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________________________________________________________________________________
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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SCHEDULE 14D-9
SOLICITATION/RECOMMENDATION STATEMENT PURSUANT TO
SECTION 14(D)(4) OF THE
SECURITIES EXCHANGE ACT OF 1934
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TRISTAR AEROSPACE CO.
(NAME OF SUBJECT COMPANY)
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TRISTAR AEROSPACE CO.
(NAME OF PERSON(S) FILING STATEMENT)
COMMON STOCK, PAR VALUE $0.01 PER SHARE
(TITLE OF CLASS OF SECURITIES)
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89674L101
(CUSIP NUMBER OF CLASS OF SECURITIES)
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DOUGLAS CHILDRESS
EXECUTIVE VICE PRESIDENT AND CHIEF FINANCIAL OFFICER
TRISTAR AEROSPACE CO.
2527 WILLOWBROOK ROAD
DALLAS, TEXAS 75220
(214) 366-5000
(NAME, ADDRESS AND TELEPHONE NUMBER OF PERSON AUTHORIZED
TO RECEIVE NOTICES AND COMMUNICATIONS ON BEHALF OF PERSON(S) FILING STATEMENT)
------------------------
WITH A COPY TO:
SIMEON GOLD, ESQ.
WEIL, GOTSHAL & MANGES LLP
767 FIFTH AVENUE
NEW YORK, NEW YORK 10153-0119
(212) 310-8000
________________________________________________________________________________
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ITEM 1. SECURITY AND SUBJECT COMPANY
The name of the subject company is TriStar Aerospace Co., a Delaware
corporation (the 'Company'). The address of the principal executive office of
the Company is 2527 Willowbrook Road, Dallas, Texas 75220. The title and class
of equity securities to which this Statement on Schedule 14D-9 (the
'Schedule 14D-9') relates is the Company's common stock, par value $0.01 per
share (the 'Shares').
ITEM 2. TENDER OFFER OF THE BIDDER
This Schedule 14D-9 relates to a tender offer (the 'Offer') by AlliedSignal
Acquisition Corp., a Delaware corporation ('Offeror') and a wholly owned
subsidiary of AlliedSignal Inc., a Delaware corporation ('Parent'), disclosed in
a Tender Offer Statement on Schedule 14D-1 dated November 5, 1999 (the
'Schedule 14D-1'), to purchase all of the issued and outstanding Shares at a
purchase price of $9.50 per Share, net to the seller in cash without interest
(the consideration to be paid pursuant to the Offer being, the 'Offer Price'),
on the terms and subject to the conditions set forth in the Offer to Purchase,
dated November 5, 1999 (the 'Offer to Purchase'), and the related Letter of
Transmittal (which, together with the Offer to Purchase, as amended and
supplemented from time to time, constitute the 'Offer Documents').
The Offer is being made pursuant to an Agreement and Plan of Merger, dated
October 31, 1999 (the 'Merger Agreement'), by and among Parent, Offeror and the
Company. See Item 3(b)(2) below for a description of the Merger Agreement, a
copy of which is filed as Exhibit A hereto and is incorporated herein by
reference. A copy of the joint press release, announcing the execution of the
Merger Agreement, issued by the Parent and the Company on November 1, 1999 is
filed as Exhibit B hereto and is incorporated herein by reference.
The Merger Agreement provides that after consummation of the Offer and the
satisfaction or waiver of the conditions set forth in Item 3(b)(2) under the
heading 'The Merger Agreement -- Conditions to Obligations of Offeror' (the
'Offer Conditions'), Offeror (or another direct or indirect wholly owned
subsidiary of Parent) will be merged with and into the Company (the 'Merger')
pursuant to the General Corporation Law of the State of Delaware (the 'Delaware
Law'). Unless Offeror otherwise revises the structure of the Merger as it is
permitted to do subject to meeting certain conditions, as a result of the
Merger, the separate corporate existence of Offeror will cease and the Company
will continue as the surviving corporation and a wholly owned subsidiary of
Parent (the 'Surviving Corporation'), and will continue to be governed by the
laws of the State of Delaware. At the effective time of the Merger (the
'Effective Time'), each Share then outstanding (other than Shares owned by the
Company, Parent or any subsidiary thereof, or those Shares held by stockholders
who have properly exercised their rights for appraisal of such Shares in
accordance with Delaware Law) will be converted into the right to receive the
Offer Price.
The Offer to Purchase states that the address and principal executive
offices of Parent are located at 101 Columbia Road, Morris Township, New Jersey
07962, and the address and principal executive offices of Offeror are located at
101 Columbia Road, Morris Township, New Jersey 07962.
ITEM 3. IDENTITY AND BACKGROUND
(a) Name and Address of the Company. The name and business address of the
Company, which is the person filing this Schedule 14D-9, are set forth in Item 1
above.
(b) Material Contracts, etc. Certain contracts, agreements, arrangements or
understandings between the Company or its affiliates and certain of its
directors and executive officers are described under the captions 'Director
Compensation,' 'Compensation of Executive Officers,' 'Employment Agreements,'
'Stock Option Plans,' and 'Certain Related Party Transactions' in the Company's
Proxy Statement, dated December 23, 1998, relating to its 1999 Annual Meeting of
Stockholders held on January 22, 1999 (the 'Proxy Statement') are incorporated
herein by reference. A copy of the Proxy Statement is filed as Exhibit C hereto
and is incorporated herein
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by reference. Except as set forth in this Item 3(b) or incorporated by reference
herein, to the knowledge of the Company, as of the date hereof, there exists no
material contract, agreement, arrangement or understanding and no actual or
potential conflict of interest between the Company or its affiliates and:
(1) the Company, its executive officers, directors or affiliates; or (2) Parent
or Offeror or their respective executive officers, directors or affiliates.
(b)(1) Certain Contracts, Agreements, Arrangements or Understandings and
any Actual or Potential Conflicts of Interests Between (A) the Company
or its Affiliates and (B) the Executive Officers, Directors or
Affiliates of the Company
Employment Agreements
P. Quentin Bourjeaurd Executive Employment Agreement. Mr. Bourjeaurd
entered into an executive employment agreement with the Company on September 19,
1996. Pursuant to his employment agreement, Mr. Bourjeaurd will serve as
President of the Company through September 19, 2001, unless earlier terminated
as provided therein. Under his employment agreement, Mr. Bourjeaurd receives an
annual salary of $200,000 and is entitled to medical and other benefits
generally available to senior executives of the Company. On July 1, 1997 the
Compensation Committee increased Mr. Bourjeaurd's annual compensation to
$225,000.
The Company and Mr. Bourjeaurd amended certain provisions of the executive
employment agreement on October 31, 1999 by letter agreement. The amendment
provides that if Mr. Bourjeaurd's employment is terminated by the Company other
than for Cause (as defined in his employment agreement), Mr. Bourjeaurd will
continue to receive his salary and benefits as currently provided (as severance)
through September 19, 2001, the termination date. In the event Mr. Bourjeaurd's
employment is terminated for Cause or by reason of Death or Disability (as
defined in his employment agreement), no further compensation will be payable by
the Company.
Additionally, Mr. Bourjeaurd's employment agreement contains a
non-competition provision pursuant to which Mr. Bourjeaurd has agreed, during
the term of his employment and for such period of time following the Term that
he is receiving payments, not to engage in any business activity, without the
consent of the Company, which would be in competition with any business in which
the Company or any of its subsidiaries or affiliates are then engaged or
planning to be engaged. The executive employment agreement was further amended
by the October 31, 1999 letter agreement so that the non-competition covenant
contained in the agreement will continue to apply until September 19, 2001 under
all circumstances. Also, in the letter amendment, Mr. Bourjeaurd acknowledged
that the transactions contemplated by the Merger Agreement would make
AlliedSignal Hardware Product Group an 'affiliate' as it is defined in the
employment agreement for purposes of the non-competition provisions of the
agreement. A copy of Mr. Bourjeaurd's executive employment agreement is filed as
Exhibit D hereto and is incorporated herein by reference. A copy of the letter
agreement amending Mr. Bourjeaurd's executive employment agreement is filed as
Exhibit E hereto and is incorporated herein by reference.
Denny Barge Amended and Restated Executive Employment Agreement. The
Company and Mr. Barge amended and restated Mr. Barge's executive employment
agreement as of June 22, 1999. This agreement amended and restated the executive
employment agreement dated December 8, 1997 between Mr. Barge and the Company.
The agreement provides that Mr. Barge will continue to serve as Vice President
of Strategic Planning for a term ending December 8, 1999. The executive
employment agreement was further amended such that Mr. Barge effectively
resigned from all other positions he held with the Company. Under the agreement,
Mr. Barge receives an annual salary of $200,000 and is entitled to medical and
other benefits generally available to senior executives of the Company. Mr.
Barge's employment agreement also provides that the Company will not terminate
the agreement as long as Mr. Barge is performing his duties under the terms of
the agreement, except for Cause (as defined therein) or by reason of Death.
Additionally, Mr. Barges' agreement contains a non-competition provision
pursuant to which Mr. Barge has agreed not to engage in any business activity,
without the consent of the Company, which will be in competition with any
business engaged in by the Company during the term of the agreement. Also, in
the agreement, Mr. Barge has signed a broad release discharging the Company from
all
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liabilities associated with his employment. The release does not prohibit Mr.
Barge from pursuing a claim to enforce his rights under the agreement itself or
from exercising his rights under any employee benefit plan or stock option plan
or shareholder agreement that he participated in while employed by the Company.
A copy of Mr. Barge's amended and restated executive employment agreement is
filed as Exhibit F hereto and is incorporated herein by reference.
John King Letter Agreement. The Company terminated the employment of John
R. King, Jr. in a letter dated May 17, 1999. The termination letter provided
that Mr. King would receive 26 weeks of pay at his then current base rate
(totaling $60,000) as severance. In the termination letter, the Company offered
to extend group health, dental and life insurance to Mr. King until midnight
November 19, 1999, as consideration for releasing and waiving any claims Mr.
King may have against the Company. Mr. King has signed a broad release
discharging the Company from all liabilities associated with his employment. A
copy of the letter terminating the employment of Mr. King and the release are
filed as Exhibits G and H, respectively, hereto and are incorporated herein by
reference.
Daniel Barth Executive Employment Agreement. Mr. Barth entered into an
executive employment agreement with the Company on May 24, 1999. Pursuant to his
employment agreement, Mr. Barth will serve as Vice President of Information
Technology of the Company through May 24, 2000, unless earlier terminated as
provided therein. Under his employment agreement, Mr. Barth receives an annual
salary of $175,000, is eligible for such discretionary bonuses as the
Compensation Committee may determine and is entitled to medical and other
benefits generally available to senior executives of the Company.
Mr. Barth's employment agreement also provides that if Mr. Barth's
employment is terminated other than for Cause (as defined therein), Mr. Barth
will continue to receive his salary and benefits until the end of the Employment
Term (as defined therein); provided that such continued salary and benefits will
be reduced by any earned income received by Mr. Barth during such period
following termination. In the event Mr. Barth's employment is terminated for
Cause or by reason of Death or Disability (as defined therein), no further
compensation will be payable by the Company. Additionally, Mr. Barth's
employment agreement contains a non-competition provision pursuant to which Mr.
Barth has agreed not to work for, directly or indirectly, any other business
entity that competes with the Company in the states of California, Florida,
Texas and Arizona during the Employment Term. Mr. Barth has further agreed that,
until 12 months after the Employment Term, he will not persuade or induce any
Company employee to leave his or her employment with the Company. A copy of Mr.
Barth's executive employment agreement is filed as Exhibit I hereto and is
incorporated herein by reference.
Loans to Management
On January 13, 1999, the Company released 100,000 Shares that were pledged
as collateral for a loan of $75,000 granted on May 30, 1997 to Charles
Balchunas, Executive Vice President and Chief Operating Officer. The Company
retains a pledge on 36,512 Shares owned by Mr. Balchunas, as collateral for the
loan.
Director Compensation
During fiscal year 1999, Cindy Brown, a director of the Company, was paid
$20,000 on January 20, 1999 as compensation for finance committee meetings from
June through November 1998 and $25,000 on June 2, 1999 as compensation for
finance committee meetings from January through May 1999.
Stock Options
The 1996 Stock Option Plan. The Company's Amended and Restated 1996 Stock
Option Plan (the '1996 Stock Option Plan') authorizes the issuance of up to
3,950,000 Shares pursuant to stock options granted to key employees,
non-employee directors and consultants of the Company. The 1996 Stock Option
Plan is administered by the Compensation Committee which selects the
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optionees and determines the terms and provisions of each option grant within
the parameters set forth in the 1996 Stock Option Plan.
In general, in the event of a 'change in control' of the Company (as
defined in the 1996 Stock Option Plan), each option will terminate within a
specified number of days after notice to the holder of such option, and each
such holder will receive, in respect of each option which is then exercisable,
an amount equal to the excess of the aggregate fair market value of the Shares
subject to the vested option over the exercise price, payable in the same
consideration as received by the stockholders of the Company upon the closing of
such transaction. Pursuant to the 1996 Stock Option Plan and confirmed by the
Compensation Committee, the conversion of the vested options into consideration
received by stockholders shall occur simultaneously with, and the termination of
all options under the 1996 Stock Option Plan shall occur after, the consummation
of the Merger, which event constitutes a 'change in control.' On October 19,
1999, the Compensation Committee resolved to grant under the 1996 Stock Option
Plan a total of 407,140 options to employees other than executive officers,
directors or affiliates of the Company. All options granted on October 19, 1999
pursuant to the 1996 Stock Option Plan shall accelerate and become exercisable
immediately prior to and subject to the occurrence of the Merger, entitling the
holder to receive the compensation described above. A copy of the 1996 Stock
Option Plan is filed hereto as Exhibit J and is incorporated herein by
reference.
The 1998 Stock Option Plan. The Company's 1998 Stock Option Plan (the '1998
Stock Option Plan') authorizes the issuance of up to 2,000,000 Shares of the
Company pursuant to stock options granted to key employees, non-employee
directors and consultants of the Company. The 1998 Stock Option Plan is
administered by the Compensation Committee which selects the optionees and
determines the terms and provisions of each option grant within the parameters
set forth in the 1998 Stock Option Plan.
In general, in the event of a 'change in control' of the Company (as
defined in the 1998 Plan), the Compensation Committee has the discretion (i) to
accelerate the vesting of each option not then currently exercisable, (ii) to
cause each option to terminate within a period of time after delivery of notice
and (iii) to cause each option holder to receive, in respect of each Share for
which such option is exercisable, an amount equal to the excess of the fair
market value of such Share over the exercise price per Share, payable in a form
of consideration as determined by the Compensation Committee.
The Compensation Committee has exercised its discretion in Section 11 of
the Stock Option Plan to provide that options subject to the 1998 Stock Option
Plan shall, in connection with the transactions contemplated by the Merger
Agreement, terminate immediately after the Effective Time (as defined in the
Merger Agreement), and such options which are exercisable at the Effective Time
shall be converted as described in clause (iii) above, upon the occurrence of
the Effective Time.
The Compensation Committee has decided not to exercise its discretion in
Section 11 of the 1998 Stock Option Plan to accelerate any option granted under
the 1998 Stock Option Plan if the option agreement evidencing the granting of
such options contains a provision that provides such option will accelerate upon
a 'change in control' if, and only if, the closing price of the Shares on the
closing date of such Change of Control is at least $14. Accordingly, options
subject to such provisions which are not otherwise vested at the Effective Time
will not accelerate or be converted as described above as the Offer Price is
$9.50.
On October 19, 1999, the Compensation Committee resolved to grant, under
the 1998 Stock Option Plan, a total of 345,000 options, 5,000 of which were to a
consultant of the Company. All options granted on October 19, 1999 pursuant to
the 1998 Stock Option Plan shall accelerate and become exercisable immediately
prior to and subject to the occurrence of the Merger, entitling the holder to
receive the compensation described above.
Pursuant to the 1998 Stock Option Plan, the Compensation Committee resolved
to grant options to the following executive officers and directors of the
Company:
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(1) Douglas Childress, Executive Vice President and Chief Financial
Officer, was granted 75,000 options on October 13, 1998 at a strike price
of $8.375 per Share, 100,000 options on June 22, 1999 at a strike price of
$6.875 per Share and 80,000 options on October 19, 1999 at a strike price
of $5.50 per Share.
(2) Daniel Barth, Vice President of Information Technology, was
granted 75,000 options on June 24, 1999 at a strike price of $9.375 per
Share and 60,000 options on October 19, 1999 at a strike price of $5.50 per
Share.
(3) Jon A. Cohen, Vice President of Quality Assurance and Acting Vice
President of Operations, was granted 50,000 options on October 13, 1998 at
a strike price of $8.375 per Share, 25,000 options on June 22, 1999 at a
strike price of $6.875 per Share and 60,000 options on October 19, 1999 at
a strike price of $5.50 per Share.
(4) Trevor Wright, Executive Vice President of Sales and Marketing,
was granted 100,000 options on October 13, 1998 at a strike price of $8.375
per Share and 60,000 options on October 19, 1999 at a strike price of $5.50
per Share.
A copy of the 1998 Stock Option Plan is filed as Exhibit K hereto and in
incorporated herein by reference.
Indemnification of Directors and Officers
The Company's Certificate of Incorporation provides that directors and
officers of the Company shall be indemnified to the fullest extent authorized by
the Delaware Law as in effect (or as it may be amended) from threatened, pending
or completed actions, suits or proceedings, whether civil, criminal,
arbitrative, administrative or investigative, any appeal in such action and any
inquiry or investigation that could lead to such an action or suit. The
Certificate of Incorporation further provides that, to the extent permitted by
the Delaware Law, expenses so incurred by any such person in defending an
action, suit or proceeding shall, at his or her request, be paid by the Company
in advance of the final disposition of such action or proceeding within 60 days
after a written claim has been received by the Company. The Company may
additionally indemnify any employee or agent of the Company to the fullest
extent permitted by law.
The Certificate of Incorporation also provides that a director of the
Company shall not be personally liable to the Company or its stockholders for
monetary damages for breach of the director's fiduciary duties except for
liability (i) for any breach of the director's duty of loyalty to the Company or
its stockholders, (ii) for acts or omissions not in good faith or which involve
intentional misconduct or knowing violation of law, (iii) under Section 174 of
the Delaware Law, or (iv) for any transaction from which the director derived an
improper personal benefit.
For additional information regarding indemnification, see Item 3(b)(2)
under the heading 'Merger Agreement -- Indemnification; Settlement of
Stockholder Claims' below.
(b)(2) Certain Contracts, Agreements, Arrangements or Understandings and
any Actual or Potential Conflicts of Interests Between (A) the Company
or its Affiliates and (B) Parent and Offeror and their Executive
Officers, Directors or Affiliates.
P. Quentin Bourjeaurd Executive Employment Agreement. The description of
the amendment to the employment contract with Mr. Bourjeaurd is set forth in
Item 3(b)(1) under the topic 'P. Quentin Bourjeaurd Executive Employment
Agreement' of this Schedule 14D-9.
Confidentiality; Standstill. In connection with granting Parent and its
representatives access to certain confidential information of the Company,
Parent executed a Confidentiality Agreement with the Company, dated April 5,
1999, and reaffirmed on October 7, 1999 (the 'Confidentiality Agreement'). Among
other things, the Confidentiality Agreement provides that, for a period of
18 months from the date of the Confidentiality Agreement, Parent will not,
without the prior consent of the Board of Directors of the Company (the 'Board')
or its designee, directly or indirectly, in any manner, do the following (the
'Standstill Provisions'), except with respect to certain permitted actions by
benefit plan investment vehicles of Parent and its affiliates:
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(a) acquire, offer or propose to acquire, solicit an offer to sell or
agree to acquire, directly or indirectly, alone or in concert with others,
by purchase or otherwise, any voting securities of the Company;
(b) make, or in any way participate in, directly or indirectly, alone
or in concert with others, any 'solicitation' of 'proxies' (as such terms
are used in the proxy rules promulgated pursuant to Section 14 of the
Exchange Act) to vote, or seek to advise or influence in any manner
whatsoever any person with respect to the voting of, any voting securities
of the Company;
(c) form, join or in any way participate in a 'group' (within the
meaning of Section 13(d)(3) of the Exchange Act) with respect to any voting
securities of the Company or any of its subsidiaries;
(d) acquire, offer to acquire or agree to acquire, directly or
indirectly, alone or in concert with others, by purchase or otherwise,
(i) any of the assets, tangible and intangible, of the Company or
(ii) direct or indirect rights or options to acquire any assets of the
Company or any of its subsidiaries or affiliates, except for such assets as
are then being offered for sale by the Company or any of its subsidiaries
or affiliates;
(e) arrange, or in any way participate, directly or indirectly, in any
financing for the purchase of any voting securities of the Company or any
of its subsidiaries;
(f) otherwise act, alone or in concert with others, to seek to propose
to the Company or any of its subsidiaries or affiliates or any of their
respective stockholders any merger, business combination, restructuring,
recapitalization or other transaction involving the Company to or with
Parent to otherwise seek, alone or in concert with others, to control,
change or influence the management, board of directors or policies of the
Company or any of its subsidiaries or affiliates;
(g) make any request or proposal to amend, waive or terminate any of
the foregoing provisions or take any initiative with respect to the Company
or any of its subsidiaries which could require the Company to make a public
announcement regarding any such prohibited initiative referred to above, or
(h) announce an intention to do, or enter into any arrangement or
understanding with others to do, any of the actions restricted or
prohibited under the foregoing provisions.
The Company waived the Standstill Provisions with respect to the Offer and
the Merger. In addition, in the Merger Agreement, the Company has agreed that,
notwithstanding the Standstill Provisions and other provisions of the
Confidentiality Agreement: (i) following any notification to Parent of a written
proposal that permits the Company to negotiate with or furnish information to
any third party in accordance with the Nonsolicitation Provisions (defined in
'The Merger Agreement -- Nonsolicitation Obligations and Exceptions' below), and
until any transaction resulting from such proposal shall have either been
consummated or the Company shall have received written notification that any
such third party shall no longer seek to engage in such transaction with or
involving the Company, Parent shall be entitled to propose or present to the
Company any offer in response to such third party's offer, and (ii) if, from the
date of the Merger Agreement until the effective time of the Merger, any third
party shall announce its intention to commence, or shall commence, any tender
offer to acquire Shares, Parent and Offeror shall be entitled to make any public
announcement or proposal, or to take any other action it or they may deem
appropriate, in response to such announcement or tender offer and which is
consistent with their obligations under the Merger Agreement. See 'The Merger
Agreement -- Nonsolicitation Obligations and Exceptions' below.
The Merger Agreement
Commencement. The Merger Agreement provides for the commencement of the
Offer not later than five business days after the execution of the Merger
Agreement, provided that none of the Offer Conditions has occurred. Parent,
Offeror and the Company are required to use all
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reasonable efforts to take all action as may be reasonably necessary or
appropriate in order to effectuate the Offer and the Merger as promptly as
possible and to carry out the transactions provided for or contemplated by the
Merger Agreement.
Merger. The Merger Agreement provides that, as soon as practicable after
the approval and adoption of the Merger Agreement by the stockholders of the
Company, to the extent required by Delaware law, and the satisfaction or waiver,
if possible, of certain other conditions contained in the Merger Agreement, and
in no event later than five business days after such satisfaction or waiver,
Offeror (or another direct or indirect wholly owned subsidiary of Parent) will
be merged with and into the Company, with the Company continuing as the
surviving corporation (the 'Surviving Corporation') in the Merger under the
corporate name it possesses immediately prior to the Effective Time.
Notwithstanding the foregoing, the parties to the Merger Agreement have agreed
that Offeror may revise the structure of the Merger (including merging the
Company into Offeror or merging the Company with or into another direct or
indirect wholly owned subsidiary of Parent) provided that any such restructuring
does not adversely affect the stockholders of the Company or cause the Company
to breach its representations and warranties under the Merger Agreement.
Vote Required to Approve Merger. In the Merger Agreement, the Company has
agreed, if a stockholder vote is required, to take all action necessary in
accordance with the Delaware Law and its Certificate of Incorporation and
By-laws to convene a meeting of its stockholders as promptly as practicable
following consummation of the Offer for the purpose of considering and voting on
the Merger. The Company, acting through the Board, has further agreed that if a
stockholders' meeting is convened, the Board shall recommend that stockholders
of the Company vote to approve the Merger, but that such recommendation may be
withdrawn, modified or amended to the extent that the Board concludes, in good
faith after consultation with its outside financial advisor, upon advice of
outside legal counsel, that it is inconsistent with its fiduciary duties under
applicable law not to do so. In the event that proxies are to be solicited from
the Company's stockholders, the Company shall, if and to the extent requested by
Offeror, use its reasonable efforts to solicit from stockholders of the Company
proxies in favor of the Merger and shall take all other reasonable action
necessary or, in the opinion of Offeror, helpful to secure a vote or consent of
stockholders in favor of the Merger. At any such meeting, all of the Shares then
owned by Offeror and by any of its subsidiaries, and all Shares for which the
Company has received proxies to vote, will be voted in favor of the Merger. The
Company has also agreed to postpone the holding of its Annual Meeting of
Stockholders indefinitely pending consummation of the Merger unless the Company
is otherwise required to hold such meeting by the Delaware Law.
Conversion of Securities. At the Effective Time, each Share issued and
outstanding immediately prior thereto (other than Shares held in the treasury of
the Company or owned by Parent or any subsidiary of Parent, which shall
automatically be cancelled and retired) will automatically be cancelled and
extinguished and, other than Shares with respect to which appraisal rights are
properly exercised, will be converted into and become a right to receive the
Offer Price upon the surrender of the certificate formerly representing such
Share. Each share of common stock of Offeror issued and outstanding immediately
prior to the Effective Time shall, at the Effective Time, by virtue of the
Merger and without any action on the part of Offeror, the Company or the holders
of Shares, be converted into and shall thereafter evidence one validly issued
fully paid and nonassessable share of common stock of the Surviving Corporation.
Treatment of Stock Options. In the Merger Agreement, the Company has agreed
that, at the Effective Time, each holder of an outstanding option, warrant or
other right to acquire Shares (collectively the 'Options'), whether granted
under any employee or non-employee compensation plan, agreement or arrangement
of the Company, and whether or not then vested, shall be cancelled, and the
holders of fully vested Options shall be entitled to receive from the Surviving
Corporation, in cancellation of such vested Options, an amount in cash equal to
the excess, if any, of (a) the product of the number of Shares covered by such
vested Options multiplied by the Offer Price, over (b) the product of the number
of Shares covered by such vested Options multiplied by the per-Share exercise,
purchase or conversion price payable upon exercise, purchase
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or conversion of such vested Options, subject to any required withholding taxes.
The Company has agreed in the Merger Agreement to take all action necessary to
effectuate such provisions, including obtaining any necessary consents of the
holders of the Options.
Conditions to Obligations of All Parties to Merger Agreement. The
obligations of each of the parties to effect the Merger are subject to the
following conditions:
(i) the Merger shall have been approved and adopted by the vote of the
stockholders of the Company to the extent required by the Delaware Law;
(ii) all waiting, review and investigation periods (and any extension
thereof) applicable to the consummation of the Merger under the
Hart-Scott-Rodino Act shall have expired or been terminated;
(iii) there shall have been no law, statute, rule or order, domestic
or foreign, enacted or promulgated which would make consummation of the
Merger illegal;
(iv) no injunction or other order entered by a United States (state or
federal) court of competent jurisdiction shall have been issued and remain
in effect which would prohibit consummation of the Merger (but the parties
shall use their reasonable efforts to cause any such injunction or order to
be vacated or lifted); and
(v) Parent, Offeror or their affiliates shall have purchased Shares
validly tendered and not withdrawn pursuant to the Offer (but neither
Parent nor Offeror may invoke that condition if Parent or Offeror has
failed to purchase Shares so tendered and not withdrawn in violation of the
Merger Agreement or the Offer).
Conditions to Obligations of Offeror. Offeror shall not be required to
continue the Offer or accept for payment, purchase or pay for any Shares
tendered, or may postpone the acceptance, purchase or payment for Shares, or may
amend (to the extent permitted by the Merger Agreement) or terminate the Offer
(1) if the Minimum Condition (as defined in the Merger Agreement) is not
satisfied as of the expiration of the Offer, (2) if any applicable waiting,
review and investigation periods under the Hart-Scott-Rodino Act in respect of
the Offer shall not have expired or been terminated prior to the expiration of
the Offer, or (3) if, at any time on or after October 31, 1999 and prior to the
expiration date of the Offer (or, in respect of clause (viii) below concerning
required governmental consents, the latest date permitted in accordance with
Rule 14d-1(c) of the Exchange Act), any of the following events shall have
occurred (each of paragraphs (i) through (viii) providing a separate and
independent condition to Offeror's obligations pursuant to the Offer):
(i) the Company or any subsidiary of the Company, or their respective
Boards of Directors, shall have authorized, recommended or proposed, or
shall have announced an intention to authorize, recommend or propose, or
shall have entered into an agreement or agreement in principle with respect
to, any merger, consolidation or business combination (other than the
Merger), any acquisition or disposition of a material amount of assets or
securities or any material change in its capitalization, or the Board shall
have withdrawn or adversely modified (including by amendment to its
Schedule 14D-9), or upon request of Offeror, failed to reaffirm its
favorable recommendations with respect to the Offer and the Merger as
provided in the Merger Agreement, or any corporation, entity, 'group' or
'person' (as defined in the Exchange Act), other than Parent or Offeror,
shall have acquired beneficial ownership of 35% or more of the outstanding
Shares;
(ii) there shall have been any statute, rule, injunction or other
order promulgated, enacted, entered or enforced by any court or
governmental agency or other regulatory or administrative agency or
commission, domestic or foreign (other than the routine application to the
Offer, the Merger or other subsequent business combination of waiting,
review and investigation periods under the Hart-Scott-Rodino Act):
(a) making the purchase of some or all of the Shares pursuant to the Offer
or the Merger illegal, or resulting in a material delay in the ability of
Offeror to purchase some or all of the Shares, (b) invalidating or
rendering unenforceable any material provision of the Merger Agreement,
(c) imposing material limitations on the ability of Offeror effectively to
acquire or hold or to exercise full rights of
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ownership of the Shares acquired by it, including but not limited to, the
right to vote the Shares purchased by it on all matters properly presented
to the stockholders of the Company, (d) imposing material limitations on
the ability of any of Parent, Offeror, or the Company to continue
effectively all or any material portion of its respective business as
heretofore conducted or to continue to own or operate effectively all or
any material portion of its respective assets as heretofore owned or
operated, (e) imposing material limitations on the ability of Offeror to
continue effectively all or any material portion of the business of the
Company and its subsidiaries (taken as a whole) as previously conducted or
to own or operate effectively all or any material portion of the assets of
the Company and its subsidiaries (taken as a whole) as heretofore operated,
or (f) to the effect that the Offer or the Merger is violative of any
applicable law which would reasonably be expected to result in any of the
consequences described in subclauses (a) through (e) above;
(iii) there shall have been any law, statute, rule or regulation,
domestic or foreign, enacted or promulgated that, directly or indirectly,
results or may be anticipated to result in any of the consequences referred
to in clause (ii) above, or any action, suit or proceeding shall have been
commenced before any court or governmental or regulatory authority or body
seeking to restrain, enjoin or otherwise prohibit the Offer, the Merger, or
the completion of the transactions contemplated by the Merger Agreement;
(iv) there shall have occurred (i) any general suspension of, or
limitation on prices for, trading in securities on any national securities
exchange or in the over the counter market in the United States for a
period of in excess of six and one-half trading hours in any period of 24
consecutive hours (excluding suspensions resulting solely from physical
damage or interference with such exchanges not related to market
conditions), (ii) the declaration of a banking moratorium or any suspension
of payments in respect of banks in the United States, (iii) any limitation
by any governmental authority on, or any other event which might materially
adversely affect, the extension of credit by banks or other lending
institutions in the United States, or (iv) in the case of any of the
foregoing existing at the time of the commencement of the Offer, a material
acceleration or worsening thereof;
(v) except as set forth in certain filings made by the Company with
the Commission before October 31, 1999 or disclosed in schedules to the
Merger Agreement, any change shall have occurred or be threatened which
individually or in the aggregate has had or is continuing to have a Company
Material Adverse Effect (as defined in the Merger Agreement);
(vi) (i) any of the representations and warranties of the Company in
the Merger Agreement shall not be true and correct in all respects as if
made on the date of any determination thereunder except for those
representations or warranties that address matters only as of a specified
date or only with respect to a specified period of time which need only be
true and accurate as of such date or with respect to such period; provided,
however, any representation or warranty not qualified by 'material,'
'Company Material Adverse Effect,' a specified dollar limitation or the
like need only be true and correct in all material respects on the date of
any determination hereunder, or (ii) the Company shall have breached in any
respect or shall not have performed in all respects each covenant and
complied with each agreement to be performed and complied with by it under
the Merger Agreement unless the Company gives prompt notice to Offeror of
such breach or nonperformance, such breach or nonperformance is capable of
being fully and completely cured at no more than an inconsequential cost or
expense to the Company or its subsidiaries and such breach or
nonperformance is so cured within three business days following such breach
or nonperformance;
(vii) the Company and Offeror shall have reached an agreement or
understanding regarding termination of the Offer or the Merger Agreement
shall have been terminated in accordance with its terms; or
(viii) all governmental consents (including consents of foreign
governmental entities) required to be obtained in connection with the
purchase of Shares pursuant to the Offer shall
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not have been obtained or any governmental agency shall have announced an
intention to seek to prohibit or interfere with the purchase of Shares
pursuant to the Offer;
which, in the good faith judgment of Offeror, in any such case, and regardless
of the circumstances giving rise to any such condition, make it inadvisable to
proceed with acceptance for payment or purchase of or payment for the Shares.
The foregoing conditions are for the sole benefit of Offeror and Parent and
may be asserted by Offeror and Parent regardless of the circumstances giving
rise to such conditions, or may be waived by Offeror in whole at any time or in
part from time to time in their sole discretion. The failure by Offeror or
Parent 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
and may be asserted at any time and from time to time.
Schedule 14D-9. In the Merger Agreement, the Company has agreed that
simultaneously with, or as promptly as possible after, the commencement of the
Offer, it will file with the Commission and promptly mail to its stockholders a
Solicitation/Recommendation Statement on Schedule 14D-9 containing the
recommendation of the Board that the Company's stockholders accept the Offer,
tender their Shares in the Offer and, if applicable, approve the Merger
Agreement and the Merger (and such recommendation shall not be withdrawn or
adversely modified except by resolution of the Board adopted in the exercise of
applicable fiduciary duties upon the advice of outside legal counsel and in
accordance with the Merger Agreement).
Board of Directors. The Merger Agreement provides that, promptly upon the
payment for any Shares by Offeror pursuant to the Offer as a result of which
Parent, Offeror or any of their affiliates beneficially own (excluding Shares
held by the Company) at least a majority of the outstanding Shares, the Company
shall increase the size of the Board to seven members and Offeror shall be
entitled to designate members of the Board such that Offeror, subject to
compliance with Section 14(f) of the Exchange Act, will have a number of
representatives on the Board, rounded up to the next whole number, equal to the
product obtained by multiplying seven by the percentage of Shares beneficially
owned by Parent and any of its subsidiaries. The Company has agreed, upon the
request of Offeror, to promptly increase the size of the Board to the extent
permitted by the Certificate of Incorporation of the Company and/or use its best
efforts to secure the resignations of such number of directors as is necessary
to enable Offeror's designees to be elected to the Board of Directors and has
agreed to use its best efforts to cause Offeror's designees to be so elected.
