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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE
14D-9
Solicitation/Recommendation Statement
Pursuant to Section 14(d)(4) of the
Securities Exchange Act of 1934
CRSS Inc.
(Name of Subject Company)
CRSS Inc.
(Name of Person(s) Filing Statement)
Common Stock, $1.00 par value
(Title of Class of Securities)
126 270 10 7
(CUSIP Number)
CRSS Inc.
1177 West Loop South, Suite 800
Houston, Texas 77027
Attn: William J. Gardiner, Senior Vice President,
Chief Financial Officer and Treasurer
(713) 552-2160
(Name, Address and Telephone Number
of Person Authorized to Receive
Notices and Communications)
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ITEM 1. SECURITY AND SUBJECT COMPANY.
The name of the subject company is CRSS Inc., a Delaware corporation
(the "Company"), and the address of the Company is 1177 West Loop South, Suite
800, Houston, Texas 77027-9096. The title of the class of equity securities to
which this statement relates is the Common Stock, $1.00 par value (the
"Shares").
ITEM 2. TENDER OFFER OF THE BIDDER.
This Statement relates to a tender offer from ATC Acquisition Corp., a
Delaware corporation (the "Purchaser"), and a wholly owned subsidiary of
American Tractebel Corporation, a Delaware corporation ("Parent"), disclosed in
a Tender Offer Statement on Schedule 14D-1, dated May 18, 1995 (the "Schedule
14D-1") to purchase all the outstanding Shares, at a price of $14.50 per Share,
net to the seller in cash, upon the terms and subject to the conditions set
forth in the Offer to Purchase, dated May 18, 1995 (the "Offer to Purchase")
and the related Letter of Transmittal (which together constitute the "Offer"
and are contained within the Schedule 14D-1).
The Offer is being made pursuant to an Agreement of Merger, dated as
of May 16, 1995 (the "Merger Agreement"), among Parent, Purchaser and the
Company. The Merger Agreement provides, among other things, that as soon as
practicable after the expiration of the Offer and fulfillment or waiver of all
remaining conditions, Purchaser will be merged with and into the Company (the
"Merger") and the Company will continue as the surviving corporation (the
"Surviving Corporation"). A copy of the Merger Agreement has been filed
herewith as Exhibit 1 and is incorporated herein by reference.
Based on information in the Schedule 14D-1, the principal executive
offices of Purchaser and Parent are located at 12 East 49th Street, New York,
New York 10017.
ITEM 3. IDENTITY AND BACKGROUND.
(a) The name and address of the Company, which is the
person filing this statement, are set forth in Item 1 above.
(b) Each material contract, agreement, arrangement and
understanding and actual or potential conflict of interest between the Company
or its affiliates and (i) the Company's executive officers, directors or
affiliates or (ii) Purchaser, its executive officers, directors or affiliates,
is described below or incorporated herein by reference as provided below.
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Certain contracts, agreements, arrangements and understandings between
the Company and certain of its directors and executive officers are described
in "EXECUTIVE COMPENSATION AND OTHER INFORMATION" in the Company's Proxy
Statement dated September 21, 1994 (the "1994 Proxy Statement"). Certain pages
of the 1994 Proxy Statement have been filed herewith as Exhibit 2 and are
incorporated herein by reference.
THE MERGER AGREEMENT
The summary of the Merger Agreement contained in the Offer to Purchase
which has been filed with the Securities and Exchange Commission (the
"Commission") as an exhibit to the Schedule 14D-1, a copy of which is being
provided to stockholders with this Schedule 14D-9, is incorporated herein by
reference. Such summary should be read in its entirety for a more complete
description of the terms and provisions of the Merger Agreement. The following
is a summary of certain portions of the Merger Agreement which relate to
arrangements among the Company, Purchaser, Parent and the Company's executive
officers and directors.
BOARD REPRESENTATION. The Merger Agreement provides that upon the
purchase by Parent or Purchaser of at least a majority of the outstanding
Shares, Parent shall be entitled, subject to compliance with applicable law, to
designate up to a number of directors on the Board of Directors (the "Board")
of the Company, rounded up to the next whole number (the "Purchaser
Designees"), such that Parent will have representation on the Board equal to
the percentage of outstanding shares of Common Stock held by Parent and any of
its direct or indirect wholly-owned subsidiaries (including Purchaser).
Further, the Merger Agreement provides that the Company will, upon the request
of Parent, increase the size of the Board and/or use its reasonable efforts to
secure the resignation of such number of directors as is necessary to enable
Parent's designees to be elected to the Company's Board, and to cause Parent's
designees to be so elected, provided that, prior to the Merger, the Company
will use its reasonable efforts to assure that the Company's Board always has
(at the Company's election) at least three members who are directors of the
Company as of the date of the Merger Agreement.
AGREEMENT WITH RESPECT TO DIRECTOR AND OFFICER INDEMNIFICATION AND
INSURANCE. The Merger Agreement provides that from and after the earlier of
the consummation of the Merger or the Parent's designees constituting a
majority of the Board (the "D&O Initial Date"), the Parent will cause to be
maintained in effect the Company's current directors' and officers' insurance
and indemnification policies or provide or cause to be provided benefits under
one or more equivalent policies, subject to terms and provisions no less
advantageous, for all present and former directors and officers of the Company,
covering the claims made within three years after the D&O Initial Date, if
such policies are available on a commercially reasonable basis. After the
Merger, the Parent will cause to be maintained the right to indemnification,
and to advancement of expenses, of officers and directors as provided for in
the Certificate of Incorporation and By-Laws of the Company, with respect to
indemnification for acts and
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omissions occurring prior to the Merger. Without limiting the foregoing, the
Merger Agreement provides that in the event any officer or director becomes
involved in any capacity in any action, proceeding or investigation in
connection with any matter, including without limitation, the transactions
contemplated by the Merger Agreement, occurring prior to, and including, the
Merger, Parent will cause the Company to pay as incurred such officer's or
director's legal and other expenses incurred in connection therewith in
accordance with the procedures authorized by the Bylaws of the Company and the
Delaware General Corporation Law. The Merger Agreement also provides that
Parent will cause the Company to pay all expenses, including reasonable
attorneys' fees, that may be incurred by any officer or director in enforcing
the indemnity and other obligations provided in the Merger Agreement.
EMPLOYMENT AGREEMENTS. The Merger Agreement provides that after the
Merger, the Company will honor, in accordance with their respective terms in
effect on the date of the Merger Agreement, the employment agreements of the
Company with Mr. Bruce W. Wilkinson, Mr. James T. Stewart, Mr. William J.
Gardiner, Mr. William P. Utt, Mr. Werner E. Schattner and Mr. Timothy R. Dunne.
Discussions between Purchaser and Mr. Wilkinson currently contemplate
liquidation of his Employment Agreement effective upon consummation of the
Offer, and its replacement with an agreement having a duration of 12 months
covering transitional responsibilities at a salary of 50% of Mr. Wilkinson's
current salary; however, terms of the replacement agreement have not been
finalized.
EMPLOYEE BENEFITS. The Merger Agreement provides that the Company's
employees after the Merger will continue to receive employee benefits which in
the aggregate are at least as favorable as those provided by Parent from time
to time to its employees who are similarly situated; provided that such
employee benefits shall be, in the aggregate, at least as favorable as those
currently provided by the Company to its employees. "Employee benefits" for
this purpose means all pension, profit sharing, Section 401(k), excess benefit,
deferred compensation, incentive compensation, cash bonus, severance pay,
cafeteria, flexible compensation, life insurance, medical, dental, disability,
welfare or vacation plans or arrangements of any kind and any other employee,
pension benefit plan or employee welfare benefit plan (as such terms are
defined in Section 3(2) and 3(1), respectively, of the Employee Income
Retirement Securities Act of 1974, as amended ("ERISA")) in which employees of
the Company or any of its subsidiaries participate, other than defined benefit
pension plans or any stock-based plans, agreements, or arrangements or
stock-based provisions and plans, agreements or arrangements or any
change-of-control provisions in any plans, agreements, or arrangements other
than change-of-control provisions that solely apply to the Merger. The Merger
Agreement also provides that (i) the Company's employees after the Merger will
be credited with all of their years of service with the Company and its
subsidiaries for purposes of all Employee Benefits, (ii) the Company's Senior
Management Deferred Compensation Plan (the "SMDCP"), Supplemental Executive
Retirement Plan (the "SERP"), and Senior Executive Officer Early Retirement
Plan (the "SEOERP") will be maintained by the Company after the Merger on at
least as favorable terms as are in effect on the date of the Merger Agreement
(other than change-of-control provisions that do not apply to the Merger), and
(iii) the Company's remaining
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obligations under its Leaders' Incentive Compensation Plan will be fulfilled
after the Merger with respect to the current fiscal year.
STOCK OPTIONS. Pursuant to the Merger Agreement, the Company has
agreed with respect to the stock options granted under the Company's 1990
Long-Term Incentive Plan, 1984 Non-Qualified Stock Option Plan and 1981
Incentive Stock Option Plan (collectively, the "Stock Option Plans") which are
outstanding prior to the consummation of the Offer, (a) with respect to all
stock options which are exercisable in consideration of a cash payment
prescribed by the change-of-control provisions of the respective Stock Option
Plan, to use its commercially reasonable efforts to procure the surrender of
all outstanding stock options to purchase Shares of the Company pursuant to the
respective Stock Option Plan for the cash consideration prescribed by the
change-of-control provisions, and (b) with respect to all outstanding stock
options for which change-of-control provisions do not apply, after acceptance
of Shares for payment and payment therefor and prior to the Merger, to use its
commercially reasonably efforts to procure the surrender of all such stock
options prior to the Merger. As to stock options not so surrendered, the
Company has agreed under the Merger Agreement, if requested by Purchaser, to
use its commercially reasonable efforts to obtain, prior to the Merger, the
consent of any holder of any such outstanding stock options to acquire upon
payment of the exercise price an amount of cash equal to the Merger Price (as
defined in the Merger Agreement) in lieu of each Share formerly covered
thereby. In accordance with the terms of the Merger Agreement, as a condition
to the consummation of the Merger, except for stock options to acquire 100,000
Shares, all stock options shall have been exercised or surrendered for the cash
consideration prescribed by the applicable Stock Option Plan upon a
change-of-control of the Company or, as to any stock option not so surrendered
or exercised in excess of stock options to acquire 100,000 Shares, the holder
shall have consented to acquire upon payment of the exercise price an amount of
cash equal to the Merger Price in lieu of each Share formerly covered thereby.
STOCK OPTION AND INCENTIVE PLANS
On May 11, 1995, the Board adopted resolutions authorizing the
purchase by the Company, upon consummation of the Offer, of all outstanding
Options for a cash purchase price per Share into which such Options are
exercisable equal to the highest price per Share paid by Purchaser pursuant to
the Offer less the Exercise Price of such Option, such offer to purchase by the
Company to expire upon the Merger or its earlier abandonment.
RIGHTS AGREEMENT
The Company has in place a stockholder rights plan pursuant to a
Rights Agreement between the Company and First Chicago Trust Company of New
York, as Rights Agent, dated as of November 29, 1988, as amended by amendments
dated January 27, 1994 and May 16, 1995 (the "Rights Plan"). The Rights Plan
was adopted by the Board of Directors of the Company for the purpose
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of protecting the Company and the stockholders from coercive or otherwise
unfair takeover attempts.
Under the Rights Plan, upon certain "Triggering Events," each
stockholder of the Company, other than stockholders who have acquired
beneficial ownership of 20% or more of the Company's shares (defined by the
Rights Plan as "Acquiring Persons"), are entitled to exercise certain Rights,
and receive upon such exercise Shares of the Company having a value equal to
two times the exercise price of the Rights. These Rights, if exercised,
significantly dilute the value of the Acquiring Person's Shares, thus making it
very expensive for the Acquiring Person to acquire control of the Company
without the consent of the Company.
The Triggering Events under the Rights Plan, generally speaking, are
events that affect control of the Company, including, among other events,
mergers with an Acquiring Person, the acquisition by any person of 30% or more
of the Shares, and certain significant asset sales.
The Offer and the Merger normally would constitute Triggering Events
under the Rights Plan. However, the Board of Directors, because it has
determined that the Offer and Merger are in the best interests of the Company's
stockholders, and in order to facilitate the Offer and the Merger, has amended
the Rights Plan to provide that neither Purchaser nor Parent is an Acquiring
Person (as defined under the Rights Plan), and that the Offer, Merger, and
other transactions contemplated by the Merger Agreement are not Triggering
Events (as defined under the Rights Plan) so as to trigger the Rights issued
under the Rights Plan, and do not otherwise result in any of the consequences
contemplated by the Rights Plan. This amendment to the Rights Plan is required
as a condition to the Merger Agreement; however, the Company has the right to
amend the Rights Plan in the future to reverse the effect of this amendment,
and to potentially cause the Parent and Purchaser to become Acquiring Persons,
and to cause the Offer, the Merger and the other transactions contemplated by
the Merger Agreement to be Triggering Events, if the Board of Directors of the
Company determines that such action is necessary in order for members of the
Board of Directors to satisfy their fiduciary duties to the stockholders of the
Company. A copy of the Rights Plan, including the amendments to same, is
filed herewith as Exhibits 4 through 6 and is incorporated herein by reference,
and the foregoing summary is qualified in its entirety by reference thereto.
LIMITATION OF LIABILITY
The Company's Certificate of Incorporation provides that a director of
the Company shall not be personally liable to the Company or its stockholders
for monetary damages for breach of fiduciary duty as a director unless, and
only to the extent that, such director is liable (i) for any breach of the
director's duty of loyalty to the Company or its stockholders, (ii) for acts or
omissions not in good faith or which involve intentional misconduct or are in
violation of law, (iii) under Section 174 of the Delaware General Corporation
Law or any amendment thereto or successor provision thereto in respect of
certain unlawful dividend payments or stock redemptions or repurchases, or (iv)
for any transactions from which the director derived an improper personal
benefit. The effect of this provision of the Company's Certificate of
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Incorporation is to eliminate the rights of the Company and its stockholders
(through stockholders' derivative suits on behalf of the Company) to recover
monetary damages against a director for breach of his fiduciary duty (including
breaches resulting from negligent or grossly negligent behavior) except in the
situations described in clauses (i) through (iv) above. This provision does
not limit or eliminate the rights of the Company or any stockholder to seek
non-monetary relief such as an injunction or rescission in the event of a
breach of a director's fiduciary duty.
CERTAIN CONFLICTS
STOCK OPTIONS. As of the date of filing of this Schedule 14D-9, the
current directors and executive officers of the Company as a group hold stock
options to purchase an aggregate of 498,037 Shares at exercise prices ranging
from $4.335 to $17.625 per Share granted under the Stock Option Plans. The
Stock Option Plans each provide that upon a change-of-control of the Company,
the outstanding Options shall vest in full and be immediately exercisable in
full. In contemplation of the Offer and the Merger, the Stock Option Plans
have been amended to provide that, in the event of a change-of-control of the
Company which is followed within one year by a merger of (a) the beneficial
owner which has, directly or indirectly, acquired securities of the Company
constituting the change-of-control of the Company with (b) the Company, in
which the Company is the surviving entity, all outstanding stock options under
the Stock Option Plans shall become exercisable only for the cash, property,
stock, securities and other consideration that a holder of the number of shares
of the Company's common stock subject to such stock option would have been
entitled to receive in such merger or consolidation.
RESTRICTED STOCK. As of the date of filing this Schedule 14D-9,
various current directors and executive officers of the Company hold 2,600
shares of restricted stock granted under the Stock Option Plans. In the event
of a change-of-control of the Company, the Stock Option Plans provide that all
restrictions with respect to the restricted stock shall lapse immediately and
immediately such stock shall vest, except with respect to the restriction
provided in Section 7(b)(ii) of the 1990 Long-Term Incentive Plan, which
provides that the Company may repurchase such Shares if the holder of such
Shares has not paid to the Company an amount equal to any federal, state, local
or foreign income or other taxes which the Company determines is required to be
withheld in respect of such Shares.
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN. In April 1995, the Company's
SERP, in which Mr. Bruce W. Wilkinson, Mr. Truitt Garrison and certain former
executive officers of the Company participate, was amended to extend the time
period from six months to one year following a change-of-control during which
an employee can terminate his or her employment for good cause and still
receive benefits under the SERP. It is currently contemplated that Mr.
Wilkinson will terminate his employment for good cause within one year
following the Merger, in which case he will be entitled to receive $400,000 in
a lump sum payment pursuant to the SERP.
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IRREVOCABLE GRANTOR TRUSTS. In April 1995, the Board authorized the
establishment of irrevocable grantor trusts for the SERP, the SMDCP (in which
Mr. Bruce W. Wilkinson, Mr. James T. Stewart, Mr. Werner E. Schattner and
certain former management personnel of the Company participate), and SEOERP (in
which Mr. Thomas A. Bullock and Mr. C. Herbert Paseur, each a director of the
Company, and certain former executive officers of the Company participate), to
secure fully its obligations under those plans. These trusts have not been
funded yet, but it is contemplated that they will be funded prior to
consummation of the Offer.
EMPLOYMENT AGREEMENTS. The Company maintains an employment agreement
(the "Wilkinson Agreement") with Mr. Bruce W. Wilkinson, its Chairman and
Chief Executive Officer, described under the section captioned "EXECUTIVE
COMPENSATION AND OTHER INFORMATION" in Exhibit 2 hereto, a copy of which
agreement is filed herewith as Exhibit 7 and is incorporated herein by
reference. The Wilkinson Agreement contains provisions which state that if
within three years after a change-of-control the Company terminates Mr.
Wilkinson's employment other than for cause or Mr. Wilkinson terminates
employment with the Company for good reason within six months after such good
reason arises or prior to the earlier expiration of the term of the Wilkinson
Agreement, the Company shall pay to Mr. Wilkinson a cash amount equal to 2.5
multiplied by the sum of Mr. Wilkinson's annual base salary and aggregate bonus
for the 12-month period prior to the change-of-control or prior to such
termination (whichever is greater). If the payments and benefits that Mr.
Wilkinson has a right to receive would result in "excess parachute payments",
as defined in the Internal Revenue Code of 1986, as amended (the "Code"), and
Mr. Wilkinson would be required to pay an excise tax pursuant to the Code in
respect of such payments and benefits, the Company shall also pay Mr. Wilkinson
an additional amount such that Mr. Wilkinson would retain the amount of such
payments and benefits as if such excise tax had not been payable thereon.
