights of material
value or modify or change in any material respect any existing material
license, lease, contract, production sharing agreement, government land
concession or other document, other than in the ordinary course of business
consistent with past practice; (vii) enter into any interest rate swaps,
currency swaps or any other rate fixing agreement for a financial transaction
or enter into any call arrangement of any sort or any forward sale agreement
for commodities, other than in the ordinary course of business consistent with
past practice; (viii) authorize or propose any of the foregoing, or enter into
or modify any contract, agreement, commitment or arrangement to do any of the
foregoing; or (ix) make any capital expenditures other than in accordance with
the 1999 capital expenditure budget previously disclosed in writing to Parent;
(D) neither the Company nor any of its subsidiaries shall create any new
payment obligations to officers, grant to any officer or director an increase
in compensation in any form, grant any general salary increase other than in
accordance with the requirements of any existing collective bargaining or
union contracts, grant to any other employee any increase in compensation in
any form other than routine increases in the ordinary course of business
consistent with past practices, make any loan to any officer or director, or
take any action with respect to the grant of any severance or termination pay
arising from the Offer or a change of control of the Company or the entering
into of any employment agreement with, any senior officer or director, or with
respect to any increase of benefits payable under its current severance or
termination pay policies; (E) neither the Company nor any of its subsidiaries
shall adopt or amend or make any contribution to any bonus, profit sharing,
option, pension, retirement, deferred compensation, insurance, incentive
compensation, other compensation or other similar plan, agreement, trust, fund
or arrangements for the benefit of employees, except as is necessary to comply
with the law or as required by existing provisions of any such plans,
programs, arrangements or agreements; and (F) the Company shall use its
reasonable efforts to cause it current insurance (or re-insurance) policies
not be canceled or terminated or any of the coverage thereunder to lapse,
unless simultaneously with such termination, cancellation or lapse,
replacement policies underwritten by insurance and re-insurance companies of
nationally recognized standing providing coverage equal to or greater than the
coverage under the cancelled, terminated or lapsed policies for substantially
similar premiums are in full force and effect.
Employment Agreements, Maintenance of Employment and Benefit Plans. The Pre-
Acquisition Agreement requires Parent to honor and comply with the terms of
those existing executive termination and severance
28
<PAGE>
agreements, plans or policies of the Company and its subsidiaries, in each
case to the extent disclosed in the Disclosure Schedule or the Company's SEC
Reports or except as may otherwise be agreed with the relevant employee if
Parent or the Company choose to terminate, whether constructively or actually,
the employment of any employees (other than for cause) of the Company or any
of its subsidiaries within one year of the completion of the Offer, notice and
severance shall be provided to such employees in accordance with the Company's
existing severance practices, in each case to the extent disclosed in the
Disclosure Schedule or the Company's SEC Reports or except as may otherwise be
agreed with the relevant employee. Except as otherwise agreed with a relevant
employee, Parent and the Purchaser agree, and after the Effective Time will
cause the Company and any successor to the Company to agree, to maintain until
December 31, 1999 salaries and all benefit plans and compensation programs
currently available to employees of the Company or any of its subsidiaries,
including without limitation members of management of the Company or any of
its subsidiaries, or to make available until December 31, 1999 alternative
benefit plans and compensation programs which are comparable in the aggregate
to those currently available to such employees.
Fees and Expenses. Except in connection with fees payable to obtain the
modification of the Company's debt covenants (which shall be paid or
reimbursed by Parent) or fees payable as a result of the reason for the
termination of the Pre-Acquisition Agreement, all fees, costs and expenses
incurred in connection with the Pre-Acquisition Agreement and the transactions
contemplated thereby shall be paid by the party incurring such cost or
expense, whether or not the Offer is consummated.
Termination. The Pre-Acquisition Agreement may be terminated by one party
giving written notice to the other parties thereto, at any time prior to
completion of the transactions contemplated thereby: by mutual written consent
of the Company and Parent; by either Parent or the Company (provided that the
terminating party is not then in breach, in any material respect, of any
covenant or other agreement contained therein and no representation or
warranty of such terminating party contained therein that is qualified as to
materiality shall be untrue or incorrect, and no representation or warranty of
such terminating party contained therein that is not so qualified shall be
untrue or incorrect in any material respect, at any time before the Effective
Time, in each case, as if made at and as of such time (or, to the extent such
representation or warranty speaks as of a specific date, no such
representation or warranty was so untrue or incorrect as of such date)), if
there shall have been a breach, in any material respect, of any covenant or
other agreement contained therein on the part of the other party or if any
representation or warranty of such other party contained therein that is
qualified as to materiality shall not be true and correct, or any
representation or warranty of such other party contained therein that is not
so qualified shall not be true and correct in all material respects, at any
time before the Effective Time, in each case as if made at and as of such time
(or, to the extent such representation or warranty speaks as of a specific
date, such representation or warranty was not so true and correct as of such
date), which breach or misrepresentation is not cured within 10 days following
written notice to such other party, or such breach, by its nature or timing
cannot be cured prior to the Expiry Time. The Pre-Acquisition Agreement may
also be terminated: by the Company, following receipt of, and in order to
accept or recommend, a superior take-over proposal if, after consulting with
outside counsel, the Board of Directors of the Company has determined that
such action is required in order to discharge properly the directors'
fiduciary duties under applicable law; by Purchaser, if (i) the Board of
Directors or any committee thereof of the Company modifies or amends in any
manner adverse to Parent or Purchaser, or withdraws, its authorization,
approval or recommendation of the Offer or the Pre-Acquisition Agreement or
shall have resolved to do any of the foregoing or (ii) the Company or any of
its subsidiaries (or the Board of Directors or any committee thereof) shall
have approved, recommended, authorized, proposed or filed a document with any
securities authority not opposing, or publicly announced its intention to
enter into any take-over proposal (other than with Parent, Purchaser or any of
their affiliates), or shall have resolved to do any of the foregoing; by
either Parent or the Company, if the Offer terminates or expires at the Expiry
Time, without Purchaser taking up and paying for any Company Shares on account
of the failure of any of the Offer Conditions which has not been waived by
Purchaser, unless the absence of such occurrence shall be due to the failure
of the party seeking to terminate the Pre-Acquisition Agreement to perform its
requisite obligations thereunder; or by either Parent or the Company, if the
date that Purchaser first takes up and acquires Company Shares pursuant to the
Offer has
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not occurred on or prior to December 15, 1999. No termination of the Pre-
Acquisition Agreement shall relieve any party from liability for any breach of
the Pre-Acquisition Agreement.
In the event of termination of the Pre-Acquisition Agreement (a) by the
Company, following receipt of, and in order to accept or recommend, a superior
take-over proposal if, after consulting with outside counsel, the Board of
Directors of the Company has determined that such action is required in order
to discharge properly the directors' fiduciary duties under applicable law or
(b) by Parent, if (i) the Board of Directors or any committee thereof of the
Company modifies or amends in any manner adverse to Parent, or withdraws, its
authorization, approval or recommendation of the Offer or the Pre-Acquisition
Agreement or shall have resolved to do any of the foregoing or (ii) the
Company or any of its subsidiaries (or the Board of Directors or any committee
thereof) shall have approved, recommended, authorized, proposed or filed a
document with any securities authority not opposing, or publicly announced its
intention to enter into any take-over proposal (other than with Parent or any
of its affiliates), or shall have resolved to do any of the foregoing, the
Company shall make payment to Parent by wire transfer of immediately available
funds of a fee in the amount of $15 million.
In the event of termination of the Pre-Acquisition Agreement without
consummation of the Offer principally as a result of a failure to obtain the
antitrust approvals contemplated by paragraph (b) of the Offer Conditions,
then, within two business days after such termination, Parent shall make
payment to the Company by wire transfer of immediately available funds of a
fee in the amount of $10 million, provided, however, that no payment shall be
due if the Company shall have breached certain sections of the Pre-Acquisition
Agreement.
In the event a take-over proposal is announced publicly while the Offer is
open for acceptance and the Minimum Condition is not satisfied at the Expiry
Time (other than principally as a result of a failure to obtain the antitrust
approvals contemplated by the Offer Conditions), then the Company shall make
payment to Parent by wire transfer of immediately available funds of a fee in
the amount of $15 million.
In the event a take-over proposal is announced publicly and made after the
Expiry Time but prior to March 31, 2000, then, if Purchaser did not take up
and pay for any Shares under the Offer and the Company was not entitled to any
payment from Parent as a result of a failure to obtain the antitrust approvals
contemplated by the Offer Conditions, the Company shall within two business
days of the date on which such take-over proposal is made make payment to
Parent by wire transfer of immediately available funds of a fee in the amount
of $15 million.
Indemnification and Insurance. The Pre-Acquisition Agreement also provides
for the Parent's agreement to use reasonable efforts to secure directors and
officers liability insurance coverage for the Company's current and former
directors and officers on a six year "trailing" or "runoff" basis from and
after the Effective Time. If a "trailing" policy is not available, then Parent
agrees that for the entire period from the Effective Time until six years
after the Effective Time, Parent will use reasonable efforts to cause the
Company or any successor to the Company to maintain the Company's current
directors' and officers' insurance policy or an equivalent policy, subject in
either case to terms and conditions no less advantageous to the directors and
officers of the Company than those contained in the policy in effect on the
date hereof, for all present and former directors and officers of the Company,
covering claims made prior to or within six years after the Effective Time.
This obligation shall not require Parent to pay an annual premium in excess of
200% of the aggregate annual amounts currently paid by the Company to maintain
the existing policies (the "Insurance Amount") and, if equivalent coverage
cannot be obtained, or can be obtained only by paying an annual premium in
excess of such amount, Parent shall use its reasonable best efforts to obtain
as much comparable insurance as available for the Insurance Amount. Parent
agrees that if it acquires the Shares under the Offer it shall cause the
Company to fulfill its obligations pursuant to indemnities provided or
available to past and present officers and directors of the Company pursuant
to the provisions of the Company's Governing Documents, the CBCA, and the
written indemnity agreements entered into between the Company and its officers
and directors, in each case to the extent disclosed in the Disclosure Schedule
or the Company's SEC Reports.
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No Solicitation. The Pre-Acquisition Agreement requires the Company to cease
immediately and cause to be terminated all existing discussions and
negotiations, if any, with any parties conducted before the date of the Pre-
Acquisition Agreement with respect to any takeover proposal and, without
limitation, promptly following the execution of the Pre-Acquistion Agreement
to request the return of all confidential information provided by the Company
to all parties who have had such discussions or negotiations or who have
entered into confidentiality agreements with the Company pertaining to the
sale of the Company or a substantial portion of its assets.
The Company also must immediately notify Purchaser of any takeover proposal
received by it or any of its subsidiaries or any of their respective
directors, officers, employees, agents, financial advisors, counsel or other
representatives or any request for confidential information relating to the
Company in connection with a takeover proposal or for access to the
properties, books or records of the Company or any of its subsidiaries by any
person or entity that it is considering making a takeover proposal. Any such
notice to Purchaser shall be made orally immediately following any such
receipt or request, shall be confirmed in writing, and shall indicate such
details of the takeover proposal or information request known to such persons
as the Purchaser may reasonably request, including the identity of the person
making such takeover proposal or request for information.
Neither the Company nor any of its subsidiaries, or any of their respective
directors, officers, employees, agents, financial advisors, counsel or other
representatives may, directly or indirectly, (i) solicit, initiate or
encourage, or enter into any agreements or understandings with respect to any
takeover proposal (other than from Parent and its subsidiaries and their
respective directors, officers, employees, agents, financial advisors, counsel
or other representatives) or (ii) provide any confidential information to any
person or entity (other than Parent and its affiliates) or participate in any
discussions or negotiations relating to any such takeover proposal.
Notwithstanding the foregoing, if the Board of Directors of the Company
receives a request for confidential information from a party who proposes to
the Company a takeover proposal and the Board of Directors of the Company
determines that such proposal is reasonably likely to lead to a takeover
proposal which is more favorable to holders of Company Shares from a financial
point of view than the Offer and, after consulting with its outside counsel,
that it is necessary to do so in order for the directors to discharge properly
their fiduciary duties under applicable law, then, and only in such case, the
Company may, subject to the prior execution and delivery of a confidentiality
agreement in substantially the same form and containing the same restrictions
and limitations as are set forth in the confidentiality agreement between the
Company and Parent, provide such party with access to such information
regarding the Company as was provided to or made available to Parent and/or
the Purchaser, and the Company or its Board of Directors may consider and
negotiate such superior takeover proposal (it being understood that neither
the Company nor its Board of Directors may approve, make a recommendation to
the Company shareholders or enter into an agreement with respect to such
superior takeover proposal unless the Pre-Acquisition Agreement has been
previously terminated). In such event, upon Parent's request, the Company
shall from time to time advise Parent as to the status of such discussions and
shall provide to Parent a copy of any such confidentiality agreement
immediately upon its execution.
The Company is also prohibited from waiving, in whole or in part, the
"standstill" provisions applicable to any party to a confidentiality agreement
with the Company (other than Parent) as at June 23, 1999.
Other Covenants of Parent and Purchaser. Parent and Purchaser have agreed to
take any and all steps necessary to avoid or eliminate each and every
impediment under any antitrust, competition, or trade regulation law that may
be asserted by any governmental authority or any other party so as to enable
the parties to consummate the transactions contemplated by the Pre-Acquisition
Agreement as soon as practicable, but in any event no later than December 15,
1999, including without limitation, committing to and/or effecting, by consent
decree, hold separate orders, or otherwise, the sale, divestiture or
disposition of such assets or businesses of Parent, Purchaser or the Company
as are required to be divested in order to avoid the entry of any injunction,
temporary restraining order or other governmental order, which would otherwise
have the effect of preventing the consummation of all or any part of the
transactions contemplated under the Pre-Acquisition Agreement; provided,
however, that neither Parent nor Purchaser shall have any obligation to take
any actions if such actions,
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in the reasonable judgment of Parent, would reasonably be expected, in the
aggregate, to materially impair the overall benefits to be realized by Parent
from consummation of the Offer and the other transactions contemplated by the
Pre-Acquisition Agreement.
Other Mutual Covenants. Subject to the terms and conditions herein provided,
each of the parties to the Pre-Acquisition Agreement has agreed to use all
commercially reasonable efforts to take, and to cause its officers, employees,
representatives, advisors and agents to take, all action and to do, or cause
to be done, all things necessary, proper or advisable to consummate and make
effective as promptly as practicable the transactions contemplated by the Pre-
Acquisition Agreement and to cooperate with each other in connection with the
foregoing, including using commercially reasonable efforts (i) to obtain all
necessary waivers, consents and approvals from other parties to material
agreements, leases and other contracts or agreements (including, without
limitation, the agreement of any persons as may be required pursuant to any
agreement, arrangement or understanding relating to the Company's operations),
(ii) to make all filings and obtain all necessary consents, approvals and
authorizations as are required to be obtained under any federal, provincial or
foreign law or regulations, (iii) to defend all lawsuits or other legal
proceedings challenging the Pre-Acquisition Agreement or the consummation of
the transactions contemplated hereby, (iv) to cause to be lifted or rescinded
any injunction or restraining order or other order adversely affecting the
ability of the parties to consummate the transactions contemplated hereby, (v)
to effect all necessary registrations and other filings and submissions of
information requested by governmental authorities and (vi) to fulfill all
conditions and satisfy all provisions of the Pre-Acquisition Agreement and the
Offer.
Nothing in the Pre-Acquisition Agreement (other than as expressly provided
for) shall obligate Parent or the Purchaser (i) to keep the Offer open for
acceptance beyond the expiration date set forth in the Offer (as it may be
extended from time to time) or (ii) to take any action that, in the reasonable
judgment of Parent, would reasonably be expected to materially impair the
overall benefits to be realized by Parent from consummation of the Offer and
the other transactions contemplated by the Pre-Acquisition Agreement.
Subject to the confidentiality agreement between Parent and the Company and
upon reasonable notice, the Company is obligated to afford Parent's officers,
employees, counsel, accountants and other authorized representatives and
advisers reasonable access, during normal business hours and until the
expiration of the Pre-Acquisition Agreement, to all of its properties, books,
contracts and records as well as to its management personnel, and, during such
period, the Company is obligated to furnish promptly to Parent all information
concerning its business, properties and personnel as Parent may reasonably
request.
In the Pre-Acquisition Agreement, the Company acknowledged that following
completion of the Offer the modification or elimination of the covenants
contained in, and reduction of the outstanding amount of, its existing debt
obligations is integral to Parent's business plans. The Company has agreed to
use reasonable efforts to cooperate and assist Parent in obtaining consents to
such modifications and in purchasing such obligations in furtherance of those
plans, including the conduct of (or provision of assistance to Parent in
conducting) a consent solicitation and tender offer for the outstanding debt
securities of the Company or its subsidiaries on terms satisfactory to Parent;
provided that (i) the Company shall not be required to purchase any debt
obligations or pay any fees in connection with such efforts prior to
consummation of the Second Stage Transaction, unless funds therefore are
provided by Parent on terms satisfactory to the Company and (ii) Parent shall
pay or reimburse the Company for all reasonable expenses in connection
therewith.
Lock-up Agreements with Shareholders
The following sets forth a summary of certain provisions of the Lock-up
Agreements between Purchaser and Ravine and between Purchaser and Teachers,
respectively. A copy of each of the Lock-up Agreements is filed with the SEC
as an exhibit to Purchaser's Schedule 14D-1.
Concurrently with the execution of the Pre-Acquisition Agreement, Purchaser
entered into Lock-up Agreements with Ravine, the owner of 7,889,870 Shares
(representing approximately 18.4% of the outstanding Shares on a fully diluted
basis), and Teachers, the owner of 7,919,638 Shares (representing
approximately 18.5%
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of the outstanding Shares on a fully diluted basis), respectively. Pursuant to
the Lock-up Agreements, Ravine and Teachers agreed to validly tender and not
withdraw their Shares, unless (in the case of Teachers only) a Superior
Takeover Proposal (as defined in the Pre-Acquisition Agreement) is made. In
addition, Ravine has granted Purchaser an option to purchase its Shares at a
price of U.S.$11.75 per Share (or any greater amount per Share paid in the
Offer). Such option is exercisable in certain circumstances following
termination of the Pre-Acquisition Agreement.
The option to acquire Ravine's Shares is exercisable if (a) the Pre-
Acquisition Agreement is terminated (i) by the Company because the Company has
received a superior take-over proposal and the Board of Directors of the
Company has determined that its fiduciary duties require it to terminate the
Pre-Acquisition Agreement, or (ii) by Parent because (A) the Board of
Directors of the Company or any committee thereof has modified or withdrawn
its approval or recommendation of the Offer or (B) the Company has publicly
announced its intention to enter into a business combination with any person
other than Parent or Purchaser or taken other public actions not opposing
another take-over proposal; (b) a take-over proposal with respect to the
Company is announced by a person other than Parent or Purchaser while the
Offer is open and the Minimum Condition is not satisfied; or (c) a take-over
proposal with respect to the Company is announced by a person other than
Parent or Purchaser after the Offer has closed but prior to March 31, 2000 and
Purchaser did not consummate the Offer.
If Purchaser acquires the Shares by exercising its option in respect of
Ravine and then sells such Shares to a buyer pursuant to any Take-over
Proposal within 12 months of the Closing, Ravine is entitled to receive 75% of
the excess of the aggregate proceeds received by the Purchaser in such sale
over the aggregate price the Purchaser paid in exercising the option for those
Shares.
The two Lock-up Agreements also contain covenants by Ravine and Teachers not
to take any action to solicit, initiate or encourage inquiries, proposals or
offers from, or provide information to any other person relating to the direct
or indirect acquisition or disposition of any securities of the Company or its
subsidiaries. Each of Ravine and Teachers further covenants not to cooperate
or participate in any amalgamation, merger or other business combination of
the Company or its subsidiaries and not to dispose of any of their Shares,
except in accordance with the applicable Lock-up Agreement.
The Lock-up Agreements further contain a covenant by Ravine and Teachers to
use all reasonable efforts to cause their associates or nominees who serve as
directors of the Company to resign as the Purchaser requests after the
Purchaser acquires the Shares under the Offer. Currently, at least two Board
members, one of whom is the chair, are designees of Ravine and Teachers.
In the case of the Lock-up Agreement with Ravine, from and after the date
when the option ceases to be exercisable, the Lock-up Agreement terminates.
Teachers may terminate its Lock-up Agreement at the earliest of (i) a third
party's making a bona fide offer that constitutes a Superior Take-over
Proposal; (ii) termination of the Pre-Acquisition Agreement; and (iii)
December 15, 1999.
Arrangements with Certain Employees of the Company
Parent has offered employment effective upon consummation of the Offer upon
terms to be negotiated to each of: W. Michael Clevy, President and Chief
Executive Officer of the Company; Herman V. Kling, Senior Vice President for
Sales and Marketing of the Company; and David B. Schumacher, Vice President
and General Manager of the Commercial Products Group for the Company. In
addition, each of these individuals has been offered sign-on bonuses of
US$100,000 and the opportunity to convert certain severance benefits and stock
awards. At this time, no agreement has been reached with any of these
individuals.
The Company, in consultation with Parent, also has adopted an incremental
bonus plan for certain senior officers in respect of services to be provided
by such officers in connection with the transition of the Company's ownership
to Purchaser. The bonus plan will provide for bonuses to be paid by the
Company within 60 to 90 days after the consummation of the Offer and will
involve aggregate payments of approximately US$1 million. With the exception
of W. Michael Clevy, President and Chief Executive Officer, who is proposed to
receive US$500,000, the participating officers and the amounts to be paid to
the participating officers have not yet been determined; however, the Company
and Parent intend to consult with each other in respect of the details of the
plan.
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Confidentiality Agreement
The following is a summary of certain material provisions of the
Confidentiality Agreement, dated March 19, 1999 (the "Confidentiality
Agreement"), between Parent and the Company, a copy of which is filed with the
SEC as an exhibit to Purchaser's 14D-1. This summary does not purport to be
complete and is qualified in its entirety by reference to the complete text of
the Confidentiality Agreement.
Pursuant to the Confidentiality Agreement, Parent and its representatives
agreed to keep confidential certain information received from the Company. The
Confidentiality Agreement also contains a six-month standstill provision and a
provision pursuant to which Parent agreed not to solicit for employment any
person employed by the Company. The provisions of the Confidentiality
Agreement shall remain binding and in full force and effect for a period of
two years and the parties shall comply with, and shall cause their respective
agents and representatives to comply with, all of their respective obligations
under the Confidentiality Agreement.
Acquisition of Shares Not Tendered
Purchaser intends (and the Pre-Acquisition Agreement obligates Purchaser to
use reasonable best efforts) to acquire all Shares that are not tendered in
the Offer through a compulsory acquisition or other type of second stage
transaction (each, a "Second Stage Transaction") permitted by Canadian
corporate law. The Pre-Acquisition Agreement provides that the consideration
per Share in such Transaction may not be less than the consideration paid in
the Offer, and Purchaser intends that the per Share consideration will be
equal to the Offer Price.
The Company is obligated under the Pre-Acquisition Agreement to assist in a
Second Stage Transaction, including by calling a shareholders' meeting and by
distributing necessary informational materials in connection therewith. As
described below, a Second Stage Transaction may take one of several forms.
Compulsory Acquisition. If, within 120 days after the date of the Offer,
Purchaser acquires in the Offer at least 90% of the Shares, other than Shares
held at the date of the Offer by or on behalf of the Purchaser or its
affiliates or associates and such Shares have been taken up and paid for by
the Purchaser, the Purchaser intends to acquire pursuant to the provisions of
Section 206 of Canada Business Corporations Act (the "CBCA") the remaining
Shares held by each Shareholder who did not accept the Offer, on the same
terms as the Shares acquired under the Offer (a "compulsory acquisition").
To exercise such statutory right, Purchaser must give notice (the "Offeror's
Notice") to each Shareholder who did not accept the Offer (and to each person
who subsequently acquires any such Shares) (in each case a "Dissenting
Offeree") and to the Director under the CBCA of such proposed acquisition on
or before the earlier of 60 days from the Expiry Time and 180 days from the
date of the Offer. Within 20 days of giving the Offeror's Notice, Purchaser
must pay or transfer to the Company the consideration Purchaser would have had
to pay or transfer to the Dissenting Offerees if they had elected to accept
the Offer, to be held in trust for the Dissenting Offerees. In accordance with
Section 206 of the CBCA, within 20 days after receipt of the Offeror's Notice,
each Dissenting Offeree must send the certificates representing the applicable
securities held by such Dissenting Offeree to the Company, and may elect
either to transfer such securities to Purchaser on the terms of the Offer or
to demand payment of the fair value of such securities held by such holder by
so notifying the Purchaser. If a Dissenting Offeree has elected to demand
payment of the fair value of such securities, Purchaser may apply to a court
having jurisdiction to hear an application to fix the fair value of such
securities of that Dissenting Offeree. If Purchaser fails to apply to such
court within 20 days after it made the payment or transferred the
consideration to the Company referred to above, the Dissenting Offeree may
then apply to the court within a further period of 20 days to have the court
fix the fair value. If no such application is made by the Dissenting Offeree
within such period, the Dissenting Offeree will be deemed to have elected to
transfer such securities to Purchaser on the terms of the Offer. Any judicial
determination of the fair value of the securities could be more or less than
the amount paid pursuant to the Offer.
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The foregoing is a summary only. Section 206 of the CBCA is complex and may
require strict adherence to notice and timing provisions, failing which such
rights may be lost or altered. Shareholders who wish to be better informed
about these provisions should consult their legal advisors.
See Sections 6a and 6b for a discussion of the tax consequences to
Shareholders in the event of a compulsory acquisition.
Other Second Stage Transactions. If the foregoing statutory right of
compulsory acquisition is not available, then Purchaser intends to consider
other means of acquiring, directly or indirectly, all of the Shares in
accordance with applicable law, including a subsequent acquisition transaction
(as described below). In order to effect a subsequent acquisition transaction,
Purchaser may seek to cause a special meeting of the necessary classes of
securities of the Company and/or the shareholders to be called to consider an
amalgamation, share consolidation, statutory arrangement, capital
reorganization or other transaction involving Purchaser and/or an affiliate of
Purchaser and the Company and/or the shareholders for the purposes of the
Company becoming, directly or indirectly, a wholly-owned subsidiary of
Purchaser or effecting an amalgamation or merger of the Company's business and
assets with or into Purchaser and/or an affiliate of Purchaser (each of the
foregoing, a "subsequent acquisition transaction"). The Purchaser currently
intends to propose a consolidation of the Shares pursuant to which
shareholders who do not deposit their Shares under the Offer would have the
number of Shares they hold changed into a number of Shares which is less than
one, resulting in such shareholders receiving cash consideration equal to the
purchase price which would have been paid for such Shares had they been
tendered under the Offer. Depending upon the nature and terms of the
subsequent acquisition transaction, the approval of at least 66 2/3% of the
votes cast by holders of the outstanding Shares may be required at a meeting
duly called and held for the purpose of approving the subsequent acquisition
transaction.
The tax consequences to a shareholder of a subsequent acquisition
transaction may differ from the tax consequences to such shareholder of
accepting the Offer. See Section 6a and 6.
The methods of acquiring the remaining outstanding Shares described above,
other than a compulsory acquisition, would be a "going private transaction"
within the meaning of certain applicable Canadian securities legislation and
the regulations to the Securities Act (Ontario) (the "Regulations"), Policy
9.1 promulgated under the Securities Act (Ontario) ("Policy 9.1") and Policy
Q-27, promulgated under the Securities Act (Quebec) ("Policy Q-27") with
respect to holders of a class of participating securities, if such method
would result in the interest of a holder of Shares (the "affected securities')
being terminated without the consent of the holder and without the
substitution therefor of an interest of equivalent value in a participating
security of the Company, a successor to the business of the Company or another
issuer who controls the Company or, in the case of Policy 9.1 and Policy Q-27,
an issuer who controls a successor to the business of the Company. In certain
circumstances, the provisions of Policy 9.1 and Policy Q-27 may also deem
certain types of subsequent acquisition transactions to be "related party
transactions."
The Regulations, Policy 9.1 and Policy Q-27 provide that, unless exempted, a
corporation proposing to carry out a going private transaction (or a related
party transaction in the case of Policy 9.1 and Policy Q-27) is required to
prepare a valuation of the affected securities (and any non-cash consideration
being offered therefor) and to provide to the holders of the affected
securities a summary of such valuation. In connection therewith, Purchaser
intends to rely on any exemption then available or to seek waivers pursuant to
Policy 9.1 and Policy Q-27 or any rule promulgated in substitution therefor
from the Ontario Securities commission (the "OSC") and the Quebec Securities
Commission ("QSC"), respectively, exempting Purchaser or the Company, as
appropriate, from the requirement to prepare a valuation in connection with
the subsequent acquisition. In connection with the aforementioned exemptions,
Purchaser confirms that it has no knowledge, after reasonable inquiry, of non-
financial factors or factors particular to Ravine or Teachers which were
considered relevant by Ravine or Teachers in assessing the price offered by
Purchaser for the Shares. Purchaser also certifies that it has no knowledge,
after reasonable inquiry, of any prior event in the affairs of the Company
which was undisclosed at the time of the discussions with Ravine and Teachers
regarding the possible acquisition of the Company which
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if disclosed could reasonably have been expected to affect the price offered
by Purchaser for the Shares following the discussions with Ravine and Teachers
and that no intervening event, other than the Offer, has occurred which could
reasonably be expected to increase the value of the Shares.
Policy 9.1 and Policy Q-27 would also require that, in addition to any other
required securityholder approval, in order to complete a going private
transaction, the approval of a simple majority of the votes cast by "minority"
holders of the affected securities be obtained, unless a formal valuation is
required and the consideration is payable in cash and is less in amount than
per security value or the simple average of the high and low ends of the range
of per security values arrived at by the formal valuation, in which case a
two-thirds majority of the "minority" vote is required. In relation to the
Offer and any going private transaction, the "minority" holders will be,
unless an exemption is available or discretionary relief is granted by the OSC
and QSC, all holders of Shares other than the Offeror, its directors and
senior officers, any associate or affiliate of the Offeror or its directors or
senior officers in connection with the Offer or the subsequent going private
transaction, and any person who is a "related party" of the Offeror as defined
by Policy 9.1 and Policy Q-27. Subject to any exemption or waiver then
available or obtained, as the case may be, Shares which are deposited under
the Offer by Ravine and Teachers pursuant to the Lock-up Agreements will not
be treated as "minority" shares. Policy 9.1 and Policy Q-27 also provide that
the Offeror may treat Shares acquired pursuant to the Offer as "minority"
shares and may vote them, or consider them voted, in favor of such going
private transaction if a summary of a valuation was provided or no valuation
was required in respect of the Offer and if the consideration per security in
the going private transaction is at least equal in value to the consideration
paid under the Offer and the intention to proceed with the transaction is
disclosed in the Offer to Purchase. The Offeror intends that the consideration
offered under any subsequent going private transaction proposed by it would be
identical to the consideration offered under the Offer.
In the event a subsequent acquisition transaction were to be consummated,
holders of Shares, under the CBCA, may have the right to dissent and demand
payment of the fair value of such Shares. This right, if the statutory
procedures are complied with, could lead to a judicial determination of the
fair value required to be paid to such dissenting holders for their Shares.
The fair value of Shares so determined could be more or less than the amount
paid per Share pursuant to the subsequent acquisition transaction or the
Offer. Any such judicial determination of the fair value of the Shares could
be based upon considerations other than, or in addition to, the market price
of the Shares.