Notwithstanding the foregoing sentence: (i) in the event that Offeror's
designees are appointed or elected to the Board, until the Effective Time, the
Board shall have at least one director who is a director on the date of the
Merger Agreement and who is neither an officer of the Company nor a stockholder,
affiliate or associate (within the meaning of federal securities laws) of Parent
(any such directors, the 'Continuing Directors'), and (ii) if no Continuing
Directors remain, the other directors shall designate one (1) person to fill one
(1) of the vacancies, who shall not be either an officer of the Company or a
stockholder, affiliate or associate of Parent, and such person shall be deemed
to be a Continuing Director. The Company has agreed, at its expense and at the
request of Offeror, to take all actions necessary to effect any such election,
including the mailing to its stockholders of the information required by
Section 14(f) of the Exchange Act and Rule 14f-1 promulgated thereunder, in form
and substance reasonably satisfactory to Offeror and its counsel (but Parent and
Offeror will supply to the Company, and be solely responsible for, any written
information with respect to its nominees, officers, directors and affiliates
required by Section 14(f) and Rule 14f-1).
Parent has informed the Company that Parent currently intends to designate
a majority of the directors of the Company following consummation of the Offer.
Parent has informed the Company that Parent currently anticipates that Parent
will designate some or all of Robert D. Johnson, Peter M. Kreindler, Steven R.
Loranger, Donald J. Redlinger, James D. Taiclet and Richard F. Wallman, or such
other persons listed on Annex 1 of the Offer to Purchase, as Parent shall
determine, to serve as directors of the Company following consummation of the
Offer.
Representations and Warranties. In the Merger Agreement, the Company has
made customary representations and warranties to Parent and Offeror, including,
but not limited to, representations
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and warranties relating to the Company's organization and qualification, the
Company's subsidiaries, capitalization and authority to enter into the Merger
Agreement and carry out the transactions contemplated thereby, required consents
and approvals, Commission filings (including financial statements), the absence
of certain material adverse changes or events since September 30, 1998,
litigation, the material liabilities of the Company and its subsidiaries,
environmental matters relating to the Company and its subsidiaries, employee
benefit plans, labor matters, the documents supplied by the Company relating to
the Offer, trademarks, patents and other intellectual property (including
Year 2000 issues), the payment of taxes, arrangements with financial advisors,
the absence of product liability claims, the absence of related party
transactions, relationships with suppliers and customers, and the absence of
actions in violation of the Foreign Corrupt Practices Act of 1977, as amended.
The Company has also represented that it has taken all action necessary to
render Section 203 of the Delaware Law (see the discussion in Item 8 under the
heading 'State Takeover Laws' below) inapplicable to the Offer, the Merger, the
Merger Agreement and the Shareholders Agreement and the transactions
contemplated thereby.
Parent and Offeror have also made customary representations and warranties
to the Company, including, but not limited to, representations and warranties
relating to Parent and Offeror's organization and qualification, their authority
to enter into the Merger Agreement and the Shareholders Agreement and consummate
the transactions contemplated thereby, required consents and approvals,
documents related to the Offer, the availability of sufficient financing to
consummate the Offer, the absence of violations of any margin rules (see the
discussion in Item 8 under the heading 'Federal Reserve Board Regulations'
below), and the absence of any prior activities by Offeror.
Conduct of Company's Business Pending the Merger. Pursuant to the Merger
Agreement, the Company has agreed that, prior to the Effective Time, unless
Offeror shall otherwise have agreed in writing or as otherwise contemplated or
permitted by the Merger Agreement, the Company will do the following:
(i) conduct the business of the Company and its subsidiaries only in,
and maintain their facilities in, the ordinary course of business and
consistent with past practice;
(ii) use its commercially reasonable efforts to cause its current
insurance (or reinsurance) policies not to be cancelled or terminated or
any of the coverage thereunder to lapse, unless simultaneously with such
termination, cancellation or lapse, replacement policies 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;
(iii) use its commercially reasonable efforts, and cause its
subsidiaries to use commercially reasonable efforts, to preserve intact
their respective business organizations and goodwill, keep available the
services of their current officers and employees as a group and maintain
satisfactory relationships with suppliers, distributors, customers and
others having business relationships with them;
(iv) confer on a regular and frequent basis with representatives of
Offeror to report financial matters and, to the extent not prohibited by
applicable law, operational matters and the general status of ongoing
operations;
(v) notify Offeror of any emergency or other change in the normal
course of the Company's or any of its subsidiaries' business or in the
operation of the Company's or the subsidiaries' properties and of any
governmental or third party complaints, investigations or hearings (or
communications indicating that the same may be contemplated) if such
emergency, change, complaint, investigation or hearing has or would be
reasonably likely to have, individually or in the aggregate, a material
adverse effect, individually or in the aggregate, on the business,
liabilities, revenues, operations, results of operations or financial
condition of the Company and its subsidiaries, taken as a whole (a 'Company
Material Adverse Effect') or would be material to any party's ability to
consummate the transaction contemplated by the Merger Agreement; and
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<PAGE>
(vi) postpone the holding of its Annual Meeting of Stockholders
indefinitely pending consummation of the Merger unless otherwise required
by the Delaware Law.
The Company has also agreed pursuant to the Merger Agreement that, prior to
the Effective Time, unless Offeror shall otherwise have agreed in writing or as
otherwise contemplated or permitted by the Merger Agreement, it will not
directly or indirectly do, or permit the occurrence of, any of the following:
(i) issue, sell, pledge, dispose of or encumber (or permit any of its
subsidiaries to issue, sell, pledge, dispose of or encumber) any shares of,
or any options, warrants, conversion privileges or rights of any kind to
acquire any shares of, any capital stock of the Company or any of its
subsidiaries (other than shares issuable upon exercise of the outstanding
(as of the date of the Merger Agreement) options to acquire Shares in
accordance with their terms in effect on the date of the Merger Agreement);
(ii) amend or propose to amend the Certificate or Articles of
Incorporation or By-laws of the Company or any of its subsidiaries;
(iii) split, combine or reclassify any outstanding Shares, or declare,
set aside or pay any dividend or other distribution payable in cash, stock,
property or otherwise with respect to the Shares (except the declaration
and payment of dividends by a wholly owned subsidiary of the Company to its
parent);
(iv) redeem, purchase or acquire or offer to acquire (or permit any of
its subsidiaries to redeem, purchase or acquire or offer to acquire) any
Shares or other securities of the Company or any of its subsidiaries other
than as contemplated by the Merger Agreement and other than for the
repurchase by the Company, pursuant to existing agreements, of any
outstanding Shares upon termination of any employment, director or
consulting relationship with the Company;
(v) enter into any material contract; or
(vi) enter into or modify any agreement, commitment or arrangement
with respect to any of the foregoing.
Pursuant to the Merger Agreement, the Company has further agreed that,
unless Offeror shall otherwise have agreed in writing or as otherwise
contemplated or permitted by the Merger Agreement, the Company and its
subsidiaries (including, in the case of clause (viii), any 'Company ERISA
Affiliate,' as defined in Section 4.11 of the Merger Agreement) will not:
(i) sell, pledge, lease, dispose of or encumber any material assets
other than in the ordinary course of business consistent with past
practice;
(ii) acquire (by merger, consolidation, acquisition of stock or assets
or otherwise) any corporation, partnership or other business organization
or enterprise or material assets thereof;
(iii) incur any indebtedness for borrowed money or issue any debt
securities for borrowings except in the ordinary course of business and
consistent with past practice;
(iv) guarantee, endorse or otherwise become liable or responsible
(whether directly, contingently or otherwise) for the obligations of any
other person (other than a subsidiary of the Company or the Company) except
in the ordinary course of business consistent with past practice and in
amounts immaterial to the Company;
(v) enter into or modify any contract, agreement, commitment or
arrangement with respect to any of the foregoing;
(vi) enter into or modify any employment, severance or similar
agreements or arrangements with, or grant any Options (or accelerate any
Options), bonuses, salary increases, severance or termination pay to, any
officers or directors;
(vii) in the case of employees who are not officers or directors, take
any action to grant or accelerate any Options, or take any other action
other than in the ordinary course of business consistent with past practice
(none of which actions shall be unreasonable or unusual) with respect to
the grant or creation of any bonuses, salary increases, severance or
termination
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pay, employment or similar agreements or with respect to any increase of
benefits in effect on the date of the Merger Agreement;
(viii) except as may be required by applicable law, adopt or amend any
bonus, profit sharing, compensation, stock option, pension, retirement,
deferred compensation, employment or other employee benefit plan,
agreement, trust fund or arrangement for the benefit or welfare of any
employee;
(ix) adopt a plan of liquidation, dissolution, merger, consolidation,
restructuring, recapitalization, or reorganization;
(x) make any material tax election or settle or compromise any
material federal, state, local, or foreign tax liability, except in the
ordinary course of business and consistent with past practice; or
(xi) take any action which would render or which reasonably may be
expected to render any representation or warranty made by the Company in
the Merger Agreement untrue in any respect at any time prior to the
Effective Time (or untrue in any material respect if such representation or
warranty is not qualified by 'material,' 'Company Material Adverse Effect,'
a specified dollar limitation or the like).
In addition, the Company has agreed that it will not, unless Offeror shall
otherwise have agreed in writing or as otherwise contemplated or permitted by
the Merger Agreement: (i) call any meeting (other than as contemplated by the
Merger Agreement) of its stockholders or waive or modify any provision of, or
terminate any, confidentiality or standstill agreement entered into by the
Company with any person or (ii) modify or accelerate the exercisability of any
Options outstanding on the date of the Merger Agreement.
Nonsolicitation Obligations and Exceptions. The Company has agreed in the
Merger Agreement to immediately cease and terminate any existing activities,
discussions or negotiations with any parties with respect to any acquisition of
or sale of any equity interest in or substantial assets of the Company or any of
its subsidiaries. Also, the Company has agreed (except as set forth below) that
it will not, directly or indirectly, solicit, encourage, participate in or
initiate discussions or negotiations with, or provide any information to, any
other person other than Offeror or its affiliates or representatives (a 'third
party') concerning any merger, consolidation, tender offer, exchange offer, sale
of all or substantially all of the Company's assets, sale of shares of capital
stock or similar business combination transaction involving the Company or any
principal operating or business unit of the Company or its subsidiaries (an
'Acquisition Proposal').
Notwithstanding the foregoing: (i) if, prior to Offeror owning a majority
of the outstanding Shares, the Company receives an unsolicited, written
indication of a willingness to make an Acquisition Proposal at a price per share
which the Company reasonably concludes is in excess of the Offer Price, and the
Company reasonably concludes in good faith, after consultation with its outside
financial advisor, that the person delivering such indication is capable of
consummating such an Acquisition Proposal, then the Company may provide access
to information concerning the Company's business, properties or assets to any
such person pursuant to an appropriate confidentiality agreement and the Company
may engage in discussions related thereto, and (ii) the Company may participate
in and engage in discussions and negotiations with any person meeting the
requirement set forth in clause (i) above in response to a written Acquisition
Proposal if the Company concludes in good faith, after consultation with its
outside financial advisor, upon advice of its legal counsel, that the failure to
engage in such discussions or negotiations is inconsistent with the fiduciary
duties of its Board of Directors to its stockholders under applicable laws, and
the Company receives from the person making an Acquisition Proposal an executed
confidentiality agreement the terms of which are (without regard to the terms of
the Acquisition Proposal) (A) no less favorable to the Company, and (B) no less
restrictive to the person making the Acquisition Proposal, than those contained
in the Confidentiality Agreement.
Also, in the event that, after the Company has received a written
Acquisition Proposal (without breaching its obligations under clause (i) or (ii)
above) but prior to Offeror beneficially owning a majority of the outstanding
Shares, the Board concludes in good faith, after consultation
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with its outside financial advisor, upon advice of its legal counsel, that it is
inconsistent with its fiduciary duties under applicable law not to do so, the
Company may concurrently with the payment of the Termination Fee (defined below
under 'Expenses; Termination Fee') do any or all of the following: (x) withdraw
or modify the Board's recommendation of the Merger or the Merger Agreement,
(y) approve or recommend an Acquisition Proposal, subject to the relevant
provisions of the Merger Agreement, and (z) terminate the Merger Agreement.
The Company has agreed promptly (but in any event within two days) to
advise Parent in writing of any Acquisition Proposal or any inquiry regarding
the making of an Acquisition Proposal including any request for information, the
material terms and conditions of such request, Acquisition Proposal or inquiry
and the identity of the person making such request, Acquisition Proposal or
inquiry and thereafter to keep Parent reasonably informed, on a current basis,
of the status and material terms of such proposals and the status of such
negotiations or discussions, providing copies to Parent of any Acquisition
Proposals made in writing. The Company has also agreed to provide Parent with
one business day advance notice of, in each and every case, its intention to
provide any information to, or enter into any confidentiality agreement with,
any person or entity making any such inquiry or proposal, and the Company has
agreed to provide Parent with three business days advance notice of, in each and
every case, its intention to enter into any other agreement with any person or
entity making any such inquiry or proposal.
Notwithstanding the provisions of the Confidentiality Agreement: (i)
following any notification to Parent of a written proposal that permits the
Company to negotiate with or furnish information to any third party in
accordance with the foregoing provisions, and until any transaction resulting
from such proposal shall have either been consummated or the Company shall have
received written notification that any such third party shall no longer seek to
engage in such transaction with or involving the Company, Parent shall be
entitled to propose or present to the Company any offer in response to such
third party's offer, and (ii) if, from the date of the Merger Agreement until
the Effective Time, any third party shall announce its intention to commence, or
shall commence, any tender offer to acquire Shares, Parent and Offeror shall be
entitled to make any public announcement or proposal, or to take any other
action it or they may deem appropriate, in response to such announcement or
tender offer and which is consistent with their obligations under the Merger
Agreement.
The Merger Agreement provides that its does not prohibit the Company and
its Board of Directors from taking and disclosing to the Company's stockholders
a position with respect to a tender or exchange offer by a third party pursuant
to Rules 14d-9 and 14e-2(a) promulgated under the Exchange Act or from making
such disclosure to the Company's stockholders or otherwise which, in the
judgment of the Board upon advice of legal counsel, is required under applicable
law or rules of any stock exchange.
The Company has agreed not to release any third party from, or waive any
provisions of, any confidentiality or standstill agreement to which the Company
is a party and to use its best efforts to enforce any such agreements at the
request of and on behalf of Parent. The Company also will promptly request each
person or entity which has executed, within 12 months prior to the date of the
Merger Agreement, a confidentiality agreement in connection with its
consideration of acquiring the Company to return or destroy all confidential
information furnished to such person or entity by or on behalf of the Company.
The provisions discussed in the preceding seven paragraphs are referred to
herein below as the 'Nonsolicitation Provisions.'
Indemnification; Settlement of Stockholder Claims. The parties to the
Merger Agreement have agreed that, for a period of six years after Parent or
Offeror acquires a majority of the Shares, the Certificate of Incorporation of
the Surviving Corporation shall contain provisions no less favorable with
respect to indemnification that are set forth in Articles VIII and IX of the
Certificate of Incorporation of the Company. Also, the Surviving Corporation
shall maintain in full force and effect, for a period of at least six years from
the Effective Time, directors' and officers' liability insurance comparable to
the Company's current policy but only to the extent obtainable at a cost of no
more than 100% greater than the cost of such policy (and, if not so obtainable,
the
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Surviving Corporation shall obtain what it believes in good faith constitutes
the best available insurance at such price level).
The Company has agreed not to settle or compromise any claim brought by any
present, former or purported holder of any securities of the Company in
connection with the Merger prior to the Effective Time without the prior written
consent of Offeror.
Existing Employment Agreements and Benefits. The Merger Agreement provides
that Parent will cause the Surviving Corporation to honor all employment,
consulting, termination and severance agreements in effect prior to the date of
the Merger Agreement between the Company or any of its subsidiaries and any
current or former officer, director, consultant or employee of the Company.
Also, the parties to the Merger Agreement have agreed to certain provisions to
provide for the continued coverage of the employees of the Company and its
subsidiaries under benefits plans.
Consents; Audit; Access to Information. In the Merger Agreement, the
Company has agreed to use its best efforts to obtain, without the payment of any
fee or compensation, certain consents to the Offer, the Merger, and the
transactions contemplated by the Merger Agreement. The Company has also agreed
to use reasonable commercial efforts to have Arthur Andersen LLP complete its
audit of the Company's consolidated financial statements for the fiscal year
ended September 30, 1999 as promptly as practicable, and to give Parent and
Offeror reasonable access to such audit work papers and audit staff, as well as
(subject to the provisions of the Confidentiality Agreement and to the extent
not prohibited by applicable law) to any other books, records and personnel of
the Company as may be reasonably requested.
Termination. The Merger Agreement may be terminated at any time prior to
the Effective Time, whether prior to or after approval by the stockholders of
the Company:
(a) by mutual consent of the Boards of Directors of Parent and the
Company;
(b) by either Offeror or the Company if the Offer shall not have been
consummated on or before the Termination Date; provided, however, that a
party shall not be entitled to terminate the Merger Agreement pursuant to
such provision if such party is in material breach of its obligations under
the Merger Agreement; provided, further, that if the Offer shall not have
been consummated on or before the Termination Date solely as a result of
the failure of any waiting, review and investigation period (and any
extension thereof) applicable to the consummation of the Offer or the
Merger under the Hart-Scott-Rodino Act to expire or terminate or failure to
obtain required governmental consents of, the Termination Date shall, in
the sole discretion of Offeror, be extended to a date that is up to 60
business days from the date the Offer is commenced;
(c) by Offeror if the Board shall have withdrawn or adversely modified
(or, upon the written request of Offeror, failed to reaffirm within three
business days; provided that no such additional request may be made during
such three business day period) its recommendations to the stockholders of
the Company to approve the Offer and the Merger;
(d) by Offeror if the Offer terminates or expires on account of the
occurence of any of the Offer Conditions, without Offeror having purchased
any Shares thereunder;
(e) by the Company if (i) the Offer shall not have been commenced
substantially in accordance with the relevant provisions of the Merger
Agreement, or (ii) the Offer shall have expired or been terminated without
any Shares having been purchased thereunder, or (iii) a tender offer for
Shares is commenced by a person or entity, or the Company receives an
Acquisition Proposal, any of which the Board determines, in the exercise of
its fiduciary duties and subject to compliance with the Nonsolicitation
Provisions, makes necessary or advisable the termination of the Merger
Agreement; provided that the Nonsolicitation Provisions and the provisions
described below under 'Expenses; Termination Fee' (the 'Expense
Provisions') shall survive any such termination of the Merger Agreement; or
(f) by Offeror if any action, suit or proceeding is commenced or
overtly threatened against Parent or Offeror or the Company, before any
court or governmental or regulatory
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authority or body, seeking to restrain, enjoin, or otherwise prohibit the
Offer, the Merger, or the completion of any of the other transactions
contemplated by the Merger Agreement; provided that the Nonsolicitation
Provisions and the Expense Provisions shall survive any such termination of
the Merger Agreement.
If the Merger Agreement is so terminated, Offeror shall terminate the
Offer, if still pending, without purchasing any Shares thereunder, and the
Merger Agreement will become void and there will be no liability or further
obligation on the part of Parent, Offeror or the Company or their respective
stockholders, officers or directors, except (i) as described under clauses
(e) and (f) above, under the Nonsolicitation Provisions, under the Expense
Provisions, and with respect to certain confidentiality obligations, and
(ii) to the extent that such termination results from the breach by a party of
any of its representations, warranties, covenants or agreements set forth in the
Merger Agreement; provided, however, that if Parent has received the Termination
Fee, Parent shall not assert or pursue in any manner, directly or indirectly,
any claim or cause of action against the Company or any of its officers or
directors based in whole or in part upon its or their receipt, consideration,
recommendation or approval of an Acquisition Proposal or the exercise of the
right of the Company to terminate the Merger Agreement under clause (e) above as
long as the Company complied in all material respects with the Nonsolicitation
Provisions.
Expenses; Termination Fee. The Merger Agreement provides that the Company
will pay Parent, upon demand, $5,500,000 (the 'Termination Fee'), to compensate
Parent and Offeror for taking actions to consummate the Merger Agreement, to
reimburse them for the time and expense relating thereto and for other direct
and indirect costs in connection with the transactions contemplated by the
Merger Agreement, upon the following events:
(i) the termination of the Merger Agreement by the Company pursuant to
the Nonsolicitation Provisions or pursuant to clause (e)(iii) above;
(ii) the termination of the Merger Agreement by Offeror pursuant to
clause (c) above;
(iii) the termination of the Offer by Offeror pursuant to clause (i)
under 'Certain Conditions to Offeror's Obligations' above; or
(iv) the termination of the Merger Agreement pursuant to its terms for
any reason other than a material breach by Parent or Offeror if within six
months thereafter either (x) a definitive agreement is entered into between
the Company and any third party for the acquisition or disposition of all
or substantially all of the assets of the Company, or securities of the
Company constituting (or convertible into) 35% or more of the Shares
outstanding on the date of the Merger Agreement, or for a merger,
consolidation or other reorganization of the Company, at a price equivalent
to a price per Share in excess of $9.50 and such transaction is closed
concurrently therewith or at any time thereafter, or (y) any person or
'group' (as that term is used in Section 13(d)(3) of the Exchange Act)
other than Offeror or any affiliate of Offeror acquires beneficial
ownership of 35% or more of the outstanding Shares.
Also, in the event that, after the Company has received a written
Acquisition Proposal (without breaching certain Nonsolicitation Provisions) but
prior to Offeror beneficially owning a majority of the outstanding Shares, the
Board concludes in good faith, after consultation with its outside financial
advisor, upon advice of its legal counsel, that it is inconsistent with its
fiduciary duites under applicable law not to do so, the Company may,
concurrently with the payment of the Termination Fee, do any or all of the
following: (x) withdraw or modify the Board's recommendation of the Merger or
the Merger Agreement, (y) approve or recommend an Acquisition Proposal, subject
to the relevant provisions of the Merger Agreement, or (z) terminate the Merger
Agreement.
The Merger Agreement further provides that, in addition to any damages
caused by conduct that constitutes a breach under the Merger Agreement by
Parent, Offeror or the Company, the breaching parties, jointly and severally,
will pay to the nonbreaching parties all costs and expenses (including
attorneys' fees and expenses) it incurs in connection with its enforcement of
its rights under the Merger Agreement.
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Consent of Continuing Directors to Termination, Modification, Amendment or
Waiver. Notwithstanding anything in the Merger Agreement to the contrary, if
Offeror's designees are elected to the Board, after the acceptance for purchase
of Shares pursuant to the Offer and prior to the Effective Time the affirmative
vote of a majority of the Continuing Directors will be required (i) to amend or
terminate the Merger Agreement on behalf of the Company, (ii) to amend the
Company's Certificate of Incorporation or By-laws, (iii) to exercise or waive
any of the Company's rights or remedies under the Merger Agreement, (iv) to
extend the time for performance of Parent or Offeror's obligations under the
Merger Agreement, (v) to take any other action by the Company in connection with
the Merger Agreement required to be taken by the Board.
The Shareholders Agreement
Agreement to Tender Shares. On October 31, 1999, Parent and Offeror entered
into the Tender and Option Agreement (the 'Shareholders Agreement') with P.
Quentin Bourjeaurd and Charles Balchunas, each of whom is an officer and
director of the Company (the 'Subject Stockholders'). The Shareholders Agreement
applies with respect to the Shares now beneficially owned by Messrs. Bourjeaurd
and Balchunas (1,459,447 Shares and 136,522 Shares, respectively), any Shares
either such person may acquire pursuant to the exercise of Options (1,534,022
Shares and 602,276 Shares, respectively), and any Shares of which either such
person may later acquire beneficial ownership by any means (collectively, the
'Subject Shares'). Each Subject Stockholder has agreed to tender and sell in the
Offer all of the then outstanding Subject Shares.
Voting. Each Subject Stockholder has generally agreed to cause its Subject
Shares to be present or absent at stockholders meetings as directed by Parent or
Offeror, and has appointed Parent and Offeror, or any nominee thereof, as his
attorney and proxy to vote the Subject Shares, in each case (i) in favor of the
Merger and the Merger Agreement and (ii) against any Acquisition Proposal (other
than the Merger), any actions which would result in a breach of the Merger
Agreement, or any actions which are intended or could be expected to adversely
affect the Offer and the related agreements.
Grant of Purchase Option. The Subject Stockholders have also granted to
Parent and Offeror an irrevocable option (the 'Purchase Option') to purchase for
cash at the Offer Price, any or all of the Subject Shares, including, without
limitation, by requiring the Subject Stockholder to exercise any or all Options
(to the extent exercisable and convertible, and other than Options with exercise
or conversion prices above the Offer Price) and tender the shares of Company
Common Stock acquired pursuant to such exercise or conversion into the Offer or
sell such shares of Company Common Stock to Parent or Offeror. At the request of
the Subject Stockholder following receipt of an exercise notice, Parent or
Offeror shall advance to such Subject Stockholder an amount in cash equal to the
aggregate per share exercise price of the Options to be exercised pursuant to
the exercise notice. The Purchase Option may be exercised by Parent or Offeror,
in whole or in part, at any time or from time to time after the occurrence of
any 'Trigger Event,' meaning any of the following: (i) the Merger Agreement
becomes terminable under circumstances that entitle Parent or Offeror to receive
the Termination Fee (regardless of whether the Merger Agreement is actually
terminated and whether such Fee is actually paid) or (ii) the Offer is
consummated but, due solely to the failure of the Subject Stockholder to validly
tender its Subject Shares, Parent has not accepted for payment or paid for all
of such Shares.
Conditions. The obligations of the Subject Stockholders to sell Subject
Shares under the Shareholders Agreement is subject to the following conditions:
(i) all applicable waiting periods, if any, under the Hart-Scott-Rodino Act have
expired or been terminated; (ii) all applicable consents, approvals, orders or
authorizations of, or registrations, declarations or filings with, any court,
administrative agency or other governmental entity, if any, have been obtained
or made; and (iii) no preliminary or permanent injunction or other order by any
court of competent jurisdiction prohibiting or otherwise restraining such sale
or acquisition is in effect.
Restrictions on Transfer. Each Subject Stockholder has generally agreed not
to tender into any other tender or exchange offer or otherwise transfer or
encumber any interest in the Subject
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Shares, not to enter into any voting arrangements with respect to the Subject
Shares, and not to exercise any appraisal rights with respect to the Subject
Shares in connection with the Merger. Each Subject Stockholder may, however,
transfer Subject Shares to certain affiliates, family members and family trusts,
as well as organizations qualifying under Section 501(c)(3) of the Internal
Revenue Code of 1986, as amended, but in each case only if the transferee agrees
to be bound by the Shareholders Agreement.
No Solicitation. Other than to the extent permitted in the stockholder's
capacity as an officer or director of the Company as permitted in the Merger
Agreement or consistent with his fiduciary duties, each Subject Stockholder has
agreed not to initiate, solicit, encourage or otherwise facilitate any inquiries
or the making or submission of any Acquisition Proposal, and to promptly advise
Parent of any Acquisition Proposals.
Termination. The Shareholders Agreement will terminate with respect to a
Subject Stockholder upon the purchase of all his Subject Shares in the Offer.
Otherwise, the Shareholders Agreement will terminate upon the earliest of the
following: (i) the Effective Time; (ii) the termination of the Merger Agreement
in accordance with its terms other than upon, during the continuance of, or
after, a Trigger Event or an event which could lead to a Trigger Event (as
provided above under 'The Merger Agreement -- Expenses; Termination Fee'); or
(iii) 180 days following the earlier of (x) any termination of the Merger
Agreement upon, during the continuance of or after a Trigger Event or
(y) termination of the Merger Agreement under circumstances that could lead to a
Trigger Event (as provided above under 'The Merger Agreement -- Expenses;
Termination Fee' above) (or if, at the expiration of such 180 day period the
Purchase Option cannot be exercised by reason of any applicable judgment,
decree, order, injunction, law or regulation, five (5) business days after such
impediment to exercise has been removed or has become final and not subject to
appeal).
Representations and Warranties; Covenants. Under the Shareholders
Agreement, each of the Subject Stockholders has made customary representations
and warranties to Parent and Offeror, including with respect to (i) his
beneficial ownership of the Subject Shares free of undisclosed encumbrances,
(ii) the Subject Shares constituting all securities in the Company beneficially
owned by such Subject Stockholder, (iii) the Subject Stockholder not having
rights to acquire any other securities of the Company, (iv) the absence of
voting restrictions on the Subject Shares, (v) the Subject Stockholder's due
execution and delivery of the Shareholders Agreement, (vi) the legal, valid and
binding effect of the Shareholders Agreement, (vii) the absence of certain
violations, breaches, defaults, lien creations and other events arising by
virtue of the Shareholders Agreement under existing agreements, court orders,
laws and the like, (viii) the absence of any investment banker or other
intermediary requiring a fee, and (ix) the acknowledgment of Parent and
Offeror's reliance on such representations and warranties.
Each of Parent and Offeror has also made customary representations and
warranties under the Shareholders Agreement, including with respect to (i) its
authority to enter into and perform its obligations under the Shareholders
Agreement, (ii) its due execution and delivery by of the Shareholders Agreement,
(iii) the legal, valid and binding effect of the Shareholders Agreement,
(iv) the transfer of the Subject Shares upon exercise of the Purchase Option
only in compliance with the Securities Act, and (v) the absence of certain
violations, breaches, defaults, lien creations and other events arising by
virtue of the Shareholders Agreement under existing agreements, court orders,
laws and the like.
All representations and warranties in the Shareholders Agreement will
survive for 12 months after the termination thereof. A copy of the Shareholders
Agreement is filed as Exhibit L hereto and is incorporated herein by reference.
ITEM 4. THE SOLICITATION OR RECOMMENDATION
(a) Recommendation of the Board of Directors. On October 31, 1999, the
Board by the unanimous vote of all directors, (i) approved the Offer and the
Merger, and (ii) determined that the terms of the Merger Agreement and the Offer
are fair to and advisable and in the best interests of the Company and its
stockholders. The Board recommends to the Company's
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stockholders that they accept the Offer and tender their Shares to Offeror in
response to the Offer.
(b) Background of the Offer; Reasons for Recommendation.
Background
At the request of Parent, on March 31 and April 1, 1999, P. Quentin
Bourjeaurd, Chairman, President and Chief Executive Officer of the Company, met
with Thomas Schmidt, former Vice President and General Manager, Hardware Product
Group, and Ricardo Navarro, Director, Corporate Strategic Planning, of Parent,
in Dallas, Texas. They were joined by James Taiclet, President, Aerospace
Services, on April 1, 1999. The parties discussed the Company's willingness to
explore possible strategic alternatives involving Parent. The parties concluded
the meeting by determining that they should pursue further discussions.
On April 2, 1999, the Board met and discussed the possibility of an
acquisition of the Company by Parent and authorized management to retain
Goldman, Sachs & Co. ('Goldman Sachs') as financial advisor, and Weil, Gotshal &
Manges LLP ('Weil Gotshal') as counsel, to the Company.
On April 5, 1999, Parent and the Company executed a Confidentiality
Agreement, which required each party and its representatives to maintain the
confidentiality of certain information provided to them by or on behalf of the
other party, and which also included customary standstill provisions entered
into by Parent with respect to the Company.
On April 9, 1999, the Board met and discussed a possible acquisition of the
Company by Parent with representatives of Weil Gotshal and Goldman Sachs who
were in attendance.
On April 23, 1999, the Board met and was given an update by Mr. Bourjeaurd,
the Chairman, regarding a possible acquisition by Parent and the directors
requested that management provide the Board with regular reports concerning the
status of the negotiations. From and after the end of April, Mr. Bourjeaurd was
in regular contact with individual members of the Board updating them on
developments.
On May 5, 1999, Mr. Taiclet and James Gelly, currently Vice President and
Treasurer of Parent, telephoned Mr. Bourjeaurd to express Parent's continued
willingness to explore Parent's possible acquisition of the Company. Messrs.
Taiclet and Gelly requested that the Company provide Parent with preliminary
information regarding the Company's business and operations. They further stated
that Parent would review that information and contact the Company regarding its
willingness to make a proposal. Mr. Bourjeaurd agreed to Parent's request to
conduct due diligence. On May 13, 1999, Goldman Sachs forwarded additional due
diligence materials to Parent.
In early June 1999, Mr. Taiclet called Mr. Bourjeaurd and requested
permission for Parent to conduct further due diligence on the Company. On June
17 and 18, 1999, representatives of Parent met with representatives of the
Company in Dallas to conduct an on-site and off-site review of the Company's
business and operations. During the course of such review, the Company provided
Parent with financial forecasts for the remainder of fiscal year 1999 (including
lower than previously forecasted earnings for the third quarter) as well as
fiscal years 2000 and 2001.
On June 22, 1999 the Company announced that results for the third quarter
of fiscal 1999 would be disappointing due to the slower than expected ramp up of
major just-in-time agreements, increased costs associated with several of such
agreements and the timing of the realization of the anticipated benefits of the
Company's integration of Standard Parts & Equipment Corp., acquired by the
Company in March 1999.
On June 23, 1999, Mr. Taiclet and Mr. Bourjeaurd met in Phoenix, Arizona.
At that meeting, Mr. Taiclet indicated that, based upon Parent's due diligence
to date, and subject to further due diligence, Parent would be willing to
consider a possible acquisition of the Company at a price around $10 per Share.
Mr. Bourjeaurd stated that the Company was unwilling to pursue further
discussions on that basis. Promptly thereafter, the Company requested that
Parent return or destroy all due diligence materials previously furnished to
them.
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On July 22, 1999 the Company announced its third quarter results. On July
23, 1999, the Board had its quarterly meeting at which Mr. Bourjeaurd advised
the Board of the Company's termination of its negotiations with Parent.
In mid September, 1999, Robert Johnson, President and Chief Executive
Officer of AlliedSignal Aerospace, spoke with Brian Barents, an outside director
of the Company, and indicated that Parent might have a willingness to renew
discussions. Mr. Bourjeaurd called Mr. Taiclet on September 21, 1999, and
inquired as to whether Parent was interested in resuming discussions concerning
a possible business combination between the Company and Parent. Mr. Taiclet
indicated that he was willing to meet with Mr. Bourjeaurd.
On September 24, 1999, the Board met. At that meeting, Mr. Barents reported
to the Board on the impending resumption of negotiations with Parent. At the
invitation of the Board, representatives of Deutsche Banc Alex. Brown made a
presentation concerning the status of the industry. The Board was also apprised
of the Company's preliminary estimates of the results of operations for the
fourth quarter, which were significantly below the Company's expectations for
the same period.
On October 1, 1999, Mr. Taiclet met with Mr. Bourjeaurd in Dallas. During
that meeting, Mr. Taiclet expressed Parent's willingness to consider a possible
acquisition of the Company at a price of $8.50 to $11 per share, subject to
Parent's completion of its due diligence review, including a review of the
Company's revised financial forecasts.
On October 7, 1999, the Board met and Mr. Bourjeaurd reported on the
developments in discussions with Parent.
On October 12, 1999, Mr. Bourjeaurd and Douglas Childress, Chief Financial
Officer of the Company, together with representatives of Goldman Sachs, met in
Phoenix with Jeffrey Reichard, Vice President and General Manager, Hardware
Product Group, and other representatives of Parent. The Company reviewed with
Parent its estimated financial results for fiscal year 1999 and revised
financial forecasts for fiscal years 2000 and 2001. Also at that meeting, Parent
provided the Company with additional due diligence requests. Mr. Bourjeaurd
requested that Parent express a more specific price range for the Company's
shares prior to the Company permitting Parent to complete its due diligence
review.
In a series of telephone calls on October 19, 1999, Mr. Taiclet advised Mr.
Bourjeaurd that Parent was interested in acquiring the Company at a price range
of $8.50 to $9.50 per Share, subject to its satisfactory completion of its
remaining due diligence. Mr. Bourjeaurd agreed to permit Parent to proceed with
its due diligence review. Mr. Bourjeaurd also updated various outside directors
of the Company telephonically on the developments with Parent.
From October 26 through October 29, 1999, Parent continued its due
diligence review of the Company, and at Parent's request the Company provided
Parent with revised financial forecasts for fiscal years 2000 and 2001, as well
as a copy of its unaudited results for fiscal year 1999. Also during that
period, representatives of Parent and the Company met in person in Dallas and
engaged in telephonic discussions to negotiate the terms of the Merger Agreement
and the Shareholders Agreement and, at the request of Parent, an amendment to
Mr. Bourjeaurd's employment agreement (the 'Employment Agreement Amendment').
