SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
May 12, 2000
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(Date of earliest event reported)
CHAMPION INTERNATIONAL CORPORATION
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(Exact name of Registrant as specified in its charter)
New York 1-3053 13-1427390
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(State of (Commission File No.) (IRS Employer
Incorporation) Identification No.)
One Champion Plaza, Stamford, Connecticut 06921
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(Address of principal executive offices, including zip code)
(203) 358-7000
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(Registrant's telephone number, including area code)
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(Former name or former address, if changed since last report)
Item 5. Other Events
On May 12, 2000, Champion International Corporation ("Champion"),
International Paper Company and Condor Acquisition Corporation entered into
an Agreement and Plan of Merger (the "Merger Agreement"), a copy of which
is attached hereto and incorporated herein by reference.
On May 12, 2000, Champion's Board of Directors approved a Rights
Agreement between Champion and ChaseMellon Shareholder Services, L.L.C., as
Rights Agent (the "Rights Agreement"), which is intended to protect against
certain abusive tactics that might be implemented by a third party in an
effort to prevent the consummation of the transactions contemplated by the
Merger Agreement. The Rights Agreement exempts from its provisions any
tender offer or exchange offer for all outstanding shares of Champion
common stock or any merger or similar transaction approved by the Champion
Board of Directors. Accordingly, the execution of the Merger Agreement and
the consummation of the transactions contemplated thereby will not trigger
the provisions of the Rights Agreement. The rights issued pursuant to the
Rights Agreement are attached to the shares of Champion common stock, and
will be represented by certificates representing Champion common stock
until (a) the tenth day following the public announcement that a person has
become the beneficial owner of 20% or more of Champion's common stock or
(b) the tenth business day following the commencement by a person of a
tender offer or exchange offer which would, if consummated, result in such
person becoming the beneficial owner of 20% or more of Champion's common
stock.
Item 7. Financial Statements, Pro Forma Financial Information and
Exhibits.
(c) Exhibits
2.1 Agreement and Plan of Merger, dated as of May 12, 2000,
among Champion International Corporation, International
Paper Company and Condor Acquisition Corporation.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of
1934, as amended, the registrant has duly caused this report to be signed
on its behalf by the undersigned hereunto duly authorized.
Date: May 17, 2000
CHAMPION INTERNATIONAL CORPORATION
By: /s/ Lawrence A. Fox
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Name: Lawrence A. Fox
Title: Vice President and Secretary
EXHIBIT INDEX
Exhibit No. Description
2.1 Agreement and Plan of Merger, dated as of May 12, 2000, among
Champion International Corporation, International Paper
Company and Condor Acquisition Corporation
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
INTERNATIONAL PAPER COMPANY,
CONDOR ACQUISITION CORPORATION
AND
CHAMPION INTERNATIONAL CORPORATION
Dated as of May 12, 2000
TABLE OF CONTENTS
PAGE
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ARTICLE 1
DEFINITIONS
SECTION 1.01. Definitions.............................................. 1
ARTICLE 2
THE OFFER
SECTION 2.01. The Offer................................................ 8
SECTION 2.02. Company Action........................................... 10
SECTION 2.03. Directors................................................ 11
ARTICLE 3
THE MERGER
SECTION 3.01. The Merger............................................... 13
SECTION 3.02. Certificate of Incorporation of the Surviving
Corporation............................................ 13
SECTION 3.03. By-Laws of the Surviving Corporation..................... 13
SECTION 3.04. Directors and Officers of the Surviving Corporation...... 13
SECTION 3.05. Closing.................................................. 14
ARTICLE 4
CONVERSION OF SHARES AND RELATED MATTERS
SECTION 4.01. Conversion of Capital Stock.............................. 14
SECTION 4.02. Exchange of Shares....................................... 15
SECTION 4.03. Exchange of Certificates................................. 15
SECTION 4.04. Company Stock Options and Stock Rights................... 19
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
SECTION 5.01. Due Organization, Good Standing and Corporate Power...... 21
SECTION 5.02. Authorization and Validity of Agreement.................. 21
SECTION 5.03. Capitalization........................................... 21
SECTION 5.04. Consents and Approvals; No Violations.................... 23
SECTION 5.05. Company Reports and Financial Statements................. 24
SECTION 5.06. Information to Be Supplied............................... 25
SECTION 5.07. Absence of Certain Events................................ 25
SECTION 5.08. Litigation............................................... 26
SECTION 5.09. Title to Properties; Encumbrances........................ 26
SECTION 5.10. Compliance with Laws..................................... 27
SECTION 5.11. Company Employee Benefit Plans........................... 27
SECTION 5.12. Employment Relations and Agreement....................... 29
SECTION 5.13. Taxes.................................................... 30
SECTION 5.14. Intellectual Property.................................... 31
SECTION 5.15. Broker's or Finder's Fee................................. 32
SECTION 5.16. Environmental Laws and Regulations....................... 32
SECTION 5.17. State Takeover Statutes.................................. 33
SECTION 5.18. Voting Requirements; Board Approval; Appraisal Rights.... 34
SECTION 5.19. Opinion of Financial Advisor............................. 34
SECTION 5.20. Trust Agreement.......................................... 34
SECTION 5.21. Termination of Existing Agreements....................... 35
ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
SECTION 6.01. Due Organization, Good Standing and Corporate Power...... 35
SECTION 6.02. Authorization and Validity of Agreement.................. 36
SECTION 6.03. Capitalization........................................... 36
SECTION 6.04. Consents and Approvals; No Violations.................... 37
SECTION 6.05. Parent Reports and Financial Statements.................. 38
SECTION 6.06. Information to Be Supplied............................... 39
SECTION 6.07. Absence of Certain Events................................ 40
SECTION 6.08. Litigation............................................... 40
SECTION 6.09. Title to Properties; Encumbrances........................ 40
SECTION 6.10. Compliance with Laws..................................... 41
SECTION 6.11. Parent Employee Benefit Plans............................ 41
SECTION 6.12. Employment Relations and Agreement....................... 43
SECTION 6.13. Taxes.................................................... 44
SECTION 6.14. Intellectual Property.................................... 45
SECTION 6.15. Broker's or Finder's Fee................................. 45
SECTION 6.16. Environmental Laws and Regulations....................... 46
SECTION 6.17. Ownership of Capital Stock............................... 46
SECTION 6.18. No Prior Activities...................................... 46
SECTION 6.19. Financing................................................ 46
ARTICLE 7
TRANSACTIONS PRIOR TO CLOSING DATE
SECTION 7.01. Access to Information Concerning Properties and
Records................................................ 47
SECTION 7.02. Confidentiality.......................................... 47
SECTION 7.03. Conduct of the Business of the Company Pending
the Closing Date....................................... 48
SECTION 7.04. Conduct of the Business of Parent Pending the
Closing Date........................................... 51
SECTION 7.05. Company Shareholder Meeting; Preparation of Proxy
Statement/Prospectus................................... 53
SECTION 7.06. Reasonable Best Efforts.................................. 54
SECTION 7.07. No Solicitation.......................................... 55
SECTION 7.08. Notification of Certain Matters.......................... 58
SECTION 7.09. Antitrust Laws........................................... 58
SECTION 7.10. Directors' and Officers' Insurance....................... 59
SECTION 7.11. Public Announcements..................................... 61
SECTION 7.12. Transfer Tax............................................. 61
SECTION 7.13. NYSE Listing............................................. 61
SECTION 7.14. Affiliates of the Company................................ 62
SECTION 7.15. Employee Benefits........................................ 62
SECTION 7.16. Section 16 Matters....................................... 67
SECTION 7.17. Voting of Shares......................................... 68
ARTICLE 8
CONDITIONS TO THE MERGER
SECTION 8.01. Conditions to Obligations of Each Party.................. 68
SECTION 8.02. Conditions To the Obligations of Parent and
Merger Sub............................................. 68
ARTICLE 9
TERMINATION AND ABANDONMENT
SECTION 9.01. Termination.............................................. 69
SECTION 9.02. Effect of Termination.................................... 70
SECTION 9.03. Payment of Certain Fees.................................. 71
ARTICLE 10
MISCELLANEOUS
SECTION 10.01. Representations and Warranties.......................... 72
SECTION 10.02. Extension; Waiver....................................... 72
SECTION 10.03. Notices................................................. 73
SECTION 10.04. Entire Agreement........................................ 74
SECTION 10.05. Binding Effect; Benefit; Assignment..................... 74
SECTION 10.06. Amendment and Modification.............................. 74
SECTION 10.07. Further Actions......................................... 74
SECTION 10.08. Headings................................................ 74
SECTION 10.09. Enforcement............................................. 75
SECTION 10.10. Counterparts............................................ 75
SECTION 10.11. Applicable Law.......................................... 75
SECTION 10.12. Severability............................................ 75
SECTION 10.13. Waiver of Jury Trial.................................... 75
EXHIBITS
Exhibit A Rule 145 Affiliate Agreement
SCHEDULES
Company Disclosure Letter
Parent Disclosure Letter
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of May 12, 2000 (this
"AGREEMENT"), by and among INTERNATIONAL PAPER COMPANY, a New York
corporation ("PARENT"), CONDOR ACQUISITION CORPORATION, a New York
corporation and a direct wholly-owned subsidiary of Parent ("MERGER SUB"),
and CHAMPION INTERNATIONAL CORPORATION, a New York corporation (the
"COMPANY").
WHEREAS, the Boards of Directors of Parent and the Company each have
determined that it is advisable and in the best interests of each
corporation and their respective shareholders to effect a business
combination between Parent and the Company, and accordingly have agreed to
effect the merger of Merger Sub with and into the Company, with the Company
as the surviving corporation, upon the terms and subject to the conditions
set forth herein (the "MERGER"); and
WHEREAS, by resolutions duly adopted, the respective Boards of
Directors of the Company, Parent and Merger Sub have approved and adopted
this Agreement and the transactions contemplated hereby;
NOW THEREFORE, in consideration of the premises and of the mutual
covenants, representations, warranties and agreements herein contained, the
parties hereto agree as follows:
ARTICLE 1
DEFINITIONS
SECTION 1.01. Definitions. When used in this Agreement, the following
terms shall have the respective meanings specified therefor below (such
meanings to be equally applicable to both the singular and plural forms of
the terms defined).
"ACQUISITION AGREEMENT" shall have the meaning set forth in Section
7.07(b).
"AFFILIATE" of any Person shall mean any Person directly or
indirectly controlling, controlled by, or under common control with, such
Person; provided that, for the purposes of this definition, "control"
(including with correlative meanings, the terms "controlled by" and "under
common control with"), as used with respect to any Person, shall mean the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of such Person, whether through
the ownership of voting securities or partnership interests, by contract or
otherwise.
"AGREEMENT" shall have the meaning set forth in the preamble hereto.
"ANTITRUST AUTHORITIES" shall have the meaning set forth in Section
7.09(d).
"ANTITRUST LAW" shall have the meaning set forth in Section 7.09(d).
"AVERAGE PRICE" shall have the meaning set forth in Section 2.01(a).
"BCL" shall have the meaning set forth in Section 2.02(a).
"BUSINESS DAY" means a day other than a Saturday, a Sunday or a day
on which banks in New York, New York are permitted or required to close.
"CERTIFICATE OF MERGER" shall have the meaning set forth in Section
3.01(a).
"CERTIFICATE" shall have the meaning set forth in Section 4.01(c).
"CLAIMS" shall have the meaning set forth in Section 5.16.
"CLOSING" shall have the meaning set forth in Section 3.05.
"CLOSING DATE" shall have the meaning set forth in Section 3.05.
"CODE" shall have the meaning set forth in Section 5.11(a).
"COMPANY" shall have the meaning set forth in the preamble hereto.
"COMPANY COMMON STOCK" shall mean the Company's common stock, par
value $0.50 per share, including the associated rights (the "RIGHTS") to
purchase the Series C Participating Cumulative Preference Stock of the
Company issued pursuant to the Rights Agreement between the Company and the
rights agent thereunder.
"COMPANY DISCLOSURE LETTER" shall have the meaning set forth in
Article 5.
"COMPANY EMPLOYEE BENEFIT PLANS" shall have the meaning set forth in
Section 5.11(a).
"COMPANY INTELLECTUAL PROPERTY" shall have the meaning set forth in
Section 5.14(a).
"COMPANY MATERIAL ADVERSE EFFECT" shall mean any event, change,
occurrence, effect, fact or circumstance that is materially adverse to (i)
the ability of the Company to perform its obligations under this Agreement
or to consummate the transactions contemplated hereby or (ii) the business,
assets, liabilities, results of operations or financial condition of the
Company and its Subsidiaries, taken as a whole, but shall exclude any
material adverse effect arising out of (i) any change in (x) U.S. or global
economic or industry conditions, (y) changes in U.S. or global financial
markets or conditions or (z) any generally applicable change in law, rule
or regulation or GAAP or interpretation of any of the foregoing and/or (ii)
the announcement of this Agreement or the transactions contemplated hereby
or the termination of the Agreement and Plan of Merger, dated as of
February 17, 2000, by and among the Company, UPM-Kymmene Corporation and
Blue Acquisition, Inc.
"COMPANY MULTIEMPLOYER PLANS" shall have the meaning set forth in
Section 5.11(b).
"COMPANY OPTIONS" shall mean the options to purchase shares of the
Company Common Stock, whether issued pursuant to a Company Employee Benefit
Plan or otherwise.
"COMPANY PREFERRED STOCK" shall have the meaning set forth in Section
5.03(a).
"COMPANY PROPERTY" shall have the meaning set forth in Section 5.16.
"COMPANY RECOMMENDATION" shall have the meaning set forth in Section
7.05(a).
"COMPANY SEC REPORTS" shall have the meaning set forth in Section
5.05(a).
"COMPANY SECURITIES" shall mean shares of the Company Common Stock
and the Company Options.
"COMPANY SHAREHOLDER APPROVAL" shall mean the approval of not less
than two-thirds of the vote of all outstanding shares of Company Common
Stock of this Agreement and the Merger at the Company Shareholder Meeting.
"COMPANY SHAREHOLDER MEETING" shall have the meaning set forth in
Section 7.05(a).
"COMPANY STOCK PLANS" shall have the meaning set forth in Section
4.04(a).
"COMPANY STOCK RIGHTS" shall have the meaning set forth in Section
4.04(a).
"COMPETITION ACT" shall have the meaning set forth in Section 5.04.
"CONTINUING DIRECTORS" shall have the meaning set forth in Section
2.03(a).
"CONTRACTS" shall have the meaning set forth in Section 5.04.
"EFFECTIVE TIME" shall have the meaning set forth in Section 3.01(a).
"ENVIRONMENTAL CLAIMS" shall have the meaning set forth in Section
5.16.
"ENVIRONMENTAL LAW" shall have the meaning set forth in Section 5.16.
"ERISA" shall have the meaning set forth in Section 5.11(a).
"EUROPEAN ANTITRUST LAWS" shall have the meaning set forth in Section
5.04.
"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as
amended.
"EXCHANGE AGENT" shall have the meaning set forth in Section 4.02.
"EXCHANGE FUND" shall have the meaning set forth in Section 4.03(a).
"EXCHANGE RATIO" shall have the meaning set forth in Section 2.01(a).
"EXPENSES" shall have the meaning set forth in Section 9.03(b).
"FUNDING AMOUNT" shall have the meaning set forth in Section 5.20.
"GAAP" shall mean generally accepted accounting principles of the
United States of America, as in effect from time to time.
"GOVERNMENTAL AUTHORITY" shall have the meaning set forth in Section
5.04.
"HAZARDOUS MATERIALS" shall have the meaning set forth in Section
5.16.
"HSR ACT" shall have the meaning set forth in Section 5.04.
"INDEMNIFIED PARTIES" shall have the meaning set forth in Section
7.10(b).
"ISSUANCE OBLIGATION" shall have the meaning set forth in Section
5.03(a).
"LAWS" shall have the meaning set forth in Section 5.04.
"LIENS" shall have the meaning set forth in Section 6.03(b).
"MERGER" shall have the meaning set forth in the first recital
hereto.
"MERGER REGISTRATION STATEMENT" shall have the meaning set forth in
Section 6.06(a).
"MERGER SUB" shall have the meaning set forth in the preamble hereto.
"MERGER SUB COMMON STOCK" shall mean Merger Sub's common stock, par
value $1.00 per share.
"MINIMUM CONDITION" shall have the meaning set forth in Section
2.01(a).
"NAMED EXECUTIVE" shall have the meaning set forth in Section
7.15(j).
"NYSE" shall mean the New York Stock Exchange, Inc.
"OFFER" shall have the meaning set forth in Section 2.01(a).
"OFFER DOCUMENTS" shall have the meaning set forth in Section
2.01(b).
"OFFER REGISTRATION STATEMENT" shall have the meaning set forth in
Section 2.01(b).
"OPTION" shall have the meaning set forth in Section 4.04(a).
"ORDERS" shall have the meaning set forth in Section 5.04.
"ORDERS OF DISPOSITION" shall have the meaning set forth in Section
7.09(b)(iii).
"PARENT" shall have the meaning set forth in the preamble hereto.
"PARENT COMMON STOCK" shall mean Parent's common stock, par value
$1.00 per share.
"PARENT DISCLOSURE LETTER" shall have the meaning set forth in
Article 6.
"PARENT EMPLOYEE BENEFIT PLANS" shall have the meaning set forth in
Section 6.11(a).
"PARENT INTELLECTUAL PROPERTY" shall have the meaning set forth in
Section 6.14(a).
"PARENT MATERIAL ADVERSE EFFECT" shall mean any event, change,
occurrence, effect, fact or circumstance that is materially adverse to (i)
the ability of Parent to perform its obligations under this Agreement or to
consummate the transactions contemplated hereby or (ii) the business,
assets, liabilities, results of operations or financial condition of Parent
and its Subsidiaries, taken as a whole, but shall exclude any material
adverse effect arising out of (i) any change in (x) U.S. or global economic
or industry conditions, (y) changes in U.S. or global financial markets or
conditions or (z) any generally applicable change in law, rule or
regulation, GAAP or interpretation of any of the foregoing and/or (ii) the
announcement of this Agreement or the transactions contemplated hereby.
"PARENT MULTIEMPLOYER PLAN" shall have the meaning set forth in
Section 6.11(b).
"PARENT PREFERRED STOCK" shall have the meaning set forth in Section
6.03(a).
"PARENT PROPERTY" shall have the meaning set forth in Section 6.16.
"PARENT SEC REPORTS" shall have the meaning set forth in Section
6.05(a).
"PERMITS" shall have the meaning set forth in Section 5.10(b).
"PERSON" shall mean and include an individual, a partnership, a joint
venture, a corporation, a trust, an unincorporated organization, a limited
liability company, a group and a government or other department or agency
thereof.
"PHANTOM SHARE" shall have the meaning set forth in Section 7.15(b).
"POST-CLOSING PERIOD" shall have the meaning set forth in Section
7.15(i).
"PROXY STATEMENT/PROSPECTUS" shall mean the proxy
statement/prospectus included in the Merger Registration Statement relating
to the Company Shareholder Meeting.
"RELEASE" shall have the meaning set forth in Section 5.16.
"RETURNS" shall have the meaning set forth in Section 5.13(a).
"RULE 145 AFFILIATES" shall have the meaning set forth in Section
7.14.
"RULE 145 AFFILIATE AGREEMENT" shall have the meaning set forth in
Section 7.14.
"SCHEDULE 14D-9" shall have the meaning set forth in Section 2.02(b).
"SCHEDULE TO" shall have the meaning set forth in Section 2.01(b).
"SEC" shall mean the U.S. Securities and Exchange Commission.
"SECURITIES ACT" shall mean the Securities Act of 1933, as amended.
"SIGNIFICANT SUBSIDIARY" with respect to a Person shall mean any
Subsidiary that constitutes a "significant subsidiary" of such Person
within the meaning of Rule 1-02 of Regulation S-X of the Exchange Act.
"SUBSIDIARY" with respect to a Person shall mean (x) any partnership
of which such Person or any of its Subsidiaries is a general partner or (y)
any other entity in which such Person or any of its Subsidiaries owns or
has the power to vote more than 50% of the equity interests in such entity
having general voting power to participate in the election of the governing
body of such entity.
"SUPERIOR PROPOSAL" shall have the meaning set forth in Section
7.07(a).
"SURVIVING CORPORATION" shall have the meaning set forth in Section
3.01(b).
"TAKEOVER PROPOSAL" shall have the meaning set forth in Section
7.07(a).
"TAXES" shall have the meaning set forth in Section 5.13(a).
"TERMINATION DATE" shall have the meaning set forth in Section
9.01(d)(i).
"TERMINATION FEE" shall have the meaning set forth in Section
9.03(a).
"THIRD PARTY ACQUISITION EVENT" shall have the meaning set forth in
Section 9.03(b).
"TRADING DAY" shall mean any day on which securities are traded on
the NYSE.
"TRANSFER TAXES" shall have the meaning set forth in Section 7.12.
"TRUST AGREEMENT" shall have the meaning set forth in Section 5.20.
"VOTING DEBT" shall have the meaning set forth in Section 5.03(a).
ARTICLE 2
THE OFFER
SECTION 2.01. The Offer. (a) Provided that nothing shall have
occurred that, had the Offer referred to below been commenced, would give
rise to a right to terminate the Offer pursuant to any of the conditions
set forth in Annex I hereto, as promptly as practicable after the date
hereof following the public announcement of the terms of this Agreement
(but in no event later than five Business Days after the date hereof),
Merger Sub shall commence an offer (the "OFFER") to purchase all of the
outstanding shares of Company Common Stock at a price for each share of
Company Common Stock of $50, net to the seller in cash, and a number of
shares of Parent Common Stock equal to the Exchange Ratio. The Offer shall
be subject only to the condition that there shall be validly tendered in
accordance with the terms of the Offer, prior to the expiration date of the
Offer and not withdrawn, a number of shares of Company Common Stock that,
together with the shares of Company Common Stock then owned by Parent
and/or Merger Sub, represents at least two-thirds of the shares of Company
Common Stock outstanding on a fully-diluted basis (the "MINIMUM CONDITION")
and to the other conditions set forth in Annex I hereto. Merger Sub
expressly reserves the right to waive any of the conditions to the Offer
and to make any change in the terms of or conditions to the Offer; provided
that (i) the Minimum Condition may be amended or waived only with the prior
written consent of the Company and (ii) no change may be made that changes
the form of consideration to be paid, decreases the price per share of
Company Common Stock or the number of shares of Company Common Stock sought
in the Offer, imposes conditions to the Offer in addition to those set
forth in Annex I, extends the expiration date of the Offer beyond the
initial expiration date of the Offer (which shall be the 20th Business Day
after the commencement of the Offer) or makes any other change which is
adverse to the holders of the shares of Company Common Stock.