If Purchaser decides not to effect a compulsory acquisition or propose a
subsequent acquisition transaction involving the Company, or proposes a
subsequent acquisition transaction but cannot promptly obtain any required
approval, then Purchaser will evaluate its other alternatives. Such
alternatives could include, to the extent permitted by applicable law,
purchasing additional Shares in the open market, in privately negotiated
transactions, in another take-over bid or exchange offer or otherwise, or
taking no further action to acquire additional Shares. Any additional
purchases of Shares could be at a price greater than, equal to or less than
the price to be paid for Shares under the Offer and could be for cash or other
consideration. Alternatively, the Purchaser may sell or otherwise dispose of
any or all Shares acquired pursuant to the Offer or otherwise. Such
transactions may be effected on terms and at prices then determined by the
Purchaser, which may vary from the terms and the price paid for Shares under
the Offer.
In September, 1994 the Director appointed under the CBCA released a policy
on "going private transactions" stating, among other things, that the Director
is of the opinion that going private transactions are permitted under the CBCA
provided that the transaction is not oppressive or unfairly prejudicial to or
unfairly disregards the interests of a person whose interest in a
participating security is being terminated without his or her consent In
determining whether a going private transaction is fair, the policy states
that compliance with the requirements set forth in Policy 9.1 or Policy Q-27
will usually be viewed by the Director as sufficient.
Certain judicial decisions may be considered relevant to any subsequent
acquisition transaction which may be proposed or effected subsequent to the
expiry of the Offer. Prior to the adoption of Policy 9.1 and Policy Q-27,
Canadian courts, in a few instances, granted preliminary injunctions to
prohibit transactions involving going private amalgamations. The current trend
both in legislation and in the U.S. jurisprudence upon which the
36
<PAGE>
previous Canadian decisions were based is toward permitting going private
transactions to proceed subject to compliance with procedures designed to
ensure substantive fairness to the minority shareholders. Holders should
consult their legal advisors for a determination of their legal rights.
Rule 13e-3 under the Exchange Act is applicable to certain going private
transactions and may under certain circumstances be applicable to the proposed
acquisition of Shares not tendered in the Offer, whether acquired by statutory
right of compulsory acquisition under the CBCA, amalgamation, share
consolidation, statutory arrangement and/or other business combination.
However, Rule 13e-3 would be inapplicable if (i) the Shares are deregistered
under the Exchange Act prior to the subsequent acquisition transaction or (ii)
the subsequent acquisition transaction is consummated within one year after
the purchase of the Shares pursuant to the Offer and the amount paid per Share
in the subsequent acquisition transaction is at least equal to the amount paid
per Share in the Offer, provided disclosure of the possible subsequent
acquisition transaction is made at the time of the Offer. If applicable, Rule
13e-3 requires, among other things, that certain financial information
concerning the fairness of the proposed transaction and the consideration
offered to minority shareholders in such transaction be filed with the SEC and
disclosed to shareholders prior to the consummation of the transaction. The
Purchaser does not believe that Rule 13e-3 will be applicable to any
subsequent acquisition transaction contemplated herein.
Shareholders should consult their legal advisors for a determination of
their legal rights with respect to any transaction which may constitute a
going private transaction or a related party transaction.
Plans for the Company
It is expected that, following the Second Stage Transaction, the Company
will substantially retain its current operational structure, manufacturing and
sales infrastructure, distribution and dealer networks and brands.
As contemplated by the Pre-Acquisition Agreement and as described in Section
8, the Note Issuer, a subsidiary of the Company, is making the Senior Note
Offer.
14. Dividends and Distributions
Pursuant to the terms of the Pre-Acquisition Agreement, unless the Purchaser
shall otherwise agree in writing, during the period from the date of the Pre-
Acquisition Agreement until the Pre-Acquisition Agreement is terminated, the
Company shall not directly or indirectly declare, set aside or pay any
dividend or other distribution or payment (whether in cash, shares or
property) in respect of its share capital or enter into or modify any
contract, agreement, commitment or arrangement with respect to any of the
foregoing.
According to the Company 10-K, the Company has not paid a dividend on its
ordinary shares since 1990. The Company currently intends to retain all
earnings to support the development and growth of the Company. In addition,
the Company's senior debt issue limits the ability to pay dividends and
distributions on its ordinary shares.
15. Certain Legal Matters
Except as described in this Section 15, Purchaser is not aware of any
license or regulatory permit that appears to be material to the business of
the Company and its subsidiaries, taken as a whole, that might be adversely
affected by Purchaser's acquisition of Shares as contemplated herein or of any
approval or other action by any Governmental Authority that would be required
for the acquisition or ownership of Shares by Purchaser as contemplated
herein. Should any such approval or other action be required, Purchaser
currently contemplates that such approval or other action will be sought,
except as described below under "State Takeover Laws". While, except as
otherwise expressly described in this Section 15, Purchaser does not presently
intend to delay the acceptance for payment of or payment for Shares tendered
pursuant to the Offer pending the outcome of any such matter, there can be no
assurance that any such approval or other action, if needed, would be obtained
or would be obtained without substantial conditions or that failure to obtain
any such approval or other action might
37
<PAGE>
not result in consequences adverse to the Company's business or that certain
parts of the Company's business might not have to be disposed of if such
approvals were not obtained or such other actions were not taken in order to
obtain any such approval or other action. If certain types of adverse action
are taken with respect to the matters discussed below, Purchaser could decline
to accept for payment or pay for any Shares tendered. See Section 5 for
certain conditions to the Offer.
State Takeover Laws. A number of states have adopted "takeover' statutes
that purport to apply to attempts to acquire corporations that are
incorporated in such states, or whose business operations have substantial
economic effects in such states, or which have substantial assets, security
holders, employees, principal executive offices or places of business in such
states.
In Edgar v. MITE Corporation, the Supreme Court of the United States
invalidated on constitutional grounds the Illinois Business Takeover Act,
which, as a matter of state securities law, made takeovers of corporations
meeting certain requirements more difficult. However, in CTS Corp. v. Dynamics
Corp. of America, the Supreme Court held that a state may, as a matter of
corporate law and, in particular, those laws concerning corporate governance,
constitutionally disqualify a potential acquirer from voting on the affairs of
a target corporation without prior approval of the remaining stockholders,
provided that such laws were applicable only under certain conditions, in
particular, that the corporation has a substantial number of shareholders in
the state and is incorporated there.
Based on information supplied by the Company, Parent and Purchaser do not
believe that any state takeover statutes purport to apply to the Offer or a
Second Stage Transaction. Neither Purchaser nor Parent has currently complied
with any state takeover statute or regulation. Parent and Purchase reserve the
right to challenge the applicability or validity of any state law purportedly
applicable to the Offer or a Second Stage Transaction and nothing in this
Offer to Purchase or any action taken in connection with the Offer or a Second
Stage Transaction is intended as a waiver of such right. If it is asserted
that any state takeover statute is applicable to the Offer or a Second Stage
Transaction and if an appropriate court does not determine that it is
inapplicable or invalid as applied to the Offer or a Second Stage Transaction.
Parent and Purchaser might be required to file certain information with, or to
receive approvals from, the relevant state authorities, and Purchaser might be
unable to accept for payment or pay for Shares tendered pursuant to the Offer,
or be delayed in consummating the Offer or a Second Stage Transaction. In such
case, Purchaser may not be obliged to accept for payment or pay for any shares
tendered pursuant to the Offer.
Antitrust. Under the provisions of the HSR Act applicable to the Offer, the
purchase of Shares under the Offer may be consummated following the expiration
or earlier termination of a 15-calendar-day waiting period following the
filing by Purchaser of a Notification and Report Form with respect to the
Offer, unless Purchaser receives a request for additional information or
documentary material from the Antitrust Division of the U.S. Department of
Justice or the U.S. Federal Trade Commission (the "FTC"). Purchaser expects to
make its filing with the Antitrust Division and the FTC on or about July 1,
1999. If, within the initial 15-day waiting period, either the Antitrust
Division or the FTC requests additional information or documentary material
from Purchaser, the waiting period will be extended and would expire at 11:59
P.M., New York City time, on the tenth calendar day after the date of
substantial compliance by Purchaser with such request. Only one extension of
the waiting period pursuant to a request for additional information is
authorized by the HSR Act. Thereafter, such waiting period may be extended
only by court order or with the consent of Purchaser. If the acquisition of
Shares is delayed pursuant to a request by the FTC or the Antitrust Division
for additional information or documentary material pursuant to the HSR Act,
the Offer may, at the discretion of Purchaser, be extended and, in any event,
the purchase of and any payment for Shares will be deferred until ten days
following the date the request is complied with by Purchaser, unless the
waiting period is terminated early by the FTC and the Antitrust Division.
Unless the Offer is extended, any extension of the waiting period may not give
rise to any additional withdrawal rights. See Section 4.
38
<PAGE>
In practice, complying with a request for additional information or
documentary material can take a significant amount of time. In addition, if
the Antitrust Division or the FTC raises substantive issues in connection with
a proposed transaction, the parties frequently engage in negotiations with the
relevant governmental agency concerning possible means of addressing those
issues and may agree to delay consummation of the transaction while such
negotiations continue.
The FTC and the Antitrust Division frequently scrutinize the legality under
the antitrust laws of transactions such as Purchaser's proposed acquisition of
the Company. At any time before or after Purchaser's purchase of Shares
pursuant to the Offer, the Antitrust Division or the FTC could take such
action under the antitrust laws as it deems necessary or desirable in the
public interest, including seeking to enjoin the purchase of Shares pursuant
to the Offer or the consummation of the Second Stage Transaction or seeking
the divestiture of Shares acquired by Purchaser or the divestiture of
substantial assets of Purchaser or its subsidiaries, or of the Company or its
subsidiaries. Private parties may also bring legal action under the antitrust
laws under certain circumstances. There can be no assurance that a challenge
to the Offer on antitrust grounds will not be made or, if such a challenge is
made, of the result thereof. If any such action by the FTC, the Antitrust
Division or any other person should be threatened or commenced, Purchaser may
extend, terminate or amend the Offer. See Section 5 for certain conditions to
the Offer. Purchaser believes that consummation of the Offer would not violate
any antitrust laws; there can be no assurance, however, that a challenge to
the Offer on antitrust grounds will not be made or, if a challenge is made,
what the result will be.
Although the parties to the Pre-Acquisition Agreement are required to remove
or satisfy, if reasonably practicable, any objections to the validity or
legality of the Second Stage Transaction, Parent is not required by the Pre-
Acquisition Agreement to take any action that in its reasonable judgment would
reasonably be expected to impair the overall benefits to be realized by Parent
from consummation of the Offer and the other transactions contemplated by the
Pre-Acquisition Agreement.
Competition Act. The business combination provisions of the Competition Act
(Canada) (the "Competition Act") permit the Director of Investigation and
Research appointed under such Act (the "Director"), to apply to the
Competition Tribunal (the "Tribunal") to seek relief in respect of a business
combination transaction which prevents or lessens, or is likely to prevent or
lessen, competition substantially. The relief that may be ordered by the
Tribunal includes, in the case of a completed business transaction, ordering a
dissolution of the business transaction or a disposition of assets or shares,
and in the case of a proposed business transaction, prohibiting completion of
the transaction.
The Competition Act also requires parties to certain proposed business
combination transactions which exceed specified size thresholds to provide the
Director with prior notice of and information relating to the transaction and
the parties thereto, and to await the expiration of the prescribed waiting
period, prior to completing the transaction. In lieu of, or in addition to,
filing a prescribed notice and awaiting the expiration of the prescribed
waiting period, a party to a proposed business combination transaction may
apply to the Director for an advance ruling certificate which may be issued by
the Director if he is satisfied he would not have sufficient grounds on which
to apply to the Tribunal for an order under the business combination
provisions in respect of the transaction. Purchaser will apply for an advance
ruling certificate and will be filing a short form pre-merger notification
with the Director.
Investment Canada Act. The Investment Canada Act is Canada's statute of
general application governing the acquisition of control of Canadian
businesses by non-Canadians. An investment governed by the Act is either
notifiable or reviewable. A notifiable investment is simply one for which the
acquiror must provide a two page notice to the Investment Review Decision of
Industry Canada ("Investment Canada") at any time prior to the closing of the
investment or within 30 days thereafter.
39
<PAGE>
A reviewable investment is one for which the acquiror must submit an
application for review with prescribed information to Investment Canada. With
certain limited exceptions relating to the type of business carried on by the
target company, an acquisition of a Canadian business by a non-Canadian that
qualifies as a "WTO investor" for purposes of the Act is reviewable if the
value of the assets acquired is equal to or greater than Cdn $184 million as
set forth in the audited financial statements of the target company for its
most recently completed fiscal period.
Before a reviewable investment may be completed, the Minister of the federal
Cabinet responsible for Investment Canada must determine that the investment
is likely to be of "net benefit to Canada".
The Minister has an initial 45-day period to make his determination from the
date of receipt by the Investment Review Division of a completed application
for review. The Minister may, at his discretion, extend this initial 45-day
period for a further 30 days by giving notice to the prospective acquiror. Any
further extensions require the consent of the acquiror. If at the end of the
75-day period the Minister is not satisfied that the investment is likely to
be of net benefit to Canada, he must send a notice to that effect to the
prospective acquiror, and the acquiror has 30 days to make representations and
submit undertakings to the Minister in an attempt to change his decision.
A filing will be made on a confidential basis for an application for review
under the Investment Canada Act, at or about the time of the mailing of the
Offer.
Class Action. Two shareholders of the Company filed a class action complaint
against the Company and its directors on June 25, 1999 in the Chancery Court
for the State of Tennessee, Marshall County, Lewisburg, seeking, among other
things, (i) a declaration that the Pre-Acquisition Agreement was entered into
by the Company in breach of the directors' fiduciary duties and is therefore
unenforceable, (ii) an injunction restraining the defendants from taking
action in furtherance of the Offer and (iii) in the event that a business
combination of the Company and Purchaser is consummated, compensatory damages.
In addition, the plaintiffs filed an emergency motion for an order to
temporarily restrain the defendants from taking any action in furtherance of
the Offer.
Statutory Rights in Canada. Securities legislation in certain of the
provinces and territories of Canada provides holders of Shares with, in
addition to any other rights they may have at law, rights of rescission or to
damages, or both, if there is a misrepresentation in a circular or a notice
that is required to be delivered to the holders of Shares. However, such
rights must be exercised within prescribed time limits. Holders of Shares
should refer to the applicable provisions of the securities legislation of
their province or territory for particulars of those rights or consult with a
lawyer.
16. Certain Fees and Expenses
Purchaser has retained Salomon Smith Barney Inc. as U.S. Dealer Manager for
this Offer. Salomon Smith Barney Inc. will also act as dealer manager for the
Senior Note Offer. Salomon Smith Barney Inc. will receive customary
compensation in connection with such activities, and will receive
reimbursement for reasonable out-of-pocket expenses, as well as
indemnification against certain liabilities in connection with the Offer,
including liabilities under applicable securities laws.
Purchaser has also retained Citibank, N.A. as U.S. Depositary, Montreal
Trust Company of Canada as Canadian Depositary, and Georgeson & Company as
Information Agent. Each of the foregoing will receive customary compensation
and reimbursement for reasonable out-of-pocket expenses, as well as
indemnification against certain liabilities in connection with the Offer,
including liabilities under applicable securities laws.
Except as set forth above, Purchaser will not pay any fees or commissions to
any broker or dealer or other person for soliciting tenders of Shares pursuant
to the Offer. Brokers, dealers, commercial banks and trust companies will upon
request be reimbursed by Purchaser for customary mailing and handling expenses
incurred by them in forwarding the offering materials to their customers.
40
<PAGE>
17. Miscellaneous
Purchaser is not aware of any jurisdiction where the making of the Offer is
prohibited by any administrative or judicial or other governmental action. If
Purchaser becomes aware of any valid prohibition, Purchaser will make a good
faith effort to comply with any such prohibition. If, after such good faith
effort, Purchaser cannot comply with any such prohibition, the Offer will not
be made to (nor will tenders be accepted from or on behalf of) the holders of
Shares in the relevant jurisdiction. In any jurisdiction where the securities,
blue sky or other laws require the Offer to be made by a licensed broker or
dealer, the Offer shall be deemed to be made on behalf of Purchaser by one or
more registered brokers or dealers licensed under the laws of such
jurisdiction.
Purchaser and Parent have filed with the SEC a Tender Offer Statement on
Schedule 14D-1 (including exhibits) pursuant to Rule 14d-3, under the Exchange
Act, containing certain additional information with respect to the Offer and
may file amendments thereto. The Company has filed with the SEC the Schedule
14D-9 (including exhibits) containing the Company's recommendation with
respect to the Offer and other information required to be disseminated to
stockholders of the Company pursuant to Rule 14d-9. Such Tender Offer
Statement, Schedule 14D-9 and any amendments thereto, including exhibits, may
be examined and copies may be obtained from the principal office of the SEC in
the manner set forth in Sections 9 and 10 (except that they will not be
available at the regional offices of the Commission).
No person has been authorized to give any information or make any
representation on behalf of Purchaser or Parent not contained in this Offer to
Purchase or in the Letter of Transmittal and, if given or made, such
information or representations must not be relied upon as having been
authorized.
Purchaser has no information which indicates any material change in the
affairs of the Company since the date of the last published financial
statements of the Company. Purchaser has no knowledge of any other matter that
has not previously been generally disclosed but which would reasonably be
expected to affect the decision of the holders of Shares to accept or reject
the Offer.
Except as disclosed under the heading "Lock-up Agreements with Shareholders"
in this Offer to Purchase, in Item 6(b) of the Schedule 14D-9 filed with the
SEC today by the Company or under the caption "Acceptance of the Offer" in the
Directors' Circular filed with the SEC today by the Company as an exhibit to
the Schedule 14D-9, Purchaser has no knowledge of whether any holders of
Shares have committed to accept this Offer to tender.
The contents of the Offer to Purchase and this Circular have been approved,
and the sending thereof to the holders of the Shares has been authorized, by
the board of directors of the Purchaser.
41
<PAGE>
CONSENTS
Consents of Counsel
To: The Directors of
Titan Acquisitions, Ltd.
We hereby consent to the reference to our opinion contained under "Certain
Canadian Federal Income Tax Considerations" in the Circular accompanying the
Offer dated June 30, 1999 made by Titan Acquisitions, Ltd. to the holders of
Shares of the Company.
(Signed) Stikeman, Elliott
Montreal, Quebec
June 30, 1999
Consents of Counsel
To: The Directors of
Titan Acquisitions, Ltd.
We hereby consent to the inclusion of Section 6a, "Certain Federal Income
Tax Consequences," which was prepared by us, in the Circular accompanying the
Offer dated June 30, 1999 to purchase for cash all outstanding ordinary shares
of International Comfort Products Corporation made by Titan Acquisitions, Ltd.
to the holders of ordinary shares of International Comfort Products
Corporation.
(Signed) Cleary, Gottlieb, Steen &
Hamilton
New York, New York
June 30, 1999
42
<PAGE>
APPROVAL AND CERTIFICATE
DATED: June 30, 1999
The contents of the Offer to Purchase and the Circular have been approved,
and the sending, communication or delivery thereof to the shareholders of
International Comfort Products Corporation has been authorized by the board of
directors of the Offeror. The foregoing contains no untrue statement of a
material fact and does not omit to state a fact that is required to be stated
or that is necessary to make a statement not misleading in the light of the
circumstances in which it was made. In addition, the foregoing does not
contain any misrepresentation likely to affect the value or the market price
of the securities which are the subject of the Offer.
-------------------------------------
Ari Bousbib, President
As the sole member of the Board of
Directors of
Titan Acquisitions, Ltd.
-------------------------------------
Ari Bousbib, Director
43
<PAGE>
ANNEX I
DIRECTORS AND EXECUTIVE OFFICERS OF
PARENT AND PURCHASER
Parent. Set forth below are the name, business address and present principal
occupation or employment, and material occupations, positions, offices or
employment for the past five years of each director and executive officer of
Parent. The business address of each such person is One Financial Plaza,
Hartford, CT 06101. Unless otherwise indicated, each such person is a citizen
of the United States and has held his or her present position as set forth
below for the past five years. Directors of Parent are indicated by an
asterisk. Effective as of close of business on June 30, 1999, Eugene Buckley
is expected to retire from his position as Chairman and Chief Executive
Officer of Sikorsky Aircraft Corp. and Dean C. Borgman will become President
and Chief Executive Officer of Sikorsky Aircraft Corp.
<TABLE>
<CAPTION>
Present Principal Occupation or
Employment;
Name, Citizenship and Material Positions Held During the Past
Current Business Address Age Five Years
------------------------------- --- ------------------------------------------
<C> <C> <S>
Dean C. Borgman................ 58 Expected to become President and Chief
Executive Officer of Sikorsky Aircraft
Corp. effective as of the close of
business on June 30, 1999; previously
Senior Vice President of The Boeing
Company (helicopter unit); former
President of McDonnell Douglas' helicopter
business
Ari Bousbib.................... 38 Vice President of Strategic Planning of
Citizenship: French/Portuguese Parent since 1997; previously Managing
Director, the Strategic Partners Group;
Partner, Booz, Allen & Hamilton
Eugene Buckley**............... 68 Expected to resign as Chairman and Chief
Executive Officer, Sikorsky Aircraft
effective as of the close of business on
June 30, 1999; previously President,
Sikorsky Aircraft Corporation; President
and Chief Executive Officer, Sikorsky
Aircraft Division
William L. Bucknall, Jr........ 56 Senior Vice President, Human Resources &
Organization, of Parent since 1992.
John F. Cassidy, Jr............ 55 Senior Vice President--Science and
Technology, of Parent since 1998;
previously Vice President, United
Technologies Research Center
Antonia Handler Chayes*........ 69 Director since 1981; Senior Advisor and
Board Member of Conflict Management Group
(CMG); Senior Consultant to
JAMS/ENDISPUTE; Adjunct Lecturer at the
Kennedy School of Government and Co-
Director of the Project on International
Compliance and Dispute Settlement at the
Program on Negotiation at Harvard Law
School; member of the American Law
Institute and the Council on Foreign
Relations
Louise Chenevert............... 41 President of Pratt & Whitney since 1999;
Executive Vice President of Pratt &
Whitney for operations, worldwide
purchasing, and aftermarket business from
June 1998-1999; Executive Vice President
for operations of Pratt & Whitney from
January 1997-1998; joined Pratt & Whitney
Canada in 1993
Kevin Conway................... 50 Vice President, Taxes, of Parent since
1995; previously Director of Taxes, United
Technologies Corporation
</TABLE>
A-1
<PAGE>
<TABLE>
<CAPTION>
Present Principal Occupation or Employment;
Name, Citizenship and Material Positions Held During the Past Five
Current Business Address Age Years
----------------------------- --- --------------------------------------------
<C> <C> <S>
George David*................ 57 Director of Parent since 1992; Chairman of
Parent since 1997; Chief Executive Officer
of Parent since 1994; President of Parent
from 1992 to 1999; member of The Business
Roundtable; Chairman or President of the
Boards of the Graduate School of Business
Administration at the University of
Virginia, the National Minority Supplier
Development Council and the U.S.-ASEAN
Business Council
David J. Fitzpatrick......... 45 Senior Vice President and Chief Financial
Officer of Parent since 1998; previously
Vice President and Controller, Eastman Kodak
Co.; Finance Director--Cadillac Luxury Car
Division, Chief Accounting Officer, General
Motors Corp.
Jean-Pierre Garnier, Ph.D.*.. 51 Director of Parent since 1997; Chief
Operating Officer and Executive Member of
the Board of Directors of SmithKline Beecham
plc, Philadelphia, PA (pharmaceuticals)
since 1995; Chairman, SmithKline Beecham
plc, Pharmaceuticals from 1994-1995;
Director of the Eisenhower Exchange
Fellowship
Pehr G. Gyllenhammar*........ 64 Director of Parent since 1981; Chairman, CGU
Citizenship: Swedish plc (insurance);
Senior Advisor, Lazard Freres & Co., LLC
(investment banking); previously Executive
Chairman, AB Volvo, Gotegorg, Sweden; also
Chairman of Actinova Limited; member of the
Supervisory Board of Lagardere SCA; Trustee
of the Reuters Founders Share Co. Limited;
Chairman of the Board of Cofinec N.V. and
Chairman of Swedish Ships' Mortgage Bank
Jay L. Haberland............. 48 Vice President-Controller of Parent since
1996; previously Acting Chief Financial
Officer, Director of Internal Auditing, of
Parent; Vice President, Finance, Commercial
& Industrial Group, The Black & Decker
Corporation
Ruth R. Harkin............... 54 Senior Vice President, International Affairs
and Government Relations, of Parent since
1997; previously President and Chief
Executive Officer, Overseas Private
Investment Corporation
Robert H. Jenkins............ 56 Chairman, Hamilton Sunstrand Corporation
since June 10, 1999; Chairman of the Board,
President and Chief Executive Officer of
Sundstrand Corporation from 1997-99;
Director of Sunstrand Corporation since
1995; Executive Vice President of Illinois
Tool Works Inc., Glenview, IL (construction
products, engineered polymers, automotive
and specialty components, packaging
products/systems and finishing systems) from
1990-1995; currently Director of AK Steel
Holding Corporation, Middletown OH (steel
manufacture); Solution, Inc., St. Louis, MO
(chemical company); Cordant Technologies,
Inc., Salt Lake City, UT (aerospace and
industry).
Karl J. Krapek*.............. 50 Director of Parent since 1997; President and
Chief Operating Officer of Parent since
1999. Previously Executive Vice President of
Parent; President, Pratt & Whitney; Chairman
of the Board of Directors of the Connecticut
Capitol Region Growth Council; Chairman of
the MetroHartford Millennium Management
Group; Vice Chairman of the Board of
Trustees of the Connecticut State University
System member of the Director's Advisory
Board of the Yale Cancer Center; Director of
Saint Francis Care, Inc. and will serve as
1999 General Campaign Chairman for the
United Way and Combined Health Appeal
Community Campaign in Hartford area
</TABLE>
A-2
<PAGE>
<TABLE>
<CAPTION>
Name, Citizenship and
Current Business Present Principal Occupation or Employment;
Address Age Material Positions Held During the Past Five Years
----------------------- --- --------------------------------------------------
<C> <C> <S>
Charles R. Lee*........ 59 Director of Parent since 1994; Chairman and Chief
Executive Officer of GTE Corporation, Irving, TX
(telecommunications); Director of The Procter &
Gamble Company; Director of the USX Corporation;
member of The Business Roundtable and The Business
Council; Trustee of the Board of Trustees of
Cornell University; Director of the New American
Schools Development Corporation; member of The
Conference Board; Harvard Business School's Board
of Directors of the Associates; Director of the
Stamford Hospital Foundation
John R. Lord........... 55 President, Carrier Corporation since 1995;
previously President, Carrier NAO
Richard D. McCormick*.. 58 Director of Parent since February, 1999; Chairman,
U S WEST, Inc., Denver, CO (telecommunications).
Previously Chairman, President and Chief Executive
Officer of former parent company, also known as U
S WEST, Inc.; also Director of United Airlines;
Wells Fargo and Company; Concept Five
Technologies; Chairman of the United States
Council for International Business; Vice President
of the International Chamber of Commerce; Chairman
of Creighton University; member of the Business
Council; Trustee of the Denver Art Museum; Board
Member of the American Indian College Fund
Ronald F. McKenna...... Executive Vice President and Chief Operating
Officer of Hamilton Sundstrand, Aerospace, since
May 6, 1996; Vice President of Business
Development, Sunstrand Aerospace from January,
1995-May, 1996; Vice President and General Manager
of Sunstrand Aerospace Electric Power from
December, 1989-January, 1995
Angelo J. Messina...... 46 Vice President, Financial Planning and Analysis,
of Parent since 1998; previously Director,
Financial Planning and Analysis, of Parent; Vice
President, Strategic Planning, Pratt & Whitney;
Director, Investor Relations, of Parent
Stephen F. Page........ 59 Executive Vice President and President and Chief
Executive Officer, Otis Elevator since 1997;
previously Executive Vice President and Chief
Financial Officer of Parent
William J. Perry*...... 71 Director of Parent since 1997; Michael and Barbara
Berberian Professor at Stanford University, with a
joint appointment in the Department of
Engineering-Economic Systems & Operations Research
and the Institute for International Studies;
Fellow at the Hoover Institute; co-director of the
Stanford-Harvard Preventive Defense Project;
previously Secretary of Defense for the United
States; also Chairman of Global Technology
Partners; Director of Hambrecht & Quist, LLC; The
Boeing Company; and Cylink Corporation
Frank P. Popoff*....... 63 Director of Parent since 1996; Chairman, The Dow
Chemical Company, Midland, MI; Director of
American Express Company; U S West, Inc.; Chemical
Financial Corporation; and Michigan Molecular
Institute; member of the Business Council for
Sustainable Development; The Business Council; the
Council for Competitiveness; the American Chemical
Society; and director emeritus of the Indiana
University Foundation
</TABLE>
A-3
<PAGE>
<TABLE>
<CAPTION>
Present Principal Occupation or Employment;
Name, Citizenship and Material Positions Held During the Past Five
Current Business Address Age Years
---------------------------- --- --------------------------------------------
<C> <C> <S>
Gilles A.H. Renaud.......... 53 Vice President-Treasurer of Parent since
1996; previously Vice President and Chief
Financial Officer, Carrier Corporation
William H. Trachsel......... 56 Senior Vice President, General Counsel and
Secretary of Parent since 1998; previously
Vice President, Secretary and Deputy General
Counsel of Parent
Andre Villeneuve*........... 54 Director of Parent since 1997; Executive
Director of Reuters Holdings PLC, London,
England; member of Reuters' board; Chairman
of Instinet Corp., Reuters' electronic
brokerage subsidiary; Director of CGU plc
Harold Wagner*.............. 63 Director of Parent since 1994; Chairman and
Chief Executive Officer, Air Products and
Chemicals, Inc., Allentown, PA; previously
Chairman, President and Chief Executive
Officer, Air Products and Chemicals, Inc.;
also Director of CIGNA Corporation; Daido-
Hoxan; Member of The Business Council; the
Policy Committee of The Business Roundtable;
Member of the Pennsylvania Business
Roundtable; has served on the Board of
Trustees of Lehigh University
</TABLE>
Purchaser. Set forth below are the name, business address and present
principal occupation or employment, and material occupations, positions,
offices or employment for the past five years of the director and executive
officer of Purchaser. Except as otherwise noted, the business address of such
person is One Financial Plaza, Hartford, CT 06101. Unless otherwise indicated,
such person is a citizen of the United States.
<TABLE>
<CAPTION>
Present Principal Occupation or Employment;
Name, Citizenship and Material Positions Held During the Past Five
Current Business Address Age Years
---------------------------- --- --------------------------------------------
<C> <C> <S>
Ari Bousbib................. 38 Director of Purchaser since June 1999;
Citizenship: President of Purchaser since June 1999; Vice
French/Portuguese President, Strategic Planning of Parent
since 1997; previously Managing Director,
the Strategic Partners Group; Partner, Booz,
Allen & Hamilton
</TABLE>
A-4
<PAGE>
The Depositary in the United States
is:
The Depositary in Canada is:
Citibank, N.A.
Montreal Trust Company of Canada
By Courier: Reorganization Department
151 Front Street West--8th Floor
915 Broadway, 5th Floor Toronto, Ontario M5J2N1
New York, NY 10010
Tel: (416) 981-9633
By Mail: Toll free: (800) 663-9097
Fax: (416) 981-9600
Citibank, N.A.
P.O. Box 685
Old Chelsea Station
New York, NY 10113
By Hand:
Citibank, N.A.
Corporate Trust Window
111 Wall Street, 5th Floor
New York, NY 10043
Facsimile for Eligible Institutions:
(212) 505-2248
To Confirm By Telephone:
(800) 270-0808
The Information Agent is:
Georgeson & Company Inc.