Late Friday afternoon, October 29, 1999, representatives of Parent conveyed
to Mr. Bourjeaurd a proposal of $9.50 per Share subject to the completion of
remaining due diligence which Parent expected to complete by October 31, 1999.
In the evening of October 29, 1999, the Board met to review the
negotiations with Parent. The Chairman updated the Board. The Board discussed
the developments with representatives of Weil Gotshal and Goldman Sachs who were
in attendance.
On the afternoon of Sunday, October 31, 1999, Parent completed its due
diligence review of the Company and Mr. Taiclet and Martin Cohen (Vice
President, Corporate Development, of Parent) called Mr. Bourjeaurd and stated
that Parent was willing to acquire the Company at a price of $9.50 per Share in
cash, subject to the satisfactory completion of definitive documentation.
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During the evening of October 31, 1999, the Board met with representatives of
Goldman Sachs and Weil Gotshal to review the status of the negotiations with
Parent. Representatives of Weil Gotshal advised the Board regarding certain
legal matters, including their fiduciary duties with respect to Parent's
proposal, and reviewed with the Board the terms of the latest draft of the
Merger Agreement, the Shareholders Agreement and the Employment Agreement
Amendment. Representatives of Goldman Sachs summarized their financial analysis
and orally advised the board of Goldman Sachs' opinion (which was subsequently
confirmed in writing) to the effect that, as of October 31, 1999, and based upon
and subject to the assumptions and other matters set forth therein, the $9.50
per Share in cash to be received by the holders of Shares (other than Parent or
any subsidiary thereof) in the Offer and the Merger was fair from a financial
point of view to the holders of such Shares. After questions to the
representatives of both Weil Gotshal and Goldman Sachs and extensive
discussions, the Board voted unanimously to approve the Offer, the Merger and
the Merger Agreement and to recommend that all of the stockholders of the
Company tender their Shares pursuant to the Offer.
Following such approval, the representatives of Parent and the Company
concluded their negotiations of such definitive documentation. The Merger
Agreement, the Shareholders Agreement and the Employment Agreement Amendment
were executed and delivered late in the evening of October 31, 1999. In the
morning of November 1, 1999, the Company and Parent announced in a press release
the execution of the Merger Agreement.
Reasons for the Recommendation; Fairness of the Offer
In making the determination and recommendations described in paragraph
4(a), the Board considered the matters referred to above in this paragraph 4(b)
in addition to several other factors including, without limitation, the
following:
1. The alternatives available to the Company in light of the
consideration proposed for the Shares pursuant to the Offer and
the Merger, including continuing to maintain the Company as an
independent company.
2. The financial condition, results of operations and prospects of
the Company, which helped the directors determine the
appropriateness of a sale of the Company at the price offered at
this time.
3. Current financial market conditions and the historical market
price and trading information with respect to the Shares and the
fact that the $9.50 per Share price to be paid in the Offer
represented (a) a premium of approximately 43.4% over the $6.63
closing price for the shares on the New York Stock Exchange on
October 29, 1999, the last trading day prior to the public
announcement of the execution of the Merger Agreement, and (b) a
premium of approximately 59.4% over the average price of the
Shares over the previous twenty trading days.
4. The possibility that the consideration the Company's stockholders
might obtain in a future transaction, or through continued
ownership of shares in an independent TriStar Aerospace Co.,
would likely be less advantageous than the consideration they
would receive pursuant to the Offer, because of the Company's
failure to meet earnings expectations for the third and fourth
fiscal quarters of 1999 and the uncertainty concerning whether
the Company would be able to improve its performance in fiscal
year 2000.
5. The structural features of the Offer and the Merger providing for
a prompt cash tender offer for all outstanding Shares to be
followed by a merger for the same consideration, and that the
Offer and Merger are not subject to any financing condition,
thereby enabling stockholders to obtain the benefits of the
transaction in exchange for their Shares at the earliest possible
time.
6. The history of the negotiations between the Company and its
representatives and Parent and its representatives, including the
Company's belief that Parent would not further increase the price
of the Offer or improve the terms of the Offer, and,
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accordingly, $9.50 per Share was, in the opinion of the Board,
the highest price that could be obtained from Parent at the time.
7. Parent's financial resources and its ability to meet its
obligations under the Merger Agreement.
8. The effect of the provision in the Merger Agreement that, without
the consent of the Company, no change in the Offer may be made by
Parent or Purchaser which (i) decreases the $9.50 per Share
payable in the Offer, (ii) reduces the maximum number of Shares
to be purchased in the offer, (iii) imposes conditions to the
Offer in addition to those set forth in the Merger Agreement,
(iv) changes any Offer Condition or amends any other term of the
Offer if any such change or amendment would be adverse, in any
respect, to the holders of Shares (other than Parent or Offeror),
(v) except under limited circumstances, extends the Offer if the
Offer Conditions were satisfied or (vi) amends or waives the
Minimum Condition.
9. The fact that, pursuant to the Merger Agreement, the Company is
not prohibited from responding to any unsolicited requests for
information, and may participate in discussions and negotiate
with the entity or group making such request, concerning any
merger, sale of assets, sale of shares of capital stock or
similar transaction involving the Company, and potentially may
terminate the Merger Agreement, if such entity or group submits a
written proposal to the Company relating to any such transaction
and meets certain procedural requirements and the Board concludes
in good faith, after consultation with its outside financial
advisor, upon advice of its legal counsel, that the failure to
engage in such discussions or negotiations is inconsistent with
the fiduciary duties of the Board to its stockholders under
applicable laws.
10. The oral opinion of Goldman Sachs, which was later confirmed in a
written opinion dated October 31, 1999, to the effect that, as of
such date, the $9.50 per Share in cash to be received by the
holders of Shares (other than Parent or any subsidiary thereof)
in the Offer and the Merger was fair from a financial point of
view to holders of such Shares. The full text of Goldman Sachs'
written opinion, which sets forth the assumptions made, matters
considered and limitations on the review undertaken in connection
with such opinion, is filed as Exhibit N hereto and is
incorporated herein by reference. STOCKHOLDERS ARE URGED TO READ
THE OPINION OF GOLDMAN SACHS CAREFULLY AND IN ITS ENTIRETY.
The foregoing discussion of the information and factors considered by the
Board is not meant to be exhaustive, but includes the material factors
considered by the Board in reaching its conclusions and recommendations. The
members of the Board evaluated the various factors listed above in light of
their knowledge of the business, financial condition and prospects of the
Company and based upon the advice of financial and legal advisors. In light of
the number and variety of factors that the Board considered in connection with
its evaluation of the Merger Agreement and the transactions contemplated thereby
(including the Offer), the Board did not find it practicable to assign relative
weights to the foregoing factors and, accordingly, the Board did not do so. In
addition, individual members of the Board may have given different weights to
different factors.
ITEM 5. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED
The Company retained Goldman Sachs to act as the Company's financial
advisor with respect to the matters referenced in Item 4 of this Schedule 14D-9.
Pursuant to the terms of the engagement letter, dated April 30, 1999, between
Goldman Sachs and the Company (the 'Engagement Letter'), the Company agreed to
pay to Goldman Sachs, in consideration of its services, a transaction fee equal
to 1.125% of the aggregate consideration (as defined in the Engagement Letter)
paid in a transaction in which 50% or more of the outstanding common stock or
the assets of the Company is acquired in one or a series of transactions,
including, but not limited to, private or open market purchases of stock, a
tender offer, a merger or a sale by the
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Company of its stock or assets. The Company also agreed to reimburse Goldman
Sachs for its reasonable out-of pocket expenses, including attorneys' fees and
disbursements, and to indemnify Goldman Sachs and related persons against
certain liabilities, including liabilities under the Federal securities laws.
Except as set forth above, neither the Company nor any person acting on its
behalf has or currently intends to employ, retain or compensate any person to
make solicitations or recommendations to the stockholders of the Company on its
behalf with respect to the Offer.
ITEM 6. RECENT TRANSACTIONS AND INTENT WITH RESPECT TO SECURITIES
(a) Share Transactions in the Last 60 Days. During the past 60 days, no
transactions in Shares have been effected by the Company or, to the best of the
Company's knowledge, by any of its executive officers, directors, affiliates or
subsidiaries, except as set forth in Item 3(b)(1) under the heading 'Stock
Options' above.
(b) Intent to Tender. See Item 3(b)(2) under the heading 'The Shareholders
Agreement.'
To the best of the Company's knowledge, each of the Company's executive
officers not named above presently intend to tender to Offeror, pursuant to the
Offer, all Shares of which he is the record or beneficial owner, and each other
officer, director and affiliate of the Company presently intends to tender to
Offeror, pursuant to the Offer all of which he is the record or beneficial
owner.
ITEM 7. CERTAIN NEGOTIATIONS AND TRANSACTIONS BY THE SUBJECT COMPANY
(a) Certain Negotiations. Except as set forth herein, the Company is not
engaged in any negotiation in response to the Offer which relates to or would
result in: (1) an extraordinary transaction, such as a merger or reorganization
involving the Company or any subsidiary thereof; (2) a purchase, sale or
transfer a purchase, of a material amount of assets by the Company or any
subsidiary of the Company, (3) a tender offer for or other acquisition of
securities by or of the Company or (4) any material change in the present
capitalization or dividend policy of the Company.
(b) Certain Transactions. Except as described in Item 3(b) and Item 4 of
this Schedule 14D-9, there are no transactions, board restrictions, agreements
in principle, or signed contracts which relate or would result in one or more of
the matters referred to in Item 7(a).
ITEM 8. ADDITIONAL ITEMS TO BE FURNISHED
Short-form Merger. Under the Delaware Law, if Offeror acquires, pursuant to
the Offer, at least 90% of the outstanding Shares, Offeror will be able to
approve the Merger without a vote of the Company's stockholders. In such event,
Parent and Offeror anticipate that they will take all necessary and appropriate
action to cause the Merger to become effective as soon as reasonably practicable
after such acquisition, without a meeting of the Company's stockholders. If,
however, Offeror does not acquire at least 90% of the outstanding Shares
pursuant to the Offer or otherwise and a vote of the Company's stockholders is
required under the Delaware Law, a significantly longer period of time would be
required to effect the Merger. Pursuant to the Merger Agreement, the Company has
agreed to take all action necessary under the Delaware Law and its Certificate
of Incorporation and By-laws to convene a meeting of its stockholders promptly
following consummation of the Offer to consider and vote on the Merger, if a
stockholders' vote is required.
Except as set forth in this Item 8, the Company is not aware of any
approval or other action by any governmental or administrative agency which
would be required for the acquisition or ownership of Shares by Offeror as
contemplated herein. However, each of the Company, Offeror and Parent, together
with its advisors, is currently reviewing whether any approval or other action
will be required by any governmental or administrative agency of any foreign
country in connection with the Offer and the Merger. Should any such approval or
other action (whether foreign or domestic) be required, it will be sought, but
Offeror has no current intention to delay the purchase of Shares tendered
pursuant to the Offer pending the outcome of any such matter, subject, however,
to Offeror's right to decline to purchase Shares if any of the Offer conditions,
shall not have occurred. There can be no assurance that any such approval or
other action, if
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needed, would be obtained or would be obtained without substantial conditions,
or that adverse consequences might not result to the Company's business or that
certain parts of the Company's business might not have to be disposed of if any
such approvals were not obtained or other action taken.
Antitrust. The Hart-Scott-Rodino Act provides that the acquisition of
Shares by Offeror may not be consummated unless certain information has been
furnished to the Division (the 'Division') and the Federal Trade Commission
('FTC') and certain waiting period requirements have been satisfied. The rules
promulgated by the FTC under the Hart-Scott-Rodino-Act require the filing of a
Notification and Report Form (the 'Form') with the Division and the FTC and that
the acquisition of Shares under the Offer may not be consummated earlier than
15 days after receipt of the Form by the Division and the FTC. Within such
15 day period the Division or the FTC may request additional information or
documentary material from Offeror. In the event of such request the acquisition
of Shares under the Offer may not be consummated until 10 days after receipt of
such additional information or documentary material by the Division or the FTC.
Offeror filed its Form with the Division and the FTC on November 5, 1999. The
Company anticipates that it will file its Form with the Division and the FTC
shortly.
Federal Reserve Board Regulations. Federal Reserve Board Regulations T, U
and X (the 'Margin Regulations') promulgated by the Federal Reserve Board place
restrictions on the amount of credit that may be extended for the purpose of
purchasing margin stock (including the Shares) if such credit is secured
directly or indirectly by margin stock. Because no borrowings secured by margin
stock will be borrowed in order to finance the Offer, Parent and Offeror have
represented to the Company that the Margin Regulations are not applicable to the
Offer.
State Takeover Laws. The Company is incorporated under the laws of the
State of Delaware. In general, Section 203 of the Delaware Law prevents an
'interested stockholder' (generally a person who owns or has the right to
acquire 15% or more of a corporation's outstanding voting stock, or an affiliate
or associate thereof) from engaging in a 'business combination' (defined to
include mergers and certain other transactions) with a Delaware corporation for
a period of three years following the date such person became an interested
stockholder unless, among other things, prior to such date the board of
directors of the corporation approved either the business combination or the
transaction in which the interested stockholder became an interested
stockholder. On October 31, 1999, prior to the execution of the Merger
Agreement, the Board, by unanimous vote of all directors present at a meeting
held on such date, (i) approved the Offer and the Merger, (ii) determined that
the terms of the Merger Agreement and the Offer are fair to and advisable and in
the best interests of the Company and its stockholders and (iii) resolved to
recommend that the stockholders of the Company accept the Offer and tender their
Shares in the Offer and, if applicable, vote to approve and adopt the Merger
Agreement and the Merger. Accordingly, Section 203 is inapplicable to the Offer
and the Merger.
A number of other states have adopted laws and regulations applicable to
attempts to acquire securities of corporations which are incorporated, or have
substantial assets, stockholders, principal executive offices or principal
places of business, or whose business operations otherwise have substantial
economic effects, in such states. In Edgar v. MITE Corp., the Supreme Court of
the United States invalidated on constitutional grounds the Illinois Business
Takeover Statute, which, as a matter of state securities law, made takeovers of
corporations meeting certain requirements more difficult. However, in 1987 in
CTS Corp. v. Dynamics Corp. of America, the Supreme Court held that the State of
Indiana may, as a matter of corporate law and, in particular, with respect to
those aspects of corporate law concerning corporate governance, constitutionally
disqualify a potential acquirer from voting on the affairs of a target
corporation without the prior approval of the remaining stockholders. The state
law before the Supreme Court was by its terms applicable only to corporations
that had a substantial number of stockholders in the state and were incorporated
there.
The Company, directly or through subsidiaries, conducts business in a
number of states throughout the United States, some of which have enacted
takeover laws. Offeror does not know whether any of these laws will, by their
terms, apply to the Offer or the Merger and has not complied with any such laws.
Should any person seek to apply any state takeover law, Offeror will
25
<PAGE>
take such action as then appears desirable, which may include challenging the
validity or applicability of any such statute in appropriate court proceedings.
In the event it is asserted that the takeover laws or any state are applicable
to the Offer or the Merger, and an appropriate court does not determine that it
is inapplicable or invalid as applied to the Offer, Offeror might be required to
file certain information with, or receive approvals from, the relevant state
authorities. In addition, if enjoined, Offeror might be unable to accept for
payment any Shares tendered pursuant to the Offer, or be delayed in continuing
or consummating the Offer and the Merger. In such case, Offeror may not be
obligated to accept for payment any Shares tendered. See Item 3(b)(2) under the
heading 'The Merger Agreement -- Certain Conditions to Offeror's Obligations'
above.
ITEM 9. MATERIAL TO BE FILED AS EXHIBITS
<TABLE>
<S> <C>
Exhibit A -- Agreement and Plan of Merger dated October 31, 1999, by and among Parent,
Offeror and the Company.
Exhibit B -- Press release issued by Parent and the Company on November 1, 1999.
Exhibit C -- Excerpts from the Company's Proxy Statement, dated December 23, 1998,
relating to its 1999 Annual Meeting of Stockholders held on January 22,
1999 (incorporated herein by reference to the Company's proxy statement on
Schedule 14A, filed with the Commission on December 21, 1998).
Exhibit D -- Employment Agreement, dated as of September 19, 1996, as amended on
October 31, 1999, between the Company and P. Quentin Bourjeaurd
(incorporated herein by reference to Exhibit 10.18 included in the
Registration Statement Number 333-46335 on Form S-1 effective April 29,
1998).
Exhibit E -- Letter amendment dated October 31, 1999, by the Company and P. Quentin
Bourjeaurd, amending the employment agreement dated as of September 19,
1996, between the Company and P. Quentin Bourjeaurd.
Exhibit F -- Amended and Restated Employment Agreement, dated June 22, 1999, by the
Company and Denny Barge, amending and restating the employment agreement
dated as of December 8, 1997 between the Company and Denny Barge.
Exhibit G -- Letter dated May 17, 1999 by the Company to John R. King Jr., terminating
the employment of John R. King Jr.
Exhibit H -- Release and Waiver of Claims dated June 3, 1999 by and between TriStar
Aerospace Inc., its parents, subsidiaries and affiliates and John R. King,
Jr.
Exhibit I -- Employment Agreement dated May 24, 1999, between the Company and Daniel
L. Barth.
Exhibit J -- Amended and Restated Maple Leaf Aerospace, Inc. 1996 Stock Option Plan
(incorporated herein by reference to Exhibit 10.31 included in the
Registration Statement Number 333-46335 on Form S-1 effective April 29,
1998).
Exhibit K -- TriStar Aerospace Co. 1998 Stock Option Plan (incorporated herein by
reference to Exhibit 10.26 included in the Registration Statement Number
333-46335 on Form S-1 effective April 29, 1998).
Exhibit L -- Tender and Option Agreement dated October 31, 1999, among Parent, Offeror
and the Stockholders Listed on Schedule A (P. Quentin Bourjeaurd and
Charles Balchunas).
Exhibit M -- Letter dated November 5, 1999 to the Company's Stockholders.
Exhibit N -- Opinion of Goldman Sachs dated October 31, 1999.*
Exhibit O -- Press release issued by the Company on November 4, 1999.
</TABLE>
- ------------
* Included in the materials sent to the stockholders of the Company and annexed
hereto.
26
<PAGE>
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
TRISTAR AEROSPACE CO.
By: /s/ DOUGLAS CHILDRESS
.......................
Name: Douglas Childress
Title: Executive Vice President,
Chief Financial Officer
Dated: November 5, 1999
27
<PAGE>
EXHIBIT INDEX
<TABLE>
<S> <C>
Exhibit A Agreement and Plan of Merger dated October 31, 1999, by and among Parent,
Offeror and the Company..
Exhibit B Press release issued by Parent and the Company on November 1, 1999....
Exhibit C Excerpts from the Company's Proxy Statement, dated December 23, 1998,
relating to its 1999 Annual Meeting of Stockholders held on January 22,
1999 (incorporated herein by reference to the Company's proxy statement
on Schedule 14A, filed with the Commission on December 21, 1998)....
Exhibit D Employment Agreement, dated as of September 19, 1996, as amended on
October 31, 1999, between the Company and P. Quentin Bourjeaurd
(incorporated herein by reference to Exhibit 10.18 included in the
Registration Statement Number 333-46335 on Form S-1 effective April 29,
1998).............................................................
Exhibit E Letter amendment dated October 31, 1999, by the Company and P. Quentin
Bourjeaurd, amending the employment agreement dated as of September 19,
1996, between the Company and P. Quentin Bourjeaurd...............
Exhibit F Amended and Restated Employment Agreement, dated June 22, 1999, by the
Company and Denny Barge, amending and restating the employment agreement
dated as of December 8, 1997 between the Company and Denny Barge....
Exhibit G Letter dated May 17, 1999 by the Company to John R. King Jr., terminating
the employment of John R. King Jr.................................
Exhibit H Release and Waiver of Claims dated June 3, 1999 by and between TriStar
Aerospace Inc., its parents, subsidiaries and affiliates and John R.
King, Jr..........................................................
Exhibit I Employment Agreement dated May 24, 1999, between the Company and
Daniel L. Barth...................................................
Exhibit J Amended and Restated Maple Leaf Aerospace, Inc. 1996 Stock Option Plan
(incorporated herein by reference to Exhibit 10.31 included in the
Registration Statement Number 333-46335 on Form S-1 effective April 29,
1998).............................................................
Exhibit K TriStar Aerospace Co. 1998 Stock Option Plan (incorporated herein by
reference to Exhibit 10.26 included in the Registration Statement Number
333-46335 on Form S-1 effective April 29, 1998)...................
Exhibit L Tender and Option Agreement dated October 31, 1999, among Parent, Offeror
and the Stockholders Listed on Schedule A (P. Quentin Bourjeaurd and
Charles Balchunas)................................................
Exhibit M Letter dated November 5, 1999 to the Company's Stockholders.......
Exhibit N Opinion of Goldman Sachs dated October 31, 1999.*.................
Exhibit O Press release issued by the Company on November 4, 1999...........
</TABLE>
- ------------
* Included in the materials sent to the stockholders of the Company and annexed
hereto.
28
<PAGE>
EXHIBIT A
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of October 31, 1999 (the
"Agreement"), by and among AlliedSignal Inc., a Delaware corporation (the
"Purchaser"), AlliedSignal Acquisition Corp., a Delaware corporation and a
wholly-owned subsidiary of Purchaser (the "Merger Sub"), and TriStar Aerospace
Co., a Delaware corporation (the "Company").
WHEREAS, the Boards of Directors of the Purchaser, the Merger Sub and the
Company have each determined that it is advisable and in the best interests of
their respective stockholders for the Purchaser to acquire the Company on the
terms and subject to the conditions set forth in this Agreement;
WHEREAS, in furtherance thereof, it is proposed that the Merger Sub shall
make a cash tender offer to acquire all of the issued and outstanding shares of
common stock, par value $.01 per share, of the Company (the "Company Common
Stock"), for $9.50 per share of Company Common Stock (all issued and outstanding
shares of Company Common Stock, being hereinafter referred to as the "Shares"),
net to the seller in cash, in accordance with the terms and subject to the
conditions provided for herein and in the offering documents relating to the
Offer (as defined below);
WHEREAS, the Board of Directors of each of the Purchaser, the Merger Sub
and the Company have resolved to approve and adopt this Agreement and the Merger
(as defined below) following the Offer pursuant to which the Merger Sub shall
merge with and into the Company and each Share (other than Shares held by the
Purchaser or the Merger Sub or any subsidiary of the Purchaser or the Merger
Sub) shall be converted into the right to receive the Merger Consideration (as
defined below) upon the terms and subject to the conditions set forth herein;
and
WHEREAS, the Board of Directors of the Company has unanimously (i)
determined that each of the Offer and the Merger (as defined below) is
advisable, fair to and in the best interests of the Company and its stockholders
and (ii) resolved to recommend acceptance of the Offer and approval and adoption
by the stockholders of the Company of this Agreement and the Merger on the terms
and conditions set forth herein.
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
and agreements herein contained, and intending to be legally bound hereby, the
Purchaser, the Merger Sub and the Company hereby agree as follows:
<PAGE>
ARTICLE 1
THE OFFER
1.1 The Offer.
(a) Provided that none of the conditions set forth in Annex I to this
Agreement shall have occurred, the Merger Sub shall, not later than one business
day after execution of this Agreement, publicly announce the transactions
contemplated hereby, and not later than five business days after execution of
this Agreement, commence (within the meaning of Rule 14d-2 under the Securities
Exchange Act of 1934, as amended (the "Exchange Act")), an offer to purchase all
Shares at a price of $9.50 per Share, net to the seller in cash (the "Offer,"
which term shall include any amendments to such Offer not prohibited by this
Agreement) and, subject to a minimum number of Shares which, when added to the
Shares, if any, beneficially owned by the Purchaser, its affiliates or the
Merger Sub (excluding Shares beneficially owned by the Purchaser by virtue of
the Shareholders Agreement (as defined below)) would constitute at least a
majority of the outstanding Shares (on a fully-diluted basis) being validly
tendered and not withdrawn prior to the expiration of the Offer (the "Minimum
Condition") and the conditions set forth in Annex I of this Agreement, shall use
its best efforts to consummate the Offer. The Offer shall be made by means of an
offer to purchase containing the Minimum Condition and the conditions set forth
in Annex I and no other conditions. Simultaneously with the commencement of the
Offer, the Merger Sub shall file with the Securities and Exchange Commission
(the "Commission") a Tender Offer Statement on Schedule 14D-1 with respect to
the Offer (together with all amendments and supplements thereto, the "Schedule
14D-1"). The Schedule 14D-1 will include, as exhibits, the offer to purchase and
a form of letter of transmittal (collectively, together with any amendments and
supplements thereto, the "Offer Documents"). The Company and its counsel shall
be given a reasonable opportunity to review and make comments with respect to
the Schedule 14D-1 and the Offer Documents and all amendments and supplements
thereto prior to their filing with the Commission or dissemination to
stockholders of the Company.
(b) The Merger Sub shall, and the Purchaser shall cause the Merger Sub
to, accept for payment and as promptly as practicable pay for any Shares validly
tendered on or prior to the expiration of the Offer and not withdrawn, subject
to the satisfaction or waiver of the conditions set forth in Annex I hereto (the
"Offer Conditions"). The Purchaser shall make available to the Merger Sub on a
timely basis the funds necessary to accept for payment, and pay for, any Shares
properly tendered pursuant to the Offer.
(c) The Merger Sub will not, without the prior written consent of the
Company (i) decrease the amount or change the form of consideration payable in
the Offer, (ii) decrease the number of Shares sought in the Offer, (iii) impose
additional conditions to the Offer, (iv) change any Offer Condition or amend any
other term of the Offer if any such change or amendment would be adverse in any
respect to the holders of Shares (other than the Purchaser or the Merger Sub),
(v) except as provided below, extend the Offer if all of the Offer Conditions
have been satisfied or (vi) amend or waive the Minimum Condition. Subject to the
terms and
2
<PAGE>
conditions hereof, the Offer shall expire at midnight, New York City time, on
the date that is twenty (20) business days after the Offer is commenced (within
the meaning of Rule 14d-2 under the Exchange Act) (the "Scheduled Expiration
Date"); provided however, that without the consent of the the Company, the
Merger Sub may (x) extend the Offer, if on the Scheduled Expiration Date of the
Offer any of the Offer Conditions shall not have been satisfied or waived, for
one (1) or more periods but in no event past 45 business days from the date the
Offer is commenced unless the waiting, review and investigation periods
applicable to the transactions contemplated by this Agreement under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the
"Hart-Scott-Rodino Act") have not terminated or expired or the consents referred
to in paragraph (h) of Annex I have not been obtained in which case not past the
date set forth in Section 8.1(b), (y) extend the Offer for such period as may be
required by any rule, regulation, interpretation or position of the Commission
or the staff thereof applicable to the Offer or (z) extend the Offer for one (1)
or more periods (each such period to be for not more than three (3) business
days and such extensions to be for an aggregate period of not more than five (5)
business days beyond the latest expiration date that would otherwise be
permitted under clause (x) or (y) of this sentence) if on such expiration date
there shall not have been tendered that number of Shares which would equal more
than ninety percent of the issued and outstanding Shares. The Merger Sub agrees
that if all of the Offer Conditions are not satisfied on the Scheduled
Expiration Date, then, provided that all such conditions are and continue to be
reasonably probable of being satisfied by the date that is 35 business days from
the date the Offer is commenced, the Merger Sub shall extend the Offer for one
or more periods of not more than five (5) business days each if requested to do
so by the Company; provided that the Merger Sub shall not be required to extend
the Offer beyond the date that is 35 business days from the date the Offer is
commenced or, if earlier, the date of termination of this Agreement in
accordance with the terms hereof.
1.2 Company Action.
(a) The Company hereby consents to the Offer and represents that its
Board of Directors has unanimously (i) approved the Offer and the Merger, has
determined that this Agreement and the Offer are fair to and advisable and in
the best interest of the Company and its stockholders and has resolved to
recommend acceptance of the Offer to the Company's stockholders, and that the
stockholders tender their Shares in the Offer and, if applicable, vote to
approve and adopt this Agreement and the Merger; provided, however, that such
recommendation may be withdrawn or modified to the extent permitted in this
Agreement, and (ii) taken all action necessary to render Section 203 of the
Delaware Law (as defined below) inapplicable to the Offer, the Merger, this
Agreement and the Tender and Option Agreement, dated as of the date hereof,
among the Purchaser, the Merger Sub and each of the persons listed on Schedule A
thereto (the "Shareholders Agreement") or any of the transactions contemplated
hereby or thereby. The Company hereby consents to the inclusion in the Offer
Documents of the recommendation of the Board of Directors described in the first
sentence of this Section 1.2. The Company represents that it has received the
opinion of Goldman, Sachs & Co., dated as of the date hereof, to the effect that
the $9.50 per Share in cash to be received by the holders of Shares (other than
the Purchaser or any subsidiary thereof) in the Offer and the Merger is fair
from a financial point of view to such holders.
3
<PAGE>
(b) Simultaneously with, or as promptly as possible after, the
commencement of the Offer, the Company shall file with the Commission and mail
to the holders of Shares a Solicitation/Recommendation Statement on Schedule
14D-9 (together with all amendments and supplements thereto, the "Schedule
14D-9"), which shall reflect the recommendation of the Board of Directors
referred in clause (a)(i) of Section 1.2; provided that prior to the filing of
such Schedule 14D-9, the Company shall have provided the Merger Sub's counsel
with a reasonable opportunity to review and make comments with respect to such
Schedule 14D-9. Such recommendation shall not be withdrawn or adversely modified
except by resolution of the Board of Directors adopted in the exercise of
applicable fiduciary duties upon the advice of outside legal counsel and in
accordance with this Agreement.
(c) Each of the Purchaser and the Merger Sub will take all steps
necessary to ensure that the Offer Documents, and the Company will take all
steps necessary to ensure that the Schedule 14D-9, to be filed with the
Commission and to be disseminated to holders of the Shares, comply with, and are
filed in each case as and to the extent required by, applicable Federal and
state securities laws. The Company agrees to provide the Merger Sub and its
counsel with copies of any written comments that the Company or its counsel may
receive from the Commission or its staff with respect to the Schedule 14D-9
promptly after the receipt of such comments, and each of the Purchaser and the
Merger Sub agrees to provide the Company and its counsel with copies of any
written comments that the Purchaser, the Merger Sub or their counsel may receive
from the Commission or its staff with respect to the Offer Documents promptly
after the receipt of such comments.
(d) The Company shall promptly furnish the Merger Sub with mailing
labels containing the names and addresses of the record holders and, if
available, of non-objecting beneficial owners of Shares and lists of securities
positions of Shares held in stock depositories, each as of the most recent
practicable date, and shall from time to time furnish the Merger Sub with such
additional information, including updated or additional lists of the
stockholders, mailing labels and lists of securities positions, and other
assistance as the Merger Sub may reasonably request in order to be able to
communicate the Offer to the stockholders of the Company. Subject to the
requirements of law, and except for such steps as are necessary to disseminate
the Offer Documents and any other documents necessary to consummate the Merger,
the Purchaser and the Merger Sub and each of their affiliates shall use such
lists, labels and additional information only in connection with the Offer and
Merger and treat all information in such labels, lists and additional
information as "Confidential Material" in accordance with the Confidentiality
Agreement, dated April 5, 1999, and amended on October 7, 1999, between the
Purchaser and the Company (the "Confidentiality Agreement").
1.3 Directors. Promptly upon the payment for any Shares by the Merger Sub
pursuant to the Offer as a result of which the Purchaser, the Merger Sub and any
of their affiliates beneficially own (excluding Shares held by the Company) at
least a majority of the outstanding Shares and from time to time thereafter, the
Company shall increase the size of its Board of Directors to seven (7) members
and the Merger Sub shall be entitled to designate members of the Company's Board
of Directors such that the Merger Sub, subject to compliance with Section
4
<PAGE>
14(f) of the Exchange Act, will have a number of representatives on the Board of
Directors, rounded up to the next whole number, equal to the product obtained by
multiplying seven (7) by the percentage of Shares beneficially owned by the
Purchaser and any of its subsidiaries. The Company shall, upon request by the
Merger Sub, promptly increase the size of the Board of Directors to the extent
permitted by its Certificate of Incorporation and/or use its best efforts to
secure the resignations of such number of directors as is necessary to enable
the Merger Sub's designees to be elected to the Board of Directors and shall use
its best efforts to cause the Merger Sub's designees to be so elected; provided,
however, that, in the event that the Merger Sub's designees are appointed or
elected to the Company's Board of Directors, until the Effective Time (as
defined below) the Company's Board of Directors shall have at least one director
who is a director on the date hereof and who is neither an officer of the
Company nor a stockholder, affiliate or associate (within the meaning of the
Federal securities laws) of the Purchaser (one or more of such directors, the
"Continuing Directors"); provided, further, that if no Continuing Directors
remain, the other directors shall designate one person to fill one of the
vacancies who shall not be either an officer of the Company or a stockholder,
affiliate or associate of the Purchaser, and such Person shall be deemed to be a
Continuing Director for the purposes of this Agreement. At the request of the
Merger Sub, the Company shall take, at its expense, all action necessary to
effect any such election, including the mailing to its stockholders of the
information required by Section 14(f) of the Exchange Act and Rule 14f-1
promulgated thereunder, in form and substance reasonably satisfactory to the
Merger Sub and its counsel. The Purchaser and the Merger Sub will supply to the
Company and be solely responsible for any written information so provided by it
or its affiliates with respect to its nominees, officers, directors and
affiliates required by Section 14(f) and Rule 14-f-1.
Notwithstanding anything in this Agreement to the contrary, if the Merger
Sub's designees are elected to the Company's Board of Directors, after the
acceptance for payment and purchase of Shares pursuant to the Offer and prior to
the Effective Time (i) the affirmative vote of a majority of the Continuing
Directors shall be required to amend or terminate this Agreement on behalf of
the Company, amend the Company's certificate of incorporation, or the Company's
By-laws, exercise or waive any of the Company's rights or remedies hereunder,
extend the time for performance of the Purchaser or the Merger Sub's obligations
hereunder, or take any other action by the Company in connection with this
Agreement required to be taken by the Company's Board of Directors, and any such
actions when so taken shall be deemed to constitute the action of the full Board
of Directors of the Company and any committee specifically designated by the
Company Board of Directors to approve the actions contemplated hereby, and (ii)
neither the Merger Sub nor the Purchaser shall, directly or indirectly, cause
the Company to breach its obligations hereunder.
ARTICLE 2
THE MERGER
2.1 The Merger. At the Effective Time (as defined in Section 2.3), in
accordance with this Agreement and the Delaware General Corporation Law, as
amended (the "Delaware Law"), the Merger Sub (or another direct or indirect
wholly-owned subsidiary of the Purchaser) shall be
5
<PAGE>
merged with and into the Company (the "Merger"), the separate existence of the
Merger Sub (except as may be continued by operation of law) shall cease, and the
Company shall continue as the surviving corporation under the corporate name it
possesses immediately prior to the Effective Time. The Company, in its capacity
as the corporation surviving the Merger, sometimes is referred to herein as the
"Surviving Corporation." Notwithstanding the foregoing, the Merger Sub may
revise the structure of the Merger (including merging the Company into the
Merger Sub or merging the Company with or into another direct or indirect
wholly-owned subsidiary of the Purchaser) provided that any such restructuring
does not adversely affect the stockholders of the Company and does not cause the
Company to breach its representations and warranties hereunder.
2.2 Effect of the Merger. The Surviving Corporation shall possess all the
rights, privileges, immunities and franchises, both public and private, of the
Merger Sub and the Company (collectively, the "Constituent Corporations"); shall
be vested with all property, whether real, personal, or mixed, and all debts due
on whatever account, including subscriptions to shares, and all other choses in
action, and all and every other interest belonging to or due to each of the
Constituent Corporations; and shall be responsible and liable for all the
obligations and liabilities of each of the Constituent Corporations, all with
the effect set forth in the Delaware Law.