Notwithstanding the foregoing, without the consent of the Company, Merger
Sub shall have the right to extend the Offer (i) for one or more periods
(not in excess of 10 Business Days each) but in no event ending later than
September 30, 2000 if, at the scheduled or extended expiration date of the
Offer, any of the conditions to the Offer shall not have been satisfied or
waived, until such conditions are satisfied or waived and (ii) for any
period required by any rule, regulation, interpretation or position of the
SEC or the staff thereof applicable to the Offer or any period required by
applicable law. If any of the conditions to the Offer is not satisfied or
waived on any scheduled expiration date of the Offer, at the request of the
Company, Parent shall cause Merger Sub to, and Merger Sub shall, extend the
Offer, if such condition or conditions could reasonably be expected to be
satisfied, from time to time until such conditions are satisfied or waived;
provided that Merger Sub shall not be required to extend the Offer beyond
September 30, 2000. Subject to the foregoing and upon the terms and subject
to the conditions of the Offer, Merger Sub shall, and Parent shall cause it
to, accept for payment and pay for, as promptly as practicable after the
expiration of the Offer, all shares of Company Common Stock validly
tendered and not withdrawn pursuant to the Offer. If Merger Sub does not
accept for payment the shares of Company Common Stock in the Offer on the
initial expiration date of the Offer by virtue of the failure of any of the
regulatory conditions to the Offer specified in clause (i)(B) of the
preamble to Annex I or clauses (c) or (d) of Annex I to be satisfied,
Parent and Merger Sub hereby agree to pay to the holders of shares of
Company Common Stock cash interest at a rate of 8.00% per annum (calculated
on the basis of a 365 day calendar year) on the $75 per share offer
consideration from and after the initial expiration date of the Offer until
the acceptance for payment of shares of Company Common Stock validly
tendered and not withdrawn in the Offer. "EXCHANGE RATIO" (as the same may
be adjusted pursuant to Section 4.01(d)) shall be equal to (i) $25 divided
by the Average Price (as defined below), if the Average Price is greater
than or equal to $34.00; or (ii) .7353, if the Average Price is less than
$34.00. "AVERAGE PRICE" means the average (rounded to the nearest 1/10,000)
of the volume weighted averages (rounded to the nearest 1/10,000) of the
trading prices of Parent Common Stock on the NYSE, as reported by Bloomberg
Financial Markets (or such other source as the parties shall agree in
writing), for the 15 Trading Days randomly selected by lot by Parent and
the Company together from the 30 consecutive Trading Days ending on the
third Trading Day immediately preceding the date on which all of the
conditions to the Offer set forth in Annex I hereto have been satisfied or
waived.
(b) As soon as practicable on the date of commencement of the Offer,
Parent and Merger Sub shall file with the SEC a Tender Offer Statement on
Schedule TO (the "SCHEDULE TO") and a Registration Statement on Form S-4
(the "OFFER REGISTRATION STATEMENT") with respect to the Offer (the
Schedule TO, the Offer Registration Statement and such documents included
therein pursuant to which the Offer will be made, together with any
supplements or amendments thereto, the "OFFER DOCUMENTS"). Parent, Merger
Sub and the Company each agrees promptly to correct any information
provided by it for use in the Offer Documents if and to the extent that
such information shall have become false or misleading in any material
respect. Parent and Merger Sub agree to take all steps necessary to cause
the Schedule TO and the Offer Registration Statement as so corrected to be
filed with the SEC and the other Offer Documents as so corrected to be
disseminated to holders of shares of Company Common Stock, in each case as
and to the extent required by applicable federal securities laws. The
Company and its counsel shall be given an opportunity to review and comment
on the Offer Documents prior to their being filed with the SEC or
disseminated to the holders of shares of Company Common Stock. Each of
Parent and Merger Sub agrees to provide the Company and its counsel with
any comments Parent and Merger Sub or their counsel may receive from the
SEC or its staff with respect to the Offer Documents promptly after the
receipt of such comments and shall provide the Company and its counsel an
opportunity to participate in the response of Parent or Merger Sub to such
comments, including by participating with Parent and Merger Sub or their
counsel in any discussions with the SEC or its staff.
SECTION 2.02. Company Action. (a) The Company hereby consents to the
Offer and represents that its Board of Directors, at a meeting duly called
and held, has (i) unanimously determined that this Agreement and the
transactions contemplated hereby, including the Offer and the Merger, are
fair to and in the best interests of the Company's stockholders, (ii)
unanimously approved and adopted this Agreement and the transactions
contemplated hereby, including the Offer and the Merger, in accordance with
the requirements of the New York Business Corporation Law (the "BCL") and
(iii) subject to Section 7.07, unanimously resolved to recommend acceptance
of the Offer and approval and adoption of this Agreement and the Merger by
its stockholders. The Company further represents that Goldman, Sachs & Co.
has delivered to the Company's Board of Directors its written opinion that
the consideration to be paid in the Offer and the Merger is fair to the
holders of shares of Company Common Stock from a financial point of view.
The Company has been advised that all of its directors and executive
officers who own shares of Company Common Stock intend either to tender
their shares of Company Common Stock pursuant to the Offer or to vote in
favor of the Merger. The Company will promptly furnish Parent with a list
of its stockholders, mailing labels and any available listing or computer
file containing the names and addresses of all record holders of shares of
Company Common Stock and lists of securities positions of shares of Company
Common Stock held in stock depositories, in each case true and correct as
of the most recent practicable date, and will provide to Parent such
additional information (including updated lists of stockholders, mailing
labels and lists of securities positions) and such other assistance as
Parent may reasonably request in connection with the Offer.
(b) As soon as practicable on the day that the Offer is commenced, the
Company shall file with the SEC and disseminate to holders of shares of
Company Common Stock, in each case as and to the extent required by
applicable federal securities laws, a Solicitation/Recommendation Statement
on Schedule 14D-9 (together with any amendments or supplements thereto, the
"SCHEDULE 14D-9") that, subject to Section 7.07, shall reflect the
recommendations of the Company's Board of Directors referred to above;
provided, however, that prior to the consummation of the Offer, the Board
of Directors of the Company may amend, modify, withdraw, condition or
qualify such recommendations or may take any action or make any statement
inconsistent with such recommendations, to the extent a majority of the
Company's Board of Directors concludes in its good faith judgment, after
receiving the advice of outside legal counsel, that it is necessary to take
such action in order to comply with its fiduciary duties to shareholders
under applicable law. The Company agrees to provide Parent and its counsel
with any comments the Company or its counsel may receive from the SEC or
its staff with respect to the Schedule 14D-9 promptly after the receipt of
such comments and shall provide Parent and its counsel an opportunity to
participate in the response of the Company to such comments, including by
participating with the Company or its counsel in any discussions with the
SEC or its staff. The Company, Parent and Merger Sub each agree promptly to
correct any information provided by it for use in the Schedule 14D-9 if and
to the extent that it shall have become false or misleading in any material
respect. The Company agrees to take all steps necessary to cause the
Schedule 14D-9 as so corrected to be filed with the SEC and to be
disseminated to holders of shares of Company Common Stock, in each case as
and to the extent required by applicable federal securities laws. Parent
and its counsel shall be given an opportunity to review and comment on the
Schedule 14D-9 prior to its being filed with the SEC.
SECTION 2.03. Directors. (a) Effective upon the acceptance for
payment of any shares of Company Common Stock pursuant to the Offer, Parent
shall be entitled to designate the number of directors, rounded up to the
next whole number, on the Company's Board of Directors that equals the
product of (i) the total number of directors on the Company's Board of
Directors (giving effect to the election of any additional directors
pursuant to this Section) and (ii) the percentage that the number of shares
of Company Common Stock beneficially owned by Parent and/or Merger Sub
(including shares of Company Common Stock accepted for payment) bears to
the total number of shares of Company Common Stock outstanding, and the
Company shall take all action necessary to cause Parent's designees to be
elected or appointed to the Company's Board of Directors, including
increasing the number of directors, and seeking and accepting resignations
of incumbent directors. At such time, the Company will also use its best
efforts to cause individuals designated by Parent to constitute the number
of members, rounded up to the next whole number, on (i) each committee of
the Board and (ii) each board of directors of each Subsidiary of the
Company (and each committee thereof) that represents the same percentage as
such individuals represent on the Board of Directors of the Company.
Notwithstanding the provisions of this Section 2.03, the parties hereto
shall use their respective best efforts to ensure that at least two of the
members of the Company's Board of Directors shall, at all times prior to
the Effective Time, be directors of the Company who were directors of the
Company on the date hereof (the "CONTINUING DIRECTORS"); provided that if
there shall be in office fewer than two Continuing Directors for any
reason, the Company's Board of Directors shall cause a person designated by
the remaining Continuing Director to fill such vacancy who shall be deemed
to be a Continuing Director for all purposes of this Agreement, or if no
Continuing Directors then remain, the other directors of the Company then
in office shall designate two persons to fill such vacancies who will not
be officers or employees or affiliates of the Company, Parent or Merger Sub
or any of their respective Subsidiaries and such persons shall be deemed to
be Continuing Directors for all purposes of this Agreement.
(b) The Company's obligations to appoint Parent's designees to the
Company's Board of Directors shall be subject to Section 14(f) of the
Exchange Act and Rule 14f-1 promulgated thereunder. The Company shall
promptly take all actions, and shall include in the Schedule 14D-9 such
information with respect to the Company and its officers and directors, as
Section 14(f) and Rule 14f-1 require in order to fulfill its obligations
under this Section, so long as Parent shall have provided to the Company on
a timely basis the information referred to in the following sentence.
Parent shall supply to the Company in writing and be solely responsible for
any information with respect to itself and its nominees, officers,
directors and affiliates required by Section 14(f) and Rule 14f-1.
(c) Following the election or appointment of Parent's designees
pursuant to Section 2.03(a) and until the Effective Time, the approval of a
majority of the Continuing Directors shall be required to authorize (and
such authorization shall constitute the authorization of the Company's
Board of Directors and no other action on the part of the Company,
including any action by any other director of the Company, shall be
required to authorize) any termination of this Agreement by the Company,
any amendment of this Agreement requiring action by the Company's Board of
Directors, any extension of time for performance of any obligation or
action hereunder by Parent or Merger Sub, any waiver of compliance with any
of the agreements or conditions contained herein for the benefit of the
Company, any consent or action by the Board of Directors of the Company
hereunder and any other action of the Company hereunder which adversely
affects the holders of shares of Company Common Stock (other than Parent or
Purchaser).
ARTICLE 3
THE MERGER
SECTION 3.01. The Merger. (a) Upon the terms and subject to the
conditions of this Agreement, as soon as practicable after satisfaction or,
to the extent permitted hereby, waiver of all conditions to the Merger set
forth herein, a certificate of merger (the "CERTIFICATE OF MERGER") shall
be duly prepared, executed and acknowledged by Merger Sub and the Company
in accordance with the BCL and shall be filed with the Secretary of State
of New York. The Merger shall become effective upon the filing of the
Certificate of Merger (or at such later time reflected in such Certificate
of Merger as shall be agreed to by Parent and the Company). The date and
time when the Merger shall become effective is hereinafter referred to as
the "EFFECTIVE TIME."
(b) At the Effective Time, Merger Sub shall be merged with and into
the Company and the separate corporate existence of Merger Sub shall cease,
and the Company shall continue as the surviving corporation under the laws
of the State of New York (the "SURVIVING CORPORATION").
(c) From and after the Effective Time, the Merger shall have the
effects set forth in this Agreement and in Section 906 of BCL.
SECTION 3.02. Certificate of Incorporation of the Surviving
Corporation. The Certificate of Incorporation of the Merger Sub, as in
effect immediately prior to the Effective Time, shall be the Certificate of
Incorporation of the Surviving Corporation.
SECTION 3.03. By-Laws of the Surviving Corporation. The By-Laws of
the Merger Sub, as in effect immediately prior to the Effective Time, shall
be the By-Laws of the Surviving Corporation.
SECTION 3.04. Directors and Officers of the Surviving Corporation. At
the Effective Time, the directors of Merger Sub immediately prior to the
Effective Time shall be the directors of the Surviving Corporation, each of
such directors to hold office, subject to the applicable provisions of the
BCL and the Certificate of Incorporation and By-Laws of the Surviving
Corporation, until the next annual shareholders' meeting of the Surviving
Corporation and until their respective successors shall be duly elected or
appointed and qualified. At the Effective Time, the officers of the Company
immediately prior to the Effective Time shall, subject to the applicable
provisions of the Certificate of Incorporation and By-Laws of the
Surviving Corporation, be the officers of the Surviving Corporation until
their respective successors shall be duly elected or appointed and
qualified.
SECTION 3.05. Closing. The closing of the Merger (the "CLOSING")
shall be held at the offices of Davis Polk & Wardwell, 450 Lexington
Avenue, New York, New York 10017 as soon as practicable, but in any event
within three (3) Business Days after the last of the conditions (excluding
conditions that, by their nature, cannot be satisfied until the Closing
Date) set forth in Article 8 hereof is satisfied or waived or at such other
time and date as the parties hereto shall agree in writing. Such date is
herein referred to as the "CLOSING DATE."
ARTICLE 4
CONVERSION OF SHARES AND RELATED MATTERS
SECTION 4.01. Conversion of Capital Stock. At the Effective Time, by
virtue of the Merger:
(a) Cancellation of Treasury Stock and Stock Owned by Parent and
Merger Sub. All shares of Company Common Stock owned by the Company as
treasury stock and any shares of Company Common Stock owned by Parent,
Merger Sub or any Subsidiary of Parent or Merger Sub immediately prior to
the Effective Time shall, by virtue of the Merger, and without any action
on the part of the holder thereof, no longer be outstanding, shall be
canceled and retired without payment of any consideration therefor and
shall cease to exist.
(b) Capital Stock of Merger Sub. Each share of Merger Sub Common Stock
outstanding immediately prior to the Effective Time shall be converted into
and become one share of common stock of the Surviving Corporation.
(c) Conversion of Company Common Stock. Except as provided in clause
(a) of this Section 4.01, each share of Company Common Stock outstanding
immediately prior to the Effective Time shall be converted into and shall
be canceled in exchange for the right to receive from Parent the same
amount of cash (including any cash interest payable pursuant to Section
2.01) and the same number of shares of Parent Common Stock paid in the
Offer. At the Effective Time, all Company Common Stock shall no longer be
outstanding, shall be canceled and retired and shall cease to exist, and
each certificate (a "CERTIFICATE") formerly representing any of such
Company Common Stock shall thereafter represent only the right to receive
cash and the number of whole shares of Parent Common Stock into which the
Company Common Stock represented by such Certificate is converted pursuant
to this Section 4.01(c) and the right, if any, to receive pursuant to
Section 4.03(e) cash in lieu of fractional shares of Parent Common Stock
and any dividend or distribution pursuant to Section 4.03(c), in each case
without interest.
(d) In the event that, subsequent to the date of this Agreement but
prior to the Effective Time, the Company changes the number of shares of
Company Common Stock, or Parent changes the number of shares of Parent
Common Stock, issued and outstanding as a result of a stock split, stock
combination, stock dividend, recapitalization, redenomination of share
capital or other similar transaction, the Exchange Ratio and other items
dependent thereon shall be appropriately adjusted.
SECTION 4.02. Exchange of Shares. Prior to the Effective Time, Parent
shall appoint a bank or trust company reasonably acceptable to the Company
as exchange agent (the "EXCHANGE AGENT") for the purposes of exchanging the
Certificates for cash and the whole number of shares of Parent Common Stock
into which the shares of Company Common Stock formerly represented thereby
have been converted and cash in lieu of fractional shares of Parent Common
Stock. Promptly after the Effective Time, Parent will send, or will cause
the Exchange Agent to send, to each holder of record of Company Common
Stock as of the Effective Time (i) a letter of transmittal (which shall
specify that delivery shall be effected, and risk of loss and title to the
Certificates shall pass, only upon delivery of the Certificates to the
Exchange Agent and shall be in customary form and have such other customary
provisions as the Surviving Corporation or Parent may reasonably specify)
providing instructions for use in effecting the surrender of Certificates
in exchange for cash and the whole number of shares of Parent Common Stock
into which the shares of Company Common Stock formerly represented thereby
have been converted and cash in lieu of fractional shares of Parent Common
Stock.
SECTION 4.03. Exchange of Certificates. (a) Exchange Agent. Within
three Business Days following the Effective Time, Parent shall deposit with
the Exchange Agent (i) as nominee for the benefit of the holders of Company
Common Stock, the aggregate amount of cash (including any cash interest
payable under Section 2.01) and the aggregate number of shares of Parent
Common Stock to be issued pursuant to Section 4.01(c) and (ii) an amount of
cash sufficient to permit the Exchange Agent to make the necessary payments
of cash in lieu of fractional shares of Parent Common Stock in accordance
with Section 4.03(e) (such cash and shares of Parent Common Stock, together
with any dividends or distributions with respect thereto being hereinafter
referred to as the "EXCHANGE FUND"), to be held for the benefit of and
distributed to the holders of Company Common Stock in accordance with this
Section. The Exchange Agent shall invest any cash included in the Exchange
Fund as directed by the Surviving Corporation on a daily basis in direct
obligations of the United States, obligations for which the full faith and
credit of the United States is pledged to provide for the payment of
principal and interest, commercial paper rated the highest quality by
Moody's Investors Services, Inc. or Standard & Poor's Ratings Group or
certificates of deposit, bank repurchase agreements or bankers' acceptances
of a commercial bank having at least $100,000,000 in assets, or in money
market funds which are invested in the foregoing; provided that no such
investment or loss thereon shall affect the amounts payable to the
Company's shareholders pursuant to this Article 4. Parent and the Surviving
Corporation shall replace any monies lost through an investment made
pursuant to this Section 4.03. Any interest and other income resulting from
such investments shall promptly be paid to the Surviving Corporation.
(b) Exchange Procedures. Upon surrender of a Certificate for
cancellation to the Exchange Agent, together with the letter of transmittal
referred to in Section 4.02 duly executed and completed in accordance with
its terms, the holder of such Certificate shall be entitled to receive in
exchange therefor (i) the amount of cash and a certificate or certificates
representing the whole number of shares of Parent Common Stock into which
the shares of Company Common Stock represented by such Certificate have
been converted in accordance with Section 4.01(c), (ii) the amount of
dividends or other distributions, if any, with a record date on or after
the Effective Time which theretofore became payable with respect to such
shares of Parent Common Stock, and (iii) the cash amount payable in lieu of
fractional shares of Parent Common Stock in accordance with Section
4.03(e), in each case which such holder has the right to receive pursuant
to the provisions of this Article 4, and the Certificate so surrendered
shall forthwith be canceled. In no event shall the holder of any
Certificate be entitled to receive interest on any funds to be received in
the Merger. In the event of a transfer of ownership of shares of Company
Common Stock which is not registered in the transfer records of the
Company, the amount of cash and a certificate or certificates representing
that whole number of shares of Parent Common Stock into which such shares
of Company Common Stock have been converted in accordance with Section
4.01(c), plus the cash amount payable in lieu of fractional shares of
Parent Common Stock in accordance with Section 4.03(e), may be issued to a
transferee if the Certificate representing such Company Common Stock is
presented to the Exchange Agent accompanied by all documents required to
evidence and effect such transfer and by evidence that any applicable stock
transfer taxes have been paid. Until surrendered as contemplated by this
Section 4.03(b) and subject to Section 4.03(c), each Certificate shall,
after the Effective Time, represent for all purposes only the right to
receive the amount of cash and the whole number of shares of Parent Common
Stock into which the number of shares of Company Common Stock shown thereon
has been converted in accordance with Section 4.01(c), plus the cash amount
payable in lieu of fractional shares of Parent Common Stock in accordance
with Section 4.03(e). Notwithstanding the foregoing, certificates
representing Company Common Stock surrendered for exchange by any Person
constituting an "Affiliate" of the Company for purposes of Section 7.14
shall not be exchanged until Parent has received a Rule 145 Affiliate
Agreement (as defined in Section 7.14) as provided in Section 7.14.
(c) Distributions With Respect To Unexchanged Shares. No dividends or
other distributions declared, made or paid after the Effective Time with
respect to shares of Parent Common Stock with a record date on or after the
Effective Time shall be paid to the holder of any unsurrendered Certificate
with respect to the shares of Parent Common Stock represented thereby and
no cash payment in lieu of fractional shares of Parent Common Stock shall
be paid to any such holder pursuant to Section 4.03(e) until the holder of
record of such Certificate shall surrender such Certificate in accordance
with this Section. Subject to the effect of applicable laws, following
surrender of any such Certificate, there shall be paid to the record holder
of the certificates representing shares of Parent Common Stock, without
interest, (i) at the time of such surrender, the amount of dividends or
other distributions, if any, with a record date on or after the Effective
Time which theretofore became payable, but which were not paid by reason of
the immediately preceding sentence, with respect to such shares of Parent
Common Stock and (ii) at the appropriate payment date, the amount of
dividends or other distributions with a record date on or after the
Effective Time but prior to surrender and a payment date subsequent to
surrender payable with respect to such shares of Parent Common Stock.
Dividends or other distributions with a record date on or after the
Effective Time but prior to surrender of Certificates by holders thereof
payable in respect of shares of Parent Common Stock held by the Exchange
Agent shall be held in trust for the benefit of such holders of
Certificates.
(d) No Further Ownership Rights In Company Common Stock. All shares of
Parent Common Stock issued and all cash paid upon the surrender for
exchange of Certificates in accordance with the terms hereof (including any
cash paid pursuant to Section 4.03(e)) shall be deemed to have been issued
at the Effective Time in full satisfaction of all rights pertaining to the
shares of Company Common Stock represented thereby, subject, however, to
the Surviving Corporation's obligation to pay any dividends which may have
been declared by the Company on the shares of Company Common Stock in
accordance with the terms of this Agreement and which remained unpaid at
the Effective Time. From and after the Effective Time, the stock transfer
books of the Company shall be closed and there shall be no further
registration of transfers thereon of the shares of Company Common Stock
which were outstanding immediately prior to the Effective Time. If, after
the Effective Time, Certificates are presented to the Surviving Corporation
for any reason, they shall be canceled and exchanged as provided in this
Section.
(e) No Fractional Shares. No certificate or scrip representing
fractional shares of Parent Common Stock will be issued in the Offer or the
Merger upon the surrender for exchange of Certificates, and such fractional
shares of Parent Common Stock will not entitle the owner thereof to vote or
to any rights of a holder of shares of Parent Common Stock. In lieu of any
such fractional shares of Parent Common Stock, each holder of Certificates
who would otherwise have been entitled to a fraction of a share of Parent
Common Stock in exchange for such Certificates (after taking into account
all Certificates delivered by such holder) pursuant to this Section shall
receive from the Exchange Agent, as applicable, a cash payment in lieu of
such fractional share of Parent Common Stock, determined by multiplying (A)
the average of the last reported sales prices of Parent Common Stock, as
reported on the NYSE, on each of the 20 Trading Days ending on the third
Trading Day immediately preceding the acceptance for payment of shares of
Company Common Stock in the Offer by (B) the fractional share of Parent
Common Stock to which such holder would otherwise be entitled.