United States: Canada:
Wall Street Plaza Commerce Court West, Suite 1925
New York, New York 10005 Toronto, Ontario M5L 1B9, Canada
Toll free: (800) 223-2064 Toll free: (800) 890-1037
Banks & Brokers Call Collect:
(212) 440-9800
The Dealer Manager in the United States is:
Salomon Smith Barney Inc.
7 World Trade Center
31st Floor
New York, New York 10048
Toll free: (800) 221-1629
<PAGE>
Exhibit (a)(2)
LETTER OF TRANSMITTAL
To Tender Ordinary Shares
of
INTERNATIONAL COMFORT PRODUCTS CORPORATION
Pursuant to the Offer
dated June 30, 1999
by
TITAN ACQUISITIONS, LTD.
A Wholly Owned Subsidiary
of
UNITED TECHNOLOGIES CORPORATION
THE OFFER WILL EXPIRE AT 12:00 MIDNIGHT, TORONTO TIME, ON WEDNESDAY, JULY 28,
1999,
UNLESS THE OFFER IS EXTENDED OR WITHDRAWN.
The U.S. Depositary for the Offer is Citibank, N.A.
The Canadian Depositary for the Offer is
Montreal Trust Company of Canada
The Information Agent for the Offer is Georgeson & Company, Inc.
DELIVERY OF DOCUMENTS TO THE DEPOSITARY TRUST COMPANY OR THE CANADIAN
DEPOSITORY FOR SECURITIES LIMITED DOES NOT CONSTITUTE DELIVERY TO THE U.S. OR
CANADIAN DEPOSITARY.
Provide the following details with respect to the Shares deposited:
DESCRIPTION OF SHARES DEPOSITED
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Name and
Address(es) of
Registered
Holder(s)
(Please fill
in, if blank,
exactly as
name(s)
appear(s) on Share Certificate(s) and Share(s) Deposited
certificate(s) (Attach additional signed list, if necessary)
- --------------------------------------------------------------------
Total Number of
Shares
Share Certificate Represented Number of Shares
Number(s)* by Certificate(s) Deposited**
-----------------------------
-----------------------------
-----------------------------
-----------------------------
-----------------------------
-----------------------------
<S> <C> <C> <C>
Total Shares
</TABLE>
- -------------------------------------------------------------------------------
* Need not be completed by Book-Entry Shareholders.
** Unless otherwise indicated it will be assumed that all Shares evidenced
by certificates delivered to the U.S. or Canadian Depositary are being
deposited. See Instruction 2.
1
<PAGE>
This Letter of Transmittal, the certificates for ordinary shares (the
"Shares") of International Comfort Products Corporation (the "Corporation")
covered hereby (or a Book-Entry Confirmation with respect thereto) and all
other required documents with respect to Shares deposited by a Shareholder
must be delivered or sent to and received by the U.S. or Canadian Depositary
(unless an Agent's Message (as defined in the Offer) is utilized), at one of
the appropriate addresses set forth below. The Offer to Purchase and Circular
(the "Offer") by Titan Acquisitions, Ltd. dated June 30, 1999 to purchase all
of the outstanding Shares will be open for acceptance until 12:00 midnight
(Toronto time) on July 28, 1999, unless the Offer is extended or withdrawn.
The terms and conditions of the Offer are incorporated by reference in this
Letter of Transmittal. Capital terms used, but not defined, in this Letter of
Transmittal which are defined in the Offer have the respective meanings set
out in the Offer.
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET FORTH
BELOW WILL NOT CONSTITUTE A VALID DELIVERY.
THE INSTRUCTIONS ACCOMPANYING THIS LETTER OF TRANSMITTAL SHOULD BE READ
CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL IS COMPLETED.
This Letter of Transmittal is to be completed by Shareholders, either if
certificates for Shares are to be forwarded herewith or, unless an Agent's
Message is utilized, if delivery of Shares is to be made by book-entry
transfer to the U.S. Depositary's account at the Depository Trust Company or
The Canadian Depositary's account at The Canadian Depository for Securities
Limited, pursuant to the procedures set forth in Section 3 of the Offer.
Shareholders who deliver Shares by book-entry transfer are referred to herein
as "Book-Entry Shareholders" and other Shareholders are referred to herein as
"Certificate Shareholders." Shareholders whose certificates for such Shares
are not immediately available or who cannot deliver their certificates and all
other documents required hereby to the U.S. or Canadian Depositary at or prior
to the Expiry Time (as defined in the Offer), or who cannot complete the
procedure for book-entry transfer on a timely basis, may deposit their Shares
pursuant to the procedures for guaranteed delivery set forth in Section 3 of
the Offer. See Instruction 2.
U.S. RESIDENTS/CITIZENS ARE REQUIRED TO PROVIDE THEIR TAXPAYER
IDENTIFICATION NUMBER OR COMPLETE THE "CERTIFICATE OF AWAITING TAXPAYER
IDENTIFICATION NUMBER" BOX BELOW. SEE INSTRUCTION 8.
2
<PAGE>
NOTE: SIGNATURES MUST BE PROVIDED BELOW
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
TO: TITAN ACQUISITIONS, LTD.
AND TO: CITIBANK, N.A., AS U.S. DEPOSITARY, OR MONTREAL TRUST COMPANY OF
CANADA, AS CANADIAN DEPOSITARY
The undersigned hereby irrevocably deposits with Titan Acquisitions, Ltd., a
corporation organized under the laws of the Province of New Brunswick (the
"Offeror"), the above-described ordinary shares (the "Shares"), of
International Comfort Products Corporation, a corporation continued under the
federal laws of Canada (the "Corporation"), pursuant to the Offeror's offer to
purchase all outstanding Shares at a price of US$11.75 per Share, upon the
terms and subject to the conditions set forth in the Offer to Purchase and
Circular dated June 30, 1999, receipt of which is hereby acknowledged, and in
this Letter of Transmittal (the Offer to Purchase and Circular and the related
Letter of Transmittal and Notice of Guaranteed Delivery together constituting
the "Offer"). The undersigned, subject only to the provisions of the Offer
regarding withdrawal, irrevocably accepts the Offer, for and in respect of the
above-described Shares.
Subject to, and effective upon, acceptance for payment of and payment for
the Shares deposited herewith in accordance with the terms of the Offer, the
undersigned hereby sells, assigns and transfers to, or upon the order of, the
Offeror all right, title and interest in and to all of the Shares that are
being deposited hereby free and clear of all liens, charges, encumbrances,
claims and equities and together with all rights and benefits arising
therefrom, including without limitation the right to any and all dividends.
The undersigned hereby irrevocably appoints the President of the Offeror,
and any other person designated by the Offeror in writing, as the true and
lawful agent, attorney and attorney-in-fact and proxy of the undersigned with
respect to such Shares and with respect to any and all securities, rights,
warrants or other interests issued, transferred or distributed on or in
respect of such Shares on or after the date of the Offer (collectively, "Other
Securities"), effective from and after the date that Offeror takes up and pays
for such Shares (the "Effective Date"), with full power of substitution, in
the name of and on behalf of the undersigned (such power of attorney being
deemed to be an irrevocable power coupled with an interest), to: (a) register
or record, transfer and enter the transfer of such Shares and any Other
Securities on the appropriate register of holders of such Shares and Other
Securities and on the account books maintained by the Corporation, The
Depository Trust Company ("DTC") and/or The Canadian Depository for Securities
Limited ("CDS"); (b) except as may otherwise be agreed, to exercise any and
all of the rights of such Shares and Other Securities including, without
limitation, the right to vote, execute and deliver any and all instruments of
proxy, authorizations or consents in respect of any or all of such Shares and
any or all Other Securities, revoke any such instrument, authorization or
consent given prior to, on or after the Expiry Time, designate in any such
instruments of proxy any person or persons as the proxy or the proxy nominee
or nominees of the undersigned in respect of such Shares and Other Securities
for all purposes including, without limiting the generality of the foregoing,
in connection with any meeting (whether annual, special or otherwise) of
holders of securities of the Corporation (or any adjournment thereof), and
execute, endorse and negotiate, for and in the name of and on behalf of the
undersigned, any and all checks or other instruments respecting any
distribution payable to or to the order of the undersigned; and (c) exercise
any and all rights of the undersigned in respect of such Shares or Other
Securities. The undersigned hereby agrees, effective from the Effective Date,
not to vote any of such Shares or Other Securities at any meeting (whether
annual, special or otherwise) of holders of Shares or Other Securities and not
to exercise any or all of the other rights or privileges attached to any or
all instruments of proxy, authorizations or consents in respect of any or all
of such Shares or Other Securities, and to designate in any such instruments
of proxy the person or persons specified by the Offeror as the proxy or the
proxy nominee or nominees of the undersigned in respect of such Shares or
Other Securities.
Upon such appointment, all prior proxies given by the undersigned with
respect to such Shares or Other Securities shall be revoked and no subsequent
proxies may be given by the undersigned with respect thereto.
3
<PAGE>
The undersigned hereby represents and warrants that (i) the undersigned has
full power and authority to deposit, sell, assign and transfer the Shares (and
any Other Securities) deposited hereby and has not sold, assigned or
transferred or agreed to sell, assign or transfer any of such Shares or Other
Securities to any other person; (ii) the undersigned owns the Shares (and any
Other Securities) which are being deposited, within the meaning of applicable
securities laws; (iii) the deposit of the Shares (and any Other Securities)
complies with applicable securities laws; and (iv) when the Shares (and any
Other Securities) are taken up and paid for by the Offeror, the Offeror will
acquire good title thereto, free and clear of all liens, restrictions,
charges, encumbrances, claims and equities whatsoever. The undersigned
covenants to execute and deliver, upon request, any additional documents
necessary or desirable to complete the sale, assignment and transfer of the
Shares and Other Securities deposited hereby.
The undersigned acknowledges that all authority herein conferred or agreed
to be conferred shall survive the death, incapacity, bankruptcy or insolvency
of the undersigned, and any and all obligations of the undersigned hereunder
shall be binding upon the heirs, personal representatives, successors and
assigns of the undersigned.
Except as stated in the Offer, deposits of Shares made pursuant to the Offer
are irrevocable.
The undersigned understands that (i) all questions as to the validity, form,
eligibility (including timely receipt) and acceptance of any Shares deposited
pursuant to the Offer will be determined by the Offeror in its sole
discretion, and that such determination shall be final and binding; (ii) the
Offeror reserves the absolute right to reject any and all deposits which it
determines not to be in proper form or which, in the opinion of its counsel,
may be unlawful to accept under the laws of any jurisdiction; (iii) the
Offeror reserves the absolute right to waive any defects or irregularities in
the deposit of any Shares; (iv) there shall be no duty or obligation on the
Offeror, United Technologies Corporation, a Delaware corporation of which the
Offeror is a wholly owned subsidiary, the Dealer Manager, the U.S. or Canadian
Depositary, the Information Agent or any other person to give notice of any
defects or irregularities in any deposit and no liability shall be incurred by
any of them for failure to give any notice; and (v) the Offeror's
interpretation of the terms and conditions of the Offer (including, without
limitation, the Offer to Purchase and Circular, this Letter of Transmittal and
the Notice of Guaranteed Delivery) shall be final and binding.
The undersigned understands that deposits of Shares pursuant to any of the
procedures described in Section 3 of the Offer to Purchase and Circular and in
the instructions hereto will constitute a binding agreement between the
undersigned and the Offeror upon the terms and subject to the conditions set
forth in the Offer, including the undersigned's representations and warranties
set forth above.
Unless otherwise indicated herein under "Special Payment Instructions,"
please issue the check for the purchase price and/or issue or return any
certificate(s) representing Shares not deposited or not accepted for payment
in the name(s) of the undersigned. Similarly, unless otherwise indicated
herein under "Special Delivery Instructions," please mail the check for the
purchase price and/or send any certificate(s) for Shares not deposited or not
accepted for payment (and accompanying documents, as appropriate) to the
undersigned at the address appearing under "Sign Here." In the event that both
the Special Delivery Instructions and the Special Payment Instructions are
completed, please issue the check for the purchase price and/or return any
certificate(s) for Shares not deposited or accepted for payment in the name
of, and send or hold such check and/or such certificates to or for the person
or persons so indicated. Shareholders depositing Shares by book-entry transfer
may request that any Shares not accepted for payment be returned to them by
crediting such account maintained at DTC or CDS as such shareholders may
designate by making an appropriate entry under "Special Delivery
Instructions." The undersigned recognizes that the Offeror has no obligation,
pursuant to the Special Payment Instructions, to transfer any Shares from the
name(s) of the registered holder(s) thereof if the Offeror does not accept for
payment any of the Shares so deposited.
By reason of the use of the undersigned of an English language form of
Letter of Transmittal, the undersigned and each of you shall be deemed to have
required that any contract evidenced by the Offer as accepted through this
Letter of Transmittal, as well as all documents related thereto, be drafted
exclusively in the English language. En raison de l'usage d'une lettre d'envoi
en langue anglaise par le soussigne, le soussigne et les destinataires sont
presume avoir requis que tout contrat atteste par l'offre et son acceptation
par cette lettre d'envoi, de meme que tous les documents qui s'y rapportent,
soient rediges exclusivement en langue anglaise.
4
<PAGE>
SPECIAL PAYMENT INSTRUCTIONS SPECIAL DELIVERY INSTRUCTIONS
(See Instructions 1, 5 and 6) (See Instruction 1, 5 and 6)
To be completed ONLY if certifi- To be completed ONLY if certifi-
cates for Shares not deposited or cate(s) for Shares not deposited
not accepted for payment and/or or not accepted for payment
the check for the purchase price and/or the check for the purchase
of Shares accepted for payment price of Shares accepted for pay-
are to be issued in the name of ment are to be sent to someone
someone other than the under- other than the undersigned or to
signed. the undersigned at an address
other than that appearing under
"Sign Here" or are to be held by
the U.S. or Canadian Depositary
for pick-up by the undersigned in
writing or if the Shares deliv-
ered by book-entry transfer that
are not purchased are to be re-
turned by credit to an account
maintained at DTC or CDS other
than that designated above.
Issue: [_] Check [_] Certificates
to:
Name: ____________________________
(Please Print)
Address: _________________________
__________________________________
__________________________________ Mail: [_] Check [_] Certificates
(Include Postal (Zip) Code) to:
__________________________________ Name: ____________________________
(Tax Id., Social Insurance or (Please Print)
Social Security No.)
Address: _________________________
__________________________________
__________________________________
(Include Postal (Zip) Code)
__________________________________
(Tax Id., Social Insurance or
Social Security No.)
Hold: [_] Check
[_] Certificates for
pick-up at the
Depositary against
counter receipt.
__________________________________
(Specify office)
Credit Shares deposited by book-
entry transfer that are not ac-
cepted for payments to:
__________________________________
(DTC/CDS Account Number (circle
one))
[_] CHECK HERE IF DEPOSITED SHARES ARE BEING DELIVERED PURSUANT TO A NOTICE
OF GUARANTEED DELIVERY PREVIOUSLY SENT TO THE DEPOSITARY AND COMPLETE THE
FOLLOWING:
Name(s) of Registered Owner(s): ____________________________________________
Date of Execution of Notice of Guaranteed Delivery: ________________________
Name of Institution that Guaranteed Delivery: ______________________________
If delivered by Book-Entry Transfer, complete the following:
The Depository Trust Company/The Canadian Depository for Securities Limited
(circle one)
Account Number ___________________ Transaction Code Number __________
5
<PAGE>
[_]CHECK HERE IF YOU ARE SUBMITTING THIS LETTER TO THE CANADIAN DEPOSITARY
AND WISH TO RECEIVE PAYMENT IN CANADIAN DOLLARS. OTHERWISE, PAYMENT
WILL BE MADE IN UNITED STATES DOLLARS (ALL LETTERS SUBMITTED TO THE
U.S. DEPOSITARY WILL RESULT IN PAYMENT IN U.S. DOLLARS ONLY.)
SIGN HERE
___________________________________________________________________________
___________________________________________________________________________
(Signature(s) of Holder(s))
(See Instructions 1 and 5)
Dated: _______________ , 1999
Name(s)____________________________________________________________________
___________________________________________________________________
(Please Print or Type)
Authorized representative (if applicable) _________________________________
Address____________________________________________________________________
___________________________________________________________________
(Include Postal (Zip) Code)
Area Code and Telephone Number ____________________________________________
Tax Identification, Social Insurance
or Social Security Number _________________________________________________
Guarantee of Signature(s), if required by Instruction 1
(See Instruction 1 and 5)
This area to be used for Guarantor's stamp.
Area Code and Telephone Number ____________________________________________
Dated: _______________ , 1999
[_]CHECK HERE IF DEPOSITED SHARES ARE BEING DELIVERED BY BOOK-ENTRY
TRANSFER MADE TO THE ACCOUNT MAINTAINED BY THE DEPOSITARY WITH THE
DEPOSITORY TRUST COMPANY OR CDS AND COMPLETE THE FOLLOWING:
Name of Depositing Institution ____________________________________________
The Depository Trust Company/The Canadian Depository for Securities
Limited (circle one)
Account Number ________________ Transaction Code Number __________________
6
<PAGE>
SUBSTITUTE FORM W-9
To be completed by United States Holders only
(see Instruction 8)
PAYER'S NAME:
- -------------------------------------------------------------------------------
Part 1--PLEASE PROVIDE YOUR Social Security Number
TIN IN THE BOX AT RIGHT AND
CERTIFY BY SIGNING AND
DATING BELOW.
or Employer
SUBSTITUTE Identification Number
FORM W-9 -----------------------
--------------------------------------------------------
Department of the Part 2. Certification--Under penalties of perjury, I
Treasury Internal certify that:
Revenue Service (1) The number shown on this form is my correct
Taxpayer identification Number (or I am waiting for
a number to be issued to me) and
(2) I am not subject to backup withholding because:
(a) I am exempt from backup withholding, or (b) I
have not been notified by the Internal Revenue
Service (the "IRS") that I am subject to backup
withholding as a result of a failure to report all
interest or dividends, or (c) the IRS has notified
me that I am no longer subject to backup
withholding.
Payer's Request for Taxpayer Identification Number ("TIN") Sign Here
Certification Instruments--You must cross out item
(2) above if you have been notified by the IRS
that you are currently subject to backup
withholding because of under-reporting interest or
dividends on your tax return. However, if after
being notified by the IRS that you were subject to
backup withholding you received another
notification from the IRS that you are no longer
subject to backup withholding, do not cross out
such Item (2).
--------------------------------------------------------
SIGNATURE ________________________ DATE ____________
--------------------------------------------------------
Part 3. Awaiting TIN [_]
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP
WITHHOLDING OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE OFFER.
PLEASE REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER
IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS.
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED THE BOX IN
PART 3 OF SUBSTITUTE FORM W-9
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a taxpayer identification number
has not been issued to me, and either (1) I have mailed or delivered an
application to receive a taxpayer identification number to the appropriate
Internal Revenue Center or Social Security Administration Office or (2) I
intend to mail or deliver an application in the near future. I understand
that if I do not provide a taxpayer identification number by the time of
payment, 31% of all reportable payments made to me will be withheld, but that
such amounts will be refunded to me if I then provide a Taxpayer
Identification Number within sixty (60) days.
----------------------------------------------- _____________________, 1999
Signature Date
7
<PAGE>
INSTRUCTIONS
Forming Part Of The Terms And Conditions Of The Offer
1. Guarantee of Signatures. No signature guarantee is required on this
Letter of Transmittal (a) if this Letter of Transmittal is signed by the
registered holder(s) of the Shares (which term, for purposes of this document,
shall include any participant in DTC or CDS whose name appears on a security
position listing as the owner of Share(s) deposited herewith), unless such
holder(s) has/have completed either the box entitled "Special Payment
Instructions" or the box entitled "Special Delivery Instructions" above, or
(b) if such Share(s) are deposited for the account of a firm which is an
Eligible Institution. Where a share certificate is in the name of person other
than the signatory of the Letter of Transmittal, the existing certificate must
be endorsed exactly as registered by the registered Shareholder and the
endorsement guaranteed by an Eligible Institution.
2. Requirements of Deposit. This Letter of Transmittal is to be completed by
Shareholders either if certificates for Shares are to be forwarded herewith
or, unless an Agent's Message is utilized, if delivery of Shares is to be made
pursuant to the procedures for delivery by book-entry transfer set forth in
Section 3 of the Offer to Purchase and Circular. Certificates for all
physically delivered Shares, or timely confirmation (a "Book-Entry
Confirmation") of a book-entry transfer into the Depositary's account at DTC
or CDS of such Shares delivered by book-entry transfer, as well as this Letter
of Transmittal (or a facsimile hereof), properly completed and duly executed,
with any required signature guarantees, or an Agent's Message in the case of a
book-entry delivery, and any other documents required by this Letter of
Transmittal must be received by the U.S. or Canadian Depositary at its address
set forth herein at or prior to the Expiry Time (as defined in the Offer to
Purchase and Circular). Shareholders whose certificates are not immediately
available or who cannot deliver their certificates and all other required
documents to the U.S. or Canadian Depositary at or prior to the Expiry Time or
who cannot complete the procedure for delivery by book-entry transfer for
registered Shares on a timely basis may deposit their Shares by properly
completing and duly executing a Notice of Guaranteed Delivery pursuant to the
guaranteed delivery procedures set forth in Section 3 of the Offer to Purchase
and Circular. Pursuant to such procedure: (i) such deposit must be made by or
through an Eligible Institution; (ii) a properly completed and duly executed
Notice of Guaranteed Delivery, in the form provided by the Offeror, or a
manually signed facsimile thereof, must be received by the U.S. or Canadian
Depositary at its principal office as set forth on the Notice of Guaranteed
Delivery, at or prior to the Expiry Time; and (iii) the certificate(s) for all
deposited Shares (or a Book-Entry Confirmation with respect to such Shares),
in proper form for transfer, in each case together with the Letter of
Transmittal (or a facsimile thereof), properly completed and duly executed,
with any required signature guarantees (or, in the case of a book-entry
delivery, an Agent's Message) and all other documents required by this Letter
of Transmittal, must be received by the U.S. or Canadian Depositary at its
principal office in as set forth on the Notice of Guaranteed Delivery, at or
before 4:30 p.m. (Toronto time) on the third trading day on The Toronto Stock
Exchange after the Expiry Time, all as provided in Section 3 of the Offer to
Purchase and Circular. If certificates are forwarded separately to the U.S. or
Canadian Depositary, a properly completed and duly executed Letter of
Transmittal must accompany each such delivery.
THE METHOD OF DELIVERY OF CERTIFICATES REPRESENTING SHARES, THIS LETTER OF
TRANSMITTAL AND ALL OTHER REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH DTC
OR CDS, IS AT THE OPTION AND RISK OF THE DEPOSITING SHAREHOLDER. THE OFFEROR
RECOMMENDS THAT SUCH DOCUMENTS BE DELIVERED BY HAND TO THE U.S. OR CANADIAN
DEPOSITARY AND A RECEIPT OBTAINED, OR IF MAILED, THAT REGISTERED MAIL, WITH
RETURN RECEIPT REQUESTED, BE USED AND THAT PROPER INSURANCE BE OBTAINED. IN
ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY.
SHAREHOLDERS WHOSE SHARES ARE REGISTERED IN THE NAME OF A NOMINEE SHOULD
CONTACT THEIR BROKER, INVESTMENT DEALER, BANK, TRUST COMPANY OR OTHER NOMINEE
FOR ASSISTANCE IN DEPOSITING THOSE SHARES.
No alternative, conditional or contingent deposits will be accepted and no
fractional Shares will be purchased. All depositing Shareholders, by execution
of this Letter of Transmittal (or a facsimile thereof), waive any right to
receive any notice of the acceptance of their Shares for payment.
3. Inadequate Space. If the space provided herein is inadequate, the
certificate numbers and/or the number of Shares and any other required
information should be listed on a separate signed schedule attached hereto.
8
<PAGE>
4. Partial Deposits. (Applicable to Certificate Shareholders Only) If fewer
than all the Shares evidenced by any certificate submitted are to be
deposited, fill in the number of Shares that are to be deposited in the box
entitled "Number of Shares Deposited." In such case, new certificate(s) for
the remainder of the Shares that were evidenced by old certificate(s) will be
issued and sent to the person(s) signing this Letter of Transmittal, unless
otherwise provided in the appropriate box on this Letter of Transmittal, as
soon as practicable after the expiration or termination of the Offer. All
Shares evidenced by certificates delivered to the U.S. or Canadian Depositary
will be deemed to have been deposited unless otherwise indicated.
5. Signatures on Letter of Transmittal, Stock Powers and Endorsements. If
this Letter of Transmittal is signed by the registered holder(s) of the Shares
deposited hereby, the signature(s) must correspond with the name(s) as written
on the face of the certificate(s) without alteration, enlargement or any
change whatsoever.
If any of the Shares deposited hereby are owned of record by two or more
joint owners, all such owners must sign this Letter of Transmittal.
If any of the deposited Shares are registered in different names on several
certificates, it will be necessary to complete, sign and submit as many
separate Letters of Transmittal as there are different registrations of
certificates.
If this Letter of Transmittal or any certificates or stock powers are signed
by a trustee, executor, administrator, guardian, attorney-in-fact, agent,
officer of a corporation or any other person acting in a fiduciary or
representative capacity, such persons should so indicate when signing, and
proper evidence satisfactory to the Offeror of their authority to so act must
be submitted.
If this Letter of Transmittal is signed by the registered holder(s) of the
Shares evidenced by certificates listed and transmitted herewith, no
endorsements of certificates or separate stock powers are required.
If this Letter of Transmittal is signed by a person other than the
registered holder(s) of the Shares evidenced by certificates listed and
submitted hereby, the certificates must be endorsed or accompanied by
appropriate share transfer or stock powers, in either case signed exactly as
the name or names of the registered holder or holders appear on the
certificates. Signatures on such certificates or stock powers must be
guaranteed by an Eligible Institution.
6. Special Payment and Delivery Instructions. If a check is to be issued in
the name of and/or certificates for Shares not deposited or not accepted for
payments are to be issued or returned to a person other than the signer of
this Letter of Transmittal or if a check and/or such certificates for Shares
not deposited or not accepted for payment are to be sent to a person other
than the signer of this Letter of Transmittal or to the signer of this Letter
of Transmittal at an address other than that appearing under "Sign Here"
above, or if a check and/or certificates for Shares not deposited or not
accepted for payment are to be held by the Depositary for pick-up by the
undersigned or any person designated by the undersigned in writing, the
appropriate boxes on this Letter of Transmittal must be completed.
Shareholders delivering Shares by book-entry transfer may request that Shares
not accepted for payment be credited to such account maintained at DTC or CDS
as such Shareholder may designate under "Special Delivery Instructions." If no
such instructions are given, such Shares not accepted for payment will be
returned by crediting the account at DTC or CDS designated above.
7. Waiver of Conditions. The conditions to the Offer may be waived by the
Offeror in whole or in part at any time from time to time in its sole
discretion.
8. 31% Backup Withholding; Substitute Form W-9. Under U.S. Federal income
tax law, a U.S. Holder (as defined in the Offer) whose deposited Shares are
accepted for payment generally is required to provide the U.S. or Canadian
Depositary with such Shareholder's correct taxpayer identification number
("TIN") on Substitute Form W-9 above. Failure of a Shareholder or other payee
to provide a properly completed and correct Form W-9 to the U.S. or Canadian
Depositary, if such form is required by law, may subject such Shareholder or
other payee to penalties imposed by the U.S. Internal Revenue Service. In
addition, payments that are made to such Shareholder or other payee with
respect to Shares purchased pursuant to the Offer may be subject to 31% backup
withholding.
Certain Shareholders (including, among others, all corporations and certain
non-U.S. individuals) are not subject to these backup withholding and
reporting requirements. A non-U.S. Holder may be required to submit a Form W-
8, signed
9
<PAGE>
under penalties of perjury, attesting to such Shareholder's non-U.S. status. A
Form W-8 can be obtained from the U.S. or Canadian Depositary.
If backup withholding applies, the U.S. or Canadian Depositary is required
to withhold 31% of any such payments made to the Shareholder or other payee.
Backup withholding is not an additional tax. Rather, the tax liability of
persons subject to backup withholding will be reduced by the amount of tax
withheld. If withholding results in an overpayment of taxes, a refund may be
obtained from the Internal Revenue Service.
The box in Part 3 of the Substitute Form W-9 may be checked if the
depositing U.S. Holder has not been issued a TIN and has applied for a TIN or
intends to apply for a TIN in the near future. If the box in Part 3 is
checked, the U.S. Holder or other payee must also complete the Certificate of
Awaiting Taxpayer Identification Number above in order to avoid backup
withholding. Notwithstanding that the box in Part 3 is checked and the
Certificate of Awaiting Taxpayer Identification Number is completed, the U.S.
or Canadian Depositary will withhold 31% of all payments made prior to the
time a properly certified TIN is provided to the U.S. or Canadian Depositary.
The U.S. Holder is required to give the U.S. the TIN (e.g. social security
number or employer identification number) of the record owner of the Shares or
of the last transferee appearing on the transfers attached to, or endorsed on,
the Shares. If the Shares are in more than one name or are not in the name of
the actual owner, consult the enclosed "Guidelines for Certification of
Taxpayer Identification Number on Substitute Form W-9" for additional guidance
on which number to report.
9. Requests for Assistance or Additional Copies. Questions and requests for
assistance may be directed to the U.S. or Canadian Depositary, the Information
Agent, or (in the case of questions and requests from U.S. investors only) the
U.S. Dealer Manager at their respective addresses and telephone numbers set
forth below. Additional copies of the Offer to Purchase and Circular, this
Letter of Transmittal and the Notice of Guaranteed Delivery may also be
obtained from the Information Agent or (for U.S. investors only) the U.S.
Dealer Manager.
10. Lost, Destroyed or Stolen Certificates. If any certificate representing
Shares has been lost, destroyed or stolen, this Letter of Transmittal should
be completed as fully as possible and forwarded to the Depositary together
with a letter stating the loss. The Shareholder will then be instructed as to
the steps that must be taken in order to replace the certificate(s). This
Letter of Transmittal and related documents cannot be processed until the
procedures for replacing lost or destroyed certificates have been followed.
11. Other Jurisdictions. The Offer is not being made to, nor will deposits
of Shares be accepted from or on behalf of Shareholders in, any jurisdiction
in which the making or acceptance of the Offer would not be in compliance with
the laws of such jurisdictions. The Offeror may, in its sole discretion, take
such action as it may deem necessary to make the Offer in any jurisdiction and
extend the Offer to holders of Shares in such jurisdictions.
12. Governing Law. With respect to tenders of Shares from Canada, the Offer
and any agreement resulting from the acceptance of the Offer will be construed
in accordance with and governed by the laws of the Province of Ontario and the
laws of Canada applicable therein and the holder of Shares covered by this
Letter of Transmittal hereby unconditionally and irrevocably attorns to the
jurisdiction of the courts of the Province of Ontario and the courts of appeal
therefrom. With respect to tenders of Shares from any other jurisdiction, the
Offer and any agreement resulting from the acceptance of the Offer will be
construed in accordance with and governed by the laws of the State of New York
and the holder of Shares covered by this Letter of Transmittal hereby
unconditionally and irrevocably submits to the jurisidiction of the courts of
the State of New York.
IMPORTANT: THIS LETTER OF TRANSMITTAL OR A FACSIMILE HEREOF (OR AN AGENT'S
MESSAGE IN THE CASE OF A BOOK-ENTRY DELIVERY), TOGETHER WITH
CERTIFICATES (OR CONFIRMATION OF BOOK-ENTRY TRANSFER) AND ALL OTHER
REQUIRED DOCUMENTS MUST BE RECEIVED BY THE U.S. OR CANADIAN
DEPOSITARY OR THE NOTICE OF GUARANTEED DELIVERY MUST BE RECEIVED BY
THE U.S. OR CANADIAN DEPOSITARY AT ITS OFFICE AT OR PRIOR TO THE
EXPIRY TIME (AS DEFINED IN THE OFFER TO PURCHASE AND CIRCULAR).