2.3 Consummation of the Merger. As soon as is practicable after the
satisfaction or waiver, if possible, of the conditions set forth in Article 7,
and in no event later than five business days after such satisfaction or waiver,
the parties hereto will cause an Agreement or Certificate of Merger to be filed
with the Secretary of State of the State of Delaware, in such form as required
by, and executed in accordance with, the relevant provisions of applicable law
using the procedures permitted in Section 253 (if possible) or Section 251 of
the Delaware Law. The Merger shall be effective at the time of the filing of the
Agreement or Certificate of Merger with the Secretary of State of the State of
Delaware (the "Effective Time").
2.4 Certificate of Incorporation and By-Laws; Directors and Officers. The
Certificate of Incorporation and By-Laws of the Company, as in effect
immediately prior to the Effective Time, shall be the Certificate of
Incorporation and By-Laws of the Surviving Corporation immediately after the
Effective Time and shall thereafter continue to be its Certificate of
Incorporation and By-Laws until amended as provided therein and under the
Delaware Law. The directors and officers of the Merger Sub holding office
immediately prior to the Effective Time shall be the directors and officers of
the Surviving Corporation immediately after the Effective Time.
2.5 Conversion of Securities. At the Effective Time, by virtue of the
Merger and without any action on the part of the Merger Sub, the Company or the
holder of any of the following securities:
(a) Each Share issued and outstanding immediately prior to the
Effective Time, other than Shares to be cancelled pursuant to Section 2.5(b)
hereof, shall automatically be cancelled and extinguished and, other than Shares
with respect to which appraisal rights are
6
<PAGE>
properly exercised ("Dissenting Shares"), be converted into and become a right
to receive in cash the highest price per share paid pursuant to the Offer (the
"Merger Consideration").
(b) Each Share issued and outstanding immediately prior to the
Effective Time and held in the treasury of the Company or owned by the Purchaser
or any subsidiary thereof shall automatically be cancelled and retired and no
payment shall be made with respect thereto.
(c) Each share of the Merger Sub's Common Stock, par value $.01 per
share, issued and outstanding immediately prior to the Effective Time shall
automatically be converted into and become one validly issued, fully paid and
nonassessable share of Common Stock, par value $.01 per share, of the Surviving
Corporation.
(d) The holders of Dissenting Shares, if any, shall be entitled to
payment for such shares only to the extent permitted by and in accordance with
the provisions of Section 262 of the Delaware Law; provided, however, that if,
in accordance with such Section of the Delaware Law, any holder of Dissenting
Shares shall (i) subsequently withdraw his demand for payment for such shares,
or (ii) fail to maintain a petition for appraisal as provided in such Section;
or if neither any holder of Dissenting Shares nor the Surviving Corporation has
filed suit as provided in Section 262 of the Delaware Law, such holder or
holders (as the case may be) shall forfeit such right to payment of such Shares,
and such Shares shall thereupon be deemed to have been converted into and to
have become exchangeable for, as of the Effective Time, the right to receive the
Merger Consideration.
2.6 Company Stock Options. Each holder of then outstanding options,
warrants or other rights to acquire Shares ("Options") granted under any
employee or non-employee compensation plan, agreement or arrangement of the
Company (the "Stock Plans") that are fully vested at the Effective Time in
accordance with the respective Stock Plan shall be entitled, at the Effective
Time, to receive payment with respect thereto in accordance with the provisions
of Section 6.3(a) hereof.
2.7 Surrender of Shares; Stock Transfer Books.
(a) Prior to the Effective Time, the Merger Sub shall designate a bank
or trust company reasonably satisfactory to the Company to act as agent for the
holders of Shares (the "Exchange Agent") to receive the Merger Consideration,
and at or immediately following the Effective Time, the Purchaser shall take all
steps necessary to cause the Merger Sub to have sufficient funds to be able to
provide the Exchange Agent with the funds necessary to make the payments
contemplated by this Article II.
(b) Promptly after the Effective Time, the Exchange Agent shall mail to
each person who was, at the Effective Time, a holder of record of Shares
entitled to receive the Merger Consideration pursuant to Section 2.5(a) a letter
of transmittal (which shall specify that delivery shall be effected, and risk of
loss and title to the certificates previously representing Shares to be
exchanged pursuant to the Merger (the "Certificates") shall pass, only upon
proper delivery of such Certificates to the Exchange Agent) and instructions for
use thereof in effecting the
7
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surrender of the Certificates. Upon surrender to the Exchange Agent of the
Certificates, together with such letter of transmittal, duly completed and
validly executed in accordance with the instructions thereto, and such other
documents as may be requested, the Exchange Agent shall promptly deliver to the
persons entitled thereto the Merger Consideration payable in respect of the
Shares represented by the Certificates, and the Certificates shall forthwith be
cancelled. Until so surrendered and exchanged, each such Certificate (other than
Certificates representing Shares held in the treasury of the Company, by the
Merger Sub or any subsidiary of the Purchaser and Dissenting Shares) evidencing
Shares shall, after the Effective Time, be deemed to evidence only the right to
receive the Merger Consideration.
(c) If delivery of the Merger Consideration in respect of cancelled
Shares is to be made to a person other than the person in whose name a
surrendered Certificate or instrument is registered, it shall be a condition to
such delivery or payment that the Certificate or instrument so surrendered shall
be properly endorsed or shall be otherwise in proper form for transfer and that
the person requesting such delivery or payment shall have paid any transfer and
other taxes required by reason of such delivery or payment in a name other than
that of the registered holder of the Certificate or instrument surrendered or
shall have established to the satisfaction of the Surviving Corporation or the
Exchange Agent that such tax either has been paid or is not payable.
(d) At the Effective Time, the stock transfer books of the Company
shall be closed and there shall be no further registration of transfers of
Shares thereafter on the records of the Company. From and after the Effective
Time, holders of Certificates evidencing ownership of Shares outstanding
immediately prior to the Effective Time shall cease to have any rights with
respect to such Shares except as otherwise provided herein or by law. No
interest shall be paid or accrue on any portion of the Merger Consideration.
(e) Notwithstanding anything to the contrary in this Section 2.7, none
of the Exchange Agent, the Surviving Corporation or any party hereto shall be
liable to a holder of Shares for any amount properly paid to a public official
pursuant to any applicable property, escheat or similar law.
2.8 Lost Certificates. If any Certificate shall have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the person claiming
such Certificate to be lost, stolen or destroyed and, if required by the
Surviving Corporation, the posting of such person of a bond in such reasonable
amount as the Surviving Corporation may direct as indemnity against any claim
that may be made against it with respect to such Certificate, the Exchange Agent
shall pay in exchange for such lost, stolen or destroyed Certificate the Merger
Consideration pursuant to this Agreement.
2.9 Taking of Necessary Action; Further Action. The Purchaser, the Merger
Sub and the Company, respectively, shall use all reasonable efforts to take all
such action as may be reasonably necessary or appropriate in order to effectuate
the Offer and the Merger as promptly as possible and to carry out the
transactions provided for herein or contemplated hereby. If at any time after
the Effective Time any further action is necessary or desirable to carry out the
purposes of this Agreement and to vest the Surviving Corporation with full
right, title and possession to all
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assets, property, rights, privileges, immunities, powers and franchises of
either of the Constituent Corporations, the officers and directors of the
Surviving Corporation are fully authorized in the name of either of the
Constituent Corporations or otherwise to take, and shall take, all such action.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER AND THE
MERGER SUB
The Purchaser and the Merger Sub hereby agree and represent and warrant to
the Company as follows:
3.1 Organization and Qualification. Each of the Purchaser and the Merger
Sub has been duly incorporated and is validly existing as a corporation in good
standing under the laws of Delaware and has the requisite corporate power to
carry on its respective business as now conducted. Each of the Purchaser and the
Merger Sub is duly qualified as a foreign corporation in good standing in each
jurisdiction in which the character of its properties owned or leased or the
nature of its activities makes such qualification necessary, except where the
failure to be so qualified would not have a material adverse effect on the
business, assets, revenues, operations or financial condition of the Purchaser
and its subsidiaries, taken as a whole. As of the date of this Agreement, the
Purchaser and the Merger Sub have no obligations or liabilities, and none of
such parties are parties to any litigation, which in any case if paid or
adversely determined would have a material effect on their ability to consummate
the transactions contemplated by this Agreement. The Merger Sub is a
wholly-owned subsidiary of the Purchaser. The Certificate of Incorporation and
By-Laws of the Merger Sub contain no provisions which would have a material
adverse effect on the Merger Sub's ability to consummate the transactions
contemplated by this Agreement.
3.2 Authority Relative to this Agreement. Each of the Purchaser and the
Merger Sub has the requisite corporate power and authority to enter into this
Agreement and the Shareholders Agreement, as applicable, and to carry out its
respective obligations hereunder and thereunder. The execution and delivery of
this Agreement and the Shareholders Agreement, as applicable, by the Purchaser
and the Merger Sub, as applicable, and the consummation by the Purchaser and the
Merger Sub, as applicable, of the transactions contemplated hereby and thereby
have been duly authorized by the respective Boards of Directors of the Purchaser
and the Merger Sub, as applicable, by the Purchaser as the sole stockholder of
the Merger Sub, and no other corporate proceedings, including the vote of the
stockholders of the Purchaser, on the part of the Purchaser or the Merger Sub
are necessary to authorize this Agreement or the Shareholders Agreement, as
applicable, or commence the Offer and consummate the transactions contemplated
hereby and thereby. This Agreement and the Shareholders Agreement, as
applicable, have been duly executed and delivered by the Purchaser and the
Merger Sub and constitute valid and binding obligations of each such company, as
applicable, enforceable in accordance with their terms subject to applicable
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and
similar laws affecting or relating to the enforcement of creditors' rights and
remedies generally and subject, as to enforceability, to general principles of
equity (regardless of whether
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enforcement is sought in a proceeding at law or in equity). Neither the
Purchaser nor the Merger Sub is subject to or obligated under any provision of
(a) its Certificate of Incorporation or By-Laws, or (b) any contract, indenture,
instrument, or other agreement, or (c) any license, franchise or permit, or (d)
any law, regulation, order, judgment or decree, which would be breached,
violated or defaulted or in respect of which a right of termination or
acceleration or any encumbrance on any of its assets could be created by its
execution, delivery and performance of this Agreement or the Shareholders
Agreement, as applicable, and the consummation by it of the transactions
contemplated hereby and thereby, other than any such breaches, violations,
defaults, rights of termination or acceleration, or encumbrances, which will
not, individually or in the aggregate, have a material adverse effect on the
ability of the Merger Sub to consummate the Offer or the Merger. Other than in
connection with or in compliance with the provisions of the Delaware Law, the
Exchange Act, the Hart-Scott-Rodino Act, no authorization, consent or approval
of, or filing with, any public body, court or authority is necessary on the part
of the Purchaser or the Merger Sub for the consummation by the Purchaser and the
Merger Sub of the transactions contemplated by this Agreement or the
Shareholders Agreement, as applicable, other than filings with such foreign
jurisdictions in which subsidiaries of the Company are organized which may
require filings to be made in connection with the transfer of control of such
subsidiaries, and the Purchaser and the Merger Sub each agrees to make any and
all such filings on or prior to the Effective Time if any of such parties are
required to make such filings under applicable law.
3.3 Offer Documents; Proxy Information. The Offer Documents shall in all
material respects conform with the requirements of the Exchange Act and the
rules and regulations thereunder (except that the foregoing representation shall
not apply with respect to the accuracy of information relating to the Company
which has been excerpted or derived from public sources or furnished in writing
by the Company specifically for inclusion in the Offer Documents). As of their
respective dates, and on the date they are first published, sent or given to
holders of Shares, the Offer Documents, taken as a whole, shall not contain any
misstatement of material fact or omit to state any material fact required to be
stated therein or necessary to make the statements contained therein, in light
of the circumstances in which they were made, not misleading. The Purchaser and
the Merger Sub agree to correct the Schedule 14D-1 and the other Offer Documents
if and to the extent that any of them shall become false or misleading in any
material respect, and the Purchaser and the Merger Sub further agree to take all
steps necessary to cause the Schedule 14D-1 as so corrected to be disseminated
to holders of Shares, in each case as and to the extent required by applicable
law. The information supplied by the Purchaser for inclusion in the proxy
statement to be sent to the stockholders of the Company in connection with the
meeting of the Company's stockholders to consider the Merger, or the information
statement to be sent to such stockholders, as appropriate, shall not, on the
date the proxy statement or information statement (including any amendments or
supplements thereto) is first mailed to stockholders, at the time of such
stockholders' meeting, if any, or at the Effective Time, contain any statement
which, at such time and in light of the circumstances under which it shall be
made, is false or misleading with respect to any material fact, or shall omit to
state any material fact necessary in order to make the statements therein not
false or misleading or necessary to correct any statement in any earlier
communication with respect to the solicitation of proxies for such stockholders'
meeting which has become false or misleading.
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3.4 Financing. The Purchaser and the Merger Sub have available financing in
an amount sufficient to consummate the Offer and the Merger.
3.5 No Violation of the Margin Rules. None of the transactions contemplated
by this Agreement will violate or result in the violation of Section 7 of the
Exchange Act or any regulation promulgated pursuant thereto, including, without
limitation, Regulations G, T, U or X of the Board of Governors of the Federal
Reserve System.
3.6 No Prior Activities. Except for obligations incurred in connection with
its incorporation or organization or the negotiation and consummation of this
Agreement or the Shareholders Agreement and the transactions contemplated hereby
or thereof, the Merger Sub has neither incurred any obligation or liability nor
engaged in any business or activity of any type or kind whatsoever or entered
into any agreement or arrangement with any person.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to the Purchaser and the Merger
Sub, except as set forth in the Disclosure Schedule which was dated and
delivered to the Purchaser and the Merger Sub on the date hereof, as follows:
4.1 Organization and Qualification. The Company has been duly incorporated
and is validly existing as a corporation in good standing under the laws of
Delaware. The Company is duly qualified as a foreign corporation in good
standing in each jurisdiction in which the character of its properties owned or
leased or the nature of its activities makes such qualification necessary,
except where the failure to be so qualified would not have a material adverse
effect, individually or in the aggregate, on the business, liabilities,
revenues, operations, results of operations or financial condition of the
Company and its subsidiaries, taken as a whole ("Company Material Adverse
Effect"), other than changes (and the effects of changes) in general economic
conditions and any change, circumstance or effect relating generally to the
industries in which the Company operates and not specifically relating to the
Company or its subsidiaries. The Company has full corporate power and authority
to own its properties and conduct its business as presently owned and conducted.
The copies of the Certificate of Incorporation and By-Laws of the Company
previously delivered to the Merger Sub are true, correct and complete as of the
date hereof.
4.2 Subsidiaries. Each subsidiary of the Company, all of which are listed
in either Exhibit 21.1 to the Company's Annual Report on Form 10-K for the
fiscal year ended September 30, 1998 (the "Form 10-K Report") or the Disclosure
Schedule, has been duly incorporated and is validly existing as a corporation in
good standing under the laws of its jurisdiction of incorporation, is duly
qualified as a foreign corporation in good standing in each jurisdiction in
which the character of its properties owned or leased or the nature of its
activities make such qualification necessary, except where the failure to be so
qualified would not have a Company Material Adverse Effect, and has full
corporate power and authority to own its
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properties and conduct its business as presently owned and conducted. The
Company owns, directly or indirectly, all of the outstanding shares of capital
stock of each such subsidiary free and clear of all liens, claims, charges or
encumbrances except as disclosed in Schedule 4.2; there are no irrevocable
proxies with respect to such shares; and all such shares are validly issued,
fully paid and nonassessable. Except for the capital stock of such subsidiaries
or otherwise as disclosed in Schedule 4.2 or the Form 10-K Report, the Company
does not own, directly or indirectly, any investment in (a) any partnership,
limited liability company or joint venture or (b) any equity or debt investment
having either a fair market or face value or cost in excess of $100,000. Except
as disclosed in Schedule 4.2, neither the Company nor any of its subsidiaries is
obligated to make any payments in the form of earn-outs, deferred purchase price
or other consideration in respect of the purchase price payable in connection
with the acquisition of any subsidiary or business.
4.3 Capitalization. The authorized capital stock of the Company consists of
40,000,000 Shares and 10,000,000 shares of preferred stock, $.01 par value
("Preferred Stock"). As of the date hereof, 17,277,054 Shares, and no shares of
Preferred Stock, are issued and outstanding. All issued and outstanding Shares
are duly authorized and issued, and are fully paid and nonassessable. As of the
date hereof, (a) 4,491,074 Shares are reserved for issuance pursuant to
outstanding stock options and (b) 1,458,926 shares are reserved for future
grants pursuant to the Stock Plans. Schedule 4.3 sets forth a complete and
correct list of the Company's outstanding stock options, including for each the
name of the option holder, the date of grant, the plan under which the option
(or any portion thereof) was granted, and the next occurring date and the number
of Shares as to which any portion of the option becomes exercisable. Except as
otherwise described in Schedule 4.3, there are no options, warrants, conversion
privileges or other rights, agreements, arrangements or commitments obligating
the Company or any of its subsidiaries to issue or sell any shares of, or make
any payments based on the value or appreciation of any, capital stock of the
Company or any of its subsidiaries or securities or obligations of any kind
convertible into or exchangeable for any shares of capital stock of the Company,
any of its subsidiaries or any other person. The holders of outstanding Shares
are not entitled to any contractual or statutory preemptive or other similar
rights. Upon consummation of the Merger in accordance with the terms of this
Agreement, the Merger Sub will own the entire equity interest in the Company,
and there will be no options, warrants, conversion privileges or other rights,
agreements, arrangements or commitments obligating the Company or any of its
subsidiaries to issue or sell any shares of capital stock of the Company or of
any of its subsidiaries.
4.4 Authority Relative to this Agreement. The Company has the requisite
corporate power and authority to enter into this Agreement and to perform its
obligations hereunder. The execution and delivery of this Agreement by the
Company and the consummation by the Company of the transactions contemplated
hereby have been duly and unanimously authorized by the Board of Directors of
the Company and, except for the approval of its stockholders (if required) as
set forth in Section 6.1, no other corporate proceedings on the part of the
Company are necessary to authorize this Agreement and the transactions
contemplated hereby. This Agreement has been duly executed and delivered by the
Company and constitutes a valid and binding obligation of the Company,
enforceable in accordance with its terms subject to applicable bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and similar laws
affecting or relating to the enforcement of creditors' rights and remedies
generally and subject, as to enforceability, to
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general principles of equity (regardless of whether enforcement is sought in a
proceeding at law or in equity). Neither the Company nor any of its subsidiaries
is subject to or obligated under any provision of (a) its Certificate or
Articles of Incorporation or By-Laws, (b) except as set forth in the Disclosure
Schedule, any material contract, (c) any license, franchise or permit, or (d)
any law, regulation, order, judgment or decree, which would be breached or
violated or in respect of which a right of termination or acceleration or any
encumbrance on any of its or any of its subsidiaries' assets could be created by
the Company's execution, delivery and performance of this Agreement and the
consummation by the Company of the transactions contemplated hereby, other than,
in the case of clause (c) or (d), any such breaches, violations, rights or
encumbrances which will not, individually or in the aggregate, have a Company
Material Adverse Effect. Other than in connection with or in compliance with the
provisions of the Delaware Law, the Exchange Act and the Hart-Scott-Rodino Act,
no authorization, consent or approval of, or filing with, any public body, court
or authority is necessary for the consummation by the Company of the
transactions contemplated by this Agreement.
4.5 Commission Filings. The Company has heretofore delivered to the Merger
Sub copies of the Company's (a) Form 10-K Report, (b) quarterly reports or Form
10-Q for each fiscal quarter of the Company during the Company's fiscal year
ended September 30, 1999, and (c) all proxy statements relating to the Company's
meetings of stockholders (whether annual or special) during 1998 and 1999, in
each case as filed with the Commission. The Company has heretofore made
available to the Merger Sub all other reports, registration statements and other
documents filed by the Company with the Commission under the Exchange Act and
the Securities Act. All such documents described in the first two sentences of
this section are collectively referred to herein as the "Commission Filings."
Except as set forth on the Disclosure Schedule, the Company has not filed any
Form 8-K Reports with the Commission since September 30, 1998. The Company has
timely filed all reports, registration statements and other documents required
to be filed with the Commission under the rules and regulations of the
Commission, and all Commission Filings complied in all material respects with
the requirements of the Securities Act or the Exchange Act, as the case may be.
As of their respective dates, the Commission Filings (including in all cases any
exhibits or schedules thereto or documents incorporated therein by reference)
did not contain any untrue statement of 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.
4.6 Financial Statements and Related Data. The audited consolidated
financial statements of the Company included in the Form 10-K Report have been
prepared in accordance with generally accepted accounting principles applied on
a consistent basis during the periods involved (except as may be indicated in
the notes thereto) and fairly present in all material respects the consolidated
financial position of the Company and its consolidated subsidiaries as of the
dates thereof and the consolidated results of their operations and changes in
financial position for the periods then ended. The unaudited consolidated
financial statements of the Company included in the Company's Quarterly Report
on Form 10-Q for the quarter ended June 30, 1999 and the unaudited consolidated
financial statements of the Company for the fiscal year ended September 30, 1999
(attached hereto as Schedule 4.6) have been prepared in accordance with
generally accepted accounting principles applied on a consistent basis during
the periods involved
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(except that such financial statements are unaudited, subject to normal year end
adjustments, none of which will be material, and do not contain all of the
footnote disclosure required by generally accepted accounting principles) and
fairly present in all material respects the consolidated financial position of
the Company and its consolidated subsidiaries as of the date thereof and the
consolidated results of their operations and changes in financial position for
the period then ended.
4.7 Absence of Certain Changes or Events. Except as contemplated by this
Agreement, or reflected in any financial statement or note thereto referred to
in Section 4.6 or reflected in the Disclosure Schedule, or reflected in any
Commission Filing filed prior to the date hereof, since September 30, 1998,
there has not been (a) any change having a Company Material Adverse Effect; (b)
any damage, destruction or loss, whether covered by insurance or not, having a
Company Material Adverse Effect; (c) any entry by the Company or any subsidiary
into any commitment or transaction material to the Company and its subsidiaries
taken as a whole, which is not in the ordinary course of business; (d) any
change by the Company in accounting principles or methods except insofar as may
be required by a change in generally accepted accounting principles; (e) any
declaration, payment or setting aside for payment of any dividends or purchase
or redemption of any securities of the Company or (f) any entering into or
modification of any employment or severance contract with any executive officer
of the Company or any of its subsidiaries or any increase in compensation
payable by the Company or any of its subsidiaries to any of their executive
officers or any increase, which individually or in the aggregate exceeds
$200,000, under any bonus, pension or benefit plan.
4.8 Litigation. Except as previously disclosed in the Commission Filings
filed prior to the date hereof or as set forth on Schedule 4.8(a), no action,
suit, claim, proceeding, investigation, compliance review, or other legal or
administrative proceeding is pending or, to the knowledge of any of the persons
listed on Schedule 4.8(b) (the "Company's Knowledge"), threatened at law, in
equity or otherwise, before any court, board, commission, agency or
instrumentality of any federal, state, or local government or of any agency or
subdivision thereof, or before any arbitrator or panel of arbitrators (a
"Claim") which is Material (as defined in this Section 4.8) against (i) the
Company, (ii) or any of its subsidiaries or (iii) against any of the officers or
directors of the Company or any of its subsidiaries with respect to the Company
or its subsidiaries or the business or property of the Company or its
subsidiaries; nor does a state of facts exist which could give rise to such a
Claim. For purposes of this Section 4.8, a Claim is "Material" if such a Claim
(i) seeks damages in an amount exceeding applicable insurance coverage by $1
million, (ii) seeks damages in an unspecified amount and such damages could
exceed applicable insurance coverage by $1 million or (iii) seeks equitable or
other relief which could have a Company Material Adverse Effect.
4.9 Liabilities. Except as disclosed in Schedule 4.9, the financial
statements described in Section 4.6 or in any Commission Filings prior to the
date hereof, neither the Company nor any of its subsidiaries has any material
obligation or liability (whether accrued, absolute, contingent, unliquidated or
otherwise, whether or not known to the Company, whether due or to become due)
other than liabilities incurred since September 30, 1999 in the ordinary course
of business
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consistent with past practice, which in the aggregate are not material to the
Company and its subsidiaries, taken as a whole.
4.10 Environmental Matters. The Company and its subsidiaries have obtained
all material permits, licenses and other authorizations which are required under
applicable federal, state, local and foreign laws or regulations relating to
public health and safety, worker health and safety, pollution or protection of
the environment, including those relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport, or handling of
pollutants, contaminants or hazardous or toxic materials or wastes
(collectively, "Environmental Laws"), except where its failure to obtain the
same would not have a Company Material Adverse Effect. The Company and its
subsidiaries have complied and are in compliance with all terms and conditions
of any and all permits, licenses, and authorizations required by Environmental
Laws, and with all other applicable limitations, restrictions, conditions,
standards, prohibitions, requirements, obligations, schedules and timetables
contained in any applicable Environmental Law, or any notice or demand letter
issued, entered, promulgated or approved thereunder, except where the failure to
comply would not have a Company Material Adverse Effect.
4.11 Employee Benefit Plans.
(a) Schedule 4.11(a) hereto sets forth a list of all "employee benefit
plans," as defined in Section 3(3) of the Employee Retirement Income Security
Act of 1974, as amended ("ERISA"), and all other material employee benefit or
compensation arrangements or policies (whether or not written, whether U.S. or
foreign, and whether or not subject to ERISA), including, without limitation,
any such arrangements providing severance pay, sick leave, vacation pay, salary
continuation for disability, retirement benefits, deferred compensation, bonus
pay, incentive pay, stock purchase plan, stock options (including those held by
directors, employees, and consultants), hospitalization insurance, medical
insurance, life insurance, scholarships or tuition reimbursements, that are
maintained by the Company, any subsidiary of the Company or any Company ERISA
Affiliate (as defined in this Section 4.11) or with respect to which the
Company, any subsidiary of the Company or any Company ERISA Affiliate has or may
have any liability, contingent or otherwise (the "Company Employee Benefit
Plans").
(b) The Company has made available to the Purchaser a complete and
current copy of each Company Employee Benefit Plan document or a written
description of any unwritten Company Employee Benefit Plan; any employee
handbook applicable to employees of the Company or any subsidiary; and with
respect to any Company Employee Benefit Plan, any related trust agreement or
insurance contract; the most recent summary plan description, the most recent
IRS determination letter (including IRS determination upon termination of any
Company Employee Benefit Plan), and the two most recent (i) Forms 5500 and
attached schedules; (ii) audited financial statements and (iii) participant
account and valuation reports.
(c) None of the Company Employee Benefit Plans is a "multiemployer
plan," as defined in Section 4001(a)(3) of ERISA (a "Multiemployer Plan"), and
neither the Company nor any subsidiary of the Company or Company ERISA Affiliate
presently contributes to or has contributed to such a plan.
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(d) Except as set forth on Schedule 4.11(d) or as provided in Part 6 of
Title I of ERISA, none of the Company, any subsidiary of the Company or any
Company ERISA Affiliate maintain or contribute to any plan or arrangement which
provides or has any liability to provide life insurance or medical or other
employee welfare benefits to any employee or former employee upon his retirement
or termination of employment, and none of the Company, any subsidiary of the
Company or any Company ERISA Affiliate have represented, promised or contracted
(whether in oral or written form) to any employee or former employee that such
benefits would be provided.
(e) Except as provided for in the Options set forth in Schedule 5.1(b),
the execution of, and performance of the transactions contemplated in, this
Agreement will not, either alone or upon the occurrence of subsequent events,
result in any payment (whether of severance pay or otherwise), acceleration,
forgiveness of indebtedness, vesting, distribution, increase in benefits or
obligation to fund benefits with respect to any individual. There are no
severance agreements, severance policies, employment agreements or other
promises applicable to the Company, any subsidiary of the Company or any Company
ERISA Affiliate in the event of a change of control of the Company. Except as
previously disclosed in writing to the Purchaser, no payment or benefit which
will or may be made by the Company, the Purchaser, the Merger Sub or any of
their subsidiaries or affiliates with respect to any employee of the Company,
any subsidiary of the Company or any Company ERISA Affiliate will be
characterized as an "excess parachute payment" within the meaning of Section
280G(b)(1) of the Internal Revenue Code of 1986, as amended.
(f) Each Company Employee Benefit Plan that is intended to qualify
under Section 401 of the Code, and each trust maintained pursuant thereto, has
been determined to be so qualified and exempt from federal income taxation under
Section 501 of the Code by the IRS, and, to the Company's Knowledge, nothing has
occurred with respect to the operation or organization of any such Company
Employee Benefit Plan that would cause the loss of such qualification or
exemption or the imposition of any liability, penalty or tax under ERISA or the
Code. No Company Employee Benefit Plan is a "defined benefit plan" within the
meaning of Section 3(35) of ERISA, and neither the Company nor any subsidiary of
the Company or any Company ERISA Affiliate maintains or has maintained such a
plan in the last five years.
(g) Except as set forth on Schedule 4.11(g), no Company Employee
Benefit Plan covers employees other than employees of the Company, any
subsidiary of the Company or any Company ERISA Affiliate. None of the Company,
any subsidiary of the Company or any Company ERISA Affiliate has communicated to
present or former employees of the Company, any subsidiary of the Company or
Company ERISA Affiliate, or formerly adopted or authorized, any additional
employee benefit plan or program or any change in or termination of any existing
Company Employee Benefit Plan.
(h) (i) All contributions (including all employer contributions and
employee salary reduction contributions) required to have been made under any of
the Company Employee Benefit Plans to any funds or trusts established thereunder
or in connection therewith have been
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made by the due date thereof (including any permitted extensions), and have been
properly accrued and reflected on the Company's financial statements, (ii) each
of the Company, any subsidiary of the Company and any Company ERISA Affiliate
have complied in all material respects with any notice, reporting and
documentation requirements of ERISA and the Code, (iii) there are no pending
actions, claims (other than routine claims for benefits) or lawsuits which have
been asserted, instituted or, to the Company's Knowledge, threatened, in
connection with any of the Company Employee Benefit Plans, and (iv) the Company
Employee Benefit Plans have been maintained, in all material respects, in
accordance with their terms and with all provisions of ERISA and the Code
(including rules and regulations thereunder) and other applicable federal and
state laws and regulations.
(i) Schedule 4.11(i) sets forth a complete list of all amounts
outstanding relating to bonuses payable to employees and any obligation to pay
bonuses to employees relating to the Company's performance, the employees'
performance or the transactions contemplated hereby.
(j) No compensation paid to any employees of the Company or its
subsidiaries will result in any material nondeductibility under Section 162(m)
of the Code.
(k) The Company has provided, or will promptly provide, all notices to
holders of Options required under any Stock Plan or otherwise in connection with
the Offer and the other transactions contemplated hereby.
(l) No Company Employee Benefit Plan is currently under governmental
investigation or audit, and to the Company's Knowledge, no such investigation or
audit is threatened.
(m) With respect to Company Employee Benefit Plans that are not U.S.
plans ("Foreign Plans"), if any, (i) each Foreign Plan covers only employees of
a single company and no other employee and covers only employees who are in a
single country; (ii) each Foreign Plan and the manner in which it has been
administered satisfy in all material respects all applicable laws and
regulations, (iii) all contributions to each Foreign Plan required through the
Effective Date will be made by the Company or a subsidiary; and (iv) each
Foreign Plan is either fully funded (or fully insured) based upon generally
accepted local actuarial and accounting practice and procedure or appropriate
liabilities for each Foreign Plan are fully reflected on the Company's financial
statements dated September 30, 1999.
For purposes of this Agreement, "Company ERISA Affiliate" means any
business or entity which is a member of the same "controlled group of
corporations," under "common control" or a member of an "affiliated service
group" with the Company within the meanings of Sections 414(b), (c) or (m) of
the Code, or required to be aggregated with the Company under Section 414(o) of
the Code, or is under "common control" with the Company, within the meaning of
Section 4001(a)(14) of ERISA, or any regulations promulgated or proposed under
any of the foregoing Sections.
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4.12 Labor and Employment Matters.
(a) (i) Except as set forth on Schedule 4.12(a)(i), there are no
controversies pending or, to the Company's Knowledge, threatened, between the
Company or any of its subsidiaries and any group of their respective employees;
(ii) neither the Company nor, to the Company's Knowledge, any of its
subsidiaries, is a party to any collective bargaining agreement or other labor
union contract applicable to persons employed by the Company or its subsidiaries
nor to the Company's Knowledge, except as set forth on Schedule 4.12(a)(ii),
have there been any activities or proceedings of any labor union to organize any
such employees during 1998 or 1999; (iii) neither the Company nor any of its
subsidiaries has breached or otherwise failed to comply with any provision of
any such agreement or contract and there are no grievances outstanding against
any such parties under any such agreement or contract; (iv) there are no unfair
labor practice complaints pending against the Company or any of its subsidiaries
before the National Labor Relations Board or any current union representation
questions involving employees of the Company or any of its subsidiaries; and (v)
to the Company's Knowledge, there are no strikes, slowdowns, work stoppages,
lockouts, or threats thereof, by or with respect to any employees of the Company
or any of its subsidiaries. No consent of any union which is a party to any
collective bargaining agreement with the Company is required to consummate the
transactions contemplated by this Agreement. The Company is in and has been in
compliance with all federal, state and local laws relating to employment
(including employment discrimination), wages and hours, working conditions,
occupational safety, workers compensation and the payment of social security and
other payroll related taxes, except where noncompliance would not reasonably be
expected to have a Company Material Adverse Effect and neither the Company nor
its subsidiaries have received any written notice alleging a failure to comply
in any material respect with any such laws, rules or regulations.
(b) Except as set forth on Schedule 4.12(b), within the 90 days prior
to the date hereof, (i) neither the Company nor any subsidiary has effectuated
(x) a "plant closing" (as defined in the Worker Adjustment and Retraining
Notification Act, 29 U.S.C. 'SS'2101, et seq., the "WARN Act") affecting any
site of employment or one or more facilities or operating units within any site
of employment or facility, or (y) a "mass layoff" (as defined in the WARN Act)
affecting any site of employment or one or more facilities or operating units
within any site of employment or facility, (ii) neither the Company nor any
subsidiary has been affected by any transaction or engaged in layoffs or
employment terminations sufficient in number to trigger application of any
similar foreign, state or local law, and (iii) no employee of the Company or any
subsidiary has suffered an "employment loss" (as defined in the WARN Act).
(c) The Executive Employment Agreement, dated as of September 19, 1996,
by and between the Company and P. Quentin Bourjeaurd (the "Executive"), as
amended by the letter agreement dated October 31, 1999 (a copy of such amendment
is set forth on Schedule 4.12(c)), has been duly executed and delivered by the
Company and the Executive and constitutes a valid and binding obligation of the
Executive, enforceable in acccordance with its terms subject to applicable
bankruptcy, insolvency, moratorium and similar laws affecting or relating to the
enforcement of creditors' rights and remedies generally and subject, as to
enforceability, to
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general principles of equity (regardless of whether enforcement is sought in a
proceeding at law or in equity).
4.13 Offer Documents. Neither the Schedule 14D-9 nor any of the information
supplied by the Company for inclusion in the Offer Documents shall, at the
respective times the Schedule 14D-9, the Offer Documents or any such amendments
or supplements are filed with the SEC or are first published, sent or given to
stockholders, as the case may be, contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading. In the event that the
Merger Sub has not designated a majority of the members of the Company's Board
of Directors pursuant to the terms of Section 1.3 hereof and a stockholder vote
is required, all information supplied by the Company for inclusion in any proxy
or information statement filed with the Commission and sent or given to
stockholders pursuant to Section 6.2 hereof 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 false or misleading at the
time of filing with the Commission, mailing to stockholders, any meeting of
stockholders or the Effective Time. Notwithstanding the foregoing, the Company
makes no representation or warranty with respect to any information which is
supplied in writing by the Purchaser or the Merger Sub specifically for
inclusion and which is contained in any of the foregoing documents or which is
excerpted or derived from public sources.