Termination other than for cause or resignation for good reason include
termination or resignation after certain events, such as (i) a demotion, (ii)
the assignment to Mr. Wilkinson of any duties or responsibilities that are
inconsistent with his position, (iii) layoff or involuntary termination, except
for cause or as a result of Mr. Wilkinson's retirement, disability or death,
(iv) a reduction in compensation or benefits, (v) the failure of any acquiror
of the Company to assume the Wilkinson Contract and (vi) a breach of the
Company's obligations under the Wilkinson Contract. The acquisition of Shares
pursuant to the Offer and Merger will constitute a change-of-control for
purposes of the Wilkinson Agreement. The lump sum amount that would have been
payable to Mr. Wilkinson under the Wilkinson Agreement if the Wilkinson
Agreement were terminated in accordance with the change-of-control provision
at May 10, 1995 is approximately $1,200,000 (not including amounts payable to
Mr. Wilkinson for excise taxes). See "--THE MERGER AGREEMENT--Employment
Agreement" for a discussion of current intentions with respect to
Mr. Wilkinson's employment agreement.
OTHER MATTERS. Certain other transactions have occurred, or
relationships exist, between the Company and its directors, executive officers
or affiliates. See "EXECUTIVE COMPENSATION AND OTHER INFORMATION" in Exhibit 2
hereto.
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ITEM 4. THE SOLICITATION OR RECOMMENDATION.
(a) THE RECOMMENDATION OF THE BOARD OF DIRECTORS.
The Board of Directors has, by the unanimous vote of the directors
present and voting at the meeting of the Board held May 11, 1995, called for
such purpose, approved the Merger Agreement in substantially the form presented
to and reviewed by the Board, and the transactions contemplated thereby and
recommends that all holders of Shares tender such Shares pursuant to the Offer;
however, since as of the date of the Board meeting, an offer had not yet been
made by Purchaser or Parent, the Board's approval was conditioned on receipt of
such an offer on the terms contemplated by the draft of the Merger Agreement
presented to and reviewed by the Board, as well as on receipt of the final
written fairness opinion from Morgan Stanley & Co. Incorporated ("Morgan
Stanley") and the continuing recommendation of the Offer and Merger by Mr.
Wilkinson, the Company's Chief Executive Officer. All of the directors, except
Mr. C. Herbert Paseur, were present and voting at the meeting at which such
approval was given and recommendation was made.
(b) BACKGROUND; REASONS FOR THE RECOMMENDATION.
On December 5, 1994, the Company retained Morgan Stanley to conduct a
financial advisory review of the Company's stockholder relations program. In
connection with this review, Morgan Stanley agreed to suggest such steps as
Morgan Stanley believed were appropriate with a view towards increasing the
Company's knowledge of, and responsiveness to, the interests and investment
objectives of the Company's stockholders. As part of this process, Morgan
Stanley thereafter began, among other things, the preliminary process of
identifying and contacting prospective purchasers to assess their level of
interest in a possible transaction with the Company. Morgan Stanley reported
its findings to the Board on January 26, 1995, recommending that the Company
consider a strategic merger as an alternative to remaining independent. A
subsequent engagement letter was entered into with Morgan Stanley on January
30, 1995, under the terms of which Morgan Stanley agreed to provide services in
connection with the proposed sale or merger of the Company. Pursuant to this
subsequent engagement letter, Morgan Stanley provided the Company with
financial advice and assistance in connection with the proposed sale or merger
of the Company, including advice and assistance with respect to defining
objectives, performing valuation analysis, and structuring, planning and
negotiating the transaction.
In connection with this engagement, Morgan Stanley approached or was
contacted by a substantial number of domestic and international companies on a
confidential basis, including Parent, to discuss their interest in exploring a
strategic transaction with the Company. The Company executed confidentiality
agreements, having terms described below, with several of these companies,
including Parent, and provided certain non-public information regarding the
Company to such companies. Virtually all of the companies, including Parent,
that executed confidentiality agreements undertook preliminary on-site
diligence reviews of the Company's
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business and operations. Some of these companies, Parent among them, indicated
to the Company their preliminary assessments of value. The Company's Executive
Committee considered each of these preliminary assessments to be unacceptable
and informed each of the respective companies of this fact. No further offers
were forthcoming from these companies, other than Parent, and so no further
discussions were pursued with any of these companies.
Specifically with respect to Parent, in December 1994 and January 1995,
Philippe van Marcke, President of Parent, received two phone calls from Morgan
Stanley about an opportunity to enter into discussions for the acquisition of,
or merger or other business combination with, the Company. Mr. van Marcke
expressed an interest in pursuing that discussion and, as a condition to
obtaining further information about the Company in order to evaluate a proposed
transaction, Parent executed a confidentiality agreement dated as of January
20, 1995 ("Confidentiality Agreement"). Under the Confidentiality Agreement,
Parent is required to keep confidential certain information relating to the
Company and may not use such information other than in connection with the
Offer and the Merger. In the event Parent decides not to proceed with the
transaction, the Confidentiality Agreement requires Parent to return all such
information to the Company and to destroy all other copies of written
information. The terms of the Confidentiality Agreement also provide that, for
a period of two years from the date of the agreement, Parent and its affiliates
may not, without the prior written consent of the Company, (i) acquire, offer
to acquire or agree to acquire, any voting securities or assets of the Company
or any subsidiary thereof, or of any successor to or person in control of the
Company; (ii) make or participate in any solicitation of proxies to vote, or
seek to advise or influence any person or entity with respect to the voting of,
any voting securities of the Company; or (iii) make any public announcement
with respect to, or submit a proposal for, or offer of, any extraordinary
transaction involving the Company or its securities or assets.
At a meeting in Houston on January 25, 1995, Mr. van Marcke and other
representatives from Parent met with Bruce Wilkinson, James Stewart and William
Gardiner, the Chief Executive Officer, President and Chief Financial Officer,
respectively, of the Company. Each group of representatives made a
presentation about their respective companies. The Company also discussed its
criteria for entering into a business combination with another company. The
parties decided to meet again to discuss the possibility of an acquisition.
On March 6, Mr. van Marcke and other officers of Parent met again with
Mr. Wilkinson and other Company officers in Houston. At that meeting,
Mr. van Marcke indicated that Parent could probably offer no more than the
market price for Company stock, but that Parent wanted to continue to evaluate
the possibility of an acquisition.
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On or about March 14, Mr. Wilkinson telephoned Mr. van Marcke and
indicated that the Company's Executive Committee would be meeting on March 30,
and unless the Company received a stronger indication of interest from Parent,
the Company would proceed with discussions with other parties or decide to
discontinue such discussions with Parent.
On March 28 and 29, 1995, Mr. van Marcke discussed orally with
Mr. Wilkinson a price range of $11 to $12 per Share. On March 30, 1995, Mr. van
Marcke formally advised Mr. Wilkinson that Parent's preliminary investigation
of the Company indicated a price range of $11 to $12 per Share. Mr. Wilkinson
reported this to the Company's Executive Committee at a meeting held that same
day, and then reported back to Mr. van Marcke that such price range was
considered unacceptable by the Company's Executive Committee.
On April 7, Messrs. van Marcke and Wilkinson met in Houston where they
discussed possible target prices for Company stock. Mr. van Marcke also agreed
to commence more extensive due diligence efforts to determine a target price.
During the week of April 10, Parent's representatives, including its legal and
financial advisors, met with Company representatives to review the Company's
financial and business information. Mr. van Marcke also met with Mr. Wilkinson
during this week to discuss the status of the due diligence efforts.
On April 19, Messrs. Wilkinson and Gardiner gave a presentation in New
York of the Company and its strategies and purposes to Messrs. Loeb and Deroux,
two directors of Parent, and Mr. van Marcke. After the presentation, it was
agreed that Parent would commence the process for seeking the approval
of the proposed tender offer from Powerfin, S.A. ("Powerfin"), the parent of
Parent. It was also decided that Mr. van Marcke would make a presentation at
the Company's April 27 Board meeting at which he would discuss the terms and
the timing for formalizing the proposed tender offer.
At an April 23 meeting in Houston between Messrs. Deroux and van
Marcke and Messrs. Wilkinson, Stewart, Gardiner and other Company officers,
Mr. van Marcke indicated that Parent could not make a final decision to proceed
with the tender offer by the Company's April 27 Board meeting. However, it was
decided that Mr. van Marcke still would make the previously planned
presentation at the Company's April 27 Board meeting.
During the period from May 1 to May 11, Parent's representatives
toured the Company's facilities, continued their evaluation of the Company's
business and operations and entered into discussions about the terms of the
Merger Agreement. During this time, Mr. van Marcke informed Mr. Wilkinson that
he would be meeting with Powerfin's principals in Brussels to discuss final
approval of the proposed tender offer.
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On May 10, 1995, Parent advised the Company that the purchase price of
$14.50 had been authorized, subject to satisfactory resolution of any remaining
contractual issues, and subject to obtaining the approval of Powerfin. Despite
the fact that Parent had not yet made an offer, after consideration and
discussion of the proposed purchase price and the other terms and conditions of
the proposed transactions with Parent and Purchaser, Mr. Wilkinson and other
executive officers of the Company agreed to submit such tentative non-binding
proposal to a meeting of the Board for its consideration on May 11, 1995.
On May 11, 1995, the Company's Board of Directors met to consider such
proposal and receive the oral report of Morgan Stanley. The Board of Directors
had received a substantially final draft of the Merger Agreement, a summary of
the Merger Agreement, and other supporting information, on May 9. At the
meeting, the Company's legal counsel summarized the terms of the Merger
Agreement. Counsel also described the acceleration provisions of and certain
proposed modifications to outstanding options, outstanding benefit plans,
existing management employment plans and related matters.
Representatives of Morgan Stanley then made a presentation to the
Board of Directors and delivered the oral opinion of Morgan Stanley that, as of
May 11, 1995, and based upon and subject to the matters reviewed with the
Board, the $14.50 per Share cash consideration to be received by the holders of
the Shares pursuant to the proposed Merger Agreement is fair from a financial
point of view to such holders.
The Board then analyzed and discussed the possible Offer, the proposed
Merger Agreement, and the modifications to be made or previously made to the
options, benefit plans and related agreements. Following extensive discussion
and consideration, the Board, by unanimous vote of all directors present,
determined (i) that the consideration contemplated to be received by the
holders of the Shares pursuant to the proposed Merger Agreement is fair from a
financial point of view to the holders of Shares, and that the Offer and the
Merger contemplated by the proposed Merger Agreement are fair and in the best
interests of the Company and its stockholders and that the Offer and the Merger
will directly benefit the Company and its stockholders, (ii) to approve and
consent to the proposed Offer and Merger contemplated by the proposed Merger
Agreement, (iii) to authorize the execution and delivery of the proposed Merger
Agreement, in substantially the form presented to and reviewed by the Board,
(iv) to authorize the offer to purchase outstanding stock options of the
Company, which offer will expire upon the closing of the proposed Merger or its
earlier abandonment, and (v) to recommend that the Company's stockholders
accept the proposed Offer, if and when initiated, and approve and adopt the
proposed Merger contemplated by the most recent draft of the Merger Agreement.
Since the Board had not yet received a binding offer, each of the above actions
and authorizations of the Board were conditioned on (i) execution and delivery
by Parent and Purchaser of a Merger Agreement substantially in the form
presented to and reviewed by the Board, with such changes as are approved by
the appropriate officers of the Company, (ii) delivery to the Board of
Directors of the written
- 11 -
<PAGE> 13
opinion of Morgan Stanley that as of the date of execution of the Merger
Agreement the consideration to be received by the holders of Shares pursuant to
the Merger Agreement is fair from a financial point of view, and (iii) the
continuing recommendation of the Offer and Merger by Mr. Wilkinson, the Chief
Executive Officer of the Company.
On May 16, 1995, the Steering Committee of Powerfin approved the
Offer, Merger and the Merger Agreement, and Parent and Purchaser executed and
delivered the Merger Agreement to the Company. In addition, on May 16, 1995,
the written fairness opinion of Morgan Stanley was received by the Company, and
consequently, the Merger Agreement was executed and delivered by Mr. Wilkinson
on behalf of the Company.
In approving the proposed Merger Agreement and the transactions
contemplated thereby and recommending that all holders of Shares tender such
Shares pursuant to the Offer, if and when initiated, the Board of Directors
considered a number of factors, including:
(i) the terms of the Merger Agreement;
(ii) the financial condition, results of operations, business
and prospects of the Company, and current industry economic
and market conditions;
(iii) that the $14.50 per Share price in the Offer represented
(a) a premium of approximately 57% over the closing price
of the Shares on May 10, 1995 (the day prior to the
meeting), (b) a premium of approximately 36% over the
closing price of the shares on December 30, 1994, and (c) a
price higher than the Shares have traded since the
Company's fourth quarter of fiscal year 1991;
(iv) the oral fairness opinion of Morgan Stanley delivered at
the Board meeting on May 11 to the effect that, as of such
date and based upon and subject to the matters reviewed
with the Board, the $14.50 per Share cash consideration to
be received by the holders of the Shares was fair from a
financial point of view to such holders;
(v) the fact that the Merger Agreement, while not permitting
the Company to solicit or initiate discussions with other
prospective purchasers, permits the Company to furnish
information to, and negotiate or participate in discussions
with, any third party if required by the fiduciary duties
of its directors after consulting with outside counsel to
the Company;
(vi) the fact that the Company and its representatives solicited
possible acquisition interest from a substantial number of
third parties before agreeing to pursue the proposed Offer
and Merger, which solicitations resulted in expressions of
interest and preliminary due diligence reviews by several
companies, but did not result in acceptable price
assessments or further negotiations;
- 12 -
<PAGE> 14
(vii) the reasonableness of the fee and expense reimbursement
requirements described in Section 7.10 of the Merger
Agreement, which were a condition to the Offer; and
(viii) the limited number of conditions to the obligations of
Parent and Purchaser to consummate the Offer and the
Merger, including the fact that the Offer is not
conditioned on financing.
The Board of Directors did not assign relative weights to the foregoing
factors or determine that any factor was of more importance than other factors.
Rather, the Board of Directors viewed its position and recommendations as being
based on the totality of the information presented to and considered by it.
A copy of the written fairness opinion of Morgan Stanley is attached
hereto as Exhibit 8 and incorporated herein by reference. STOCKHOLDERS ARE
URGED TO READ THE OPINION OF MORGAN STANLEY IN ITS ENTIRETY.
ITEM 5. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED.
On January 30, 1995, the Company and Morgan Stanley entered into a
letter agreement (the "Engagement Letter"), pursuant to which Morgan Stanley
agreed to provide the Company with financial advice and assistance in
connection with the proposed sale or merger of the Company, and to render a
fairness opinion with respect to the consideration to be received in the
transaction.
Under the terms of the Engagement Letter, the Company will pay Morgan
Stanley an "Advisory Fee" between $150,000 and $200,000. Upon the acquisition
by Purchaser of a majority of the Shares, the Company will pay Morgan Stanley a
"Transaction Fee", against which any Advisory Fee paid will be credited. The
Transaction Fee will be calculated as a percentage of the transaction's
Aggregate Value, as defined in the Engagement Letter. The Offer and the
Merger, if consummated, have an Aggregate Value of approximately $200,000,000
which would result in a Transaction Fee of $2,000,000. In addition, the
Engagement Letter with Morgan Stanley provides that the Company will reimburse
Morgan Stanley for its reasonable out-of-pocket expenses and will indemnify
Morgan Stanley against certain liabilities incurred in connection with its
services.
The Company has been informed that Morgan Stanley, previous to
December 5, 1994, when the Company engaged Morgan Stanley as described in
Item 4(B) above, has not been retained by and does not have any other contract,
agreement, arrangement or understanding giving rise to an actual or potential
conflict of interest, and does not otherwise have any actual or potential
conflict of interest, with the Company, Purchaser, Parent or any of their
respective directors, executive officers or affiliates.
- 13 -
<PAGE> 15
ITEM 6. RECENT TRANSACTIONS AND INTENT WITH RESPECT TO SECURITIES.
(a) No transactions in Shares have been effected during the
past 60 days by the Company or, to the best of the Company's knowledge, by any
executive officer, director, affiliate or subsidiary of the Company.
(b) To the best of the Company's knowledge, to the extent
permitted by applicable securities laws, rules or regulations, each executive
officer, director, affiliate and subsidiary of the Company currently intends to
tender all Shares to Purchaser which are held of record or beneficially by such
person or over which he, she or it has sole dispositive power.
ITEM 7. CERTAIN NEGOTIATIONS AND TRANSACTIONS BY THE SUBJECT COMPANY.
(a) Except as set forth in this Schedule 14D-9, no negotiation
is being undertaken or is underway by the Company in response to the Offer
which relates to or would result in (i) an extraordinary transaction, such as a
merger or reorganization, involving the Company or any subsidiary of the
Company; (ii) a purchase, sale or transfer of a material amount of assets by
the Company or any subsidiary of the Company; (iii) a tender offer for or other
acquisition of securities by or of the Company; or (iv) any material change in
the present capitalization or dividend policy of the Company.
(b) There are no transactions, board resolutions, agreements in
principle, or any signed contracts in response to the Offer, other than as
described in Item 3(b) of this Statement, which relates to or would result in
one or more of the matters referred to in Item 7(a)(i), (ii), (iii) or (iv).
ITEM 8. ADDITIONAL INFORMATION TO BE FURNISHED.
(A) DGCL 203.
Section 203 of the General Corporation Law of Delaware ("DGCL") purports
to regulate certain business combinations of a corporation organized under
Delaware law, such as the Company, with a stockholder beneficially owning 15%
or more of the voting stock of such corporation after the date the relevant
person or entity first becomes a 15% stockholder. Section 203 provides that
the corporation shall not engage for a period of three years in any business
combination with such a stockholder without approval of the holders of
two-thirds of the outstanding shares (other than the shares owned by the 15%
stockholder), with certain exceptions, including (i) prior approval by the
Board of Directors of the Corporation, either of the business combination or
the transaction which results in a stockholder becoming a 15% stockholder, or
(ii) the ownership by the 15% stockholder of at least 85% of the outstanding
voting shares of the corporation, exclusive of shares acquired in a transaction
not approved by
- 14 -
<PAGE> 16
the Board of Directors. The Company's Board of Directors has approved the
Merger Agreement and the transactions contemplated thereby, including the Offer
and the Merger, and therefore, Section 203 of the DGCL is inapplicable to the
Offer and the Merger.
(B) INFORMATION STATEMENT.
The Information Statement required by Section 14(f) and Rule 14(f)-1
of the Exchange Act will be furnished separately to stockholders in connection
with the possible designation by Purchaser, pursuant to the Merger Agreement,
of certain persons to be appointed to the Board of Directors of the Company
other than at a meeting of the Company's stockholders.
ITEM 9. MATERIAL TO BE FILED AS EXHIBITS.
Exhibit No.