10
<PAGE>
The Depositary in the United States is:
Citibank, N.A.
By Courier:
Citibank, N.A.
915 Broadway, 5th Floor
New York, NY 10010
By Mail:
Citibank, N.A.
P.O. Box 685
Old Chelsea Station
New York, NY 10113
By Hand:
Citibank, N.A.
Corporate Trust Window
111 Wall Street, 5th Floor
New York, NY 10043
Facsimile For Eligible Institutions: (212) 505-2248
To Confirm By Telephone: (800) 270-0808
The Depositary in Canada is:
Montreal Trust Company of Canada
Reorganization Department
151 Front Street West
8th Floor
Toronto, Ontario
M5J 2N1
Tel: (416) 981-9633
Call Toll Free: (800) 663-9097
Fax: (416) 981-9600
The Information Agent is:
Georgeson & Company Inc.
United States: Canada:
Wall Street Plaza Commerce Court West, Suite 1925
New York, New York 10005 Toronto, Ontario M5L 1B9, Canada
Banks & Brokers Call Collect: (212) Call Toll-Free: (800) 890-1037
440-9800
All others call Toll Free: (800) 223-
2064
The Dealer Manager in the United States is:
Salomon Smith Barney
7 World Trade Center
31st Floor
New York, New York 10048
Call Toll Free: (800) 221-1629
Any questions and requests for assistance or additional copies of the Offer
and Circular and the Letter of Transmittal and the Notice of Guaranteed
Delivery may be directed by Shareholders to the Information Agent or the
Dealer Manager (in the case of questions and requests from U.S. investors
only) at their respective telephone numbers and addresses listed above. You
may also contact your broker, dealer, bank or trust company or other nominee
for assistance.
11
<PAGE>
Exhibit (a)(3)
NOTICE OF GUARANTEED DELIVERY
to
Deposit Ordinary Shares
of
INTERNATIONAL COMFORT PRODUCTS CORPORATION
As set forth in Section 3 of the Offer to Purchase and Circular (the "Offer
to Purchase and Circular" and, together with the related Letter of Transmittal
and any amendments or supplements thereto, the "Offer") by Titan Acquisitions,
Ltd., dated June 30, 1999 to purchase all of the outstanding Shares (as
defined below), this form must be used to accept the Offer if certificates
representing Shares are not immediately available or the certificates
representing Shares and all other required documents cannot be delivered to
the U.S. or Canadian Depositary at or prior to the Expiry Time (as defined in
the Offer to Purchase and Circular) or if the procedures for delivery by book-
entry transfer of Shares cannot be complied with on a timely basis. Such form
may be delivered by hand or transmitted by facsimile to the U.S. or Canadian
Depositary at the address below.
The terms and conditions of the Offer are incorporated by reference in this
Notice of Guaranteed Delivery. Capitalized terms used, but not defined, in
this Notice of Guaranteed Delivery which are defined in the Offer have the
respective meanings set out in the Offer.
To The U.S. Depositary To The Canadian Depositary
Citibank, N.A. Montreal Trust Company of Canada
By Courier: Reorganization Department
151 Front Street West
Citibank, N.A. 8th Floor
915 Broadway, 5th Floor Toronto, Ontario
New York, NY 10010 M5J 2N1
Tel.: (416) 981-9633
By Mail: Toll Free: (800) 663-9097
Fax: (416) 981-9600
Citibank, N.A.
P.O. Box 685
Old Chelsea Station
New York, NY 10113
By Hand:
Citibank, N.A.
Corporate Trust Window
111 Wall Street, 5th Floor
New York, NY 10043
Facsimile for Eligible Institutions:
(212) 505-2248
To Confirm by Telephone: (800) 270-
0808
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE, OR
TRANSMISSION OF THIS NOTICE OF GUARANTEED DELIVERY OTHER THAN AS SET FORTH
ABOVE, WILL NOT CONSTITUTE A VALID DELIVERY.
This form is not to be used to guarantee signatures. If a signature on a
Letter of Transmittal is required to be guaranteed by an Eligible Institution
under the instructions thereto, such signature guarantee must appear in the
applicable space provided in the signature box in the Letter of Transmittal.
<PAGE>
TO: TITAN ACQUISITIONS, LTD.
AND TO:
CITIBANK, N.A., AS U.S. DEPOSITARY OR
MONTREAL TRUST COMPANY OF CANADA, AS CANADIAN DEPOSITARY
The undersigned hereby deposits to Titan Acquisitions, Ltd. upon the terms
and subject to the conditions set forth in the Offer, receipt of which is
hereby acknowledged, the number of ordinary shares (the "Shares"), of
International Comfort Products Corporation, a corporation continued under the
federal laws of Canada, pursuant to the guaranteed delivery procedure set
forth in Section 3 of the Offer to Purchase and Circular.
------------------------------------- ------------------------------------
Certificate Nos. (if available)
------------------------------------
-------------------------------------
Number of Shares Tendered ------------------------------------
------------------------------------
Name(s) of Record Holder(s)
(Please Type or Print)
Address(es):
------------------------------------
------------------------------------
------------------------------------
Postal/Zip Code
Tel. No.: ( ) ____________________
(Area Code)
------------------------------------
Signature(s)
------------------------------------
Date
- -------------------------------------------------------------------------------
Check box if Shares will be delivered by
book-entry transfer: [_]
-------------------------------------
Name of Tendering Institution
-------------------------------------
Account No.
2
<PAGE>
GUARANTEE
(Not to be used for signature guarantees)
The undersigned, (i) in the case of Letters of Transmittal being submitted
to the Canadian Depositary: a Schedule A Canadian chartered bank, a major
Canadian trust company, or a member in good standing of the Securities
Transfer Agents Medallion Program in Canada or (ii) in the case of Letters of
Transmittal being submitted to the U.S. Depositary: a member in good standing
of the Securities Transfer Agents Medallion Program in the United States or
any other bank, broker, dealer, credit union, savings association or other
entity that is an "eligible guarantor institution," as such term is defined in
Rule 17Ad-15 under the Securities Exchange Act of 1934, guarantees to deliver
to the U.S. or Canadian Depositary either the certificates evidencing all
deposited Shares, in proper form for transfer, or to deliver Shares pursuant
to the procedures for book-entry transfer in the U.S. Depositary's account at
The Depository Trust Company or the Canadian Depositary's account with The
Canadian Depository for Securities Limited, together with the Letter of
Transmittal (or a facsimile thereof), properly completed and duly executed,
with any required signature guarantees, or an Agent's Message (as defined in
the Offer to Purchase and Circular), and any other required documents, to the
principal office of the U.S. or Canadian Depositary as set forth in the Letter
of Transmittal, at or before 4:30 p.m. (Toronto time) on the third trading day
on The Toronto Stock Exchange after the Expiry Time.
------------------------------------ ------------------------------------
Name of Firm Authorized Signature
------------------------------------ Title: ____________________________
Address
Name: _____________________________
------------------------------------ (Please Type or Print)
Postal/Zip Code
Dated: ______________________ , 1999
------------------------------------
Telephone No. (including Area Code)
NOTE: DO NOT SEND CERTIFICATES FOR SHARES WITH THIS NOTICE. SHARE
CERTIFICATES SHOULD BE SENT WITH YOUR LETTER OF TRANSMITTAL
3
<PAGE>
Exhibit (a)(4)
Offer to Purchase for Cash
all of the outstanding Ordinary Shares of
INTERNATIONAL COMFORT PRODUCTS CORPORATION
at
U.S.$11.75 Per Share by
TITAN ACQUISITIONS, LTD.
A Wholly Owned Subsidiary
of
UNITED TECHNOLOGIES CORPORATION
THE OFFER WILL EXPIRE AT 12:00 MIDNIGHT TORONTO TIME, ON WEDNESDAY,JULY 28,
1999, UNLESS THE OFFER IS EXTENDED OR WITHDRAWN.
June 30, 1999
To Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees in the United States:
We have been appointed by Titan Acquisitions, Ltd, a corporation organized
under the laws of the Province of New Brunswick (the "Offeror") and a wholly
owned subsidiary of United Technologies Corporation, a Delaware corporation
("UTC"), to act as Dealer Manager in the United States, in connection with the
Offeror's offer to purchase for cash all of the issued and outstanding
ordinary shares (the "Shares"), including Shares underlying currently
outstanding options to purchase Shares and Shares which may become outstanding
on the exercise of currently outstanding warrants or rights to purchase
Shares, of International Comfort Products Corporation, a corporation continued
under the federal laws of Canada (the "Corporation") at a price of U.S.$11.75
in cash for each Share upon the terms and conditions set forth in the Offer to
Purchase and Circular dated June 30, 1999 and the related Letter of
Transmittal and Notice of Guaranteed Delivery (which collectively constitute
the "Offer"), copies of which are enclosed herewith. Citibank, N.A. will act
as the depositary in the United States (the "U.S. Depositary"), Montreal Trust
Company of Canada, as the depositary in Canada (the "Canadian Depositary") and
Georgeson & Company, Inc. as the information agent (the "Information Agent")
in connection with the Offer. Each of the U.S. Depositary and the Canadian
Depositary may be referred to herein as a "Depositary." Please furnish copies
of the enclosed materials to those of your clients for whose accounts you hold
Shares in your name or in the name of your nominee.
Enclosed herewith for your information and forwarding to your clients are
copies of the following documents:
1.The Offer dated June 30, 1999, and the accompanying Offer to Purchase and
Circular.
2. The Letter of Transmittal to deposit Shares for your use and for the
information of your clients. Facsimile copies of the Letter of
Transmittal may be used to deposit Shares.
3. A letter to stockholders of the Corporation from W. Michael Clevy,
President and Chief Executive Officer of the Corporation, together with
a Solicitation/Recommendation Statement on Schedule 14D-9 filed with the
Securities and Exchange Commission by the Corporation and mailed to
shareholders of the Corporation.
<PAGE>
4. The Notice of Guaranteed Delivery for Shares to be used to accept the
Offer if none of the three procedures for tendering Shares set forth in
the Offer can be completed on a timely basis.
5. A printed form of letter which may be sent to your clients for whose
accounts you hold Shares registered in your name or in the name of your
nominee, with space provided for obtaining such clients' instructions
with regard to the Offer.
6. Guidelines of the U.S. Internal Revenue Service for Certification of
Taxpayer Identification Number on Substitute Form W-9.
WE URGE YOU TO CONTACT YOUR CLIENTS AS PROMPTLY AS POSSIBLE.
THE OFFER WILL BE OPEN FOR ACCEPTANCE UNTIL 12:00 MIDNIGHT (TORONTO TIME) ON
JULY 28, 1999, UNLESS THE OFFER IS EXTENDED OR WITHDRAWN.
Please note the following:
1. The Offer price is U.S.$11.75 in cash for each Share upon the terms and
subject to the conditions set forth in the Offer.
2. The Offer is subject to certain conditions, including that there are
validly deposited under the Offer and not withdrawn as at the Expiry
Time (as defined in the Offer), together with any Shares held by or on
behalf of UTC or any of its subsidiaries, not less than 71% of the
Shares outstanding (calculated on a fully diluted basis) as at the
Expiry Time. See Section 5 of the Offer to Purchase and Circular.
3. The Offer is being made for all of the issued and outstanding Shares.
4. Depositing Shareholders will not be obligated to pay brokerage fees or
commissions if they accept the Offer by depositing their Shares directly
with a Depositary. Transfer taxes, if any, on the purchase of Shares
will be paid by the Offeror. However, U.S. federal income tax backup
withholding at a rate of 31% may be required, unless an exemption is
available or unless the required tax identification information is
provided. Canadian Shareholders who deposit their Shares are not
generally subject to such federal income tax backup withholding, though
such withholding may be assessed under certain circumstances. See
Instruction 8 of the Letter of Transmittal.
5. The Offer is open for acceptance until 12:00 midnight (Toronto time) on
July 28, 1999, unless the Offer is extended or withdrawn.
6. The board of directors of the Corporation has, by unanimous vote of all
directors present, recommended that the shareholders of the Corporation
accept the Offer.
7. In all cases, payment for the Shares deposited and taken up by the
Offeror will be made only after timely receipt by a Depositary of (i)
the certificates representing the Shares (or, in the case of a
Depositary, a book-entry confirmation of the transfer of such Shares
into a Depositary's account at The Depository Trust Company or CDS),
(ii) a properly completed and duly executed Letter of Transmittal, or a
manually signed facsimile thereof, in respect of such Shares with the
signatures guaranteed, if required, in accordance with the instructions
set out in the Letter of Transmittal (or, in the case of a Depositary,
an Agent's Message (as defined in the Offer to Purchase and Circular) in
connection with a book-entry transfer) and (iii) any other required
documents.
8. Shares accepted for purchase will be paid for in U.S. dollars, unless a
Shareholder tenders shares to the Canadian Depositary and elects to
receive Canadian dollars by checking the appropriate box in the Letter
of Transmittal deposited with the Shares. The amount payable in Canadian
dollars will be determined on the basis of the rate of exchange
available to the Offeror on the business day immediately preceding the
day upon which payment is made (net of any applicable commissions or
exchange charges).
2
<PAGE>
A Shareholder wishing to accept the Offer must deposit the certificate
representing the Shares, together with a properly completed Letter of
Transmittal or a manually signed facsimile thereof, at any one of the offices
of a Depositary specified in the Letter of Transmittal at or prior to the
Expiry Time. See the Instructions contained in the Letter of Transmittal.
If a Shareholder wishes to deposit Shares pursuant to the Offer and the
certificates representing the Shares are not immediately available, or such
person cannot deliver the certificates to a Depositary at or prior to the
Expiry Time, such securities may nevertheless be deposited in compliance with
the procedures for guaranteed delivery. A Shareholder may also accept the
Offer by following the procedures for a book-entry transfer. See Section 3 of
the Offer to Purchase and Circular, "Procedure for Tendering Shares."
Neither UTC nor the Offeror will pay any fees or commissions to any broker,
dealer or other person for soliciting deposits of Shares pursuant to the Offer
(other than the Dealer Managers, the Depositaries and the Information Agent as
described in the Offer). The Offeror will, however, upon request, reimburse
you for customary mailing and handling expenses incurred by you in forwarding
any of the enclosed materials to your clients. The Offeror will pay or cause
to be paid any transfer taxes payable on the transfer of Shares to it, except
as otherwise provided in Instruction 8 of the Letter of Transmittal.
Any inquiries you may have with respect to the Offer should be addressed to
the Information Agent, Wall Street Plaza, New York, New York 10005, telephone
number (212) 440-9800 (call collect), or in the case of inquiries from U.S.
brokers, dealers, commercial banks, trust companies and other nominees only,
the Dealer Manager, Salomon Smith Barney, telephone number (800) 221-1629.
Requests for copies of the enclosed materials may also be directed to the
Information Agent or, in the case of Canadian investors only, the Canadian
Dealer Manager or, in the case of U.S. investors only, the U.S. Dealer Manager
at the above addresses and telephone numbers.
Very truly yours,
Salomon Smith Barney Inc.
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU
OR ANY OTHER PERSON THE AGENT OF THE OFFEROR, UTC, THE CORPORATION, THE DEALER
MANAGER, THE U.S. OR CANADIAN DEPOSITARY, THE INFORMATION AGENT OR ANY
AFFILIATE OF ANY OF THEM, OR AUTHORIZE YOU OR ANY OTHER PERSON TO MAKE ANY
STATEMENT OR USE ANY DOCUMENT ON BEHALF OF ANY OF THEM IN CONNECTION WITH THE
OFFER OTHER THAN THE ENCLOSED DOCUMENTS AND THE STATEMENTS CONTAINED THEREIN.
3
<PAGE>
Exhibit (a)(5)
Offer to Purchase for Cash
all of the outstanding Ordinary Shares of
INTERNATIONAL COMFORT PRODUCTS CORPORATION
at
U.S.$11.75 Per Share by
TITAN ACQUISITIONS, LTD.
A Wholly Owned Subsidiary
of
United Technologies Corporation
THE OFFER WILL EXPIRE AT 12:00 MIDNIGHT TORONTO TIME,
ON WEDNESDAY, JULY 28, 1999, UNLESS THE OFFER IS EXTENDED OR WITHDRAWN.
To Our Clients:
Enclosed for your consideration are the Offer to Purchase and Circular dated
June 30, 1999 and the related Letter of Transmittal and Notice of Guaranteed
Delivery (which collectively constitute the "Offer"), in connection with the
offer by Titan Acquisitions, Ltd., a corporation organized under the laws of
the Province of New Brunswick (the "Offeror") and a wholly owned subsidiary of
United Technologies Corporation, a Delaware corporation ("UTC"), to purchase
all of the issued and outstanding ordinary shares (the "Shares") of
International Comfort Products Corporation, a corporation continued under the
federal laws of Canada (the "Corporation"), at a price of U.S.$11.75 in cash
for each Share upon the terms and subject to the conditions set forth in the
Offer. If a shareholder wishes to deposit Shares pursuant to the Offer and (i)
the certificates representing such Shares are not immediately available or
(ii) the shareholder is not able to deliver the certificates and all other
required documents to a Depositary at or prior to the Expiry Time (as defined
in the Offer to Purchase and Circular) or (iii) the shareholder cannot comply
with the procedures for book-entry on a timely basis, such Shares may
nevertheless be deposited pursuant to the procedures for guaranteed delivery
set forth in Section 3 of the Offer to Purchase and Circular. Citibank, N.A.
will act as the depositary in the United States (the "U.S. Depositary"),
Montreal Trust Company of Canada, as the depositary in Canada (the "Canadian
Depositary") and Georgeson & Company, Inc. as the information agent (the
"Information Agent") in connection with the Offer. Each of the U.S. Depositary
and the Canadian Depositary may be referred to herein as a "Depositary."
We are (or our nominee is) the holder of record of Shares held by us for
your account. A deposit of such Shares can be made only by us as the holder of
record and pursuant to your instructions. The Letter of Transmittal is
furnished to you for your information only and cannot be used by you to
deposit Shares held by us for your account.
Accordingly, we request instructions as to whether you wish to have us
deposit on your behalf any or all Shares held by us for your account pursuant
to the terms and conditions set forth in the Offer.
Please note the following:
1. The offer price is U.S.$11.75 in cash for each Share upon the terms and
subject to the conditions set forth in the Offer.
2. The Offer is subject to certain conditions, including that there are
validly deposited under the Offer and not withdrawn as at the Expiry
Time (as described below), together with any Shares held by or on behalf
of UTC or any of its subsidiaries, a number of Shares which represents
not less than 71% of the
<PAGE>
Shares outstanding (calculated on a fully diluted basis) as at the Expiry
Time. See Section 5 of the Offer to Purchase and Circular.
3. The Offer is being made for all of the issued and outstanding Shares.
4. Tendering shareholders will not be obligated to pay brokerage fees or
commissions if they accept the Offer by depositing their Shares directly
with a Depositary. Transfer taxes, if any, on the purchase of Shares
will be paid by the Offeror. However, U.S. federal income tax backup
withholding at a rate of 31% may be required, unless an exemption is
available or unless the required tax identification information is
provided. Canadian Shareholders who deposit their Shares are not
generally subject to such federal income backup withholding, though such
withholding may be assessed under certain circumstances. See Instruction
8 of the Letter of Transmittal.
5. The Offer is open for acceptance until 12:00 Midnight (Toronto time) on
July 28, 1999, unless the Offer is extended or withdrawn.
6. The board of directors of the Corporation has, by the unanimous vote of
all directors present, recommended that the shareholders of the
Corporation accept the Offer.
7. In all cases, payment for the Shares deposited and taken up by the
Offeror will be made only after timely receipt by a Depositary of (i)
the certificates representing the Shares or a book-entry confirmation of
the transfer of such Shares into the Depositary's account at The
Depository Trust Company or the Canadian Depositary for Securities, (ii)
a properly completed and duly executed Letter of Transmittal, or a
manually signed facsimile thereof, in respect of such Shares with the
signatures guaranteed, if required, in accordance with the instructions
set out in the Letter of Transmittal or an Agent's Message (as defined
in the Offer to Purchase and Circular) in connection with a book-entry
transfer and (iii) any other required documents.
8. Shares accepted for purchase will be paid for in United States dollars,
unless you instruct us, on your behalf, to receive payment in Canadian
dollars by checking the appropriate box in the Letter of Transmittal
deposited with the Shares and forwarding to the Canadian Depositary the
certificates (or book-entry confirmation), the duly executed Letter of
Transmittal and any other required documents, all as described in the
preceding paragraph. The amount payable in Canadian dollars will be
determined on the basis of the market rate of exchange obtained by the
Offeror (net of any applicable commissions or exchange charges) on the
business day immediately preceding the day of the delivery of such
payment by the Canadian Depositary.
If you wish to have us tender any or all of the Shares held by us for your
account, please so instruct us by completing, executing, detaching and
returning to us the instruction form set forth herein. If you authorize the
tender of your Shares, all such shares will be deposited unless otherwise
specified below. An envelope to return your instructions to us is enclosed.
Your instructions should be forwarded to us in ample time to permit us to
submit a deposit on your behalf prior to the Expiry Time.
Note for U.S. Shareholders: The Offeror is not aware of any state where the
making of the Offer is prohibited by administrative or judicial action
pursuant to any valid state statute. If the Offeror becomes aware of any valid
state statute prohibiting the making of the Offer or the acceptance of Shares
pursuant thereto, the Offeror will make a good faith effort to comply with
such state statute or seek to have such statute declared inapplicable to the
Offer. If, after such good faith effort, the Offeror cannot comply with such
state statute, the Offer will not be made to (nor will deposits be accepted
from or on behalf of) the holders of Shares in such state. In any jurisdiction
where the securities, blue sky or other laws require the Offer to be made by a
licensed broker or dealer, the Offer shall be deemed to be made on behalf of
the Offeror by one or more registered brokers or dealers licensed under the
laws of such jurisdiction.
2
<PAGE>
Instructions with respect to the
Offer to Purchase for Cash
All of the Outstanding Ordinary Shares
of International Comfort Products Corporation
The undersigned acknowledge(s) receipt of your letter, the enclosed Offer to
Purchase and Circular dated June 30, 1999 and the related Letter of
Transmittal and Notice of Guaranteed Delivery (which collectively constitute
the "Offer"), in connection with the offer by Titan Acquisitions Ltd., a
corporation organized under the laws of the Province of New Brunswick (the
"Offeror"), a wholly owned subsidiary of United Technologies Corporation, a
Delaware corporation ("UTC"), to purchase all issued and outstanding ordinary
shares (the "Shares") of International Comfort Products Corporation, a
corporation continued under the federal laws of Canada (the "Corporation"), at
the price of U.S.$11.75 in cash for each Share upon the terms and subject to
the conditions set forth in the Offer.
This will instruct you to transfer to the Offeror the number of Shares
indicated below (or if no number is indicated below, all Shares) which are
held by you for the account of the undersigned, upon terms and subject to the
conditions set forth in the Offer.
[_] Check here if you wish to receive a payment in Canadian dollars.
Otherwise, payment will be made in United States dollars.
Number of Shares to be Tendered*: _________________________________________
Date: _____________________________________________________________________
SIGN HERE
Signature(s): _____________________________________________________________
(Print Name(s)): __________________________________________________________
Print Address(es): ________________________________________________________
(Area Code and Telephone Number(s)): ______________________________________
(Taxpayer Identification or Social Security Number(s) (U.S. Shareholders
only)):
-------------------------------------
* Unless otherwise indicated, it will be assumed that all of your Shares held
by us for your account are to be tendered.
3
<PAGE>
Exhibit (a)(6)
This announcement is neither an offer to purchase nor a solicitation of an offer
to sell Shares.The Offer is made solely by the Offer to Purchase,dated June 30,
1999,and the related Letter of Transmittal and Notice of Guaranteed Delivery,
and is not being made to (nor will tenders be accepted from or on behalf of)
holders of Shares in any jurisdiction where the making of the Offer or the
acceptance thereof would not be in compliance with the laws of such
jurisdiction. In any jurisdiction where the securities,blue sky or other laws
require the Offer to be made by a licensed broker or dealer,the Offer shall be
deemed to be made on behalf of the Purchaser by Salomon Smith Barney Inc.or one
or more registered brokers or dealers licensed under the laws of such
jurisdiction.
Notice of Offer to Purchase for Cash
All Outstanding Ordinary Shares
of
International Comfort Products
Corporation
at
US$11.75 Per Share
by
Titan Acquisitions,Ltd.
A Wholly Owned Subsidiary of
United Technologies Corporation
Titan Acquisitions,Ltd.("Purchaser"),a corporation organized under the laws
of the Province of New Brunswick,and a wholly owned subsidiary of United
Technologies Corporation,a Delaware corporation ("Parent"),offers to purchase
all of the outstanding ordinary shares (the "Shares") of International Comfort
Products Corporation,a corporation continued under the federal laws of Canada
(the "Company"),at a cash purchase price of US$11.75 per Share (the "Offer
Price"),upon the terms and subject to the conditions set forth in the Offer to
Purchase (collectively,the "Offer to Purchase"),dated June 30,1999,and in the
related Letter of Transmittal and Notice of Guaranteed Delivery (which,together
with the Offer to Purchase and the supplements or amendments thereto,
collectively constitute the "Offer").
- --------------------------------------------------------------------------------
THE OFFER WILL EXPIRE AT 12:00 MIDNIGHT,TORONTO TIME,ON WEDNESDAY,JULY
28,1999,UNLESS EXTENDED OR WITHDRAWN.
- --------------------------------------------------------------------------------
The Offer is conditioned upon,among other things,at the Expiry Time (as
defined below) of there being tendered and not withdrawn that number of Shares
that,together with the Shares held by or on behalf of Parent,represents at least
71% of the outstanding Shares on a fully diluted basis (the "Minimum
Condition").The Offer is also subject to certain other conditions described in
the Offer to Purchase.
The Offer is being made pursuant to a Pre-Acquisition Agreement,dated June
23,1999 (the "Pre-Acquisition Agreement"), among Purchaser,Parent and the
Company.Purchaser intends to acquire all Shares remaining untendered after the
Offer at the same price per Share through a compulsory acquisition or other type
of second stage transaction.
The Board of Directors of the Company,by the unanimous vote of all
Directors present,has determined that the Offer is fair to,and in the best
interests of,the Company's stockholders,has approved the Pre-Acquisition
Agreement and the transactions contemplated thereby and recommends that the
Company's stockholders tender all their Shares in the Offer.
Concurrently with the execution of the Pre-Acquisition Agreement,Purchaser
entered into lock-up agreements with Ravine Partners,Ltd.and Ontario Teachers'
Pension Plan Board ("Teachers") owning approximately 18.4% and 18.5% of the
outstanding shares (on a fully-diluted basis),respectively,pursuant to which
such holders have agreed to tender their Shares.
In all cases,payment for Shares purchased pursuant to the Offer will be
made only after timely receipt by the Canadian or U.S. Depositary,as applicable
(the "Depositary"),of (i) certificates evidencing such Shares (or a timely Book-
Entry Confirmation (as defined in the Offer to Purchase) with respect to such
Shares),(ii) the Letter of Transmittal (or a manually signed facsimile thereof),
properly completed and duly executed with all required signature guarantees or
an Agent's Message (as defined in the Offer to Purchase) and (iii) all other
documents required by the Letter of Transmittal.For purposes of the
Offer,Purchaser will be deemed to have accepted for payment,and thereby
purchased,Shares validly tendered and not withdrawn as,if and when Purchaser
gives oral and written notice to the Depositary of Purchaser's acceptance of
such Shares for payment.In all cases,payment for Shares purchased pursuant to
the Offer will be made by deposit of the purchase price therefor with the
Depositary,which will act as agent for the tendering stockholders for the
purpose of receiving payment from Purchaser and transmitting the payment to
tendering stockholders whose Shares have theretofore been accepted for
payment.Under no circumstances will interest on the Offer Price be paid by
Purchaser,regardless of any delay in making such payment.
All payments will be made in U.S.dollars,unless the holder tenders Shares
to the Canadian Depositary and elects to receive payment in Canadian
dollars by checking the appropriate box in the Letter of Transmittal,with the
amount determined based on the rate of exchange determined as set forth in the
Offer to Purchase.
The term "Expiry Time"means 12:00 Midnight,Toronto time,on Wednesday,July
28,1999,unless and until Purchaser shall have extended the period of time during
which the Offer is open,in which event the term "Expiry Time"shall mean the
latest time and date at which the Offer,as so extended by Purchaser,shall
expire.Subject to the limitations set forth in the Pre-Acquisition Agreement,
Purchaser reserves the right (but will not be obligated),at any time or from
time to time,in its sole discretion,to extend the period of time during which
the Offer is open by giving oral or written notice of such extension to the
Depositary and by making a public announcement of such extension.There can be no
assurance that Purchaser will exercise its right to extend the Offer.Any such
extension will be followed by a public announcement thereof no later than 9:00
A.M.,New York City time,on the next business day after the previously scheduled
Expiry Time.If Purchaser extends the Offer,then,without prejudice to the rights
of Purchaser,tendered Shares may be retained by the Depositary on behalf of
Purchaser and may not be withdrawn except to the extent that tendering
stockholders are entitled to withdrawal rights,as set forth below.
Except as otherwise provided below,tenders of Shares made pursuant to the
Offer are irrevocable.Shares tendered pursuant to the Offer may be withdrawn at
any time prior to the Expiry Time and,unless theretofore accepted for payment by
Purchaser pursuant to the Offer may also be withdrawn at any time after August
14,1999.For a withdrawal to be effective,a written or facsimile transmission
notice of withdrawal must be timely received by the Depositary at its address
set forth on the back cover of the Offer to Purchase.Any such notice of
withdrawal must specify the name of the person who tendered the Shares to be
withdrawn,the number of shares to be withdrawn and the name of the registered
holder,if different from the name of the person who tendered such Shares.If
certificates evidencing Shares to be withdrawn have been delivered or otherwise
identified to the Depositary,then prior to the physical release of such
certificates,the tendering stockholder must also submit the serial numbers shown
on such certificates, and the signature(s) on the notice of withdrawal must be
guaranteed by an Eligible Institution (as defined in the Offer to Purchase),
except in the case of Shares tendered for the account of an Eligible
Institution.If Shares have been tendered pursuant to the procedure for
book-entry transfer as set forth in the Offer to Purchase,any notice of
withdrawal with respect to such Shares must specify the name and number of the
account at the applicable Book-Entry Transfer Facility (as defined in the Offer
to Purchase) to be credited with the withdrawn Shares.Any Shares properly
withdrawn will be deemed not to have been validly tendered for purposes of the
Offer, but may be retendered at any subsequent time prior to the Expiry Time by
following any of the procedures as described in the Offer to Purchase.All
questions as to the form and validity (including time of receipt) of notices of
withdrawal will be determined by Purchaser,in its sole discretion,whose
determination shall be final and binding on all parties.
The Offer to Purchase and the related Letter of Transmittal and other
relevant materials will be mailed to record holders of Shares and furnished to
brokers,dealers,banks,trust companies and similar persons whose names,or the
names of whose nominees,appear on the stockholders lists or,if applicable,who
are listed as participants in a clearing agency's security position listing for
subsequent transmittal to beneficial owners of Shares.
The information required to be disclosed by Rule 14d-6(e)(1)(vii) under the
Securities Exchange Act of 1934,as amended,is contained in the Offer to Purchase
and is incorporated herein by reference. The Offer to Purchase and Letter of
Transmittal contain important information which should be read before any
decision is made with respect to the Offer.