(f) Termination of Exchange Fund. Any portion of the Exchange Fund
which remains undistributed to the shareholders of the Company for one (1)
year after the Effective Time shall be delivered to or as directed by
Parent, upon demand, and any holders of Certificates who have not
theretofore complied with this Article 4 shall thereafter look only to
Parent (subject to abandoned property, escheat and other similar laws) as a
general creditor for payment of their claim for shares of Parent Common
Stock, any cash in lieu of fractional shares of Parent Common Stock and any
dividends or distributions with respect to shares of Parent Common Stock.
Neither Parent nor the Surviving Corporation shall be liable to any holder
of any Certificate for cash or shares of Parent Common Stock (or dividends
or distributions with respect thereto), or cash payable in respect of
fractional shares of Parent Common Stock, delivered to a public official
pursuant to any applicable abandoned property, escheat or similar law. Any
securities or cash amounts remaining unclaimed by holders of Certificates
five years after the Effective Time (or such earlier date immediately prior
to such time as such amounts would otherwise escheat to or become property
of any governmental entity) shall, to the extent permitted by applicable
law, become the property of the Surviving Corporation free and clear of any
claims or interest of any Person previously entitled thereto.
(g) Lost, Stolen or Destroyed 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 Parent, the posting by such person of a bond
in such reasonable amount as Parent may direct as indemnity against any
claim that may be made against it with respect to such Certificate, the
Exchange Agent will deliver in exchange for such lost, stolen or destroyed
Certificate the cash and the whole number of shares of Parent Common Stock
into which the shares of Company Common Stock formerly represented thereby
have been converted, any cash in lieu of fractional shares of Parent Common
Stock, and unpaid dividends and distributions in respect of or on shares of
Parent Common Stock deliverable in respect thereof, pursuant to this
Agreement.
(h) Withholding Rights. Each of the Surviving Corporation and Parent
shall be entitled to deduct and withhold from the cash and the shares of
Parent Common Stock (and any dividends or distributions thereon) and cash
in lieu of fractional shares of Parent Common Stock otherwise payable
hereunder to any holder of Certificates in respect of the shares of Company
Common Stock formerly represented thereby such amounts as it is required to
deduct and withhold with respect to the making of such payment under any
provision of federal, state, local or foreign income tax law. To the extent
that the Surviving Corporation or Parent so withholds those amounts, such
withheld amounts shall be treated for all purposes of this Agreement as
having been paid to the holder of Company Common Stock in respect of which
such deduction and withholding was made by the Surviving Corporation or
Parent, as the case may be.
SECTION 4.04. Company Stock Options and Stock Rights. (a) As soon as
practicable following the date of this Agreement, the Board of Directors of
the Company (or the appropriate committee thereof) shall adopt such
resolutions, take such actions and obtain such consents as may be required
to effect the following, effective at the Effective Time:
(i) each option granted to an employee or former employee of the
Company (each, an "OPTION") to purchase shares of Company Common
Stock theretofore granted under the Company's stock plans, programs,
arrangements or agreements ("COMPANY STOCK PLANS") which is
outstanding and unexercised immediately prior to the Effective Time,
whether or not vested or exercisable, shall be cancelled in exchange
for a single lump sum cash payment (less any applicable income or
employment tax withholding) payable by Parent at the Effective Time
and equal to the product of (x) the number of shares of Company
Common Stock subject to such Option immediately prior to the
Effective Time and (y) the excess, if any, of $75 over the exercise
price per share of Company Common Stock of such Option; and
(ii) each restricted stock unit granted to an employee or former
employee of the Company (each, a "COMPANY STOCK RIGHT") under any
Company Stock Plan, whether or not vested, outstanding immediately
prior to the Effective Time shall be cancelled in exchange for a
single lump sum cash payment (less any applicable income or
employment tax withholding) payable by Parent at the Effective Time
and equal to $75.
(b) Prior to the Effective Time, the Company shall use its reasonable
best efforts to take all actions (including, if appropriate, amending the
terms of the Company's stock option or compensation plans or arrangements)
and obtain such consents as are necessary to give the effect to the
transactions contemplated by Section 4.04(a).
(c) As soon as practicable after the Effective Time, Parent shall
deliver to the holders of Options and Company Stock Rights appropriate
notices setting forth such holders' rights pursuant to the applicable
Company Stock Plans, and the agreements evidencing the grants of such
Options and Company Stock Rights shall continue in effect on the same terms
and conditions (subject to the adjustments required by this Section 4.04
after giving effect to the Merger).
(d) Except as disclosed in writing to Parent prior to the date hereof,
the Company agrees that it will not grant any stock options, stock
appreciation rights, stock units, deferred stock awards or other rights to
acquire Company Common Stock or any other interest in Company Common Stock
or any other equity security of the Company and will not take any action to
accelerate the exercisability or vesting of Options or Company Stock
Rights, and/or permit cash payments to holders of Options or Company Stock
Rights with respect to such Options or Company Stock Rights.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as disclosed in (i) the Company's disclosure letter delivered
concurrently with the delivery of this Agreement (the "COMPANY DISCLOSURE
LETTER") or (ii) the Company SEC Reports (as defined below) made or filed
prior to the date of this Agreement, the Company hereby represents and
warrants to Parent and Merger Sub as follows:
SECTION 5.01. Due Organization, Good Standing and Corporate Power.
Each of the Company and its Significant Subsidiaries is a corporation duly
organized, validly existing and in good standing (with respect to
jurisdictions which recognize the concept of good standing) under the laws
of the jurisdiction of its incorporation and each such Person has all
requisite corporate power and authority to own, lease and operate its
properties and to carry on its business as now being conducted, except
where the failure to be so organized, existing and in good standing or to
have such power and authority could not reasonably be expected to,
individually or in the aggregate, have a Company Material Adverse Effect.
The Company and each of its Significant Subsidiaries is duly qualified or
licensed to do business and is in good standing in each jurisdiction in
which the property owned, leased or operated by it or the nature of the
business conducted by it makes such qualification necessary, except in such
jurisdictions where the failure to be so qualified or licensed and in good
standing could not reasonably be expected to, individually or in the
aggregate, have a Company Material Adverse Effect. Other than as set forth
in Section 5.01 of the Company Disclosure Letter, the respective
Certificates of Incorporation and By-Laws or other organizational documents
of the Significant Subsidiaries of the Company do not contain any provision
limiting or otherwise restricting the ability of the Company to control its
Significant Subsidiaries. Section 5.01 of the Company Disclosure Letter
sets forth a list of all Significant Subsidiaries of the Company and their
respective jurisdictions of incorporation or organization and identifies
the Company's (direct or indirect) percentage of equity ownership therein.
SECTION 5.02. Authorization and Validity of Agreement. The Company
has full corporate power and authority to execute and deliver this
Agreement, to perform its obligations hereunder and, subject to obtaining
the Company Shareholder Approval, to consummate the transactions
contemplated hereby. The execution, delivery and performance of this
Agreement by the Company, and the consummation by it of the transactions
contemplated hereby, have been duly authorized and unanimously approved by
its Board of Directors and no other corporate action on the part of the
Company is necessary to authorize the execution, delivery and performance
of this Agreement by the Company and the consummation of the transactions
contemplated hereby, other than obtaining the Company Shareholder Approval.
This Agreement has been duly executed and delivered by the Company and is a
valid and binding obligation of the Company enforceable against the Company
in accordance with its terms, except to the extent that its enforceability
may be subject to applicable bankruptcy, insolvency, reorganization,
moratorium and similar laws affecting the enforcement of creditors' rights
generally and by general equitable principles.
SECTION 5.03. Capitalization. (a) The authorized capital stock of the
Company consists of 250,000,000 shares of Company Common Stock and
8,531,431 shares of preferred stock, par value $1.00 per share (the
"COMPANY PREFERRED STOCK"). At the close of business on May 11, 2000: (i)
96,851,138 shares of Company Common Stock were issued and outstanding, (ii)
3,900,736 shares of Company Common Stock were reserved for issuance under
the Company's stock option and stock benefit plans and arrangements, (iii)
no shares of Company Preferred Stock were issued and outstanding and (iv)
15,427,059 shares of Company Common Stock were held by the Company in its
treasury. All issued and outstanding shares of capital stock of the Company
have been duly authorized and validly issued and are fully paid and
nonassessable. Except as set forth in Section 5.03(a) of the Company
Disclosure Letter and other than the Rights, there are no outstanding or
authorized options, warrants, rights, subscriptions, claims of any
character, agreements, obligations, convertible or exchangeable securities,
or other commitments, contingent or otherwise, relating to shares of
capital stock or other equity interests of the Company or any of its
Subsidiaries, pursuant to which the Company or any of its Subsidiaries is
or may become obligated to issue shares of its capital stock or other
equity interests or any securities convertible into, exchangeable for, or
evidencing the right to subscribe for, any shares of the capital stock or
other equity interests of the Company or any of its Subsidiaries (each an
"ISSUANCE OBLIGATION"). There are no outstanding obligations of the Company
to repurchase, redeem or otherwise acquire any outstanding securities of
the Company. The Company has no authorized or outstanding bonds,
debentures, notes or other indebtedness the holders of which have the right
to vote (or convertible or exchangeable into or exercisable for securities
the holders of which have the right to vote) with the shareholders of the
Company on any matter ("VOTING DEBT"). Except as set forth in Section
5.03(a) of the Company Disclosure Letter, there are no restrictions of any
kind which prevent or restrict the payment of dividends by the Company or
any of its Subsidiaries and there are no limitations or restrictions on the
right to vote, sell or otherwise dispose of such capital stock or other
ownership interests.
(b) All of the issued and outstanding shares of capital stock of each
Significant Subsidiary are validly existing, fully paid and non-assessable.
Except as set forth in the Company SEC Reports or Section 5.03(b) of the
Company Disclosure Letter, no Significant Subsidiary of the Company has
outstanding Voting Debt and no Significant Subsidiary of the Company is
bound by, obligated under, or party to an Issuance Obligation with respect
to any security of the Company or any Significant Subsidiary of the Company
and there are no obligations of the Company or any of its Significant
Subsidiaries to repurchase, redeem or otherwise acquire any outstanding
securities of any of its Significant Subsidiaries or any capital stock of,
or other ownership interests in, any of its Significant Subsidiaries.
(c) Except for the Company's interest in its Significant Subsidiaries,
and as set forth in the Company SEC Reports or Section 5.03(c) of the
Company Disclosure Letter, the Company does not directly or indirectly own
any equity or similar interest in, or any interest convertible into or
exchangeable or exercisable for any equity or similar interest in, any
corporation, partnership, joint venture, limited liability company or other
business association or entity which is material to the Company and its
Subsidiaries, taken as a whole.
SECTION 5.04. Consents and Approvals; No Violations. Assuming (i) the
filings required under applicable Brazilian antitrust or competition laws,
the Competition Act Canada (the "COMPETITION ACT") and the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR
ACT"), are made and the waiting periods thereunder (if applicable) have
been terminated or expired, (ii) the prior notification and reporting
requirements of the German Act Against Restraints in Competition and other
antitrust laws of the member states of the European Union as may be
applicable (collectively, the "EUROPEAN ANTITRUST LAWS") are satisfied and
any antitrust filings/notifications which must or may be effected at the
national level in countries having jurisdiction are made and any applicable
waiting periods thereunder have been terminated or expired, (iii) the prior
notification and reporting requirements of other antitrust or competition
laws as may be applicable are satisfied and any antitrust
filings/notifications which must or may be effected in countries having
jurisdiction are made, (iv) the applicable requirements of the Securities
Act and the Exchange Act are met, (v) the requirements under any applicable
foreign or state securities or blue sky laws are met, (vi) the filing of
the Certificate of Merger and other appropriate merger documents, if any,
as required by the BCL, are made, (vii) in the case of this Agreement the
Company Shareholder Approval is received, and (viii) the requirements of
any applicable state law relating to the transfer of contaminated property
are met, the execution and delivery of this Agreement by the Company and
the consummation by the Company of the transactions contemplated hereby do
not and will not: (A) violate or conflict with any provision of the
Company's Certificate of Incorporation or the Company's By-Laws or the
comparable governing documents of any of its Subsidiaries; (B) violate or
conflict with any statute, law, ordinance, rule or regulation (together,
"LAWS") or any order, judgment, decree, writ, permit or license (together,
"ORDERS"), of any court, tribunal, arbitrator, authority, agency,
commission, official or other instrumentality of the United States, any
foreign country or any domestic or foreign state, county, city or other
political subdivision (a "GOVERNMENTAL AUTHORITY") applicable to the
Company or any of its Subsidiaries or by which any of their respective
properties or assets may be bound; (C) except as set forth in Section 5.04
of the Company Disclosure Letter, require any filing with, or permit,
consent or approval of, or the giving of any notice to, any Governmental
Authority; or (D) except as set forth in Section 5.04 of the Company
Disclosure Letter, result in a violation or breach of, conflict with,
constitute (with or without due notice or lapse of time or both) a default
(or give rise to any right of termination, cancellation, payment or
acceleration) under, or result in the creation of any Lien upon any of the
properties or assets of the Company or any of its Significant Subsidiaries
under, or give rise to any obligation, right of termination, cancellation,
acceleration or increase of any obligation or a loss of a material benefit
under, any of the terms, conditions or provisions of any note, bond,
mortgage, indenture, license, franchise, permit, agreement, contract,
lease, franchise agreement or other instrument or obligation of any kind
("CONTRACTS") to which the Company or any of its Significant Subsidiaries
is a party, or by which any such Person or any of its properties or assets
are bound, excluding from the foregoing clauses (B), (C) and (D) conflicts,
violations, breaches, defaults, rights of payment and reimbursement,
terminations, modifications, accelerations and creations and impositions of
Liens which could not reasonably be expected to, individually or in the
aggregate, have a Company Material Adverse Effect.
SECTION 5.05. Company Reports and Financial Statements. (a) Since
December 31, 1997, the Company and, to the extent applicable, its
Subsidiaries, have filed all forms, reports and documents with the SEC
required to be filed by it pursuant to the federal securities laws and the
SEC rules and regulations thereunder, and all forms, reports, schedules,
registration statements and other documents filed with the SEC by the
Company and, to the extent applicable, its Subsidiaries have complied in
all material respects with all applicable requirements of the federal
securities laws and the SEC rules and regulations promulgated thereunder.
The Company has, prior to the date of this Agreement, made available to
Parent true and complete copies of all forms, reports, registration
statements and other filings filed by the Company and its Subsidiaries with
the SEC since December 31, 1997 (such forms, reports, registration
statements and other filings, together with any exhibits, any amendments
thereto and information incorporated by reference therein, are sometimes
collectively referred to as the "COMPANY SEC REPORTS"). As of their
respective dates, the Company SEC Reports did not contain any untrue
statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading. The audited
consolidated financial statements and the unaudited consolidated interim
financial statements of the Company included in the Company SEC Reports
were prepared in accordance with GAAP applied on a consistent basis (except
as may be indicated therein or in the notes or schedules thereto) and
present fairly, in all material respects, the consolidated financial
position of the Company and its consolidated Subsidiaries as of the dates
thereof and their consolidated results of operations and changes in
financial position for the periods then ended. The Company has heretofore
provided Parent with true and correct copies of any amendments and/or
modifications to any Company SEC Reports which have not yet been filed with
the SEC but that are required to be filed with the SEC in accordance with
applicable federal securities laws and the SEC rules.
(b) Except as set forth or provided in the Company SEC Reports or
Section 5.05(b) of the Company Disclosure Letter, neither the Company nor
any of its Subsidiaries has any liability or obligation of any nature
(whether accrued, absolute, contingent or otherwise), in each case that is
required by GAAP to be set forth on a consolidated balance sheet of the
Company, except for (i) liabilities and obligations under this Agreement or
incurred in connection with the transactions contemplated hereby and (ii)
liabilities and obligations incurred in the ordinary course of business
consistent with past practice since September 30, 1999 which could not
reasonably be expected to, individually or in the aggregate, have a Company
Material Adverse Effect. Neither the Company nor any of its Subsidiaries is
in default in respect of the material terms and conditions of any
indebtedness or other agreement which could reasonably be expected to,
individually or in the aggregate, have a Company Material Adverse Effect.
SECTION 5.06. Information to Be Supplied. (a) Each of the Schedule
14D-9 and the Proxy Statement/Prospectus and the other documents required
to be filed by the Company with the SEC in connection with the Offer, the
Merger and the other transactions contemplated hereby will comply as to
form in all material respects with the requirements of the Exchange Act and
the Securities Act, as the case may be, and will not, on the date of its
filing or, in the case of the Proxy Statement/Prospectus, on the dates it
is mailed to shareholders of the Company and at the time of the Company
Shareholder Meeting, contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary
in order to make the statements therein, in light of the circumstances
under which they are made, not misleading.
(b) Notwithstanding the foregoing provisions of this Section 5.06, no
representation or warranty is made by the Company with respect to
statements made or incorporated by reference in the Merger Registration
Statement, the Proxy Statement/Prospectus or the Schedule 14D-9 based on
information supplied by Parent or Merger Sub expressly for inclusion or
incorporation by reference therein or based on information which is not
made in or incorporated by reference in such documents but which should
have been disclosed pursuant to Section 6.06.
SECTION 5.07. Absence of Certain Events. Except as disclosed in the
Company SEC Reports or in Section 5.07 of the Company Disclosure Letter or
as required or expressly permitted by this Agreement, since December 31,
1998, the Company and its Subsidiaries have operated their respective
businesses only in the ordinary course and, except as disclosed in the
Company SEC Reports or in Section 5.07 of the Company Disclosure Letter,
there has not occurred (i) any event, occurrence or conditions which could
reasonably be expected to, individually or in the aggregate, have a Company
Material Adverse Effect; (ii) any damage, destruction or loss which,
individually or in the aggregate, resulted in or could reasonably be
expected to result in, a Company Material Adverse Effect; or (iii) any
increase in the compensation of, or change of control agreement with, any
officer of the Company or any of its Subsidiaries or any general salary or
benefits increase to the employees of the Company or any of its
Subsidiaries other than in the ordinary course of business.
SECTION 5.08. Litigation. Except as disclosed in Section 5.08 of the
Company Disclosure Letter, there are no investigations, actions, suits or
proceedings pending against the Company or its Subsidiaries or, to the
knowledge of the Company, threatened against the Company or its
Subsidiaries (or any of their respective properties, rights or franchises),
at law or in equity, or before or by any federal or state commission,
board, bureau, agency, regulatory or administrative instrumentality or
other Governmental Authority or any arbitrator or arbitration tribunal,
that could reasonably be expected to, individually or in the aggregate,
have a Company Material Adverse Effect, and, to the knowledge of the
Company, no development has occurred with respect to any pending or
threatened action, suit or proceeding that could reasonably be expected to
result in a Company Material Adverse Effect or could reasonably be expected
to prevent, materially impair or materially delay the consummation of the
transactions contemplated hereby. Neither the Company nor any of its
Subsidiaries is subject to any judgment, order or decree entered in any
lawsuit or proceeding which could reasonably be expected to, individually
or in the aggregate, have a Company Material Adverse Effect.
SECTION 5.09. Title to Properties; Encumbrances. Except as disclosed
in Section 5.09 of the Company Disclosure Letter, the Company and each of
its Significant Subsidiaries has good, valid and marketable title to, or,
in the case of leased properties and assets, valid leasehold interests in,
all of its tangible properties and assets except where the failure to have
such good, valid and marketable title could not reasonably be expected to,
individually or in the aggregate, have a Company Material Adverse Effect;
in each case subject to no Liens, except for (A) Liens reflected in the
consolidated balance sheet as of September 30, 1999, (B) Liens consisting
of zoning or planning restrictions, easements, permits and other
restrictions or limitations on the use of real property or irregularities
in title thereto which do not materially detract from the value of, or
impair the use of, such property by the Company or any of its Significant
Subsidiaries in the operation of its respective business, (C) Liens for
current Taxes, assessments or governmental charges or levies on property
not yet due or which are being contested in good faith and (D) Liens which
could not reasonably be expected to, individually or in the aggregate, have
a Company Material Adverse Effect. Except as could not reasonably be
expected to, individually or in the aggregate, have a Company Material
Adverse Effect, (i) the Company and each of its Significant Subsidiaries
are in compliance with the terms of all leases of tangible properties to
which they are a party and under which they are in occupancy, and all such
leases are in full force and effect and (ii) the Company and each of its
Significant Subsidiaries enjoys peaceful and undisturbed possession under
all such leases.
SECTION 5.10. Compliance with Laws. Except as disclosed in the
Company SEC Reports and except as disclosed in Section 5.10 of the Company
Disclosure Letter:
(a) The Company and its Subsidiaries are in compliance with all
applicable federal, state, local and foreign statutes, laws, regulations,
orders, judgments and decrees except where the failure to so comply could
not reasonably be expected to, individually or in the aggregate, have a
Company Material Adverse Effect.
(b) The Company and its Subsidiaries hold, to the extent legally
required, all federal, state, local and foreign permits, approvals,
licenses, authorizations, certificates, rights, exemptions and orders from
Governmental Authorities (the "PERMITS") that are required for the
operation of the respective businesses of the Company and/or its
Subsidiaries as now conducted, except where the failure to hold any such
Permit could not reasonably be expected to, individually or in the
aggregate, have a Company Material Adverse Effect, and there has not
occurred any default under any such Permit, except to the extent that such
default could not reasonably be expected to, individually or in the
aggregate, have a Company Material Adverse Effect.
SECTION 5.11. Company Employee Benefit Plans. (a) Set forth in
Section 5.11(a) of the Company Disclosure Letter is an accurate and
complete list of each material domestic or foreign employee benefit plan,
within the meaning of Section 3(3) of the Employee Retirement Income
Security Act of 1974, as amended, and the rules and regulations thereunder
("ERISA"), whether or not subject to ERISA, and each stock option, stock
appreciation right, restricted stock, stock purchase, stock unit,
performance share, incentive, bonus, profit-sharing, savings, deferred
compensation, health, medical, dental, life insurance, disability,
accident, supplemental unemployment or retirement, employment, severance or
salary or benefits continuation or fringe benefit plan, program,
arrangement, or agreement maintained by the Company or any Affiliate
thereof (including, for this purpose and for the purpose of all of the
representations in this Section 5.11, all employers (whether or not
incorporated) that would be treated together with the Company and/or any
such Affiliate as a single employer within the meaning of Section 414 of
the Internal Revenue Code of 1986, as amended, and the rules and
regulations thereunder (the "CODE")) or to which the Company or any
Affiliate thereof contributes (or has any obligation to contribute), has
any liability or is a party (collectively, the "COMPANY EMPLOYEE BENEFIT
PLANS").