4.14 Intellectual Property; Year 2000.
(a) The Company and its subsidiaries own the entire right, title and
interest in and to or have the right to use (pursuant to valid and defensible
license arrangements), all Intellectual Property (as defined below) used or held
for use in, or otherwise necessary for, the operation of their respective
businesses, except as set forth in Schedule 4.14(a) or as would not, in the
aggregate, reasonably be expected to have a Company Material Adverse Effect.
Except as set forth in Schedule 4.14(a), there are no pending, or to the
Company's Knowledge, threatened proceedings or litigation or other adverse
claims affecting or relating to any such Intellectual Property, nor, to the
Company's Knowledge, any reasonable basis upon which a claim may be asserted by
or against the Company or any of its subsidiaries for infringement of any such
Intellectual Property that, in the aggregate, would reasonably be expected to
have a Company Material Adverse Effect. As used herein, "Intellectual Property"
means all industrial and intellectual property rights, including proprietary
technology, patents, patent applications, trademarks, trademark applications and
registrations, servicemarks, servicemark applications and registrations, trade
dress, copyrights, internet domain names, software, know-how, licenses, trade
secrets, proprietary processes, formulae and customer lists.
(b) The officers and employees of the Company or its subsidiaries and
the consultants to the Company or its subsidiaries listed on Schedule 4.14(b)
have executed agreements containing provisions regarding protection of
proprietary information and confidentiality, true and complete copies of which
have previously been provided to the Purchaser by the Company, and other
employees, consultants and contractors have executed such an
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agreement. All computer software included in the Company's or its Subsidiaries'
products (i) has been either created by employees of the Company or its
subsidiary within the scope of their employment or otherwise on a work-for-hire
basis or by consultants or contractors who have created such software themselves
and have assigned, except as otherwise specifically set forth in the agreements
with the consultants listed on Schedule 4.14(b) (true and complete copies of
such agreements have heretofore been delivered to the Purchaser) all right,
title and interest they have in such software to the Company or its subsidiary
or (ii) is licensed to the Company or its subsidiary pursuant to valid and
binding agreements.
(c) The computer systems of the Company and its subsidiaries are Year
2000 Compliant in all material respects. All inventory, products and material
independently developed applications of the Company and its subsidiaries that
are, consist of, include or use computer software are Year 2000 Compliant in all
material respects. The Company has contacted its principal vendors of hardware
and software and other persons with whom the Company has material business
relationships and all such vendors and other persons have notified the Company
that their hardware and software are Year 2000 compliant to the extent affecting
the Company in any material respect. To the Company's Knowledge, any failure on
the part of the customers of, and suppliers to, the Company and its subsidiaries
to be Year 2000 Compliant by December 31, 1999 will not have or be likely to
have a Company Material Adverse Effect. The term "Year 2000 Compliant," with
respect to a computer system or software program, means that such computer
system or program: (i) is capable of recognizing, processing, managing,
representing, interpreting and manipulating correctly date-related data for
dates earlier and later than January 1, 2000, including, but not limited to,
accepting date input, providing date output and performing calculations on dates
or portions of dates; (ii) has the ability to provide date recognition for any
data element without limitation and respond to two digit year date input in a
way that resolves the ambiguity as to century in a disclosed, defined and
predetermined manner; (iii) has the ability to function automatically into and
beyond the year 2000 without human intervention; (iv) has the ability to
interpret data, dates and time correctly into and beyond the year 2000; (v) has
the ability not to produce noncompliance in existing data, nor otherwise corrupt
such data, into and beyond the year 2000; (vi) has the ability to process
correctly after January 1, 2000, data containing dates before that date; (vii)
has the ability to store and provide output of date information in ways that are
unambiguous as to century; (viii) has the ability to function accurately and
without interruption before, during and after January 1, 2000, without any
change in operations associated with the advent of the new century; and (ix) has
the ability to recognize all "leap year" dates, including February 29, 2000.
4.15 Taxes. Each of the Company and its subsidiaries has timely filed (or
there has been timely filed on its behalf) all federal, and all material state,
local and foreign, tax returns and reports, that it was required to file. All
such tax returns and reports were correct and complete in all material respects.
All taxes owed by any of the Company and its subsidiaries have been paid except
where the failure to pay would not reasonably be expected to have a Company
Material Adverse Effect. Each of the Company and its subsidiaries has withheld
and paid all taxes required to have been withheld and paid in connection with
amounts paid to any employee, independent contractor, creditor, stockholder, or
other third party except where the failure to withhold or pay would not
reasonably be expected to have a Company Material Adverse Effect. Neither the
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Internal Revenue Service (the "IRS") nor any other taxing authority or agency is
now asserting or, to the Company's Knowledge, threatening to assert against the
Company or any of its subsidiaries any deficiency or claim for material
additional taxes or interest thereon or penalties in connection therewith. As of
the date hereof, neither the Company nor any of its subsidiaries has granted, or
been requested to grant, any waiver of any statute of limitations with respect
to, or any extension of a period for the assessment of, any federal, state,
local or foreign income tax. The accruals and reserves for taxes reflected in
the balance sheet of the Company as of September 30, 1999 have been estimated in
accordance with past practice and are adequate to cover all taxes accruable
through such date (including interest and penalties, if any, thereon) in
accordance with generally accepted accounting principles. Neither the Company
nor any of its subsidiaries has made an election under Section 341(f) of the
Code. The Company is not, and has not been during the period specified in
Section 897(c)(1)(A)(ii) of the Code, a United States real property holding
corporation within the meaning of Section 897(c) of the Code.
4.16 Brokers, Advisors. No broker, finder or investment banker (other than
Goldman, Sachs & Co.) is entitled to any brokerage, finder's or other fee or
commission in connection with the transactions contemplated by this Agreement
based upon arrangements made by and on behalf of the Company. The Company has
heretofore furnished to the Merger Sub a complete and correct copy of all
agreements between the Company and Goldman, Sachs & Co. pursuant to which such
firm would be entitled to any payment relating to the transactions contemplated
hereunder.
4.17 Product Liabilities. There are no material product warranty, product
liability or similar claims pending, or to the Company's Knowledge, threatened,
against the Company or any of its subsidiaries.
4.18 Related Party Transactions. Except as set forth in the Schedule 4.18,
or disclosed in the Commission Filings filed before the date hereof, no current
or former stockholder, director, officer or key employee of the Company or any
of its subsidiaries nor any "Associate" (as defined in Rule 405 promulgated
under the Securities Act) of any such person, is presently or has been, directly
or indirectly through his affiliation with any other person or entity, a party
to any material transaction with the Company or any of its subsidiaries
providing for the furnishing of services (except as an employee) by or to, or
rental of real or personal property from or to, or otherwise requiring cash
payments by or to any such person. In addition, except as set forth in the
Schedule 4.18 or disclosed in the Commission Filings filed before the date
hereof, during such periods there was no relationship or transaction involving
the Company or any of its subsidiaries which is described in Item 404 of
Regulation S-K promulgated under the Securities Act.
4.19. Suppliers and Customers. Schedule 4.19 sets forth a list of (a) the
ten (10) largest suppliers of materials or services to the Company during the
twelve month period ending September 30, 1999 (the "Major Suppliers") and (b)
the ten (10) largest customers of products or services of the Company during the
twelve month period ending September 30, 1999 (the "Major Customers"). Except as
set forth on Schedule 4.19, no Major Supplier or Major Customer of the Company
has during the last twelve months decreased materially or, to the Company's
Knowledge, threatened to decrease or limit materially its purchase of products
from, or provision
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of services or supplies to, as applicable, the Company. To the Company's
Knowledge, there is no termination, cancellation or limitation of, or any
material modification or change in, the business relationships of the Company
with any Major Supplier or Major Customer that would reasonably be expected to
have a Company Material Adverse Effect. Except as set forth on Schedule 4.19, to
the Company's Knowledge, there will not be any such change in relations with
Major Suppliers or Major Customers of the Company or triggering of any right of
termination, cancellation or penalty or other payment in connection with or as a
result of transactions contemplated by this Agreement which would reasonably be
expected to have a Company Material Adverse Effect.
4.20 Foreign Corrupt Practices Act. Neither the Company nor any of its
subsidiaries has at any time made or committed to make any payments for illegal
political contributions or made any bribes, kickback payments or other illegal
payments. Neither the Company nor any of its subsidiaries has made, offered or
agreed to offer anything of value to any governmental official, political party
or candidate for governmental office (or any person that the Company or its
subsidiaries knows or has reason to know, will offer anything of value to any
governmental official, political party or candidate for political office), such
that the Company or its subsidiaries have violated the Foreign Corrupt Practices
Act of 1977, as amended from time to time, and all applicable rules and
regulations promulgated thereunder. There is not now nor has there ever been any
employment by the Company or any of its subsidiaries of any governmental or
political official in any country while such official was in office.
ARTICLE 5
CONDUCT OF BUSINESS PENDING THE MERGER
5.1 Conduct of Business by the Company Pending the Merger. The Company
covenants and agrees that, prior to the Effective Time, unless the Merger Sub
shall otherwise agree in writing or except as set forth on Schedule 5.1 or as
otherwise expressly contemplated or permitted by this Agreement:
(a) The business of the Company and its subsidiaries shall be conducted
only in, and the Company and its subsidiaries shall maintain their facilities
in, the ordinary course of business and consistent with past practice;
(b) The Company shall not directly or indirectly do or permit to occur
any of the following: (i) issue, sell, pledge, dispose of or encumber (or permit
any of its subsidiaries to issue, sell, pledge, dispose of or encumber) any
shares of, or any options, warrants, conversion privileges or rights of any kind
to acquire any shares of, any capital stock of the Company or any of its
subsidiaries (other than shares issuable upon exercise of the outstanding (as of
the date hereof) options to acquire Shares in accordance with their terms in
effect on the date hereof); (ii) amend or propose to amend the Certificate or
Articles of Incorporation or By-Laws of it or any of its subsidiaries; (iii)
split, combine or reclassify any outstanding Shares, or declare, set aside or
pay any dividend or other distribution payable in cash, stock, property or
otherwise with respect to the Shares (except the declaration and payment of
dividends by a wholly-owned subsidiary of
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the Company to its parent); (iv) redeem, purchase or acquire or offer to acquire
(or permit any of its subsidiaries to redeem, purchase or acquire or offer to
acquire) any Shares or other securities of the Company or any of its
subsidiaries other than as contemplated by Section 2.5 and other than for the
repurchase by the Company, pursuant to existing agreements, of any outstanding
Shares upon termination of an employment, director or consulting relationship
with the Company; (v) enter into any material contract; or (vi) enter into or
modify any agreement, commitment or arrangement with respect to any of the
foregoing;
(c) Neither the Company nor any of its subsidiaries shall (i) sell,
pledge, lease, dispose of or encumber any material assets other than in the
ordinary course of business consistent with past practice; (ii) acquire (by
merger, consolidation, acquisition of stock or assets or otherwise) any
corporation, partnership or other business organization or enterprise or
material assets thereof; (iii) incur any indebtedness for borrowed money or
issue any debt securities for borrowings except in the ordinary course of
business and consistent with past practice; (iv) guarantee, endorse or otherwise
become liable or responsible (whether directly, contingently or otherwise) for
the obligations of any other person (other than a subsidiary of the Company or
the Company) except in the ordinary course of business consistent with past
practice and in amounts immaterial to the Company; or (v) enter into or modify
any contract, agreement, commitment or arrangement with respect to any of the
foregoing;
(d) Neither the Company nor any of its subsidiaries shall (i) enter
into or modify any employment, severance or similar agreements or arrangements
with, or grant any Options (or accelerate any Options), bonuses, salary
increases, severance or termination pay to, any officers or directors; or (ii)
in the case of employees who are not officers or directors, take any action to
grant or accelerate any Options, or take any other action other than in the
ordinary course of business consistent with past practice (none of which actions
shall be unreasonable or unusual) with respect to the grant or creation of any
bonuses, salary increases, severance or termination pay, employment or similar
agreements or with respect to any increase of benefits in effect on the date of
this Agreement;
(e) Except as may be required by applicable law, none of the Company,
any of its subsidiaries or any Company ERISA Affiliate shall adopt or amend any
bonus, profit sharing, compensation, stock option, pension, retirement, deferred
compensation, employment or other employee benefit plan, agreement, trust fund
or arrangement for the benefit or welfare of any employee;
(f) The Company will not (i) call any meeting (other than any meeting
contemplated by Section 6.1) of its stockholders or (ii) waive or modify any
provision of, or terminate any, confidentiality or standstill agreement entered
into by the Company with any person;
(g) The Company shall use its commercially reasonable efforts to cause
its current insurance (or reinsurance) policies not to be cancelled or
terminated or any of the coverage thereunder to lapse, unless simultaneously
with such termination, cancellation or lapse, replacement policies providing
coverage equal to or greater than the coverage under the
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cancelled, terminated or lapsed policies for substantially similar premiums are
in full force and effect;
(h) The Company (i) shall use its commercially reasonable efforts, and
cause each of its subsidiaries to use commercially reasonable efforts, to
preserve intact their respective business organizations and goodwill, keep
available the services of its officers and employees as a group and maintain
satisfactory relationships with suppliers, distributors, customers and others
having business relationships with it or its subsidiaries; (ii) shall confer on
a regular and frequent basis with representatives of the Merger Sub to report
financial matters and, to the extent not prohibited by applicable law,
operational matters and the general status of ongoing operations; (iii) shall
not take any action, and shall not permit any of its subsidiaries to take any
action, which would render, or which reasonably may be expected to render, any
representation or warranty made by it in this Agreement untrue in any respect
(or untrue in any material respect if such representation or warranty is not
qualified by "material," "Company Material Adverse Effect, a specified dollar
limitation or the like) at any time prior to the Effective Time; and (iv) shall
notify the Merger Sub of any emergency or other change in the normal course of
its or any of its subsidiaries' business or in the operation of its or any of
its subsidiaries' properties and of any governmental or third party complaints,
investigations or hearings (or communications indicating that the same may be
contemplated) if such emergency, change, complaint, investigation or hearing has
or would be reasonably likely to have, individually or in the aggregate, a
Company Material Adverse Effect, or would be material to any party's ability to
consummate the transactions contemplated by this Agreement;
(i) Neither the Company nor any of its subsidiaries shall adopt a plan
of liquidation, dissolution, merger, consolidation, restructuring,
recapitalization, or reorganization;
(j) Neither the Company nor any of its subsidiaries shall make any
material tax election or settle or compromise any material federal, state,
local, or foreign tax liability, except in the ordinary course of business and
consistent with past practice;
(k) The Company shall not modify or accelerate the exercisability of
any stock options, rights or warrants presently outstanding; and
(l) The Company shall postpone the holding of its Annual Meeting of
Stockholders (the "Company Annual Meeting") indefinitely pending consummation of
the Merger unless the Company is otherwise required to hold the Company Annual
Meeting by Delaware Law.
ARTICLE 6
ADDITIONAL AGREEMENTS
6.1 Action of Stockholders. The Company shall take all action necessary in
accordance with the Delaware Law and its Certificate of Incorporation and
By-Laws to convene a meeting of its stockholders as promptly as practicable
following consummation of the Offer to
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consider and vote upon the Merger, if a stockholder vote is required. If a
stockholders' meeting is convened, the Board of Directors shall recommend that
the stockholders of the Company vote to approve the Merger; provided, however,
that such recommendation may be withdrawn, modified or amended to the extent
that the Board of Directors of the Company concludes, in good faith after
consultation with its outside financial advisor, upon advice of outside legal
counsel, that it is inconsistent with such Board's fiduciary duties under
applicable law not to do so. In the event that proxies are to be solicited from
the Company's stockholders, the Company shall, if and to the extent requested by
the Merger Sub, use its reasonable efforts to solicit from stockholders of the
Company proxies in favor of such approval and shall take all other reasonable
action necessary or, in the opinion of the Merger Sub, helpful to secure a vote
or consent of stockholders in favor of the Merger. At any such meeting, the
Merger Sub shall vote or cause to be voted all of the Shares then owned by the
Merger Sub or any subsidiary of the Merger Sub in favor of the Merger and the
Company shall vote all Shares in favor of the Merger for which proxies in the
form distributed by the Company shall have been given and with respect to which
no contrary direction shall have been made.
Notwithstanding anything else herein or in this Section 6.1, if the
Purchaser, the Merger Sub and any other subsidiaries of the Purchaser shall
acquire in the aggregate a number of the outstanding Shares, pursuant to the
Offer or otherwise, sufficient to enable the Merger Sub or the Company to cause
the Merger to become effective under applicable law without a meeting of
stockholders of the Company, the parties hereto shall, at the request of the
Purchaser and subject to Article 7, take all necessary and appropriate action to
cause the Merger to become effective as soon as reasonably practicable after the
consummation of such acquisition, without a meeting of stockholders of the
Company, in accordance with Section 253 of the Delaware Law.
6.2 Proxy Statement. If a stockholder vote is required, the Company and the
Merger Sub shall cooperate with each other and use all reasonable efforts to
prepare, and the Company and the Merger Sub shall file with the Commission as
soon as reasonably practicable following consummation of the Offer and use their
reasonable efforts to have cleared by the Commission, a proxy statement or
information statement, as appropriate, with respect to the approval of the
Merger by the Company's stockholders. The information provided and to be
provided by the Purchaser, the Merger Sub and the Company, respectively, for use
in the proxy statement or information statement shall not contain an untrue
statement of material fact and shall not omit to state any material fact
required to be stated therein or necessary in order to make such information not
misleading.
6.3 Employee Benefits and Options.
(a) Option Termination. The Purchaser, the Merger Sub and the Company
hereby acknowledge and agree that neither the Purchaser nor the Surviving
Corporation shall assume or continue any outstanding Options under the Stock
Plans, or substitute any additional options, warrants or other rights for such
outstanding Options. At the Effective Time, all Options (whether vested or
unvested) shall be canceled, and holders of fully vested options at the
Effective Time shall be entitled to receive from the Surviving Corporation, in
cancellation of such vested options, an amount in cash equal to the excess of
(a) the product of the number of Shares covered
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by such vested Options multiplied by the Merger Consideration, over (b) the
product of the number of Shares covered by such vested Options multiplied by the
per-Share exercise, purchase or conversion price payable upon exercise, purchase
or conversion of the same, less applicable withholding of taxes. The Company
shall take all action necessary to effectuate the foregoing, including obtaining
any necessary consents of the holders of Options.
(b) Employment Matters. The Purchaser shall cause the Surviving
Corporation to honor, without modification adverse to the employee party
thereto, all employment, consulting, termination and severance agreements in
effect prior to the date hereof between the Company or any of its subsidiaries
and any current or former officer, director, consultant or employee of the
Company, all of which, the Company hereby represents and warrants, have been
disclosed on Schedules 4.11(a), 4.11(g) and 4.14(b).
(c) Benefit Plans. The Surviving Corporation shall (i) to the extent it
is permitted to do so under that benefit plan, waive all limitations as to
preexisting conditions, exclusions and waiting periods with respect to
participation and coverage requirements applicable to the employees of the
Company or any of its subsidiaries under any benefit plan that such employees
may be eligible to participate in after the Effective Time, and (ii) provide
each employee of the Company and its subsidiaries with credit for any
co-payments and deductibles paid prior to the Effective Time in satisfying any
applicable deductible or out-of-pocket requirements under any benefit plans that
such employees are eligible to participate in after the Effective Time, but
excluding in the case of each of (i) and (ii), limitations or restrictions under
benefit plans of the Company in effect as of the Effective Time that are not met
as of the Effective Time.
6.4 Expenses. If (a) this Agreement is terminated by the Company pursuant
to Section 8.1(e)(iii) or Section 6.6, or (b) this Agreement is terminated by
the Merger Sub pursuant to Section 8.1(c), (c) the Offer is terminated by the
Merger Sub pursuant to paragraph (a) of Annex I hereto, or (d) this Agreement is
terminated pursuant to its terms for any reason other than a material breach of
this Agreement by the Purchaser or the Merger Sub, and in case of this clause
(d) (x) within six months thereafter a definitive agreement is entered into
between the Company and any person other than the Merger Sub or any affiliate of
the Merger Sub, for the acquisition or disposition of (i) all or substantially
all of the assets of the Company, or (ii) securities of the Company constituting
(or convertible into) 35% or more of the currently outstanding Shares, or for a
merger, consolidation or other reorganization of the Company, at a price
equivalent to a price per Share in excess of $9.50 and is closed concurrently
therewith or at any time thereafter or (y) within six months thereafter any
person or "group" (as that term is used in Section 13(d)(3) of the Exchange Act)
other than the Merger Sub or any affiliate of the Merger Sub shall have
acquired, beneficial ownership of 35% or more of the outstanding Shares, the
Company shall pay to the Purchaser upon demand (by wire transfer of immediately
available federal funds to an account designated by the Purchaser for such
purpose) the amount of $5,500,000 (the "Fee") to compensate the Purchaser and
the Merger Sub for taking actions to consummate this Agreement, to reimburse
them for the time and expense relating thereto and for other direct and indirect
costs (including lost opportunity costs) in connection with the transactions
contemplated herein. Payment of such amount by the Company shall constitute a
full and complete discharge of all
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obligations or liabilities of the Company under this Section 6.4. The Company
acknowledges that the provisions set forth in this Section 6.4 are an integral
part of this Agreement that have been negotiated in order to induce the
Purchaser and the Merger Sub to enter into this Agreement.
In addition to any damages caused by conduct which constitutes a breach by
any of the Purchaser or the Merger Sub or the Company of any of their
obligations under this Agreement, the breaching party agrees, jointly and
severally, to pay to the nonbreaching party all costs and expenses (including
attorneys' fees and expenses) incurred by the nonbreaching party in connection
with the enforcement by the nonbreaching party of its rights hereunder.
6.5 Additional Agreements. Subject to its fiduciary duties and the
terms and conditions provided herein, each of the parties agrees to use its best
efforts to take, or cause to be taken, 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 this Agreement,
including using best efforts to obtain all necessary waivers, consents and
approvals and to effect all necessary registrations and filings, including but
not limited to filings under the Hart-Scott-Rodino Act and submissions of
information requested by governmental authorities. Nothing in this Agreement
shall require that the Purchaser or the Merger Sub divest, sell or hold separate
any of their respective assets or properties or the assets or properties of the
Company, nor shall anything in this Agreement require that the Purchaser or the
Merger Sub take any action that could affect the normal and regular operations
of the Purchaser or the Company after the Effective Date. The Company shall, and
shall cause its officers, directors, affiliates and agents to, immediately cease
and cause to be terminated any existing activities, discussions or negotiations
with any parties conducted heretofore with respect to any acquisition of or sale
of any equity interest in or substantial assets of the Company or any of its
subsidiaries. For purposes of this Section 6.5, best efforts shall not include
the obligation to make any payment to any third party as a condition to
obtaining such party's consent or approval; provided, however, that the
Purchaser and the Merger Sub shall be obligated to pay all filing and related
fees required by the Hart-Scott-Rodino Act.
6.6 No Solicitation. The Company shall not, and shall not authorize or
permit any of its officers, directors, employees or agents to directly or
indirectly, solicit, encourage, participate in or initiate discussions or
negotiations with, or provide any information to, any corporation, partnership,
person or other entity or group (other than the Merger Sub, any of its
affiliates or representatives) (collectively, a "Person") concerning any merger,
consolidation, tender offer, exchange offer, sale of all or substantially all of
the Company's assets, sale of shares of capital stock or similar business
combination transaction involving the Company or any principal operating or
business unit of the Company or its subsidiaries (an "Acquisition Proposal").
Notwithstanding the foregoing, (i) if prior to the Merger Sub owning a majority
of the outstanding Shares the Company receives an unsolicited, written
indication of a willingness to make an Acquisition Proposal at a price per share
which the Company reasonably concludes is in excess of the Merger Consideration
from any Person and if the Company reasonably concludes in good faith, after
consultation with its outside financial advisor, that the Person delivering such
indication is capable of consummating such an Acquisition Proposal (based upon,
among other things, the availability of financing and the capacity to obtain
financing, the expectation of receipt
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of required antitrust and other regulatory approvals and the identity and
background of such Person), then the Company may provide access to or furnish or
cause to be furnished information concerning the Company's business, properties
or assets to any such Person pursuant to an appropriate confidentiality
agreement and the Company may engage in discussions related thereto, and (ii)
the Company may participate in and engage in discussions and negotiations with
any Person meeting the requirement set forth in clause (i) above in response to
a written Acquisition Proposal if the Company concludes in good faith, after
consultation with its outside financial advisor, upon advice of its legal
counsel, that the failure to engage in such discussions or negotiations is
inconsistent with such Board's fiduciary duties to the Company's stockholders
under applicable laws and the Company receives from the Person making an
Acquisition Proposal an executed confidentiality agreement the terms of which
are (without regard to the terms of the Acquisition Proposal) (A) no less
favorable to the Company, and (B) no less restrictive to the Person making the
Acquisition Proposal, than those contained in the Confidentiality Agreement. In
the event that, after the Company has received a written Acquisition Proposal
(without breaching its obligations under clause (i) or (ii) above) but prior to
the Merger Sub beneficially owning a majority of the outstanding Shares, the
Board of Directors concludes in good faith, after consultation with its outside
financial advisor, upon advice of its legal counsel, that it is inconsistent
with such Board's fiduciary duties under applicable law not to do so, the
Company may concurrently with the payment of the Fee provided in Section 6.4 do
any or all of the following: (x) withdraw or modify the Board of Directors' or
recommendation of the Merger or this Agreement, (y) approve or recommend an
Acquisition Proposal, subject to this Section 6.6 and (z) terminate this
Agreement. Furthermore, nothing contained in this Section 6.6 shall prohibit the
Company or its Board of Directors from taking and disclosing to the Company's
stockholders a position with respect to a tender or exchange offer by a third
party pursuant to Rules 14d-9 and 14e-2(a) promulgated under the Exchange Act or
from making such disclosure to the Company's stockholders or otherwise which, in
the judgment of the Board of Directors upon advice of legal counsel, is required
under applicable law or rules of any stock exchange. The Company shall promptly
(but in any event within two days) advise the Purchaser in writing of any
Acquisition Proposal or any inquiry regarding the making of an Acquisition
Proposal including any request for information, the material terms and
conditions of such request, Acquisition Proposal or inquiry and the identity of
the Person making such request, Acquisition Proposal or inquiry and thereafter
shall keep the Purchaser reasonably informed, on a current basis, of the status
and material terms of such proposals and the status of such negotiations or
discussions, providing copies to the Purchaser of any Acquisition Proposals made
in writing. The Company shall provide the Purchaser with one business day
advance notice of, in each and every case, its intention to provide any
information to, or enter into any confidentiality agreement with, any person or
entity making any such inquiry or proposal and the Company shall provide the
Purchaser with three business days advance notice of, in each and every case,
its intention to enter into any other agreement with any person or entity making
any such inquiry or proposal. The Company agrees not to release any third party
from, or waive any provisions of, any confidentiality or standstill agreement to
which the Company is a party and will use its best efforts to enforce any such
agreements at the request of and on behalf of the Purchaser. The Company will
inform the individuals or entities referred to in the first sentence of this
Section 6.6 of the obligations undertaken in this Section 6.6. The Company also
will promptly request each person or entity which has executed, within 12 months
prior to the date of this Agreement, a
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confidentiality agreement in connection with its consideration of acquiring the
Company to return or destroy all confidential information heretofore furnished
to such person or entity by or on behalf of the Company. Notwithstanding
anything contained in this Agreement to the contrary, any action by the
Company's Board of Directors permitted by, and taken in accordance with, this
Section 6.6 shall not constitute a breach of this Agreement.
Notwithstanding the provisions of the Confidentiality Agreement, (i)
following any notification to the Purchaser of a written proposal that permits
the Company to negotiate with or furnish information to any third party in
accordance with Section 6.6, and until any transaction resulting from such
proposal shall have either been consummated or the Company shall have received
written notification that any such third party shall no longer seek to engage in
such transaction with or involving the Company, the Purchaser shall be entitled
to propose or present to the Company any offer in response to such third party's
offer, and (ii) if, from the date hereof until the Effective Time, any third
party shall announce its intention to commence, or shall commence, any tender
offer to acquire Shares, the Purchaser and the Merger Sub shall be entitled to
make any public announcement or proposal, or to take any other action it or they
may deem appropriate, in response to such announcement or tender offer and which
is consistent with their obligations under this Agreement.
6.7 Notification of Certain Matters. Each party shall give prompt notice to
the others of (a) the occurrence or failure to occur of any event, which
occurrence or failure would be likely to cause any representation or warranty on
its part contained in this Agreement to be untrue or inaccurate in any respect
(or untrue in any material respect if such representation or warranty is not
qualified by "material," Company Material Adverse Effect, a specified dollar
limitation or the like) at any time from the date hereof to the Effective Time,
and (b) any failure of such party, or any officer, director, employee or agent
thereof, to comply with or satisfy any covenant, condition or agreement to be
complied with or satisfied by it hereunder.
6.8 Access to Information. From the date hereof to the Effective Time, to
the extent not prohibited by applicable law, the Company shall, and shall cause
its subsidiaries, officers, directors, employees and agents (including lenders,
attorneys and accountants), upon reasonable notice, to afford the Purchaser and
the Merger Sub reasonable access at all reasonable times to its officers,
employees, agents, properties, books and records, and shall furnish the
Purchaser and the Merger Sub all financial, operating, personnel, compensation,
tax and other data and information as the Parent or the Merger Sub, through its
officers, employees or agents, may reasonably request. All of such information
shall be treated as "Confidential Material" pursuant to the terms of the
Confidentiality Agreement, which continues (subject to the terms of this
Agreement) in full force and effect and which shall survive termination of this
Agreement.
6.9 Stockholder Claims. The Company shall not settle or compromise any
claim brought by any present, former or purported holder of any securities of
the Company in connection with the Merger prior to the Effective Time without
the prior written consent of the Merger Sub.
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6.10 Indemnification.
(a) The Certificate of the Surviving Corporation shall contain
provisions no less favorable with respect to indemnification than are set forth
in Article VIII and IX of the Certificate of Incorporation of the Company. Such
provisions in the Certificate of Incorporation of the Company and the Surviving
Corporation shall not be amended, repealed or otherwise modified for a period of
six years from the date the Purchaser or the Merger Sub acquires a majority of
the Shares in any manner that would adversely affect the rights thereunder of
individuals who at or prior to the Effective Time were directors, officers,
employees or agents of the Company, unless such modification is required by law.
In addition, the Company, as the Surviving Corporation, shall maintain in full
force and effect for a period of at least six years following the Effective
Time, directors and officers liability insurance containing terms and provisions
comparable to the terms and provisions of the current policy maintained by the
Company for the benefit of existing and former officers, directors, employees
and agents of the Company but only to the extent obtainable at a cost no more
than 100% greater than that presently incurred by the Company on the date
hereof. In the event that the Surviving Corporation cannot obtain comparable
insurance at the price level contemplated by this Section 6.10(a), the Surviving
Corporation shall obtain what it believes in good faith constitutes the best
available insurance at such price level.
(b) This Section 6.10 shall survive the Effective Time, is intended to
benefit the Company, the Surviving Corporation and each of the persons referred
to in paragraph (a) of this Section and shall be binding on all successors and
assigns of the Surviving Corporation.
6.11 Consents and Amendments. The Company shall use its best efforts to
obtain, without the payment of any fee or compensation, consents to the Offer,
the Merger, and the transactions contemplated by this Agreement from the parties
to the agreements listed on Schedule 6.11.
6.12 Audit. The Company shall use reasonable commercial efforts to have
Arthur Andersen LLP ("AA") complete its audit of the Company's consolidated
financial statements for the fiscal year ended September 30, 1999 as promptly as
practicable after the date hereof. The Purchaser and the Merger Sub shall be
given reasonable access to the work papers of AA and to the staff of AA
conducting the audit and shall be provided a copy of such audit upon completion.
ARTICLE 7
CONDITIONS
7.1 Conditions to Obligations of Each Party to Effect the Merger. The
respective obligations of each party to effect the Merger shall be subject to
the fulfillment at or prior to the Effective Time of the following conditions,
any or all of which may be waived in whole or in part by the parties hereto, to
the extent permitted by applicable law:
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(a) The Merger shall have been approved and adopted by the vote of the
stockholders of the Company to the extent required by the Delaware Law;
(b) All waiting, review and investigation periods (and any extension
thereof) applicable to the consummation of the Merger under the
Hart-Scott-Rodino Act shall have expired or been terminated;
(c) There shall have been no law, statute, rule or order, domestic or
foreign, enacted or promulgated which would make consummation of the Merger
illegal;
(d) No injunction or other order entered by a United States (state or
federal) court of competent jurisdiction shall have been issued and remain in
effect which would prohibit consummation of the Merger; provided, however, that
the parties shall use their reasonable efforts to cause such injunction or order
to be vacated or lifted;
(e) The Purchaser, the Merger Sub or their affiliates shall have
purchased Shares validly tendered and not withdrawn pursuant to the Offer;
provided, however, that neither the Purchaser nor the Merger Sub may invoke this
condition if the Purchaser or the Merger Sub shall have failed to purchase
Shares so tendered and not withdrawn in violation of the terms of this Agreement
or the Offer.
ARTICLE 8
TERMINATION, AMENDMENT AND WAIVER
8.1 Termination. This Agreement may be terminated at any time prior to the
Effective Time, whether prior to or after approval by the stockholders of the
Company:
(a) By mutual consent of the Boards of Directors of the Purchaser and
the Company;
(b) By either the Merger Sub or the Company if the Offer shall not have
been consummated on or before 45 business days from the date the Offer is
commenced (the "Termination Date"), provided, however, that a party shall not be
entitled to terminate this Agreement pursuant to this Section 8.1(b) if it is in
material breach of its obligations under this Agreement; provided further, if
the Offer shall not have been consummated on or before the Termination Date
solely as a result of the failure of any waiting, review and investigation
period (and any extension thereof) applicable to the consummation of the Offer
or the Merger under the Hart-Scott-Rodino Act to expire or terminate or failure
to obtain the consents referred to in paragraph (h) of Annex I, the Termination
Date shall, in the sole discretion of the Merger Sub, be extended to a date that
is up to 60 business days from the date the Offer is commenced;
(c) By the Merger Sub if the Board of Directors of the Company shall
have withdrawn or adversely modified (or, upon the written request of the Merger
Sub, failed to
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reaffirm within three business days; provided that no such additional request
may be made during such three business day period) either of its recommendations
referred to in Sections 1.2 and 6.1;
(d) By the Merger Sub if the Offer terminates or expires on account of
the failure of any of the conditions to the Offer set forth in Annex I without
the Merger Sub having purchased any Shares thereunder;
(e) By the Company if any of (i) the Offer shall not have been
commenced substantially in accordance with Section 1.1; or (ii) the Offer shall
have expired or been terminated without any Shares having been purchased
thereunder; or (iii) if a tender offer for Shares is commenced by a person or
entity, or the Company receives an Acquisition Proposal any of which the Board
of Directors determines, in the exercise of its fiduciary duties and subject to
compliance with Section 6.6, makes necessary or advisable the termination of
this Agreement; provided that the provisions of Sections 6.4 and 6.6 shall
survive termination of the Agreement pursuant to this clause (e); or
(f) By the Merger Sub if any action, suit or proceeding is commenced or
overtly threatened against the Purchaser or the Merger Sub or the Company,
before any court or governmental or regulatory authority or body, seeking to
restrain, enjoin, or otherwise prohibit the Offer, the Merger, or the completion
of any of the other transactions contemplated by this Agreement; provided that
the provisions of Section 6.4 and 6.6 shall survive termination of the Agreement
pursuant to this clause (f).
8.2 Amendment. This Agreement may not be amended except by an instrument in
writing approved by the parties to this Agreement and signed on behalf of each
of the parties hereto; provided, however, that after approval of the Merger by
the stockholders of the Company (if such approval is required), no amendment may
be made which changes the amount into which each Share will be converted or
effects any change which would adversely affect the stockholders of the Company
without the further approval of the stockholders of the Company.