- - -----------
Exhibit 1 Agreement of Merger dated May 16, 1995 among ATC
Acquisition Corp., American Tractebel Corporation and
CRSS Inc.*
Exhibit 2 Pages 7-22 of the Proxy Statement, dated as of
September 21, 1994, of CRSS Inc.*
Exhibit 3 Joint Press Release issued on May 17, 1995*
Exhibit 4 Rights Agreement dated as of November 28, 1988
between CRSS Inc. and Morgan Shareholder Services
Trust Company, as Rights Agent*
Exhibit 5 Amendment to Rights Agreement dated as of January 27,
1994 between CRSS Inc. and First Chicago Trust
Company of New York, as Rights Agent*
Exhibit 6 Second Amendment to Rights Agreement dated as of
May 16, 1995 between CRSS Inc. and First Chicago
Trust Company of New York, as Rights Agent*
Exhibit 7 Amended and Restated Employment Agreement dated as of
June 30, 1988, by and between CRSS Inc. and Bruce W.
Wilkinson*
Exhibit 8 Opinion of Morgan Stanley & Co. Incorporated dated
May 16, 1995
Exhibit 9 Letter dated May 18, 1995, from Bruce W. Wilkinson,
Chairman of the Board and Chief Executive Officer of
the Company, to the stockholders of CRSS Inc. with
regard to the Offer.
________________________
* Not included in copies mailed to stockholders
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
Date: May 18, 1995
CRSS INC.
By: /s/ TIMOTHY R. DUNNE
_____________________________________
Name: Timothy R. Dunne
Title: Vice President, General Counsel
and Secretary
- 15 -
<PAGE> 1
Exhibit 1
AGREEMENT OF MERGER
AMONG
AMERICAN TRACTEBEL CORPORATION,
ATC ACQUISITION CORP.
AND
CRSS INC.
DATED AS OF
MAY 16, 1995
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
------
<S> <C>
I. THE TENDER OFFER.................................................................. 1
1.1. The Offer................................................................... 1
1.2. Company Action.............................................................. 1
1.3. Stockholder Lists........................................................... 2
1.4. Board of Directors of the Company........................................... 2
II. THE MERGER........................................................................ 2
2.1. Merger...................................................................... 2
2.1.1. Merger............................................................... 2
2.1.2. Effective Time....................................................... 2
2.1.3. Effect of Merger..................................................... 3
2.1.4. Conversion of Shares................................................. 3
2.2. Stockholders' Meeting of the Company........................................ 3
2.3. Consummation of the Merger.................................................. 3
2.4. Payment for Shares.......................................................... 3
2.5. Closing of the Company's Transfer Books..................................... 4
2.6. Company Stock Options and Related Matters................................... 4
2.7. Dissenters' Rights.......................................................... 5
III. REPRESENTATIONS AND WARRANTIES OF PARENT AND PURCHASER............................ 5
3.1. Corporate Organization...................................................... 5
3.2. Authority................................................................... 5
3.3. Offer Documents............................................................. 5
3.4. Merger Proxy Statement...................................................... 6
3.5. Fees........................................................................ 6
3.6. Consents and Approvals; No Violation........................................ 6
3.7. Financing................................................................... 6
3.8. Not a Public Utility........................................................ 6
IV. REPRESENTATIONS AND WARRANTIES OF THE COMPANY...................................... 6
4.1. Corporate Organization...................................................... 6
4.2. Capitalization.............................................................. 7
4.3. Authority................................................................... 7
4.4. Consent and Approvals; No Violation......................................... 7
4.5. Commission Filings.......................................................... 8
4.6. Absence of Certain Changes.................................................. 8
4.7. Fees........................................................................ 8
4.8. Offer Documents............................................................. 9
4.9. Schedule 14D-9.............................................................. 9
4.10. Merger Proxy Statement...................................................... 9
4.11. Qualifying Facility......................................................... 9
V. COVENANTS.......................................................................... 9
5.1. Acquisition Proposals....................................................... 9
5.2. Amendment of Rights Agreement............................................... 9
5.3. Interim Operations.......................................................... 10
5.3.1. Conduct of Business.................................................. 10
5.3.2. Certificate of Incorporation and By-Laws............................. 10
5.3.3. Capital Stock........................................................ 10
</TABLE>
i
<PAGE> 3
<TABLE>
<CAPTION>
PAGE
------
<S> <C>
5.3.4. Dividends............................................................ 10
5.3.5. Employee Plans, Compensation, Etc.................................... 10
5.3.6. Debt................................................................. 11
5.4. Access and Information...................................................... 11
5.5. Certain Filings, Consents and Arrangements.................................. 11
5.6. Merger Proxy Statement...................................................... 11
5.7. Additional Agreements....................................................... 11
5.8. Compliance with Antitrust Laws.............................................. 12
5.9. Publicity................................................................... 12
5.10. Directors' and Officers' Insurance: Indemnification......................... 12
5.11. Employee Benefits........................................................... 13
5.11.1. Employment Agreements............................................... 13
5.11.2. Employee Benefits................................................... 13
5.11.3. No Guaranty......................................................... 13
VI. CONDITIONS......................................................................... 13
6.1. Conditions.................................................................. 13
6.1.1. Purchase of Shares................................................... 13
6.1.2. Shareholder Approval................................................. 13
6.1.3. Injunctions; Illegality.............................................. 13
6.1.4. HSR Act and Exon-Florio.............................................. 13
6.2. Conditions to Parent and Purchaser Obligations.............................. 14
VII. MISCELLANEOUS..................................................................... 14
7.1. Termination................................................................. 14
7.2. Non-Survival of Representations, Warranties and Agreements.................. 14
7.3. Waiver and Amendment........................................................ 14
7.4. Entire Agreement............................................................ 15
7.5. Applicable Law.............................................................. 15
7.6. Interpretation.............................................................. 15
7.7. Notices..................................................................... 15
7.8. Counterparts................................................................ 16
7.9. Parties in Interest; Assignment............................................. 16
7.10. Expenses.................................................................... 16
7.11. Obligation of Parent........................................................ 17
7.12. Enforcement of the Agreement................................................ 17
7.13. Severability................................................................ 17
7.14. Fiduciary Duty.............................................................. 17
</TABLE>
ii
<PAGE> 4
AGREEMENT OF MERGER
AGREEMENT OF MERGER, dated as of May 16, 1995 (the "Agreement"), among
American Tractebel Corporation, a Delaware corporation ("Parent"), ATC
Acquisition Corp., a Delaware corporation and a wholly owned subsidiary of
Parent ("Purchaser"), and CRSS Inc., a Delaware corporation (the "Company").
WHEREAS, the Boards of Directors of Parent, Purchaser and the Company have
each determined that it is in the best interests of their respective
stockholders for the Company to be acquired upon the terms and subject to the
conditions set forth herein; and
WHEREAS, in furtherance thereof, Parent has organized Purchaser.
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth herein, and
intending to be legally bound hereby, Parent, Purchaser and the Company hereby
agree as follows:
I. THE TENDER OFFER
1.1. The Offer. Provided that this Agreement has not been terminated in
accordance with Section 7.1 hereof and none of the events set forth in Exhibit A
has occurred or exists, Purchaser will, and Parent will cause Purchaser to,
commence (within the meaning of Rule 14d-2(a) promulgated under the Securities
Exchange Act of 1934, as amended (the "Exchange Act")) as promptly as
practicable after the date hereof, but in any event not later than May 24, 1995,
a tender offer for all outstanding shares of Common Stock, $1 par value
(referred to herein as the "Shares" and individually as a "Share"), of the
Company at a price of $14.50 per Share, net to the seller in cash (the "Price
Per Share"). (Such tender offer, as it may be amended from time to time pursuant
to this Agreement, being referred to herein as the "Offer.") The Offer will be
subject only to the conditions set forth in Exhibit A, including without
limitation the condition that a number of Shares be validly tendered and not
withdrawn prior to the expiration date provided in the Offer which, when added
to the Shares beneficially owned by Parent, Purchaser and their affiliates, will
represent not less than a majority of the Shares outstanding on a fully diluted
basis (the "Minimum Share Condition"). Any such condition other than the Minimum
Share Condition may be waived by Purchaser in its sole discretion. Purchaser
may, at any time, transfer or assign to Powerfin, S.A., the parent corporation
of Parent, or to one or more corporations directly or indirectly wholly owned by
Parent or Powerfin, S.A. the right to purchase all or any portion of the Shares
tendered pursuant to the Offer, but any such transfer or assignment will not
relieve Purchaser of its obligations under the Offer or prejudice the rights of
tendering stockholders to receive payment for Shares validly tendered and
accepted for payment. Purchaser will accept for payment all Shares validly
tendered pursuant to the Offer and not withdrawn as soon as legally permissible,
and pay for all such Shares as promptly as practicable thereafter, in each case
upon the terms and subject to the conditions of the Offer. Notwithstanding
anything herein to the contrary, it is understood and agreed that Purchaser may
extend the expiration date of the Offer for up to ten business days beyond the
time it would otherwise be required to accept validly tendered Shares for
payment if (i) at least 80% of the Shares outstanding on a fully diluted basis
have been validly tendered for payment, (ii) Purchaser reasonably determines
such extension is appropriate in order to enable it to purchase at least 90% of
the outstanding Shares on a fully diluted basis in the Offer and (iii) Purchaser
waives all other conditions to the Offer.
1.2. Company Action. The Company consents to the Offer. As soon as
practicable after the date of commencement of the Offer, the Company will file
with the Securities and Exchange Commission (the "Commission") and mail to the
holders of Shares a Solicitation/Recommendation Statement on Schedule 14D-9
pursuant to the Exchange Act (the "Schedule 14D-9 "). The Schedule 14D-9 will
set forth, and the Company hereby represents, that the Board of Directors of the
Company has at a meeting duly called and held and at which a quorum was present
and acting throughout, by the unanimous vote of all directors present (a)
determined that the Offer and the Merger are fair to and in the best interests
of the Company and its stockholders, (b) approved the Offer, this Agreement and
the Merger, and (c) recommended that the holders of Shares accept the Offer and
tender their Shares pursuant thereto; provided, however, that such
<PAGE> 5
recommendation may be withdrawn, modified or amended to the extent required by
the Board of Directors' Fiduciary Duty (as defined in Section 7.14 hereof). The
Company has received the written opinion of Morgan Stanley & Co. Incorporated
that the consideration to be received by the holders of the Shares pursuant to
the Agreement is fair from a financial point of view. The Company represents
that its Board of Directors has taken all actions which are necessary on the
part of the Company or its Board of Directors for purposes of Section 251 of the
General Corporation Law of the State of Delaware (the "GCL"). The Company has
taken all appropriate actions so that the restrictions on business combinations
contained in Section 203 of the GCL will not apply with respect to or as a
result of the transactions contemplated by this Agreement.
1.3. Stockholder Lists. The Company will promptly furnish Purchaser a
computer tape or diskette containing the names and addresses of all record
holders of Shares and lists of securities positions of Shares held in stock
depositories, each as of a recent date, and will promptly furnish Purchaser with
such additional information, including updated lists of stockholders of the
Company and lists of securities positions, and such other assistance as
Purchaser or its agents may reasonably request in connection with the Offer.
Subject to the requirements of law, and except for such steps as are necessary
to disseminate the Offer Documents (as defined in Section 3.3 hereof) and other
documents contemplated hereby, Parent and Purchaser will hold in confidence the
information furnished pursuant to this Section 1.3, will use such information
only in connection with the Offer, and, if this Agreement is terminated, will
upon request deliver to the Company the computer tape or diskette, together with
any copy thereof and all such information, and any copies or extracts therefrom,
in its possession or under its control.
1.4. Board of Directors of the Company. Upon Purchaser's acquisition of a
majority of the outstanding shares of Common Stock pursuant to the Offer or
otherwise, and from time to time thereafter so long as Powerfin, S.A. or Parent
and/or any of its direct or indirect wholly owned subsidiaries (including
Purchaser) owns a majority of the outstanding shares of Common Stock, Parent
will be entitled, subject to compliance with applicable law, to designate at its
option up to that number of directors, rounded up to the nearest whole number,
of the Company's Board of Directors as will make the percentage of the Company's
directors designated by Parent equal to the percentage of outstanding shares of
Common Stock held by Parent and any of its direct or indirect wholly owned
subsidiaries (including Purchaser). The Company will, upon the request of
Parent, promptly increase the size of its Board of Directors and/or use its
reasonable efforts to secure the resignation of such number of directors as is
necessary to enable Parent's designees to be elected to the Company's Board of
Directors and shall use its reasonable efforts to cause Parent's designees to be
so elected, subject in all cases to Section 14(f) of the Exchange Act, provided
that, prior to the Effective Time (as defined in Section 2.1.2 hereof), the
Company will use its reasonable efforts to assure that the Company's Board of
Directors always has (at the Company's election) at least three members who are
directors of the Company as of the date hereof.
II. THE MERGER
2.1. Merger.
2.1.1. Merger. Subject to the terms and conditions hereof, (a) Purchaser
will be merged with and into the Company and the separate corporate existence of
Purchaser will thereupon cease (the "Merger") in accordance with the applicable
provisions of the GCL, and (b) each of the Company, Purchaser and Parent will
use its commercially reasonable efforts to cause the Merger to be consummated as
soon as practicable following the expiration of the Offer.
2.1.2. Effective Time. As soon as practicable following fulfillment or
waiver of the conditions specified in Article VI hereof, and provided that this
Agreement has not been terminated or abandoned pursuant to Section 7.1 hereof,
the Company and Purchaser (the "Constituent Corporations") will cause a
Certificate of Merger (the "Certificate of Merger") to be filed with the
Secretary of State of the State of Delaware as provided in Sections 103 and 251
or 253 of the GCL. The Merger will become effective at the time that the
Certificate of Merger has been filed with the Secretary of State of the State of
Delaware or at such other time specified in the Certificate of Merger as the
effective time (the "Effective Time").
2
<PAGE> 6
2.1.3. Effect of Merger. The Company will be the surviving corporation in
the Merger (sometimes hereinafter referred to as the "Surviving Corporation")
and will continue to be governed by the laws of the State of Delaware, and the
separate corporate existence of Purchaser shall cease. The Certificate of
Incorporation (the "Certificate of Incorporation") and the By-Laws (the
"By-Laws") of the Company in effect at the Effective Time will be the
Certificate of Incorporation and By-Laws of the Surviving Corporation, until
duly amended in accordance with their terms and the GCL. The directors of
Purchaser immediately prior to the Effective Time will be the initial directors
of the Surviving Corporation, and the officers of the Company at the Effective
Time will be the initial officers of the Surviving Corporation, to serve in
accordance with the By-Laws. Upon the consummation of the Merger, the Surviving
Corporation shall thereupon and thereafter possess all assets and property of
every description, and every interest therein, wherever located, and the rights,
privileges, immunities, powers, franchises and authority, of a public as well as
of a private nature, of each of the Constituent Corporations, and all
obligations belonging to or due each of the Constituent Corporations shall be
vested in the Surviving Corporation without further act or deed. Title to any
real estate or any interest therein vested in any Constituent Corporation shall
not revert or in any way be impaired by reason of the Merger. The Surviving
Corporation shall thenceforth be liable for all the obligations of each
Constituent Corporation, including any liability to holders of Dissenting Shares
(as defined in Section 2.7 hereof). Any claim existing, or action or proceeding
pending, by or against any Constituent Corporation, may be prosecuted to
judgment, with right of appeal, as if the Merger had not taken place, or the
Surviving Corporation may be substituted in place of any Constituent
Corporation. All the rights of creditors of each Constituent Corporation shall
be preserved unimpaired, and all liens upon the property of any Constituent
Corporation shall be preserved unimpaired but only as to the property affected
by such liens immediately prior to the Effective Time. The Merger shall have the
effects set forth in Section 259 of the GCL.
2.1.4. Conversion of Shares. At the Effective Time, (a) each
then-outstanding Share not owned by Parent or Powerfin, S.A., Purchaser or any
other direct or indirect subsidiary of Parent or Powerfin, S.A. (other than
those Shares held in the treasury of the Company or Dissenting Shares) will be
cancelled and retired and be converted into a right to receive in cash an amount
per Share equal to the highest price paid per Share by Purchaser pursuant to the
Offer (the "Merger Price"), (b) each then-outstanding Share owned by Parent or
Powerfin, S.A., Purchaser or any other direct or indirect subsidiary of Parent
or Powerfin, S.A., will be cancelled and retired, and no payment will be made
with respect thereto, (c) each Share issued and held in the Company's treasury
will be cancelled and retired, and no payment will be made with respect thereto,
and (d) each outstanding share of common stock of Purchaser will be converted
into and become a share of common stock of the Surviving Corporation, which
thereafter will constitute all of the issued and outstanding shares of capital
stock of the Surviving Corporation.
2.2. Stockholders' Meeting of the Company. The Company will take all
action necessary in accordance with applicable law and the Certificate of
Incorporation and By-Laws to convene a meeting of its stockholders promptly
after the purchase of Shares pursuant to the Offer to consider and vote upon the
approval of the Merger, if such stockholder approval is required by applicable
law. At any such meeting all of the Shares then owned by Parent, Powerfin, S.A.,
Purchaser or any other direct or indirect subsidiary of Parent or Powerfin, S.A.
will be voted in favor of the Merger. Subject to its Fiduciary Duty, the Board
of Directors of the Company will recommend that the Company's stockholders
approve the Merger if such stockholder approval is required.
2.3. Consummation of the Merger. The closing of the Merger (the
"Closing") will take place (a) at the principal executive offices of the
Company as promptly as practicable after the later of (i) the day of (and
immediately following) the receipt of approval of the Merger by the Company's
stockholders if such approval is required, or as soon as practicable after
completion of the Offer if such approval by stockholders is not required, and
(ii) the day on which the last of the conditions set forth in Article VI hereof
is satisfied or duly waived, or (b) at such other time and place and on such
other date as Purchaser and the Company may agree.
2.4. Payment for Shares. Purchaser will authorize the depositary for the
Offer (or one or more commercial banks organized under the laws of the United
States or any state thereof with capital, surplus and undivided profits of at
least $100,000,000) to act as Paying Agent hereunder with respect to the Merger
(the "Paying Agent"). Each holder (other than holders of Dissenting Shares, and
other than Parent,
3
<PAGE> 7
Powerfin, S.A., Purchaser or any direct or indirect subsidiary of Parent or
Powerfin, S.A.) of a certificate or certificates which prior to the Effective
Time represented Shares will be entitled to receive, upon surrender to the
Paying Agent of such certificate or certificates for cancellation and subject to
any required withholding of taxes, the aggregate amount of cash into which the
Shares previously represented by such certificate or certificates will have been
converted in the Merger. On or before the Effective Time, Purchaser will deposit
with the Paying Agent sufficient funds to make all payments pursuant to the
preceding sentence. Pending payment of such funds to the holders of Shares, such
funds shall be held and invested by the Paying Agent as Parent directs. Any net
profit resulting from, or interest or income produced by, such investments will
be payable to the Surviving Corporation or Parent, as Parent directs. Parent
will promptly replace any monies lost through any investment made pursuant to
this Section 2.4. Following the Effective Time, each certificate which
immediately prior to the Effective Time represented outstanding Shares (other
than Dissenting Shares and Shares owned by Parent, Powerfin, S.A., Purchaser or
any other direct or indirect subsidiary of Parent or Powerfin, S.A.) will be
deemed for all corporate purposes to evidence only the right to receive upon
such surrender the aggregate amount of cash into which the Shares represented
thereby will have been converted, subject to any required withholding of taxes.