(b) Except as set forth in Section 5.11(b) of the Company Disclosure
Letter or disclosed in the Company SEC Reports, (i) each Company Employee
Benefit Plan is in compliance with all applicable laws (including, without
limitation, ERISA and the Code) and has been administered and operated in
accordance with its terms, in each case except as would not have a Company
Material Adverse Effect; (ii) each Company Employee Benefit Plan which is
intended to be "qualified" within the meaning of Section 401(a) of the Code
has received a favorable determination letter from the Internal Revenue
Service and, to the best knowledge of the Company, no event has occurred
and no condition exists which could reasonably be expected to result in the
revocation of any such determination; (iii) the actuarial present value of
the accumulated plan benefits (whether or not vested) under each Company
Employee Benefit Plan covered by Title IV of ERISA, or which otherwise is a
pension plan (as defined in Section 3(2) of ERISA) or provides for
actuarially-determined benefits (other than any Company Employee Benefit
Plan which is a "multiemployer plan" (as defined in Section 4001(a)(3) of
ERISA) (a "COMPANY MULTIEMPLOYER PLAN")), as of the close of its most
recent plan year did not exceed the market value of the assets allocable
thereto; (iv) no Company Employee Benefit Plan covered by Title IV of ERISA
has been terminated and no proceedings have been instituted to terminate or
appoint a trustee under Title IV of ERISA to administer any such plan; (v)
no Company Employee Benefit Plan (other than any Company Multiemployer
Plan) subject to Section 412 of the Code or Section 302 of ERISA has
incurred any accumulated funding deficiency within the meaning of Section
412 of the Code or Section 302 of ERISA, or obtained a waiver of any
minimum funding standard or an extension of any amortization period under
Section 412 of the Code or Section 303 or 304 of ERISA; (vi) as of the date
of this Agreement, neither the Company nor any of its Affiliates has
incurred any unsatisfied withdrawal liability under Part 1 of Subtitle E of
Title IV of ERISA to any Company Multiemployer Plan, and the aggregate
liabilities of the Company and its Affiliates to all Company Multiemployer
Plans in the event of a complete withdrawal therefrom, as of the close of
the most recent fiscal year of each Company Multiemployer Plan ended prior
to the date hereof, would not have a Company Material Adverse Effect; (vii)
the execution of this Agreement and the consummation of the transactions
contemplated hereby do not constitute a triggering event under any Company
Employee Benefit Plan, policy, arrangement, statement, commitment or
agreement, which (either alone or upon the occurrence of any additional or
subsequent event) will result in any "excess parachute payment," as such
term is defined in Section 280G of the Code, or will result in any
severance, bonus, retirement, job security or similar-type benefit, or
increase any benefits or accelerate the payment or vesting of any benefits
to any employee or former employee or director of the Company or its
Affiliates, other than any benefits, payments, accelerations or increases
(1) under any Company Employee Benefit Plan that is subject to the laws of
a jurisdiction outside of the United States or (2) mandated by applicable
law; (viii) no liability, claim, action, litigation, audit, examination,
investigation or administrative proceeding has been made, commenced or, to
the best knowledge of the Company, threatened with respect to any Company
Employee Benefit Plan (other than routine claims for benefits payable in
the ordinary course) which would have a Company Material Adverse Effect;
(ix) except as required to maintain the tax-qualified status of any Company
Employee Benefit Plan intended to qualify under Section 401(a) of the Code,
no condition or circumstance exists that would prevent the amendment or
termination of any Company Employee Benefit Plan; and (x) there has been no
amendment to, written interpretation or announcement (whether or not
written) relating to, or change in employee participation or coverage
under, any Company Employee Benefit Plan which would increase materially
the expense of maintaining such Company Employee Benefit Plan above the
level of such expense incurred for the most recently ended fiscal year.
(c) The Company has delivered or caused to be delivered to Parent or
its counsel true and complete copies of each Company Employee Benefit Plan
and any related trust agreement or funding vehicle, together with all
amendments thereto, and, to the extent applicable with respect thereto, (i)
the current summary plan description; (ii) the most recent annual report on
Internal Revenue Service Form 5500-series, including any attachments
thereto; (iii) the most recent financial report; (iv) the most recent
actuarial valuation report; and (v) the most recent determination letter
received from the Internal Revenue Service.
SECTION 5.12. Employment Relations and Agreement. Except as could not
reasonably be expected to, individually or in the aggregate, have a Company
Material Adverse Effect or as disclosed in the Company SEC Reports or
Section 5.12 of the Company Disclosure Letter, (i) each of the Company and
its Subsidiaries is, and at all times has been, in compliance with all
federal, state or other applicable laws respecting employment and
employment practices, terms and conditions of employment and wages and
hours, and has not and is not engaged in any unfair labor practice; (ii) no
unfair labor practice complaint against the Company or any of its
Subsidiaries is pending before the National Labor Relations Board; (iii)
during the last three years there has not been any labor strike, dispute,
slowdown or stoppage or, to the Company's knowledge, threatened against or
involving the Company or any of its Subsidiaries; (iv) no representation
question exists respecting the employees of the Company or any of its
Subsidiaries; (v) no arbitration proceeding arising out of or under any
collective bargaining agreement is pending and no claim therefor has been
asserted; and (vi) no collective bargaining agreement is currently being
negotiated by the Company or any of its Subsidiaries.
SECTION 5.13. Taxes. Except as set forth in Section 5.13 of the
Company Disclosure Letter:
(a) Tax Returns. The Company and each of its Subsidiaries has timely
filed or caused to be timely filed with the appropriate Taxing authorities
all Federal income and all other material returns, statements, forms and
reports for Taxes (as hereinafter defined) ("RETURNS") that are required to
be filed by, or with respect to, the Company and such Subsidiaries on or
prior to the Closing Date. The Returns as filed were correct and complete
in all material respects. "TAXES" shall mean all taxes, assessments,
charges, duties, fees, levies or other governmental charges including,
without limitation, all Federal, state, local, foreign and other income,
franchise, profits, capital gains, capital stock, transfer, sales, use,
occupation, property, excise, severance, windfall profits, stamp, license,
payroll, withholding and other taxes, assessments, charges, duties, fees,
levies or other governmental charges of any kind whatsoever (whether
payable directly or by withholding and whether or not requiring the filing
of a Return), all estimated taxes, deficiency assessments, additions to
tax, penalties and interest and shall include any liability for such
amounts as a result either of being a member of a combined, consolidated,
unitary or affiliated group or of a contractual obligation to indemnify any
person or other entity.
(b) Payment of Taxes. All material Taxes and Tax liabilities of the
Company and its Subsidiaries that have become due and payable have been
timely paid or fully provided for as a liability on the financial
statements of the Company and its Subsidiaries in accordance with GAAP.
(c) Other Tax Matters. Neither the Company nor any of its Subsidiaries
has been or is the subject of an audit, other examination, matter in
controversy, proposed adjustment, refund litigation or other proceeding
with respect to Taxes by the Tax authorities of any nation, state or
locality which could reasonably be expected to result in a material Tax
liability, nor has the Company or any of its Subsidiaries received any
notices from any Tax authority relating to any issue which could reasonably
be expected to result in a material Tax liability.
(d) Neither the Company nor any of its Subsidiaries has been included
in any "consolidated," "unitary" or "combined" Return (other than Returns
which include only the Company and any Subsidiaries of the Company)
provided for under the laws of the United States, any foreign jurisdiction
or any state or locality with respect to material Taxes for any taxable
period for which the statute of limitations has not expired.
(e) All material Taxes which the Company or any of its Subsidiaries is
(or was) required by law to withhold or collect have been duly withheld or
collected, and have been timely paid over to the proper authorities to the
extent due and payable.
(f) There are no Tax sharing, allocation, indemnification or similar
agreements (in writing) in effect as between the Company, any of its
Subsidiaries, or any predecessor or Affiliate of any of them and any other
party under which the Company (or any of its Subsidiaries) could be liable
for any material Taxes of any party other than the Company or any
Subsidiary of the Company.
(g) Neither the Company nor any of its Subsidiaries has applied for,
been granted, or agreed to any accounting method change for which it will
be required to take into account any adjustment under Section 481 of the
Code or any similar provision of the Tax laws of any nation, state or
locality.
(h) Neither the Company nor any of its Subsidiaries has, as of the
Closing Date, entered into an agreement or waiver extending any statute of
limitations relating to the payment or collection of U.S. Federal income
Taxes of the Company or any of its Subsidiaries.
(i) No election under Section 341(f) of the Code has been made or
shall be made prior to the Closing Date to treat the Company or any of its
Subsidiaries as a consenting corporation, as defined in Section 341 of the
Code.
SECTION 5.14. Intellectual Property. Except as could not,
individually or in the aggregate, reasonably be expected to have a Company
Material Adverse Effect:
(a) The Company or one of its Subsidiaries exclusively owns, without
restrictions, or is licensed to use, the rights to all patents, trademarks,
trade names, service marks, copyrights together with any registrations and
applications therefor, Internet domain names, net lists, schematics,
inventories, technology, trade secrets, source codes, know-how, computer
software programs or applications including, without limitation, all object
and source codes and tangible or intangible proprietary information or
material that are used in the business of the Company and any of its
Subsidiaries as currently conducted (the "COMPANY INTELLECTUAL PROPERTY").
Neither the Company nor any of its Subsidiaries is, or as a result of the
execution, delivery or performance of the Company's obligations hereunder
will be, in violation of, or lose any rights pursuant to, any Company
Intellectual Property.
(b) No claims with respect to the Company Intellectual Property have
been asserted or, to the knowledge of the Company, are threatened by any
Person nor does the Company or any of its Subsidiaries know of any valid
grounds for any bona fide claims against the use by the Company or any of
its Subsidiaries of any Company Intellectual Property, or challenging the
ownership, validity, enforceability or effectiveness of any of the Company
Intellectual Property. All granted and issued patents and all registered
trademarks and service marks and all copyrights held by the Company or any
of its Subsidiaries are valid, enforceable and subsisting. To the Company's
knowledge, there has not been and there is not any unauthorized use,
infringement or misappropriation of any of the Company Intellectual
Property by any third Person, including, without limitation, any employee
or former employee.
(c) Except as set forth in Section 5.14(c) of the Company Disclosure
Letter, no owned Company Intellectual Property is subject to any
outstanding order, judgment, decree, stipulation or agreement restricting
in any manner the licensing thereof by the Company or any of its
Subsidiaries.
SECTION 5.15. Broker's or Finder's Fee. Except for the fees of
Goldman, Sachs & Co. (whose fees and expenses will be paid by the Company
in accordance with the Company's agreement with such firm, a true and
correct copy of which has been previously delivered to Parent by the
Company), no agent, broker, Person or firm acting on behalf of the Company
is, or will be, entitled to any fee, commission or broker's or finder's
fees from any of the parties hereto, or from any Person controlling,
controlled by, or under common control with any of the parties hereto, in
connection with this Agreement or any of the transactions contemplated
hereby.
SECTION 5.16. Environmental Laws and Regulations. Except as could not
reasonably be expected to, individually or in the aggregate, have a Company
Material Adverse Effect and except as set forth in Section 5.16 of the
Company Disclosure Letter, (i) Hazardous Materials have not been generated,
used, treated or stored on, transported to or from or Released or disposed
of on, any Company Property except in compliance with applicable
Environmental Laws, (ii) the Company and each of its Subsidiaries are in
compliance with all applicable Environmental Laws and the requirements of
any permits issued under such Environmental Laws with respect to any
Company Property, (iii) there are no past, pending or, to the Company's
knowledge, threatened Environmental Claims against the Company or any of
its Subsidiaries or any Company Property and (iv) there are no facts or
circumstances, conditions or occurrences regarding the business, assets or
operations of the Company or any Company Property that could reasonably be
anticipated to form the basis of an Environmental Claim against the Company
or any of its Subsidiaries or any Company Property.
For purposes of this Agreement, (i) "COMPANY PROPERTY" means any real
property and improvements owned, leased or operated by the Company or any
of its Subsidiaries; (ii) "HAZARDOUS MATERIALS" means (A) any petroleum or
petroleum products, radioactive materials, asbestos in any form that is or
could become friable, transformers or other equipment that contain
dielectric fluid containing levels of polychlorinated biphenyls, and radon
gas; (B) any chemicals, materials or substances defined as or included in
the definition of "hazardous substances," "hazardous wastes," "hazardous
materials," "extremely hazardous wastes," "extremely hazardous substances,"
"restricted hazardous wastes," "toxic substances," "toxic pollutants," or
words of similar import, under any applicable Environmental Law; and (C)
any other chemical, material or substance, exposure to which is prohibited,
limited or regulated by any Governmental Authority; (iii) "ENVIRONMENTAL
LAW" means any federal, state, foreign or local statute, law, rule,
regulation, ordinance, code or rule of common law and any judicial or
administrative interpretation thereof binding on the Company or its
operations or property as of the date hereof and Closing Date, including
any judicial or administrative order, consent decree or judgment, relating
to the environment, health or Hazardous Materials, including, without
limitation, the Comprehensive Environmental Response, Compensation, and
Liability Act of 1980, as amended, 42 U.S.C.ss.9601 et seq.; the Resource
Conservation and Recovery Act, as amended, 42 U.S.C.ss.6901 et seq.; the
Federal Water Pollution Control Act, as amended, 33 U.S.C.ss.1251 et seq.;
the Toxic Substances Control Act, 15 U.S.C.ss. 2601 et seq.; the Clean Air
Act, 42 U.S.C.ss.7401 et seq.; Oil Pollution Act of 1990, 33 U.S.C.ss.2701
et seq.; the Safe Drinking Water Act, 42 U.S.C.ss.300f et seq.; and their
state and local counterparts and equivalents; (iv) "ENVIRONMENTAL CLAIMS"
means any and all administrative, regulatory or judicial actions, suits,
demands, demand letters, claims, liens, notices of noncompliance or
violation, investigations or proceedings under any Environmental Law or any
permit issued under any such Environmental Law (for purposes of this
subclause (iv), "CLAIMS"), including, without limitation, (A) any and all
Claims by Governmental Authorities for enforcement, cleanup, removal,
response, remedial or other actions or damages pursuant to any applicable
Environmental Law and (B) any and all Claims by any third party seeking
damages, contribution, indemnification, cost recovery, compensation or
injunctive relief resulting from Hazardous Materials or arising from
alleged injury or threat of injury to health, safety or the environment;
and (v) "RELEASE" means disposing, discharging, injecting, spilling,
leaking, leaching, dumping, emitting, escaping, emptying or seeping into or
upon any land or water or air, or otherwise entering into the environment.
SECTION 5.17. State Takeover Statutes. The Board of Directors of the
Company has approved the Offer, the Merger and this Agreement and such
approval is sufficient to render inapplicable to the Offer, the Merger,
this Agreement and the other transactions contemplated hereby the
provisions of Section 912 of the BCL. Except for Section 912 of the BCL
(which has been rendered inapplicable), no other takeover statute or
similar statute or regulation of any state is applicable to the Offer, the
Merger, this Agreement and the other transactions contemplated hereby.
SECTION 5.18. Voting Requirements; Board Approval; Appraisal Rights.
(a) The affirmative vote of the holders of at least two-thirds of the
outstanding shares of the Company Common Stock (voting as one class, with
each share of the Company Common Stock having one (1) vote) entitled to be
cast approving this Agreement is the only vote of the holders of any class
or series of the Company's capital stock necessary to approve this
Agreement, the Merger and the transactions contemplated hereby.
(b) The Board of Directors of the Company has, as of the date of this
Agreement, (i) determined that the Offer and the Merger are advisable and
fair to, and in the best interests of the Company and its shareholders,
(ii) approved this Agreement and the transactions contemplated hereby and
(iii) resolved to recommend that the shareholders of the Company approve
and adopt this Agreement, the Offer and the Merger.
(c) No holder of Company Common Stock will have appraisal rights under
Section 910 of the BCL as a result of, or in connection with, the Offer or
the Merger.
SECTION 5.19. Opinion of Financial Advisor. The Company has received
the opinion of Goldman, Sachs & Co. to the effect that, as of the date of
this Agreement, the consideration payable in the Offer and the Merger to
the holders of the Company Common Stock is fair to such holders from a
financial point of view, and a copy of such opinion has been, or promptly
upon receipt thereof will be, delivered to Parent; it being understood and
acknowledged by Parent and Merger Sub that such opinion has been rendered
for the benefit of the Board of Directors of the Company, and is not
intended to, and may not, be relied upon by Parent, its Affiliates or their
respective shareholders.
SECTION 5.20. Trust Agreement. Section 5.20 of the Company Disclosure
Letter sets forth the total amount of funds (the "FUNDING AMOUNT") required
to fund the Company's obligation under the Trust Agreement, dated as of
February 19, 1987, between the Company and Fleet National Bank of
Connecticut, as amended (the "TRUST AGREEMENT"), with respect to the
executives listed therein. The Funding Amount was determined in good faith
based on all relevant information which was reasonably necessary for the
Company to determine the Funding Amount.
SECTION 5.21. Termination of Existing Agreements. Each of the
Agreement and Plan of Merger dated as of February 17, 2000 by and among
UPM-Kymmene Corporation, Blue Acquisition, Inc. and the Company, the Stock
Option Agreement dated as of February 17, 2000 between UPM-Kymmene
Corporation and the Company and any other related agreement between
UPM-Kymmene Corporation and the Company (other than the Confidentiality
Agreement dated April 20, 1999) has been duly terminated.
ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
Except as disclosed in (i) Parent's disclosure letter delivered
concurrently with the delivery of this Agreement (the "PARENT DISCLOSURE
LETTER") or (ii) the Parent SEC Reports (as defined below) made or filed
prior to the date of this Agreement, Parent and Merger Sub hereby represent
and warrant, jointly and severally, to the Company as follows:
SECTION 6.01. Due Organization, Good Standing and Corporate Power.
Each of Parent and its Significant Subsidiaries is a corporation duly
organized, validly existing and in good standing (with respect to
jurisdictions which recognize the concept of good standing) under the laws
of the jurisdiction of its incorporation and each such Person has all
requisite corporate power and authority to own, lease and operate its
properties and to carry on its business as now being conducted, except
where the failure to be so organized, existing and in good standing or to
have such power and authority could not reasonably be expected to,
individually or in the aggregate, have a Parent Material Adverse Effect.
Parent and each of its Significant Subsidiaries is duly qualified or
licensed to do business and is in good standing in each jurisdiction in
which the property owned, leased or operated by it or the nature of the
business conducted by it makes such qualification necessary, except in such
jurisdictions where the failure to be so qualified or licensed and in good
standing could not reasonably be expected to, individually or in the
aggregate, have a Parent Material Adverse Effect. Other than as set forth
in Section 6.01 of the Parent Disclosure Letter, the respective
Certificates of Incorporation and By-Laws or other organizational documents
of the Significant Subsidiaries of Parent do not contain any provision
limiting or otherwise restricting the ability of Parent to control its
Significant Subsidiaries. Section 6.01 of the Parent Disclosure Letter sets
forth a list of all Significant Subsidiaries of Parent and their respective
jurisdictions of incorporation or organization and identifies Parent's
(direct or indirect) percentages of equity ownership therein.
SECTION 6.02. Authorization and Validity of Agreement. Each of Parent
and Merger Sub has full corporate power and authority to execute and
deliver this Agreement, to perform its obligations hereunder and to
consummate the transactions contemplated hereby. The execution, delivery
and performance of this Agreement by Parent and Merger Sub, and the
consummation by each such party of the transactions contemplated hereby,
have been duly authorized and unanimously approved by the respective Board
of Directors of Parent and the Merger Sub and no other corporate action on
the part of either of Parent or Merger Sub is necessary to authorize the
execution, delivery and performance of this Agreement by each of Parent and
Merger Sub and the consummation of the transactions contemplated hereby.
This Agreement has been duly executed and delivered by each of Parent and
Merger Sub and is a valid and binding obligation of each of Parent and
Merger Sub, enforceable against each of Parent and Merger Sub in accordance
with its terms, except to the extent that its enforceability may be subject
to applicable bankruptcy, insolvency, reorganization, moratorium and
similar laws affecting the enforcement of creditors' rights generally and
by general equitable principles.
SECTION 6.03. Capitalization. (a) The authorized capital stock of
Parent consists of 990,850,000 shares of Parent Common Stock and 9,150,000
shares of preferred stock (the "PARENT PREFERRED STOCK"). At the close of
business on May 11, 2000: (i) 413,091,346 shares of Parent Common Stock
were issued and outstanding, (ii) 19,128,373 shares of Parent Common Stock
were reserved for issuance under Parent's stock option and stock benefit
plans and arrangements, (iii) 15,696 shares of Parent Preferred Stock were
issued and outstanding and (iv) 1,839,121 shares of Parent Common Stock
were held by Parent in its treasury. All issued and outstanding shares of
capital stock of Parent are, and all shares of Parent Common Stock to be
issued hereunder will be, upon issuance, duly authorized, validly issued,
fully paid and nonassessable. Except as set forth in Section 6.03(a) of the
Parent Disclosure Letter, (i) Parent is not bound by, obligated under, or
party to an Issuance Obligation with respect to any security of Parent or
any Significant Subsidiary of Parent and (ii) there is no outstanding
Voting Debt of Parent. There are no outstanding obligations of Parent to
repurchase, redeem or otherwise acquire any outstanding securities of
Parent. Except as set forth in Section 6.03(a) of the Parent Disclosure
Letter, there are no restrictions of any kind which prevent or restrict the
payment of dividends by Parent or any of its Subsidiaries and there are no
limitations or restrictions on the right to vote, sell or otherwise dispose
of such capital stock or other ownership interests.
(b) The authorized capital stock of Merger Sub consists of 100 shares
of common stock, par value $1.00 per share, all of which are validly issued
and outstanding, fully paid and nonassessable and are owned by Parent free
and clear of all security interests, liens, claims, pledges, options,
rights of first refusal, agreements, charges or other encumbrances of any
nature or any other limitation or restriction (including any restriction on
the right to vote or sell the same, except as may be provided under
applicable Federal or state securities laws) (collectively, "LIENS").
(c) All of the issued and outstanding shares of capital stock of each
Significant Subsidiary are validly existing, fully paid and non-assessable.
Except as set forth in the Parent SEC Reports or Section 6.03(c) of the
Parent Disclosure Letter, no Significant Subsidiary of Parent has
outstanding Voting Debt and no Significant Subsidiary of Parent is bound
by, obligated under, or party to an Issuance Obligation with respect to any
security of Parent or any Significant Subsidiary of Parent and there are no
obligations of Parent or any of its Significant Subsidiaries to repurchase,
redeem or otherwise acquire any outstanding securities of any of its
Significant Subsidiaries or any capital stock of, or other ownership
interests in, any of its Significant Subsidiaries.