No fees or commissions will be payable to brokers,dealers or other persons
other than the Information Agent,the Depositaries and the Dealer Manager in
connection with soliciting tenders of Shares pursuant to the Offer.Requests for
copies of the Offer to Purchase,the Letter of Transmittal and all other tender
offer materials may be directed to the Information Agent or (in the United
States) the Dealer Manager as set forth below,and copies will be furnished
promptly at Purchaser's expense.
The Information Agent for the Offer is:
United States: Canada:
Wall Street Plaza Commerce Court West,Suite 1925
New York,New York 10005 Toronto,Ontario M5L 1B9,CANADA
Banks and Brokers call collect:(212) 440-9800 Call toll-free:(800) 890-1037
All others call toll-free (800) 223-2064
The Dealer Manager for the Offer in the United States is:
Salomon Smith Barney
7 World Trade Center
31(st) Floor
New York,New York 10048
Call toll-free:(800) 221-1629
June 30,1999
<PAGE>
EXHIBIT (a)(7)
UNITED TECHNOLOGIES CORPORATION
================================================================================
Contact: Matt Chadderdon
Carrier Corp.
315-432-6625
Carrier Corp. to Purchase International Comfort Products Corp.
FARMINGTON, CT, June 24, 1999 -- Carrier Corp., a wholly owned subsidiary
of United Technologies Corp. (UTC) (NYSE:UTX), today announced the signing of an
agreement to purchase International Comfort Products Corp. (ICP) (AMEX:ICP)
headquartered in Nashville, TN for $11.75 per share in cash.
ICP manufactures and markets central air conditioning and heat pump
systems, gas and oil furnaces, air handlers and component parts and accessories.
ICP's products are marketed under the Heil, Tempstar, Arcoaire, Comfortmaker,
Airquest, Keeprite, Lincoln, Dettson, and Clare brandnames. Its worldwide sales
for 1998 were $733.5 million.
Carrier, with 1998 worldwide sales of $6.9 billion, manufactures and
markets heating, ventilating, air conditioning and refrigeration systems and
equipment. UTC will commence a tender offer for all of the outstanding shares of
common stock of ICP no later than June 30, 1999. UTC will pay a purchase price
of approximately $490 million in cash for all of the outstanding shares of ICP
and will assume approximately $230 million in debt.
The transaction is subject to regulatory approvals and the valid tender of
at least 71 percent of ICP shares, as well as other customary conditions. The
directors of ICP are unanimously recommending that all ICP shareholders accept
UTC's offer.
ICP's largest shareholders, Ravine Partners, an affiliate of SnyderCapital
Corp., and the Ontario Teachers' Pension Plan Board, together holding
approximately 40 percent of ICP's shares, have agreed to tender their shares and
support the transaction.
"The proposed acquisition by UTC represents excellent value for our
stockholders, and outstanding opportunities for our distributors, dealers, and
employees," said Richard W. Snyder, chairman of ICP Corporation.
"This transaction will enhance our ability to continue to serve our
customers with the full backing of the resources of United Technologiess Corp.,"
stated W. Michael Clevy, president of ICP Corporation.
ICP will retain its current operational structure, sales infrastructure,
distribution and dealer networks, and brands.
The companies intend to generate significant cost savings by accelerating
implementation of advanced manufacturing practices and product delivery systems
as well as achieving greater efficiencies in all areas of operations, including
purchasing synergies and technology integration. Carrier expects the annual
pretax integration benefits to exceed $50 million within three years.
"The acquisition of ICP is an exciting opportunity for Carrier Corp. to
offer
<PAGE>
complementary products and brands, to access new market channels, and to serve a
new customer base. Integrating administrative, manufacturing, and engineering
operations will enable both companies to become more efficient and effective in
serving customers," said John R. Lord, president of Carrier Corp.
Carrier Corp. is a subsidiary of United Technologies Corp. a provider of a broad
range of high technology products and support services to the aerospace and
building systems industries.
2
<PAGE>
EXHIBIT (c)(1)
PRE-ACQUISITION AGREEMENT
BETWEEN
UNITED TECHNOLOGIES CORPORATION
AND
TITAN ACQUISITIONS, LTD.
AND
INTERNATIONAL COMFORT PRODUCTS CORPORATION
DATED June 23, 1999
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE 1
INTERPRETATION
1.1 Definitions........................................... 2
1.2 Singular, Plural, etc................................. 7
1.3 Deemed Currency....................................... 7
1.4 Headings, etc......................................... 7
1.5 Date for any Action................................... 7
1.6 Governing Law......................................... 7
1.7 Attornment............................................ 7
ARTICLE 2
THE OFFER
2.1 The Offer............................................. 8
2.2 ICP Directors' Circular............................... 9
2.3 Offer Documents....................................... 10
2.4 Outstanding Stock Options............................. 11
ARTICLE 3
PUBLICITY AND SOLICITATION
3.1 Publicity............................................. 12
3.2 Solicitation.......................................... 12
ARTICLE 4
TRANSACTIONS FOLLOWING COMPLETION OF THE OFFER
4.1 Second Stage Transaction.............................. 12
4.2 Information Circular, Etc............................. 12
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF UTC AND UTCSUB
5.1 Organization and Qualification........................ 13
5.2 Authority Relative to this Agreement.................. 13
5.3 No Violations......................................... 13
5.4 Funds Available....................................... 14
5.5 Litigation............................................ 14
ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF ICP
6.1 Organization and Qualification........................ 15
6.2 Authority Relative to this Agreement.................. 15
6.3 No Violations......................................... 15
6.4 Capitalization........................................ 16
6.5 No Material Adverse Effect............................ 17
6.6 No Undisclosed Material Liabilities................... 17
<PAGE>
TABLE OF CONTENTS
(continued)
Page
6.7 Brokerage Fees....................................... 17
6.8 Conduct of Business.................................. 17
6.9 Reports.............................................. 18
6.10 U.S. Registration.................................... 19
6.11 Subsidiaries......................................... 19
6.12 Litigation........................................... 19
6.13 Insurance............................................ 19
6.14 Environmental........................................ 20
6.15 Benefit Plans........................................ 20
6.16 Tax Matters.......................................... 21
6.17 Year 2000............................................ 22
6.18 Compliance........................................... 22
6.19 Debt Covenant........................................ 23
ARTICLE 7
CONDUCT OF BUSINESS
7.1 Conduct of Business by ICP............................ 23
ARTICLE 8
COVENANTS OF ICP
8.1 No Solicitation....................................... 25
8.2 ICP Board of Directors................................ 26
ARTICLE 9
COVENANTS OF UTC AND UTCSUB
9.1 Regulatory and Other Authorizations: Consents......... 27
9.2 Employment Agreements................................. 27
9.3 Officers' and Directors' Insurance.................... 27
9.4 Employment Termination................................ 28
9.5 Indemnities........................................... 28
9.6 Compensation; Benefit Plans........................... 28
ARTICLE 10
MUTUAL COVENANTS
10.1 Notification of Certain Matters....................... 29
10.2 Competition Filings and Investment Canada Act Filing.. 29
10.3 Other Filings......................................... 30
10.4 Additional Agreements................................. 30
10.5 Access to Information................................. 31
10.6 Debt Obligations...................................... 31
ARTICLE 11
TERMINATION, AMENDMENT AND WAIVER
11.1 Termination........................................... 31
ii
<PAGE>
TABLE OF CONTENTS
(continued)
Page
11.2 Effect of Termination and Other Events................ 32
11.3 Amendment............................................. 33
11.4 Waiver................................................ 33
ARTICLE 12
GENERAL PROVISIONS
12.1 Notices............................................... 34
12.2 Miscellaneous......................................... 35
12.3 Assignment............................................ 35
12.4 Expenses.............................................. 35
12.5 Severability.......................................... 35
12.6 Survival.............................................. 36
12.7 Counterpart Execution................................. 36
iii
<PAGE>
PRE-ACQUISITION AGREEMENT
THIS AGREEMENT made the 23rd day of June, 1999,
BETWEEN:
UNITED TECHNOLOGIES CORPORATION, a corporation duly incorporated under and
governed by the laws of the State of Delaware and having its principal
office in the City of Hartford, in the State of Connecticut (hereafter
referred to as "UTC"),
- and -
TITAN ACQUISITIONS, LTD., a corporation duly incorporated under and
governed by the laws of the Province of New Brunswick and having its
registered office in the City of St. John, in the Province of New Brunswick
(hereafter referred to as "UTCSub"),
- and -
INTERNATIONAL COMFORT PRODUCTS CORPORATION, a corporation duly continued
under and governed by the federal laws of Canada and having its registered
office in the City of Toronto, in the Province of Ontario (hereafter
referred to as "ICP"),
WHEREAS the Board of Directors of each of UTC and ICP has determined that it is
in the best interests of their respective corporations and shareholders that UTC
and ICP combine their business interests with the result that there shall be one
economic enterprise and that such combination be effected through an offer by
UTCSub, a wholly-owned subsidiary of UTC, to purchase all of the outstanding
ordinary shares of ICP;
AND WHEREAS the Board of Directors of ICP has unanimously determined to
recommend acceptance of the UTCSub offer to the shareholders of ICP;
AND WHEREAS the Board of Directors of ICP has unanimously determined that it
would be in the best interests of ICP and its shareholders to enter into this
Agreement;
AND WHEREAS UTC, through UTCSub, is willing to make an offer subject to the
terms and conditions of this Agreement.
NOW THEREFORE IN CONSIDERATION OF the mutual covenants hereinafter contained and
other good and valuable consideration (the receipt and adequacy whereof is
hereby acknowledged), the parties hereto agree as follows:
<PAGE>
ARTICLE 1
INTERPRETATION
1.1 Definitions
In this Agreement, unless there is something in the subject matter or context
inconsistent therewith:
"Agreement", "this Agreement", "herein", "hereto" and "hereof' and similar
expressions refer to this Agreement, as the same may be amended or supplemented
from time to time;
"Business Day" means any day excepting a Saturday, Sunday or any other day on
which banking institutions in New York City (in the State of New York) or
Toronto (in the Province of Ontario) are authorized or required by any
applicable law to close;
"Canada BCA" means the Canada Business Corporations Act as the same has been and
may hereafter from time to time be amended;
"Competition Act" means the Competition Act (Canada), as the same has been and
may hereafter from time to time be amended;
"Confidentiality Agreement" has the meaning set forth in Section 2.2(a);
"diluted basis" means, with respect to the number of outstanding ICP Shares at
any time, such number of outstanding ICP Shares calculated on the basis that all
outstanding options and other rights to purchase ICP Shares are exercised;
"Disclosure Schedule" means a letter from ICP to UTC dated the date hereof
containing disclosures made by ICP pursuant to this Agreement;
"Effective Time" means the time that UTCSub shall have acquired ownership of and
paid for ICP Shares pursuant to the terms of the Offer;
"Exchange Act" means the United States Securities Exchange Act of 1934, as the
same has been and may hereafter from time to time be amended;
"Expiry Time" means the Initial Expiry Time unless the Offer has been extended,
in which case it means the expiry time of the Offer as extended from time to
time;
"Governmental Authority" means any government, parliament, legislature,
regulatory authority, governmental department, agency, commission, board,
tribunal, crown corporation, court or other law, rule or regulation-making
entity having jurisdiction or exercising executive, legislative, judicial,
regulatory or administrative powers on behalf of any federation of nations,
nation, or any province, territory, state or other subdivision thereof or any
municipality, district or other subdivision thereof;
2
<PAGE>
"Governmental Order" means any order, writ, judgment, injunction, decree,
stipulation, determination, award, directive, or citation entered by or with any
Governmental Authority and having force of law;
"HSR Act" means the United States Hart-Scott-Rodino Antitrust Improvements Act
of 1976, as the same has been amended and may hereafter from time to time be
amended;
"ICP Governing Documents" means the Certificate and Articles of Continuance and
By-laws of ICP;
"ICP Options" means the outstanding options to acquire ICP Shares under the
Stock Option Plans;
"ICP Shares" means ordinary shares in the share capital of ICP;
"in writing" means information delivered in a written form, whether by mail,
telecopy or other transmitted means, and includes documents, files, records,
books and other materials made available, delivered or produced to UTC by or on
behalf of ICP in the course of UTC conducting its due diligence review in
respect of ICP and its subsidiaries between the date of the Confidentiality
Agreement and the date of this Agreement;
"Information Circular" has the meaning set forth in Section 4.2;
"Initial Expiry Time" means 11:59 p.m. (Toronto time) on the day which is the
twentieth (20th) Business Day from and including the day that the Offer
Documents are filed with the appropriate Securities Authorities and mailed to
shareholders of ICP;
"Investment Canada Act" means the Investment Canada Act, as the same has been
amended and may hereafter from time to time be amended;
"Lockup Agreements" mean the letter agreements dated the date hereof between
UTCSub and each of Ravine Partners, Ltd. and Ontario Teachers' Pension Plan
Board;
"Material Adverse Effect" means any effect on the business, operations, results
of operations or financial condition of ICP or any of its subsidiaries that,
individually or in the aggregate, is materially adverse to the business of ICP
and its subsidiaries considered as a whole, other than any such effect (i) which
arises out of a matter that has been publicly disclosed prior to the date of
this Agreement or otherwise disclosed in the Disclosure Schedule, (ii) resulting
from conditions affecting the residential and light commercial air conditioning
and heating product industries in Canada and the United States, (iii) resulting
from general economic, financial, currency exchange, securities or commodity
market conditions in Canada, the United States or elsewhere or (iv) resulting
solely from the public announcement of the transactions contemplated by this
Agreement;
"Offer" has the meaning set forth in Section 2.1 (a);
"Offer Conditions" mean the following conditions to the Offer:
3
<PAGE>
(a) at the Expiry Time, the number of ICP Shares that shall have been validly
deposited under the Offer (and not properly withdrawn), together with any
ICP Shares held by or on behalf of UTC, or any of its subsidiaries, shall
constitute at least 71.0% of the outstanding ICP Shares (calculated on a
diluted basis);
(b) all material requisite governmental and regulatory approvals and consents
(including, without limitation, those of any stock exchanges or Securities
Authorities) required in UTC's reasonable judgment to make lawful the
purchase by, or the sale to, UTCSub of the ICP Shares (whether under the
Offer, a compulsory acquisition or Second Stage Transaction) shall have
been obtained and all applicable statutory or regulatory waiting periods
during the pendency of which the purchase by, or the sale to, UTCSub of the
ICP Shares would be illegal shall have expired or been terminated without
the imposition of any conditions that, individually or in the aggregate,
have or are reasonably likely to have the consequences referred to in
clauses (i) through (iii) of paragraph (c) below; without limiting the
foregoing: (i) the applicable waiting periods under the HSR Act and the
Competition Act with respect to the Offer shall have expired or been
terminated; (ii) the Offer shall have been approved or deemed to be
approved or exempted pursuant to the Investment Canada Act; and (iii) all
other consents and approvals without which in UTC's reasonable judgment the
purchase by, or the sale to, UTCSub of the ICP Shares (whether under the
Offer, a compulsory acquisition or Second Stage Transaction) would be
illegal have been obtained;
(c) no statute, rule, regulation, executive or other order shall have been
enacted, issued, promulgated or enforced by any Governmental Authority and
no preliminary or permanent injunction, temporary restraining order or
other legal restraint or prohibition shall have been threatened or issued
by (and no action, proceeding or counterclaim shall be pending or
threatened by or before) a court or other Governmental Authority (i)
preventing or rendering, or seeking to prevent or render, illegal the
making of the Offer, the acceptance for payment of, the payment for, or
ownership, directly or indirectly, of some or all of the ICP Shares by
UTCSub or the completion of a compulsory acquisition or Second Stage
Transaction, (ii) imposing or confirming, or seeking to impose or confirm,
limitations on the ability of UTC or UTCSub, directly or indirectly,
effectively to acquire or hold or to exercise full rights of ownership of
the ICP Shares or otherwise control ICP, in a manner that, in the
reasonable judgment of UTC, would reasonably be expected, in the aggregate,
to materially impair the overall benefits to be realized by UTC from
consummation of the Offer and the other transactions contemplated by this
Agreement, or (iii) requiring, or seeking to require, divestiture by
UTCSub, directly or indirectly, of any ICP Shares or requiring UTCSub, UTC,
ICP or any of their respective subsidiaries or affiliates to dispose of or
hold separate all or any portion of their respective businesses, assets or
properties or imposing any limitations on the ability of any of such
entities to conduct their respective businesses or own such assets,
properties or the ICP Shares or on the ability of UTC or UTCSub to conduct
the business of ICP and its subsidiaries and own the assets and properties
of ICP and its subsidiaries, in each case under this clause (iii) in a
manner that, in the reasonable judgment of
4
<PAGE>
UTC, would reasonably be expected, in the aggregate, to materially impair
the overall benefits to be realized by UTC from consummation of the Offer
and the other transactions contemplated by this Agreement;
(d) (i) ICP shall not have breached, or failed to comply with, in any material
respect, any of its covenants or other obligations under this Agreement,
and (ii) each of the representations and warranties of ICP contained in
this Agreement that is qualified as to materiality shall be so true and
correct and any such representation or warranty that is not so qualified
shall be so true and correct, in all material respects, as of the date of
this Agreement and as of the Expiry Time as if made on and as of the Expiry
Time (except to the extent such representations and warranties speak as of
a specific date, which shall be so true and correct as of such date);
provided that in either case ICP has been given notice of and ten (10)
Business Days to cure any such misrepresentation, breach or non-performance
or such misrepresentation, breach or non-performance by its timing or
nature cannot be cured before such tenth Business Day;
(e) at any time after date of this Agreement, there shall not have occurred any
event, occurrence, development or state of circumstances that has had a
Material Adverse Effect;
(f) there shall not have occurred, developed or come into effect or existence
any event, action, state, condition or major financial occurrence of
national or international consequence or any law, regulation, action,
governmental regulation, inquiry or other occurrence of any nature
whatsoever which, in the reasonable judgment of UTC, materially adversely
affects or involves, the general economic, financial, currency exchange,
securities or commodity market operations in Canada or the United States;
(g) neither ICP nor any of its subsidiaries (or the Board of Directors or any
committee thereof of ICP) shall have approved, recommended, authorized,
proposed, filed a document with any Securities Authorities not opposing, or
publicly announced its intention to enter into, any Take-over Proposal
(other than with UTCSub or any of its affiliates) and shall not have
resolved to do any of the foregoing;
(h) this Agreement shall not have been terminated pursuant to its terms; and
(i) the Board of Directors or any committee thereof of ICP shall not have
modified or amended in any manner adverse to UTC or UTCSub, and shall not
have withdrawn, its authorization, approval or recommendation of the Offer
or this Agreement and shall not have resolved to do any of the foregoing.
The foregoing conditions are for the sole benefit of UTC and UTCSub and may be
asserted regardless of the circumstances (including any action or inaction by
UTC or UTCSub or any of their affiliates giving rise to any such condition) or
waived by UTC or UTCSub in whole or in part at any time from time to time in its
discretion subject to the terms and conditions of this Agreement. The failure
of UTC or UTCSub at any time to exercise any of the foregoing rights
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shall not be deemed a waiver of any such right and each such right shall be
deemed an ongoing right which may be asserted at any time and from time to time.
"Offer Documents" has the meaning set forth in Section 2.3(a);
"Officer Obligations" means any existing written obligations or liabilities of
ICP or any of its subsidiaries to pay any amount to its officers, directors or
employees, other than for salary, bonuses under their existing bonus
arrangements and directors' fees in the ordinary course and, without limiting
the generality of the foregoing, shall include the obligations of ICP or any of
its subsidiaries to officers or employees, in each case to the extent disclosed
in the Disclosure Schedule or the SEC Reports (i) for severance or termination
payments on the change of control of ICP pursuant to any executive involuntary
severance and termination agreements in the case of officers and pursuant to
ICP's severance policy in the case of employees, and (ii) for retention bonus
payments pursuant to any retention bonus program;
"SEC" means the United States Securities and Exchange Commission;
"SEC Reports" means annual and periodic reports, proxy materials and
registration statements required to be filed by ICP and its subsidiaries with
the SEC pursuant to applicable Securities Laws;
"Second Stage Transaction" has the meaning set forth in Section 4.1;
"Securities Authorities" means the appropriate securities commissions or similar
regulatory authorities in Canada and each of the provinces and territories
thereof and in the United States and each of the states thereof;
"Securities Laws" means, collectively, the Canada BCA, any applicable Canadian
provincial securities laws or United States federal securities laws, the "blue
sky" or securities laws of the states of the United States and any other
applicable securities laws;
"Stock Option Plans" means the Employee Stock Option Plan and the 1998 Employee
Stock Option Plan of ICP;
"subsidiary" has the meaning set forth in the Canada BCA;
"Superior Take-over Proposal" means any written unsolicited Take-over Proposal
(i) which, in the opinion of ICP's Board of Directors, after consulting with and
receipt of advice from Credit Suisse First Boston Corporation, ICP's independent
financial advisor (or any other nationally recognized investment banking firm),
is more favourable to ICP's shareholders from a financial point of view than the
Offer (including, and after considering, any adjustment to the terms and
conditions proposed by UTC and UTCSub in response to such Take-over Proposal),
and (if such Take-over Proposal includes cash as consideration) that sufficient
financing commitments have been obtained with respect to such Take-over Proposal
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 Take-over Proposal; and (ii) in respect of which UTC has
received a copy of such Take-over Proposal as executed by the party making the
proposal, at
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least 48 hours prior to acceptance or recommendation of such proposal by the
Board of Directors of ICP;
"Take-over Proposal" means, in respect of ICP or its subsidiaries or their
assets, any proposals or offers regarding any take-over bid, merger,
consolidation, amalgamation, arrangement, sale of a material amount of assets,
sale of treasury shares (other than pursuant to options under the Stock Option
Plans) or other business combination or similar transaction; and
"Take-up Date" means the date that UTCSub first takes up and acquires ICP Shares
pursuant to the Offer.
1.2 Singular, Plural, etc.
Words importing the singular number include the plural and vice versa and words
importing gender include the masculine, feminine and neuter genders.
1.3 Deemed Currency
In the absence of a specific designation of any currency any undescribed dollar
amount herein shall be deemed to refer to United States dollars.
1.4 Headings, etc.
The division of this Agreement into Articles and Sections, the provision of a
table of contents hereto and the insertion of the recitals and headings are for
convenience of reference only and shall not affect the construction or
interpretation of this Agreement and, unless otherwise stated, all references in
this Agreement to Articles and Sections refer to Articles and Sections of this
Agreement in which such reference is made.
1.5 Date for any Action
In the event that any date on which any action is required to be taken hereunder
by any of the parties hereunder is not a Business Day, such action shall be
required to be taken on the next succeeding day which is a Business Day.
1.6 Governing Law
This Agreement shall be governed by and interpreted in accordance with the laws
of the Province of Ontario and the laws of Canada applicable therein.
1.7 Attornment
The parties hereby irrevocably and unconditionally consent to and submit to the
courts of the Province of Ontario for any actions, suits or proceedings arising
out of or relating to this Agreement or the matters contemplated hereby (and
agree not to commence any action, suit or proceeding relating thereto except in
such courts) and further agree that service of any process, summons, notice or
document by single registered mail to the addresses of the parties set forth in
this Agreement shall be effective service of process for any action, suit or
proceeding brought
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against either party in such court. The parties hereby irrevocably and
unconditionally waive any objection to the laying of venue of any action, suit
or proceeding arising out of this Agreement or the matters contemplated hereby
in the courts of the Province of Ontario and hereby further irrevocably and
unconditionally waive and agree not to plead or claim in any such court that any
such action, suit or proceeding so brought has been brought in an inconvenient
forum.
ARTICLE 2
THE OFFER
2.1 The Offer
(a) Provided that this Agreement shall not have been terminated in accordance
with Article 11, then UTCSub shall, as promptly as practicable, (but in no
event later than five Business Days after the date of the public
announcement of the execution of this Agreement), and UTC shall cause
UTCSub to, commence (within the meaning of Rule 14d-2 under the Exchange
Act) an offer to purchase all of the outstanding ICP Shares for a price of
$11.75 in cash for each ICP Share, which offer shall be made in accordance
with applicable Securities Laws and be subject only to the Offer Conditions
(the "Offer", which definition shall include any permitted amendments to,
or extensions of, the Offer). The Offer shall be made pursuant to the
Offer Documents and shall contain the terms and conditions set forth in
this Agreement. The obligation of UTCSub to, and of UTC to cause UTCSub
to, commence the Offer, conduct and consummate the Offer and accept for
payment, and pay for, any ICP Shares tendered (and not properly withdrawn)
pursuant to the Offer shall be subject only to the Offer Conditions (any of
which may be waived in whole or in part by UTCSub in its sole discretion).
UTCSub expressly reserves the right, subject to compliance with applicable
Securities Laws, to modify the terms of the Offer, except that, without the
express written consent of ICP, UTCSub shall not (i) reduce the number of
ICP Shares subject to the Offer, (ii) reduce the Offer price, (iii) add to
or modify the Offer Conditions, (iv) except as provided in the next
sentence, change the Expiry Time, (v) change the form of consideration
payable in the Offer or (vi) amend, alter, add or waive any term of the
Offer in any manner that is, in the opinion of ICP, acting reasonably,
materially adverse to the holders of the ICP Shares. Notwithstanding the
foregoing, (A) if on any scheduled expiration date of the Offer, which
shall initially be the Initial Expiry Time, all of the Offer Conditions
have not been satisfied or waived, UTCSub shall, and UTC shall cause UTCSub
to, unless in the reasonable judgment of UTC all of the Offer Conditions
cannot be satisfied or waived on or prior to December 15, 1999, from time
to time, extend the Expiry Time for such period of time as is necessary to
satisfy or fulfill such conditions, (B) UTCSub may extend the Offer for any
period required by any rule, regulation, interpretation or position of any
of the Securities Authorities applicable to the Offer, or to permit ICP to
cure any misrepresentation, breach or non-performance during the time
period referred to in the proviso to clause (d) of the Offer Conditions,
and (C) UTCSub may extend the Offer for up to ten (10) Business Days (but
not beyond December 15, 1999) if there have been validly tendered (and not
properly withdrawn) prior to the expiration of the Offer such number of
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ICP Shares that would constitute at least 80%, but less than 90%, of the
issued and outstanding ICP Shares as of the date of determination. Subject
only to the Offer Conditions, UTCSub shall, and UTC shall cause UTCSub to,
pay, as soon as practicable after the expiration of the Offer, for all ICP
Shares validly tendered (and not properly withdrawn).
(b) UTCSub will instruct the depositary under the Offer to advise ICP, from
time to time (but not less frequently than every two (2) Business Days
until the day immediately prior to the Expiry Time and thereafter on an
hourly basis, if requested by ICP and in such manner as ICP may reasonably
request), as to the number of ICP Shares that have been tendered (and not
properly withdrawn) under the Offer.
(c) The parties hereto agree that UTC may make the Offer through UTCSub but
that UTC shall be liable to ICP for the full performance by UTCSub of its
obligations under this Agreement.
2.2 ICP Directors' Circular
(a) ICP hereby consents to the Offer as set forth in Section 2.1 and
represents, warrants and confirms that (i) its Board of Directors has
unanimously (A) determined that the Offer is fair to the holders of ICP
Shares and is in the best interests of ICP and such holders and (B)
approved the Offer and this Agreement and resolved to recommend acceptance
of the Offer by the holders of ICP Shares, provided that the Offer is not
amended except in accordance with the terms of this Agreement, and (C)
determined to elect, to the extent permitted by law, not to be subject to
any "moratorium", "control share acquisition", "business combination",
"fair price" or other form of anti-takeover laws and regulations of any
jurisdiction that may purport to be applicable to this Agreement or the
Lockup Agreements, (ii) the making of the Offer and the taking of any other
action by UTC or UTCSub in connection with this Agreement or the Lockup
Agreements and the transactions contemplated hereby and thereby have been
consented to by the Board of Directors of ICP in accordance with the terms
and provisions of the Confidentiality Agreement dated March 19, 1999
between UTC and ICP (the "Confidentiality Agreement") and (iii) Credit
Suisse First Boston Corporation, ICP's independent financial advisor, has
advised ICP's Board of Directors that, in its opinion, the consideration to
be paid in the Offer to ICP's shareholders is fair, from a financial point
of view, to such shareholders. On the date the Offer Documents are filed
with the appropriate Securities Authorities, ICP shall file with the
Securities Authorities a directors' circular with respect to the Offer
containing the recommendation described in Section 2.2(a) and shall mail
the directors' circular to the shareholders of ICP. The directors'
circular shall comply as to form and content in all material respects with
the requirements of applicable Securities Laws and, on the date filed with
Securities Authorities and on the date first published, sent or given to
ICP's shareholders, shall not contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of the
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circumstances under which they were made, not misleading, except that no
representation or warranty is made by ICP with respect to written
information supplied by UTC or UTCSub or any other third party specifically
for inclusion in the directors' circular. ICP, UTC and UTCSub each agree
promptly to correct any written information provided by it for use in the
directors' circular if and to the extent that such information shall have
become false or misleading in any material respect, and ICP further agrees
to take all steps necessary to amend or supplement the directors' circular
and to cause the directors' circular as so amended or supplemented to be
filed with the appropriate Securities Authorities and disseminated to ICP's
shareholders, in each case as and to the extent required by applicable
Securities Laws. UTC shall be given reasonable opportunity to review and
comment upon the directors' circular prior to its filing with the
Securities Authorities or dissemination to ICP's shareholders, and ICP
shall consider such comments in good faith. ICP agrees to provide UTC any
comments ICP or its counsel may receive from the Securities Authorities
with respect to the directors' circular promptly after the receipt of such
comments.
(b) The Board of Directors of ICP has been advised that all directors of ICP
intend to tender their ICP Shares under the Offer. The directors' circular
shall reflect the intention of such directors to tender their ICP Shares
pursuant to the Offer.
(c) Notwithstanding Section 2.2(a), in the event that, prior to the expiry of
the Offer, a Superior Take-over Proposal is offered or made to the holders
of ICP Shares or ICP, the Board of Directors of ICP may withdraw, modify or
change any recommendation regarding the Offer if the Board of Directors of
ICP, acting in good faith, after consulting outside counsel, determines
that the directors are required to do so in order to discharge properly
their fiduciary duties under applicable law.
2.3 Offer Documents
(a) On the date of commencement of the Offer, UTC and UTCSub shall file or
cause to be filed with the appropriate Securities Authorities an offer to
purchase and take-over circular and the related letter of transmittal,
notice of guaranteed delivery and summary advertisement pursuant to which
the Offer will be made (collectively, the "Offer Documents"). UTC and
UTCSub further agree to take all reasonable steps necessary to cause the
Offer Documents to be disseminated to holders of ICP Shares in accordance
with applicable Securities Laws. UTC and UTCSub agree that the Offer
Documents shall comply as to form and content in all material respects with
applicable Securities Laws, and the Offer Documents, on the date first
published, sent or given to ICP's shareholders, shall not contain any
untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading, except that no representation or warranty is made by UTC or
UTCSub with respect to written information supplied by ICP or any third
party specifically for inclusion or incorporation by reference in the Offer
Documents. UTC, UTCSub and ICP each
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agree promptly to correct any written information provided by it for use in
the Offer Documents if and to the extent that such information shall have
become false or misleading in any material respect and UTC and UTCSub
further agree to take all steps to cause the Offer Documents as so
corrected to be filed with the appropriate Securities Authorities and
disseminated to ICP's shareholders, in each case as and to the extent
required by applicable Securities Laws. ICP shall be given reasonable
opportunity to review and comment upon the Offer Documents prior to their
filing with Securities Authorities or dissemination to ICP's shareholders,
and UTC and UTCSub shall consider such comments in good faith. UTC and
UTCSub agree to provide ICP any comments UTC, UTCSub or their counsel may
receive from Securities Authorities with respect to the Offer Documents
promptly after the receipt of such comments.