No interest will be paid on the cash payable upon the surrender of the
certificate or certificates. Any cash delivered or made available to the Paying
Agent pursuant to this Section 2.4 and not exchanged for certificates
representing Shares within two years after the Effective Time will be returned
by the Paying Agent to the Surviving Corporation which thereafter will act as
Paying Agent, subject to the rights of holders of unsurrendered certificates
representing Shares under this Article II. Thereafter, any former stockholders
of the Company who have not theretofore complied with the instructions for
exchanging their certificates representing Shares will thereafter look only to
the Surviving Corporation for payment of their claim for the consideration set
forth in Section 2.1, without any interest thereon, but will have no greater
rights against the Surviving Corporation (or either Constituent Corporation)
than may be accorded to general creditors thereof under applicable law.
Notwithstanding the foregoing, neither the Paying Agent nor any party hereto
will be liable to a holder of Shares for any cash or interest thereon delivered
to a public official pursuant to applicable abandoned property laws. Promptly
after the Effective Time, the Paying Agent will mail to each record holder of
certificates (other than Parent, Powerfin, S.A., Purchaser or any direct or
indirect subsidiary of Parent or Powerfin, S.A. which immediately prior to the
Effective Time represented Shares (the "Certificates") a form of letter of
transmittal (the "Transmittal Letter") and instructions for use thereof in
surrendering such Certificates which will specify that delivery will be
effected, and risk of loss and title to the Certificates will pass, only upon
proper delivery of the Certificates to the Paying Agent in accordance with the
terms of delivery specified in the Transmittal Letter and instructions for use
thereof in surrendering such Certificates and receiving the Merger Price for
each Share previously represented thereby.
2.5. Closing of the Company's Transfer Books. At the Effective Time, the
stock transfer books of the Company will be closed and no transfer of Shares
will thereafter be made. If, after the Effective Time, Certificates are
presented to the Surviving Corporation, they will be cancelled, retired and
exchanged for cash as provided in Section 2.4 hereof, subject to applicable law
in the case of Dissenting Shares.
2.6. Company Stock Options and Related Matters. With respect to the
outstanding stock options to purchase shares of Common Stock of the Company (the
"Options") pursuant to Company's 1990 Long-Term Incentive Plan, 1984
Non-Qualified Stock Option Plan and 1981 Incentive Stock Option Plan, (a) prior
to the Effective Time, in the case of Options that contain provisions
specifically relating to settlement thereof in cash upon a change of control of
the Company ("change-of-control provisions"), the Company shall use its
commercially reasonable efforts to procure the surrender of all such Options as
have not theretofore been exercised in consideration of the cash payment
prescribed by the change-of-control provisions, and (b) in the case of each
outstanding Option that does not contain change-of-control provisions, after
acceptance of Shares for payment and payment therefor and prior to the Effective
Time, the Company shall use its commercially reasonable efforts to procure the
surrender of all such Options. As to any Option not so surrendered, if requested
by Purchaser, the Company shall use its commercially reasonable efforts to
obtain, prior to the Effective Time, the consent of the holder of the Option to
acquire upon payment of the exercise price an amount of cash equal to the Merger
Price in lieu of each Share formerly covered thereby.
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2.7. Dissenters' Rights. Notwithstanding anything in this Agreement to
the contrary, any Shares which are issued and outstanding immediately prior to
the Effective Time and which are held by stockholders of the Company who shall
not have voted such Shares in favor of the adoption of the Merger and who shall
have delivered a written demand for the appraisal of such Shares in the manner
provided in Section 262 of the GCL ("Dissenting Shares") shall not be converted
as described in Section 2.1.4 hereof but shall become the right to receive
payment of the appraisal value of such shares in accordance with the provisions
of Section 262 of the GCL; provided, however, that (i) if any holder of
Dissenting Shares shall subsequently withdraw such holder's demand for payment
of the appraisal value of such Shares (within sixty (60) days of the Effective
Time or with the consent of the Surviving Corporation by its directors), (ii) if
any holder fails to comply with such Section 262 (unless the Surviving
Corporation by its directors waives such failure), (iii) if the Purchaser
abandons or is finally enjoined or prevented from carrying out, or the
stockholders rescind their adoption of, the Merger, (iv) if the Surviving
Corporation and any holder of Dissenting Shares will not have come to an
agreement as to the appraisal value of such holder's Dissenting Shares, and
neither such holder of Dissenting Shares nor the Surviving Corporation has filed
or joined in a petition demanding a determination of the appraisal value of all
Dissenting Shares within the period provided in Section 262 of the GCL or (v) if
any holder of Dissenting Shares otherwise loses (through failure to perfect or
otherwise) the right to appraisal of the Dissenting Shares, the right and
obligation of such holder or holders (as the case may be) to receive such
appraisal value and to sell such Shares shall terminate, and such Shares shall
thereupon be deemed to have been extinguished and to have been converted, as of
the Effective Time of the Merger, into the right to receive the Merger Price,
without interest. Persons who have perfected statutory rights with respect to
Dissenting Shares as aforesaid shall not be paid by the Surviving Corporation as
provided in this Agreement and shall have only such rights as are provided by
Section 262 of the GCL with respect to such Shares.
III. REPRESENTATIONS AND WARRANTIES OF PARENT AND PURCHASER
Parent and Purchaser hereby jointly and severally represent and warrant to
the Company that:
3.1. Corporate Organization. Each of Parent and Purchaser is a
corporation duly organized, validly existing and in good standing under the laws
of its state of incorporation and has all requisite corporate power and
authority to own, lease and operate its properties and assets and to carry on
its business as it is now being conducted. Parent is the record and beneficial
owner of all of the outstanding capital stock of Purchaser.
3.2. Authority. Each of Parent and Purchaser has the requisite corporate
power and authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby have been duly
approved by the respective Boards of Directors of Parent and Purchaser and by
Parent as the sole stockholder of Purchaser and no other corporate proceedings
on the part of Parent or Purchaser are necessary to consummate the transactions
so contemplated. This Agreement has been duly executed and delivered by each of
Parent and Purchaser and constitutes a valid and binding obligation of each of
Parent and Purchaser, enforceable against Parent and Purchaser in accordance
with its terms.
3.3. Offer Documents. The documents (the "Offer Documents") pursuant to
which the Offer will be made, including the Schedule 14D-1 filed by Purchaser
pursuant to the Exchange Act (the "Schedule 14D-1"), will comply as to form in
all material respects with the provisions of the Exchange Act and the rules and
regulations thereunder. The information contained in the Offer Documents (other
than information supplied in writing by the Company expressly for inclusion in
the Offer Documents) will not, at the respective times the Schedule 14D-1 or any
amendments or supplements thereto are filed with the Commission, 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 made therein,
in light of the circumstances under which they were made, not misleading.
Purchaser will promptly correct any statements in the Schedule 14D-1 and the
Offer Documents that have become false or misleading and take all steps
necessary to cause such Schedule 14D-1 as so corrected to be filed with the
Commission and such Offer Documents as so corrected to be disseminated to
holders of Shares, in each case as and to the extent required by applicable law.
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<PAGE> 9
3.4. Merger Proxy Statement. None of the information to be supplied by
Parent or Purchaser expressly for inclusion in a proxy or information statement
of the Company required to be mailed to the Company's stockholders in connection
with the Merger (the "Merger Proxy Statement"), or in any amendments or
supplements thereto will, at the time of (a) the first mailing thereof or (b)
the meeting, if any, of stockholders to be held in connection with the Merger,
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading.
3.5. Fees. Except for the fees payable to Goldman, Sachs & Co., neither
Parent nor Purchaser nor any of Parent's other subsidiaries has paid or will
become obligated to pay any fee or commission to any broker, finder or
intermediary in connection with the transactions contemplated hereby.
3.6. Consents and Approvals; No Violation. Neither the execution and
delivery of this Agreement by Parent and Purchaser nor the consummation by
Parent and Purchaser of the transactions contemplated hereby will (a) conflict
with, or result in any breach or violation of, any provision of their respective
certificates of incorporation or by-laws (or comparable governing instruments),
or (b) violate, conflict with, constitute a breach or default (or an event
which, with notice or lapse of time or both, would constitute a breach or
default) under, or result in the termination of, or accelerate the performance
required by, or result in the creation of any lien or other encumbrance upon any
of the properties or assets of Parent or any of its subsidiaries under, any of
the terms, conditions or provisions of any order, writ, injunction, decree,
statute, rule or regulation, governmental permit or license, or note, bond,
mortgage, indenture, deed of trust, license, lease agreement or other instrument
or obligation to which Parent or any such subsidiary is a party or to which they
or any of their respective properties or assets are subject, except for such
violations, conflicts, breaches, defaults, terminations, accelerations or
creations of liens or other encumbrances, which, individually or in the
aggregate, will not have a material adverse effect upon the ability of Parent or
Purchaser to perform their respective obligations under this Agreement, or (c)
except as set forth in Schedule 3.6, require any consent, approval,
authorization or permit of or from, or filing with or notification to, any
court, governmental authority or other regulatory or administrative agency or
commission ("Governmental Entity") of the United States or of any state or local
government or any subdivision thereof (the "U.S.") or of Belgium or any local
government or subdivision thereof, except (i) pursuant to the Exchange Act, (ii)
filing certificates of merger pursuant to the GCL and the laws of any other
state, (iii) filings required under the securities or blue sky laws of the
various states, (iv) filings under the Hart-Scott-Rodino Antitrust Improvements
Act of 1976, as amended (the "HSR Act") and the "Exon-Florio Amendment" to the
Omnibus Trade and Competitiveness Act of 1988, as amended ("Exon-Florio"), or
(v) consents, approvals, authorizations, permits, filings or notifications which
if not obtained or made will not, individually or in the aggregate, have a
material adverse effect upon the ability of Parent or Purchaser to perform their
respective obligations under this Agreement.
3.7. Financing. Prior to the expiration of the Offer, Parent or Purchaser
will have all funds necessary for the purchase of the Shares pursuant to the
Offer. Prior to the Effective Time, Parent or Purchaser will have all funds
necessary to consummate the Merger.
3.8. Not a Public Utility. Assuming the accuracy of the representation
made by the Company contained in Section 4.11 hereof, neither Parent nor
Purchaser is and the acquisition of Shares pursuant to the Offer will not cause
the Company to be deemed to be a public utility, electric utility holding
company, affiliate or combination thereof within the meaning of the Public
Utility Holding Company Act of 1935 ("PUHCA"), as amended.
IV. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to each of Parent and Purchaser
that:
4.1. Corporate Organization. Each of the Company and its subsidiaries is
a corporation or partnership duly organized, validly existing and in good
standing under the laws of its respective country or state of organization and
is in good standing or qualified to conduct business in each jurisdiction where
failure to so qualify or be in good standing is reasonably likely to have a
material adverse effect on the business, properties,
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<PAGE> 10
assets, condition (financial or otherwise), results of operations or prospects
of the Company and its subsidiaries, taken as a whole. Each of the Company and
its subsidiaries has the requisite corporate or other power to own, lease and
operate its properties and assets and to carry on its businesses as they are now
being conducted. The Company has furnished Parent true and correct copies of its
Certificate of Incorporation and By-Laws, as amended to the date hereof. The
Company's Certificate of Incorporation and By-Laws as so delivered are in full
force and effect.
4.2. Capitalization. As of the date hereof, the authorized capital stock
of the Company consists of (i) 50,000,000 Shares and (ii) 2,000,000 shares of
Preferred Stock, no par value ("Preferred Stock"). As of May 9, 1995, (a)
12,809,177 Shares were validly issued and outstanding, fully paid and
nonassessable and not subject to preemptive rights, (b) no shares of Preferred
Stock were issued or outstanding and (c) Options to purchase an aggregate of
1,441,123 Shares at exercise prices reflected in Schedule 4.2 were outstanding.
Since May 9, 1995, the Company has not issued any additional Shares other than
pursuant to the exercise of Options outstanding on May 9, 1995, has not issued
any shares of Preferred Stock, has not granted any additional Options and has
not modified outstanding Options except as expressly contemplated in this
Agreement. Except as set forth in this Section 4.2 or in Schedule 4.2, there are
no shares of capital stock of the Company authorized, issued or outstanding and
there are no outstanding subscriptions, options, warrants, rights, convertible
securities (other than the Rights (as such term is defined in Section 5.2
hereof)) or any other agreements or commitments of any character relating to the
issued or unissued capital stock or other securities or equity interests of the
Company or any of its subsidiaries (other than the Rights) obligating the
Company or any of its subsidiaries to issue, deliver or sell, or cause to be
issued, delivered or sold, shares of capital stock or equity interests of the
Company or any of its subsidiaries or obligating the Company or any of its
subsidiaries to grant, extend or enter into any subscription, option, warrant,
right, convertible security or other similar agreement or commitment. Except as
set forth in Schedule 4.2, there are no voting trusts or other agreements or
understandings to which the Company or any subsidiary of the Company is a party
with respect to the voting of the capital stock of the Company.
4.3. Authority. The Company has the requisite corporate power and
authority to enter into this Agreement and, except for any required approval of
the Company's stockholders with respect to the Merger, to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby have been duly
approved by the Board of Directors of the Company and no other corporate
proceedings on the part of the Company are necessary to authorize this Agreement
or to consummate the transactions so contemplated, subject, to the extent
required with respect to the consummation of the Merger, to approval, if
necessary, by the stockholders of the Company as provided in Section 2.2 hereof.
This Agreement has been duly executed and delivered by, and constitutes a valid
and binding obligation of, the Company, enforceable against the Company in
accordance with its terms.
4.4. Consent and Approvals; No Violation. Neither the execution and
delivery of this Agreement by the Company nor the consummation by the Company of
the transactions contemplated hereby will (a) conflict with or result in any
breach or violation of any provision of, or constitute a default (or an event
which, with notice or lapse of time or both, would constitute a default) under,
or result in the termination of, or accelerate the performance required by, or
result in the creation of any lien or other encumbrance upon any of the
properties or assets of the Company or any of its subsidiaries under, any of the
terms, conditions or provisions of (i) their respective certificates of
incorporation or by-laws (or similar governing document) or (ii) any order,
writ, injunction, decree, statute, rule or regulation, governmental permit or
license, or note, bond, mortgage, indenture, deed of trust, license, lease,
agreement or other instrument or obligation to which the Company or any such
subsidiary is a party or to which they or any of their respective properties or
assets are subject, except for such violations, conflicts, breaches, defaults,
terminations, accelerations or creations of liens or other encumbrances, which
are set forth on Schedule 4.4 or which, individually or in the aggregate, will
not have a material adverse effect on the business, properties, assets,
condition (financial or otherwise), results of operations or prospects of the
Company and its subsidiaries, taken as a whole, or (b) require any consent,
approval, authorization or permit of, or filing with or notification to, any
Governmental Entity, except (i) pursuant to the Exchange Act, (ii) filing
certificates of merger pursuant to the GCL and the laws of any other state,
(iii) filings required under the securities or blue sky laws of the various
states, (iv) filings under
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<PAGE> 11
the HSR Act or Exon-Florio, or (v) consents, approvals, authorizations, permits,
filings or notifications which, if not obtained or made will not, individually
or in the aggregate, have a material adverse effect on the business, properties,
assets, condition (financial or otherwise), results of operations or prospects
of the Company and its subsidiaries, taken as a whole.
4.5. Commission Filings. The Company has heretofore filed all reports
with the Commission required to be filed pursuant to the Exchange Act since
January 1, 1993, and has made available to Parent copies of all such reports,
including without limitation each registration statement, Current Report on Form
8-K, proxy or information statement, Annual Report on Form 10-K and Quarterly
Report on Form 10-Q filed during such period (in the case of each such report,
including all exhibits thereto) (the "SEC Documents"). The SEC Documents did not
(as of their respective filing dates) contain any untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary
in order to make the statements made therein, in light of the circumstances
under which they were made, not misleading. The audited and unaudited
consolidated financial statements, together with the notes thereto, of the
Company included (or incorporated by reference) in the SEC Documents fairly
present the financial position of the Company and its consolidated subsidiaries
as of the dates thereof and the results of their operations and changes in
financial position for the periods then ended in accordance with generally
accepted accounting principles applied on a consistent basis (except as stated
in such financial statements, including the related notes, and except that the
quarterly financial statements do not contain all the footnote disclosures
required by generally accepted accounting principles), subject, in the case of
the unaudited financial statements, to normal year-end audit adjustments and any
other adjustments described therein. The information in the Annual Report of the
Company on Form 10-K for the fiscal year ended June 30, 1994 (the "1994 Form
10-K") and in the reports filed by the Company with the Commission under the
Exchange Act subsequent to the filing with the Commission of the 1994 Form 10-K,
taken as a whole, when read together with the information included in this
Agreement and the schedules and exhibits hereto, does not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary in order to make the statements made therein, in the
light of the circumstances under which they were made, not misleading. The
Company has provided Purchaser with a copy of each document of which it is aware
which is of the character of document which would otherwise be required to be
filed by the Company with the Commission as an exhibit (other than financial
statements, financial exhibits or financial schedules) to any Annual Report on
Form 10-K, Quarterly Report on Form 10-Q or Current Report on Form 8-K required
to be filed by the Company under the Exchange Act, if filed with respect to a
period ending on the date hereof, which has not been previously filed or
incorporated by reference in the SEC Documents or which is not referred to in
Schedule 5.3.5 hereto.
4.6. Absence of Certain Changes. Except as disclosed in the SEC Documents
or Schedule 4.6 or as disclosed to Parent by the Company in a writing on or
before the date hereof, since June 30, 1994, there has not been (a) any material
adverse change in the business, properties, assets, condition (financial or
otherwise), results of operations or prospects of the Company and its
subsidiaries, taken as a whole, (b) in the case of the Company, any declaration,
setting aside or payment of any dividend or other distribution with respect to
its capital stock, other than the regular cash dividends on Shares or (c) any
material change by the Company in accounting principles or methods. Except as
described in Schedule 5.3.5 and except for normal increases in the ordinary
course of business that are consistent with past practices and that, in the
aggregate, do not result in a material increase in benefits or compensation
expense to the Company or pursuant to existing collective bargaining agreements,
since June 30, 1994, the Company has not adopted or amended any agreements,
trusts, plans, funds or other arrangements of the type described in Section
5.3.5 or increased the compensation or fringe benefits of any director, officer
or employee or paid any benefit not required by any existing plan or arrangement
(including without limitation the granting of stock options or stock
appreciation rights) or taken any action or granted any benefit not expressly
required under the terms of any existing agreements, trusts, plans, funds or
other such arrangements or entered into any contract, agreement, commitment or
arrangement to do any of the foregoing.