8.3 Waiver. Subject to applicable law and the provisions of this Agreement,
at any time prior to the Effective Time, any party hereto may (a) extend the
time for the performance of any of the obligations or other acts of any other
party hereto, (b) waive any inaccuracies in the representations or warranties of
the other party contained herein or in any document, certificate or writing
delivered pursuant hereto or (c) waive compliance with any of the agreements of
any other party or with any conditions to its own obligations, in each case only
to the extent such obligations, agreements and conditions are intended for its
benefit. No failure or delay by any party in exercising any right, power or
privilege hereunder shall operate as a waiver thereof nor shall any single or
partial exercise thereof preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. The rights and remedies herein
provided shall be cumulative and not exclusive of any rights or remedies
provided by law. For the purposes of this Section 8, the Purchaser and the
Merger Sub shall be considered to be a single party.
8.4 Effect of Termination. In the event of termination of this Agreement as
provided in Section 8.1, (a) this Agreement shall become void and there shall be
no liability or further
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obligation on the part of the Purchaser, the Merger Sub or the Company or their
respective stockholders, officers or directors, except as set forth in Section
6.4, in the last sentence of Section 1.2(d) hereof, in the confidentiality
obligations of Section 6.8 hereof and in Sections 6.6, 8.1(e) and 8.1(f) hereof,
and except to the extent that such termination results from the breach by a
party of any of its representations, warranties, covenants or agreements set
forth in this Agreement; provided, further, that if the Purchaser has received
the Fee provided by Section 6.4, the Purchaser shall not assert or pursue in any
manner, directly or indirectly, any claim or cause of action against the Company
or any of its officers or directors based in whole or in part upon its or their
receipt, consideration, recommendation or approval of an Acquisition Proposal or
the exercise of the right of the Company to terminate this Agreement under
Section 8.1(e) provided that the Company complied in all material respects with
Section 6.6 and (b) the Merger Sub shall terminate the Offer, if still pending,
without purchasing any Shares thereunder.
ARTICLE 9
GENERAL PROVISIONS
9.l Public Statements. Except as required by applicable law or by
obligations pursuant to any listing agreement with any national securities
exchange or quotation system, as applicable, neither the Purchaser nor the
Merger Sub, on the one hand, nor the Company, on the other hand, shall make any
public announcement or statement with respect to the Offer, the Merger, this
Agreement or the transactions contemplated hereby, without the approval of the
Company or the Merger Sub, respectively. The parties hereto agree to consult
with each other prior to issuing each public announcement or statement with
respect to the Offer, the Merger, this Agreement or the transactions
contemplated hereby.
9.2 Notices. All notices and other communications hereunder shall be in
writing and sent by hand delivery, facsimile transmission (with confirmation of
receipt), or nationally recognized overnight courier service (with proof of
delivery), to the parties at the addresses set forth below (or at such other
address for a party as shall be specified by like notice):
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(a) if to the Purchaser:
AlliedSignal Inc.
101 Columbia Road
Morristown, New Jersey 07962
Attention: Peter M. Kreindler, Esq.
Senior Vice President and General Counsel
Telephone: (973) 455-2000
Facsimile: (973) 455-6039
(b) if to Merger Sub:
AlliedSignal Acquisition Corp.
c/o AlliedSignal Inc.
2525 West 190th Street
Torrance, California 90504
Attention: Thomas F. Larkins, Esq.
Vice President and General Counsel - Aerospace
Services
Telephone: (310) 512-4809
Facsimile: (310) 512-3987
with copies to:
Fried, Frank, Harris, Shriver & Jacobson
350 South Grand Avenue, 32nd Floor
Los Angeles, CA 90071
Attention: David K. Robbins, Esq.
Telephone: (213) 473-2000
Facsimile: (213) 473-2222
(c) if to the Company:
TriStar Aerospace Co.
2527 Willowbrook Road
Dallas, Texas 75220
Attention: P. Quentin Bourjeaurd
President and Chief Executive Officer
Telephone: (214) 366-5000
Facsimile: (214) 366-5030
34
<PAGE>
with copies to:
Weil, Gotshal & Manges LLP
767 Fifth Avenue
New York, NY 10153
Attention: Simeon Gold, Esq.
Telephone: (212) 310-8000
Facsimile: (212) 310-8007
9.3 Interpretation. When a reference is made in this Agreement to
subsidiaries of the Merger Sub or the Company, the word "subsidiaries" means any
"majority-owned subsidiary" (as defined in Rule 12b-2 under the Exchange Act) of
the Merger Sub or the Company, as the case may be; provided, however, that the
Company shall in no event and at no time be considered a subsidiary of the
Merger Sub for purposes of this Agreement. As used herein, the term "person"
means an individual, a partnership, a corporation, a limited liability company,
an association, a joint stock company, a trust, a joint venture, an
unincorporated organization or other entity. The headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement. References to Sections and Articles
refer to sections and articles of this Agreement unless otherwise stated.
9.4 Severability. If any term, provision, covenant or restriction of this
Agreement is held by a court of competent jurisdiction to be invalid, void or
unenforceable, the remainder of the terms, provisions, covenants, and
restrictions of this Agreement shall remain in full force and effect and shall
in no way be affected, impaired or invalidated as long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
adverse to any party. Upon such determination that any term or other provision
is invalid, illegal or incapable of being enforced, the parties shall negotiate
in good faith to modify the Agreement to preserve each party's anticipated
benefits under the Agreement.
9.5 Miscellaneous. This Agreement (together with all other documents and
instruments referred to herein including the Confidentiality Agreement, except
as expressly provided in Section 6.6 hereof): (a) constitutes the entire
agreement and supersedes all other prior agreements and undertakings, both
written and oral, among the parties with respect to the subject matter hereof;
(b) is not intended to confer upon any other person any rights or remedies
hereunder; (c) shall not be assigned by operation of law or otherwise, except
that the Merger Sub may assign all or any portion of their rights under this
Agreement to any direct or indirect wholly-owned subsidiary of the Purchaser,
but no such assignment shall relieve either the Purchaser or the Merger Sub of
their obligations hereunder, and except that this Agreement may be assigned by
operation of law to any corporation with or into which the Merger Sub may be
merged; and (d) shall be governed in all respects, including validity,
interpretation and effect, by the internal laws of the State of Delaware,
without giving effect to the principles of conflict of laws thereof. This
Agreement may be executed in two or more counterparts which together shall
constitute a single agreement.
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9.6 Survival of Representations and Warranties. The representations and
warranties of the parties set forth herein shall be deemed to be continuing as
if made as of the date of any determination hereunder; provided, however, that
such representations and warranties shall terminate as of the Effective Time or
the time the Purchaser or the Merger Sub acquires more than 90% of the then
outstanding Shares, if earlier, or upon the termination of this Agreement
pursuant to Section 8.1.
9.7 Specific Performance. The parties hereto each acknowledge that, in view
of the uniqueness of the subject matter hereof, the parties hereto would not
have an adequate remedy at law for money damages if this Agreement were not
performed in accordance with its terms, and therefore agree that the parties
hereto shall be entitled to specific enforcement of the terms hereof in addition
to any other remedy to which the parties hereto may be entitled at law or in
equity.
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<PAGE>
IN WITNESS WHEREOF, the Purchaser, the Merger Sub, and the Company have
caused this Agreement and Plan of Merger to be executed as of the date first
written above by their respective officers thereunder duly authorized.
ALLIEDSIGNAL INC.
By:/s/ James D. Taiclet
---------------------------------------
Name: James D. Taiclet
Its: President - Aerospace Services
ALLIEDSIGNAL ACQUISITION CORP.
By:/s/ Thomas F. Larkins
---------------------------------------
Name: Thomas F. Larkins
Its: Assistant Secretary
TRISTAR AEROSPACE CO.
By:/s/ Quentin Bourjeaurd
---------------------------------------
Name: Quentin Bourjeaurd
Its: President and Chief Executive Officer
<PAGE>
ANNEX I
CONDITIONS TO THE OFFER
Notwithstanding any other provision of the Agreement and Plan of Merger
(the "Agreement") or the Offer, the Merger Sub shall not be required to commence
or continue the Offer or accept for payment, purchase or pay for any Shares
tendered, or may postpone the acceptance, purchase or payment for Shares, or may
amend (to the extent permitted by the Agreement) or terminate the Offer (1) if
the Minimum Condition is not satisfied as of the expiration of the Offer; (2)
any applicable waiting, review and investigation periods under the
Hart-Scott-Rodino Act in respect of the Offer shall not have expired or been
terminated prior to the expiration of the Offer; or (3) if, at any time on or
after October 31, 1999 and prior to the expiration date of the Offer (or, in
respect of paragraph (h), the latest date permitted in accordance with Rule
14d-1(c) of the Securities Exchange Act of 1934, as amended) any of the
following events shall have occurred (each of paragraphs (a) through (h)
providing a separate and independent condition to the Merger Sub's obligations
pursuant to the Offer):
(a) The Company or any subsidiary of the Company, or their respective
Boards of Directors, shall have authorized, recommended or proposed, or shall
have announced an intention to authorize, recommend or propose, or shall have
entered into an agreement or agreement in principle with respect to, any merger,
consolidation or business combination (other than the Merger), any acquisition
or disposition of a material amount of assets or securities or any material
change in its capitalization, or the Company's Board of Directors shall have
withdrawn or adversely modified (including by amendment to the Schedule 14D-9),
or upon request of the Merger Sub, failed to reaffirm its favorable
recommendations with respect to the Offer and the Merger as provided in the
Agreement, or any corporation, entity, "group" or "person" (as defined in the
Exchange Act) other than the Purchaser or the Merger Sub, shall have acquired
beneficial ownership of 35% or more of the outstanding Shares;
(b) there shall have been any statute, rule, injunction or other order
promulgated, enacted, entered or enforced by any court or governmental agency or
other regulatory or administrative agency or commission, domestic or foreign
(other than the routine application to the Offer, the Merger or other subsequent
business combination of waiting, review and investigation periods under the
Hart-Scott-Rodino Act), (i) making the purchase of some or all of the Shares
pursuant to the Offer or the Merger illegal, or resulting in a material delay in
the ability of the Merger Sub to purchase some or all of the Shares, (ii)
invalidating or rendering unenforceable any material provision of the Agreement,
(iii) imposing material limitations on the ability of the Merger Sub effectively
to acquire or hold or to exercise full rights of ownership of the Shares
acquired by it, including but not limited to, the right to vote the Shares
purchased by it on all matters properly presented to the stockholders of the
Company, (iv) imposing material limitations on the ability of any of Purchaser,
the Merger Sub, or the Company to continue effectively all or any material
portion of its respective business as heretofore conducted or to continue to own
or operate effectively all or any material portion of its respective assets as
heretofore owned or operated, (v) imposing material limitations on the ability
of the Merger Sub to continue effectively all or any material portion of the
business of the Company and its
<PAGE>
subsidiaries (taken as a whole) as heretofore conducted or to own or operate
effectively all or any material portion of the assets of the Company and its
subsidiaries (taken as a whole) as heretofore operated, or (vi) to the effect
that the Offer or the Merger is violative of any applicable law which would
reasonably be expected to result in any of the consequences described in clauses
(i) through (v) above;
(c) there shall have been any law, statute, rule or regulation, domestic or
foreign, enacted or promulgated that, directly or indirectly, results or may be
anticipated to result in any of the consequences referred to in paragraph (b)
above, or any action, suit or proceeding shall have been commenced before any
court or governmental or regulatory authority or body seeking to restrain,
enjoin or otherwise prohibit the Offer, the Merger, or the completion of the
transactions contemplated by the Agreement;
(d) there shall have occurred (i) any general suspension of, or limitation
on prices for, trading in securities on any national securities exchange or in
the over the counter market in the United States for a period of in excess of
six and one-half trading hours in any twenty-four consecutive hour period
(excluding suspensions resulting solely from physical damage or interference
with such exchanges not related to market conditions), (ii) the declaration of a
banking moratorium or any suspension of payments in respect of banks in the
United States, (iii) any limitation by any governmental authority on, or any
other event which might materially adversely affect, the extension of credit by
banks or other lending institutions in the United States, or (iv) in the case of
any of the foregoing existing at the time of the commencement of the Offer, a
material acceleration or worsening thereof;
(e) except as set forth in the Commission Filings filed before October 31,
1999 or the Disclosure Schedule, any change shall have occurred or be threatened
which individually or in the aggregate has had or is continuing to have a
Company Material Adverse Effect;
(f) (i) any of the representations and warranties of the Company in the
Agreement shall not be true and correct in all respects as if made on the date
of any determination hereunder except for those representations or warranties
that address matters only as of a specified date or only with respect to a
specified period of time which need only be true and accurate as of such date or
with respect to such period; provided, however, any representation or warranty
not qualified by "material", "Company Material Adverse Effect," a specified
dollar limitation or the like need only be true and correct in all material
respects on the date of any determination hereunder, or (ii) the Company shall
have breached in any respect or shall not have performed in all respects each
covenant and complied with each agreement to be performed and complied with by
it under the Agreement unless the Company gives prompt notice to the Merger Sub
of such breach or nonperformance, such breach or nonperformance is capable of
being fully and completely cured at no more than an inconsequential cost or
expense to the Company or its subsidiaries and such breach or nonperformance is
so cured within three business days following such breach or nonperformance;
<PAGE>
(g) the Company and the Merger Sub shall have reached an agreement or
understanding regarding termination of the Offer or the Agreement shall have
been terminated in accordance with its terms; or
(h) all governmental consents (including consents of foreign governmental
entities) required to be obtained in connection with the purchase of Shares
pursuant to the Offer shall not have been obtained or any governmental agency
shall have announced an intention to seek to prohibit or interfere with the
purchase of Shares pursuant to the Offer;
which, in the good faith judgment of the Merger Sub, in any such case, and
regardless of the circumstances giving rise to any such condition, make it
inadvisable to proceed with acceptance for payment or purchase of or payment for
the Shares.
The foregoing conditions are for the sole benefit of the Merger Sub and
Purchaser and may be asserted by the Merger Sub and Purchaser regardless of the
circumstances giving rise to such conditions, or may be waived by the Merger Sub
in whole at any time or in part from time to time in their sole discretion. The
failure by the Merger Sub 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 and may be asserted at any time and from
time to time.
The capitalized terms used in this Annex A shall have the meanings set
forth in the Agreement to which it is annexed.
<PAGE>
EXHIBIT B
ALLIEDSIGNAL TO ACQUIRE TRISTAR AEROSPACE CO.
MORRIS TOWNSHIP, N.J. & DALLAS--(BUSINESS WIRE)--Nov. 1, 1999--
Acquisition To Support Company's Expansion Of Aerospace Consumable
Hardware And Services Offerings; Will Create $600 Million Global
Aerospace Consumable Hardware Business
AlliedSignal Inc. (NYSE: ALD) and TriStar Aerospace Co. (NYSE: TSX) announced
today that they have entered into a definitive merger agreement under which
AlliedSignal will acquire TriStar for $9.50 per share in cash.
Under the merger agreement, AlliedSignal will commence, by Friday, November 5,
1999, a tender offer to acquire all of the outstanding shares of TriStar. The
transaction will total approximately $291 million, which includes the assumption
of approximately $107 million of TriStar debt.
The acquisition is part of AlliedSignal's ongoing strategy to grow its offerings
in the aerospace consumable hardware and aftermarket services areas. It builds
upon the company's 1998 acquisition of the aerospace parts distribution business
of Banner Aerospace Inc. and forms a $600 million global aerospace consumable
hardware business.
TriStar has annual sales of approximately $200 million. The company is a leading
provider of fasteners, fastening systems and related hardware to the aerospace
industry. It also provides just-in-time and automatic parts replenishment and
other customized inventory management services designed to reduce overall
customer costs.
"We will integrate TriStar with our Hardware Product Group," said James D.
Taiclet, President, AlliedSignal Aerospace Services. "The result will be a
single business capable of providing worldwide customers with one-stop shopping
for a wide range of consumable parts and value-added services that can help make
them more competitive. We'll be able to get more customers more parts as soon as
they're needed, and do so in ways that will enable our customers to operate with
greater efficiency and at lower costs."
Quentin Bourjeaurd, TriStar's Chairman and CEO, said, "TriStar and AlliedSignal
Hardware Product Group have complementary businesses and this combination will
allow us to achieve our mutual goals at a much quicker pace. Our respective
shareowners, employees, customers and suppliers will benefit as a result of this
merger."
TriStar executive officers beneficially owning approximately 20% of TriStar's
shares have committed to support the transaction and have entered into
tendering, voting and
<PAGE>
option agreements. The acquisition is subject to clearance under the
Hart-Scott-Rodino Antitrust Improvements Act and the acquisition of a majority
of TriStar shares by AlliedSignal, as well as other customary conditions. The
two companies expect to complete the acquisition in December 1999.
This news release does not constitute an offer to purchase any securities, nor
solicitation of a proxy, consent or authorization for or with respect to a
meeting of the shareowners of AlliedSignal Inc. or TriStar Aerospace Co. or any
action in lieu of a meeting. Any solicitations will be made only pursuant to
separate materials in compliance with the requirements of applicable federal and
state securities laws.
TriStar is headquartered in Dallas, Texas, and employs approximately 500 people
and has facilities in North America and Europe.
AlliedSignal Aerospace, a US$7.5-billion unit of AlliedSignal Inc., is the
largest supplier of aircraft engines, equipment, systems and services for
commercial transport, regional, general aviation and military aircraft.
AlliedSignal Inc. is an advanced technology and manufacturing company serving
customers worldwide with aerospace products and services, automotive products,
plastics, chemicals, fibers and advanced materials. It is one of the 30 stocks
that make up the Dow Jones Industrial Average and is also a component of the
Standard & Poor's 500 Index. The company employs 70,400 people in some 40
countries. Additional information on the company is available on the World Wide
Web at http://www.allliedsignal.com.
This release contains forward-looking statements as defined in Section 21E of
the Securities Exchange Act of 1934, including statements about future business
operations, financial performance and market conditions. Such forward-looking
statements involve risks and uncertainties inherent in business forecasts.
CONTACT: Tom Crane John Clendening AlliedSignal Inc. AlliedSignal Aerospace
(973) 455-4732 (310) 512-1656.
<PAGE>
EXHIBIT E
TriStar Aerospace Co.
2527 Willowbrook Road
Dallas, TX 75220
October 31, 1999
P. Quentin Bourjeaurd
President and Chief Executive Officer
TriStar Aerospace Co.
2527 Willowbrook Road
Dallas, TX 75220
Dear Quentin:
You and TriStar Aerospace Co. (the "Company") hereby agree that this letter
amends your Executive Employment Agreement (the "Agreement"), dated September
19, 1996, in the manner set forth herein. Capitalized terms not defined in this
letter shall have the meanings set forth in the Agreement.
1. To reflect our agreement that, upon termination of your employment by
the Company other than for Cause, you shall continue to receive salary and
benefits as currently provided in Section 5(a) of the Agreement through
September 19, 2001, Section 5(a) of the Agreement is hereby amended and restated
in full as follows:
(a) TERMINATION WITHOUT CAUSE. If, prior to the expiration of the
Term, the Company terminates the employment of the Executive other than for
Cause (as defined herein), the Executive shall continue to receive his
salary set forth in Section 4(a) hereof (and such medical and life
insurance and other benefits as are regularly offered to senior executives
of the Company) until the earlier to occur of (i) the fifth anniversary of
the Commencement Date and (ii) a period of two years from the Date of
Termination (as defined herein).
2. To reflect our agreement that the non-competition covenant contained in
Section 6(a) of the Agreement shall continue to apply through September 19, 2001
under all circumstances, Section 6(a) of the Agreement is hereby amended and
restated in full as follows:
<PAGE>
(a) NON-COMPETITION. During the Term and through September 19, 2001,
the Executive expressly covenants and agrees that he shall not, without the
express written consent of the Company, for his own account or jointly with
any other person, directly or indirectly, own, manage, operate, join,
control, loan money to, invest in, or otherwise participate in, or be
connected with, or become or act as an officer, employee, consultant,
representative or agent of any business, individual, partnership, firm or
corporation (other than the Company and its subsidiaries and affiliates)
which is in competition with any business in which the Company or any of
its subsidiaries and affiliates are then engaged or planning to be engaged;
PROVIDED, HOWEVER, that the Executive may purchase or own, solely as an
inactive investor, the securities of any entity if (a) such securities are
publicly traded on a nationally-recognized stock exchange or on NASDAQ and
(b) the aggregate holdings of such securities by the Executive and his
immediate family do not exceed three percent (3%) of the voting power or
three percent (3%) of the capital stock of such entity.
You acknowledge that, following the consummation of the transactions
contemplated by the Agreement and Plan of Merger between AlliedSignal Inc. and
the Company, dated October 31, 1999, the AlliedSignal Inc. Hardware Product
Group (but not AlliedSignal Inc. or any of its other divisions, subsidiaries or
affiliates (excluding the Company)) will be an "affiliate" of the Company for
purposes of Section 6(a) of the Agreement.
-2-
<PAGE>
IN WITNESS WHEREOF, the undersigned acknowledge and agree to the foregoing
amendments to the Agreement and have executed this letter in one or more
counterparts, each of which shall be deemed to be one and the same instrument,
as of the date first written above.
Very truly yours,
TRISTAR AEROSPACE CO.
/s/ Doug Childress
----------------------------------------
By: Doug Childress
Its: Executive Vice President and Chief
Financial Officer
Agreed and accepted this
31st day of October, 1999.
/s/ P. Quentin Bourjeaurd
- ---------------------------
P. Quentin Bourjeaurd
-3-
<PAGE>
EXHIBIT F
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT is dated as of June 22,
1999, and is between TriStar Aerospace, Inc., a Florida corporation (the
"Company"), TriStar Aerospace Co., a Delaware corporation (the "Parent"), and
Denny J. Barge (the "Executive").
WHEREAS, the Parent and the Executive are parties to an Employment
Agreement, dated December 8, 1997; and the Company and the Executive are parties
to a Letter Agreement, dated November 13, 1997;
WHEREAS, the parties hereto wish to amend and restate such Employment
Agreement, and wish to terminate such Letter Agreement;
NOW, THEREFORE, in consideration of the promises and the respective
covenants and agreements of the parties set forth below, the parties agree as
follows:
1 . Employment. Subject to all of the terms and conditions set forth in
this Agreement, the Company and the Executive agree that the Executive will
continue to be employed in the position of Vice President of Strategic Planning.
Effective on June 22, 1999, Executive resigns from all other positions he has
held with the Company, the Parent or their subsidiaries or affiliates, whether
as a director, officer, employee or agent, including, without limitation,
Executive's position as Vice President of Operations.
2. Term. Unless earlier terminated pursuant to Section 6 of this Agreement,
the Term of the Executive's employment (the "Term") shall end on December 8,
1999.
3. Duties. From and after June 22, 1999, the Executive agrees that he shall
only perform those duties and take actions on behalf of the Company after he has
been specifically directed to perform a duty or take an action by the President
of the Company. Any actions taken by the Executive on or after June 22, 1999,
which are not at the express direction of the President of the Company, shall be
without the apparent or express authority of the Company. From and after June
22, 1999, the Executive shall not perform any duties on behalf of the Company
such as, but not limited to, signing documents on behalf of the Company, paying
expenses of the Company and requesting reimbursements thereof, or making any
commitments on behalf of or incurring any liabilities on behalf of the
Company, the Parent or their subsidiaries or affiliates. From and after June 22,
1999, the Executive will not report to the corporate headquarters of the
Company, nor will the Executive maintain office space or secretarial support
within the corporate headquarters of the Company nor any other office or place
of business of the Company, its Parent, or any their subsidiaries or
affiliates.
-1-
<PAGE>
4. Compensation.
(a) Salary. During the Term the Executive shall receive an annual salary of
$200,000, payable in accordance with the customary payroll practices of the
Company. Executive will not be eligible for any raises or bonuses during
the Term.
(b) Benefits. During the Term the Executive shall receive such medical and
other benefits as are regularly offered to other senior executives of the
Company.
5. Expenses. During the Term the Executive shall be entitled to receive
reimbursement for all reasonable travel and business expenses incurred by him
(in accordance with the policies and procedures of the Company) at the express
direction of the President, provided that the Executive promptly and properly
accounts for such expenses in accordance with the Company's expense policy.
6. Termination.
(a) Limitation on Company's Termination Rights. So long as the Executive
complies with the terms of this Agreement, the Company agrees that the
Company will not terminate the Executive's employment during the Term,
except for cause, or due to the death of Executive.
(b) Definitions. For purposes of this Agreement:
(i) "Cause" shall mean the occurrence of one or more of the following
events: (A) any breach by the Executive of any material covenant
contained in this Agreement or in any option agreements, stockholder
agreements or subscription agreements entered into by the Executive
with the Company or Parent, or (B) such Executive's conviction or entry
of a plea of nolo contendere in respect of any felony, or of a
misdemeanor which results in or is reasonably expected to result in
significant economic or reputational injury to the Company, the Parent
or their subsidiaries or affiliates.
(ii) "Affiliate" shall mean, when used with reference to a specific
person: (A) any person that directly or indirectly through one or more
intermediaries controls or is controlled by or is under common control
with a specified person; or (B) any person that is an officer or
director of, general partner in, or a trustee of, or serves in a
similar capacity with respect to, a specified person or of which a
specified person is an officer or director, general partner or trustee,
or with respect to which the specified person serves in a similar
capacity.
-2-
<PAGE>
(c) Notice of Termination. Any termination of the Executive's employment
(other than a termination due to the death of the Executive) shall be
communicated by a written notice of termination (the "Notice of
Termination") in accordance with the notice provisions herein.
(d) Date of Termination. For purposes of this Agreement, the "Date of
Termination" shall mean (i) if the Executive's employment is terminated by
his death, the date of his death, and (ii) in any other case, the date
specified in the Notice of Termination.
7. Effect of Other Agreements. To the extent a conflict exists between the
provisions of this Agreement and the current or future provisions of any option
agreements, stock option plans, or other stockholder agreements entered into
between the Parent or the Company and the Executive, the provisions of this
Agreement shall control. This Agreement supersedes and replaces the Employment
Agreement dated December 8, 1997 between the Parent and the Executive and the
Letter Agreement dated November 13, 1997, between the Company and the Executive
regarding the Executive's offer of employment.
8. Executive Covenants.
(a) Non-Competition. During the Term the Executive expressly covenants and
agrees that he shall not, without the express written consent of the
Company, for his own account or jointly with any other person, directly or
indirectly, own, manage, operate, join, control, loan money to, invest in,
or otherwise participate in, or be connected with, or act as an officer,
employee, consultant, representative or agent of, any business,
partnership, firm or corporation (other than the Company and its
subsidiaries and affiliates) which is in competition with any business in
which the Company or any of its subsidiaries and affiliates are then
engaged or planning to be engaged; provided, however, that the Executive
may purchase or own, solely as an inactive investor, the securities of any
entity if (a) such securities are publicly traded on a
nationally-recognized stock exchange or on NASDAQ and (b) the aggregate
holdings of such securities by the Executive and his immediate family do
not exceed three percent (3%) of the voting power or three percent (3%) of
the outstanding capital stock of such entity.
(b) No Solicitation. The Executive hereby agrees that during the Term and
for a period of one year after the date of his employment with the Company
terminates, he shall not, directly or indirectly, for his own account or
jointly with another, or for or on behalf of any entity, as principal,
agent or otherwise, (i) solicit or induce or in any manner attempt to
solicit or induce any person employed by or acting as a consultant to or an
agent of the Company or its subsidiaries or affiliates to leave their
position or (ii) interfere with, disrupt or attempt to disrupt any
relations, contractual or otherwise, between the Company or any of its
subsidiaries or affiliates and any of their customers, clients or
suppliers.
-3-
<PAGE>
(c) Confidential Information. The Executive expressly covenants and agrees
that he will not at any time, whether during or after the Term, directly or
indirectly, disclose, use or permit the use of any trade secrets,
confidential information or proprietary information relating to or
belonging to the Company or any of its subsidiaries or affiliates, other
than as contemplated hereunder during the Term.
(d) Covenants Non-Exclusive. The Executive acknowledges and agrees that the
covenants contained in this Section 8 shall not be deemed exclusive of any
common law rights of the Company or any of its subsidiaries or affiliates
in connection with the relationships contemplated hereby and that the
Company shall have any and all rights as may be provided by law in
connection with the relationship contemplated hereby.
9. Release of Claims. Executive, on behalf of himself, his heirs, and legal
representatives, does hereby release, discharge and covenant not to sue or file
any charges or claim against the Parent and the Company, their subsidiaries and
affiliates, and their respective agents, stockholders, attorneys, partners,
directors, agents, associates, employees, officers, divisions, successors and
assigns (the "Released Parties") under any local, state, or federal law,
including but not limited to the Fair Labor Relations Act, Title VII of the
Civil Rights Act of 1964, the Civil Rights Act of 1991, the Civil Rights Act of
1866, the Americans with Disabilities Act, the Employee Retirement income
Security Act, the Family and Medical Leave Act, the Texas Worker's
Compensation Act, the Age Discrimination and Employment Act, the Texas
Commission On Human Rights Act, and any other federal, state or local statute,
ordinance, or regulation regarding his claims against the Released Parties for
any type of claim, demand or action whatsoever, including any actions arising
under common law. This release does not prohibit the Executive from pursuing a
claim to enforce his rights under this Agreement or from exercising his rights
under any employee benefit plan or stock option plan or shareholder agreement
that he participated in while employed by the Company.
10. Notice. Any and all paychecks, notices or any other communication
provided for herein shall be made in writing by hand-delivery, first-class mail
(registered or certified, with return receipt requested), telecopier, or
overnight air courier guaranteeing next day delivery, effective upon receipt, to
the address of the party appearing under his or its name below (or to such other
address as may be designated in writing by such party):
<TABLE>
<CAPTION>
If to the Executive: If to the Company:
-------------------- ------------------
<S> <C>
Mr. Denny J. Barge TriStar Aerospace Co.
7750 North MacArthur Blvd. 2527 Willowbrook Road
Suite 120 Dallas, Texas 75220-4420
PMB 152 Attn: Quentin Bourjeaurd
Irving, Texas 75063-7501
</TABLE>
-4-
<PAGE>
11. Nondisparagement. The parties agree that neither the Executive nor the
Company, the Parent or its subsidiaries or affiliates will engage in any conduct
or take any action, written or oral, that will reflect negatively on or harm the
reputation or business interest of the other party.
12. Confidentiality. It is the express intent of the parties that the terms
and conditions of this Agreement shall be kept confidential except as set out
below. The parties agree that the Executive may disclose the terms of this
Agreement only to his spouse, his attorneys, his accountants or other financial
advisors and, if requested, to appropriate authorities for tax purposes. The
parties also agree that the Company and the Parent may disclose the terms of
this Agreement to their officers, directors, attorneys and to those employees
who are necessary to carry out the terms of the Agreement.
13. Miscellaneous.
(a) Amendment. Any provision of this Agreement may be amended or waived
if, but only if such amendment or waiver is agreed to in writing signed
by the Executive and a duly authorized officer of the Company (other
than the Executive).
(b) Waiver. No waiver by any party hereto at any time of any breach of
another party hereto of, or compliance with, any condition or provision
of this Agreement to be performed by such other party shall be deemed a
waiver of any other provision hereof. This Agreement shall be binding
on and inure to the benefit of the Company and its successors and
permitted assigns.
(c) Governing Law. This Agreement shall be governed and construed in
accordance with the laws of the State of Texas without giving effect to
the conflict of laws provisions thereof.
(d) Counterparts. This Agreement may be executed in counterparts, each
of which shall be deemed to be an original, but all of which together
shall constitute one and the same instrument.
(e) Severability. Whenever possible, each provision of this Agreement
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be
prohibited by or invalid under applicable law, such provision shall be
ineffective only to the extent of such prohibition or invalidity,
without invalidating the remainder of this Agreement.
(f) Entire Agreement. This Agreement supersedes any other agreement,
whether written or oral, that may have been made or entered into
between the parties hereto and constitutes the entire agreement by the
parties related to the matter specified herein.
-5-
<PAGE>
(g) Equitable Relief. It is hereby acknowledged that irreparable harm
would occur in the event that any of the provisions of this Agreement
were not performed fully by the undersigned in accordance with the
terms specified herein, and that monetary damages are an inadequate
remedy for breach of this Agreement because of the difficulty of
ascertaining and quantifying the amount of damage that will be
suffered by the parties relying hereon in the event that the
undertakings and provisions contained in this Agreement were breached
or violated. Accordingly, each party hereto shall be entitled to an
injunction or injunctions to restrain, enjoin and prevent breaches of
the undertaking and provisions hereof and to enforce specifically the
undertaking and provisions hereof in any court of the United States or
any state having jurisdiction over the matter, it being understood that
any such remedies shall be in addition to, and not in lieu of, any
other rights and remedies available at law or in equity.
IN WITNESS WHEREOF, the parties have signed and delivered this Agreement as
of the date first above written.
TRISTAR AEROSPACE CO.
By: /s/ Quentin Bourjeaurd
------------------------------
Quentin Bourjeaurd
Chairman, President and Chief
Executive Officer
TRISTAR AEROSPACE, INC.
By: /s/ Quentin Bourjeaurd
------------------------------
Quentin Bourjeaurd
Chairman, President and Chief
Executive Officer
/s/ Denny J. Barge
-------------------------------
Denny J. Barge
-6-
<PAGE>
EXHIBIT G
[TRISTAR LOGO]
May 17, 1999
Mr. John R. King, Jr. Quentin Bourjeaurd
1557 Faringdon Drive President
Plano, TX 75075 Chief Executive Officer
Dear John:
This letter is to advise you that your employment with TriStar Aerospace, Inc.,
its parents, subsidiaries and affiliates (the "Company") is being terminated
effective as of the close of business on May 17, 1999. Accordingly, the
following arrangements have been made:
RELEASE PAYMENT PROGRAM: In consideration of and contingent upon your execution
of the "Release and Waiver of Claims" which is attached to this letter and
assuming you have not revoked the Release within the seven (7) day period after
execution, you will receive 26 weeks of pay at your current rate of base pay.
This payment ("Release Payment") equates to $60,000.00, which will be subject to
statutory deductions, and will be paid as usual on the Company's normal paydays
until November 19, 1999. In addition, you will be paid any earned 1999 personal
time and banked personal time. A separate paycheck for your 1999 earned personal
time will be mailed to the above address (unless otherwise notified) on November
19, 1999.
You should contact an attorney to discuss the attached Release and Waiver of
Claims. However, in order to receive the Release Payments, this Release and
Waiver of Claims must be signed, notarized and returned to us within 21 days of
your receipt of this letter. If the Release and Waiver of Claims is not received
in our offices within the 21 days, a member of the Human Resources Department
will contact you.
BONUS: Under the Company's 1999 Bonus Plan, you will not receive a 1999 mid-year
bonus payment. Additionally, there will be no award to you under any other
Company incentive or bonus plan.
GROUP INSURANCE: As an accommodation to you and as further consideration for the
Release and Waiver of Claims, your Company-provided group health, dental, and
life insurance will remain in effect until midnight on November 19, 1999.
However, your Long Term Disability and Short Term Disability coverage will be
discontinued on May 17, 1999. You may obtain information on extending group
health and dental coverage for up to 18 months as provided by the enactment of
COBRA by contacting Janiece Biggs, Human Resources Manager, in Dallas at
214/366-5203.
4O1(K) PLAN: You can receive 401(k) rollover or withdrawal information by
contacting Janiece Biggs, Human Resources Manager at 214/366-5203.
<PAGE>
Mr. John R. King, Jr.
May 17, 1999
Page 2
COMPANY PROPERTY: Employees who have been issued a Company Access card or
Company office and desk keys are asked to please return them to Bud Mann.
Employees who have been issued company credit cards and all other company
property are asked to please return them as part of your clearance process on or
prior to close of business on May 17, 1999. Outstanding expense reports should
be completed and filed as soon as possible. Any outstanding advances or other
money owed to the Company will be deducted from your final check unless other
arrangements are made.