(b) ICP agrees to provide such reasonable assistance as UTCSub or its agents
may reasonably request in connection with communicating the Offer and any
amendments and supplements thereto to the holders of the ICP Shares and to
such other persons as are entitled to receive the Offer under Securities
Laws, including providing lists of the shareholders of ICP and of the
holders of ICP Options and other securities convertible into or
exchangeable for ICP Shares and mailing labels with respect to all such
holders of securities as soon as possible after the date of this Agreement
but in any event no later than the close of business in Toronto on June 28,
1999 and updates or supplements thereto from time to time as may be
requested by UTCSub.
2.4 Outstanding Stock Options
ICP shall cause the vesting of option entitlements under the Stock Option Plans
to accelerate prior to or concurrent with the Expiry Time, such that all
outstanding ICP Options to acquire ICP Shares are exercisable prior to or
concurrent with the Expiry Time. At the Effective Time, each holder of a then
outstanding ICP Option shall, in settlement thereof, be entitled to receive from
ICP, and shall be paid in full satisfaction for each ICP Share subject to such
ICP Option an amount (subject to any applicable withholding tax) in cash equal
to the product of (i) the excess of the Offer price over the per share exercise
or purchase price of such ICP Option and (ii) the number of ICP Shares subject
to such ICP Option. Upon receipt of such consideration, each such ICP Option
shall be cancelled. The surrender of a ICP Option to ICP in exchange for such
consideration shall be deemed a release of any and all rights the holder had or
may have had in respect of such ICP Option. The Stock Option Plans shall
terminate as of the Effective Time and any and all rights under any and all
rights under any provisions in any other plan, program or arrangement providing
for the issuance or grant of any other interest in respect of the capital stock
of ICP or any subsidiary thereof shall be cancelled by ICP as of the Effective
Time.
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ARTICLE 3
PUBLICITY AND SOLICITATION
3.1 Publicity
UTC, UTCSub and ICP shall not issue any press release with respect to this
Agreement or the transactions contemplated hereby unless such action is agreed
to jointly or is required by applicable law or by obligations pursuant to any
listing agreement with a stock exchange, in which case the party making such
release will use reasonable efforts to consult the other party before issuance
of such release.
3.2 Solicitation
The financial advisors to UTC and UTCSub will act as dealer managers (the
"Dealer Managers") in connection with the solicitation of acceptances of the
Offer and will form a soliciting dealer group comprised of members of stock
exchanges in Canada and the United States therefor.
ARTICLE 4
TRANSACTIONS FOLLOWING COMPLETION OF THE OFFER
4.1 Second Stage Transaction
If UTCSub takes up and pays for any ICP Shares pursuant to the terms of the
Offer, UTCSub shall use its reasonable best efforts to, subject to any necessary
regulatory and shareholder approval, acquire, and ICP agrees to assist UTCSub in
acquiring, the balance of any non-tendered ICP Shares as soon as practicable
(but in any event no later than ninety (90) days) following the Take-up Date by
way of a statutory arrangement, amalgamation, merger, reorganization,
consolidation, recapitalization or other type of acquisition transaction or
transactions ("Second Stage Transaction") carried out for a cash consideration
per ICP Share not less than the consideration paid pursuant to the Offer.
Nothing herein shall be construed to prevent UTCSub from acquiring, directly or
indirectly, additional ICP Shares in the open market or in privately negotiated
transactions, in accordance with Securities Laws (including by way of compulsory
acquisition) following completion of the Offer.
4.2 Information Circular, Etc.
Without limiting Section 4.1, ICP agrees that if UTCSub is required to use its
reasonable best efforts to effect a Second Stage Transaction which requires
approval of ICP's shareholders in a meeting of ICP's shareholders, ICP shall
take all action necessary in accordance with the Securities Laws, other
applicable Canadian laws, the ICP Governing Documents and the requirements of
The Toronto Stock Exchange and the American Stock Exchange or any other
regulatory authority having jurisdiction to duly call, give notice of, convene
and hold a meeting of its shareholders as promptly as practicable to consider
and vote upon the action proposed by UTCSub. In the event of such a meeting or
meetings, ICP shall mail to its shareholders an Information Circular with
respect to the meeting of ICP's shareholders. The term "Information Circular"
shall mean such proxy or other required informational statement or circular, as
the case may be, and all related materials at the time required to be mailed to
ICP's shareholders and all amendments or supplements thereto, if any. Each of
UTCSub and ICP shall obtain and furnish
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the information required to be included in any Information Circular. The
information provided and to be provided by UTCSub and ICP for use in the
Information Circular, on both the date the Information Circular is first mailed
to ICP's shareholders and on the date any such meeting is held, shall 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 are made, not misleading and will
comply in all material respects with all applicable requirements of law. UTCSub
and ICP each agree to correct promptly any such information provided by it for
use in any Information Circular which shall have become false or misleading.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF UTC AND UTCSUB
As of the date hereof, UTC and UTCSub hereby jointly and severally represent and
warrant to ICP as follows and acknowledge that ICP is relying upon these
representations and warranties in connection with the entering into of this
Agreement:
5.1 Organization and Qualification
UTC is a corporation duly incorporated and organized and validly existing under
the laws of the State of Delaware and has the requisite corporate power and
authority to carry on its business as it is now being conducted. UTCSub is a
corporation duly incorporated and organized and validly existing under the laws
of the Province of New Brunswick and has the requisite corporate power and
authority to carry on its business as it is now being conducted.
5.2 Authority Relative to this Agreement
UTC and UTCSub have the requisite corporate authority to enter into this
Agreement and to carry out their obligations hereunder. The execution and
delivery of this Agreement and the consummation by UTC and UTCSub of the
transactions contemplated hereby have been duly authorized by their respective
Boards of Directors and no other corporate proceedings on their part are or will
be necessary to authorize this Agreement and the transactions contemplated
hereby. This Agreement has been duly executed and delivered by each of UTC and
UTCSub and constitutes the legal, valid and binding obligation of each of UTC
and UTCSub enforceable against each of them in accordance with its terms,
subject to bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and other laws relating to or affecting creditors' rights generally
and to general principles of equity.
5.3 No Violations
(a) Neither the execution and delivery of this Agreement by UTC and UTCSub, the
consummation by them of the transactions contemplated hereby nor compliance
by them with any of the provisions hereof will: (i) violate, conflict with,
or result in breach of any provision of, require any consent, approval or
notice under, or constitute a default (or an event which, with notice or
lapse of time or both, would constitute a default) or result in a right of
termination or acceleration under, or result in a creation of any lien,
security interest, charge or encumbrance upon any of the properties or
assets of UTC or UTCSub or any of their subsidiaries under,
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any of the terms, conditions or provisions of (x) the charter or bylaws of
either UTC or UTCSub or (y) any material note, bond, mortgage, indenture,
loan agreement, deed of trust, agreement, lien, contract or other
instrument or obligation to which UTC or UTCSub or any of their
subsidiaries is a party or to which any of them, or any of their respective
properties or assets, may be subject or by which either UTC or UTCSub or
any of their subsidiaries is bound; or (ii) subject to compliance with the
statutes and regulations referred to in Section 5.3(b), violate any
judgment, ruling, order, writ, injunction, determination, award, decree,
statute, ordinance, rule or regulation applicable to UTC or UTCSub or any
of their subsidiaries (except, in the case of each of clauses (i) and (ii)
above, for such violations, conflicts, breaches, defaults or terminations
which, or any consents, approvals or notices which if not given or
received, would not have any material adverse effect on the ability of UTC
to consummate the transactions contemplated hereby on a timely basis).
(b) Other than in connection with or in compliance with the provisions of
Securities Laws, the Competition Act, the HSR Act, the Investment Canada
Act, the rules of The Toronto Stock Exchange or the American Stock
Exchange, and any other pre-merger notification or similar statutes, (i)
there is no legal impediment to UTC and UTCSub's consummation of the
transactions contemplated by this Agreement and (ii) no filing or
registration with, or authorization, consent or approval of, any domestic
or foreign public body or authority is necessary by UTC or UTCSub in
connection with the making or the consummation of the Offer, except for
such filings or registrations which, if not made, or for such
authorizations, consents or approvals, which, if not received, would not
have a material adverse effect on the ability of UTCSub to consummate the
transactions contemplated hereby on a timely basis.
5.4 Funds Available
Adequate arrangements have been made for aggregate funds to be available at each
of the Expiry Time and the Effective Time, such that UTCSub will be in a
position (i) to pay for all ICP Shares tendered pursuant to the Offer in
accordance with the terms of the Offer and any ICP Shares acquired pursuant to a
compulsory acquisition or Second Stage Transaction and (ii) to satisfy all other
financial obligations of UTC, UTCSub and ICP arising as a result of the
consummation of the transactions contemplated hereby.
5.5 Litigation
There is no litigation, suit, claim, action, proceeding or investigation pending
or, to the knowledge of UTC and UTCSub, threatened against UTC or UTCSub or any
of their respective properties or assets by or before any Governmental
Authority, which would seek to delay or prevent the consummation of any
transaction contemplated by this Agreement. Neither UTC, UTCSub nor any
property or asset of UTC or UTCSub is subject to any continuing order of,
consent decree, settlement agreement or similar written agreement with, or, to
the knowledge of UTC and UTCSub, continuing investigation by, any Governmental
Authority, or any order, writ, judgment, injunction, decree, determination or
award of any Governmental Authority or any
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arbitrator which would prevent UTC or UTCSub from performing their respective
material obligations under this Agreement or prevent or materially delay the
consummation of any transaction contemplated by this Agreement.
ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF ICP
As of the date hereof and except as otherwise disclosed in ICP's SEC Reports or
the Disclosure Schedule, ICP hereby represents and warrants to UTC and UTCSub as
follows and acknowledges that they are relying upon these representations and
warranties in connection with the entering into of this Agreement:
6.1 Organization and Qualification
ICP is a corporation duly continued and validly existing under the federal laws
of Canada and has the requisite corporate power and authority to carry on its
business as it is now being conducted. Each of ICP's subsidiaries is a
corporation duly incorporated and organized and validly subsisting under the
laws of the jurisdiction of its incorporation and has the requisite corporate
power and authority to carry on its business as now being conducted. ICP and
each of its subsidiaries is duly registered to do business and is in good
standing in each jurisdiction in which the character of its properties, owned or
leased, or the nature of its activities make such registration necessary, except
where the failure to be so registered or in good standing neither, individually
or in the aggregate, has had or would be reasonably expected to have a Material
Adverse Effect nor would prevent or materially delay or limit the performance of
this Agreement by ICP.
6.2 Authority Relative to this Agreement
ICP has the requisite corporate authority to enter into this Agreement and to
carry out its obligations hereunder. The execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby have been
duly authorized by ICP's Board of Directors, and no other corporate proceedings
on the part of ICP are necessary to authorize this Agreement and the
transactions contemplated hereby (except for obtaining shareholder approval in
respect of any Second Stage Transaction). This Agreement has been duly executed
and delivered by ICP and constitutes the legal, valid and binding obligation of
ICP enforceable against ICP in accordance with its terms, subject to bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium and other laws
relating to or affecting creditors' rights generally and to general principles
of equity.
6.3 No Violations
(a) Neither the execution and delivery of this Agreement by ICP, the
consummation of the transactions contemplated hereby nor compliance by ICP
with any of the provisions hereof will: (i) violate, conflict with, or
result in breach of any provision of, require any consent, approval or
notice under, or constitute a default (or an event which, with notice or
lapse of time or both, would constitute a default) or result in a right of
termination or acceleration under, cause any available credit to cease to
be available under, or result in a creation of any lien,
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security interest, charge or encumbrance upon any of the properties or
assets of ICP or any of its subsidiaries, or impair or limit the ability of
ICP or any subsidiary to carry on business under, any of the terms,
conditions or provisions of (x) the ICP Governing Documents or (y) any
note, bond, mortgage, indenture, loan agreement, deed of trust, agreement,
lien, contract or other instrument or obligation to which ICP or any of its
subsidiaries is a party or to which any of them, or any of their respective
properties or assets, may be subject or by which ICP or any of its
subsidiaries is bound; or (ii) subject to compliance with the statutes and
regulations referred to in Section 6.3(b), violate any judgment, ruling,
order, writ, injunction, determination, award, decree, statute, ordinance,
rule or regulation applicable to ICP or any of its subsidiaries (except, in
the case of each of clauses (i) and (ii) above, for such violations,
conflicts, breaches, defaults, terminations which, or any consents,
approvals or notices which if not given or received, neither, individually
or in the aggregate, have had or would be reasonably expected to have a
Material Adverse Effect nor would prevent or materially delay or limit the
performance of this Agreement by ICP or the consummation of any of the
transactions contemplated by this Agreement).
(b) Other than in connection with or in compliance with the provisions of
Securities Laws, the Competition Act, the HSR Act, the Investment Canada
Act, the rules of The Toronto Stock Exchange or the American Stock
Exchange, and any other pre-merger notification or similar statutes, (i)
there is no legal impediment to ICP's consummation of the transactions
contemplated by this Agreement and (ii) no filing or registration with, or
authorization, consent or approval of, any domestic or foreign public body
or authority is necessary by ICP in connection with the making or the
consummation of the Offer, except for such filings or registrations which,
if not made, or for such authorizations, consents or approvals, which, if
not received, would not prevent or materially delay or limit the
performance of this Agreement by ICP or the consummation of any of the
transactions contemplated by this Agreement.
6.4 Capitalization
As of the date hereof, the authorized share capital of ICP consists of an
unlimited number of ordinary shares and class A and B preference shares. As of
the date of ICP's Quarterly Report on Form 10-Q for the fiscal quarter ended
March 31, 1999, forty million seven hundred forty-seven thousand four hundred
and seventy-one (40,747,471) ICP Shares were issued and outstanding and no Class
A or Class B preference shares were issued and outstanding. As of the date
hereof, 2,043,000 ICP Shares are reserved for issuance pursuant to the exercise
of outstanding ICP Options granted under the Stock Option Plans. Except for
such ICP Options, there are no options, warrants or other rights, agreements or
commitments of any character whatsoever requiring the issuance, sale or transfer
by ICP of any shares of ICP (including the ICP Shares) or any subsidiary of ICP
or any securities convertible into, or exchangeable or exercisable for, or
otherwise evidencing a right to acquire, any shares of ICP (including the ICP
Shares) or any subsidiary of ICP, nor are there any outstanding stock
appreciation rights, phantom equity or similar rights, agreements, arrangements
or commitments based upon the book value, income or other attribute of ICP or
any subsidiary of ICP. All outstanding ICP
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Shares have been duly authorized and validly issued, are fully paid and non-
assessable and are not subject to, nor were they issued in violation of, any
preemptive rights, and all ICP Shares issuable upon exercise of outstanding
stock options in accordance with their respective terms will be duly authorized
and validly issued, fully paid and non-assessable and will not be subject to any
preemptive rights.
6.5 No Material Adverse Effect
Since March 31, 1999, there has not been any change, condition, event or
development that has had or is reasonably likely to have a Material Adverse
Effect.
6.6 No Undisclosed Material Liabilities
Except (a) as disclosed or reflected in the consolidated interim unaudited
financial statements of ICP as at March 31, 1999 included in ICP's Quarterly
Report on Form 10-Q for such period, (b) for liabilities and obligations (i)
incurred after March 31, 1999 in the ordinary course of business and consistent
with past practice, or (ii) pursuant to the terms of this Agreement, and (c) for
liabilities or obligations which neither, individually or in the aggregate, have
had or would reasonably be expected to have a Material Adverse Effect nor would
prevent or materially delay or limit the performance of this Agreement by ICP,
neither ICP nor any of its subsidiaries has incurred any liabilities of any
nature, whether accrued, contingent or otherwise (or which would be required by
generally accepted accounting principles in Canada to be reflected on a
consolidated balance sheet of ICP and its subsidiaries).
6.7 Brokerage Fees
ICP has not retained (nor will it retain) any financial advisor, broker, agent
or finder or paid or agreed to pay any financial advisor, broker, agent or
finder on account of this Agreement, any transaction contemplated hereby or any
transaction presently ongoing or contemplated, except that Credit Suisse First
Boston Corporation has been retained as ICP's financial advisor in connection
with certain matters including the transactions contemplated hereby. ICP has
delivered to UTCSub a true and complete copy of its agreement with Credit Suisse
First Boston Corporation.
6.8 Conduct of Business
Since March 31, 1999, neither ICP nor any of its subsidiaries has taken any
action that would be in violation of Section 7.1 if such provision had been in
effect since such date, other than violations which neither, individually or in
the aggregate, have had or would be reasonably expected to have a Material
Adverse Effect nor would prevent or materially delay or limit the performance of
this Agreement by ICP.
6.9 Reports
(a) ICP has heretofore made available to UTCSub true and complete copies of (i)
ICP's Annual Report on Form 10-K or 20-F, as the case may be, for each of
the fiscal years ended December 31, 1996, 1997, 1998, Information Circular
relating to ICP's 1999 annual meeting of shareholders and related 1998
Annual
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Report to shareholders and (ii) all prospectuses or other offering
documents used by ICP in the offering of its securities or filed with
Securities Authorities since January 1, 1998, and (iii) ICP's Quarterly
Report on Form 10-Q for the fiscal quarter ended March 31, 1999. As of
their respective dates, such forms, statements, prospectuses and other
offering documents (including all exhibits and schedules thereto and
documents incorporated by reference therein) 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 and complied
in all material respects with all applicable requirements of law and
related rules and regulations. The audited financial statements and
unaudited interim financial statements of ICP and its consolidated
subsidiaries publicly issued by ICP, or included or incorporated by
reference in such forms, statements, prospectuses and other offering
documents were prepared in accordance with generally accepted accounting
principles in Canada applied on a consistent basis (except (i) as otherwise
indicated in such financial statements and the notes thereto or, in the
case of audited statements, in the related report of ICP's independent
accountants or (ii) in the case of unaudited interim financial statements,
to the extent they may not include footnotes or may be condensed or summary
statements; provided, however, that were such unaudited interim financial
statements to include footnotes or not be condensed, the financial results
indicated therein would not be materially different), and fairly present
the consolidated financial position, results of operations and changes in
financial position of ICP and its consolidated subsidiaries as of the dates
thereof and for the periods indicated therein (subject, in the case of any
unaudited interim financial statements, to normal year-end audit
adjustments except for such adjustments necessary for a fair statement of
the results for the interim periods presented).
(b) ICP will deliver to UTCSub as soon as they become available true and
complete copies of any report or statement filed by it with Securities
Authorities subsequent to the date hereof. As of their respective dates,
such reports and statements (excluding any information therein provided by
UTCSub specifically for inclusion therein, as to which ICP makes no
representation) will 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
are made, not misleading and will comply in all material respects with all
applicable requirements of law and related rules and regulations. The
consolidated financial statements of ICP issued thereby or to be included
in such reports and statements (excluding any information therein provided
by UTCSub specifically for inclusion therein, as to which ICP makes no
representation) will be prepared in accordance with generally accepted
accounting principles in Canada applied on a consistent basis (except (i)
as otherwise indicated in such financial statements and the notes thereto
or, in the case of audited statements, in the related report of ICP's
independent accounts or (ii) in the case of unaudited interim financial
statements, to the extent they may not include footnotes or may be
condensed or summary statements; provided, however, that were such
unaudited interim financial statements to include
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footnotes or not be condensed, the financial results indicated therein
would not be materially different) and will present fairly the consolidated
financial position, results of operations and changes in financial position
of ICP as of the dates thereof and for the periods indicated therein
(subject, in the case of any unaudited interim financial statements, to
normal year-end audit adjustments except for such adjustments necessary for
a fair statement of the results for the interim periods presented).
6.10 U.S. Registration
The ICP Shares were not issued by a closed-end investment company registered
under the United States Investment Company Act of 1940.
6.11 Subsidiaries
All of the capital stock of each of ICP's subsidiaries is beneficially owned,
directly or indirectly, by ICP with valid and marketable title thereto, free and
clear of any and all liens, charges, security interests, adverse claims,
encumbrances and demands of any nature or kind whatsoever.
6.12 Litigation
There is no claim, action, suit, proceeding or governmental investigation
pending or, to the knowledge of ICP, threatened against or relating to ICP or
any of its subsidiaries that involves a claim against ICP or any of its
subsidiaries in excess of $500,000 or that, either individually or in the
aggregate, has had or would reasonably be expected to have a Material Adverse
Effect or in any manner challenges or seeks to prevent, enjoin, alter or
materially delay or limit the Offer or the performance of this Agreement by ICP
or any of the other transactions contemplated hereby. Neither ICP (or any of
its subsidiaries) nor any property or asset of ICP (or any of its subsidiaries)
is subject to any continuing order of, consent, decree, settlement, agreement or
similar written agreement with or, to the knowledge of ICP, continuing
investigation by, any Governmental Authority, or any order, writ, judgment,
injunction, decree, determination or award of any Governmental Authority or any
arbitrator which would prevent ICP from performing its material obligations
under this Agreement or prevent or materially delay or limit the consummation of
any transaction contemplated by this Agreement.
6.13 Insurance
ICP has insurance policies, including without limitation, policies of life,
fire, health and other casualty and liability insurance, that ICP believes is
sufficient for its business and operations.
6.14 Environmental
(a) ICP has been and is in compliance with all applicable environmental laws
and regulations except for non-compliance that neither, individually or in
the aggregate, has had or would reasonably be expected to have a Material
Adverse Effect nor would prevent or materially delay or limit the
performance of this Agreement by ICP;
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(b) ICP has never received any notice of or been prosecuted for non-compliance
with any environmental laws or regulations, nor has ICP settled any
allegation of non-compliance short of prosecution; and
(c) there are no actual or threatened orders or directions relating to
environmental matters requiring any material work, repair or construction
or capital expenditures to be made with respect to any of ICP's properties,
nor has ICP received notice of any of the same.
6.15 Benefit Plans
(a) there are no benefit plans (as defined in Section 9.6);
(b) the benefit plans have been maintained and operated in accordance with
their terms and applicable legal requirements and there are no outstanding
violations or defaults under any benefit plans except for violations or
defaults that neither, individually or in the aggregate, have had or would
be reasonably expected to have a Material Adverse Effect nor would prevent
or materially delay or limit the performance of this Agreement by ICP, nor
any actions, claims or other proceedings pending or, to the knowledge of
ICP, threatened with respect to any benefit plan except for claims for
benefits in the ordinary course of business;
(c) no benefit plan currently is under a governmental investigation or audit
and, to the knowledge of ICP, no such investigation or audit is
contemplated or under consideration;
(d) each benefit plan covers only current or former employees of ICP or its
subsidiaries and their dependents or beneficiaries;
(e) no promise or commitment to increase benefits under any benefit plan
(except pursuant to the express terms of the plan) or to adopt any
additional benefit plan has been made;
(f) no event has occurred which could subject any person to any tax, penalty or
fiduciary liability in connection with any plan that, individually or in
the aggregate, has had or would be reasonably expected to have a Material
Adverse Effect or would prevent or materially delay or limit the
performance of this Agreement by ICP;
(g) there have been no withdrawals of surplus or contribution holidays in
respect of such benefit plans, except as permitted by law and the terms of
the benefit plans;
(h) ICP and its subsidiaries do not contribute to any multi-employer plan or
multiple employer plans with respect to which there would be a liability of
ICP or its subsidiaries on withdrawal from any such plan except for
liability that neither, individually or in the aggregate, has had or would
reasonably be expected to have a Material Adverse Effect or would prevent
or materially delay or limit the performance of this Agreement by ICP;
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(i) ICP and its subsidiaries do not provide for any medical or health benefits
extending beyond termination of employment, except to the extent required
by applicable law;
(j) neither ICP nor any of its subsidiaries is a party to any collective
bargaining agreement or other agreement or understanding with a labour
union or labour organization; there are no labour unions or other
organizations representing, purporting to represent or attempting to
represent, any employee of ICP or any of its subsidiaries; and
(k) the consummation of the transactions contemplated by this Agreement (alone
or together with any other event) will not (i) entitle any person to any
benefit under any benefit plan, (ii) accelerate the time of payment,
vesting or funding of, or increase the amount, of any compensation or
benefits due to any executive officer under any benefit plan, or (iii)
accelerate the timing of payment, vesting or funding of, or increase the
amount, of any compensation or benefits due any person other than an
executive officer under any benefit plan except for amounts that neither,
individually or in the aggregate, have had or would be reasonably expected
to have a Material Adverse Effect nor would prevent or materially delay or
limit the performance of this Agreement by ICP.
6.16 Tax Matters
(a) ICP and its subsidiaries have timely filed all returns and reports relating
to taxes of any kind or nature (including but not limited to income, sales,
payroll, value added, property, withholding and estimated taxes) required
to be filed by applicable law with respect to each of ICP and its
subsidiaries or any of their income, properties or operations as of the
date hereof, except where the failure to file neither, individually or in
the aggregate, has had or would be reasonably expected to have a Material
Adverse Effect nor would prevent or materially delay or limit the
performance of this Agreement by ICP. All such returns are true, accurate
and complete and accurately set forth all items required to be reflected or
included in such terms by applicable federal, state, local or foreign tax
laws, rules or regulations, except to the extent that any inaccuracies in
filed returns would neither, individually or in the aggregate, have had or
would be reasonably expected to have a Material Adverse Effect nor would
prevent or materially delay or limit the performance of this Agreement by
ICP. ICP and its subsidiaries have timely paid all such taxes attributable
to each of ICP and its subsidiaries that were due and payable without
regarding to whether such taxes have been assessed, except to the extent
that any failure to pay neither, individually or in the aggregate, has had
or would be reasonably expected to have a Material Adverse Effect nor would
prevent or materially delay or limit the performance of this Agreement by
ICP. ICP has made available to UTC complete and accurate copies of the
portions applicable to each of ICP and its subsidiaries of all income and
franchise tax returns, and any amendments thereto, filed by or on behalf of
ICP or any of its subsidiaries or any member of a group of corporations
including ICP or any of its subsidiaries for the taxable years ending 1994
and 1995 (in respect of
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Canadian returns) and 1994 through 1997, inclusive (in respect of United
States returns).
(b) There are no pending or, to ICP's knowledge, threatened audits,
examinations, investigations, deficiencies, claims or other proceedings
relating to such taxes of ICP or any of its subsidiaries. ICP and its
subsidiaries have made adequate provisions in accordance with Canadian
generally accepted accounting principles appropriately and consistently
applied to each of ICP and its subsidiaries in the consolidated financial
statements included in the Reports referred to in Section 6.9(a) for the
payment of all taxes for which each of ICP and its subsidiaries may be
liable for the periods covered thereby that were not yet due and payable as
of the dates thereof, regardless of whether the liability for such taxes is
disputed, except where the failure to reserve neither, individually or in
the aggregate, has had or would be reasonably expected to have a Material
Adverse Effect nor would prevent or materially delay or limit the
performance of this Agreement by ICP.
6.17 Year 2000
ICP 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 ICP or its subsidiaries, and it is ICP'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.
6.18 Compliance
Neither ICP nor any of its subsidiaries is or has been in conflict with, in
default with respect to or in violation of, any statute, law, ordinance, rule,
regulation, order, judgment, decree, agreement, indenture, contract or other
instrument applicable to ICP or any of its subsidiaries or by which any property
or asset of ICP or any of its subsidiaries is bound or affected, except for any
such conflicts, defaults or violations that neither, individually or in the
aggregate, have had or would be reasonably expected to have a Material Adverse
Effect nor would prevent or materially delay or limit the performance of this
Agreement by ICP. ICP and its subsidiaries have all material permits, licenses,
authorizations, consents, approvals and franchises from Governmental Authorities
required to conduct their businesses as currently conducted, except for such
permits, licenses, authorizations, consents, approvals and franchises the
absence of which neither, individually or in the aggregate, have had or would be
reasonably expected to have a Material Adverse Effect nor would prevent or
materially delay or limit the performance of this Agreement by ICP.
6.19 Debt Covenant
At the date hereof ICP is able to incur at least $1.00 of additional
Indebtedness (other than Permitted Indebtedness) pursuant to Section 4.03 of the
Indenture dated as of May 13, 1998 among International Comfort Products
Holdings, Inc., International Comfort Products Corporation and United States
Trust Company of New York (the "Indenture"; the terms
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"Indebtedness" and "Permitted Indebtedness" as used in this sentence have the
meanings ascribed to such terms by the Indenture).
ARTICLE 7
CONDUCT OF BUSINESS
7.1 Conduct of Business by ICP
Unless UTCSub shall otherwise agree in writing or as alternatively expressly
permitted or specifically contemplated by this Agreement, ICP covenants and
agrees that, during the period from the date of this Agreement until this
Agreement is terminated:
(a) the business of ICP and its subsidiaries shall be conducted only in, and
ICP and its subsidiaries shall not take any action except in, the usual and
ordinary course of business and consistent with past practice, and ICP
shall use all commercially reasonable efforts to maintain and preserve its
and its subsidiaries' business organization, assets, employees and
advantageous business relationships;
(b) ICP shall not directly or indirectly do or permit to occur any of the
following: (i) amend the ICP Governing Documents; (ii) declare, set aside
or pay any dividend or other distribution or payment (whether in cash,
shares or property) in respect of its share capital; (iii) issue, grant,
sell or pledge or agree to issue, grant, sell or pledge any shares of ICP
or its subsidiaries, or securities convertible into or exchangeable or
exercisable for, or otherwise evidencing a right to acquire, shares of ICP
or its subsidiaries, other than ICP Shares issuable pursuant to the terms
of ICP Options outstanding on the date hereof; (iv) redeem, purchase or
otherwise acquire any of its outstanding shares or other securities; (v)
split, combine or reclassify any of its shares; (vi) adopt a plan of
liquidation or resolutions providing for the liquidation, dissolution,
merger, consolidation or reorganization of ICP or any of its subsidiaries;
or (vii) enter into or modify any contract, agreement, commitment or
arrangement with respect to any of the foregoing, except as permitted
above;
(c) other than pursuant to commitments entered into prior to the date of this
Agreement as disclosed in the Disclosure Schedule or ICP's SEC Reports,
neither ICP nor any of its subsidiaries shall directly or indirectly: (i)
sell, pledge, dispose of or encumber any assets except in the ordinary
course of business; (ii) acquire (by merger, amalgamation, consolidation or
acquisition of shares or assets) any corporation, partnership or other
business organization or division thereof, or, except for investments in
securities made in the ordinary course of business, make any investment
either by purchase of shares or securities, contributions of capital (other
than to subsidiaries), property transfer, or, except in the ordinary course
of business, purchase of any property or assets of any other individual or
entity; (iii) incur any indebtedness for borrowed money or any other
material liability or obligation or issue any debt securities or assume,
guarantee, endorse or otherwise as an accommodation become responsible for,
the obligations of any other individual or entity, or make any loans or
advances, except in the ordinary course
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of business; (iv) except for the Officer Obligations, pay, discharge or
satisfy any material claims, liabilities or obligations other than the
payment, discharge or satisfaction in the ordinary course of business
consistent with past practice of liabilities reflected or reserved against
in its financial statements or incurred in the ordinary course of business
consistent with past practice; (v) authorize, recommend or propose any
release or relinquishment of any material contract right other than in the
ordinary course of business consistent with past practice; (vi) waive,
release, grant or transfer any rights of material value or modify or change
in any material respect any existing material license, lease, contract,
production sharing agreement, government land concession or other document,
other than in the ordinary course of business consistent with past
practice; (vii) enter into any interest rate swaps, currency swaps or any
other rate fixing agreement for a financial transaction or enter into any
call arrangement of any sort or any forward sale agreement for commodities,
other than in the ordinary course of business consistent with past
practice; (viii) authorize or propose any of the foregoing, or enter into
or modify any contract, agreement, commitment or arrangement to do any of
the foregoing; or (ix) make any capital expenditures other than in
accordance with the 1999 capital expenditure budget previously disclosed in
writing to UTC;
(d) neither ICP nor any of its subsidiaries shall create any new Officer
Obligations and, except for payment of the existing Officer Obligations,
neither ICP nor any of its subsidiaries shall grant to any officer or
director an increase in compensation in any form, grant any general salary
increase other than in accordance with the requirements of any existing
collective bargaining or union contracts, grant to any other employee any
increase in compensation in any form other than routine increases in the
ordinary course of business consistent with past practices, make any loan
to any officer or director, or take any action with respect to the grant of
any severance or termination pay arising from the Offer or a change of
control of ICP or the entering into of any employment agreement with, any
senior officer or director, or with respect to any increase of benefits
payable under its current severance or termination pay policies;
(e) neither ICP nor any of its subsidiaries shall adopt or amend or make any
contribution to any bonus, profit sharing, option, pension, retirement,
deferred compensation, insurance, incentive compensation, other
compensation or other similar plan, agreement, trust, fund or arrangements
for the benefit of employees, except as is necessary to comply with the law
or as required by existing provisions of any such plans, programs,
arrangements or agreements; and
(f) ICP shall use its reasonable efforts to cause it current insurance (or re-
insurance) policies not be cancelled or terminated or any of the coverage
thereunder to lapse, unless simultaneously with such termination,
cancellation or lapse, replacement policies underwritten by insurance and
re-insurance companies of nationally recognized standing providing coverage
equal to or greater than the coverage under the cancelled, terminated or
lapsed policies for substantially similar premiums are in full force and
effect.