4.7. Fees. Except as set forth in Schedule 4.7, neither the Company nor
any of its subsidiaries has paid or become obligated to pay any fee or
commission to any broker, finder or intermediary in connection with the
transactions contemplated hereby.
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4.8. Offer Documents. None of the information supplied by the Company or
its subsidiaries expressly for inclusion in the Offer Documents or in any
amendments thereto or supplements thereto will, at the time supplied or upon the
expiration of the Offer, contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary in order
to make the statements therein, in light of the circumstances under which they
were made, not misleading.
4.9. Schedule 14D-9. Schedule 14D-9 will comply as to form in all
material respects with the applicable requirements of the Exchange Act and the
rules and regulations thereunder and will not at the respective times the
Schedule 14D-9 or any amendments thereto or supplements thereto are filed with
the Commission, contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary in order to make
the statements therein, in light of the circumstances under which they were
made, not misleading. The Company will promptly correct any statements in the
Schedule 14D-9 that have become false or misleading and take all steps necessary
to cause such Schedule 14D-9 as so corrected to be filed with the Commission and
to be disseminated to holders of Shares, in each case as and to the extent
required by applicable law.
4.10. Merger Proxy Statement. The Merger Proxy Statement and all
amendments thereto and supplements thereto will comply as to form in all
material respects with the applicable requirements of the Exchange Act and the
rules and regulations promulgated thereunder and will not, at the time of (a)
first mailing thereof or (b) the meeting, if any, of stockholders to be held in
connection with the Merger, together with any amendments thereto and supplements
thereto, contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading, except that no representation is made by the Company with
respect to information supplied in writing by Parent or Purchaser for inclusion
in the Merger Proxy Statement.
4.11. Qualifying Facility. Assuming the accuracy of the representation of
Parent and Purchaser contained in Section 3.8 hereof, (i) each of the electric
generating facilities in which the Company or any of its subsidiaries owns an
equity interest qualifies as a "qualifying facility" ("QF") within the meaning
of the Public Utility Regulatory Policies Act of 1978 and all rules and
regulations adopted thereunder and (ii) each electric generating facility
currently under development by the Company or any of its subsidiaries is
expected to qualify as a QF or as an "Exempt Wholesale Generator" under Section
32 of PUHCA.
V. COVENANTS
5.1. Acquisition Proposals. Except as set forth in Schedule 5.1, each of
the Company and its subsidiaries will not, directly or indirectly, and will
instruct and otherwise use its commercially reasonable efforts to cause their
respective officers, directors, employees, agents or advisors or other
representatives or consultants not to, (i) directly or indirectly, solicit or
initiate any proposals or offers from any person relating to any acquisition or
purchase of all or a material amount of the assets of, or any securities of, or
any merger, consolidation or business combination with, the Company or any of
its subsidiaries or (ii) except to the extent required by the Fiduciary Duty of
the Company's Board of Directors, participate in any negotiations regarding, or
furnish to any other person any information with respect to, or otherwise
cooperate in any way with, or assist or participate in, facilitate or encourage,
any effort or attempt by any other person to do or seek any of the foregoing.
The Company will promptly notify Parent in the event of any proposal or offer of
the type referred to in clause (i) of the first sentence of this Section 5.1,
indicating in reasonable detail the identity of the persons involved and the
terms and conditions of any proposal or offer. The Company will promptly notify
Parent in the event of the occurrence of any matter referred to in clause (ii)
of the first sentence of this Section 5.1 and indicate in reasonable detail the
identity of the persons involved.
5.2. Amendment of Rights Agreement. Not later than immediately prior to
the commencement of the Offer, the Board of Directors of the Company shall take
such action as is necessary to amend the Rights Agreement (the "Rights
Agreement"), dated as of November 29, 1988, between the Company and Morgan
Shareholder Services Trust Company ("MSSTC"), as Rights Agent, as amended by
amendment dated January 27, 1994, to provide that the transaction contemplated
by the Offer and this Agreement will not
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trigger the Rights issued thereunder (the "Rights") and to provide that neither
Parent nor Purchaser shall be deemed to be an "Acquiring Person" under the
Rights Agreement. Except as contemplated by the previous sentence, the Company
will not take any action to, or intended to, alter or amend the Rights Agreement
or redeem the Rights with respect to an acquisition of the Shares, other than
the Offer, unless the Board of Directors of the Company has determined that such
action or redemption is necessary in order for members of the Board to satisfy
their Fiduciary Duties.
5.3. Interim Operations. During the period from the date of this
Agreement to the earlier of the time that the designees of Parent have been
elected or appointed to, and constitute a majority of, the Board of Directors of
the Company pursuant to Section 1.4 hereof or the Effective Time, except as
specifically contemplated by this Agreement, or as set forth in Schedule 5.3 or
as otherwise approved by the Purchaser in writing:
5.3.1. Conduct of Business. The Company will, and will cause each of its
subsidiaries to, conduct their respective businesses only in, and not take any
action except in, the ordinary and usual course of its business except as the
Board of Directors deems to be required in the exercise of its Fiduciary Duty
with notice in writing thereof to Parent. The Company will use its commercially
reasonable efforts to preserve intact the business organization of the Company
and each of its subsidiaries, to keep available the services of its and their
present officers and key employees, and to preserve the goodwill of those having
business relationships with it or its subsidiaries.
5.3.2. Certificate of Incorporation and By-Laws. The Company will not,
and will not permit any of its subsidiaries to, make or propose any change or
amendment to their respective certificates of incorporation or by-laws (or
comparable governing instruments).
5.3.3. Capital Stock. Except as set forth in Schedule 4.2, the Company
will not, and will not permit any of its subsidiaries to, issue or sell any
shares of capital stock or any other securities or equity interests of any of
them or issue any securities convertible into or exchangeable for, or options,
warrants to purchase, scrip, rights to subscribe for, calls or commitments of
any character whatsoever relating to (other than pursuant to and to the extent
required by the Rights Agreement), or enter into any contract, understanding or
arrangement with respect to the issuance of, any shares of capital stock or any
other securities or equity interests of any of them or enter into any
arrangement or contract with respect to the purchase or voting of shares of
their capital stock or equity interests, or adjust, split, combine or reclassify
any of their capital stock or other securities or equity interests, or make any
other changes in their capital structures.
5.3.4. Dividends. Except as contemplated by Section 5.2 hereof, the
Company will not declare, set aside, pay or make any dividend or other
distribution or payment (whether in cash, stock or property) with respect to, or
purchase or redeem, any shares of capital stock or equity interests other than
regular quarterly cash dividends of $0.03 per Share consistent with the
Company's past established schedule of declaration, payment and record dates.
5.3.5. Employee Plans, Compensation, Etc. Except (i) as contemplated by
this Agreement, including in Section 2.6 and this Section 5.3.5, (ii) as set
forth in Schedule 5.3.5 and (iii) for normal increases in the ordinary course of
business that are consistent with past practices and that, in the aggregate, do
not result in a material increase in benefits or compensation expense to the
Company or pursuant to collective bargaining agreements as presently in effect,
the Company will not, and will not permit any of its subsidiaries to, adopt or
amend any bonus, profit-sharing, compensation, severance, termination, stock
option, pension, retirement, deferred compensation, employment or other employee
benefit agreements, trusts, plans, funds or other arrangements for the benefit
or welfare of any director, officer or employee, or increase in any manner the
compensation or fringe benefits of any director, officer or employee or pay any
benefit not required by any existing plan or arrangement (including without
limitation the granting of stock options or stock appreciation rights) or take
any action or grant any benefit not expressly required under the terms of any
existing agreements, trusts, plans, funds or other such arrangements or enter
into any contract, agreement, commitment or arrangement to do any of the
foregoing.
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5.3.6. Debt. Except as set forth on Schedule 5.3.6, the Company and its
subsidiaries will not, except in the ordinary course of its business, (a) incur
or assume any indebtedness, or (b) make any loans, advances or capital
contributions to, or investments (other than intercompany accounts and
short-term investments pursuant to customary cash management systems of the
Company in the ordinary course and consistent with past practices) in, any other
person other than such of the foregoing as are made by the Company to or in
wholly owned subsidiaries of the Company in an amount not to exceed $2,000,000
in the aggregate.
5.4. Access and Information. The Company will (and will cause each of its
subsidiaries to) afford to Parent and its representatives (including without
limitation directors, officers and employees of Parent and its affiliates, and
counsel, accountants and other professionals retained by Parent) such access
during normal business hours throughout the period prior to the Effective Time
to the Company's books, records (including without limitation tax returns and
work papers of the Company's independent auditors), properties, personnel and to
such other information as Parent reasonably requests, provided, however, that no
investigation pursuant to this Section 5.4 will affect or be deemed to modify
any of the representations or warranties made by the Company in this Agreement.
The rights and obligations of each of Parent and the Company pursuant to the
Confidentiality Agreement, dated January 20, 1995 between Parent and the
Company, will survive the execution and delivery of this Agreement, and all
information obtained by Parent or any of its representatives (including without
limitation directors, officers and employees of Parent and its affiliates and
counsel, accountants and other professionals retained by Parent) pursuant hereto
(including, without limitation, pursuant to Section 1.3 hereof) shall be deemed
"Information" as that term is defined in such Confidentiality Agreement, and
shall be subject to the provisions of that Confidentiality Agreement, except to
the extent that Parent is advised by counsel that disclosure of any such
information, including the existence of the Confidentiality Agreement, is
required by law in connection with the offer or the Merger; provided, however,
that: (i) Section 7 of the Confidentiality Agreement will not apply to prevent
the Offer and the Merger pursuant to this Agreement or to prevent Purchaser from
continuing its offer to purchase Shares during the 120-day period commencing on
the date of the commencement of the Offer if this Agreement is terminated
pursuant to Section 7.1(f) hereof; (ii) Section 9 of the Confidentiality
Agreement will no longer apply; and (iii) to the extent that any attempt is made
to enforce the Confidentiality Agreement in the context of the Offer and Merger,
such suit will be brought in a forum referred to in Section 7.12.
5.5. Certain Filings, Consents and Arrangements. Parent, Purchaser and
the Company will (a) promptly make their respective filings, and will thereafter
use their commercially reasonable efforts promptly to make any required
submissions, under the HSR Act and Exon-Florio with respect to the Offer, the
Merger and the other transactions contemplated by this Agreement and (b)
cooperate with one another (i) in promptly determining whether any filings are
required to be made or consents, approvals, permits or authorizations are
required to be obtained under any other U.S. or foreign law or regulation and
(ii) in promptly making any such filings, furnishing information required in
connection therewith and seeking timely to obtain any such consents, approvals,
permits or authorizations.
5.6. Merger Proxy Statement. As soon as practicable after the termination
or expiration of the Offer, the Company will, if required by applicable law in
order to consummate the Merger, prepare the Merger Proxy Statement, file it with
the Commission, respond to comments from the Commission, as appropriate, and
mail it to all holders of Shares. Parent, Purchaser and the Company will
cooperate with each other in the preparation of the Merger Proxy Statement;
without limiting the generality of the foregoing, Parent and Purchaser will
furnish to the Company the information relating to Parent and Purchaser required
by the Exchange Act to be set forth in the Merger Proxy Statement.
5.7. Additional Agreements. Subject to the terms and conditions herein
provided, each of the parties hereto agrees to use commercially reasonable
efforts to cause fulfillment of all conditions under this Agreement and to use
commercially reasonable efforts to take promptly, or cause to be taken, all
actions and to do promptly, or cause to be done, all things necessary, proper or
advisable under applicable laws and regulations to consummate and make effective
the transactions contemplated by this Agreement, including using commercially
reasonable efforts to obtain all necessary actions or non-actions, extensions,
waivers, consents and approvals from all applicable Governmental Entities,
effecting all necessary registrations and filings (including without limitation
filings under the HSR Act and Exon-Florio) and obtaining any required
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<PAGE> 15
contractual consents, subject, however, to any required votes of the
stockholders of the Company. If, at any time after the Effective Time, the
Surviving Corporation reasonably considers or is advised that any deeds, bills
of sale, assignments, assurances or any other actions or things are necessary or
desirable to vest, perfect or confirm of record or otherwise in the Surviving
Corporation its right, title or interest in, to or under any of the rights,
properties or assets of either of the Constituent Corporations acquired or to be
acquired by the Surviving Corporation as a result of, or in connection with the
Merger or otherwise to carry out the purposes of this Agreement, the officers
and directors of the Surviving Corporation will be authorized to execute and
deliver, in the name and on behalf of each of the Constituent Corporations or
otherwise, all such deeds, bills of sale, assignments and assurances and to take
and do, in the name and on behalf of each of the Constituent Corporations or
otherwise, all such other actions and things as may be necessary or desirable to
vest, perfect or confirm any and all right, title and interest in, to and under
such rights, properties or assets in the Surviving Corporation or otherwise to
carry out the purposes of this Agreement.
5.8. Compliance with Antitrust Laws. Each of Parent and the Company will
use commercially reasonable efforts to resolve such objections, if any, which
may be asserted with respect to the Offer or the Merger under the antitrust
laws. In the event a suit is instituted challenging the Offer or the Merger as
violative of the antitrust laws, each of Parent and the Company will use
commercially reasonable efforts to resist or resolve such suit. Parent and the
Company will use commercially reasonable efforts to take such action as may be
required: (a) by the Antitrust Division of the Department of Justice or the
Federal Trade Commission in order to resolve such objections as either of them
may have to the Offer or the Merger under the antitrust laws, or (b) by any
federal or state court of the United States, in any suit brought by a private
party or Governmental Entity challenging the Offer or the Merger as violative of
the antitrust laws, in order to avoid the entry of, or to effect the dissolution
of, any injunction, temporary restraining order or other order which has the
effect of preventing the consummation of the Offer or the Merger.
Notwithstanding the foregoing, however, none of Parent, Purchaser or the Company
will be required prior to the Effective Time to commit to a material divestiture
transaction or to commit to hold separate any of the material businesses,
product lines or assets of Parent or its affiliates or the Company.
5.9. Publicity. The Company and Parent will consult with each other in
issuing any press releases or otherwise making public statements with respect to
the transactions contemplated hereby and in making any filings with any
Governmental Entity or with any national securities exchange with respect
thereto.
5.10. Directors' and Officers' Insurance: Indemnification. From and after
the earlier of the Effective Time or the time the Parent's designees have been
elected or appointed to, and constitute a majority of, the Board of Directors of
the Company pursuant to Section 1.4 hereof (the "D&O Initial Date"), (a) Parent
will cause the Surviving Corporation to maintain the current directors' and
officers' insurance and indemnification policies or one or more equivalent
policies, subject to terms and provisions no less advantageous, for all present
and former directors and officers of the Company, covering the claims made
within three (3) years after the D&O Initial Date, if such policies are
available on a commercially reasonable basis, and (b) after the Effective Time
Parent will cause the Surviving Corporation to maintain the right to
indemnification, and to advancement of expenses, of officers and directors as
provided for in the Certificate of Incorporation and By-Laws of the Company,
with respect to indemnification for acts and omissions occurring prior to the
Effective Time, including without limitation in connection with the transactions
contemplated by the Agreement. Without limitation of the foregoing, in the event
that any such officer or director 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, Parent will cause the Surviving
Corporation to pay as incurred such officer's or director's legal and other
expenses (including the costs of any investigation and preparation) incurred in
connection therewith in accordance with the procedures authorized in the By-Laws
of the Company and the GCL. Parent shall cause the Surviving Corporation to pay
all expenses, including reasonable attorneys' fees, that may be incurred by any
officer or director in enforcing the indemnity and other obligations provided
for in this Section 5.10.
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<PAGE> 16
5.11. Employee Benefits.
5.11.1. Employment Agreements. After the Effective Time, Parent will
cause the Surviving Corporation to honor, in accordance with their respective
terms in effect on this date, the employment agreements to which the Company is
a party and which are described in Schedule 5.11.1 hereof.
5.11.2. Employee Benefits. Parent agrees that it shall cause the
Surviving Corporation to provide to the employees of the Surviving Corporation
Employee Benefits (as defined below) which in the aggregate are at least as
favorable as those provided by Parent from time to time to its employees who are
similarly situated; provided that such Employee Benefits shall be, in the
aggregate, at least as favorable as those currently provided by the Company to
its employees. "Employee Benefits" shall mean all pension, profit sharing,
Section 401(k), excess benefit, deferred compensation, incentive compensation,
cash bonus, severance pay, cafeteria, flexible compensation, life insurance,
medical, dental, disability, welfare or vacation plans or arrangements of any
kind and any other employee, pension benefit plan or employee welfare benefit
plan (as such terms are defined in Sections 3(2) and 3(1), respectively, of
ERISA) in which employees of the Company or any of its subsidiaries participate;
provided that "Employee Benefits" shall not include any defined benefit pension
plans or any stock-based plans, agreements, or arrangements or stock-based
provisions in plans, agreements, or arrangements or any change of control
provisions in any plans, agreements, or arrangements other than change of
control provisions that solely apply to the Merger. Parent shall cause the
Surviving Corporation to (i) credit the employees of the Surviving Corporation
with all of their years of service with the Company and its subsidiaries for
purposes of all Employee Benefits, (ii) maintain the Senior Management Deferred
Compensation Plan (the "SMDCP"), the Supplemental Executive Retirement Plan (the
"SERP"), and the Senior Executive Officer Early Retirement Plan (the "SEOERP")
on at least as favorable terms as are in effect on the date hereof (other than
change of control provisions that do not apply to the Merger), and fulfill the
obligations of the Company thereunder. In addition, Parent will cause the
Surviving Corporation to fulfill the obligations of the Company pursuant to the
Company's Discretionary Bonus Plan described on Schedule 5.11.2 with respect to
the current fiscal year. Parent confirms that the acceptance for payment, and
purchase of, the Shares pursuant to the Offer shall constitute a "Change in
Control" for purposes of the SERP, but that none of the transactions
contemplated by this Agreement shall constitute a "Change in Control" for
purposes of the SMDCP.
5.11.3 No Guaranty. Parent's obligations under Sections 5.10 and 5.11 do
not constitute a guaranty of the obligations of the Surviving Corporation.