1996 & 1998 STOCK OPTION PLAN: On June 7, 1997, you were granted options under
the Maple Leaf Aerospace, Inc. 1996 Stock: Option Plan (the "1996 Plan"). As of
the date of this letter, 70,222 of those options are fully vested and
outstanding. Pursuant to an option agreement you entered into with the Company
at the time such options were granted, you may exercise such options for three
(3) months from the date of termination of your employment by the Company, but
thereafter such options will terminate and become null and void. Thus, you may
exercise the 70,222 options issued under the 1996 Plan up to and including
August 17, 1999. On October 13, 1999, you were granted 50,000 options under the
TriStar 1998 Stock Option Plan (the "1998 Plan"). Pursuant to an option
agreement you entered into with the Company, you may exercise such options for
three (3) months from the date of your termination, to the extent that such
options are exercisable prior to your termination date. In this case, 20% of the
50,000 options are exercisable as of the date of this letter (your termination
date), Thus, you may exercise 10,000 options granted to you under the 1998 Plan
up to and including August 17, 1999. After August 17, 1999, all options granted
to you under the 1996 and 1998 Plans, which have not been exercised, will
terminate and become null and void.
EMPLOYMENT ASSISTANCE: As further consideration for your Release and Waiver of
Claims, arrangements have been made by the Company to provide you, free of
charge, employment assistance through Drake Beam Morin Inc. for a period of
three (3) months from the date of this letter. A member of that firm will
contact you in the near future.
If you have any questions, please feel free to contact Collin Quigley at any
time for assistance. He will be your specific contact for information and
support services. We appreciate your loyalty to TriStar Aerospace, Inc. and wish
you the very best in your future endeavors.
Sincerely,
/s/ Quentin Bourjeaurd
- -----------------------
Quentin Bourjeaurd
President and Chief Executive Officer
<PAGE>
EXHIBIT H
RELEASE AND WAVER OF CLAIMS
THIS IS A RELEASE AND WAIVER OF CLAIMS (hereinafter referred to as
"Release"), by and between TriStar Aerospace, Inc., its parents, subsidiaries
and affiliates (hereinafter referred to as the "Company") and John R. King, Jr.
(hereinafter referred to as "Employee").
IN CONSIDERATION of the covenants undertaken and the releases contained in
this Release, the Employee and Company agree as follows:
1. (a) Company acknowledges and incorporates herein by reference, intending
to be legally bound; its commitments as stated in the certain letter, dated May
17, 1999 (the "Letter Agreement") from Quentin Bourjeaurd to the Employee.
(b) Employee acknowledges and agrees that the consideration described in
the Letter Agreement above is in excess of any obligations the Company would
have to him absent execution of this Release.
2. In exchange for the consideration to the Employee described in the
Letter Agreement, Employee hereby, on behalf of himself, his descendants,
ancestors, dependents, heirs, executors, administrators, successors and assigns,
covenants not to sue, and fully and forever releases and discharges the Company,
and its parent companies, subsidiaries, affiliates, divisions, successors and
assigns, together with the past and present trustees, directors, officers,
agents, attorneys, insurers, employees, stockholders and representatives of the
Company, from any and all claims, wages, demands, rights, liens, agreements,
contracts, covenants, actions, suits, causes of action, obligations, debts,
costs, expenses, attorneys' fees, damages, judgments, orders or liabilities of
whatsoever kind or nature in law, equity or otherwise, whether now known or
unknown, suspected or unsuspected, which the Employee now owns or holds or has
at any time herefore or hereafter owned or held as against the Company, arising
out of or in any way connected with:
(a) the Employee's employment relationship with the Company;
(b) the Employee's termination from the Company;
(c) the letter agreement dated May 15, 1997 between Employee and the
Company; or
(d) any other transactions, occurrences, acts or omissions or any loss,
damage or injury whatsoever, known or unknown, suspected or unsuspected,
resulting from any act or omission by or on the part of the Company or its past
or present subsidiaries committed or omitted prior to the date of this Release
or at any time during the Employee's employment with the Company, including, but
not limited to:
<PAGE>
(i) claims under Title VII of the Civil Rights Act of 1964, the Age
Discrimination in Employment Act, the Older Workers' Benefit Protection Act, the
Texas Commission on Human Rights Act, the Americans with Disabilities Act, the
Family and Medical Leave Act, the Texas Labor Code,
(ii) any claims for breach of contract, tort, or personal injury of any
sort,
(iii) any claims for severance pay, bonus, salary, sick leave, holiday
pay, personal time, life insurance, health or medical insurance or any other
fringe benefit, worker's compensation or disability, except as specified in the
May 17, 1999 Letter.
(iv) any claims under any other federal or state statute or
regulation.
3. The Employee warrants and agrees that he is responsible for any federal,
state or local taxes which may be owed by him by virtue of the receipt of any
portion of the consideration herein provided.
4. By accepting the benefits, payments and other items described in
Paragraph 1 above, the Employee agrees:
(a) not to sue the Company or the related persons and entities described in
Paragraph 2 above other than to enforce the rights and benefits provided herein;
(b) that all documents, records, techniques, business secrets and other
information which have come into his possession from time to time during his
employment by the Company ("Confidential Information and Business Secrets")
shall be confidential and proprietary to the Company, and he will keep
confidential and not divulge to any other party any of the Company's
Confidential Information and Business Secrets, including, but not limited to,
Confidential Information and Business Secrets relating to such matters as the
Company's finances (including financial results, budgets, forecast and long-
range plans), operations, materials, processes, plans, designs, models, new
products, apparatus, equipment or formulas used in the Company's operations, and
the names of the Company's customers and suppliers;
(c) that all of the Company's Confidential Information and Business Secrets
are the sole and exclusive property of the Company;
(d) that he will return to the Company all Company owned property in his
possession or under his control;
(e) that during the one-year period following the termination of the
Employee's employment with the Company, he will not, directly or indirectly, as
an employee, agent, consultant or in any other capacity be employed in a
position similar to the position he was employed in by the Company or perform
any services similar to those he performed for the Company during his employment
by the Company on behalf of any for-profit business entity that is engaged in
Arizona, Texas, Florida or California in a business that competes with the
Company or offers the same services and products as those offered by the Company
at the time
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<PAGE>
of the termination of the Employee's employment with the Company. By signing
this Agreement the Employee acknowledges that his promises in this paragraph are
necessary for the Company to protect and maintain its legitimate interests and
to protect its good will and other business and proprietary interests. The
Employee represents to the Company that the enforcement of the restrictions
contained in this paragraph will not be unduly burdensome to him because he
will be able to work and earn a livelihood not prohibited by this paragraph.
(f) that from the effective date of his termination through May 17, 2000,
he will not, whether for his own account or for the account of any other
individual, partnership, firm, corporation or business organization, either
directly or indirectly solicit or endeavor to entice away from the Company any
person who is employed by or otherwise engaged to perform services for the
Company, to interfere with the relationship of the Company with any person who
is then a customer of the Company, to communicate, regarding any matter
directly related to the Company with any person who is then a contractor of the
Company, including, but not limited to, Trinity Technical Services, Inc., or to
interfere with the relationship of the Company and any contractor of the Company
including, but not limited to, Trinity Technical Services, Inc.
(g) that if he fails to comply with any provisions of this Paragraph 4,
the Company shall be entitled, upon application to any court of competent
jurisdiction, to specific performance or injunction in order to enforce or
prevent any violation of such provision or provisions; and
(h) that nothing contained in this Paragraph 4 shall be construed as
prohibiting the Company from pursuing any other remedies available to it for
such breach or threatened breach, including the recovery of damages from him,
and/or the cessation of any release payments discussed in the Letter Agreement.
5. Employee shall have 21 days to decide whether to sign this Release and
be bound by its terms. In addition, the Employee shall have the right to revoke
or cancel this Release within seven (7) days after he has signed it. Employee
understands that the Release shall not be effective or enforceable until the
seven (7) day revocation period ends. A cancellation or revocation must be
accomplished by delivery of a written notification sent to Shauna Martin,
General Counsel of the Company, at 2527 Willowbrook Road, Dallas, Texas
75220-4420. In the event that this Release is cancelled or revoked, the Company
shall have no obligation to furnish the payments and benefits described in the
Letter Agreement.
6. The Employee acknowledges that the Company has informed him in writing
to seek the advice of an attorney of his choice prior to signing this Release,
and has had an adequate opportunity to seek legal counsel of his own choosing.
The Company and the Employee represent that they have relied upon the advice of
their respective attorneys, who are attorneys of their choice, or they have
knowingly and willingly not sought the advice of such attorneys. The Employee
hereby understands and acknowledges the significance and consequence of this
Release and represents that the terms of this Release are fully understood and
voluntarily accepted by him.
7. The Employee acknowledges that he has read this Release, has had an
opportunity to ask questions and have them explained to him and that he.
understands that this Release will
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<PAGE>
have the effect of knowingly and voluntarily waiving any action he might pursue,
including breach of contract, personal injury, retaliation, discrimination on
the basis of race, age, sex, national origin, or disability or any other claims
described in Paragraph 2 of this Release. However, the Employee understands that
he is not releasing claims that may arise after this agreement is signed.
8. The Letter Agreement and this Release constitute the entire agreement
concerning the Employee's employment and termination and all other subjects
addressed therein and herein. The Letter Agreement and this Release supersede
and replace all prior negotiations and all agreements proposed or otherwise,
whether written or oral, concerning all subject matters covered therein and
herein.
9. If one or more of the provisions of this Release shall for any reason be
held invalid, illegal or unenforceable in any respect, such invalidity,
illegality or unenforceability shall not affect or impair any other provision of
this Release, but this Release shall be construed as if such invalid, illegal,
or unenforceable provision had not been contained herein. Unless the context
requires otherwise, all words used in this Release in the singular number shall
extend to and include the plural, all words in the plural number shall extend to
and include the singular, and all words in any gender shall extend to and
include all genders.
10. The Employee and the Company further covenant and agree to execute and
deliver, upon request, any other and further documents or instruments necessary
and desirable to implement the terms and conditions of the Release.
11. It is the express intent of the parties that the terms and conditions
of the Letter Agreement and this Release shall be kept confidential. The parties
agree that the Employee may disclose the terms of the Letter Agreement and this
Release only to his spouse, his attorney, his financial advisors, and to any
local, state or federal agency requesting information regarding the terms of
the Letter Agreement and this Release. The parties agree that the Company may
disclose the terms of the Letter Agreement and the Release only to its
attorneys, officers, directors and to those employees that are necessary to
carry out the terms of this Agreement.
12. THE TERMS AND PROVISIONS OF THE LETTER AGREEMENT AND THIS RELEASE SHALL
BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS,
EXCLUSIVE OF ANY CONFLICT OF LAW PROVISIONS, AND VENUE FOR ALL PURPOSES OF THE
LETTER AGREEMENT AND THIS RELEASE SHALL BE IN A COURT OF COMPETENT JURISDICTION
SITTING IN DALLAS COUNTY, TEXAS.
13. BY SIGNING THIS AGREEMENT AND RELEASE, YOU ACKNOWLEDGE AND AFFIRM THAT
YOU ARE COMPETENT, THAT YOU WERE AFFORDED A TIME PERIOD OF AT LEAST 21 DAYS TO
REVIEW AND CONSIDER THIS AGREEMENT AND RELEASE WITH AN ATTORNEY OF YOUR CHOICE,
THAT YOU HAVE READ AND UNDERSTAND AND ACCEPT THIS DOCUMENT AS FULLY AND FINALLY
WAIVING AND RELEASING ANY AND ALL CLAIMS AND RIGHTS WHICH YOU MAY HAVE AGAINST
THE COMPANY (AS DEFINED ABOVE), INCLUDING ANY AND ALL
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<PAGE>
CLAIMS AND RIGHTS UNDER THE AGE DISCRIMINATION IN EMPLOYMENT ACT, THAT YOU HAVE
RECEIVED AND UNDERSTOOD ALL INFORMATION DESCRIBED IN PARAGRAPH 6 OF THIS
RELEASE, THAT NO PROMISES OR INDUCEMENTS HAVE BEEN MADE TO YOU EXCEPT AS SET
FORTH IN THIS AGREEMENT AND RELEASE, AND THAT YOU HAVE SIGNED THIS AGREEMENT
AND RELEASE FREELY, KNOWINGLY AND VOLUNTARILY, INTENDING TO BE LEGALLY BOUND BY
ITS TERMS.
IN WITNESS WHERE OF, the undersigned has hereunto set his hand as of the
day and year indicated below.
ACCEPTED AND AGREED
JOHN R. KING, JR.
-----------------------------
John R. King, Jr.
Dated: June 3, 1999
----------------------
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<PAGE>
EXHIBIT I
EMPLOYMENT AGREEMENT
This Employment Agreement (The "Agreement") is made as of May 24, 1999 by
and between TriStar Aerospace, Inc, doing business at 2527 Willowbrook, Dallas,
Texas 75220 (the "Company") and Daniel L. Barth, residing presently at 1103
Horizon Trail, Richardson, Texas 75091-4358 ("Employee").
W I T N E S S E T H:
WHEREAS, the Company is engaged in the business of distributing aerospace
hardware and providing inventory management services; and
WHEREAS, Employee is experienced and knowledgeable in the management of
information systems and has agreed to work for the Company as its Vice President
of Information Technology;
WHEREAS, the Company is interested in employing Employee and Employee is
interested in working for the Company; and
WHEREAS, this Agreement will supersede and replace all prior consulting
and/or employment agreements between the Company and Employee;
NOW THEREFORE, in consideration of the mutual covenants and conditions
herein contained, the: parties hereto agree as follows:
1. Employment. Employee is hereby employed in the position of Vice
President of Information Technology of the Company to render services in
connection with the management of the information systems of the Company.
Employee hereby accepts such employment and agrees that he will at all times use
his best efforts to discharge his duties and utilize his skills in the best
interests of the Company.
2. Duties.
(a) Employee will have responsibility for all functions and duties
related to the information systems of the Company.
(b) Employee will perform all other duties as assigned by the President
and Chief Executive Officer and by the Company's Board of Directors.
3. Location of Employment. Employee's office and principal place of
business in carrying out his duties hereunder shall be at the Company's
corporate headquarters in Dallas. Employee will give reasonable consideration
to any proposed change in the location of his employment if such change would
serve the best interest of the Company. If the Company does relocate Employee,
it will provide him with adequate financial compensation to offset his moving
expenses and any losses he incurs due to the relocation.
<PAGE>
4. Term. Employee's employment under this Agreement shall be for a term of
one year commencing an May 24, 1999 (the "Commencement Date") and ending on
May 24, 2000. This Agreement may be renewed if 30 days before the termination
date of this Agreement the parties agree in writing to extend the Agreement to
a specific date. The period beginning on the Commencement Date and ending
May 24, 2000, or upon the expiration of any renewal period shall be referred
to as the "Employment Term."
5. Compensation. In consideration for the services to be performed by
Employee herein, the Company shall pay Employee as follows:
(a) Base Salary. The Company shall pay to Employee an annual base salary
of $175,000. This salary shall be payable in accordance with the
customary payroll practices of the Company. The Employee shall be
eligible for such raises as the Compensation Committee of the Board of
Directors of the Company (the "Compensation Committee"), in its sole and
absolute discretion, may provide.
(b) Bonus. In addition to a base salary, the Employee is entitled to
participate in the Bonus Plans which may be approved and authorized,
from time to time, by the Compensation Committee.
(c) Taxes. All compensation paid to Employee hereunder shall be subject
to applicable employment and withholding taxes. Employee shall be
responsible for any taxes resulting from a determination that any
portion of any benefits supplied to Employee hereunder may be
reimbursing personal as well as business expenses.
6. Employee Benefits.
(a) Benefit Plans or Other Arrangements. Subject to meeting eligibility
provisions, Employee shall be entitled to participate in all employee
benefit plans of the Company, and to receive such other employee
benefits as are available to the Company's officers as such benefits may
exist from time to time, including but not limited to, group health,
disability and life insurance benefits and participation in the
Company's 401(k) and Profit Sharing Plan and the Company's stock option
plans. Employee will be subject to any changes made to the aforesaid
employee benefit plans.
(b) Vacations and Sick Leave. Employee shall be entitled to receive the
same number of sick leave and vacation days as is maintained in the
Company's vacation and sick leave plan.
7. Expenses.
(a) Relocation Expenses. Upon presentation by the Employee to the
Company of expense reports and satisfactory supporting documentation
evidencing payment of such expenses, in such form as shall be requested
by the Company, the Company shall reimburse the Employee for such
expenses as the Board of Directors of the Company, in its sole and
absolute discretion, determines
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to be necessary and reasonable in connection with the relocation of
Employee, his family and their personal effects to a new location
designated by the Company.
(b) Business Expenses. During the term of the Employee's employment
hereunder, the Employee shall be entitled to receive reimbursement for
all reasonable travel and business expenses incurred by him (in
accordance with the policies and procedures of the Company) at the
express direction of the President of the Company, provided that the
Employee promptly and properly accounts therefore in accordance with the
Company's expense policy.
8. Termination. Employee's employment may be terminated during the
Employment Term by either party at any time by giving written notice to the
other party stating the grounds for such termination in accordance with the
provisions of this Section 8. In the event of such termination, Employee's
rights and entitlements shall be determined in accordance with the following
provisions:
(a) Disability. The Company shall have the right to terminate this
Agreement if Employee incurs a permanent disability during the
Employment Term. For the purpose of this Agreement, "Permanent
Disability" shall mean inability of Employee to perform the services
required hereunder due to physical or mental disability which continues
for either (i) a total of 180 working days during any 12-month period
or (ii) 150 consecutive working days. In the event that either party
disputes whether Employee has a permanent disability, such dispute shall
be submitted to a physician mutually agreed upon by Employee or his
legal guardian and the Company. If the parties are unable to agree on a
mutually satisfactory physician, each shall select a reputable
physician, who, together, shall in turn select a third physician whose
determination of Employee's ability to perform his job duties shall be
conclusive and binding to the parties. Evidence of such disability shall
be conclusive notwithstanding that a disability policy or clause in an
insurance policy covering Employee shall contain a different definition
of "Permanent Disability."
If Employee suffers a Permanent Disability and the Company terminates
his employment after the appropriate time period as cited above,
Employee shall receive his base salary only through the date of
termination.
(b) Death. If Employee dies during the Employment Term, the Employee
shall receive his base salary only through the date of his death.
(c) "For Cause". If The Company terminates this Agreement "For Cause"
as defined in this subsection, Employee shall not be entitled to any
damages from the Company or its employees for such termination. If the
Company terminates this Agreement for cause, Employee shall receive his
base salary only through the date of termination.
For purposes of this Agreement, "For Cause" shall mean the willful,
continued and material failure by Employee to follow the reasonable and
legitimate directions of the Board of Directors or of the President and
Chief Executive Officer in connection with Employee's duties hereunder;
conviction of a felony;
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<PAGE>
embezzlement from the Company; fraud; engaging in conduct contrary to
the best interests of the company; habitual absenteeism not related to
disability or illness; or breach of a material term of this Employment
Agreement.
(d) "Without Cause". If the Company terminates this Agreement without
Cause, Employee shall receive the balance of his base salary under this
Agreement pursuant to subsection (f) below until the end of the
Employment Term.
If Employee's employment with the Company terminates pursuant to this
subsection, he shall be required to mitigate damages by seeking other
employment or otherwise. Any amount paid by the Company hereunder shall
be reduced by any compensation earned by Employee from another employer
or through consulting.
(e) Resignation or Nonrenewal of Agreement. If Employee resigns from his
employment during the Employment Term, he shall receive his base salary
through his date of termination. If this Agreement expires by its own
terms or either Company or Employee choose not to renew the Agreement,
then Employee shall receive his base salary through the date the
Agreement expires.
(f) Time for Payment. The payment of any balance of Employee's base
salary due under this section will be made on the Company's regularly
scheduled pay days.
9. Additional Obligations of Employee During and After Employment.
(a) Acknowledgments. Employee acknowledges that, as an officer and
employee of the Company (including its subsidiaries and its affiliated
companies) he will obtain information that derives independent value
from not being generally known to the public. Employee acknowledges
that part of the consideration for the covenant not to compete in
Section 10 is supported by this factor.
(b) Noncompetition and Nonsolicitation. During the Employment Term,
Employee will not, directly or indirectly, work for or provide any
services to any employer or other business entity who competes with the
Company in the states of California. Florida. Texas and Arizona. During
the Employment Term the Employee shall not contact nor solicit any
Company customer, supplier or agent for the purposes of inducing at
persuading them to change in any way their business relationship with
the Company. For the purposes of this section, a customer is defined as
any party who, on the date of termination of Employee's employment is,
at within one year prior thereto was, a customer of the Company or to
whom the Company has made, or from whom the Company has received, a
written sales proposal within 12 months prior to the end of the
Employment Term. Employee understands, acknowledges and agrees that
such customers are developed and maintained by the Company through use
of confidential, proprietary, and trade secret information to which
Employee may have access during his employment term.
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<PAGE>
The requirement of this subsection does not extend to geographical
locations in which the Company is no longer doing business at the time
the Employment Term ends. Employee also agrees that until 12 months
after the Employment Term for any reason, he will not directly or
indirectly attempt to persuade or induce any Company employee to leave
his or her employment with the Company or hire any such employee to
work with Employee at a subsequent employer. The parties agree that the
limitations contained in this subsection with respect to geographic
area, duration and scope of activity are reasonable. Employee
acknowledges and recognizes that the enforcement of the noncompetiton
provisions in this Agreement by the Company will not interfere with
Employee's ability to earn a livelihood. Employee recognizes and agrees
that the enforcement of this Agreement is necessary to ensure the
preservation and continuity of the business and good will of the
Company. If any court or arbitrator shall determine that the geographic
area, duration or scope of activity of any restriction contained in this
subsection is unenforceable, it is the intention of the parties that
such restrictive covenant shall not be terminated but shall be reformed
to the extent required to render it valid and enforceable.
(c) Records. All records, files, documents, and the like, or abstracts,
summaries, or copies thereof, relating to the business of the Company,
which the Company or Employee shall prepare or use or come into contact
with during his employment, shall remain the sole property of the
Company and shall not be removed from the premises or disclosed to any
person without written consent of the company, and Employee shall
promptly turn all such records in his possession or under his control
to the Company upon termination of his employment.
(d) Trade Secrets and Confidentiality. During the course of Employee's
employment, he will have access to and become familiar with various
trade secrets and confidential information belonging to the Company,
consisting of but not limited to, compilations of information, financial
and operations records, technical specifications, sales procedures,
customer requirements, pricing information, customer and supplier lists,
methods of doing business, and business plans. Employee acknowledges
that such confidential information and trade secrets exist and are owned
and shall continue to be owned solely by the Company and that he shall
not discuss or disclose any trade secrets or confidential information
belonging to the Company to any person or entity except as is required
for him to perform his duties under this Agreement.
(e) Relief. In addition to its other remedies, the Company shall be
entitled to equitable relief, including provisional and final injunctive
relief, to enforce its rights under this section.
10. Notices. All notices required to be given hereunder shall be personally
delivered to the signatories of this Agreement or shall be given by certified
mail, return receipt requested, addressed to the party to which the notice is to
be given at the address for that party first set forth above.
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<PAGE>
11. Arbitration. Any controversy or claim arising out of or relating to
this Agreement, except involving matters under Section 9 of this Agreement which
will be resolved in the Texas State Courts, shall be settled by binding
arbitration. Any such arbitration proceedings shall be conducted as follows:
(a) Any party wishing to pursue a claim or controversy under this
section must give the other party written notice of the claim or
controversy within 18O days after the disputed event occurred.
(b) Arbitration shall be conducted by three arbitrators, one to be
selected by each of the parties and the third to be designated by the
two arbitrators so selected. In the event of their failure to agree on
the third arbitrator, selection shall be made by the American
Arbitration Association of Dallas, Texas where the arbitration shall
take place.
(c) The arbitrators shall follow the Employment Arbitration Rules of the
American Arbitration Association, except as otherwise provided herein or
agreed to by the parties. The Arbitrators shall substantially comply
with Texas rules of evidence; shall grant essential but limited
discovery; shall provide for the exchange of witness lists and exhibit
copies; shall conduct a pretrial hearing; and shall consider dispositive
motions. Each party shall have the right to request the arbitrators to
make findings of specific factual issues.
(d) In the event the Company terminates Employee's employment under
Section 8(c) of this Agreement and Employee challenges the termination
under this section, if the Arbitrator rules that the Company did not
have cause to terminate Employee's employment, the maximum amount of
damages that the Arbitrators may award to Employee is the balance of his
base salary under this Agreement and Employee's legal fees and expenses
in bringing the Arbitration.
(e) The Arbitrators shall complete their proceedings and render their
decision within 40 days after submission of the dispute to them, unless
both parties agree to an extension. Each party shall cooperate with the
Arbitrators to comply with procedural time requirements, and the failure
of either to do so shall entitle the Arbitrators to extend the
Arbitration proceedings accordingly and to impose sanctions on the party
responsible for the delay, payable to the other party.
(f) The majority decision of the Arbitrators shall contain findings of
facts on which the decision is based, including any specific factual
findings requested by either party, and shall further contain the
reasons for the decision with reference to the legal principles on which
the Arbitrators relied. Such decision of the Arbitrators shall be final
and binding upon the parties, and accordingly the Company and Employee
shall promptly comply with the terms of such award, and a judgment by a
court of competent jurisdiction may be entered in accordance therewith.
(g) The fees and expenses of the arbitrators in connection with the
resolution of disputes pursuant hereto shall be borne by the party who
does not prevail in the arbitration.
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<PAGE>
(h) The Company and Employee hereby consent to the jurisdiction of the
courts of the State of Texas for purposes of entering judgment with
respect to an arbitration award.
12. Indemnification. Employee will be subject to and provided the
protection afforded in the indemnification provisions of the current provisions
of the Company's Certificate of Incorporation and By-Laws.
13. Miscellaneous Provisions.
(a) Entire Agreement. This Agreement replaces and supplants all prior
agreements, oral or written, between the parties and constitutes the
entire understanding of the parties; and no change, alteration or
modification hereof may be made except by a writing signed by the
parties hereto.
(b) Succession. This Agreement shall be binding upon and shall inure to
the benefit of the parties hereto and their respective heirs, legal
representatives, successors and assigns. The Company shall have the
right to assign this Agreement to a parent, affiliate or subsidiary
corporation or to any corporation with which it may merge or consolidate
subject to the provisions of Section 8(e) herein.
(c) Applicable Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Texas.
(d) Amendment. This Agreement may only be amended, or a new agreement
substituted, by a written instrument duly authorized and executed by the
Company and Employee.
(e) Waiver. The waiver by either party of a breach or violation of any
provision of this Agreement shall not operate as or be construed as a
waiver of any subsequent breach hereof.
(f) Severability. The Company and Employee agree that each of the
foregoing covenants shall be deemed a separate, severable and
independent covenant, and in the event any covenant shall be declared
invalid by any court of competent jurisdiction, such invalidity shall
not in any manner affect or impair the validity or enforceability of any
other unrelated part or provision of such covenant or of any other
covenant contained herein.
(g) Multiple Originals. This Agreement may be executed in multiple
originals, each of which shall be deemed an original.
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<PAGE>
IN WITNESS WHEREOF the parties have executed this Agreement as of this 24th
day of May, 1999.
COMPANY:
TriStar Aerospace, Inc.
By: /s/ Quentin Bourjeaurd
-------------------------------
Quentin Bourjeaurd
President and Chief Executive Officer
EMPLOYEE:
/s/ Daniel L. Barth
-------------------------------
Daniel L. Barth
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<PAGE>
EXHIBIT L
================================================================================
TENDER AND OPTION AGREEMENT
among
ALLIEDSIGNAL INC.,
ALLIEDSIGNAL ACQUISITION CORP.
and
THE STOCKHOLDERS LISTED ON SCHEDULE A
Dated as of October 31, 1999
================================================================================
<PAGE>
TENDER AND OPTION AGREEMENT
TENDER AND OPTION AGREEMENT, dated as of October 31, 1999
(this "Agreement"), among AlliedSignal Inc., a Delaware corporation
("Purchaser"), AlliedSignal Acquisition Corp., a Delaware corporation and a
wholly-owned subsidiary of Purchaser ("Merger Sub"), and each of the persons
listed on Schedule A hereto (each a "Stockholder" and, collectively, the
"Stockholders").
RECITALS
WHEREAS, Purchaser, Merger Sub and TriStar Aerospace Co., a
Delaware corporation (the "Company"), have entered into an Agreement and Plan of
Merger dated as of the date hereof (as the same may be amended or supplemented,
the "Merger Agreement") providing for, among other things, an Offer by Merger
Sub for all of the issued and outstanding shares of common stock, par value
$0.01 per share, of the Company (the "Company Common Stock"), and, subsequent
thereto, assuming the Offer is consummated on the terms set forth in the Offer
Documents and all the other conditions to the Merger are satisfied or waived,
the Merger of Merger Sub with and into the Company with the Company as the
surviving corporation in the Merger, pursuant to which the Company will become a
wholly-owned subsidiary of Purchaser;
WHEREAS, each Stockholder is the beneficial owner of the
shares of Company Common Stock and Options set forth opposite such Stockholder's
name on Schedule A hereto (collectively referred to herein as the "Securities"
of such Stockholder; such Securities, as such Securities may be adjusted by
stock dividend, stock split, recapitalization, combination or exchange of
shares, merger, consolidation, reorganization or other change or transaction of
or by the Company, together with shares of Company Common Stock issuable upon
the exercise of Options being referred to herein as the "Shares" of such
Stockholder); and
WHEREAS, as a condition to each of Purchaser and Merger Sub's
willingness to enter into the Merger Agreement, Purchaser and Merger Sub have
requested that the Stockholders enter into, and the Stockholders have agreed to
enter into, this Agreement;
NOW, THEREFORE, in consideration of the foregoing and the
respective representations, warranties, covenants and agreements set forth
herein, the parties agree as follows:
Section 1. Certain Definitions. Capitalized terms used but not
otherwise defined herein have the meanings ascribed to such terms in the Merger
Agreement.
<PAGE>
Section 2. Representations and Warranties of the Stockholders. Each
Stockholder, severally and not jointly, represents and warrants to Purchaser and
Merger Sub, as of the date hereof and as of the Closing (as defined below), as
follows:
(a) The Stockholder is the beneficial owner (as defined in
Rule 13d-3 under the Exchange Act) of, and has good title to, all of the
Securities set forth opposite such Stockholder's name on Schedule A, free and
clear of any pledge, hypothecation, claim, security interest, charge,
encumbrance, voting trust agreement, interest, option, lien, charge or similar
restriction or limitation, including any restriction on the right to vote, sell
or otherwise dispose of the Securities, other than those arising under the
federal and state securities laws (each, a "Lien"), except as set forth in this
Agreement or in Schedule B hereto or disclosed in the Commission Filings filed
prior to the date hereof.
(b) The Securities constitute all of the securities (as
defined in Section 3(a)(10) of the Exchange Act) of the Company beneficially
owned, directly or indirectly, by the Stockholder.
(c) Except for the Securities, the Stockholder does not,
directly or indirectly, beneficially own or have any option, warrant or other
right to acquire any securities of the Company that are or may by their terms
become entitled to vote or any securities that are convertible or exchangeable
into or exercisable for any securities of the Company that are or may by their
terms become entitled to vote, nor is the Stockholder subject to any contract,
commitment, arrangement, understanding, restriction or relationship (whether or
not legally enforceable), other than this Agreement, that provides for such
Stockholder to vote or acquire any securities of the Company. The Stockholder
holds exclusive power to vote the Company Common Stock set forth opposite its
name on Schedule A, if any, and has not granted a proxy to any other person to
vote any Company Common Stock (including those issuable upon exercise of the
Options), subject to the limitations under applicable securities laws and the
terms set forth in this Agreement.
(d) This Agreement has been duly executed and delivered by the
Stockholder, and assuming the due authorization, execution and delivery thereof
by the other parties hereto, constitutes the legal, valid and binding obligation
of the Stockholder, enforceable against the Stockholder in accordance with its
terms, except as enforcement against the Stockholder may be limited by
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or
other similar laws relating to creditors rights generally and by general
equitable principles (regardless of whether such enforceability is considered in
a proceeding in equity or at law).
(e) Neither the execution and delivery of this Agreement nor
the performance by the Stockholder of the Stockholder's obligations hereunder
will conflict with, result in a violation or breach of, or constitute a default
(or an event that, with notice or lapse of time or both, would result in a
default) or give rise to any right of termination, amendment, cancellation, or
acceleration or result in the creation of any Lien on any Shares under, (i) any
contract, commitment, agreement, understanding,
2
<PAGE>
arrangement or restriction of any kind to which the Stockholder is a party or by
which the Stockholder is bound or (ii) any injunction, judgment, writ, decree,
order or ruling applicable to the Stockholder, except for conflicts, violations,
breaches, defaults, terminations, amendments, cancellations, accelerations or
Liens that would not individually or in the aggregate be expected to prevent or
materially impair or delay the consummation by such Stockholder of the
transactions contemplated hereby.
(f) Neither the execution and delivery of this Agreement nor
the performance by the Stockholder of the Stockholder's obligations hereunder
will violate any Law applicable to the Stockholder or require any order,
consent, authorization or approval of, filing or registration with, or
declaration or notice to, any court, administrative agency or other governmental
body or authority, other than any required notices or filings pursuant to the
Hart-Scott-Rodino Act, foreign antitrust or competition laws or the federal
securities laws.
(g) No investment banker, broker, finder or other intermediary
is, or will be, entitled to a fee or commission from Merger Sub, Purchaser or
the Company in respect of this Agreement based on any arrangement or agreement
made by or on behalf of such Stockholder in this Agreement or otherwise in his
or her capacity as a stockholder of the Company.
(h) The Stockholder understands and acknowledges that
Purchaser is entering into, and causing Merger Sub to enter into, the Merger
Agreement in reliance upon the Stockholder's execution and delivery of this
Agreement.
Section 3. Representations and Warranties of Purchaser and Merger Sub.
Purchaser and Merger Sub each hereby represents and warrants to the Company that
(a)(i) it has full corporate right, power and authority to execute and deliver
this Agreement and to perform all of its obligations hereunder; (ii) such
execution, delivery and performance have been duly authorized by all requisite
corporate action by Parent and Merger Sub, as applicable, and no other corporate
proceedings are necessary therefor; (iii) this Agreement has been duly and
validly executed and delivered by Parent and Merger Sub, as applicable, and
represents a valid and legally binding obligation of Parent and Merger Sub, as
applicable, enforceable against Parent in accordance with its terms; and (iv)
any Company Common Stock acquired by Parent or Merger Sub upon exercise of the
Purchase Option will not be transferred or otherwise disposed of except in
compliance with the Securities Act.
(b) Neither the execution and delivery of this Agreement by
Purchaser or Merger Sub nor the consummation by Purchaser and Merger Sub of the
transactions contemplated hereby shall conflict with or constitute a violation
of or default under any contract, commitment, agreement arrangement or
restriction of any kind to which Purchaser or Merger Sub is a party to or to
which each is bound which would materially
3
<PAGE>
impair the ability of Purchaser or Merger Sub to purchaser the Shares
beneficially owned by the Stockholder upon exercise of the Purchase Option.
(c) Nether the execution and delivery of this Agreement nor
the performance by Purchaser or Merger Sub of its obligations hereunder will
violate any law applicable to each or require any order, consent, authorization
of approval of, filing or registration with, or declaration or notice to, any
court, administrative agency or other governmental body or authority, other than
any required notices or filings pursuant to the Hart-Scott-Rodino Act, foreign
antitrust or competition laws or the federal securities laws.
Section 4. Transfer of the Shares. During the term of this Agreement,
except as otherwise expressly provided herein, each Stockholder agrees that such
Stockholder will not (a) tender into any tender or exchange offer or otherwise
sell, transfer, pledge, assign, hypothecate or otherwise dispose of (including
by operation of Law), or create any Lien on, any of the Shares, (b) deposit the
Shares into a voting trust, enter into a voting agreement or arrangement with
respect to the Shares or grant any proxy or power of attorney with respect to
the Shares, (c) enter into any contract, option or other arrangement (including
any profit sharing arrangement) or undertaking with respect to the direct or
indirect acquisition or sale, transfer, pledge, assignment, hypothecation or
other disposition of any interest in or the voting of any Shares or any other
securities of the Company, (d) exercise any rights (including, without
limitation, under Section 262 of the Delaware Law) to demand appraisal of any
Shares which may arise with respect to the Merger, or (e) take any other action
that would in any way restrict, limit or interfere with the performance of such
Stockholder's obligations hereunder or the transactions contemplated hereby.