(d) Except for Parent's interest in its Significant Subsidiaries, and
as set forth in the Parent SEC Reports or Section 6.03(d) of the Parent
Disclosure Letter, Parent does not directly or indirectly own any equity or
similar interest in, or any interest convertible into or exchangeable or
exercisable for any equity or similar interest in, any corporation,
partnership, joint venture, limited liability company or other business
association or entity which is material to Parent and its Subsidiaries,
taken as a whole.
SECTION 6.04. Consents and Approvals; No Violations. Assuming (i) the
filings required under applicable Brazilian antitrust or competition laws,
the Competition Act and the HSR Act are made and the waiting periods
thereunder (if applicable) have been terminated or expired, (ii) the prior
notification and reporting requirements of the European Antitrust Laws are
satisfied and any antitrust filings/notifications which must or may be
effected at the national level in countries having jurisdiction are made
and any applicable waiting periods thereunder have been terminated or
expired, (iii) the prior notification and reporting requirements of other
antitrust or competition laws as may be applicable are satisfied and any
antitrust filings/notifications which must or may be effected in countries
having jurisdiction are made, (iv) the applicable requirements of the
Securities Act and the Exchange Act are met, (v) the requirements under any
applicable foreign or state securities or blue sky laws are met, (vi) the
requirements of the NYSE in respect of the listing of the shares of Parent
Common Stock to be issued hereunder are met, (vii) the filing of the
Certificate of Merger and other appropriate merger documents, if any, as
required by the BCL, are made, and (viii) the requirements of any
applicable state law relating to the transfer of contaminated property are
met, the execution and delivery of this Agreement by Parent and Merger Sub
and the consummation by Parent and Merger Sub of the transactions
contemplated hereby do not and will not: (A) violate or conflict with any
provision of Parent's Certificate of Incorporation or Parent's By-Laws or
the comparable governing documents of any of its Subsidiaries; (B) violate
or conflict with any Laws or Orders of any Governmental Authority
applicable to Parent or any of its Subsidiaries or by which any of their
respective properties or assets may be bound; (C) except as set forth in
Section 6.04 of the Parent Disclosure Letter, require any filing with, or
permit, consent or approval of, or the giving of any notice to, any
Governmental Authority; or (D) except as set forth in Section 6.04 of the
Parent Disclosure Letter, result in a violation or breach of, conflict
with, constitute (with or without due notice or lapse of time or both) a
default (or give rise to any right of termination, cancellation or
acceleration) under, or result in the creation of any Lien upon any of the
properties or assets of Parent or any of its Significant Subsidiaries
under, or give rise to any obligation, right of termination, cancellation,
acceleration or increase of any obligation or a loss of a material benefit
under, any of the terms, conditions or provisions of any Contracts to which
Parent or any of its Significant Subsidiaries is a party, or by which any
such Person or any of its properties or assets are bound, excluding from
the foregoing clauses (B), (C) and (D) conflicts, violations, breaches,
defaults, rights of payment and reimbursement, terminations, modifications,
accelerations and creations and impositions of Liens which could not
reasonably be expected to, individually or in the aggregate, have a Parent
Material Adverse Effect.
SECTION 6.05. Parent Reports and Financial Statements. (a) Since
December 31, 1997, Parent and, to the extent applicable, its Subsidiaries
have filed all forms, reports and documents with the SEC required to be
filed by it pursuant to the federal securities laws and the SEC rules and
regulations thereunder, and all forms, reports, schedules, registration
statements and other documents filed with the SEC by Parent and, to the
extent applicable, its Subsidiaries have complied in all material respects
with all applicable requirements of the federal securities laws and the SEC
rules and regulations thereunder. Parent has, prior to the date of this
Agreement, made available to the Company true and complete copies of all
forms, reports, registration statements and other filings filed by Parent
and its Subsidiaries with the SEC since December 31, 1997 (such forms,
reports, registration statements and other filings, together with any
exhibits, any amendments thereto and information incorporated by reference
therein, are sometimes collectively referred to as the "PARENT SEC
REPORTS"). As of their respective dates, the Parent SEC Reports did not
contain any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading. The audited consolidated financial statements and the unaudited
consolidated interim financial statements of Parent included in the Parent
SEC Reports were prepared in accordance with GAAP applied on a consistent
basis (except as may be indicated therein or in the notes or schedules
thereto) and present fairly, in all material respects, the consolidated
financial position of Parent and its consolidated Subsidiaries as of the
dates thereof and their consolidated results of operations and changes in
financial position for the periods then ended. Parent has heretofore
provided to the Company with true and correct copies of any amendments
and/or modifications to any Parent SEC Reports which have not yet been
filed with the SEC but that are required to be filed with the SEC in
accordance with applicable federal securities laws and the SEC rules.
(b) Except as set forth or provided in the Parent SEC Reports or
Section 6.05(b) of the Parent Disclosure Letter, neither Parent nor any of
its Subsidiaries has any liability or obligation of any nature (whether
accrued, absolute, contingent or otherwise), in each case that is required
by GAAP to be set forth on a consolidated balance sheet of Parent, except
for (i) liabilities and obligations disclosed or provided for in the Parent
SEC Reports; (ii) liabilities and obligations under this Agreement or
incurred in connection with the transactions contemplated hereby; and (iii)
liabilities and obligations incurred in the ordinary course of business
consistent with past practice since September 30, 1999 which could not
reasonably be expected to, individually or in the aggregate, have a Parent
Material Adverse Effect. Neither Parent nor any of its Subsidiaries is in
default in respect of the material terms and conditions of any indebtedness
or other agreement which could reasonably be expected to, individually or
in the aggregate, have a Parent Material Adverse Effect.
SECTION 6.06. Information to Be Supplied. (a) Each of the
registration statement on Form S-4 to be filed with the SEC by Parent in
connection with the issuance of Parent Common Stock in the Merger, as
amended or supplemented from time to time (as so amended and supplemented,
the "MERGER REGISTRATION STATEMENT"), the Offer Documents and the other
documents required to be filed by Parent with the SEC in connection with
the Offer, the Merger and the other transactions contemplated hereby will
comply as to form, in all material respects, with the requirements of the
Exchange Act and the Securities Act, as the case may be, and will not, on
the date of its filing or, in the case of the Offer Registration Statement
and the Merger Registration Statement, at the time they become effective
under the Securities Act, or on the dates the Proxy Statement/Prospectus is
mailed to shareholders of the Company and at the time of the Company
Shareholder Meeting, contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary
in order to make the statements therein, in light of the circumstances
under which they are made, not misleading.
(b) Notwithstanding the foregoing provisions of this Section 6.06, no
representation or warranty is made by Parent with respect to statements
made or incorporated by reference in the Merger Registration Statement or
the Offer Documents based on information supplied by the Company expressly
for inclusion or incorporation by reference therein or based on information
which is not made in or incorporated by reference in such documents but
which should have been disclosed pursuant to Section 5.06.
SECTION 6.07. Absence of Certain Events. Except as disclosed in the
Parent SEC Reports or in Section 6.07 of the Parent Disclosure Letter or as
required or expressly permitted by this Agreement, since December 31, 1998,
Parent and its Subsidiaries have operated their respective businesses only
in the ordinary course and, except as disclosed in the Parent SEC Reports
or in Section 6.07 of the Parent Disclosure Letter, there has not occurred
(i) any event, occurrence or conditions which could reasonably be expected
to, individually or in the aggregate, have a Parent Material Adverse
Effect; (ii) any damage, destruction or loss which, individually or in the
aggregate, resulted in or could reasonably be expected to result in, a
Parent Material Adverse Effect; or (iii) any increase in the compensation
of any officer of Parent or any of its Subsidiaries or any general salary
or benefits increase to the employees of Parent or any of its Subsidiaries
other than in the ordinary course of business.
SECTION 6.08. Litigation. Except as disclosed in Section 6.08 of
Parent Disclosure Letter, there are no investigations, actions, suits or
proceedings pending against Parent or its Subsidiaries or, to the knowledge
of Parent, threatened against Parent or its Subsidiaries (or any of their
respective properties, rights or franchises), at law or in equity, or
before or by any federal or state commission, board, bureau, agency,
regulatory or administrative instrumentality or other Governmental
Authority or any arbitrator or arbitration tribunal, that could reasonably
be expected to, individually or in the aggregate, have a Parent Material
Adverse Effect, and, to the knowledge of Parent, no development has
occurred with respect to any pending or threatened action, suit or
proceeding that could reasonably be expected to result in a Parent Material
Adverse Effect or could reasonably be expected to prevent, materially
impair or materially delay the consummation of the transactions
contemplated hereby. Neither Parent nor any of its Subsidiaries is subject
to any judgment, order or decree entered in any lawsuit or proceeding which
could reasonably be expected to, individually or in the aggregate, have a
Parent Material Adverse Effect.
SECTION 6.09. Title to Properties; Encumbrances. Except as disclosed
in Section 6.09 of the Parent Disclosure Letter, Parent and each of its
Subsidiaries has good, valid and marketable title to, or, in the case of
leased properties and assets, valid leasehold interests in, all of its
tangible properties and assets except where the failure to have such good,
valid and marketable title could not reasonably be expected to,
individually or in the aggregate, have a Parent Material Adverse Effect; in
each case subject to no Liens, except for (A) Liens reflected in the
consolidated balance sheet as of September 30, 1999, (B) Liens consisting
of zoning or planning restrictions, easements, permits and other
restrictions or limitations on the use of real property or irregularities
in title thereto which do not materially detract from the value of, or
impair the use of, such property by Parent or any of its Significant
Subsidiaries in the operation of its respective business, (C) Liens for
current Taxes, assessments or governmental charges or levies on property
not yet due or which are being contested in good faith and (D) Liens which
could not reasonably be expected to, individually or in the aggregate, have
a Parent Material Adverse Effect. Except as could not reasonably be
expected to, individually or in the aggregate, have a Parent Material
Adverse Effect, (i) Parent and each of its Significant Subsidiaries are in
compliance with the terms of all leases of tangible properties to which
they are a party and under which they are in occupancy, and all such leases
are in full force and effect and (ii) Parent and each of its Significant
Subsidiaries enjoys peaceful and undisturbed possession under all such
leases.
SECTION 6.10. Compliance with Laws. Except as disclosed in the Parent
SEC Reports and except as disclosed in Section 6.10 of the Parent Disclosure
Letter:
(a) Parent and its Subsidiaries are in compliance with all applicable
federal, state, local and foreign statutes, laws, regulations, orders,
judgments and decrees except where the failure to so comply could not
reasonably be expected to, individually or in the aggregate, have a Parent
Material Adverse Effect.
(b) Parent and its Subsidiaries hold, to the extent legally required,
all Permits that are required for the operation of the respective
businesses of Parent and/or its Subsidiaries as now conducted, except where
the failure to hold any such Permit could not reasonably be expected to,
individually or in the aggregate, have a Parent Material Adverse Effect,
and there has not occurred any default under any such Permit, except to the
extent that such default could not reasonably be expected to, individually
or in the aggregate, have a Parent Material Adverse Effect.
SECTION 6.11. Parent Employee Benefit Plans. (a) Set forth in Section
6.11(a) of the Parent Disclosure Letter is an accurate and complete list of
each material domestic or foreign employee benefit plan, within the meaning
of Section 3(3) of ERISA, whether or not subject to ERISA, and each stock
option, stock appreciation right, restricted stock, stock purchase, stock
unit, performance share, incentive, bonus, profit-sharing, savings,
deferred compensation, health, medical, dental, life insurance, disability,
accident, supplemental unemployment or retirement, employment, severance or
salary or benefits continuation or fringe benefit plan, program,
arrangement, or agreement maintained by Parent or any Affiliate thereof
(including, for this purpose and for the purpose of all of the
representations in this Section 6.11, all employers (whether or not
incorporated) that would be treated together with Parent and/or any such
Affiliate as a single employer within the meaning of Section 414 of the
Code) or to which Parent or any Affiliate thereof contributes (or has any
obligation to contribute), has any liability or is a party (collectively,
the "PARENT EMPLOYEE BENEFIT PLANS").
(b) Except as set forth in Section 6.11(b) of the Parent Disclosure
Letter or disclosed in the Parent SEC Reports, (i) each Parent Employee
Benefit Plan is in compliance with all applicable laws (including, without
limitation, ERISA and the Code) and has been administered and operated in
accordance with its terms, in each case except as would not have a Parent
Material Adverse Effect; (ii) each Parent Employee Benefit Plan which is
intended to be "qualified" within the meaning of Section 401(a) of the Code
has received a favorable determination letter from the Internal Revenue
Service and, to the best knowledge of Parent, no event has occurred and no
condition exists which could reasonably be expected to result in the
revocation of any such determination; (iii) the actuarial present value of
the accumulated plan benefits (whether or not vested) under each Parent
Employee Benefit Plan covered by Title IV of ERISA, or which otherwise is a
pension plan (as defined in Section 3(2) of ERISA) or provides for
actuarially-determined benefits (other than any Parent Employee Benefit
Plan which is a "multiemployer plan" (as defined in Section 4001(a)(3) of
ERISA) (a "PARENT MULTIEMPLOYER PLAN")), as of the close of its most recent
plan year did not exceed the market value of the assets allocable thereto;
(iv) no Parent Employee Benefit Plan covered by Title IV of ERISA has been
terminated and no proceedings have been instituted to terminate or appoint
a trustee under Title IV of ERISA to administer any such plan; (v) no
Parent Employee Benefit Plan (other than any Parent Multiemployer Plan)
subject to Section 412 of the Code or Section 302 of ERISA has incurred any
accumulated funding deficiency within the meaning of Section 412 of the
Code or Section 302 of ERISA, or obtained a waiver of any minimum funding
standard or an extension of any amortization period within the meaning of
Section 412 of the Code or Section 303 or 304 of ERISA; (vi) as of the date
of this Agreement, neither Parent nor any of its Affiliates has incurred
any unsatisfied withdrawal liability under Part 1 of Subtitle E of Title IV
of ERISA to any Parent Multiemployer Plan, and the aggregate liabilities of
Parent and its Affiliates to all Parent Multiemployer Plans in the event of
a complete withdrawal therefrom, as of the close of the most recent fiscal
year of each Parent Multiemployer Plan ended prior to the date hereof,
would not have a Parent Material Adverse Effect; (vii) the execution of
this Agreement and the consummation of the transactions contemplated hereby
do not constitute a triggering event under any Parent Employee Benefit
Plan, policy, arrangement, statement, commitment or agreement, which
(either alone or upon the occurrence of any additional or subsequent event)
will result in any "excess parachute payment," as such term is defined in
Section 280G of the Code, or will result in any severance, bonus,
retirement, job security or similar-type benefit, or increase any benefits
or accelerate the payment or vesting of any benefits to any employee or
former employee or director of Parent or its Affiliates, other than any
benefits, payments, accelerations or increases (1) under any Parent
Employee Benefit Plan that is subject to the laws of a jurisdiction outside
of the United States or (2) mandated by applicable law; (viii) no
liability, claim, action, litigation, audit, examination, investigation or
administrative proceeding has been made, commenced or, to the best
knowledge of Parent, threatened with respect to any Parent Employee Benefit
Plan (other than routine claims for benefits payable in the ordinary
course) which would have a Parent Material Adverse Effect; (ix) except as
required to maintain the tax-qualified status of any Parent Employee
Benefit Plan intended to qualify under Section 401(a) of the Code, no
condition or circumstance exists that would prevent the amendment or
termination of any Parent Employee Benefit Plan; and (x) there has been no
amendment to, written interpretation or announcement (whether or not
written) relating to, or change in employee participation or coverage
under, any Parent Employee Benefit Plan which would increase materially the
expense of maintaining such Parent Employee Benefit Plan above the level of
such expense incurred for the most recently ended fiscal year.
(c) Parent has delivered or caused to be delivered to the Company or
its counsel true and complete copies of each Parent Employee Benefit Plan
and any related trust agreement or funding vehicle, together with all
amendments thereto, and, to the extent applicable with respect thereto, (i)
the current summary plan description; (ii) the most recent annual report on
Internal Revenue Service Form 5500-series, including any attachments
thereto; (iii) the most recent financial report; (iv) the most recent
actuarial valuation report; and (v) the most recent determination letter
received from the Internal Revenue Service.
SECTION 6.12. Employment Relations and Agreement. Except as could not
reasonably be expected to, individually or in the aggregate, have a Parent
Material Adverse Effect or as disclosed in the Parent SEC Reports or
Section 6.12 of the Parent Disclosure Letter, (i) each of Parent and its
Subsidiaries is, and at all times has been, in compliance with all federal,
state or other applicable laws respecting employment and employment
practices, terms and conditions of employment and wages and hours, and has
not and is not engaged in any unfair labor practice; (ii) no unfair labor
practice complaint against Parent or any of its Subsidiaries is pending
before the National Labor Relations Board; (iii) during the last three
years there has not been any labor strike, dispute, slowdown or stoppage
or, to Parent's knowledge, threatened against or involving Parent or any of
its Subsidiaries; (iv) no representation question exists respecting the
employees of Parent or any of its Subsidiaries; (v) no arbitration
proceeding arising out of or under any collective bargaining agreement is
pending and no claim therefor has been asserted; and (vi) no collective
bargaining agreement is currently being negotiated by Parent or any of its
Subsidiaries.
SECTION 6.13. Taxes. Except as set forth in Section 6.13 of the
Parent Disclosure Letter:
(a) Tax Returns. Parent and each of its Subsidiaries has timely filed
or caused to be timely filed with the appropriate Taxing authorities all
material Returns that are required to be filed by, or with respect to,
Parent and such Subsidiaries on or prior to the Closing Date. The Returns
as filed were correct and complete in all material respects.
(b) Payment of Taxes. All material Taxes and Tax liabilities of Parent
and its Subsidiaries that have become due and payable have been timely paid
or fully provided for as a liability on the financial statements of Parent
and its Subsidiaries in accordance with GAAP.
(c) Other Tax Matters. Neither Parent nor any of its Subsidiaries has
been or is the subject of an audit, other examination, matter in
controversy, proposed adjustment, refund litigation or other proceeding
with respect to Taxes by the Tax authorities of any nation, state or
locality which could reasonably be expected to result in a material Tax
liability, nor has Parent or any of its Subsidiaries received any notices
from any Tax authority relating to any issue which could reasonably be
expected to result in a material Tax liability.
(d) Neither Parent nor any of its Subsidiaries has been included in
any "consolidated," "unitary" or "combined" Return (other than Returns
which include only Parent and any Subsidiaries of Parent) provided for
under the laws of the United States, any foreign jurisdiction or any state
or locality with respect to material Taxes for any taxable period for which
the statute of limitations has not expired.
(e) All material Taxes which Parent or any of its Subsidiaries is (or
was) required by law to withhold or collect have been duly withheld or
collected, and have been timely paid over to the proper authorities to the
extent due and payable.
(f) There are no Tax sharing, allocation, indemnification or similar
agreements (in writing) in effect as between Parent, any of its
Subsidiaries, or any predecessor or Affiliate of any of them and any other
party under which Parent (or any of its Subsidiaries) could be liable for
any material Taxes of any party other than Parent or any Subsidiary of
Parent.
(g) Neither Parent nor any of its Subsidiaries has, as of the Closing
Date entered into an agreement or waiver extending any statute of
limitations relating to the payment or collection of U.S. Federal income
Taxes of Parent or any of its Subsidiaries.
SECTION 6.14. Intellectual Property. Except as could not reasonably be
expected to, individually or in the aggregate, have a Parent Material Adverse
Effect:
(a) Parent or one of its Subsidiaries exclusively owns, without
restrictions, or is licensed to use, the rights to all patents, trademarks,
trade names, service marks, copyrights together with any registrations and
applications therefor, Internet domain names, net lists, schematics,
inventories, technology, trade secrets, source codes, know-how, computer
software programs or applications including, without limitation, all object
and source codes and tangible or intangible proprietary information or
material that are used in the business of Parent and any of its
Subsidiaries as currently conducted (the "PARENT INTELLECTUAL PROPERTY").
Neither Parent nor any of its Subsidiaries is, or as a result of the
execution, delivery or performance of Parent's obligations hereunder will
be, in violation of, or lose any rights pursuant to, any Parent
Intellectual Property.
(b) No claims with respect to Parent Intellectual Property have been
asserted or, to the knowledge of Parent, are threatened by any Person nor
does Parent or any of its Subsidiaries know of any valid grounds for any
bona fide claims against the use by Parent or any of its Subsidiaries of
any Parent Intellectual Property, or challenging the ownership, validity,
enforceability or effectiveness of any of the Parent Intellectual Property.
All granted and issued patents and all registered trademarks and service
marks and all copyrights held by Parent or any of its Subsidiaries are
valid, enforceable and subsisting. To Parent's best knowledge, there has
not been and there is not any unauthorized use, infringement or
misappropriation of any of the Parent Intellectual Property by any third
Person, including, without limitation, any employee or former employee.
(c) Except as set forth in Section 6.14(c) of the Parent Disclosure
Letter, no owned Parent Intellectual Property is subject to any outstanding
order, judgment, decree, stipulation or agreement restricting in any
material manner the licensing thereof by Parent or any of its Subsidiaries.
SECTION 6.15. Broker's or Finder's Fee. Except for Credit Suisse
First Boston (whose fees and expenses will be paid by Parent or Merger Sub
in accordance with their agreement with such firm, a true and correct copy
of which has been previously delivered to the Company by Parent), no agent,
broker, Person or firm acting on behalf of Parent or Merger Sub is, or will
be, entitled to any fee, commission or broker's or finder's fees from any
of the parties hereto, or from any Person controlling, controlled by, or
under common control with any of the parties hereto, in connection with
this Agreement or any of the transactions contemplated hereby.
SECTION 6.16. Environmental Laws and Regulations. Except as could not
reasonably be expected to, individually or in the aggregate, have a Parent
Material Adverse Effect and except as set forth in Section 6.16 of the
Parent Disclosure Letter, (i) Hazardous Materials have not been generated,
used, treated or stored on, transported to or from or Released or disposed
of on, any Parent Property except in compliance with applicable
Environmental Laws, (ii) Parent and each of its Subsidiaries are in
compliance with all applicable Environmental Laws and the requirements of
any permits issued under such Environmental Laws with respect to any Parent
Property, (iii) there are no past, pending or, to Parent's knowledge,
threatened Environmental Claims against Parent or any of its Subsidiaries
or any Parent Property and (iv) there are no facts or circumstances,
conditions or occurrences regarding the business, assets or operations of
Parent or any Parent Property that could reasonably be anticipated to form
the basis of an Environmental Claim against Parent or any of its
Subsidiaries or any Parent Property.
For purposes of this Agreement, "PARENT PROPERTY" means any real
property and improvements owned, leased or operated by Parent or any of its
Subsidiaries.