VI. CONDITIONS
6.1. Conditions. The obligations of Parent, Purchaser and the Company to
consummate the Merger are subject to the satisfaction, at or before the
Effective Time, of each of the following conditions, as applicable thereto:
6.1.1. Purchase of Shares. Purchaser will have accepted for payment and
purchased Shares pursuant to the Offer in accordance with the terms thereof;
provided that this condition shall be deemed to have been satisfied with respect
to Parent and Purchaser if Purchaser fails to pay for Shares pursuant to the
Offer in violation of the terms of the Offer.
6.1.2. Shareholder Approval. The stockholders of the Company will have
duly approved the Merger and adopted this Agreement, if required by applicable
law.
6.1.3. Injunctions; Illegality. The consummation of the Merger will not
be precluded by any order, injunction, decree or ruling of a court of competent
jurisdiction or any Governmental Entity (each party agreeing to use its best
efforts to rectify any such occurrence), and there will not have been any action
taken or any statute, rule or regulation enacted, promulgated or deemed
applicable to the Merger by any Governmental Entity which would prevent the
consummation of the Merger.
6.1.4. HSR Act and Exon-Florio. Any applicable waiting period under the
HSR Act and Exon-Florio will have expired or been terminated.
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6.2. Conditions to Parent and Purchaser Obligations. The obligations of
Parent and Purchaser to consummate the Merger will be subject to the
satisfaction at or prior to the Effective Time of the additional conditions that
(a) except for Options to acquire 100,000 Shares all Options shall have been
exercised or surrendered for the cash consideration contemplated by Section 2.6
hereof or, as to any Option not so surrendered or exercised in excess of Options
to acquire 100,000 Shares, the holder shall have consented to acquire upon
payment of the exercise price an amount of cash equal to the Merger Price in
lieu of each Share covered thereby and (b) the Company will have satisfied and
complied with in all material respects each of the covenants of the Company
contained herein from the time the Purchaser accepts Shares for payment pursuant
to the Offer up to and including the earlier of the time that the designees of
Parent have been elected or appointed to, and constitute a majority of, the
Board of Directors of the Company pursuant to Section 1.4 hereof or the
Effective Time.
VII. MISCELLANEOUS
7.1. Termination. This Agreement may be terminated and the Merger
contemplated hereby may be abandoned (a) by the mutual consent of the Boards of
Directors of Parent, Purchaser and the Company; (b) by Parent and Purchaser, on
the one hand, or the Company, on the other hand, if the Offer expires or is
terminated or withdrawn in accordance with its terms without any Shares being
purchased thereunder or if Purchaser has not purchased Shares validly tendered
and not withdrawn pursuant to the Offer within 120 days after commencement of
the offer, provided, however, that the party seeking to terminate this Agreement
pursuant to this Section 7.1(b) is not in breach of this Agreement in any
material respect; (c) by the Company, if Parent or Purchaser materially breaches
any of the representations and warranties or covenants contained in this
Agreement; (d) by either Parent and Purchaser or the Company, if the Merger is
not consummated prior to December 31, 1995; provided, however, that the right to
terminate this Agreement under this Section 7.1(d) will not be available to any
party whose failure to fulfill any obligation under this Agreement has been the
cause of, or resulted in, the failure of the Effective Time to occur on or
before such date; (e) by either Parent and Purchaser, on the one hand, or the
Company, on the other hand, if either one (or any permitted assignee hereunder)
is precluded by an order or injunction (other than an order or injunction issued
on a preliminary basis) of a court of competent jurisdiction from consummating
the Merger and all means of appeal and all appeals from such order or injunction
have been finally exhausted; and (f) by either Parent and Purchaser, on the one
hand, or the Company, on the other hand, if prior to the purchase of any Shares
pursuant to the Offer, the Board of Directors of the Company withdraws or
modifies in a manner adverse to Parent or Purchaser its approval or
recommendation of the Offer because of the Fiduciary Duty of the Board of
Directors. In the event of any termination and abandonment pursuant to this
Section 7.1, no party hereto (or any of its directors or officers) shall have
any liability or further obligation to any other party to this Agreement, except
for obligations under the last sentence of Sections 1.3 and 5.4 and all of
Sections 5.10 and 7.10 hereof and except that nothing herein will relieve any
party from liability for any breach of this Agreement. Any action by the Company
to terminate this Agreement pursuant to this Section 7.1 will require only the
approval of a majority of the directors of the Company then in office who are
directors of the Company on the date hereof, or persons nominated or elected to
succeed such directors by a majority of such directors (the "Continuing
Directors").
7.2. Non-Survival of Representations, Warranties and Agreements. The
representations and warranties or agreements in this Agreement will terminate at
the Effective Time or the earlier termination of this Agreement pursuant to
Section 7.1, as the case may be, provided, however, that if the Merger is
consummated, Sections 2.4, 5.7, 5.10 and 5.11 hereof will survive the Effective
Time to the extent contemplated by such Sections, and provided further, however,
that the last sentence of Sections 1.3 and 5.4 hereof and all of Sections 5.10
and 7.10 hereof will in all events survive any termination of this Agreement.
7.3. Waiver and Amendment. Subject to applicable provisions of the GCL,
any provision of this Agreement may be waived at any time by the party which is,
or whose stockholders are, entitled to the benefits thereof, and this Agreement
may be amended or supplemented at any time, provided that no amendment will be
made after any stockholder approval of the Merger which reduces the Merger Price
without further stockholder approval, provided further that any action by the
Company to waive, amend or supplement any
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<PAGE> 18
provision of this Agreement or provide any consent authorized hereunder or
enforce any of the Company's rights hereunder, will require the approval only of
a majority of the Continuing Directors of the Company. No such waiver,
amendment, supplement or consent will be effective unless in a writing which
makes express reference to this Section 7.3 and is signed by the party or
parties sought to be bound thereby.
7.4. Entire Agreement. This Agreement contains the entire agreement among
Parent, Purchaser and the Company with respect to the Offer, the Merger and the
other transactions contemplated hereby and thereby, and, except as contemplated
by Section 5.4 hereof, this Agreement supersedes all prior agreements among the
parties with respect to such matters.
7.5. APPLICABLE LAW. THIS AGREEMENT WILL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE APPLICABLE TO CONTRACTS MADE
AND TO BE PERFORMED IN THAT STATE.
7.6. Interpretation. For purposes of this Agreement, a "subsidiary" of a
corporation means any corporation, partnership, limited liability company, trust
or other entity 50% or more of the outstanding voting securities or equity
interests of which are directly or indirectly owned by such other corporation.
The descriptive headings contained herein are for convenience and reference only
and will not affect in any way the meaning or interpretation of this Agreement.
7.7. Notices. All notices and other communications hereunder will be in
writing and will be given (and will be deemed to have been duly given upon
receipt) by delivery in person, by cable, telecopy, telex or other standard form
of telecommunications, or by registered or certified mail, postage prepaid,
return receipt requested, addressed as follows:
If to the Company to:
CRSS Inc.
1177 West Loop South
Suite 800
Houston, Texas 77027
Attention: Chairman and Chief Executive Officer
Telecopy No.: (713) 552-2364
With copies to:
Liddell, Sapp, Zivley, Hill & LaBoon, L.L.P.
3400 Texas Commerce Tower
Houston, Texas 77002
Attention: Gene G. Lewis
Telecopy No.: (713) 223-3717
If to Parent or Purchaser to:
American Tractebel Corporation
12 East 49th Street
New York, New York 10017
Attention: President
Telecopy No.: (212) 319-1626
With a copy to:
Squire, Sanders & Dempsey
520 Madison Avenue
32nd Floor
New York, New York 10022
Attention: Alan N. Waxman
Telecopy No.: (212) 872-9814
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or to such other address as any party may have furnished to the other parties in
writing in accordance herewith.
7.8. Counterparts. This Agreement may be executed in any number of
counterparts, each of which will be deemed to be an original but all of which
together will constitute but one agreement.
7.9. Parties in Interest; Assignment. This Agreement is not intended to
nor will it confer upon any other person (other than the parties hereto) any
rights or remedies. Except as otherwise expressly provided herein, this
Agreement is binding upon and is solely for the benefit of the parties hereto
and their respective successors, legal representatives and assigns, except that
Sections 5.10 and 5.11 are intended to be for the benefit of the parties
referred to therein, and may be enforced on behalf of the persons identified
therein. Purchaser will have the right (a) to assign to Powerfin, S.A., Parent
or any direct or indirect wholly owned subsidiary of Parent or Powerfin, S.A.
any and all rights and obligations of Purchaser under this Agreement, including
without limitation the right to substitute in its place Powerfin, S.A., Parent
or such a subsidiary as one of the Constituent Corporations in the Merger (such
subsidiary assuming all of the obligations of Purchaser in connection with the
Merger), provided that any such assignment will not relieve Parent or Purchaser
from any of its obligations hereunder, and (b) to transfer to Powerfin, S.A. or
Parent or to any direct or indirect wholly owned subsidiary of Parent or
Powerfin, S.A. the right to purchase Shares tendered pursuant to the Offer,
provided that any such transfer will not relieve Purchaser from any of its
obligations hereunder.
7.10. Expenses. (a) Except as set forth in Section 7.10(b) and (c), all
costs and expenses incurred in connection with the Offer, this Agreement and the
transactions contemplated hereby will be paid by the party incurring such costs
and expenses. No termination of this Agreement shall relieve any party for any
other obligation that it may have for breach hereof.
(b) If:
(i) Parent, Purchaser or the Company terminates this Agreement pursuant to
Section 7.1(f), and within 12 months thereafter, the Company enters into an
agreement with respect to a Third Party Acquisition (as defined below) or a
Third Party Acquisition occurs, involving any party (or any affiliate thereof)
(x) with whom the Company had any discussions with respect to a Third Party
Acquisition, (y) to whom the Company furnished information with respect to or
with a view to a Third Party Acquisition or (z) who had submitted a proposal or
expressed any interest publicly or to the Company in a Third Party Acquisition,
in the case of each of clauses (x), (y) and (z), prior to such termination; or
(ii) Parent, Purchaser or the Company terminates this Agreement pursuant
to Section 7.1(f), and within 12 months thereafter a Third Party Acquisition
shall occur involving a direct or indirect consideration (or implicit valuation)
for Shares in excess of the Price Per Share;
then the Company shall pay to Parent and Purchaser a fee of $5,500,000;
provided, however, that the Company in no event shall be obligated to pay more
than one such fee with respect to all such agreements and occurrences and such
termination, and provided further that the fee required to be paid under this
Section 7.10(b) shall be reduced dollar-for-dollar by any fee paid by the
Company to Parent under Section 7.10(c).
"Third Party Acquisition" means the occurrence of any of the following
events: (i) the acquisition of all of the Company by merger or otherwise by any
person other than Parent, Purchaser or any affiliate thereof (a "Third Party");
or (ii) the acquisition by a Third Party of 50% or more of the total assets of
the Company and its subsidiaries, taken as a whole; or (iii) the acquisition by
a Third Party of 50% or more of the outstanding Shares.
(c) In recognition of the significant expenditure of management time and
resources and substantial out-of-pocket expenses incurred by Parent and
Purchaser in connection with the negotiation of this Agreement and investigation
of the transactions contemplated hereby, and in light of the difficulty in
calculating the value of such management time, resources and other expenses,
upon the termination of this Agreement (i) by Parent or Purchaser pursuant to
Condition (a) set forth in Exhibit A (other than solely by reason of a material
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<PAGE> 20
adverse change beyond the reasonable control of the Company), or (ii) under
circumstances in which the Company shall be obligated to pay a fee pursuant to
Section 7.10(b), the Company shall pay to Parent $1,000,000.
(d) Any payment required to be made pursuant to Section 7.10(b) or (c)
shall be made as promptly as practicable but not later than five business days
after termination of this Agreement and shall be made by wire transfer of
immediately available funds to an account designated by Parent.
7.11. Obligation of Parent. Whenever this Agreement requires Purchaser to
take any action, such requirement will be deemed to include an undertaking on
the part of Parent to cause Purchaser to take such action.
7.12. Enforcement of the Agreement. The parties hereto agree that
irreparable damage would occur in the event that any of the provisions of this
Agreement were not performed in accordance with their specific terms or were
otherwise breached. It is accordingly agreed that the parties hereto will be
entitled to an injunction or injunctions to prevent breaches of this Agreement
and to enforce specifically the terms and provisions hereof in the United States
District Court for the State of Delaware or any Delaware state court having
jurisdiction, this being in addition to any other remedy to which they are
entitled at law or in equity (except that no remedy shall be sought in any court
other than the United States District Court for the State of Delaware or any
Delaware state court).
7.13. Severability. If any term, provision or portion of any provision of
this Agreement is invalid, illegal or incapable of being enforced by any rule of
law or public policy, all other terms, provisions or remaining portions of
provisions of this Agreement will nevertheless remain in full force and effect
so long as the economic or legal substance of the transactions contemplated
hereby is not affected in any manner adverse to any party hereto. Upon any such
determination that any term, provision or portion of any provision is invalid,
illegal or incapable of being enforced, the parties hereto will negotiate in
good faith to modify this Agreement so as to effect the original intent of the
parties as closely as possible in an acceptable manner to the end that the
transactions contemplated by this Agreement are consummated to the extent
possible.
7.14. Fiduciary Duty. Whenever used in this Agreement, "Fiduciary Duty"
or "Fiduciary Duties" shall mean action taken or not taken because the Board of
Directors of the Company, based upon advice of such independent legal counsel
with experience in such matters, has determined that such action or inaction is
necessary in order for the members of the Board of Directors to satisfy their
duties under applicable law. Purchaser and Parent agree that each of the firms
of Liddell, Sapp, Zivley, Hill & LaBoon, L.L.P. and Richards Layton & Finger are
independent legal counsel, with experience in such matters for the purposes
hereof; provided, however, that this does not prohibit the Company from relying
on other independent legal counsel with experience in such matters for the
purposes hereof. In the case of the last sentence of Section 5.2, a written
opinion of the Company's independent counsel selected by the Company's Board of
Directors shall be rendered and a copy of such opinion shall be delivered to
Parent and Purchaser as soon as reasonably practicable following the
determination by the Board referred to in such last sentence.
------------------------------
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<PAGE> 21
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement.
CRSS INC.
By /s/ Bruce W. Wilkinson
-----------------------------------
Title: Chairman and Chief Executive
Officer
AMERICAN TRACTEBEL CORPORATION
By /s/ Phillippe van Marcke
-----------------------------------
Title: President
ATC ACQUISITION CORP.
By /s/ Phillippe van Marcke
-----------------------------------
Title: President
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<PAGE> 22
EXHIBIT A
CONDITIONS OF THE OFFER
Notwithstanding any other provision of the Offer, Purchaser shall not be
required to accept for payment, purchase or pay for any Shares tendered, and
(subject to the terms of the Merger Agreement) may terminate or amend the Offer
or may postpone the acceptance for payment or payment for the Shares tendered,
if at any time on or after May 16, 1995 and before acceptance for payment of any
such Shares (whether or not any Shares have theretofore been accepted for
payment or paid for pursuant to the Offer), any of the following shall occur and
shall, in the sole judgment of Parent, in any such case regardless of the
circumstances giving rise to any such condition, make it inadvisable to proceed
with the Offer or such acceptance for payment or purchase of or payment for any
of the Shares:
(a) any representation or warranty of the Company in the Merger
Agreement shall have been untrue as of the date of the Merger Agreement or
shall have become untrue prior to acceptance for payment or payment for
Shares which untrue representations or warranties, in the aggregate, if
accurately stated would have revealed matters materially adverse to the
business, properties, assets, condition (financial or otherwise), results
of operations or prospects of the Company and its subsidiaries, taken as a
whole, or the Company shall have breached any of its covenants or
agreements contained in the Merger Agreement, which breach or breaches, in
the aggregate, would have a material adverse effect on the business,
properties, assets, condition (financial or otherwise), results of
operations or prospects of the Company and its subsidiaries, taken as a
whole, or would have a material adverse effect upon the transactions
contemplated by the Merger Agreement; provided this condition does not
provide a basis for terminating the Offer unless and until Parent provides
written notice to Company of the asserted breach of representation,
warranty or covenant, and Company fails to cure such breach within five (5)
business days after receiving such notice;
(b) the number of Shares validly tendered and not withdrawn prior to
the Expiration Date, which when added to the Shares beneficially owned by
Parent, Purchaser and their affiliates represent less than a majority of
the Shares outstanding on a fully diluted basis, or less than such lower
number of Shares outstanding as the Purchaser or Parent shall have set as a
revised minimum condition for tendered Shares as permitted under the Merger
Agreement;
(c) any United States or Belgian statute, rule or regulation shall be
enacted, promulgated, entered or enforced that is applicable to the Offer
or the Merger, that would have the effect of making the Offer or the Merger
or the consummation thereof illegal or preclude Parent or Purchaser from
exercising full rights of ownership with respect to the Shares or require
that any material portion of the assets or business of Parent or its
affiliates or the Company or its subsidiaries be divested or held separate;
(d) there shall have occurred and be continuing (i) any general
suspension of trading in, or limitation of prices for, securities on the
New York Stock Exchange, (ii) a declaration of a banking moratorium or any
suspension of payments in respect of banks in the United States or Belgium
or any general limitation on or condition applicable to lending
institutions which has had or is reasonably expected to have a material
adverse effect on the extension of credit by such lending institutions,
(iii) the commencement of a war, armed hostilities or other international
or national calamity directly or indirectly involving the United States or
Belgium that commenced after the date hereof, or (iv) in the case of the
foregoing existing at the time of the commencement of the Offer, a material
acceleration or worsening thereof;
(e) there shall be in effect any preliminary or final injunction or
other order issued by any United States or Belgian court or United States
or Belgian governmental, administrative or regulatory agency or authority
of competent jurisdiction (i) making the acceptance for payment of or
payment for a material amount of or all of the Shares illegal or (ii)
enjoining or prohibiting the Merger, the Offer or the acquisition by Parent
or Purchaser of the Shares or preventing Parent or Purchaser from
exercising full
A-1
<PAGE> 23
rights of ownership with respect to a material amount of the Shares or
requiring that a material amount of the assets or business of Parent or the
Company be divested or held separate;
(f) the Company shall have authorized, recommended, proposed or
publicly announced its intent to enter into any merger, consolidation,
liquidation, dissolution, business combination, acquisition or disposition
of a material amount of assets or securities or taken any action to
implement any such transaction previously authorized, recommended, proposed
or publicly announced, other than, in each case, the Offer and the Merger
or modified its recommendation of the Offer adversely to Purchaser;
(g) the Merger Agreement shall have been terminated in accordance with
its terms; or
(h) any waiting period under the HSR Act or Exon-Florio applicable to
the purchase of Shares pursuant to the Offer shall not have expired or been
terminated.
The foregoing conditions are for the sole benefit of Purchaser and Parent
and may be waived by Purchaser or Parent in whole or in part at any time and
from time to time in its sole discretion, except that waiver of the Minimum
Share Condition (as defined in the Merger Agreement), requires the approval of
the Company.