Notwithstanding the foregoing, each Stockholder may transfer Securities to (x)
an affiliate of the Stockholder, (y) any member of the immediate family of the
Stockholder or trusts for the benefit of family members of the Stockholder or
(z) any organizations qualifying under Section 501(c)(3) of the Internal Revenue
Code of 1986, as amended, if and to the extent that any individual or entity
referred to in clauses (x), (y) and (z), agrees to be bound by this Agreement.
Section 5. Adjustments. (a) In the event (i) of any stock dividend,
stock split, recapitalization, reclassification, combination or exchange of
shares of capital stock or other securities of the Company on, of or affecting
the Shares or the like or any other action that would have the effect of
changing a Stockholder's ownership of the Company's capital stock or other
securities or (ii) a Stockholder becomes the beneficial owner of any additional
Shares of or other securities of the Company, then the terms of this Agreement
will apply to the shares of capital stock and other securities of the Company
held by such Stockholder immediately following the effectiveness of the events
described in clause (i) or such Stockholder becoming the beneficial owner
thereof, as described in clause (ii), as though they were Shares hereunder.
4
<PAGE>
(b) Each Stockholder hereby agrees, while this Agreement is in
effect, to promptly notify Purchaser and Merger Sub of the number of any new
Shares acquired by such Stockholder, if any, after the date hereof.
Section 6. Tender of Shares of Company Common Stock. Each Stockholder
hereby agrees that such Stockholder will validly tender (or cause the record
owner of such shares to validly tender) and sell pursuant to and in accordance
with the terms of the Offer not later than the tenth business day after
commencement of the Offer (or the earlier of the expiration date of the Offer
and the tenth business day after such shares of Company Common Stock are
acquired by such Stockholder if the Stockholder acquires shares of Company
Common Stock after the date hereof), or, if the Stockholder has not received the
Offer Documents by such time, within two business days following receipt of such
documents, all of the then outstanding shares of Company Common Stock
beneficially owned by such Stockholder (including the shares of Company Common
Stock outstanding as of the date hereof and shares of Company Common Stock
issued following the exercise (if any) of the Options, in each case as set forth
on Schedule A hereto opposite such Stockholder's name). Upon the purchase by
Purchaser or Merger Sub of all of such then outstanding shares of Company Common
Stock beneficially owned by such Stockholder pursuant to the Offer in accordance
with this Section 6, this Agreement will terminate as it relates to such
Stockholder. In the event, notwithstanding the provisions of the first sentence
of this Section 6, any shares of Company Common Stock beneficially owned by a
Stockholder are for any reason withdrawn from the Offer or are not purchased
pursuant to the Offer, such shares of Company Common Stock will remain subject
to the terms of this Agreement. Each Stockholder acknowledges that Purchaser's
obligation to accept for payment and pay for the shares of Company Common Stock
tendered in the Offer is subject to all the terms and conditions of the Offer.
Section 7. Voting Agreement. Each Stockholder, by this Agreement, does
hereby (a) agree to appear (or not appear, if requested by Purchaser or Merger
Sub) at any annual, special, postponed or adjourned meeting of the stockholders
of the Company or otherwise cause the shares of Company Common Stock such
Stockholder beneficially owns to be counted as present (or absent, if requested
by Purchaser or Merger Sub) thereat for purposes of establishing a quorum and to
vote or consent, and (b) constitute and appoint Purchaser and Merger Sub, or any
nominee thereof, with full power of substitution, during and for the term of
this Agreement, as his true and lawful attorney and proxy for and in his name,
place and stead, to vote all the shares of Company Common Stock such Stockholder
beneficially owns at the time of such vote, at any annual, special, postponed or
adjourned meeting of the stockholders of the Company (and this appointment will
include the right to sign his or its name (as stockholder) to any consent,
certificate or other document relating to the Company that the laws of the State
of Delaware may require or permit), in the case of both (a) and (b) above, (x)
in favor of approval and adoption of the Merger Agreement and approval and
adoption of the Merger and the other transactions contemplated thereby and (y)
against (1) any Acquisition Proposal (other than the Merger and the other
transactions contemplated thereby), (2) any
5
<PAGE>
action or agreement that would result in a breach in any respect of any
covenant, agreement, representation or warranty of the Company under the Merger
Agreement and (3) any other action that is intended, or could be expected, to
impede, interfere with, delay, postpone, or adversely affect the Offer, the
Merger and the other transactions contemplated by this Agreement or the Merger
Agreement. This proxy and power of attorney is a proxy and power coupled with an
interest, and each Stockholder declares that it is irrevocable until this
Agreement shall terminate in accordance with its terms. Each Stockholder hereby
revokes all and any other proxies with respect to the Shares that such
Stockholder may have heretofore made or granted. For shares of Company Common
Stock as to which a Stockholder is the beneficial but not the record owner, such
Stockholder shall use his or its best efforts to cause any record owner of such
Shares to grant to Purchaser a proxy to the same effect as that contained
herein. Each Stockholder hereby agrees to permit Purchaser and Merger Sub to
publish and disclose in the Offer Documents and the Proxy Statement and related
filings under the securities laws such Stockholder's identity and ownership of
Shares and the nature of his or its commitments, arrangements and understandings
under this Agreement.
Section 8. No Solicitation. Except as otherwise permitted under Section
26 of this Agreement, each Stockholder agrees that neither such Stockholder nor
any of such Stockholder's representatives, agents or affiliates (including,
without limitation, any investment banker, attorney or accountant retained by
any of them) will directly or indirectly initiate, solicit or encourage
(including by way of furnishing non-public information or assistance), or take
any other action to facilitate, any inquiries or the making or submission of any
Acquisition Proposal, or enter into or maintain or continue discussions or
negotiate with any person or entity in furtherance of such inquiries or to
obtain or induce any person to make or submit an Acquisition Proposal or agree
to or endorse any Acquisition Proposal or assist or participate in, facilitate
or encourage, any effort or attempt by any other person or entity to do or seek
any of the foregoing or authorize or permit any of its representatives, agents
or affiliates or any investment banker, financial advisor, attorney, accountant
or other representative or agent retained by any of them to take any such
action. Each Stockholder shall promptly advise Purchaser in writing of the
receipt of request for information or any inquiries or proposals relating to an
Acquisition Proposal.
Section 9. Grant of Purchase Option. The Stockholder hereby grants to
Purchaser and Merger Sub an irrevocable option (the "Purchase Option") to
purchase for cash at a price (the "Exercise Price") set forth below, in a manner
set forth below, free and clear of all Liens, any or all of the Shares (and
including Shares acquired after the date hereof by such Stockholder)
beneficially owned by the Stockholder, including, without limitation, by
requiring the Stockholder to exercise any or all Options. The Exercise Price for
shares of Company Common Stock shall be equal to the Merger Consideration. In
the event of any stock dividends, stock splits, recapitalizations, combinations,
exchanges of shares or the like, the Exercise Price will be appropriately
adjusted for the purpose of this Section
6
<PAGE>
9. The amount payable pursuant to this Section 9 shall be subject to all
applicable withholding taxes.
Section 10. Exercise of Purchase Option.
(a) Subject to the conditions set forth in Section 12 hereof,
the Purchase Option may be exercised by Purchaser or Merger Sub, in whole or in
part, at any time or from time to time after the occurrence of any Trigger Event
(as defined below). To the extent known by such Stockholder, each Stockholder
shall notify Purchaser promptly in writing of the occurrence of any Trigger
Event or an event which could lead to a Trigger Event (as provided in Section
6.4 of the Merger Agreement), it being understood that the giving of such notice
by the Stockholder is not a condition to the right of Purchaser or Merger Sub to
exercise the Purchase Option. In the event Purchaser or Merger Sub wishes to
exercise the Purchase Option, Purchaser shall deliver to each Stockholder a
written notice (an "Exercise Notice") specifying the total number of Shares
(including the number of Shares subject to Options to be purchased) it wishes to
purchase from such Stockholder. Each closing of a purchase of Shares (a
"Closing") will occur at a place in Dallas, Texas, on a date and at a time
designated by Purchaser or Merger Sub in an Exercise Notice delivered at least
two business days prior to the date of the Closing. At the request of the
Stockholder following receipt of an Exercise Notice, Parent or Merger Sub shall
advance (an "Advance") to such Stockholder an amount in cash, by wire transfer
of immediately available funds, equal to the aggregate per share exercise price
of the Options pursuant to which the underlying Shares are to be acquired
pursuant to the Exercise Notice (it being understood that Shares subject to
Options to be acquired pursuant to the Exercise Notice will be in the order of
the lowest exercise price to the highest). No Advance shall be made unless the
Stockholder shall have concurrently properly exercised such Options and
delivered irrevocable instructions to the transfer agent of the Company (and
others as may be necessary under the Options) to issue and deliver directly to,
and in the name of, Parent or Merger Sub (as applicable) the Shares to be issued
upon exercise of the Options. The Advance shall be an offset against any
Exercise Price payable to the respective Stockholder at the Closing.
(b) A "Trigger Event" means any one of the following: (i) the
Merger Agreement becomes terminable under circumstances that entitle Purchaser
or Merger Sub to receive the Fee under Section 6.4 of the Merger Agreement
(regardless of whether the Merger Agreement is actually terminated and whether
such Fee is actually paid) or (ii) the Offer is consummated but, due solely to
the failure of the Stockholder to validly tender and not withdraw all of the
then outstanding shares of Company Common Stock beneficially owned by such
Stockholder, the Purchaser has not accepted for payment or paid for all of such
shares of Company Common Stock.
(c) If requested by Purchaser and Merger Sub in the Exercise
Notice, such Stockholder shall exercise and/or convert all Options (to the
extent exercisable and convertible) and other rights (including conversion or
exchange rights), other than Options with exercise or conversion prices above
the Merger Consideration, beneficially
7
<PAGE>
owned by such Stockholder, and shall, if directed by Purchaser and Merger Sub,
tender the shares of Company Common Stock acquired pursuant to such exercise or
conversion into the Offer or sell such shares of Company Common Stock to
Purchaser or Merger Sub as provided in this Agreement.
Section 11. Termination. This Agreement will terminate (a) pursuant to
Section 6 or (b) upon the earliest of: (i) the Effective Time; (ii) termination
of the Merger Agreement in accordance with its terms other than upon, during the
continuance of, or after, a Trigger Event or an event which could lead to a
Trigger Event (as provided in Section 6.4 of the Merger Agreement); or (iii) 180
days following the earlier of (x) any termination of the Merger Agreement, upon,
during the continuance of or after a Trigger Event or (y) termination of the
Merger Agreement under circumstances that could lead to a Trigger Event (as
provided in Section 6.4 of the Merger Agreement) (or if, at the expiration of
such 180 day period the Purchase Option cannot be exercised by reason of any
applicable judgment, decree, order, injunction, law or regulation, five business
days after such impediment to exercise has been removed or has become final and
not subject to appeal). Upon the giving by Purchaser or Merger Sub to the
Stockholder of the Exercise Notice and the tender of the aggregate Exercise
Price (less all Advances), Purchaser or Merger Sub, as the case may be, will be
deemed to be the holder of record of the Shares transferable upon such exercise,
notwithstanding that the stock transfer books of the Company are then closed or
that certificates representing such Shares have not been actually delivered to
Purchaser. Notwithstanding the termination of this Agreement, Purchaser will be
entitled to purchase the Shares subject to the Purchase Option if it has
exercised the Purchase Option in accordance with the terms hereof prior to the
termination of this Agreement and the termination of this Agreement will not
affect any rights hereunder which by their terms do not terminate or expire
prior to or as of such termination.
Section 12. Conditions To Closing. The obligation of each Stockholder
to sell such Stockholder's Shares to Purchaser or Merger Sub hereunder is
subject to the conditions that (i) all waiting periods, if any, under the
Hart-Scott-Rodino Act, applicable to the sale of the Shares or the acquisition
of the Shares by Purchaser or Merger Sub, as the case may be, hereunder have
expired or have been terminated; (ii) all consents, approvals, orders or
authorizations of, or registrations, declarations or filings with, any court,
administrative agency or other Governmental Entity, if any, required in
connection with the sale of the Shares or the acquisition of the Shares by
Purchaser or Merger Sub hereunder have been obtained or made; and (iii) no
preliminary or permanent injunction or other order by any court of competent
jurisdiction prohibiting or otherwise restraining such sale or acquisition is in
effect.
Section 13. Closing. At any Closing with respect to Shares beneficially
owned by a Stockholder, (a) such Stockholder will deliver to Purchaser, Merger
Sub or their respective designee a certificate or certificates in definitive
form representing the number of the Shares designated by Purchaser or Merger
Sub, as the case may be, in its Exercise
8
<PAGE>
Notice, free and clear of all Liens, such certificate to be registered in the
name of Purchaser, Merger Sub or their respective designee and (b) Purchaser or
Merger Sub, as the case may be, will deliver to the Stockholder the excess, if
any, of (i) the aggregate Exercise Price for the Shares so designated and being
purchased over (ii) any outstanding Advances by wire transfer of immediately
available funds. If Purchaser or Merger Sub shall require a Stockholder to
exercise Options, the delivery of certificates representing the Shares subject
to such Options shall be made concurrently with the delivery of the Exercise
Price, less any Advances, for the Shares so delivered.
Section 14. Survival of Representations and Warranties. All
representations and warranties in this Agreement or in any instrument delivered
pursuant to this Agreement shall survive for twelve months after the termination
hereof. The covenants and agreements made herein will survive in accordance with
their respective terms.
Section 15. Expenses. Except as otherwise provided in the Merger
Agreement, all costs and expenses incurred in connection with this Agreement
shall be paid by the party incurring such expenses.
Section 16. Counterparts. This Agreement may be executed in two or more
counterparts, all of which shall be considered the same agreement.
Section 17. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware, without regard
to principles of conflicts of laws thereof.
Section 18. Notices. All notices and other communications hereunder
shall be in writing and shall be deemed given if delivered by hand, mailed by
registered or certified mail (return receipt requested) or sent by prepaid
overnight courier (with proof of service) or confirmed to facsimile to the
parties as follows (or at such other addresses for a party as shall be specified
by like notice) and shall be deemed given on the date on which so
hand-delivered, or sent by confirmed telecopier and on the day after it has been
so mailed or sent by courier:
9
<PAGE>
To Purchaser or Merger Sub:
(a) Purchaser:
AlliedSignal Inc.
101 Columbia Road
Morristown, New Jersey 07962
Attention: Peter M. Kreindler, Esq.
Fax: (973) 455-6039
(b) Merger Sub:
AlliedSignal Acquisition Corp.
c/o AlliedSignal Inc.
2525 West 190th Street
Torrance, California 90504
Attention: Thomas F. Larkins, Esq.
Fax: (310) 512-3987
with a copy (which shall not constitute notice) to:
Fried, Frank, Harris, Shriver & Jacobson
350 S. Grand Avenue, 32nd Floor
Los Angeles, California 90071
Attention: David K. Robbins, Esq.
Fax: (213) 473-2222
If to a Stockholder, at the address set forth on Schedule A hereto or
to such other address as any party may have furnished to the other parties in
writing in accordance herewith with a copy (which shall not constitute notice)
to:
Weil, Gotshal & Manges LLP
767 Fifth Avenue
New York, New York 10153
Attention: Simeon Gold, Esq.
Fax: (212) 310-8007
Section 19. Miscellaneous.
(a) This Agreement shall not, nor shall any of the rights or
interests hereunder, be assigned by any party hereto or assignable by operation
of law or otherwise without the prior written consent of the other parties
hereto; provided, however, that Purchaser may assign its rights hereunder to an
affiliate, but nothing shall relieve the assignor from its obligations
hereunder. Subject to the preceding sentence, this
10
<PAGE>
Agreement shall be binding upon and shall inure to the benefit to the parties
hereto and their respective successors and assigns.
(b) The headings contained in this Agreement are for reference
purposes and shall not affect in any way the meaning or interpretation of this
Agreement. In this Agreement, unless the context otherwise requires, words
describing the singular number shall include the plural and vice versa, and
words denoting any gender shall include all genders and words denoting natural
persons shall include corporations and partnerships and vice versa. Whenever the
words "include," "includes" or "including" are used in this Agreement, they
shall be understood to be followed by the words "without limitation."
(c) All rights, powers and remedies provided under this
Agreement or otherwise available in respect hereof at law or in equity will be
cumulative and not alternative, and the exercise of any thereof by either party
will not preclude the simultaneous or later exercise of any other such right,
power or remedy by such party.
Section 20. Severability. Any term or provision of this Agreement which
is invalid or unenforceable in any jurisdiction shall, as to that jurisdiction,
be ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or unenforceability of any of the terms or
provisions of this Agreement in any other jurisdiction. If any provision of this
Agreement is so broad as to be unenforceable, the provision shall be interpreted
to be only so broad as is enforceable.
Section 21. Enforcement of Agreement; Waiver of Jury Trial. (a) 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 its
specific terms or was 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 enforce specifically the terms and provisions hereof in
any court, this being in addition to any other remedy to which they are entitled
at law or in equity.
(b) Each of the parties irrevocably and unconditionally
waives, to the fullest extent permitted by applicable law, any and all rights to
trial by jury in connection with any litigation arising out of or relating to
this Agreement.
Section 22. Waiver, Etc. Any provision of this Agreement may be waived
at any time by the party that is entitled to the benefits thereof. No such
waiver, amendment or supplement will be effective unless in writing and signed
by the party or parties sought to be bound thereby. Any waiver by any party of a
breach of any provision of this Agreement will not operate as or be construed to
be a waiver of any other breach of such provision or of any breach of any other
provision of this Agreement. The failure of a party to insist upon strict
adherence to any term of this Agreement or one or more
11
<PAGE>
sections hereof will not be considered a waiver or deprive that party of the
right thereafter to insist upon strict adherence to that term or any other term
of this Agreement.
Section 23. Amendment. This Agreement may not be amended, except by an
instrument in writing signed on behalf of each of the parties.
Section 24. Further Assurances. (a) Each party hereto will execute and
deliver all other documents and instruments and take all other actions that may
be reasonably necessary in order to consummate the transactions provided for by
such exercise.
(b) Each of the Stockholders will execute and deliver all
documents and instruments and take all other actions that may be reasonably
necessary to permit the Purchaser to exercise all rights granted to the
Purchaser by such Stockholder and obtain all benefits contemplated under this
Agreement with respect to the rights granted by such Stockholder.
Section 25. Publicity. A Stockholder shall not issue any press release
or otherwise make any public statements with respect to this Agreement or the
Merger Agreement or the other transactions contemplated hereby or thereby
without the consent of Purchaser and Merger Sub; provided, however, that a
Stockholder may, without the prior consent of Purchaser and Merger Sub, issue a
press release or otherwise make such public statement (i) as may be required by
Law if he has provided Purchaser and Merger Sub with prior written notice, (ii)
as otherwise provided in Section 26 herein, (iii) concerning the status of the
Stockholder as a party to this Agreement, the terms hereof, and its Beneficial
Ownership of the Securities required pursuant to Section 13(d) of the Exchange
Act, or (iv) required in the Proxy Statement.
Section 26. Stockholder Capacity. No person executing this Agreement
makes any agreement or understanding herein in such Stockholder's capacity as a
director or officer of the Company. Each Stockholder signs solely in such
Stockholder's capacity as the beneficial owner of such Stockholder's Shares.
Notwithstanding anything herein to the contrary, nothing herein shall limit or
affect any actions taken by a Stockholder in such Stockholder's capacity as an
officer or director of the Company to the extent specifically permitted by the
Merger Agreement or consistent with his fiduciary duties.
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<PAGE>
IN WITNESS WHEREOF, each of the Purchaser and Merger Sub has caused
this Agreement to be signed by its officer or director thereunto duly authorized
and each Stockholder has signed this Agreement, all as of the date first written
above.
ALLIEDSIGNAL INC.
By: /s/ James D. Taiclet
--------------------------------------
Name: James D. Taiclet
Title: President - Aerospace Services
ALLIEDSIGNAL ACQUISITION CORP.
By: /s/ Thomas F. Larkins
--------------------------------------
Name: Thomas F. Larkins
Title: Assistant Secretary
STOCKHOLDERS
/s/ P. Quentin Bourjeaurd
------------------------------------------
P. Quentin Bourjeaurd
/s/ Charles Balchunas
------------------------------------------
Charles Balchunas
<PAGE>
SCHEDULE A
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------
Stockholder Address Number of Number of
Shares Options
<S> <C> <C> <C>
P. Quentin Bourjeaurd 2527 Willowbrook Rd. 1,459,447 1,534,022
Dallas, Texas 75220
Charles Balchunas 2527 Willowbrook Rd. 136,522 602,276
Dallas, Texas 75220
- --------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
Schedule B
1. 300,000 shares of Company Common Stock held by P. Quentin Bourjeaurd are
pledged as collateral to Deutsche Bank Alex Brown.
2. 36,512 shares of Company Common Stock held by Charles Balchunas are pledged
to TriStar Aerospace, Inc., a Company subsidiary as collateral for a $75,000
promissory note.
<PAGE>
EXHIBIT M
[LOGO]
November 5, 1999
Dear Stockholder:
I am pleased to inform you that TriStar Aerospace Co. (the 'Company') has
entered into a definitive merger agreement with AlliedSignal Inc.
('AlliedSignal') pursuant to which AlliedSignal has agreed to acquire the
Company. Under the merger agreement, a wholly owned subsidiary of AlliedSignal
today commenced a cash tender offer for all outstanding shares of the Company's
common stock at a price of $9.50 per share, subject to the terms and conditions
in the Offer to Purchase and the related Letter of Transmittal that you will
receive in AlliedSignal's offering materials. The merger agreement provides
that, following completion of the tender offer, AlliedSignal's subsidiary will
be merged with and into the Company and all shares of the Company's common stock
not purchased in the tender offer will be converted into the right to receive
$9.50 per share in cash, without interest.
YOUR BOARD OF DIRECTORS, BY UNANIMOUS VOTE, HAS APPROVED THE MERGER
AGREEMENT, INCLUDING THE TENDER OFFER AND MERGER, AND DETERMINED THAT THE MERGER
AGREEMENT AND THE TENDER OFFER ARE FAIR TO AND ADVISABLE AND IN THE BEST
INTEREST OF THE COMPANY AND THE STOCKHOLDERS. ACCORDINGLY, THE BOARD OF
DIRECTORS UNANIMOUSLY RECOMMENDS THAT ALL STOCKHOLDERS ACCEPT THE OFFER AND
TENDER THEIR SHARES TO ALLIEDSIGNAL'S SUBSIDIARY.
In arriving at its decision to recommend the offer, the Board of Directors
gave careful consideration to a number of factors, which are described in the
Schedule 14D-9 filed by the Company with the Securities and Exchange Commission
and enclosed with this letter, including the opinion dated October 31, 1999 of
Goldman, Sachs & Co., the Company's financial advisor, to the effect that the
$9.50 per share in cash to be received by the stockholders in the tender offer
and the merger is fair, from a financial point of view, to such holders. We urge
you to consider carefully the Schedule 14D-9 and AlliedSignal's offering
materials, which are also enclosed and provide instructions on how to tender
your shares.
TriStar management and directors thank you for the support you have given
the Company over the years.
Sincerely,
P. Quentin Bourjeaurd
P. Quentin Bourjeaurd
President and
Chief Executive Officer
TriStar Aerospace, Inc.
2527 Willowbrook Road, Dallas, TX 75220-4420
(214) 366-5000
<PAGE>
EXHIBIT N
[LETTERHEAD OF GOLDMAN, SACHS & CO.]
PERSONAL AND CONFIDENTIAL
October 31, 1999
Board of Directors
TriStar Aerospace Co.
2527 Willowbrook Road
Suite 200
Dallas, Texas 75220
Ladies and Gentlemen:
You have requested our opinion as to the fairness from a financial point of view
to the holders (other than Purchaser (as defined below) and its subsidiaries) of
the outstanding shares of Common Stock, par value $0.01 per share (the
"Shares"), of TriStar Aerospace Co. (the "Company") of the $9.50 per Share in
cash proposed to be received by the holders of Shares (as defined below) in the
Tender Offer and the Merger (each as defined below) pursuant to the Agreement
and Plan of Merger, dated as of October 31, 1999, by and among AlliedSignal Inc.
("Purchaser"), AlliedSignal Acquisition Corp., a wholly-owned subsidiary of
Purchaser ("Sub"), and the Company (the "Agreement"). The Agreement provides for
a tender offer for all of the Shares (the "Tender Offer") pursuant to which Sub
will pay $9.50 per Share in cash for each Share accepted. The Agreement further
provides that following completion of the Tender Offer, Sub will be merged into
the Company (the "Merger") and each issued and outstanding Share (other than
Shares held in the treasury of the Company, owned at the Effective Time (as
defined in the Agreement) by Purchaser and its subsidiaries and Dissenting
Shares (as defined in the Agreement)) will be converted into the right to
receive $9.50 in cash.
Goldman, Sachs & Co., as part of its investment banking business, is continually
engaged in the valuation of businesses and their securities in connection with
mergers and acquisitions, negotiated underwritings, competitive biddings,
secondary distributions of listed and unlisted securities, private placements
and valuations for estate, corporate and other purposes. We are familiar with
the Company having acted as its financial advisor in connection with, and having
participated in certain of the negotiations leading to, the Agreement. We also
have provided certain investment banking services to Purchaser from time to
time, including having acted as financial advisor to the Purchaser in its
attempted acquisition of AMP
<PAGE>
Board of Directors
TriStar Aerospace Co.
October 31, 1999
Page Two
Incorporated in 1998, and may provide investment banking and financial advisory
services to Purchaser in the future. Goldman, Sachs & Co. provides a full range
of financial advisory and securities services and, in the course of its normal
trading activities, may from time to time effect transactions and hold
securities, including derivative securities, of the Company or Purchaser for its
own account and for the accounts of customers. As of the date hereof, Goldman
Sachs Asset Management, an affiliate of Goldman, Sachs & Co., serves as
investment advisor to various mutual funds which in the aggregate have
accumulated a long position of 915,500 Shares. As of the date hereof, Goldman,
Sachs & Co. accumulated a long position of 124,172 shares of Common Stock, par
value $1.00 per share, of the Purchaser ("Purchaser Common Stock") against which
Goldman, Sachs & Co. is short 98,668 shares of Purchaser Common Stock; and a
long position of $12,000 aggregate principal amount of public debt securities of
Purchaser. In addition, Goldman, Sachs & Co. has written two over-the-counter
call option contracts, convertible collectively into 800,000 shares of Purchaser
Common Stock, which short position is hedged by a long position of 329,000
shares of Purchaser Common Stock.
In connection with this opinion, we have reviewed, among other things, the
Agreement; the Shareholders Agreements (as defined in the Agreement); the
Registration Statement on Form S-1/A of the Company relating to the initial
public offering of the Company and the final Prospectus dated April 30, 1998;
the Annual Report to Stockholders and the Annual Report on Form 10-K of the
Company for the fiscal year ended September 30, 1998; certain interim reports to
stockholders and Quarterly Reports on Form 10-Q of the Company; certain other
communications from the Company to its stockholders; and certain internal
financial analyses and forecasts for the Company prepared by its management. We
also have held discussions with members of the senior management of the Company
regarding their assessment of the Company's past and current business
operations, financial condition and future prospects, including the Company's
recent financial performance and the reasons underlying the recent downward
revisions to the Company's internal forecasts. In addition, we have reviewed the
reported price and trading activity for the Shares, compared certain financial
and stock market information for the Company with similar information for
certain other companies the securities of which are publicly traded, reviewed
the financial terms of certain recent business combinations in the aerospace,
defense and industrial distribution industries specifically and in other
industries generally and performed such other studies and analyses as we
considered appropriate.
We have relied upon the accuracy and completeness of all of the financial and
other information reviewed by us and have assumed such accuracy and completeness
for purposes of rendering this opinion. In addition, we have not made an
independent evaluation or appraisal of the assets and liabilities of the Company
or any of its subsidiaries and we have not been furnished with any such
evaluation or appraisal. In that regard, we have assumed with your consent that
the recently revised internal financial forecasts prepared by the management of
the Company have been reasonably prepared on a basis reflecting the best
currently available estimates and judgments of the Company. We were not
requested to solicit, and did not solicit, interest from other parties with
respect to an acquisition of or other business combination with the Company. Our
advisory services and the opinion expressed herein are provided for the
information and assistance of the Board of
<PAGE>
Board of Directors
TriStar Aerospace Co.
October 31, 1999
Page Three
Directors of the Company in connection with its consideration of the transaction
contemplated by the Agreement and such opinion does not constitute a
recommendation as to whether or not any holder of Shares should tender such
Shares in connection with such transaction.
Based upon and subject to the foregoing and based upon such other matters as we
consider relevant, it is our opinion that as of the date hereof the $9.50 in
cash to be received by the holders of Shares (other than Purchaser and its
subsidiaries) in the Tender Offer and the Merger is fair from a financial point
of view to such holders.
Very truly yours,
/s/ Goldman, Sachs & Co.
- -------------------------------
(Goldman, Sachs & Co.)
<PAGE>
EXHIBIT O
TriStar Aerospace Co. Announces Preliminary Fiscal Year 1999 Results
DALLAS, Nov. 4 -- TriStar Aerospace Co. (NYSE: TSX), a leading provider of
customized inventory management services and a leading distributor of
aerospace fasteners, fastening systems and related hardware, today reported
earnings (unaudited) for the fiscal year ended September 30, 1999.
Sales for the year ended September 30, 1999 were $207.4 million, an increase of
11.6% over the $185.9 million for the same period in 1998. Operating income rose
9.4% to $33.0 million from $30.1 million for the same period in 1998. Net income
decreased 1.2% to $15.6 million, $0.86 per diluted share, compared to $15.8
million, $0.88 per diluted share, for the same period in the prior year.
Quentin Bourjeaurd, Chairman and Chief Executive Officer, commented "TriStar
achieved record sales in 1999. However, demand continued to soften in the
commercial transport sector during the 4th quarter of 1999 and the Company's net
income and earnings per share for 1999 came in below expectations. Increased
sales to the business jet and after-market sectors were not sufficient to offset
the decline in the commercial transport sector. Although we are disappointed
that the results for the year were below expectations, TriStar still maintains a
leading position in aerospace fastner and related hardware services."
As announced previously, TriStar has entered into a definitive merger agreement
with AlliedSignal Inc. (NYSE: ALD) under which AlliedSignal will acquire
TriStar for $9.50 per share in cash. Pursuant to the merger
<PAGE>
agreement, a subsidiary of AlliedSignal will commence, by Friday, November 5,
1999, a tender offer to acquire all of the outstanding shares of TriStar. Based
upon the proposed announcement of the tender offer, TriStar is making public at
this time its preliminary fiscal year 1999 results.
This news release contains "forward-looking statements" within the meaning of
section 21E of the Securities Exchange Act of 1934, as amended. These
forward-looking statements can be identified by the use of predictive,
future-tense or forward-looking terminology, such as "believes," "anticipates,"
"expects," "estimates," "may," "will" or similar terms. Forward-looking
statements also include projections and forecasts and any assumptions relating
to the foregoing. Certain important factors which may cause actual results to
vary materially from these forward-looking statements appear under the heading
"Risk Factors" in the Company's Form 10-K for the period ended September 30,
1998, filed with the Securities and Exchange Commission. All subsequent written
or oral forward-looking statements attributable to the Company or persons acting
on its behalf are expressly qualified by these factors.
Headquartered in Dallas, Texas, TriStar Aerospace Co. is both a leading provider
of customized inventory management services to original equipment manufacturers
and to aircraft facilities as well as a leading distributor of aerospace
fasteners, fastening systems and related hardware. The Company presently has
facilities located throughout the United States, Canada, United Kingdom and
France.
TRISTAR AEROSPACE CO. AND SUBSIDIARIES
Consolidated Statements of Operations
(In thousands, except per share data)
(Unaudited)
<TABLE>
<CAPTION>
Year Ended
September 30,
1999 1998
<S> <C> <C>
Revenues $ 207,442 $ 185,945
Cost of goods sold 141,874 126,372
Gross Profit 65,568 59,573
Selling, general &
administrative expenses 32,592 27,944
Compensation expense of
stock options --- 1,486
Operating Income 32,976 30,143
Interest and other expense
Interest Expense 7,802 5,475
Other Income (259) (163)
Income before Taxes 25,433 24,831
Provision for income taxes 9,846 9,048
Net Income $ 15,587 $ 15,783
Earnings per share:
Basic $ 0.91 $ 0.94
Diluted $ 0.86 $ 0.88
Weighted average
shares outstanding:
Basic 17,168 16,741
Diluted 18,205 18,011
Percentages of Revenue:
Revenue 100.0% 100.0%
Gross Profit 31.6% 32.0%
Operating Expenses 15.7% 15.0%
Operating Income 15.9% 16.2%
Net Income 7.5% 8.5%
</TABLE>
<PAGE>
TRISTAR AEROSPACE CO. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
<TABLE>
<CAPTION>
Year Ended
September 30,
1999 1998
<S> <C> <C>
Cash flows from
operating activities
Net income $ 15,587 $ 15,783
Adjustments to reconcile
net income to net cash
provided by (used in)
operating activities:
Depreciation and
amortization 2,485 1,505
Provision for doubtful
accounts 138 892
Provision for excess
and obsolete inventories 2,045 2,589
Deferred Income Taxes (300) (1,907)
Compensation expense
of stock options --- 1,486
Changes in operating
assets and liabilities
(Increase) decrease in
accounts receivable (4,811) (11,066)
(Increase) decrease in
inventories (11,649) (28,484)
(Increase) decrease in
other assets (2,421) (2,377)
Increase (decrease) in
accounts payable
& accrued expenses 1,359 (857)
Net cash provided by
(used in) operating
activities 2,433 (22,436)
Cash flows from investing
activities:
Acquisition of business (32,189) ---
Capital expenditures (4,147) (3,237)
Net cash provided by
(used in) investing
activities (36,336) (3,237)
Cash flows from
financing activities:
Issuance of common stock 933 1,036
Stock Option income
tax benefits --- 2,075
Borrowings from
revolving facility 5,000 27,000
Payments on revolving
facility (31,500) (500)
Borrowings from issuance
of long-term debt 61,000 ---
Payments on long-term debt (3,000) (500)
Capitalization of loan fees (1,538) ---
Net cash provided by
(used in) financing
activities 30,895 29,111
Net increase (decrease)
in cash (3,008) 3,438
Cash, beginning of period 8,202 4,764
Cash, end of period $ 5,194 $ 8,202
</TABLE>
<PAGE>
TRISTAR AEROSPACE CO. AND SUBSIDIARIES
Consolidated Balance Sheets
(Dollars in thousands, except per share data)
(Unaudited)
<TABLE>
<CAPTION>
September 30, September 30,
1999 1998
<S> <C> <C>
Assets
Current assets:
Cash $ 5,194 $ 8,202
Accounts receivable, net 41,373 34,479
Inventories, net 115,737 94,980
Other assets 6,720 4,254
Total current assets 169,024 141,915
Property & equipment, net 6,784 3,932
Intangibles & other
assets, net 34,266 9,911
Total assets $210,074 $155,758
Liabilities & Stockholders' Equity
Current liabilities:
Current portion of
long-term debt $ 11,000 $ 500
Accounts payable 26,709 21,272
Accrued liabilities & other 6,306 5,447
Total current liabilities 44,015 27,219
Long-term debt 96,000 75,000
Stockholders' equity
Common stock, $.01 par value,
40,000,000 shares authorized 173 170
Additional paid-in capital 26,624 25,694
Retained Earnings 43,262 27,675
Total stockholders' equity 70,059 53,539
Total liabilities &
stockholders' equity $210,074 $155,758
</TABLE>