SECTION 6.17. Ownership of Capital Stock. Except as set forth in
Section 6.17 of the Parent Disclosure Letter, neither Parent nor any of its
Subsidiaries beneficially owns, directly or indirectly, any capital stock
of the Company or is a party to any agreement, arrangement or understanding
for the purpose of acquiring, holding, voting or disposing of any capital
stock of the Company, other than as contemplated by this Agreement.
SECTION 6.18. No Prior Activities. Merger Sub was formed solely for
the purpose of engaging in the transactions contemplated by this Agreement,
has no Subsidiaries and has undertaken no business or activities other than
in connection with entering into this Agreement and engaging in the
transactions contemplated hereby.
SECTION 6.19. Financing. Parent has, or will have prior to the
expiration of the Offer and the Merger, sufficient cash, available lines of
credit or other sources of immediately available funds to enable it to
purchase all of the shares of Company Common Stock outstanding on a
fully-diluted basis and to pay all related fees and expenses in connection
therewith. Parent has provided the Company true and complete copies of all
commitment letters that Parent and Merger Sub have received with respect to
their financing of the Offer, the Merger and the other transactions
contemplated hereby.
ARTICLE 7
TRANSACTIONS PRIOR TO CLOSING DATE
SECTION 7.01. Access to Information Concerning Properties and
Records. During the period commencing on the date hereof and ending on the
earlier of (i) the Closing Date and (ii) the date on which this Agreement
is terminated pursuant to Section 9.01 hereof, each of the Company and
Parent shall, and each shall cause each of its Subsidiaries to, upon
reasonable notice, afford the other party, and its respective counsel,
accountants, consultants and other authorized representatives, access
during normal business hours to its and its Subsidiaries' employees,
properties, books and records in order that they may have the opportunity
to make such investigations as they shall desire of its and its
Subsidiaries' affairs; such investigation shall not, however, affect the
representations and warranties made by the Company or Parent in this
Agreement. The Company shall furnish promptly to Parent and Merger Sub and
Parent and Merger Sub shall furnish promptly to the Company (x) a copy of
each form, report, schedule, statement, registration statement and other
document filed by it or its Subsidiaries during such period pursuant to the
requirements of Federal, state or foreign securities laws and (y) all other
information concerning its or its Subsidiaries' business, properties and
personnel as Parent, Merger Sub or the Company may reasonably request. Each
of the Company and Parent agrees to cause its officers and employees to
furnish such additional financial and operating data and other information
and respond to such inquiries as the other party shall from time to time
reasonably request.
SECTION 7.02. Confidentiality. Prior to the Effective Time and after
any termination of this Agreement, each of Parent and the Company will
hold, and will use its best efforts to cause its officers, directors,
employees, accountants, counsel, consultants, advisors and agents to hold,
in confidence, unless compelled to disclose by judicial or administrative
process or by other requirements of law, all confidential documents and
information concerning the other party furnished to it or its Affiliates in
connection with the transactions contemplated by this Agreement, except to
the extent that such information can be shown to have been (i) previously
known on a nonconfidential basis by such party, (ii) in the public domain
through no fault of such party or (iii) later lawfully acquired by such
party from sources other than the other party; provided that each of Parent
and the Company may disclose such information to its officers, directors,
employees, accountants, counsel, consultants, advisors, lenders and agents
in connection with the transactions contemplated by this Agreement so long
as such party informs such Persons of the confidential nature of such
information and directs them to treat it confidentially. Each of Parent and
the Company shall satisfy its obligation to hold any such information in
confidence if it exercises the same care with respect to such information
as it would take to preserve the confidentiality of its own similar
information. If this Agreement is terminated, each of Parent and the
Company will, and will use its best efforts to cause its officers,
directors, employees, accountants, counsel, consultants, advisors and
agents to, destroy or deliver to the other party, upon request, all
documents and other materials, and all copies thereof, that it or its
Affiliates obtained, or that were obtained on their behalf, from the other
party in connection with this Agreement and that are subject to such
confidence.
SECTION 7.03. Conduct of the Business of the Company Pending the
Closing Date. The Company agrees that, except as permitted, required or
specifically contemplated by, or otherwise described in, this Agreement or
otherwise consented to or approved in writing by Parent (which consent or
approval shall not be unreasonably withheld or delayed), during the period
commencing on the date hereof until the Effective Time:
(a) the Company and each of its Subsidiaries shall conduct their
respective operations in all material respects only according to their
ordinary and usual course of business consistent with past practice and
shall use their reasonable best efforts to preserve intact their respective
business organization, keep available the services of their officers and
employees and maintain satisfactory relationships with licensors,
suppliers, distributors, clients, joint venture partners and others having
significant business relationships with them; and
(b) Except as set forth in Section 7.03(b) of the Company Disclosure
Letter or as expressly contemplated by this Agreement, neither the Company
nor any of its Subsidiaries shall:
(i) make any change in or amendment to the Company's Certificate
of Incorporation or its By-Laws;
(ii) issue or sell, or authorize to issue or sell, any shares of
its capital stock or any other securities, or issue or sell, or
authorize to issue or sell, any securities convertible into, or
options, warrants or rights to purchase or subscribe for, or enter
into any arrangement or contract with respect to the issuance or sale
of, any shares of its capital stock or any other securities, or make
any other changes in its capital structure, other than (i) the
issuance of Company Common Stock upon the exercise of Options or in
connection with Company Stock Rights outstanding on the date hereof,
in each case in accordance with their present terms or pursuant to
Options or other Company Stock Rights granted pursuant to clause (ii)
below, (ii) the granting of Options or Company Stock Rights granted
under the Company Stock Plans in effect on the date hereof in the
ordinary course of business consistent with past practice not in
excess of the amounts set forth in Section 7.03(b) of the Company
Disclosure Letter, (iii) issuances by a wholly-owned Subsidiary of
the Company of capital stock to such Subsidiary's parent, the Company
or another wholly-owned Subsidiary of the Company or (iv) issuances
of Company Common Stock upon the conversion of convertible securities
of the Company outstanding as of the date of this Agreement;
(iii) declare, pay or set aside any dividend or other
distribution or payment with respect to, or split, combine, redeem or
reclassify, or purchase or otherwise acquire, any shares of its
capital stock or its other securities, other than dividends payable
by a wholly-owned Subsidiary of the Company to the Company or another
wholly-owned Subsidiary of the Company (it being understood that the
Company's Board of Directors may declare and the Company may pay
quarterly dividends of not more than $0.25 per share on the schedule
which has been publicly announced by the Company on or prior to the
date of this Agreement);
(iv) other than in connection with transactions permitted by
Section 7.03(b)(v), incur any capital expenditures or any obligations
or liabilities in respect thereof, except for those (A) contemplated
by the capital expenditure budgets for the Company and its
Subsidiaries made available to Parent, (B) incurred in the ordinary
course of business of the Company and its Subsidiaries or (C) not
otherwise described in clauses (A) and (B) which, in the aggregate,
do not exceed $25 million;
(v) acquire (whether pursuant to merger, stock or asset purchase
or otherwise) in one transaction or series of related transactions
(A) any assets (including any equity interests) having a fair market
value in excess of $25 million, or (B) all or substantially all of
the equity interests of any Person or any business or division of any
Person having a fair market value in excess of $25 million;
(vi) except in the ordinary course of business consistent with
past practice and except to the extent required under existing
employee and director benefit plans, agreements or arrangements as in
effect on the date of this Agreement, increase the compensation or
fringe benefits of any of its directors, officers or employees or
grant any severance or termination pay not currently required to be
paid under existing severance plans or enter into any employment,
consulting or severance agreement or arrangement with any present or
former director, officer or other employee of the Company or any of
its Subsidiaries, or establish, adopt, enter into or amend in any
material respect or terminate any collective bargaining, bonus,
profit sharing, thrift, compensation, stock option, restricted stock,
pension, retirement, deferred compensation, employment, termination,
severance or other plan, agreement, trust, fund, policy or
arrangement for the benefit of any directors, officers or employees;
(vii) transfer, lease, license, guarantee, sell, mortgage,
pledge, dispose of, encumber or subject to any Lien, any material
assets, other than in the ordinary course of business;
(viii) except as required by applicable law or GAAP, make any
material change in its method of accounting;
(ix) adopt or enter into a plan of complete or partial
liquidation, dissolution, merger, consolidation, restructuring,
recapitalization or other reorganization of the Company or any of its
Subsidiaries (other than the Merger) or any agreement relating to a
Takeover Proposal, except as provided for in Section 7.07;
(x) (A) incur any material indebtedness for borrowed money or
guarantee any such indebtedness of another Person, other than
indebtedness owing to or guarantees of indebtedness owing to the
Company or any direct or indirect wholly-owned Subsidiary of the
Company or (B) make any loans or advances to any other Person, other
than to the Company or to any direct or indirect wholly-owned
Subsidiary of the Company, except, in the case of clause (A), for
borrowings in the ordinary course of business consistent with past
practice, including without limitation borrowings under existing
credit facilities described in the Company SEC Reports in the
ordinary course of business consistent with past practice for working
capital purposes;
(xi) accelerate the payment, right to payment or vesting of any
bonus, severance, profit sharing, retirement, deferred compensation,
stock option, insurance or other compensation or benefits;
(xii) pay, discharge or satisfy any claims, liabilities or
obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise) over $15 million, individually or in the aggregate, other
than the payment, discharge or satisfaction (A) of any such claims,
liabilities or obligations in the ordinary course of business and
consistent with past practice or (B) of claims, liabilities or
obligations reflected or reserved against in, or contemplated by, the
consolidated financial statements (or the notes thereto) contained in
the Company SEC Reports;
(xiii) enter into any agreement, understanding or commitment
that materially restrains, limits or impedes the Company's or any of
its Subsidiaries' ability to compete with or conduct any business or
line of business, including, but not limited to, geographic
limitations on the Company's or any of its Subsidiaries' activities;
(xiv) plan, announce, implement or effect any material reduction
in labor force, lay-off, early retirement program, severance program
or other program or effort concerning the termination of employment
of employees of the Company or its Subsidiaries; provided, however,
that routine employee terminations for cause shall not be considered
subject to this clause (xiv);
(xv) take any action including, without limitation, the adoption
of any shareholder rights plan or amendments to its Certificate of
Incorporation or By-Laws (or comparable governing documents), which
would, directly or indirectly, restrict or impair the ability of
Parent to vote, or otherwise to exercise the rights and receive the
benefits of a shareholder with respect to, securities of the Company
acquired or controlled by Parent or Merger Sub or permit any
shareholder to acquire securities of the Company on a basis not
available to Parent or Merger Sub in the event that Parent or Merger
Sub were to acquire any additional shares of the Company Common
Stock;
(xvi) materially modify, amend or terminate any material
contract to which it is a party or waive any of its material rights
or claims except in the ordinary course of business consistent with
past practice;
(xvii) other than in the ordinary course of business consistent
with past practice, make any tax election or enter into any
settlement or compromise of any tax liability that in either case is
material to the business of the Company and its Subsidiaries as a
whole; or
(xviii) agree, in writing or otherwise, to take any of the
foregoing actions.
SECTION 7.04. Conduct of the Business of Parent Pending the Closing
Date. Parent agrees that, except as permitted, required or specifically
contemplated by, or otherwise described in, this Agreement or otherwise
consented to or approved in writing by the Company (which consent or
approval shall not be unreasonably withheld or delayed), during the period
commencing on the date hereof until the Effective Time:
(a) Parent and each of its Subsidiaries shall conduct their respective
operations in all material respects only according to their ordinary and
usual course of business consistent with past practice and shall use their
reasonable best efforts to preserve intact their respective business
organization, keep available the services of their officers and employees
and maintain satisfactory relationships with licensors, suppliers,
distributors, clients, joint venture partners and others having significant
business relationships with them; and
(b) Except as set forth in Section 7.04(b) of the Parent Disclosure
Letter or as expressly contemplated by this Agreement, neither Parent nor
any of its Subsidiaries shall:
(i) make any change in or amendment to Parent's Certificate of
Incorporation that changes any material term or provision of the
Parent Common Stock;
(ii) make any material change in or amendment to Merger Sub's
Certificate of Incorporation;
(iii) engage in any material repurchase at a premium,
recapitalization, restructuring or reorganization with respect to
Parent's capital stock, including, without limitation, by way of any
extraordinary dividend on, or other extraordinary distributions with
respect to, Parent's capital stock;
(iv) acquire by merging or consolidating with, or by purchasing
a substantial portion of the assets of or equity in, or by any other
manner, any Person or any business or division thereof, or otherwise
acquire any assets, unless such acquisition or the entering into of a
definitive agreement relating to or the consummation of such
transaction would not (i) impose any delay in the obtaining of, or
increase the risk of not obtaining, any authorizations, consents,
orders, declarations or approvals of any Governmental Authority
necessary to consummate the Merger or the expiration or termination
of any applicable waiting period, (ii) increase the risk of any
Governmental Authority entering an order prohibiting the consummation
of the Merger or (iii) increase the risk of not being able to remove
any such order on appeal or otherwise; or
(v) agree, resolve or otherwise commit to do any of the
foregoing.
SECTION 7.05. Company Shareholder Meeting; Preparation of Proxy
Statement/Prospectus.
(a) Company Shareholder Meeting. If required by applicable law, the
Company, acting through its Board of Directors, shall, in accordance with
applicable law, duly call, convene and hold a meeting of the holders of the
Company Common Stock (the "COMPANY SHAREHOLDER MEETING") as soon as
reasonably practicable after the acceptance for payment of shares of
Company Common Stock pursuant to the Offer for the purpose of voting upon
this Agreement and the Merger and the Company agrees that this Agreement
and the Merger shall be submitted at such meeting. The Company shall take
all action necessary to solicit from its shareholders proxies, and shall
take all other action necessary and advisable, to secure the vote of
shareholders required by applicable law and the Company's Certificate of
Incorporation or By-Laws to obtain the approval for this Agreement and the
Merger. Unless the Board of Directors of the Company otherwise determines
(based on a majority vote of the Board of Directors in its good faith
judgment that such other action is necessary to comply with its fiduciary
duty to shareholders under applicable law after receiving the advice of
outside legal counsel) prior to the Company Shareholder Approval, (i) the
Company's Board of Directors shall recommend approval and adoption by its
shareholders of this Agreement (the "COMPANY RECOMMENDATION"), (ii) neither
the Company's Board of Directors nor any committee thereof shall amend,
modify, withdraw, condition or qualify the Company Recommendation in a
manner adverse to Parent or take any action or make any statement
inconsistent with the Company Recommendation and (iii) the Company shall
take all lawful action to solicit the Company Shareholder Approval.
(b) Preparation of Merger Registration Statement and Proxy Statement/
Prospectus. If required by applicable law, promptly after the acceptance
for payment of shares of Company Common Stock pursuant to the Offer, Parent
and the Company shall prepare, and Parent shall file with the SEC, the
Merger Registration Statement, in which the Proxy Statement/Prospectus will
be included as Parent's prospectus. Each of the Company and Parent shall
use all reasonable efforts to have the Merger Registration Statement
declared effective under the Securities Act as promptly as practicable
after the acceptance for payment of shares of Company Common Stock pursuant
to the Offer and to keep the Merger Registration Statement effective as
long as is necessary to consummate the Merger. The Company shall mail the
Proxy Statement/Prospectus to its shareholders as promptly as practicable
after the Merger Registration Statement is declared effective under the
Securities Act and, if necessary, after the Proxy Statement/Prospectus
shall have been so mailed, promptly circulate amended, supplemental or
supplemented proxy material, and, if required in connection therewith,
resolicit proxies. Parent shall take any action required to be taken under
any applicable state securities or blue sky laws in connection with the
issuance of Parent Common Stock in the Merger. No amendment or supplement
to the Proxy Statement/Prospectus will be made by the Company or Parent
without the approval of the other party, which will not be unreasonably
withheld or delayed. Each party will advise the other party, promptly after
it receives notice thereof, of the time when the Merger Registration
Statement has become effective or any supplement or amendment has been
filed, the issuance of any stop order, the suspension of the qualification
of Parent Common Stock issuable in connection with the Merger for offering
or sale in any jurisdiction, or any request by the SEC for amendment of the
Proxy Statement/Prospectus or comments thereon and responses thereto or
requests by the SEC for additional information. If at any time prior to the
Effective Time, the Company or Parent discovers any information relating to
either party, or any of their respective Affiliates, officers or directors,
that should be set forth in an amendment or supplement to the Proxy
Statement/Prospectus, so that such document would not include any
misstatement of a material fact or omit to state any material fact
necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading, the party that discovers such
information shall promptly notify the other party and an appropriate
amendment or supplement describing such information shall be promptly filed
with the SEC and, to the extent required by law or regulation, disseminated
to the shareholders of the Company.
(c) Short-Form Merger. Notwithstanding the foregoing, if Parent or
Merger Sub shall acquire at least 90% of the outstanding shares of Company
Common Stock pursuant to the Offer or otherwise, the parties hereto agree,
subject to the satisfaction or (to the extent permitted hereunder) waiver
of all conditions to the Merger, to take all necessary and appropriate
action to cause the Merger to be effective as soon as practicable after the
acceptance for payment and purchase of shares of Company Common Stock
pursuant to the Offer without the Company Shareholder Meeting.
SECTION 7.06. Reasonable Best Efforts. Subject to the terms and
conditions provided herein and in Section 7.09, each of the Company and
Parent shall, and shall cause each of its Subsidiaries to, cooperate and
use their reasonable best efforts to take, or cause to be taken, all
appropriate action, and to make, or cause to be made, all filings
necessary, proper or advisable under applicable laws and regulations to
consummate and make effective the transactions contemplated by this
Agreement including, without limitation, the Company's and Parent's
reasonable best efforts to obtain, prior to the Closing Date, all licenses,
permits, consents, approvals, authorizations, qualifications and orders of
Governmental Authorities and parties to contracts with the Company or
Parent, as the case may be, and their respective Subsidiaries as are
necessary for consummation of the transactions contemplated by this
Agreement and in order to comply with applicable Laws, including Laws
restricting the foreign ownership of assets; provided, however, that no
loan agreement or contract for borrowed money shall be repaid except as
currently required by its terms, in whole or in part, and no contract shall
be amended to increase the amount payable thereunder or otherwise to be
more burdensome to the Company or any of its Subsidiaries or Parent or any
of its Subsidiaries in order to obtain any such consent, approval or
authorization without first obtaining the written approval of Parent or the
Company, respectively.
SECTION 7.07. No Solicitation. (a) The Company shall, and shall use
its reasonable best efforts to cause its Affiliates, officers, directors,
employees, financial advisors, attorneys and other advisors,
representatives and agents to, immediately cease any discussions or
negotiations with third parties with respect to any Takeover Proposal (as
defined below). The Company shall not, nor shall it authorize or permit any
of its Affiliates to, nor shall it authorize or permit any officer,
director or employee of or any financial advisor, attorney or other
advisor, representative or agent of it or any of its Affiliates, to (i)
directly or indirectly solicit, facilitate, initiate or encourage the
making or submission of, any Takeover Proposal (including, without
limitation, the taking of any action which would make Section 912 of the
BCL inapplicable to a Takeover Proposal), (ii) enter into any agreement,
arrangement or understanding with respect to any Takeover Proposal or enter
into any agreement, arrangement or understanding requiring it to abandon,
terminate or fail to consummate the Merger or any other transaction
contemplated by this Agreement, (iii) initiate or participate in any way in
any discussions or negotiations regarding, or furnish or disclose to any
Person (other than a party to this Agreement) any information with respect
to, or take any other action to facilitate or in furtherance of any
inquiries or the making of any proposal that constitutes, or could
reasonably be expected to lead to, any Takeover Proposal or (iv) grant any
waiver or release under any standstill or similar agreement with respect to
any class of the Company's equity securities; provided that prior to the
acceptance for payment of shares of Company Common Stock pursuant to the
Offer, in response to an unsolicited Takeover Proposal that did not result
from the breach of this Section 7.07 and following delivery to Parent of
notice of the Takeover Proposal in compliance with its obligations under
Section 7.07(d) hereof, the Company may participate in discussions or
negotiations with or furnish information (pursuant to a confidentiality
agreement with customary terms) to any third party which makes a bona fide
written Takeover Proposal if (A) a majority of the Company's Board of
Directors reasonably determines in good faith (after consultation with an
independent, nationally recognized investment bank) that taking such action
would be reasonably likely to lead to the delivery to the Company of a
Superior Proposal and (B) a majority of the Company's Board of Directors
determines in good faith (after receiving the advice of outside legal
counsel) that it is necessary to take such actions(s) in order to comply
with its fiduciary duties under applicable law. Without limiting the
foregoing, the Company agrees that any violation of the restrictions set
forth in this Section 7.07(a) by any of its, or any of its Subsidiaries',
officers, employees, Affiliates or directors or any advisor,
representative, consultant or agent retained by the Company or any of its
Subsidiaries or Affiliates in connection with the transactions contemplated
hereby, whether or not such Person is purporting to act on behalf of the
Company or any of its Subsidiaries, shall constitute a breach of this
Section 7.07(a) by the Company.
For purposes of this Agreement, "TAKEOVER PROPOSAL" means any
inquiry, proposal or offer from any Person or group relating to (i) any
direct or indirect acquisition or purchase of 15% or more of the assets of
the Company or any of its Significant Subsidiaries or 15% or more of any
class of equity securities of the Company or any of its Significant
Subsidiaries, (ii) any tender offer or exchange offer that, if consummated,
would result in any Person beneficially owning all or any portion of any
class of equity securities of the Company or any of its Significant
Subsidiaries or (iii) any merger, consolidation, business combination, sale
of all or any substantial portion of the assets, recapitalization,
liquidation or a dissolution of, or similar transaction of the Company or
any of its Significant Subsidiaries other than the Offer or the Merger; and
"SUPERIOR PROPOSAL" means a bona fide written Takeover Proposal made by a
third party to purchase at least two-thirds of the outstanding equity
securities of the Company pursuant to a tender offer, exchange offer,
merger or other business combination (x) on terms which a majority of the
Company's Board of Directors determines in good faith (after consultation
with an independent, nationally recognized investment bank) to be superior
to the Company and its shareholders (in their capacity as shareholders)
from a financial point of view (taking into account, among other things,
all legal, financial, regulatory and other aspects of the proposal and
identity of the offeror) as compared to the transactions contemplated
hereby and any alternative proposed by Parent or Merger Sub in accordance
with Section 9.01(c) and (y) which is reasonably capable of being
consummated.
(b) The Company agrees that, except as set forth in Section 7.07(c),
neither its Board of Directors nor any committee thereof shall (i) approve
or recommend, or propose to approve or recommend, any Takeover Proposal or
(ii) approve, recommend or cause it to enter into any letter of intent,
agreement in principle, acquisition agreement or other similar agreement
(each, an "ACQUISITION AGREEMENT") related to any Takeover Proposal.