A-2
<PAGE> 1
Exhibit 2
EXECUTIVE COMPENSATION AND OTHER INFORMATION
SUMMARY OF CASH AND CERTAIN OTHER INFORMATION
The following table shows, for the fiscal years ended June 30, 1994, 1993,
and 1992, the cash compensation paid by the Company, as well as certain other
compensation awarded, paid or accrued for those years, to each of the Chief
Executive Officer and the four other most highly paid executive officers of the
Company serving as such as of the end of fiscal year 1994 that received
compensation from the Company. In the event an individual did not serve as an
executive officer of the Company for the entire three (3) year period,
information is only provided for the year(s) in which the individual served as
an executive officer of the Company.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
ANNUAL COMPENSATION --------------------------------
----------------------------- AWARDS PAYOUTS
OTHER ----------------------- ------- ALL
ANNUAL RESTRICTED SECURITIES LTIC OTHER
COMPEN- STOCK UNDERLYING PLAN COMPEN-
NAME AND PRINCIPAL SALARY BONUS SATION AWARDS(D) OPTIONS/ PAYOUTS SATION(F)
POSITION YEAR ($) ($) ($) ($) SARS(#) ($) ($)
------------------ ---- ------- ------- ------- ---------- ---------- ------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Bruce W. Wilkinson
Chairman, President and Chief
Executive Officer(g).............. 1994 325,000 175,000 -- -- 10,000 -- 4,559
1993 300,000 150,000 -- -- -- -- 4,498
1992 300,000 1,986 -- 134,875 50,000 -- 4,364
James T. Stewart
President and Chief Executive
Officer of CRSS Capital,
Inc.(g)........................... 1994 195,000 124,800 -- -- 41,636 749,600(e) 4,559
Craig L. Martin
Senior Vice
President/Operations(a)........... 1994 172,500 86,250 -- -- 6,139 121,972(e) 4,559
1993 172,500 86,250 -- -- -- -- 3,733
1992 143,500 65,590 -- 103,750 70,000 40,076 4,356
William J. Gardiner
Senior Vice President, Chief
Financial Officer and
Treasurer(b)...................... 1994 150,000 75,000 -- -- 27,100 398,380(e) 4,500
1993 140,000 101,000(c) -- -- 22,500 -- 3,790
Frank A. Perrone
Vice President, General Counsel
and Corporate Secretary(a)........ 1994 115,000 32,200 -- -- -- -- 4,559
1993 115,000 25,000 -- -- -- -- 3,450
1992 109,500 24,145 -- 15,563 5,000 -- 3,328
</TABLE>
- - ------------
(a) Messrs. Martin and Perrone resigned from their positions shown above on July
29, 1994.
(b) Mr. Gardiner became an executive officer of the Company on August 25, 1992.
The amounts disclosed represent all of Mr. Gardiner's compensation paid by
the Company during fiscal year 1993.
(c) Includes a $45,000 project bonus for Mr. Gardiner related to completion of
project development activities and term financing for the Appomattox
Cogeneration facility in October 1992.
(d) Twenty percent (20%) of the restricted stock award vests on the date of
award (January 29, 1992) and twenty percent (20%) vests each year
thereafter. Dividends are paid on restricted stock awards. The aggregate
values of the restricted stock holdings at June 30, 1994 for Messrs.
Wilkinson, Stewart, Martin, Gardiner and Perrone are $55,900, $0, $43,000,
$0, and $6,450, respectively.
(e) In August, 1993, the Performance Grant Units issued pursuant to the
Company's 1990 Long Term Incentive Compensation Plan and related to the
performance of CRSS Capital, Inc. were redeemed. In conjunction with this
redemption, $333,139, $52,935 and $176,993 was paid to Messrs. Stewart,
Martin and Gardiner, respectively. The remaining $416,461, $69,037 and
$221,387 due to Messrs. Stewart, Martin and Gardiner, respectively, will be
paid by December 30, 1994.
(f) Other compensation amounts represent the Company match contribution to the
Company's 401(k) Savings and Investment Plan.
(g) Mr. Wilkinson resigned as President of the Company on August 25, 1994. On
that same date, Mr. Stewart was named to that position.
7
<PAGE> 2
STOCK OPTIONS
The following table sets forth information concerning the grant of stock
options made during fiscal year 1994 under the Company's Long-Term Incentive
Compensation Program to the named executive officers of the Company.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
% OF TOTAL
OPTIONS/SARS GRANT
OPTIONS/ GRANTED TO EXERCISE OR DATE
SARS EMPLOYEES IN BASE PRICE EXPIRATION PRESENT
NAME GRANTED(#) FISCAL YEAR ($/SHARE) DATE VALUE
- - ---- ---------- ------------ ------------ ---------- ----------
<S> <C> <C> <C> <C> <C>
Bruce W. Wilkinson............. 10,000(a) 4 9.00 7/29/04 45,700(b)
James T. Stewart............... 41,636(a) 18 9.00 7/29/04 190,277(b)
Craig L. Martin................ 6,139(a) 3 9.00 7/29/04 28,055(b)
William J. Gardiner............ 27,100(a) 11 9.00 7/29/04 123,847(b)
Frank A. Perrone............... -- -- -- -- --
</TABLE>
- - ---------------
(a) All share options were granted July 29, 1993 and vest one year from date of
grant, or July 29, 1994, and expire ten years from vesting date.
(b) Grant date present value is based upon the Black-Scholes option pricing
model. The Black-Scholes option value was based upon the following
assumptions: (i) a dividend yield of 1.23%, (ii) a volatility factor of
0.3986, (iii) a 6.10% risk free rate of return, (iv) options exercised 10
years from vesting date, and (v) a discount rate of 3% per year during the
1-year vesting period to reflect the risk of forfeiture on unvested stock
options. These assumptions were based upon 3 years of historical monthly
trading data and typical executive turnover rates in the market.
OPTION EXERCISES AND HOLDINGS
The following table sets forth information with respect to the named
executive officers, concerning the exercise of options during the fiscal year
1994 and unexercised options held as of June, 1994.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF VALUE OF UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS OPTIONS AT
SHARES AT FY-END(#) FY-END($)
ACQUIRED ON VALUE -------------------------- --------------------------
NAME EXERCISE(#) REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- - ---- ----------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Bruce W. Wilkinson...... 30,000 172,500 286,964 30,000 398,200 21,500
James T. Stewart........ -- -- 23,800 55,636 20,800 104,063
Craig L. Martin......... -- -- 60,000 34,139 164,025 65,343
William J. Gardiner..... -- -- 9,000 40,600 23,400 58,725
Frank A. Perrone........ -- -- 56,000 2,000 14,288 400
</TABLE>
8
<PAGE> 3
DESCRIPTION OF COMPANY'S EXECUTIVE COMPENSATION POLICY
AND THE FACTORS AND CRITERIA IN ESTABLISHING
THE COMPANY'S EXECUTIVE OFFICER COMPENSATION
The Company's policy concerning executive officer compensation is based on
the necessity of retaining officers displaying the following attributes: (i)
versatility in responding to the changing conditions of several distinct
markets, of which all but CRSS Capital's market are highly cyclical; (ii)
ability, experience and background to maintain a high level of credibility with
CRSS Services' and CRSS Capital's clients; and (iii) commitment and discipline
to perform a variety of executive functions due to the relatively small number
of Company executive officers.
The Company's operating and financial performance is the major executive
officer compensation criterion. In order to achieve an executive officer
compensation program that is performance based, overall executive officer
compensation is made up of three (3) major components: base salary, annual bonus
and long-term incentive compensation, with the latter two (2) components tied,
directly or indirectly, to the Company's operating and financial performance. It
is the Compensation Committee's intention to establish executive officer base
salaries at levels which are generally competitive (i.e. at or near the median
level of those of comparable companies). Although the Company's chief executive
officer and other executive officers base salaries are believed to be
competitive, the Compensation Committee believes the fiscal year 1994 base
salaries fall somewhat below the median salaries for chief executive officers
and other executive officers of comparably sized companies in the general
industry, engineering and construction, and independent power categories.
The second major component of executive officer compensation consists of an
annual bonus from the Senior Management Incentive Award Plan. The annual Senior
Management Incentive Award Plan bonus for each individual executive officer is
calculated as the product of the individual officer's target bonus amount
multiplied by the ratio of the Company's, or CRSS Capital, Inc.'s in the case of
Mr. Stewart, actual performance for the year end as compared to the Operating
and Financial Plan ("Plan") for the same fiscal year. The Compensation Committee
establishes the target bonuses at the beginning of each fiscal year. The fiscal
year 1994 bonus targets were 50%, 50%, 50%, 40% and 35% of base salary for
Messrs. Wilkinson, Stewart, Martin, Gardiner and Perrone, respectively, and are
redetermined each year by the Compensation Committee based on the individual's
ability to impact the financial results for the Company. The Board of Directors
approves the Company's Plan at the beginning of each fiscal year. The actual
bonus varies linearly with actual Company performance between 50% and 150% of
Plan. For Company performance below 75% of Plan, bonus payments are only made at
the discretion of the Compensation Committee. For Company performance below 50%
of Plan, no bonus is paid. The annual bonus is capped at the amount established
when Company performance is 150% of the Plan.
Each year, the Compensation Committee also authorizes the Chief Executive
Officer to distribute certain amounts from the Discretionary Bonus Plan. Bonuses
from this plan reward employees for unusual effort benefiting the Company when
circumstances are such that normal compensation is inadequate in the opinion of
the Chief Executive Officer. All Company employees are eligible for this Plan.
No Discretionary Bonus Plan bonuses were paid in fiscal year 1994 to executive
officers.
Based on fiscal year 1994 results, the five most highly compensated
executive officers' overall cash compensation (base salary plus bonus) for
fiscal year 1994 was believed to be somewhat below the median amounts for
comparably sized general industry, engineering and construction, and independent
power companies.
The third major component of executive officer compensation consists of
long term incentive awards, which may include restricted stock, stock options,
and performance awards issued pursuant to the Company's 1990 Long Term Incentive
Compensation Plan. Awards, which generally vest over 4-5 years, are issued at
the discretion of the Compensation Committee and are typically issued to
executive officers at a frequency of every 2-4 years. Due to recent Company
stock prices, the annualized present value of executive officer long term
incentive compensation calculated pursuant to the Black Scholes Option Pricing
Model is also believed
9
<PAGE> 4
to be somewhat below the median amounts for comparably sized general industry,
engineering and construction, and independent power companies.
We believe the Company and its shareholders received significant value for
the services of its executive officers in fiscal year 1994. We also believe that
executive officer compensation for fiscal year 1994 was reasonable and in
accordance with the overall objective of retaining highly skilled and motivated
executive officers at reasonable compensation levels which reflect both the
individual's contribution to the Company's performance and actual Company
performance itself.
In July 1994, the Company sold substantially all of CRSS Services, Inc.,
its design, engineering and construction management subsidiaries, leaving the
independent power subsidiary, CRSS Capital, Inc., as the sole operating unit of
the Company. Consistent with the Company's decision to focus exclusively on the
independent power industry in the future, the Company's compensation policy
focus will shift to that of a company operating solely in that industry.
Respectfully submitted by the Compensation
Committee:
John M. Seidl, Chairman
Thomas A. Bullock
Ben R. Stuart
September 1, 1994
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Messrs. Seidl, Bullock and Stuart are the only persons who have served on
the Compensation Committee of the Board of Directors at any time during the 1994
fiscal year. No member of the Compensation Committee was, during the 1994 fiscal
year, an officer or employee of the Company or any of its subsidiaries, or was
formerly an officer of the Company or any of its subsidiaries, except that Mr.
Bullock served as an officer of the Company and its predecessors as set forth
under "Proposal No. 1 -- Election of Directors," or had any relationships with
the Company requiring disclosure by the Company under Item 404 of Regulation
S-K.
During the Company's 1994 fiscal year, no executive officer of the Company
served as (i) a member of the Compensation Committee (or other board committee
performing equivalent functions or, in the absence of any such committee, the
entire board of directors) of another entity, one of whose executive officers
served on the Company's Compensation Committee, (ii) a director of another
entity, one of whose executive officers served on the Company's Compensation
Committee, or (iii) a member of the Compensation Committee (or other board
committee performing equivalent functions or, in the absence of any such
committee, the entire board of directors) of another entity, one of whose
executive officers served as a director of the Company.
10
<PAGE> 5
PERFORMANCE GRAPH
COMPARISON OF CUMULATIVE TOTAL RETURN
Among CRSS Inc., S&P 500 Index, S&P Engineering (ENG) and
Construction (CONSTR) Index and Independent Power Companies (IPC):
(PERFORMANCE GRAPH)
In July 1994, the Company sold its design, engineering and construction
management subsidiaries, leaving the independent power subsidiary, CRSS Capital,
Inc., as the sole operating subsidiary of the Company. Consistent with the
Company's decision to focus exclusively on the independent power industry,
beginning next year the Company will change its performance graph comparison to
include only the IPC peer group. The selected IPC peer group consists of
publicly-traded, non-utility companies in the independent power and cogeneration
industry: AES Corporation, California Energy, Destec Energy, Magma Power and
Sithe Energies. In this year of transition, the S&P ENG and CONSTR index is
provided for comparison purposes.
The comparison of total return on investment (change in year-end stock
price plus reinvested dividends) for each of the periods assumes that $100 was
invested June 30, 1989 in CRSS Inc., S&P 500, S&P ENG and CONSTR and the IPC
Peer Group with investment weighted on the basis of market capitalization.
EMPLOYMENT AGREEMENTS
Mr. Bruce W. Wilkinson is a party to an employment agreement as amended on
July 27, 1989, with the Company for a term ending June 30, 1995, which term is
automatically extended an additional year on June 30 of each year if the Company
or the executive has not otherwise notified the other.
Under the terms of the above employment agreement, if the Company
terminates the executive's employment other than for cause, or the executive
terminates his employment for good reason (as hereinafter defined), then the
Company shall continue to pay the executive his salary for the duration of the
term of his Employment Agreement (but in no event for less than twelve months
following the date of such termination)
11
<PAGE> 6
and shall maintain the executive's participation for such period in all employee
benefit plans in which the executive was entitled to participate at the time of
his termination. If within three years after a change in control, the Company
terminates the executive's employment (other than for cause) or the executive
terminates employment with the Company for good reason, the Company shall pay to
the executive a cash amount equal to 2.5 multiplied by the sum of the
executive's annual base salary and aggregate bonus for the 12-month period prior
to the change in control or prior to such termination (whichever is greater). If
the payments and benefits that the executive has a right to receive would result
in "excess parachute payments" (as defined in the Internal Revenue Code of 1986,
as amended), and the executive would be required to pay an excise tax pursuant
to the Code in respect of such payments and benefits, the Company shall also pay
the executive an additional amount such that the executive would retain the
amount of such payments and benefits as if such excise tax had not been payable
thereon. Termination for good reason includes termination or resignation after
certain events, such as a demotion, the assignment to the executive of any
duties or responsibilities that are inconsistent with the executive's position,
layoff or involuntary termination (except for cause or as a result of the
executive's retirement, disability or death), a reduction in compensation or
benefits, the failure of any acquiror of the Company to assume the employment
contract and a breach of the Company's obligations under the employment
contract. If the executive terminates employment with the Company for reasons
other than good reason, as defined above, the Company shall pay the executive
compensation accrued through the date of termination and the Company shall then
have no further obligations to the executive under the agreement.
If a change in control had occurred on September 7, 1994, and if Mr.
Wilkinson had been terminated without cause or terminated his employment for
good reason on such date, he would have been entitled to receive (assuming no
excise tax were payable) approximately $1,250,000.
Mr. James T. Stewart is a party to an employment agreement with CRSS
Capital, Inc. dated July 1, 1989.
Under the terms of this employment agreement, if the Company terminates the
executive's employment other than for cause, or the executive terminates his
employment for good reason (as hereinafter defined), then the Company shall
continue to pay the executive his salary for twelve months and shall maintain
the executive's participation for such period in all employee benefit plans in
which the executive was entitled to participate at the time of his termination.
Termination for good reason includes termination or resignation after certain
events, such as a demotion, the assignment to the executive of any duties or
responsibilities that are inconsistent with the executive's position, layoff or
involuntary termination (except for cause or as a result of the executive's
retirement, disability or death), a reduction in compensation or benefits, the
failure of any acquiror of the Company to assume the employment contract and a
breach of the Company's obligations under the employment contract. If the
executive terminates his employment with the Company for reasons other than good
reason, as defined above, the Company shall pay the executive for compensation
accrued through the date of termination and the Company shall then have no
further obligations to the executive under the agreement.
If Mr. Stewart had been terminated without cause or terminated his
employment for good reason on September 7, 1994, he would have been entitled to
receive approximately $195,000 plus the amount of aggregate annual bonus Mr.
Stewart would have earned had he been employed with CRSS Capital, Inc. through
June 30, 1995.
Messrs. Craig L. Martin and Frank A. Perrone were each parties to
employment agreements dated March 1, 1992 and July 1, 1990, respectively.
Messrs. Martin and Perrone resigned from their positions on July 29, 1994 and
the Company's obligations thereunder were terminated.
CERTAIN TRANSACTIONS
Mr. Thomas A. Bullock and Mr. C. Herbert Paseur, both members of the
Company's Board of Directors, received $78,390 and $37,759, respectively, in
fiscal year 1994 from the Company's terminated defined benefit Retirement Plan.
12
<PAGE> 7
Messrs. Bullock and Paseur were paid $38,409 and $88,545, respectively, in
fiscal year 1994 pursuant to the terms of the Senior Executive Officer Early
Retirement Plan.
There are certain indemnification agreements in effect between the Company
and its directors as approved by the Company's stockholders at the 1986 Annual
Meeting. At the 1989 Annual Meeting, the Company's stockholders approved
amendments to the Company's Certificate of Incorporation and By-Laws further
expanding the indemnification of the Company's directors and officers as
permitted by Delaware law.
EXISTING BENEFIT PLANS
Set forth below is certain information with respect to the Company's other
existing benefit plans and the participation of certain individuals in such
plans. Stockholders are not being asked to take any action with respect to these
existing plans, with the exception of the 1990 Long Term Incentive Compensation
Plan.
SENIOR MANAGEMENT DEFERRED COMPENSATION PLAN
The Senior Management Deferred Compensation Plan (the "Deferred
Compensation Plan") was adopted in 1987 pursuant to stockholder approval to
offer to certain key employees of the Company, its subsidiaries and affiliates
the opportunity to participate in a savings plan on a tax-deferred basis. Only
management employees who have an annual salary of $90,000 or more (subject to
annual adjustment for cost-of-living increases), exclusive of bonuses and
incentive compensation, are eligible to participate in the Deferred Compensation
Plan.