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ARTICLE 8
COVENANTS OF ICP
8.1 No Solicitation
(a) ICP shall immediately cease and cause to be terminated all existing
discussions and negotiations, if any, with any parties conducted before the
date of this Agreement with respect to any Take-over Proposal and, without
limitation, shall promptly following the execution of this Agreement
request the return of all confidential information provided by ICP to all
parties who have had such discussions or negotiations or who have entered
into confidentiality agreements with ICP pertaining to the sale of ICP or a
substantial portion of its assets.
(b) ICP shall immediately notify UTCSub of any Take-over Proposal received by
it or any of its subsidiaries or any of their respective directors,
officers, employees, agents, financial advisors, counsel or other
representatives or any request for confidential information relating to ICP
in connection with a Take-over Proposal or for access to the properties,
books or records of ICP or any of its subsidiaries by any person or entity
that it is considering making a Take-over Proposal. Any such notice to
UTCSub shall be made orally immediately following any such receipt or
request, shall be confirmed in writing, and shall indicate such details of
the Take-over Proposal or information request known to such persons as
UTCSub may reasonably request, including the identity of the person making
such Take-over Proposal or request for information.
(c) Neither ICP nor any of its subsidiaries, or any of their respective
directors, officers, employees, agents, financial advisors, counsel or
other representatives shall, directly or indirectly, (i) solicit, initiate
or encourage, or enter into any agreements or understandings with respect
to any Take-over Proposal (other than from UTC and its subsidiaries and
their respective directors, officers, employees, agents, financial
advisors, counsel or other representatives) or (ii) provide any
confidential information to any person or entity (other than UTC and its
affiliates) or participate in any discussions or negotiations relating to
any such Take-over Proposal.
(d) Notwithstanding Section 8.1(c), if the Board of Directors of ICP receives a
request for confidential information from a party who proposes to ICP a
Take-over Proposal and the Board of Directors of ICP determines that such
proposal is reasonably likely to lead to a Superior Take-over Proposal and,
after consulting with its outside counsel, that it is necessary to do so in
order for the directors to discharge properly their fiduciary duties under
applicable law, then, and only in such case, ICP may, subject to the prior
execution and delivery of a confidentiality agreement in substantially the
same form and containing the same restrictions and limitations as are set
forth in the Confidentiality Agreement, provide such party with access to
such information regarding ICP as was provided to or made available to UTC
and/or UTCSub, and ICP or its Board of Directors may consider and negotiate
such Superior Take-over Proposal (it being
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understood that neither ICP nor its Board of Directors may approve, make a
recommendation to ICP shareholders or enter into an agreement with respect
to such Superior Take-over Proposal unless this Agreement has been
previously terminated). In such event, upon UTC's request, ICP shall from
time to time advise UTC as to the status of such discussions and shall
provide to UTC a copy of any such confidentiality agreement immediately
upon its execution.
(e) ICP shall not waive, in whole or in part, the "standstill" provisions
applicable to any party to a confidentiality agreement with ICP (other than
UTC) as at the date hereof.
8.2 ICP Board of Directors
(a) Promptly upon the purchase by UTCSub of the outstanding ICP Shares pursuant
to the Offer, and from time to time thereafter, UTC shall be entitled to
designate up to such number of directors, rounded up to the next whole
number, on the Board of Directors of ICP as shall give UTC representation
on the Board of Directors of ICP equal to the product of the total number
of directors on the Board of Directors (giving effect to the directors
appointed pursuant to this sentence) multiplied by the percentage that the
aggregate number of the ICP Shares beneficially owned by UTC or any
affiliate of UTC following such purchase bears to the total number of ICP
Shares then outstanding, and ICP shall, at such time, immediately take all
actions necessary to cause UTC's designees to be appointed as directors of
ICP, including increasing the size of the Board of Directors of ICP or
securing the resignations of incumbent directors or both.
(b) ICP shall promptly take all actions required pursuant to Section 14(f) of
the Exchange Act and Rule 14f-1 promulgated thereunder in order to fulfill
its obligations under this Section 8.2 and shall include in the Schedule
14D-9 such information with respect to ICP and its officers and directors
as is required under Section 14(f) and Rule 14f-1 to fulfill such
obligations. UTC shall supply to ICP and be solely responsible for any
information with respect to UTC and its nominees, officers, directors and
affiliates required by such Section 14(f) and Rule 14f-1.
(c) Following the appointment of designees of UTC pursuant to this Section 8.2
and prior to consummation of the Second Stage Transaction, any amendment of
this Agreement or the ICP Governing Documents, any termination of this
Agreement by ICP, any extension by ICP of the time for the performance of
any of the obligations or other acts of UTC hereunder or waiver thereof,
any waiver of any condition to the obligations of ICP or waiver of any of
ICP's rights hereunder or other action by ICP shall require the concurrence
of a majority of the directors of ICP then in office who were not
designated by UTC, which action shall be deemed to constitute the action of
the full Board of Directors of ICP even if such majority does not
constitute a majority of all directors then in office.
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ARTICLE 9
COVENANTS OF UTC and UTCSub
9.1 Regulatory and Other Authorizations: Consents
UTC and UTCSub agree to take any and all steps necessary to avoid or eliminate
each and every impediment under any antitrust, competition, or trade regulation
law that may be asserted by any Governmental Authority or any other party so as
to enable the parties to consummate the transactions contemplated hereby as soon
as practicable, but in any event no later than December 15, 1999, including
without limitation, committing to and/or effecting, by consent decree, hold
separate orders, or otherwise, the sale, divestiture or disposition of such
assets or businesses of UTC, UTCSub or ICP as are required to be divested in
order to avoid the entry of any injunction, temporary restraining order or other
Governmental Order, which would otherwise have the effect of preventing the
consummation of all or any part of the transactions contemplated hereby;
provided, however, that neither UTC nor UTCSub shall have any obligation under
this Section 9.1 to take any actions if such actions, in the reasonable judgment
of UTC, would reasonably be expected, in the aggregate, to materially impair the
overall benefits to be realized by UTC from consummation of the Offer and the
other transactions contemplated by this Agreement.
9.2 Employment Agreements
UTCSub agrees, and after the Effective Time will cause ICP and any successor to
ICP to agree, to honour and comply with the terms of those existing executive
termination and severance agreements, plans or policies of ICP and its
subsidiaries, in each case to the extent disclosed in the Disclosure Schedule or
ICP's SEC Reports or except as may otherwise be agreed with the relevant
employee.
9.3 Officers' and Directors' Insurance
UTCSub agrees to use reasonable efforts to secure directors and officers
liability insurance coverage for ICP's current and former directors and officers
on a six year "trailing" or "runoff' basis from and after the Effective Time.
If a "trailing" policy is not available, then UTCSub agrees that for the entire
period from the Effective Time until six years after the Effective Time, UTCSub
will use reasonable efforts to cause ICP or any successor to ICP to maintain
ICP's current directors' and officers' insurance policy or an equivalent policy,
subject in either case to terms and conditions no less advantageous to the
directors and officers of ICP than those contained in the policy in effect on
the date hereof, for all present and former directors and officers of ICP,
covering claims made prior to or within six years after the Effective Time.
This Section 9.3 shall not require UTCSub to pay an annual premium in excess of
200% of the aggregate annual amounts currently paid by ICP to maintain the
existing policies (the "Insurance Amount") and, if equivalent coverage cannot be
obtained, or can be obtained only by paying an annual premium in excess of such
amount, UTCSub shall use its reasonable best efforts to obtain as much
comparable insurance as available for the Insurance Amount.
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9.4 Employment Termination
If UTC, UTCSub or ICP choose to terminate, whether constructively or actually,
the employment of any employees (other than for cause) of ICP or any of its
subsidiaries within one year of the completion of the Offer, notice and
severance shall be provided to such employees in accordance with ICP's existing
severance practices, in each case to the extent disclosed in the Disclosure
Schedule or ICP's SEC Reports or except as may otherwise be agreed with the
relevant employee.
9.5 Indemnities
UTC agrees that if it acquires ICP Shares under the Offer it shall cause ICP to
fulfill its obligations pursuant to indemnities provided or available to past
and present officers and directors of ICP pursuant to the provisions of the ICP
Governing Documents, the Canada BCA, and the written indemnity agreements
entered into between ICP and its officers and directors, in each case to the
extent disclosed in the Disclosure Schedule or ICP's SEC Reports.
9.6 Compensation; Benefit Plans
Except as otherwise agreed with a relevant employee, UTC and UTCSub agree, and
after the Effective Time will cause ICP and any successor to ICP to agree, to
maintain until December 31, 1999 salaries and all benefit plans and compensation
programs currently available to employees of ICP or any of its subsidiaries,
including without limitation members of management of ICP or any of its
subsidiaries, or to make available until December 31, 1999 alternative benefit
plans and compensation programs which are comparable in the aggregate to those
currently available to such employees. For the purposes of this Section 9.6,
"benefit plans" means all arrangements, agreements, programs or policies,
whether funded or unfunded, relating to employees which ICP or any of its
subsidiaries is a party or by which it is bound and under which ICP or any of
its subsidiaries have any liability or contingent liability and relating to: (i)
retirement savings or pensions, including any defined benefit pension plan,
defined contribution plan, group registered retirement savings plan, thrift and
saving plan or supplemental pension or retirement plan; (ii) employee welfare
benefits, as defined for purposes of Section 3(1) of the Employee Retirement
Income Security Act of 1974 (United States), as amended, including
hospitalization, health, disability, life or severance pay benefits; and (iii)
profit sharing, bonus, stock incentive, stock purchase and other incentive plans
or programs.
ARTICLE 10
MUTUAL COVENANTS
10.1 Notification of Certain Matters
UTC shall give prompt notice to ICP, and ICP shall give prompt notice to UTC, of
(a) the occurrence, or non-occurrence, of any event the occurrence, or non-
occurrence, of which would cause (i) any representation or warranty contained in
this Agreement to be untrue or inaccurate or (ii) any covenant, condition or
agreement contained in this Agreement not to be complied with or satisfied and
(b) any failure of UTC or ICP, as the case may be, to comply with or satisfy any
covenant, condition or agreement to be complied with or satisfied by it
hereunder; provided,
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however, that the delivery of any notice pursuant to this Section 10.1 shall not
limit or otherwise affect the remedies available hereunder to the party
receiving such notice.
10.2 Competition Filings and Investment Canada Act Filing
(a) Without limiting UTC's and UTCSub's obligations under Section 9.1, UTC,
UTCSub and ICP shall, and shall cause their respective officers, employees,
representatives, advisors and agents to, (i) take promptly all actions
necessary to make the filings required of UTC, UTCSub, ICP or any of their
affiliates under the HSR Act, the Competition Act and any other similar
statute in other jurisdictions, (ii) comply at the earliest practicable
date with any request for additional information or documentary material
received by UTC, UTCSub, ICP or any of their affiliates from the U.S.
Department of Justice pursuant to the HSR Act or from the Canadian
Competition Bureau pursuant to the Competition Act or any other
Governmental Authority, as the case may be, and (iii) consult and cooperate
in connection with any investigation or other inquiry concerning the
transactions contemplated by this Agreement commenced by the U.S. Federal
Trade Commission or the Antitrust Division of the U.S. Department of
Justice or state attorneys general or by the Canadian Competition Bureau or
any other Governmental Authority, as the case may be.
(b) Each of the parties hereto shall promptly inform the other parties of any
material communication received by such party from the U.S. Federal Trade
Commission, the Antitrust Division of the U.S. Department of Justice, the
Canadian Competition Bureau or any other Governmental Authority regarding
any of the transactions contemplated hereby. UTC and UTCSub shall advise
ICP promptly of any understandings, undertakings or agreements which UTC
and UTCSub propose to make or enter into with the U.S. Federal Trade
Commission, the Antitrust Division of the U.S. Department of Justice, the
Canadian Competition Bureau or any other Governmental Authority in
connection with the transactions contemplated hereby.
(c) UTC, UTCSub and ICP shall, as promptly as practicable hereafter, make any
necessary filings under the Investment Canada Act and shall respond as
promptly as practicable to any inquiry from the Investment Review Division
of Industry Canada.
10.3 Other Filings
UTC, UTCSub and ICP shall, as promptly as practicable hereafter, prepare and
file any filings required under Securities Laws, the rules of The Toronto Stock
Exchange and the American Stock Exchange, or any other applicable law relating
to the transactions contemplated herein.
10.4 Additional Agreements
(a) Subject to the terms and conditions herein provided, each of the parties
hereto agrees to use all commercially reasonable efforts to take, and to
cause its officers, employees, representatives, advisors and agents to
take, all action and to do, or
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cause to be done, all things necessary, proper or advisable to consummate
and make effective as promptly as practicable the transactions contemplated
by this Agreement and to cooperate with each other in connection with the
foregoing, including using commercially reasonable efforts (i) to obtain
all necessary waivers, consents and approvals from other parties to
material agreements, leases and other contracts or agreements (including,
without limitation, the agreement of any persons as may be required
pursuant to any agreement, arrangement or understanding relating to ICP's
operations), (ii) to make all filings and obtain all necessary consents,
approvals and authorizations as are required to be obtained under any
federal, provincial or foreign law or regulations, (iii) to defend all
lawsuits or other legal proceedings challenging this Agreement or the
consummation of the transactions contemplated hereby, (iv) to cause to be
lifted or rescinded any injunction or restraining order or other order
adversely affecting the ability of the parties to consummate the
transactions contemplated hereby, (v) to effect all necessary registrations
and other filings and submissions of information requested by Governmental
Authorities and (vi) to fulfill all conditions and satisfy all provisions
of this Agreement and the Offer. For purposes of the foregoing, the
obligation to use "commercially reasonable efforts" to obtain waivers,
consents and approvals to loan agreements, leases and other contracts shall
not include any obligation to agree to a materially adverse modification of
the terms of such documents or to prepay or incur additional material
obligations to such other parties.
(b) Nothing in this Agreement (other than as expressly provided for in Section
2.1) shall obligate UTC or UTCSub (i) to keep the Offer open for acceptance
beyond the expiration date set forth in the Offer (as it may be extended
from time to time) or (ii) to take any action that, in the reasonable
judgment of UTC, would reasonably be expected to materially impair the
overall benefits to be realized by UTC from consummation of the Offer and
the other transactions contemplated by this Agreement.
10.5 Access to Information
Subject to the Confidentiality Agreement and upon reasonable notice, ICP shall
(and shall cause each of its subsidiaries to) afford UTC's officers, employees,
counsel, accountants and other authorized representatives and advisers
reasonable access, during normal business hours and until the expiration of this
Agreement, to all of its properties, books, contracts and records as well as to
its management personnel, and, during such period, ICP shall (and shall cause
each of its subsidiaries to) furnish promptly to UTC all information concerning
its business, properties and personnel as UTC may reasonably request.
10.6 Debt Obligations
ICP acknowledges that following completion of the Offer the modification or
elimination of the covenants contained in, and reduction of the outstanding
amount of, its existing debt obligations is integral to UTC's business plans.
ICP agrees to use reasonable efforts to cooperate and assist UTC in obtaining
consents to such modifications and in purchasing such obligations in
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furtherance of those plans, including the conduct of (or provision of assistance
to UTC in conducting) a consent solicitation and tender offer for the
outstanding debt securities of ICP or its subsidiaries on terms satisfactory to
UTC; provided that (i) ICP shall not be required to purchase any debt
obligations or pay any fees in connection with such efforts prior to
consummation of the Second Stage Transaction, unless funds therefore are
provided by UTC on terms satisfactory to ICP and (ii) UTC shall pay or reimburse
ICP for all reasonable expenses in connection therewith.
ARTICLE 11
TERMINATION, AMENDMENT AND WAIVER
11.1 Termination
This Agreement may be terminated by written notice given to the other parties
hereto, at any time prior to completion of the transactions contemplated hereby:
(a) by mutual written consent of ICP and UTC;
(b) by either UTC or ICP (provided that the terminating party is not then in
breach, in any material respect, of any covenant or other agreement
contained herein and no representation or warranty of such terminating
party contained herein that is qualified as to materiality shall be untrue
or incorrect, and no representation or warranty of such terminating party
contained herein that is not so qualified shall be untrue or incorrect in
any material respect, at any time before the Effective Time, in each case,
as if made at and as of such time (or, to the extent such representation or
warranty speaks as of a specific date, no such representation or warranty
was so untrue or incorrect as of such date)), if there shall have been a
breach, in any material respect, of any covenant or other agreement
contained herein on the part of the other party or if any representation or
warranty of such other party contained herein that is qualified as to
materiality shall not be true and correct, or any representation or
warranty of such other party contained herein that is not so qualified
shall not be true and correct in all material respects, at any time before
the Effective Time, in each case as if made at and as of such time (or, to
the extent such representation or warranty speaks as of a specific date,
such representation or warranty was not so true and correct as of such
date), which breach or misrepresentation is not cured within 10 days
following written notice to such other party, or such breach, by its nature
or timing cannot be cured prior to the Expiry Time;
(c) by ICP, following receipt of, and in order to accept or recommend, a
Superior Take-over Proposal if, after consulting with outside counsel, the
Board of Directors of ICP has determined that such action is required in
order to discharge properly the directors' fiduciary duties under
applicable law;
(d) by UTC, if (i) the Board of Directors or any committee thereof of ICP
modifies or amends in any manner adverse to UTC or UTCSub, or withdraws,
its authorization, approval or recommendation of the Offer or this
Agreement or shall
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have resolved to do any of the foregoing or (ii) ICP or any of its
subsidiaries (or the Board of Directors or any committee thereof) shall
have approved, recommended, authorized, proposed or filed a document with
any Securities Authority not opposing, or publicly announced its intention
to enter into any Take-over Proposal (other than with UTC, UTCSub or any of
their affiliates), or shall have resolved to do any of the foregoing;
(e) by either UTC or ICP, if the Offer terminates or expires at the Expiry
Time, without UTCSub taking up and paying for any ICP Shares on account of
the failure of any of the Offer Conditions which has not been waived by
UTCSub, unless the absence of such occurrence shall be due to the failure
of the party seeking to terminate this Agreement to perform its requisite
obligations hereunder; or
(f) by either UTC or ICP, if the Take-up Date has not occurred on or prior to
December 15, 1999.
11.2 Effect of Termination and Other Events
(a) In the event of the termination of this Agreement as provided in Section
11. 1, this Agreement shall forthwith have no further force or effect and
there shall be no obligation on the part of UTC, UTCSub or ICP hereunder
except as set forth in Section 12.4 and this Section 11.2, which provisions
shall survive the termination of this Agreement. Nothing herein shall
relieve any party from liability for any breach of this Agreement.
(b) In the event of termination of this Agreement pursuant to Section 11.1(c)
or 11.1(d), ICP shall make payment to UTC by wire transfer of immediately
available funds of a fee in the amount of $15 million. Such fee shall be
payable concurrently with a termination pursuant to Section 11.1(c) (and
such termination shall not be effective until payment of such fee) and
within two Business Days after a termination pursuant to Section 11.1(d).
(c) In the event of termination of this Agreement pursuant to Section 11.1(e)
or 11.1(f) principally as a result of a failure to obtain the antitrust
approvals contemplated under clause (b) of the Offer Conditions, then,
within two Business Days after such termination, UTC shall make payment to
ICP by wire transfer of immediately available funds of a fee in the amount
of $10 million, provided, however, that no payment shall be due if ICP
shall have breached Sections 10.2, 10.3 or 10.4 contained herein.
(d) In the event a Take-over Proposal is announced publicly while the Offer is
open for acceptance and the minimum acceptance condition contemplated under
clause (a) of the Offer Conditions is not satisfied at the Expiry Time
(other than principally as a result of a failure to obtain the antitrust
approvals contemplated under clause (b) of the Offer Conditions), then,
within two Business Days after
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such Expiry Time, ICP shall make payment to UTC by wire transfer of
immediately available funds of a fee in the amount of $15 million.
(e) In the event a Take-over Proposal is announced publicly and made after the
Expiry Time but prior to March 31, 2000, then, if UTCSub did not take up
and pay for any ICP Shares under the Offer and ICP was not entitled to any
payment under Section 11.2(c), ICP shall within two Business Days of the
date on which such Take-over Proposal is made make payment to UTC by wire
transfer of immediately available funds of a fee in the amount of $15
million.
11.3 Amendment
This Agreement may be amended by mutual agreement between the parties hereto.
This Agreement may not be amended except by an instrument in writing signed by
the appropriate officers on behalf of each of the parties hereto.
11.4 Waiver
Each of UTC and UTCSub, on the one hand, and ICP, on the other hand, may (i)
extend the time for the performance of any of the obligations or other acts of
the other, (ii) waive compliance with any of the other's agreements or the
fulfilment of any conditions to its own obligations contained herein, or (iii)
waive inaccuracies in any of the other's representations or warranties contained
herein or in any document delivered by the other party hereto; provided,
however, that any such extension or waiver shall be valid only if set forth in
an instrument in writing signed on behalf of such party.
ARTICLE 12
GENERAL PROVISIONS
12.1 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 or sent if delivered personally or as of the date sent if sent by
cable, telegram, telecopier, telex or by prepaid overnight carrier to the
parties at the following addresses (or at such other addresses as shall be
specified by the parties by like notice):
(a) if to UTC and UTCSub:
United Technologies Corporation
One Financial Plaza
Hartford, CT 06101
Attention: Ari Bousbib
Telecopy No.: 860-728-6355
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and
United Technologies Corporation
One Financial Plaza
Hartford, CT 06101
Attention: General Counsel
Telecopy No.: 860-728-7862
with a copy to:
Stikeman, Elliott
Commerce Court West
Suite 5300, P.O. Box 85, Stn. Commerce Court
Toronto, ON M5L 1B9
Attention: William J. Braithwaite
Telecopy No.: 416-947-0866
(b) if to ICP:
501 Corporate Centre Drive, Suite 200
Franklin, TN 37067
Attention: David P. Cain
Telecopy No.: 615-771-4001
with a copy to:
Osler, Hoskin & Harcourt
1900, 333 7th Avenue S.W.
Calgary, AB T2P 2Z1
Attention: F.R. Allen
Telecopy No.: 403-260-7024
12.2 Miscellaneous
This Agreement (i) except for the Confidentiality Agreement, constitutes the
entire agreement and supersedes all other prior agreements and understandings,
both written and oral, between the parties, with respect to the subject matter
hereof, and (ii) shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and assigns and no other person. The
parties hereto shall be entitled to rely upon delivery of an executed facsimile
copy of the Agreement, and such facsimile copy shall be legally effective to
create a valid and binding agreement among the parties hereto. The parties
hereto agree that irreparable damage would occur in the event that any of the
provisions of this Agreement were not performed in accordance with their
specific terms or were otherwise breached. It is accordingly agreed that the
parties shall be entitled to an injunction or injunctions to prevent breaches of
this Agreement and to
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enforce specifically the terms and provisions hereof in any court of the
Province of Ontario having jurisdiction, this being in addition to any other
remedy to which they are entitled at law or in equity.
12.3 Assignment
Except as expressly permitted by the terms hereof, neither this Agreement nor
any of the rights, interests or obligations hereunder shall be assigned by any
of the parties hereto without the prior written consent of the other parties.
UTCSub may assign all of its rights or obligations under this Agreement to a
direct or indirect wholly-owned subsidiary of UTC, provided that any such
assignment will have no material adverse tax or other effects to ICP or the
holders of ICP Shares, and provided further that if such assignment takes place,
UTC and UTCSub shall continue to be liable to ICP for all obligations under this
Agreement and for any default in performance by the assignee.
12.4 Expenses
Except as provided in Sections 10.6 and 11.2, all fees, costs and expenses
incurred in connection with this Agreement and the transactions contemplated
hereby shall be paid by the party incurring such cost or expense, whether or not
the Offer is consummated.
12.5 Severability
Whenever possible, each provision of this Agreement shall be interpreted in such
manner as to be effective and valid under applicable law. Any provision of this
Agreement that is invalid or unenforceable in any jurisdiction shall be
ineffective to the extent of such invalidity or unenforceability without
invalidating or rendering unenforceable the remaining provisions hereof, and any
such invalidity or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.
12.6 Survival
Except as otherwise provided in this Section 12.6, none of the representations,
warranties or covenants in this Agreement or in any instrument delivered
pursuant to this Agreement shall survive the Effective Time or, in the case of
ICP, shall survive the acceptance of, and payment for, any ICP Shares by UTCSub
pursuant to the Offer. This Section 12.6 shall not limit any covenant or
agreement of the parties which by its terms contemplates performance after the
Effective Time.
12.7 Counterpart Execution
This Agreement may be executed in any number of counterparts and each such
counterpart shall be deemed to be an original instrument but all such
counterparts together shall constitute one agreement.
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IN WITNESS WHEREOF, UTC, UTCSub and ICP have caused this Agreement to be
executed as of the date first written above by their respective officers
thereunto duly authorized.
UNITED TECHNOLOGIES CORPORATION
By: /s/ Ari Bousbib
-----------------------
Name: Ari Bousbib
Title: Vice President
TITAN ACQUISITIONS, LTD.
By: /s/ Ari Bousbib
-----------------------
Name: Ari Bousbib
Title: President
INTERNATIONAL COMFORT PRODUCTS CORPORATION
By: /s/ Richard W. Snyder
-----------------------
Name: Richard W. Snyder
Title: Chairman
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EXHIBIT (c)(2)
TITAN ACQUISITIONS, LTD.
June 23, 1999
Ravine Partners, Ltd.
3219 McKinney Avenue
Dallas, TX 75204
Dear Sirs:
Reference is made to the Pre-Acquisition Agreement dated June 23, 1999 (the
"Pre-Acquisition Agreement") between Titan Acquisitions, Ltd. (the "Offeror"),
United Technologies Corporation ("Parent") and International Comfort Products
Corporation ("ICP") pursuant to which the Offeror has agreed to make an offer to
purchase all of the outstanding shares (the "Shares") of ICP. All capitalized
terms referred herein and not otherwise defined herein shall have the meanings
attributed thereto in the Pre-Acquisition Agreement.
The Offeror understands, and by your acceptance of this letter agreement
(the "Agreement") you (the "Seller") represent and warrant to the Offeror that,
there are 7,889,870 Shares beneficially owned, directly or indirectly, by the
Seller or over which the Seller exercises direction or control (collectively,
the "Seller's Shares").
This Agreement sets out the terms and conditions by which the Seller
irrevocably and unconditionally agrees to deposit the Seller's Shares under the
Offer, grants an Option over the Seller's Shares to the Offeror and sets out the
obligations and commitments of the Seller in connection therewith. This
Agreement is also the Seller's agreement to ensure that the Seller's associates
(as defined in the Securities Act (Ontario)) are bound by and perform the
obligations of the Seller hereunder, and any reference to the Seller in this
Agreement shall include the Seller's associates, all to the extent applicable.
Section 1. Acceptance of the Offer
1.1 Deposit. The Seller hereby irrevocably and unconditionally agrees to
-------
deposit the Seller's Shares, together with a completed and executed
letter of transmittal, under the Offer prior to the Initial Expiry Time.
1.2 Non-Withdrawal. The Seller hereby irrevocably and unconditionally
--------------
agrees not to withdraw or take any action to withdraw any portion of the
Seller's Shares following their deposit under the Offer, notwithstanding
any statutory rights or other rights under the terms of the Offer or
otherwise which the Seller might have, unless the Pre-Acquisition
Agreement is terminated in accordance with its terms prior to the taking
up of the Seller's Shares under the Offer.
<PAGE>
Section 2 Option
2.1 Grant of Option. On the terms and subject to the conditions set forth
---------------
herein, the Seller hereby grants to Offeror an irrevocable option (the
"Option") to purchase all of the right, title and interest of the Seller
in and to the Seller's Shares at a price equal to the greater of (a)
US$11.75 per share and (b) any higher price per share paid by the
Offeror in the Offer.
2.2 Exercise of the Option. Offeror may exercise the Option in accordance
----------------------
with the terms of Section 2.1 hereof in whole, but not in part, if, but
only if, the fee provided for in Section 11.2(b), (d) or (e) of the Pre-
Acquisition Agreement has become payable to Offeror in accordance with
the terms thereof. Offeror may exercise the Option at any time within
the 60 days following the date when the Option first becomes
exercisable.
In the event that Offeror is entitled to and wishes to exercise the
Option, Offeror shall send a written notice to the Seller (the "Notice"
and the date on which the Notice is sent shall be referred to herein as
the "Notice Date") specifying the place and the date (the "Closing
Date") promptly after the Notice Date for the closing of such purchase
(the "Closing"); provided, however, that in the event that prior
-------- -------
notification to, or approval of, any regulatory or antitrust agency is
required in connection with the exercise of the Option, Offeror shall
promptly file the required notice or application for approval and shall
promptly notify the Company of such filing, and the period of time that
otherwise would run pursuant to this Section 2.2 shall run instead from
the last the date on which all required notification or waiting periods
shall have expired or been terminated or all required approvals shall
have been obtained; provided further that in the event there shall be in
-------- -------
effect any preliminary or final injunction or other order issued by any
court or governmental, administrative or regulatory agency or authority
prohibiting the exercise of the Option pursuant to this Agreement, the
period of time that otherwise would run pursuant to this Section 2.2
shall run instead from the date on which such prohibition shall have
been vacated, terminated or waived. Any exercise of the Option shall be
deemed to have occurred on the Notice Date relating thereto.
2.3 Closing. At the Closing, simultaneously with the payment by Offeror of
-------
the purchase price for the Seller's Shares, the Seller shall deliver, or
cause to be delivered, to Offeror certificates representing the Seller's
Shares duly endorsed to Offeror or accompanied by stock powers duly
executed by the Seller in blank, together with any necessary stock
transfer stamps properly affixed.
2.4 Acquired Option Shares. In the event the Seller's Shares are acquired
----------------------
by Offeror pursuant to the exercise of the Option (the "Acquired Option
---------------
Shares") and Offeror subsequently disposes of, sells or transfers the
Acquired Option Shares in connection with any Take-over Proposal for
which a binding contract of sale is executed within 12 months of the
Closing (a "Sale"), the Seller shall be entitled to receive an amount
----
in cash equal to 75% of the excess, if any, of the aggregate proceeds
received by
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Offeror in such Sale (net of selling commissions, if any) over the
aggregate purchase price paid by Offeror for the Acquired Option Shares
subject to such Sale.