(c) The Company agrees that, notwithstanding anything to the contrary
herein, prior to the acceptance for payment of shares of Company Common
Stock pursuant to the Offer, the Company and/or its Board of Directors may
take the actions otherwise prohibited by Section 7.07(b) if (i) a third
party makes a Superior Proposal, (ii) the Company complies with its
obligations under Section 7.07(d), (iii) all of the conditions to the
Company's right to terminate this Agreement in accordance with Section
9.01(c) hereof have been satisfied (including the expiration of the three
(3) Business Day period described therein and the payment of all amounts
required pursuant to Section 9.03 hereof) and (iv) simultaneously
therewith, this Agreement is terminated in accordance with Section 9.01(c)
hereof.
(d) The Company agrees that in addition to the obligations of the
Company set forth in paragraphs (a), (b) and (c) of this Section 7.07,
promptly on the date of receipt thereof, the Company shall advise Parent in
writing of any request for information or any Takeover Proposal, or any
inquiry, discussions or negotiations with respect to any Takeover Proposal,
the terms and conditions of such request, Takeover Proposal, inquiry,
discussions or negotiations and the Company shall promptly provide to
Parent copies of any written materials received by the Company in
connection with any of the foregoing, and the identity of the Person or
group making any such request, Takeover Proposal or inquiry or with whom
any discussions or negotiations are taking place. The Company agrees that
it shall keep Parent fully informed of the status and details (including
amendments or proposed amendments) of any such request, Takeover Proposal
or inquiry and keep Parent fully informed as to the material details of any
information requested of or provided by the Company and as to the details
of all discussions or negotiations with respect to any such request,
Takeover Proposal or inquiry. The Company agrees that it shall
simultaneously provide to Parent any non-public information concerning the
Company provided to any other Person or group in connection with any
Takeover Proposal which was not previously provided to Parent.
(e) Parent agrees that nothing contained in this Section 7.07 shall
prohibit the Company from taking and disclosing to its shareholders a
position contemplated by Rule 14d-9 and Rule 14e-2 promulgated under the
Exchange Act with respect to any tender offer.
(f) The Company agrees that immediately following the execution of
this Agreement, (i) it shall request each Person which has heretofore
executed a confidentiality agreement in connection with such Person's
consideration of acquiring the Company or any portion thereof to return or
destroy (which destruction shall be certified in writing by an executive
officer of the Company) all confidential information heretofore furnished
to such Person by or on its behalf and (ii) the Company shall cease and
cause to be terminated immediately all existing discussions or negotiations
with any Person conducted heretofore with respect to, or that could
reasonably be expected to lead to, any Takeover Proposal.
SECTION 7.08. Notification of Certain Matters. The Company shall give
prompt notice to Parent, and Parent and Merger Sub shall give prompt notice
to the Company, of the occurrence, or failure to occur, of any event, which
occurrence or failure to occur would be likely to cause any representation
or warranty contained in this Agreement to be untrue in any material
respect at any time from the date of this Agreement to the Effective Time.
Each of the Company and Parent shall give prompt notice to the other party
of any notice or other communication from any third party alleging that the
consent of such third party is or may be required in connection with the
transactions contemplated by this Agreement.
SECTION 7.09. Antitrust Laws. (a) Each party hereto shall (i) take
promptly all actions necessary to make the filings required of it or any of
its Affiliates under any applicable Antitrust Laws in connection with this
Agreement and the transactions contemplated hereby, (ii) comply at the
earliest practicable date with any formal or informal request for
additional information or documentary material received by it or any of its
Affiliates from any Antitrust Authority and (iii) cooperate with one
another in connection with any filing under applicable Antitrust Laws and
in connection with resolving any investigation or other inquiry concerning
the transactions contemplated by this Agreement initiated by any Antitrust
Authority.
(b) Each party hereto shall use its reasonable best efforts to resolve
such objections, if any, as may be asserted with respect to the
transactions contemplated by this Agreement under any Antitrust Law.
Without limiting the generality of the foregoing, "reasonable best efforts"
shall include, without limitation:
(i) in the case of each of Parent and the Company:
(A) filing with the appropriate Antitrust Authorities at the
earliest practicable date a Notification and Report Form or
other applicable notification with respect to the transactions
contemplated by this Agreement;
(B) if Parent or the Company receives a formal request for
information and documents from an Antitrust Authority,
substantially complying with such formal request at the
earliest practicable date following the date of its receipt
thereof; and
(C) opposing vigorously any litigation relating to the Offer,
the Merger or the other transactions contemplated hereby,
including, without limitation, promptly appealing any adverse
court order; provided, however, that if any order, injunction
or decree prohibiting the Offer, the Merger or the other
transactions contemplated hereby remains in effect on September
30, 2000, Parent may terminate this Agreement provided it is
then entitled to terminate this Agreement pursuant to Section
9.01(d).
(ii) in the case of the Company only, subject to Parent's
compliance with clause (i) above, not frustrating or impeding
Parent's strategy or negotiating positions with any Antitrust
Authority; and
(iii) in the case of Parent and Merger Sub only, subject to the
Company's compliance with clause (i) above, to accept an order
requiring Parent, Merger Sub or the Company to agree or commit to
divest, hold separate, offer for sale, abandon, limit its operations
of or take similar action with respect to any assets (tangible or
intangible) or any business interest of it or any of their
Subsidiaries (including, without limitation, the Surviving
Corporation after consummation of the Merger) as are necessary to
permit Parent and Merger Sub to otherwise fully consummate the Offer
and the Merger (an "ORDER OF DISPOSITION"); provided, however, that
nothing in this Agreement shall require Parent or any of its
Subsidiaries to comply with or accept Orders of Disposition which, if
complied with, could reasonably be expected to, individually or in
the aggregate, have a Parent Material Adverse Effect.
(c) Each party hereto shall promptly inform the other parties of any
material communication made to, or received by such party from, any
Antitrust Authority or any other Governmental Authority regarding any of
the transactions contemplated hereby.
(d) For purposes of this Agreement, (i) "ANTITRUST AUTHORITIES" means
the Federal Trade Commission, the Antitrust Division, the attorneys general
of the several states of the United States, the antitrust authorities of
Brazil, Canada, Germany and any other Governmental Authority having
jurisdiction with respect to the transactions contemplated hereby pursuant
to applicable Antitrust Laws and (ii) "ANTITRUST LAW" means the Sherman
Act, as amended, the Clayton Act, as amended, the HSR Act, the Federal
Trade Commission Act, as amended, the Competition Act, European Antitrust
Laws and all other federal, state and foreign statutes, rules, regulations,
orders, decrees, administrative and judicial doctrines, and other laws that
are designed or intended to prohibit, restrict or regulate actions having
the purpose or effect of monopolization or restraint of trade.
SECTION 7.10. Directors' and Officers' Insurance. (a) The Certificate
of Incorporation and the By-Laws of the Surviving Corporation shall contain
the provisions with respect to indemnification and exculpation from
liability set forth in the Company's Certificate of Incorporation and
By-Laws on the date of this Agreement, which provisions shall not be
amended, repealed or otherwise modified for a period of six years from the
Effective Time in any manner that would adversely affect the rights
thereunder of individuals who on or prior to the Effective Time were
directors, officers, employees or agents of the Company, unless such
modification is required by law.
(b) For a period of six years from the Effective Time, the Surviving
Corporation shall either (x) maintain in effect the Company's current
directors' and officers' liability insurance covering those Persons who are
currently covered on the date of this Agreement by the Company's directors'
and officers' liability insurance policy (a copy of which has been
heretofore delivered to Parent) (the "INDEMNIFIED PARTIES"); provided,
however, that in no event shall Parent be required to expend in any one
year an amount in excess of 225% of the annual premiums currently paid by
the Company for such insurance; provided further that if the annual
premiums of such insurance coverage exceed such amount, the Surviving
Corporation shall be obligated to obtain a policy with the greatest
coverage available for a cost not exceeding such amount; provided further
that the Surviving Corporation may substitute for the Company policy
policies with at least the same coverage containing terms and conditions
which are no less advantageous and provided that said substitution does not
result in any gaps or lapses in coverage with respect to matters occurring
prior to the Effective Time or (y) if such insurance coverage is not
otherwise available, cause Parent's directors' and officers' liability
insurance then in effect to cover those Persons who are covered on the date
of this Agreement by the Company's directors' and officers' liability
insurance policy with respect to those matters covered by the Company's
directors' and officers' liability policy.
(c) The Surviving Corporation shall indemnify all Indemnified Parties
to the fullest extent permitted by applicable law with respect to all acts
and omissions arising out of such individuals' services as officers,
directors, employees or agents of the Company or any of its Subsidiaries or
as trustees or fiduciaries of any plan for the benefit of employees of the
Company or any of its Subsidiaries occurring prior to the Effective Time,
including, without limitation, the transactions contemplated by this
Agreement. Without limitation of the foregoing, in the event any such
Indemnified Party is or becomes involved in any capacity in any action,
proceeding or investigation in connection with any matter, including,
without limitation, the transactions contemplated by this Agreement,
occurring prior to, and including, the Effective Time, the Surviving
Corporation, from and after the Effective Time, shall pay, as incurred,
such Indemnified Party's reasonable legal and other expenses (including the
cost of any investigation and preparation) incurred in connection
therewith. Subject to Section 7.10(d) below, the Surviving Corporation
shall pay all reasonable expenses, including attorneys' fees, that may be
incurred by any Indemnified Party in enforcing this Section 7.10 or any
action involving an Indemnified Party resulting from the transactions
contemplated by this Agreement.
(d) Any Indemnified Party wishing to claim indemnification under
paragraph (a) or (c) of this Section 7.10, upon learning of any such claim,
action, suit, proceeding or investigation, shall promptly notify the
Surviving Corporation thereof. In the event of any such claim, action,
suit, proceeding or investigation (whether arising before or after the
Effective Time), (i) the Surviving Corporation shall have the right, from
and after the Effective Time, to assume the defense thereof (with counsel
engaged by the Surviving Corporation to be reasonably acceptable to the
relevant Indemnified Party) and the Surviving Corporation shall not be
liable to such Indemnified Party for any legal expenses of other counsel or
any other expenses subsequently incurred by such Indemnified Party in
connection with the defense thereof, (ii) such Indemnified Party will
cooperate in the defense of any such matter and (iii) the Surviving
Corporation shall not be liable for any settlement effected without its
prior written consent; provided that the Surviving Corporation shall not
have any obligation hereunder to any Indemnified Party when and if a court
of competent jurisdiction shall ultimately determine, and such
determination shall have become final, that the indemnification of such
Indemnified Party in the manner contemplated hereby is prohibited by
applicable law.
SECTION 7.11. Public Announcements. Parent and the Company shall
consult with each other before issuing any press release or otherwise
making any public statements with respect to the transactions contemplated
by this Agreement and shall not issue any such press release or make any
such public statement prior to such consultation and review by the other
party of such release or statement, except as may be required by law, court
process or by obligations pursuant to any listing agreement with a national
securities exchange.
SECTION 7.12. Transfer Tax. The Company and Parent shall cooperate in
the preparation, execution and filing of all returns, questionnaires,
applications or other documents regarding any real property transfer or
gains, sales, use, transfer, value added, stock transfer and stamp taxes,
any transfer, recording, registration and other fees and any similar taxes
which become payable in connection with the transactions contemplated by
this Agreement (together with any related interest, penalties or additions
to tax, "TRANSFER TAXES"). All Transfer Taxes shall be paid by the Company
and expressly shall not be a liability of any holder of the Company Common
Stock.
SECTION 7.13. NYSE Listing. Parent shall use its reasonable best
efforts to cause the Parent Common Stock to be issued in connection with
the Offer and the Merger to be listed on the NYSE, subject to official
notice of issuance.
SECTION 7.14. Affiliates of the Company. Not less than 15 days prior
to the Effective Time, the Company shall deliver to Parent a letter
identifying all Persons who, to the Company's knowledge, at the Effective
Time, may be deemed to be "affiliates" of the Company for purposes of Rule
145 under the Securities Act or who may otherwise be deemed to be
Affiliates of the Company (the "RULE 145 AFFILIATES"). The Company shall
use its reasonable best efforts to cause each Person who is identified as a
Rule 145 Affiliate in such list to deliver to Parent prior to the Effective
Time, a written agreement, in the form attached hereto as Exhibit A (a
"RULE 145 AFFILIATE AGREEMENT").
SECTION 7.15. Employee Benefits. (a) Parent covenants and agrees
that, during the period commencing at the Effective Time through at least
December 31, 2001, it will provide (or shall cause the Surviving
Corporation to provide) nonrepresented current and former employees of the
Company and its Subsidiaries with salary and benefits under employee
benefit plans that are no less favorable, in the aggregate, than those
currently provided by the Company and its Subsidiaries to such employees
(including, without limitation, benefits pursuant to qualified and
nonqualified retirement plans, savings plans, medical, dental, disability
and life insurance plans and programs, deferred compensation arrangements,
bonus and incentive compensation plans, and retiree benefit plans, policies
and arrangements). Parent shall cause the Surviving Corporation to
recognize service with the Company and its Subsidiaries and any predecessor
entities (and any other service credited by the Company under similar
benefit plans) for all purposes (including for vesting, eligibility to
participate, severance, and benefit accrual); and Parent and the Surviving
Corporation shall recognize (or cause to be recognized) service with the
Company and its Subsidiaries and any predecessor entities (and any service
credited by the Company under similar benefit plans) for purposes of
vesting, eligibility to participate and severance under any employee
benefit plan or arrangement maintained by Parent, the Surviving Corporation
or any Subsidiary or Affiliate of Parent and for purposes of benefit
accrual under any employee welfare benefit plan or arrangement maintained
by Parent, the Surviving Corporation or any Subsidiary or Affiliate of
Parent; provided, however, that solely to the extent necessary to avoid
duplication of benefits, amounts payable under employee benefit plans
provided by Parent, the Surviving Corporation or a Parent Subsidiary may be
reduced by amounts payable under similar Company Employee Benefit Plans
with respect to the same periods of service. Any benefits accrued by
employees of the Company or any Subsidiary of the Company prior to the
Effective Time under any defined benefit pension plan currently maintained
by the Company or any Subsidiary of the Company that employs a final
average pay formula shall be calculated based on the employees' final
average pay with Parent, the Surviving Corporation or any Parent Subsidiary
or other Affiliate employing the employees for as long as the current final
average pay benefit formula under such plan is in effect. From and after
the Effective Time, Parent and the Surviving Corporation shall, and Parent
shall cause the Subsidiaries and Affiliates of Parent to, (i) waive any
pre-existing condition limitations to the extent that the employees or
their beneficiaries are not subject to such pre-existing condition
limitations under the comparable Company Employee Benefit Plans prior to
the Effective Time, and (ii) credit any deductibles and out-of-pocket
expenses that are applicable and/or covered under the Company Employee
Benefit Plans, and are incurred by the employees and their beneficiaries
during the portion of the calendar year prior to participation in the
benefit plans provided by Parent, the Surviving Corporation and any
Subsidiary or Affiliate of Parent. The provisions of this Section 7.15
shall not create in any employee or former employee of the Company or any
Subsidiary of the Company any rights to employment or continued employment
with Parent, the Surviving Corporation or the Company or any of their
respective Subsidiaries or Affiliates or any right to specific terms or
conditions of employment.
(b) During the period commencing at the Effective Time and through at
least December 31, 2001, Parent and the Surviving Corporation shall honor,
and Parent shall cause its Subsidiaries and Affiliates to honor, in
accordance with its terms, the Company's severance policy in effect as of
the Closing Date as set forth in Section 7.15 of the Company Disclosure
Letter. During the period commencing at the Effective Time and through at
least the second anniversary of the Closing Date, Parent and the Surviving
Corporation shall honor, and Parent shall cause its Subsidiaries and
Affiliates to honor, in accordance with its terms, the Company's Severance
Plan for Key Employees. Parent agrees that up to 27 employees listed on
Section 7.15 of the Company Disclosure Schedule may be added as
participants in the Company's Severance Plan for Key Employees. During the
period commencing at the Effective Time and through at least the first
anniversary of the Closing Date, Parent and the Surviving Corporation shall
honor, and Parent shall cause its Subsidiaries and Affiliates to honor, in
accordance with its terms, the Reorganization Severance Plan which the
Company will establish prior to the Effective Time in accordance with the
term sheet attached to Section 7.15 of the Company Disclosure Letter.
Parent shall cause the Surviving Corporation to honor all accrued
obligations under its deferred compensation and supplemental retirement
plans (including, without limitation, such plans set forth in Section 7.15
of the Company Disclosure Letter). For purposes of this Section 7.15(b),
"PHANTOM SHARE" shall mean each unit of deferred compensation or
supplemental savings which pursuant to the governing plan and/or
arrangement (of, or with, the Company or a Company Subsidiary) is measured
by, or deemed invested in, a share of the Company Common Stock, including,
without limitation, a contingently credited share and a vested deferred
restricted stock unit. Parent and the Company agree to the following:
(i) as of the Effective Time, each Phantom Share under a plan or
arrangement which gives the participants no investment alternatives
shall be automatically converted into the number of phantom shares of
Parent Common Stock equal to the sum of (A) $50 divided by the
Average Price and (B) the Exchange Ratio; and
(ii) (A) one-third of each Phantom Share under a plan or
arrangement which gives the participants investment alternatives
shall be automatically converted into the number of phantom shares of
Parent Common Stock equal to the Exchange Ratio; and (B) two-thirds
of each Phantom Share shall automatically be deemed converted into
$50 in cash which shall be deemed invested in the most conservative
deemed investment alternative under the applicable plan or
arrangement until new instructions as to deemed investments are
received from the participant.
The terms and conditions applicable to each Phantom Share under the
Company's existing plans and arrangements shall continue to apply to the
related converted Phantom Share.
(c) In addition, Parent shall cause the Surviving Corporation to
honor, in accordance with their terms, any individual employment, change of
control, severance, retirement or termination agreement between the Company
or any Subsidiary of the Company, and any current or former officer,
director or employee of the Company or any Subsidiary of the Company,
including the Company's incentive programs and change in control agreements
between the Company and certain of its officers, in each case as set forth
in Section 7.15 of the Company Disclosure Letter (including the Trust
Agreement), except as otherwise agreed to by any such officer, director or
employee. Parent shall also cause the Surviving Corporation to honor the
Executive Life Insurance Plan, in accordance with its terms existing
immediately prior to the execution of this Agreement, and the related Split
Dollar Life Insurance Agreements.
(d) The provisions of this Section 7.15 shall apply to employees of
the Company and its Subsidiaries whose terms and conditions of employment
are not subject to a collective bargaining agreement and, to the extent
required by a collective bargaining agreement, to employees of the Company
and its Subsidiaries whose terms and conditions of employment are subject
to a collective bargaining agreement.
(e) Parent acknowledges that a "POTENTIAL CHANGE IN CONTROL" has
occurred as defined in the Trust Agreement and that the Company shall
deliver the Funding Amount to the trustee under the Trust Agreement.
(f) Parent agrees that the consummation of the Merger shall constitute
a "CHANGE IN CONTROL" of the Company for all purposes within the meaning of
all applicable compensation or benefit plans or agreements of the Company
and its subsidiaries, including, without limitation, the Company Stock
Plans and the employment agreements set forth on the Company Disclosure
Letter.
(g) The Company shall deliver to Parent copies of all notices,
schedules and other documents it proposes to deliver to, or receives from,
the trustee under the Trust Agreement after the date hereof, or in
connection with the transactions contemplated hereby, including, without
limitation, the Payment Schedule, as defined in the Trust Agreement. Parent
shall have a reasonable opportunity to review such notices, schedules and
other documents proposed to be delivered to such trustee prior to such
delivery thereof.
(h) Parent agrees that the Company shall pay a pro rata bonus to each
of the approximately 650 participants in its annual bonus plan in respect
of such participant's employment with the Company in 2000 through the
Closing Date. The amount of such participant's bonus shall be determined as
follows: (i) if such participant is not terminated by the Company, the
Surviving Corporation or Parent (as the case may be) on or prior to
December 31, 2000, such participant shall receive a pro rata bonus equal to
the amount of such participant's "actual bonus" for 2000 through the
Closing Date, which amount shall be paid on or prior to February 28, 2001
in accordance with Parent's standard policies in effect for bonus payments
in respect of 2000; provided, however, that such participant shall not have
voluntarily terminated his or her employment on or prior to the bonus
payment date; and (ii) if such participant is terminated without "cause" by
the Company, the Surviving Corporation or Parent (as the case may be) on or
prior to December 31, 2000, such participant shall receive a pro rata bonus
equal to the amount of such participant's "actual bonus" for 2000 through
the Closing Date, which amount shall be paid within five days of such
participant's termination. For purposes of this Section 7.15(h), "actual
bonus" shall be determined by the Company in a manner consistent with past
practice (except that it shall be determined as of the Closing Date) and
shall be reviewed with and reasonably acceptable to Parent, and "cause"
shall have the definition of such term in the Severance Plan for Key
Employees. For the avoidance of doubt, any participant who is terminated
with "cause" or who voluntarily terminates his or her employment on or
prior to the bonus payment date shall not receive any bonus.
Notwithstanding the foregoing provisions of this Section 7.15(h), a Named
Executive entitled to a payment at the time of his termination pursuant to
Section 7.15(j) shall also be entitled to be paid his pro rata bonus
pursuant to this Section 7.15(h).
(i) Parent agrees that it shall pay (or cause to be paid) a pro rata
bonus to each of the approximately 650 participants in the Company's annual
bonus plan in respect of such participant's employment with the Surviving
Corporation or Parent for the period commencing on the day following the
Closing Date and ending on December 31, 2000 (the "POST-CLOSING PERIOD");
provided that a similarly situated employee of Parent participates in
Parent's bonus plans. The amount of such participant's bonus shall be
determined as follows: (i) if a participant is not terminated by the
Surviving Corporation or Parent (as the case may be) on or prior to
December 31, 2000, such participant shall receive a pro rata bonus equal to
the amount of such participant's "Company target bonus" for the
Post-Closing Period; provided, however, that such participant shall not
have voluntarily terminated his or her employment on or prior to the bonus
payment date; and (ii) if a participant is terminated without "cause" by
the Surviving Corporation or Parent (as the case may be) on or prior to
December 31, 2000, such participant shall receive a pro rata bonus equal to
the amount of such participant's "Company target bonus" for the period
commencing on the day following the Closing Date and ending on such
termination date, in each case, which amount shall be paid on or prior to
February 28, 2001 in accordance with Parent's standard policies in effect
for bonus payments in respect of 2000. For purposes of this Section
7.15(i), "Company target bonus" shall be reasonably determined by Parent by
application of the Company's targets (as in effect on the date hereof) and
Parent's performance measures (as in effect on the date hereof), and
"cause" shall have the definition of such term in the Severance Plan for
Key Employees. For the avoidance of doubt, any participant who is
terminated with "cause" or who voluntarily terminates his or her employment
on or prior to the bonus payment date shall not receive any bonus.
Notwithstanding the foregoing provisions of this Section 7.15(i), a Named
Executive entitled to a payment at the time of his termination pursuant to
Section 7.15(j) shall also be entitled to be paid his pro rata bonus
pursuant to this Section 7.15(i).
(j) With respect to Messrs. Olson, Nichols, Brown, Fox, Corey,
Diforio, Hart, McWilliams and Nimons (each, a "NAMED EXECUTIVE"), unless
otherwise agreed in writing by such Named Executive and Parent after the
execution of this Agreement and prior to any termination of employment, he
shall receive, at the time of his termination of employment by wire
transfer to an account designated by him, the respective aggregate payment
on account of the lump sum amounts (including, without limitation, the
Gross-Up Payment) to which he will become entitled upon such termination
under his employment or severance agreement and this Section 7.15(j) plus
the pro rata bonus to which he is entitled pursuant to Sections 7.15(h) and
7.15(i); provided that (i) such Named Executive continues to be employed by
the Company after the Closing Date (being paid his salary in effect
immediately prior to the Closing) and does not terminate his employment
prior to December 31, 2000, (ii) the date of termination of such Named
Executive shall be at the election of Parent (if such termination occurs
before December 31, 2000), (iii) such Named Executive agrees that he will
not in any way knowingly make any statement, written or oral, or take any
other action relating to Parent, the Company, the Surviving Corporation or
their respective officers, directors or shareholders that would disparage
or otherwise harm Parent, the Company, the Surviving Corporation or their
respective business or reputation or those of any of its officers,
directors or shareholders (except as required in connection with any
governmental, judicial or regulatory agency proceeding) and (iv) such Named
Executive agrees that, at least until the earlier of December 31, 2000 or
the termination of his employment at the election of Parent, he will fully
cooperate with Parent by providing Parent with such information about the
Company (and information about such other companies which is not covered by
confidentiality agreements with those companies) as it may reasonably
request and he will use his reasonably best efforts to take, or cause to be
taken, all actions and to do, or cause to be done, all things necessary or
desirable in order to effect an orderly and expeditious integration of the
Company and Parent after the Closing. Such termination shall be deemed a
termination without Cause for all purposes of such severance or employment
agreement and all agreements and plans applicable to such individual.
(k) Prior to the Effective Time, the Company shall establish a
retention plan for certain of the Company's employees. Such retention plan
shall have an aggregate cost of up to $11,500,000 and shall contain
participants who are determined as reasonably and mutually acceptable to
Parent and the Company. Payment under such retention plan shall be made to
the Company's employees who are employed by the Company at the first
anniversary of the Closing Date (or who have previously been terminated
without cause, terminated as a result of death or disability or terminated
by the participant as a result of such participant's reduction in salary or
relocation, unless such relocation is to the Borough of Manhattan in New
York, New York, if the participant is located in Stamford, Connecticut
prior to the Effective Time, or to a location not more than 35 miles away
from such participant's principal place of employment prior to the
Effective Time) within five days of such anniversary date (or within five
days of such date of termination, if applicable). Such payment made to any
participant shall equal 50% of such participant's salary as in effect
immediately prior to the Closing.
SECTION 7.16. Section 16 Matters. Prior to the Effective Time, Parent
and the Company shall take all such steps as may be required to cause any
dispositions of Company Common Stock (including derivative securities with
respect to the Company Common Stock) and acquisitions of Parent Common
Stock (including derivative securities with respect to Parent Common Stock)
resulting from the transactions contemplated by this Agreement by each
individual who is subject to the reporting requirements of Section 16(a) of
the Exchange Act with respect to the Company to be exempt under Rule 16b-3
promulgated under the Exchange Act, such steps to be taken in accordance
with the No-Action Letter, dated January 12, 1999, issued by the SEC to
Skadden, Arps, Slate, Meagher & Flom LLP.
SECTION 7.17. Voting of Shares. Parent agrees to vote all shares of
Company Common Stock beneficially owned by it or any of its Subsidiaries in
favor of adoption of this Agreement at the Company Shareholder Meeting.
ARTICLE 8
CONDITIONS TO THE MERGER
SECTION 8.01. Conditions to Obligations of Each Party. The
obligations of the Company, Parent and Merger Sub to consummate the Merger
are subject to the satisfaction of the following conditions:
(a) to the extent required by applicable law this Agreement shall have
been approved and adopted by the shareholders of the Company in accordance
with the BCL;
(b) no provision of any applicable law or regulation and no judgment,
injunction, order or decree shall prohibit the consummation of the Merger;
(c) Parent Common Stock to be issued in the Merger shall have been
authorized for listing on the NYSE, subject to official notice of issuance;
(d) the Merger Registration Statement shall have become effective in
accordance with the provisions of the Securities Act, no stop order
suspending the effectiveness of the Merger Registration Statement shall
have been issued by the SEC and no proceedings for that purpose shall have
been initiated by the SEC and not concluded or withdrawn and all state
securities or blue sky authorizations necessary to carry out the
transactions contemplated hereby shall have been obtained and be in effect;
and
(e) Merger Sub shall have purchased shares of Company Common Stock
pursuant to the Offer.
SECTION 8.02. Conditions To the Obligations of Parent and Merger Sub.
The obligations of Parent and Merger Sub to consummate the Merger are
subject to the satisfaction of the following further condition: that the
Company shall have performed in all material respects all of its
obligations hereunder required to be performed by it at or prior to the
Effective Time.
ARTICLE 9
TERMINATION AND ABANDONMENT
SECTION 9.01. Termination. This Agreement may be terminated at any
time prior to the Effective Time, whether before or after the Company
Shareholder Approval:
(a) by mutual written consent of Parent and the Company; or
(b) by Parent:
(i) if at any time prior to the acceptance for payment of shares
of Company Common Stock pursuant to the Offer, the Company has
breached in any material respect any representation, warranty,
covenant or other agreement contained in this Agreement, which (i)
would give rise to the failure of a condition set forth in clause (f)
of Annex I, (ii) cannot be or has not been cured prior to the
Termination Date and (iii) has not been waived by Parent pursuant to
the provisions hereof;
(ii) if at any time after the date hereof and prior to the
acceptance for payment of shares of Company Common Stock pursuant to
the Offer, (A) the Company, or its Board of Directors, as the case
may be, shall have (w) entered into any agreement with respect to any
Takeover Proposal other than the Offer or the Merger and other than a
confidentiality agreement permitted under Section 7.07, (x) amended,
conditioned, qualified, withdrawn or modified, or proposed or
resolved to do so, in a manner adverse to Parent or Merger Sub, its
approval and recommendation of the Offer, the Merger and this
Agreement, or (y) approved or recommended, or proposed to approve or
recommend, any Takeover Proposal other than the Offer or the Merger,
or (B) the Company or the Company's Board of Directors or any
committee thereof shall have resolved to do any of the foregoing; or
(iii) if the Company breaches any of its obligations under
Section 7.07 or Section 9.01(c) hereof;
(c) by the Company if at any time prior to the acceptance for payment
of shares of Company Common Stock pursuant to the Offer a Superior Proposal
is received by the Company and the Board of Directors of the Company
reasonably determines in good faith (after receiving the advice of outside
legal counsel) that it is necessary to terminate this Agreement and enter
into an agreement to effect the Superior Proposal to comply with its
fiduciary duties under applicable law; provided that the Company may not
terminate this Agreement pursuant to this Section 9.01(c) unless and until
(i) three (3) Business Days have elapsed following delivery to Parent of a
written notice of such determination by the Board of Directors of the
Company and during such three (3) Business Day period the Company has fully
cooperated with Parent, including, without limitation, informing Parent of
the terms and conditions of such Superior Proposal, and the identity of the
Person making such Superior Proposal, with the intent of enabling both
parties to agree to a modification of the terms and conditions of this
Agreement so that the transactions contemplated hereby may be effected;
(ii) at the end of such three (3) Business Day period the Takeover Proposal
continues to constitute a Superior Proposal and the Board of Directors of
the Company confirms its determination (after receiving the advice of
outside legal counsel) that it is necessary to terminate this Agreement and
enter into an agreement to effect the Superior Proposal to comply with its
fiduciary duties under applicable law; and (iii) (x) at or prior to such
termination, Parent has received all fees and Expenses set forth in Section
9.03 hereof by wire transfer in same day funds and (y) immediately
following such termination the Company enters into a definitive
acquisition, merger or similar agreement to effect the Superior Proposal;
(d) by either Parent or the Company:
(i) if the Offer has not been consummated on or before September
30, 2000 (the "TERMINATION DATE"); provided that the right to
terminate this Agreement pursuant to this clause shall not be
available to any party whose failure to fulfill any material
obligation of this Agreement or other material breach of this
Agreement has been the cause of, or resulted in, the failure of the
Offer to have been consummated on or prior to the aforesaid date; or
(ii) if any court of competent jurisdiction or any Governmental
Authority shall have issued an order, decree or ruling or taken any
other action permanently restricting, enjoining, restraining or
otherwise prohibiting acceptance for payment of, and payment for,
shares of Company Common Stock pursuant to the Offer or consummation
of the Merger and such order, decree, ruling or other action shall
have become final and nonappealable.
SECTION 9.02. Effect of Termination. In the event of termination of
this Agreement by Parent or the Company, as provided in Section 9.01, this
Agreement shall forthwith become void and there shall be no liability
hereunder on the part of the Company, Parent or Merger Sub or their
respective officers or directors (except as set forth in Section 7.02, this
Section 9.02 and Sections 9.03, 10.03, 10.04, 10.05, 10.11 and 10.13, which
shall survive the termination); provided, however, that nothing contained
in this Section 9.02 or in Section 9.03 shall relieve any party hereto from
any liability for any breach of this Agreement.
SECTION 9.03. Payment of Certain Fees. (a) If this Agreement is
terminated by Parent in accordance with Section 9.01(b)(i),
9.01(b)(ii)(A)(w), 9.01(b)(ii)(A)(y), 9.01(b)(ii)(B) (unless related to a
resolution to take any of the actions set forth in Section
9.01(b)(ii)(A)(x), in which case Section 9.03(c) shall apply) or
9.01(b)(iii) hereof or by the Company pursuant to Section 9.01(c), then the
Company shall (A) reimburse Parent for all of its Expenses and (B) pay to
Parent in immediately available funds a termination fee in an amount equal
to $300 million (the "TERMINATION FEE").
(b) If this Agreement is terminated by Parent or the Company pursuant
to Section 9.01(d)(i) hereof and (x) a Takeover Proposal has been made and
publicly announced or communicated to the Company's shareholders after the
date of this Agreement and prior to the Termination Date and, to the extent
applicable, (y) concurrently with or within twelve (12) months of the date
of such termination a Third Party Acquisition Event occurs, then the
Company shall (i) within one Business Day of the date of termination
pursuant to Section 9.01(d)(i) (A) pay to Parent 50% of the Termination Fee
and (B) reimburse Parent for all of its Expenses, and (ii) within one
Business Day of the occurrence of such a Third Party Acquisition Event
(including any revisions or amendments thereto) pay to Parent 50% of the
Termination Fee.
"THIRD PARTY ACQUISITION EVENT" shall mean (i) the consummation of a
Takeover Proposal involving the purchase of a majority of either the equity
securities of the Company or of the consolidated assets of the Company and
its Subsidiaries, taken as a whole, or any such transaction that, if it had
been proposed prior to the termination of this Agreement would have
constituted a Takeover Proposal or (ii) the entering into by the Company or
any of its Subsidiaries of a definitive agreement with respect to any such
transaction.
"EXPENSES" shall mean documented and reasonable out-of-pocket fees
and expenses up to a maximum aggregate amount of $10 million incurred or
paid in connection with the Merger or the consummation of any of the
transactions contemplated by this Agreement, including, but not limited to,
all filing fees, printing fees and reasonable fees and expenses of law
firms, commercial banks, investment banking firms, accountants, experts and
consultants.
(c) If this Agreement is terminated by Parent pursuant to Section
9.01(b)(ii)(A)(x), then (i) the Company shall (A) pay to Parent 50% of the
Termination Fee and (B) reimburse Parent for all of its Expenses and (ii)
if concurrently with or within 12 months after such termination a Third
Party Acquisition Event occurs, then the Company shall pay to Parent 50% of
the Termination Fee within one Business Day of the occurrence of such a
Third Party Acquisition Event (including any revisions or amendments
thereto).
(d) Any payment of the Termination Fee (and reimbursement of Expenses)
pursuant to this Section 9.03 shall be made within one Business Day after
termination of this Agreement (or as otherwise expressly set forth in this
Agreement) by wire transfer of immediately available funds. If either party
fails to pay to (or reimburse) the other party any fee or expense due
hereunder (including the Termination Fee), such party shall pay the costs
and expenses (including legal fees and expenses) in connection with any
action, including the filing of any lawsuit or other legal action, taken to
collect payment, together with interest on the amount of any unpaid fee
and/or expense at the publicly announced prime rate of Citibank, N.A. from
the date such fee was required to be paid to the date it is paid.
ARTICLE 10
MISCELLANEOUS
SECTION 10.01. Representations and Warranties. The respective
representations and warranties of the Company, on the one hand, and Parent
and Merger Sub, on the other hand, contained herein or in any certificates
or other documents delivered prior to or at the Closing shall not be deemed
waived or otherwise affected by any investigation made by any party. Each
and every such representation and warranty shall expire with, and be
terminated and extinguished by, the Closing and thereafter none of the
Company, Parent or Merger Sub shall be under any liability whatsoever with
respect to any such representation or warranty. This Section 10.01 shall
have no effect upon any other obligation of the parties hereto, whether to
be performed before or after the Effective Time.
SECTION 10.02. Extension; Waiver. At any time prior to the Effective
Time, the parties hereto, by action taken by or on behalf of the respective
Boards of Directors of the Company, Parent or Merger Sub, may (i) extend
the time for the performance of any of the obligations or other acts of the
other parties hereto, (ii) waive any inaccuracies in the representations
and warranties contained herein by any other applicable party or in any
document, certificate or writing delivered pursuant hereto by any other
applicable party or (iii) waive compliance with any of the agreements or
conditions contained herein. Any agreement on the part of any party to any
such extension or waiver shall be valid only if set forth in an instrument
in writing signed on behalf of such party.
SECTION 10.03. Notices. All notices, requests, demands, waivers and
other communications required or permitted to be given under this Agreement
shall be in writing and shall be deemed to have been duly given if
delivered in person or mailed, certified or registered mail with postage
prepaid, or sent by telex, telegram or telecopier, as follows:
(a) if to the Company, to it at:
Champion International Corporation
One Champion Plaza
Stamford, Connecticut 06921
Telecopy: 203-358-6562
Attention: General Counsel
with a copy (which shall not constitute notice) to:
Skadden, Arps, Slate, Meagher & Flom LLP
Four Times Square
New York, New York 10036
Telecopy: 212-735-2000
Attention: Blaine V. Fogg, Esq.
Joseph A. Coco, Esq.
(b) if to either Parent or Merger Sub, to it at:
International Paper Company
2 Manhattanville Road
Purchase, New York 10577
Telecopy: 914-397-1909
Attention: General Counsel
in each case, with a copy (which shall not constitute notice) to:
Davis Polk & Wardwell
450 Lexington Avenue
New York, New York 10017
Telecopy: 212-450-5744
Attention: Dennis S. Hersch, Esq.
or to such other Person or address as any party shall specify by notice in
writing to each of the other parties. All such notices, requests, demands,
waivers and communications shall be deemed to have been received on the
date of delivery unless if mailed, in which case on the third Business Day
after the mailing thereof except for a notice of a change of address, which
shall be effective only upon receipt thereof.
SECTION 10.04. Entire Agreement. This Agreement and the schedules and
other documents referred to herein or delivered pursuant hereto,
collectively contain the entire understanding of the parties hereto with
respect to the subject matter contained herein and supersede all prior
agreements and understandings, oral and written, with respect thereto.
SECTION 10.05. Binding Effect; Benefit; Assignment. This Agreement
shall inure to the benefit of and be binding upon the parties hereto and,
with respect to the provisions of Sections 7.10, 7.15(c), 7.15(j) and 7.16
hereof, shall inure to the benefit of the Persons or entities benefitting
from the provisions thereof who are intended to be third-party
beneficiaries thereof and their respective successors and permitted
assigns, but neither this Agreement nor any of the rights, interests or
obligations hereunder shall be assigned by any of the parties hereto
without the prior written consent of the other parties, except that Merger
Sub may assign and transfer its right and obligations hereunder to any of
its Affiliates. Except as provided in the immediately preceding sentence,
nothing in this Agreement, expressed or implied, is intended to confer on
any Person other than the parties hereto or their respective successors and
permitted assigns, any rights, remedies, obligations or liabilities under
or by reason of this Agreement.
SECTION 10.06. Amendment and Modification. Subject to applicable law,
this Agreement may be amended, modified and supplemented in writing by the
parties hereto in any and all respects before the Effective Time
(notwithstanding the Company Shareholder Approval), by action taken by the
respective Boards of Directors of Parent, Merger Sub and the Company or by
the respective officers authorized by such Boards of Directors or
otherwise, as the case may be; provided, however, that after the Company
Shareholder Approval, no amendment shall be made which by law requires
further approval by the shareholders of the Company without such further
approval.
SECTION 10.07. Further Actions. Each of the parties hereto agrees
that, except as otherwise provided in this Agreement and subject to its
legal obligations, it will use its reasonable best efforts to fulfill all
conditions precedent specified herein, to the extent that such conditions
are within its control, and to do all things reasonably necessary to
consummate the transactions contemplated hereby.
SECTION 10.08. Headings. The descriptive headings of the several
Articles and Sections of this Agreement are inserted for convenience only,
do not constitute a part of this Agreement and shall not affect in any way
the meaning or interpretation of this Agreement.
SECTION 10.09. Enforcement. The parties agree that irreparable damage
would occur in the event that any of the provisions of this Agreement were
not performed in accordance with their specific terms. It is accordingly
agreed that the parties shall be entitled to specific performance of the
terms hereof, this being in addition to any other remedy to which they are
entitled at law or in equity.
SECTION 10.10. Counterparts. This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original, and all of which
together shall be deemed to be one and the same instrument.
SECTION 10.11. Applicable Law. This Agreement and the legal relations
between the parties hereto shall be governed by and construed in accordance
with the laws of the State of New York, without regard to the conflict of
laws rules thereof.
SECTION 10.12. Severability. If any term, provision, covenant or
restriction contained in this Agreement is held by a court of competent
jurisdiction or other authority to be invalid, void, unenforceable or
against its regulatory policy, the remainder of the terms, provisions,
covenants and restrictions contained in this Agreement shall remain in full
force and effect and shall in no way be affected, impaired or invalidated.
SECTION 10.13. Waiver of Jury Trial. Each of the parties to this
Agreement hereby irrevocably waives all right to a trial by jury in any
action, proceeding or counterclaim arising out of or relating to this
Agreement or the transactions contemplated hereby.
[SIGNATURE PAGE FOLLOWS]
IN WITNESS WHEREOF, each of Parent, Merger Sub and the Company has
caused this Agreement to be executed by its officers thereunto duly
authorized, all as of the date first above written.
INTERNATIONAL PAPER COMPANY
By: /s/ William B. Lytton
--------------------------------------
Name: William B. Lytton
Title: Senior Vice President and
General Counsel
CONDOR ACQUISITION CORPORATION
By: /s/ C. Cato Ealy
--------------------------------------
Name: C. Cato Ealy
Title: Vice President
CHAMPION INTERNATIONAL CORPORATION
By: /s/ Steven B. Brown
--------------------------------------
Name: Steven B. Brown
Title: Senior Vice President and
General Counsel
ANNEX I
Notwithstanding any other provision of the Offer, but subject to
compliance with Section 2.01(a) of the Agreement and Plan of Merger dated
as of May 12, 2000 among Parent, Merger Sub and the Company (the "MERGER
AGREEMENT") (each defined term used herein shall have the meaning assigned
to such term in the Merger Agreement), Merger Sub shall not be required to
accept for payment or pay for any shares of Company Common Stock tendered
pursuant to the Offer, and may terminate or amend the Offer in accordance
with the Merger Agreement, if (i) prior to the expiration date of the
Offer, (A) the Minimum Condition shall not have been satisfied, or (B) the
applicable waiting period under the HSR Act, any of the European Antitrust
Laws or the Competition Act shall not have expired or been terminated; or
(ii) on or after the date of the Merger Agreement and at or prior to the
expiration date of the Offer, any of the other conditions to the Offer are
not satisfied. The other conditions are as follows:
(a) Parent Common Stock to be issued in the Offer shall have been
authorized for listing on the NYSE, subject to official notice of issuance;
(b) The Offer Registration Statement shall have become effective in
accordance with the provisions of the Securities Act, no stop order
suspending the effectiveness of the Offer Registration Statement shall have
been issued by the SEC and no proceedings for that purpose shall have been
initiated by the SEC and not concluded or withdrawn and all state
securities or blue sky authorizations necessary to consummate the Offer
shall have been obtained and be in effect;
(c) There shall not have been issued by any federal, state or foreign
court or by any federal, state or foreign governmental or regulatory
agency, body or authority and be in effect a preliminary or permanent
injunction or other order which prohibits, restrains, restricts or enjoins
the consummation of the Offer;
(d) There shall not have been enacted, entered, promulgated or
enforced by any court or governmental authority any federal, state or
foreign statute, rule, regulation, executive order, decree or order of any
kind which prohibits, restrains, restricts or enjoins the consummation of
the Offer or has the effect of making the Offer illegal;
(e) There shall not have occurred any event that has had or could
reasonably be expected to have, individually or in the aggregate, a Company
Material Adverse Effect;
(f) (i) The Company shall not have breached or failed to perform in
all material respects any of its obligations under the Merger Agreement,
(ii) the representations and warranties of the Company contained in the
Merger Agreement that are qualified by reference to a Company Material
Adverse Effect shall be true when made or at any time prior to the
consummation of the Offer as if made at and as of such time (other than
representations and warranties which by their terms address matters only as
of another specified date, which shall be true and correct only as of such
date), or (iii) the representations and warranties of the Company contained
in the Merger Agreement that are not so qualified shall be true when made
or at any time prior to the consummation of the Offer as if made at and as
of such time (other than representations and warranties which by their
terms address matters only as of another specified date, which shall be
true and correct only as of such date), except, in the case of clause (iii)
only, for such inaccuracies as are not reasonably likely to, individually
or in the aggregate, result in a Company Material Adverse Effect; and
(g) The Merger Agreement shall not have been terminated in accordance
with its terms;
which, in the sole judgment of Parent in any such case, and regardless of
the circumstances (including any action or omission by Parent) giving rise
to any such condition, makes it inadvisable to proceed with such acceptance
for payment or payment.