If any of the consideration received by Offeror in a Sale consists of
securities, for purposes hereof, the proceeds of such Sale shall be
deemed to be the net after-tax amount that would actually have been
received by Offeror in an orderly sale of such securities commencing on
the first business day following actual receipt of such securities by
Offeror, in the written opinion of an investment banking firm of
national reputation selected by Offeror and reasonably satisfactory to
the Seller.
Any payment due to the Seller pursuant to this Section 2.4 shall be paid
by Offeror to the Seller within three Business Days following receipt by
Offeror of the Sale proceeds or, if any of such consideration consists
of securities, within three Business Days after receipt of the Sale
proceeds or, if later, the date on which the investment banking firm's
written opinion is received by Offeror.
Nothing herein shall create any duty by Offeror to engage in a Sale of
the Acquired Option Shares.
Section 3 Representations and Warranties
3.1 Representations and Warranties of Seller. The Seller hereby
----------------------------------------
represents and warrants to and in favour of the Offeror that:
(a) the Seller is a limited partnership duly organized and validly
existing under the laws of the State of Texas;
(b) the Seller has the power and capacity and has received all requisite
approvals to enter into this Agreement and to perform its
obligations hereunder and this Agreement is a valid and binding
agreement enforceable by the Offeror against the Seller in
accordance with its terms;
(c) the Seller is (and, if applicable, upon the deposit of the Seller's
Shares under the Offer, will be) the sole legal and beneficial owner
of the Seller's Shares and has and will have the exclusive right to
dispose of the Seller's Shares as provided in this Agreement;
(d) the Seller's Shares are owned (and, if applicable, will be acquired
by the Offeror) with good and marketable title, free and clear of
any and all mortgages, liens, charges, encumbrances and adverse
claims;
(e) no person, firm or corporation has any agreement or option, or any
right or privilege (whether by law, pre-emptive or contractual)
capable of becoming an agreement or option, for the purchase,
acquisition or transfer of any of the Seller's Shares or any
interest therein or right thereto, except pursuant to this
Agreement; and
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(f) the execution and delivery of this Agreement and the fulfilment of
the terms hereof by the Seller do not and will not result in a
breach of any agreement or instrument to which the Seller is a party
or by which the Seller is contractually bound.
3.2 Representations and Warranties of the Offeror. The Offeror hereby
---------------------------------------------
represents and warrants to the Seller that:
(a) the Offeror is a corporation duly incorporated and validly existing
under the laws of its jurisdiction of incorporation;
(b) the Offeror has the financial resources and is financially capable
of completing the Offer; and
(c) the Offeror has the corporate power and capacity and has received
all requisite approvals to enter into this Agreement and this
Agreement is a valid and binding agreement enforceable by the Seller
against the Offeror in accordance with its terms.
Section 4 Covenants of the Seller
4.1 General. The Seller hereby covenants that during the term of this
-------
Agreement the Seller will:
(a) not take any action to solicit, initiate or encourage enquiries,
submissions, proposals or offers from, or provide information to,
any other person, entity or group relating to, and will not
participate in any negotiations regarding, or otherwise cooperate in
any way with or assist or participate in:
(i) the direct or indirect acquisition or disposition of all or any
Shares or any other securities of ICP or its subsidiaries
(except as expressly provided in this Agreement); or
(ii) except as expressly permitted by this Agreement or as
previously approved in writing by the Offeror, any
amalgamation, merger, sale of any material part of ICP's or its
subsidiaries' assets, take-over bid, plan of arrangement,
reorganization, recapitalization, liquidation or winding-up of,
or other business combination or similar transaction involving
ICP or any of its subsidiaries;
(b) not sell, assign, convey or otherwise dispose of any of the
Seller's Shares except pursuant to and in accordance with this
Agreement;
(c) not exercise any shareholder rights or remedies available at common
law or pursuant to applicable corporate and securities laws to
delay, hinder, upset or challenge the Offer;
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(d) cause the voting rights attaching to the Seller's Shares to be
exercised to oppose any proposed action by ICP, its shareholders or
others:
(i) which might reasonably be regarded as being directed towards
or likely to prevent or delay the successful completion of the
Offer; or
(ii) to materially change the business, assets, operations,
capital, affairs, financial conditions, licences, permits,
rights or privileges, whether contractual or otherwise, or
prospects of ICP which in the sole judgement of the Offeror
could individually, or in the aggregate, materially adversely
affect the value of the Shares to the Offeror;
(e) use Seller's reasonable efforts to assist the Offeror to
successfully complete the acquisition of Shares; and
(f) promptly notify the Offeror upon any of Seller's representations or
warranties contained in this Agreement becoming untrue or incorrect
in any material respect during the period commencing on the date
hereof and expiring at the time of expiry of the Offer, and for the
purposes of this provision, each representation and warranty shall
be deemed to be given at and as of all times during such period
(irrespective of any language which suggests that it is only being
given as at the date hereof).
The Seller shall not be deemed to have violated Section 4.1(a) and (e)
solely as a result of the participation by any associate of the Seller
who is a director of ICP in a decision by the Board of Directors of ICP
to provide information to any person, entity or group subject to and in
accordance with Section 8.1 of the Pre-Acquisition Agreement.
4.2 Resignation as Director. The Seller shall upon request use all
-----------------------
reasonable efforts to cause any of its associates who may be directors
of ICP to resign effective at the time and in the manner requested by
the Offeror following the purchase of the Seller's Shares by the Offeror
under the Offer.
Section 5 Covenants of the Offeror
5.1 Completion of the Offer. Subject to the terms and conditions hereof,
-----------------------
the Offeror hereby covenants to use its reasonable commercial efforts to
successfully complete the Offer, including diligently pursuing all
requisite regulatory approvals, subject to the limitations in Section
10.4(b) of the Pre-Acquisition Agreement.
Section 6 Termination
6.1 Termination. If the Option is not exercised in accordance with the
-----------
terms and conditions of Section 2.2, then, from and after the last date
on which the Option is or may become exercisable pursuant to Section
2.2, no party hereto shall have any rights or obligations hereunder and
this Agreement shall terminate and become null and void.
5
<PAGE>
In the event of such termination of this Agreement, the Seller may
withdraw all of the Seller's Shares deposited in accordance with the
terms and conditions of the Offer, this Agreement shall forthwith be of
no further force and effect and there shall be no liability on the part
of either Seller or the Offeror, except to the extent that either such
party is in default of its obligations herein contained.
Section 7 General
7.1 Disclosure. Prior to the first public disclosure of the existence and
----------
terms and conditions of this Agreement, none of the parties hereto shall
disclose the existence of this Agreement, or any details hereof, to any
person other than ICP, its directors and officers, without the prior
written consent of the other party hereto, except to the extent required
by law including applicable securities laws. The existence and terms and
conditions of this Agreement may be disclosed by the Offeror and ICP in
press releases issued in connection with the execution of the Pre-
Acquisition Agreement, in the Offer Documents and in the directors
circular prepared by ICP.
7.2 Assignment. The Offeror may assign all or any part of its rights and/or
----------
obligations under this Agreement to a wholly-owned subsidiary of the
Parent, but, if such assignment takes place, the Offeror shall continue
to be liable to Seller for any default in performance by the assignee.
This Agreement shall not otherwise be assignable by any party without
the consent of the other.
7.3 Governing Law. This Agreement shall be governed by and construed in
-------------
accordance with the laws of the Province of Ontario and of Canada
applicable therein.
7.4 Survival of Representations and Warranties. The representations and
------------------------------------------
warranties made by the Offeror and the Seller herein shall expire
immediately following the Closing. No investigations made by or on
behalf of the Offeror or any of its authorized agents at any time shall
have the effect of waiving, diminishing the scope of or otherwise
affecting any representation, warranty or covenant made by the Seller
herein or pursuant hereto.
7.5 Amendments. This Agreement may not be amended except by written
----------
agreement signed by the parties to this Agreement.
7.6 Specific Performance and other Equitable Rights. Each of the parties
-----------------------------------------------
recognizes and acknowledges that this Agreement is an integral part of
the Offer, that the Offeror would not contemplate causing the Offer to
be made unless this Agreement was executed, and that a breach by any
party of any covenants or other commitments contained in this Agreement
will cause the other party to sustain injury for which it would not have
an adequate remedy at law for money damages. Therefore, each of the
parties agrees that in the event of any such breach, the aggrieved party
shall be entitled to the remedy of specific performance of such
covenants or commitments and preliminary and permanent injunctive and
other equitable relief in addition to any other remedy to which it or
they may be entitled, at law or in equity, and the parties
6
<PAGE>
further agree to waive any requirement for the securing or posting of
any bond in connection with the obtaining of any such injunctive or
other equitable relief.
7.7 Expenses. The Offeror and the Seller shall each pay its legal,
--------
financial advisory and accounting costs and expenses incurred in
connection with the preparation, execution and delivery of this
Agreement and all documents and instruments executed or prepared
pursuant to this Agreement and any other costs and expenses whatsoever
and howsoever incurred, and none of such costs and expenses shall be
borne by ICP.
7.8 Counterparts. This Agreement may be executed in one or more
------------
counterparts which together shall be deemed to constitute one valid and
binding agreement, and delivery of the counterparts may be effected by
means of a telecopier transmission.
7.9 Entire Agreement. This Agreement constitutes the entire agreement and
----------------
understanding between the parties pertaining to the subject matter of
this Agreement.
7.10 Time. Time shall be of the essence of this Agreement.
----
7.11 Notices. Any notice, request, consent, agreement or approval which
-------
may or is required to be given pursuant to this Agreement shall be in
writing and shall be sufficiently given or made if delivered, or sent by
telecopier, in the case of:
(a) The Offeror addressed as follows:
United Technologies Corporation
One Financial Plaza
Hartford, CT 06101
Attention: Ari Bousbib
Telecopier No.: 860-728-6355
United Technologies Corporation
One Financial Plaza
Hartford, CT 06101
Attention: General Counsel
Telecopier No.: 860-728-7862
(b) The Seller, addressed as follows:
Snyder Capital Corporation
3219 McKinney Avenue
Dallas, Texas 75240
Attn: Richard Snyder
Telecopier No.: 214-754-0350
7
<PAGE>
or to such other address as the relevant party may from time to time advise
by notice in wiring given pursuant to this Section 7.11. The date of
receipt of any such notice, request, consent, agreement or approval shall
be deemed to be the date of delivery or sending thereof.
(Intentionally Blank)
8
<PAGE>
If the terms and conditions of this Agreement are acceptable to you, please so
indicate by executing and returning the enclosed copy hereof and the attached
resignation to the undersigned prior to 11:59 p.m. (Toronto time) on June 23,
1999, failing which this letter shall be null and void.
Yours truly,
TITAN ACQUISITIONS, LTD.
By: /s/ Ari Bousbib
---------------------------
(Acceptance on following page)
<PAGE>
ACCEPTANCE
Agreed and accepted this 23rd day of June, 1999.
/s/ Robert Lloyd Snyder
- -----------------------
Robert Lloyd Snyder
Attorney-in-Fact for Ravine Partners, Ltd.
POWER OF ATTORNEY
-----------------
We, Richard W. Snyder and Roberta M. Snyder, both domiciliaries and residents of
Dallas County, Texas and the General Partners of Ravine Partners, Ltd., a Texas
limited partnership, do hereby appoint Robert Lloyd Snyder, also of Dallas
County, Texas as true and lawful attorney-in-fact on behalf of Ravine Partners,
Ltd. with authority to negotiate and execute on its behalf the letter agreement,
dated June 23, 1999, between Ravine Partners, Ltd. And Titan Acquisitions, Ltd.
IN WITNESS WHEREOF, we hereunto have set our hands this 23rd day of June, 1999.
/s/ Richard W. Snyder
---------------------
Richard W. Snyder
General Partner - Ravine Partners, Ltd.
/s/ Roberta M. Snyder
---------------------
Roberta M. Snyder
General Partner - Ravine Partners, Ltd.
Acknowledgment
--------------
STATE OF TEXAS
Before me, this 23rd day of June, 1999, personally appeared Robert Lloyd Snyder,
Richard W. Snyder and Roberta M. Snyder, known to me to be the persons whose
names are subscribed to the foregoing instrument and acknowledged to me that
they executed the same for the purposes and consideration therein expressed.
GIVEN UNDER MY HAND AND SEAL OF OFFICE, this 23rd day of June, 1999.
/s/ Vicki A. Bolton
-------------------
/s/ [Seal] VICKI A. BOLTON Notary Public in and for The State of Texas
NOTARY PUBLIC
State of Texas My commission expires: 10/3/99
Comm. Exp. 10-03-99 -------
<PAGE>
EXHIBIT (c)(3)
TITAN ACQUISITIONS, LTD.
June 23, 1999
Ontario Teachers' Pension Plan Board
5650 Yonge Street
Toronto, Ontario
M2M 4H5
Attention: Portfolio Manager Merchant Banking
Dear Sirs:
Reference is made to the Pre-Acquisition Agreement dated June 23, 1999 (the
"Pre-Acquisition Agreement") between Titan Acquisitions, Ltd. (the "Offeror"),
United Technologies Corporation ("Parent") and International Comfort Products
Corporation (the "Corporation") pursuant to which the Offeror has agreed to make
an offer to purchase all of the outstanding shares (the "Shares") of the
Corporation. All capitalized terms referred herein and not otherwise defined
herein shall have the meanings attributed thereto in the Pre-Acquisition
Agreement.
The Offeror understands, and by your acceptance of this letter agreement
(the "Agreement") you (the "Seller") represent and warrant to the Offeror that
7,919,638 Shares are beneficially owned, directly or indirectly, by the Seller
or over which the Seller exercises direction or control (collectively, the
"Seller's Shares").
This Agreement sets out the terms and conditions by which the Seller
irrevocably and unconditionally agrees to deposit the Seller's Shares under the
Offer, and sets out the obligations and commitments of the Seller in connection
therewith. This Agreement is also the Seller's agreement to ensure that the
Seller's associates (as defined in the Securities Act (Ontario)) are bound by
and perform the obligations of the Seller hereunder, and any reference to the
Seller in this Agreement shall include the Seller's associates, all to the
extent applicable.
<PAGE>
-2-
Section 1 Acceptance
1.1 Deposit. Subject to the terms and conditions hereof, the Seller hereby
-------
irrevocably and unconditionally agrees to deposit the Seller's Shares,
together with a completed and executed letter of transmittal, under the
Offer prior to the Initial Expiry Time.
1.2 Non-Withdrawal. The Seller hereby irrevocably and unconditionally agrees
--------------
not to withdraw or take any action to withdraw any portion of the Seller's
Shares following their deposit under the Offer, notwithstanding any
statutory rights or other rights under the terms of the Offer or otherwise
which the Seller might have, except pursuant to Section 1.3 or unless this
Agreement is terminated in accordance with its terms prior to the taking up
of the Seller's Shares under the Offer.
1.3 Superior Take-over Proposal. If a third party has made a bona fide offer
---------------------------
for all of the Shares of the Corporation which offer constitutes a Superior
Take-over Proposal (as defined in the Pre-Acquisition Agreement), then the
Seller shall not be required to deposit the Seller's Shares pursuant to the
Offer or may withdraw the Seller's Shares deposited pursuant to the Offer,
as the case may be.
Section 2 Representations and Warranties
2.1 Representations and Warranties of Seller. The Seller hereby represents and
----------------------------------------
warrants to and in favour of the Offeror that:
(a) the Seller is a non-share capital corporation duly incorporated and
validly existing under the laws of the Province of Ontario;
(b) the Seller has the power and capacity and has received all requisite
approvals to enter into this Agreement and to perform its obligations
hereunder and this Agreement is a valid and binding agreement
enforceable by the Offeror against the Seller in accordance with its
terms;
(c) the Seller is (and, if applicable, upon the deposit of the Seller's
Shares under the Offer, will be) the sole legal and beneficial owner
of the Seller's Shares and has and will have the exclusive right to
dispose of the Seller's Shares as provided in this Agreement;
(d) the Seller's Shares are owned (and, if applicable, will be acquired by
the Offeror) with good and marketable title, free and clear of any and
all mortgages, liens, charges, encumbrances and adverse claims; and
<PAGE>
-3-
(e) no person, firm or corporation has any agreement or option, or any
right or privilege (whether by law, pre-emptive or contractual)
capable of becoming an agreement or option, for the purchase,
acquisition or transfer of any of the Seller's Shares or any interest
therein or right thereto, except pursuant to this Agreement.
2.2 Representations and Warranties of the Offeror. The Offeror hereby
---------------------------------------------
represents and warrants to the Seller that:
(a) the Offeror is a corporation duly incorporated and validly existing
under the laws of its jurisdiction of incorporation;
(b) the Offeror has the financial resources and is financially capable of
completing the Offer; and
(c) the Offeror has the corporate power and capacity and has received all
requisite approvals to enter into this Agreement and this Agreement is
a valid and binding agreement enforceable by the Seller against the
Offeror in accordance with its terms.
Section 3 Covenants of the Seller
3.1 General. The Seller hereby covenants that during the term of this
-------
Agreement the Seller will:
(a) not take any action to solicit, initiate or encourage enquiries,
submissions, proposals or offers from, or provide information to, any
other person, entity or group relating to, and will not participate in
any negotiations regarding, or otherwise cooperate in any way with or
assist or participate in:
(i) the direct or indirect acquisition or disposition of all or any
Shares or any other securities of the Corporation or its
subsidiaries (except as expressly provided in this Agreement);
or
(ii) except as expressly permitted by this Agreement or as previously
approved in writing by the Offeror, any amalgamation, merger,
sale of any material part of the Corporation's or its
subsidiaries' assets, take-over bid, plan of arrangement,
reorganization, recapitalization, liquidation or winding-up of,
or other business combination or similar transaction involving
the Corporation or any of its subsidiaries;
(b) not sell, assign, convey or otherwise dispose of any of the Seller's
Shares except pursuant to and in accordance with this Agreement;
<PAGE>
-4-
(c) cause the voting rights attaching to the Seller's Shares to be
exercised to oppose any proposed action by the Corporation, its
shareholders or others:
(i) which might reasonably be regarded as being directed towards or
likely to prevent or delay the successful completion of the
Offer (other than as contemplated in Section 1.3 hereof); or
(ii) to materially change the business, assets, operations, capital,
affairs, financial conditions, licences, permits, rights or
privileges, whether contractual or otherwise, or prospects of
the Corporation which in the sole judgement of the Offeror could
individually, or in the aggregate, materially adversely affect
the value of the Shares to the Offeror; and
(d) promptly notify the Offeror upon any of Seller's representations or
warranties contained in this Agreement becoming untrue or incorrect in
any material respect during the period commencing on the date hereof
and expiring at the time of expiry of the Offer.
The Seller shall not be deemed to have violated Section 4.1(a) solely as a
result of the participation by any associate or nominee of the Seller who
is a director of the Corporation in a decision by the Board of Directors of
the Corporation to provide information to any person, entity or group in
accordance with Sections 2.2(c), 8.1(c) and 8.1(d) of the Pre-Acquisition
Agreement.
3.2 Resignation as Director. The Seller shall upon request use all reasonable
-----------------------
efforts to cause any of its associates or nominees who may be directors of
the Corporation to resign effective at the time and in the manner requested
by the Offeror following the purchase of the Seller's Shares by the Offeror
under the Offer.
Section 4 Covenants of the Offeror
4.1 Offeror. Subject to the terms and conditions hereof, the Offeror hereby
-------
covenants to use its reasonable commercial efforts to successfully complete
the Offer, including diligently pursuing all requisite regulatory
approvals, subject to the limitations in Section 10.4(b) of the Pre-
Acquisition Agreement.
Section 5 Termination by the Seller
5.1 Termination. Seller, when not in default in performance of Seller's
-----------
obligations under this Agreement, may, without prejudice to any other
rights, terminate Seller's obligations under this Agreement by notice to
the Offeror on the earlier of: (i) an occurrence of the event referred to
in Section 1.3
<PAGE>
-5-
hereof; (ii) the Pre-Acquisition Agreement is terminated in accordance with
its terms; and (iii) December 15, 1999.
In the event of such termination of this Agreement, the Seller may withdraw
all of the Seller's Shares deposited in accordance with the terms and
conditions of the Offer, this Agreement shall forthwith be of no further
force and effect and there shall be no liability on the part of either
Seller or the Offeror, except to the extent that either such party is in
default of its obligations herein contained.
Section 6 General
6.1 Disclosure. Prior to the first public disclosure of the existence and
----------
terms and conditions of this Agreement, none of the parties hereto shall
disclose the existence of this Agreement, or any details hereof, to any
person other than the Corporation, its directors and officers, without the
prior written consent of the other party hereto, except to the extent
required by law including applicable securities laws. The existence and
terms and conditions of this Agreement may be disclosed by the Offeror and
the Corporation in press releases issued in connection with the execution
of the Pre-Acquisition Agreement, in the Offer Documents and in the
directors circular prepared by the Corporation.
6.2 Assignment. The Offeror may assign all or any part of its rights and/or
----------
obligations under this Agreement to a wholly-owned subsidiary of the
Parent, but, if such assignment takes place, the Offeror shall continue to
be liable to Seller for any default in performance by the assignee. This
Agreement shall not otherwise be assignable by any party without the
consent of the other.
6.3 Governing Law. This Agreement shall be governed by and construed in
-------------
accordance with the laws of the Province of Ontario and of Canada
applicable therein.
6.4 Survival of Representations and Warranties. The representations and
------------------------------------------
warranties made by the Offeror and the Seller herein shall expire
immediately following the Closing. No investigations made by or on behalf
of the Offeror or any of its authorized agents at any time shall have the
effect of waiving, diminishing the scope of or otherwise affecting any
representation, warranty or covenant made by the Seller herein or pursuant
hereto.
<PAGE>
-6-
6.5 Amendments. This Agreement may not be amended except by written agreement
----------
signed by the parties to this Agreement.
6.6 Specific Performance and other Equitable Rights. Each of the parties
-----------------------------------------------
recognizes and acknowledges that this Agreement is an integral part of the
Offer, that the Offeror would not contemplate causing the Offer to be made
unless this Agreement was executed, and that a breach by any party of any
covenants or other commitments contained in this Agreement will cause the
other party to sustain injury for which it would not have an adequate
remedy at law for money damages. Therefore, each of the parties agrees
that in the event of any such breach, the aggrieved party shall be
entitled to the remedy of specific performance of such covenants or
commitments and preliminary and permanent injunctive and other equitable
relief in addition to any other remedy to which it or they may be
entitled, at law or in equity, and the parties further agree to waive any
requirement for the securing or posting of any bond in connection with the
obtaining of any such injunctive or other equitable relief.
6.7 Expenses. The Offeror and the Seller shall each pay its legal, financial
--------
advisory and accounting costs and expenses incurred in connection with the
preparation, execution and delivery of this Agreement and all documents
and instruments executed or prepared pursuant to this Agreement and any
other costs and expenses whatsoever and howsoever incurred, and none of
such costs and expenses shall be borne by the Corporation.
6.8 Counterparts. This Agreement may be executed in one or more counterparts
------------
which together shall be deemed to constitute one valid and binding
agreement, and delivery of the counterparts may be effected by means of a
telecopier transmission.
6.9 Entire Agreement. This Agreement constitutes the entire agreement and
----------------
understanding between the parties pertaining to the subject matter of this
Agreement.
6.10 Time. Time shall be of the essence of this Agreement.
----
6.11 Notices. Any notice, request, consent, agreement or approval which may or
-------
is required to be given pursuant to this Agreement shall be in writing and
shall be sufficiently given or made if delivered, or sent by telecopier,
in the case of:
<PAGE>
-7-
(a) The Offeror addressed as follows:
United Technologies Corporation
One Financial Plaza
Hartford, CT 06101
Attention: Ari Bousbib
Telecopier No.: (860) 728-6355
United Technologies Corporation
One Financial Plaza
Hartford, CT 06101
Attention: General Counsel
Telecopier No.: (860) 728-7862
(b) The Seller, addressed as follows:
Ontario Teachers' Pension Plan Board
5650 Yonge Street
Toronto, Ontario
M2M 4H5
Attention: Portfolio Manager Merchant Banking
Telecopier No.: (416) 730-5374
or to such other address as the relevant party may from time to time advise
by notice in writing given pursuant to this section 6.11. The date of
receipt of any such notice, request, consent, agreement or approval shall
be deemed to be the date of delivery or sending thereof.
<PAGE>
If the terms and conditions of this Agreement are acceptable to you, please so
indicate by executing and returning the enclosed copy hereof to the undersigned
prior to 11:59 p.m. (Toronto time) on June 23, 1999, failing which this letter
shall be null and void.
Yours truly,
TITAN ACQUISITIONS, LTD.
By: /s/ Ari Bousbib
---------------
(Acceptance on following page)
<PAGE>
-9-
ACCEPTANCE
Agreed and accepted this 23rd day of June, 1999.
ONTARIO TEACHERS' PENSION PLAN BOARD
By: /s/ Roy T. Graydon
--------------------------
<PAGE>
EXHIBIT (c)(4)
19 March, 1999
Mr. Ari Bousbib
Vice President Strategic Planning
United Technologies Corporation
United Technologies Bldg.
Hartford, CT 06101
Dear Mr. Bousbib:
You have expressed interest in pursuing a transaction (the "Transaction")
involving the capital stock or assets of International Comfort Products
Corporation (the "Company"). You understand that prior to or during the course
of negotiations in respect of the Transaction, certain confidential information
concerning the Company and/or the Company's affiliates, including, without
limitation, the Information Memorandum prepared in connection therewith, may be
disclosed to you or your directors, officers, employees, affiliates and advisors
(your "Representatives"), either in written form or orally (the "Evaluation
Material"). In consideration of the Company agreeing to make the Evaluation
Material available to you or your Representatives, you agree as follows:
1. No disclosure of your interest in the Company will be made by you or your
Representatives prior to the execution of a definitive, written purchase
agreement between you and the Company in respect of the Transaction, except
as may be otherwise agreed upon by you and the Company.
2. The fact that the Company is providing Evaluation Material to you, the fact
that the parties have had, are having or may have discussions concerning the
Transaction, and any negotiations that may occur between you and the Company
shall also be deemed Evaluation Material and treated in accordance with the
provisions hereof. All Evaluation Material will be held in complete
confidence (i.e., using the same degree of care that you use for your own
confidential, non-public proprietary information of a similar nature) and,
without the Company's prior written consent, will not be disclosed, in whole
or in part, to any other person (other than such of your Representatives who
need access to any such materials or information for purposes of your
evaluating or negotiating the Transaction), nor will any Evaluation Material
be used in any way directly or indirectly detrimental to the Company or its
affiliates or for any purpose other than your evaluation or negotiation of
the Transaction. The term "Evaluation Material" does not include any
information:
(a) which, at the time of disclosure to you or your Representatives, is in
the public domain or which after such disclosure comes into the public
domain through no fault of you or your Representatives;
(b) which was available to you on a non-confidential basis from a source
other than the Company or its advisors, provided that such source is
not and was not bound by a confidentially agreement with the Company;
<PAGE>
Mr. Ari Bousib, p. 2
(c) which, after notifying the Company pursuant to paragraph 5, is required
by applicable law or regulatory authority to be disclosed; or
(d) which was independently developed by you.
3. You shall be responsible for ensuring that your Representatives adhere to
the terms of the undertakings of this agreement as if such persons were
original parties hereto.
4. You and your Representatives will, at your option, either destroy or return
to the Company upon demand or in the event you cease to be interested in
pursuing the Transaction, all Evaluation Material provided to you or your
Representatives, including all copies thereof which may have been made by or
on behalf of you or your Representatives. You shall destroy, or cause to be
destroyed, all notes or memoranda or other stored information of any kind
prepared by you or your Representatives relating to the Evaluation Material
or negotiations generally.
5. If you or your Representatives become (or if it is reasonably likely that
you or they shall become) legally compelled to disclose any Evaluation
Material, prompt notice of such fact shall be given to the Company so that
appropriate action may be taken by the Company.
6. Without prejudice to any other rights or remedies the Company may have, you
acknowledge and agree that money damages may not be an adequate remedy for
any breach of this agreement and that the Company may be entitled to the
remedies of injunction, specific performance and other equitable relief for
any threatened or actual breach of this agreement.
7. You acknowledge that, except as may be set forth in a definitive, written
purchase agreement in respect of the Transaction, neither the Company nor
any of its directors, officers, employees, affiliates or advisors shall have
been deemed to make, or shall be responsible for, any representations or
warranties, express or implied, with respect to the accuracy or completeness
of the Evaluation Material supplied under this agreement. Further, it is
acknowledged hereby by you that only those representations and warranties
made by the Company in a definitive, written purchase agreement in respect
of the Transaction shall have any force or effect.
8. During the period of one year commencing on the date hereof, you shall not
solicit or actively seek to hire any person who during such period is
employed by the Company, whether or not such person would commit any breach
of such person's contract of service in leaving such employment. This
provision shall not apply to any general solicitation for employment not
specifically targeted at such employee.
9. You agree that until six months from the date of this agreement, you will
not without the prior approval of the Board of Directors of the Company (i)
acquire or make any proposal to acquire any securities or property of the
Company, (ii) propose to enter into any merger or business combination
involving the Company or purchase a material portion of the assets of the
Company; (iii) make or participate in any solicitation of proxies to vote,
or seek to advise or influence any person with respect to the voting of any
securities of
<PAGE>
Mr. Ari Bousbib, p. 3
the Company, (iv) form, join or participate in a "group" (within the meaning
of Section 13(d)(3) of the Securities Exchange Act of 1934) with respect to
any voting securities of the Company, (v) otherwise and to seek to control
or influence the management, Board of Directors or policies of the Company,
(vi) disclose any intention, plan or arrangement inconsistent with the
foregoing or (vii) take any action which might require the Company to make a
public announcement regarding the possibility of a business combination or
merger. This provision shall not apply to investments in the Company that
are made by or through your employee pension fund in the ordinary course and
without your specific direction.
10. You acknowledge and confirm that no limitation provided, or statements made,
to you or your Representatives prior to, in the course of or for the purpose
of negotiations, will constitute an offer by the Company or on the Company's
behalf, nor will any such information or statements form the basis of any
contract or agreement (including, without limitation, an agreement in
principle), to sell the Company or any of its capital stock or assets.
11. You acknowledge that the Company and the Company's advisors shall be free to
conduct the process in respect of the Transaction as they in their sole
discretion shall determine, including, without limitation, negotiating with
any prospective or interested parties.
12. You will maintain contact with the Company at all times only through Credit
Suisse First Boston Corporation, the Company's financial advisor, and will
not attempt any direct communication with the Company relating to the
Transaction without the express permission of Credit Suisse First Boston
Corporation.
13. No failure or delay by the Company in exercising any right, power or
privilege under this agreement shall operate as a waiver thereof, and no
modification hereof shall be effective, unless in writing and signed by an
officer of the Company or other authorized person on its behalf.
14. The illegality, invalidity or unenforceability of any provision hereof under
the laws of any jurisdiction shall not affect its legality, validity or
enforceability under the laws of any other jurisdiction, nor the legality,
validity or enforceability of any other provision.
<PAGE>
15. This agreement shall terminate two years from the date hereof.
This agreement shall be governed by and construed in accordance with the laws of
the State of New York, applicable to contracts made and to be performed therein.
Very truly yours,
International Comfort Products Corporation
By CREDIT SUISSE FIRST BOSTON
CORPORATION, solely as the Company's
Representative
By: /s/ David M. Sultan
--------------------------
Name: David M. Sultan
Title: Director
Accepted and agreed to as of the date hereof:
United Technologies Corporation
By: /s/ Ari Bousbib
------------------------
Name: Ari Bousbib
Title: Vice President Strategic Planning