Each participant is entitled to defer from one percent (1%) to one hundred
percent (100%) of his total annual compensation (including bonuses and incentive
compensation). The amount of compensation deferred is credited to a deferral
account. Accruals to a participant's deferral account are based on the
performance of one or more investment vehicles selected by each participant from
among a group of investment vehicles designated by the Administrative Committee
of the Deferred Compensation Plan to serve as indices for determining the value
of such accruals.
A participant may also elect to defer awards made under the 1990 Long-Term
Incentive Compensation Plan. In the case of restricted stock Awards or other
Awards involving property, the number of shares in the deferred Award is
credited to a share account for the participant. An amount equal to any cash
dividends that would have been paid on such shares had they been delivered to
the participant is credited to a dividend account for the participant (together
with interest on the dividend account at a rate designated by the Administrative
Committee), and the amount of any dividends paid in Common Stock is credited to
his or her dividend account. At the time that the accounts are distributable to
the participant, the dividend account will be distributed in cash and the share
account will be distributed in Common Stock.
Distributions under the Deferred Compensation Plan are made only in the
event of termination of the participant's employment with the Company, or in the
event of a change of control, or with the consent of the Administrative
Committee on an earlier future date or dates, and in limited cases of severe
hardship. All distributions in respect of deferral accounts are made in cash,
except that amounts credited to share accounts are distributed in Common Stock.
All distributions with respect to matching accounts (for the twenty percent
(20%) Company matching contributions made through January 1, 1990, at which time
all further Company matching was terminated) are made, at the sole discretion of
the Administrative Committee, in either cash or Common Stock.
As indicated above, no Company matching contributions have been made since
January 1, 1990.
COMPANY 401(K) SAVINGS AND INVESTMENT PLAN
The 401(k) Plan is a Company-sponsored savings and investment plan. The
purpose of the 401(k) Plan is to enable employees of the Company to accumulate
savings on a tax-deferred basis and also to acquire an equity interest in the
Company through the investment of the Company's matching contributions in Common
13
<PAGE> 8
Stock. All employees of the Company are eligible to participate in the 401(k)
Plan after one (1) month of employment.
Under the 401(k) Plan, eligible employees may contribute from one percent
(1%) to fifteen percent (15%) of base salary in increments of one-half percent
( 1/2%) and the Company makes a matching contribution equal to fifty percent
(50%) of the employee's contribution, up to six percent (6%) of eligible
compensation.
The 401(k) Plan allows the Plan trustee to invest Company matching
contributions in Company Common Stock.
SENIOR MANAGEMENT INCENTIVE AWARD AND DISCRETIONARY BONUS PLAN
The Company presently has in effect a Senior Management Incentive Award and
Discretionary Bonus Plan which provides for payment of cash bonuses. Pursuant to
this compensation program, officers, inside directors and other key management
personnel have received bonuses based upon the profitability of each of the
operating units and the Company on a consolidated basis and for other specific
goal oriented achievements. However, directors who are not otherwise employed by
the Company or an operating unit are not eligible to receive bonuses under such
Plan. All determinations of amounts of bonuses pursuant to this Plan are made by
the Compensation Committee.
SENIOR EXECUTIVE OFFICER EARLY RETIREMENT PLAN
The Senior Executive Officer Early Retirement Plan ("Early Retirement
Plan") was established to provide special supplemental retirement benefits to
senior executive officers who have been employed by the Company for at least 25
years and have held such rank for at least ten years. The Early Retirement Plan
provides that eligible senior executive officers who retire after age 55 and
before reaching age 65 receive 1/2 of their final salary for life; however, as
they become eligible to collect benefits under the terminated CRS Sirrine, Inc.
Retirement Plan or Social Security retirement benefits, their benefits under
this Early Retirement Plan will be reduced by such amounts. There are six (6)
participants receiving benefits under this Early Retirement Plan.
Presently, no further participation in the Early Retirement Plan is
allowed.
The only officers or directors presently receiving benefits under this Plan
are Messrs. Thomas A. Bullock and C. Herbert Paseur. Such amounts are listed
elsewhere in this Proxy Statement under the caption "Certain Transactions".
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
The Supplemental Executive Retirement Plan (the "Supplemental Retirement
Plan") was adopted in 1987 to assist the Company in attracting and retaining
highly qualified employees by providing for supplemental retirement and death
benefits for senior management of the Company who perform duties which are
essential for the successful operation of the Company. Participants in the
Supplemental Retirement Plan consist of employees approved for participation by
the Board of Directors and the Compensation Committee who are either senior
executive officers of the Company or chief executive officers of a subsidiary or
division and who occupy a position essential to the successful operation of the
Company and have completed five years of service (unless waived by the
Compensation Committee and the Board).
The Supplemental Retirement Plan provides that each participant, upon
retirement on or after age 55, shall receive for 120 months a monthly
supplemental retirement payment equal to 1/12th of the participant's average
compensation multiplied by a percentage which varies linearly from a maximum
twenty percent (20%) for a participant whose retirement occurs on or after age
65 to ten percent (10%) for a participant whose retirement occurs at age 55. The
Supplemental Retirement Plan further provides that a participant, or his
designated beneficiary in the event of death, whose employment terminates by
reason of disability or death occurring on or after age 55 shall for 120 months
receive a monthly supplemental payment. In the case of disability, such monthly
supplemental disability payment shall equal 1/12th of the participant's average
14
<PAGE> 9
compensation multiplied by a percentage which varies linearly from a maximum of
twenty percent (20%) for a participant whose disability occurs on or after age
65 to ten percent (10%) for a participant whose disability occurs at age 55. In
the case of death, such monthly supplemental death payment shall be 1/12th of
the participants average compensation multiplied by 20%. In the event of a
change in control, any participant to whom a benefit becomes payable shall
receive in a single lump sum cash payment the present value of the payments due
under the Supplemental Retirement Plan.
No benefit is payable if the participant's employment is terminated for any
reason prior to age 55 or if the participant is terminated for Cause (as defined
in the Supplemental Retirement Plan) after age 55. In addition, any participant
whose employment is terminated by the Company within three years after a change
in control (other than for Cause), or who terminates his employment with the
Company for good reason (as defined in the Supplemental Retirement Plan) within
three years after a change in control, shall receive in a single lump sum cash
payment the present value of the supplemental retirement payments, calculated as
if such participant had retired at age 65. As of September 7, 1994, a total of
six (6) employees were participants in the Plan, including Mr. Wilkinson.
EMPLOYEE PROFIT SHARE PLAN
Effective July 1, 1987, the Company instituted an incentive-based Employee
Bonus Plan. This Employee Bonus Plan is a performance-based compensation plan
that binds employees of the Company and the Company's design and construction
and independent power subsidiaries to the objectives of profitability,
productivity and performance. Payment under the Employee Bonus Plan is
re-evaluated annually and made only at the discretion of management based upon
current year Company profitability. Effective July 1, 1991, the Employee Bonus
Plan was converted to a profit-share contribution to the CRSS 401(k) Savings and
Investment Plan. All payments pursuant to this Plan are paid into the individual
employee's 401(k) Savings and Investment Plan account. The amount paid into the
individual employee's 401(k) Savings and Investment Plan account is based on a
formula which takes into account the individual employee's fiscal year base
salary.
STOCK OPTION PLANS
There are currently non-qualified stock options ("NQSOs") outstanding under
the Non-Qualified Stock Option Plan approved by stockholders in 1984 and
terminated in 1989, except for options then outstanding, as well as incentive
stock options ("ISOs") outstanding under the Incentive Stock Option Plan
approved by stockholders in 1981 and also terminated in 1989, except for options
then outstanding. In 1989, stockholders approved the Company's 1990 Long-Term
Incentive Compensation Plan, under which 1,338,524 shares of Company Common
Stock are reserved for distribution.
SUMMARY OF 1990 LONG-TERM INCENTIVE COMPENSATION PLAN
The following summary of the 1990 Long-Term Incentive Compensation Plan
(the "1990 LTIC Plan") does not purport to be complete and is qualified in its
entirety by reference to the 1990 LTIC Plan attached hereto as Appendix A.
Appendix A includes all proposed amendments to the 1990 LTIC Plan, the approval
of which is being solicited pursuant to this Proxy Statement.
The purpose of the 1990 LTIC Plan is to provide incentives to key employees
of the Company and its affiliates and to other key individuals who perform
services for these entities, including persons who contribute significantly to
the strategic and long-term performance objectives and growth of the Company and
its affiliates (the "Participants"). The 1990 LTIC Plan is administered by the
Long-Term Incentive Plan Administrative Committee or any successor thereto,
which may delegate administrative responsibilities regarding Participants to
persons who are not subject to Section 16 of the Exchange Act if so permitted by
applicable law (together with any such delegate, the "LTIPA Committee"). The
1990 LTIC Plan provides for the granting of stock options (NQSOs and ISOs),
stock appreciation rights ("SARs"), restricted stock awards, performance grants
and other awards deemed by the LTIPA Committee to be consistent with the
15
<PAGE> 10
purposes of the 1990 LTIC Plan (collectively, "Awards," or individually,
"Award"). Such Awards may be granted alone, or in conjunction with one or more
other Awards, as determined by the LTIPA Committee.
A maximum of 1,838,524 shares of Common Stock of the Company (which
includes 500,000 shares subject to stockholder approval, see "Proposal
2 -- Proposal to Adopt Amendments to the 1990 LTIC Plan -- Amendment to Increase
the Number of Shares Authorized for Issuance") may be issued under the 1990 LTIC
Plan in the form, or upon the payment, of Awards, subject to appropriate
adjustment by the LTIPA Committee in the event of a stock split, stock dividend,
combination, subdivision or exchange of shares, recapitalization, merger,
consolidation, reorganization or other extraordinary or unusual event. 1,156,376
of these shares already have been issued or are reserved for issuance in
connection with the payment of Awards. Common Stock shares issued under the 1990
LTIC Plan have been and may be either newly issued shares, treasury shares,
reacquired shares or any combination thereof. If any Common Stock shares issued
under the 1990 LTIC Plan as unvested restricted stock or as stock subject to
repurchase or forfeiture rights are retained or reacquired by the Company
pursuant to such terms or rights, or if any Award terminates, expires
unexercised, or is canceled, the Common Stock shares which would otherwise have
been issuable pursuant thereto will be available for issuance pursuant to the
grant of new Awards.
The LTIPA Committee has exclusive discretion (a) to select the Participants
to whom Awards will be granted and to determine the type, size and terms of each
Award, (b) to modify within certain limits the terms of any Award which has been
granted, (c) to determine the time when Awards will be granted, (d) to establish
or (subject to any required shareholder approval) modify performance goals, (e)
to make any adjustments necessary or desirable as a result of the granting of
Awards to Participants located outside the United States, and (f) to make all
other determinations which it deems necessary or desirable in the interpretation
and administration of the 1990 LTIC Plan. The LTIPA Committee has the authority
to administer, construe and interpret the 1990 LTIC Plan, and its decisions are
final, binding and conclusive. Persons eligible to receive Awards are key
employees, as determined by the LTIPA Committee. The Company estimates that
approximately 15 key employees are eligible to receive Awards under the 1990
LTIC Plan.
AWARDS UNDER THE 1990 LTIC PLAN
Stock Options. Options are not transferable during the Participant's
lifetime, with ISOs generally expiring not later than ten (10) years after the
date on which they are granted and NQSOs expiring at such time as determined by
the LTIPA Committee. See "Proposal 2 -- Proposal to Adopt Amendments to the 1990
LTIC Plan -- Amendment Authorizing Greater Flexibility in Exercisability Periods
for NQSOs." Options shall become exercisable at such times and in such
installments as the LTIPA Committee shall determine. The exercise price of an
option may be less than, equal to or greater than the fair market value of the
Common Stock shares subject to such option on the date of grant, as determined
by the LTIPA Committee, but in no event will the exercise price be less than
fifty percent (50%) (or one hundred percent (100%) with respect to ISOs) of the
fair market value of the underlying Common Stock shares on the date of grant.
Payment of the exercise price must be made in full at the time of exercise in
cash, by tendering to the Company shares of Common Stock having a fair market
value equal to the exercise price, by a combination thereof or by any other
means that the LTIPA Committee deems appropriate (including, without limitation,
the relinquishment of rights in one or more outstanding Awards). The 1990 LTIC
Plan sets forth the maximum number of shares of Common Stock for which options
may be granted to certain key employees during any fiscal year. See "Proposal
2 -- Proposal to Adopt Amendments to the 1990 LTIC Plan -- Amendment to Comply
with Internal Revenue Code Section 162(m)."
No option may be exercised unless the holder has been, at all times during
the period from the date of grant through the date of exercise, employed by or
performing services for the Company or one of its affiliates, provided that the
LTIPA Committee may determine, subject to certain limitations required with
respect to ISOs, that such exercise may be made for certain periods following
the date on which a Participant ceases to be employed by or performing services
for the Company or one of its affiliates by reason of a period of Related
Employment (as defined in the 1990 LTIC Plan), retirement, disability, death or
otherwise in the LTIPA Committee's discretion.
16
<PAGE> 11
Stock Appreciation Rights. A SAR may be granted alone, or in tandem with an
option or other Award. A SAR that is related to another Award is exercisable
only to the extent that such other Award is exercisable and then only during
such period or periods as the LTIPA Committee may determine in its discretion.
The 1990 LTIC Plan sets forth the maximum number of shares of Common Stock for
which SARs may be granted to certain key employees during any fiscal year. See
"Proposal 2 -- Proposal to Adopt Amendments to the 1990 LTIC Plan -- Amendment
to Comply with Internal Revenue Code Section 162(m)."
Upon exercise of a SAR, the holder must surrender the SAR and surrender
unexercised any related option or other Award. At the election of the LTIPA
Committee, the holder will receive in exchange cash or shares of Common Stock or
other consideration, or any combination thereof, equal in value to the
difference between the exercise price per share of the SAR, the related option
or Award, as the case may be, and the fair market value per share on the last
business day preceding the date of exercise, for each share subject to the SAR
or option or other Award, or portion thereof, which is exercised.
A Participant to whom an Award of an option or SAR is made shall have no
rights as a stockholder with respect to any shares of Common Stock issuable
pursuant to any such option or SAR until the date of issuance of the stock
certificate for such shares upon payment of the exercise price or settlement of
the SAR.
Restricted Stock Award. A restricted stock award is an award of a given
number of shares of Common Stock that may not be sold, pledged or otherwise
disposed of, except by will or the laws of descent and distribution, for a
period and in accordance with such other terms as may be specified by the LTIPA
Committee (the "Restricted Period") unless otherwise determined by the LTIPA
Committee. The Company generally has the option to repurchase or regain by
forfeiture all or a portion of the shares, at such price as the LTIPA Committee
shall have fixed, in cases where any applicable term has not been met, including
cases where the Participant's continuous employment with or performance of
services for the Company and its affiliates has terminated (except by reason of
a period of Related Employment, as defined in the 1990 LTIC Plan).
Prior to the expiration of the Restricted Period and the satisfaction of
applicable terms, a Participant who has received a restricted stock award will
have many of the rights of ownership of the shares of Common Stock included
therein, including the right to vote and to receive dividends, subject, however,
to the limitations imposed under the 1990 LTIC Plan during the Restricted
Period.
Performance Grants. At the time a performance grant is made, the LTIPA
Committee will establish performance goals to be achieved during a specified
period (the "Award Period"). The final value, if any, of a performance grant
will be determined by the degree to which the performance goals have been
achieved during the Award Period, subject to such adjustments as the LTIPA
Committee may approve based on relevant factors. The LTIPA Committee may, in its
discretion, make such adjustments in the computation of any performance goal as
it may deem appropriate. The maximum value of an award may be established by the
LTIPA Committee and may be a fixed dollar amount, an amount that varies from
time to time based on the value of a share of Common Stock, or an amount that is
determinable from other criteria specified by the LTIPA Committee. Performance
grants may be issued in different classes or series, having different names,
terms and conditions. The final value of an Award may vest over a period of time
determined by the LTIPA Committee after the final value is determined.
Notwithstanding the foregoing, the LTIPA Committee may limit its discretion with
respect to specific performance grants, or impose other requirements with
respect to specific performance grants, in order to take advantage of certain
tax benefits related to compensation in the form of performance grants. See
"Proposal 2 -- Proposal to Adopt Amendments to the 1990 LTIC Plan -- Amendment
to Comply with Internal Revenue Code Section 162(m)."
The rights of a Participant in a performance grant will be provisional and
may be canceled or paid in whole or in part, as determined by the LTIPA
Committee, if the Participant's continuous employment with or performance of
services for the Company and its affiliates terminates during the Award Period,
except by reason of a period of Related Employment.
The LTIPA Committee generally will determine the value of a performance
grant as soon as practicable after the end of the Award Period or upon the
earlier termination of the Participant's employment or
17
<PAGE> 12
performance of services including by reason of death, disability or retirement.
The LTIPA Committee may, however, determine the value of the performance grant
and pay it out at any time during the Award Period.
Payment. Payment of an Award such as a performance grant may be made in
cash, shares of Common Stock or other consideration (for example, Company
securities or securities of Company affiliates, such as debentures, preferred
stock, warrants, securities convertible into shares of Common Stock or other
property, or a combination thereof), and in accordance with such terms as are
determined by the LTIPA Committee. Deferred payments may be made in installments
with a return calculated on the basis of one or more investment equivalents, as
determined by the LTIPA Committee in its discretion. In addition, a Participant
may elect to defer receipt of shares under a restricted stock award or of
amounts payable under a performance grant award under the Senior Management
Deferred Compensation Plan.
Market Value. On September 7, 1994, the closing sale price of the Company's
Common Stock, as reported on the New York Stock Exchange Composite Tape, was
$10.75 per share.
ADDITIONAL INFORMATION
Under the 1990 LTIC Plan, if there is any change in the outstanding shares
of Common Stock by reason of any stock split, stock dividend, combination,
subdivision or exchange of shares, recapitalization, merger, consolidation,
reorganization or other extraordinary or unusual event, the LTIPA Committee may
direct appropriate changes in the number or kind of securities that may be
issued under the 1990 LTIC Plan, in the number or kind of securities subject to,
or the exercise price under, any outstanding option, in the number or kind of
securities which have been awarded as restricted stock or in the repurchase
option price relating thereto, in the number or value of performance grants, in
the number or value of any other Award, or in any measure of performance of any
Award. In addition, the LTIPA Committee has the discretion to make appropriate
changes in some or all Awards, consistent with the purposes of the 1990 LTIC
Plan, including replacement or exchanges of Awards and the relinquishment of one
Award for another Award, and to make appropriate upward or downward adjustments
in Awards (for example, based upon job changes or transfers between units of the
Company), without the consent of Award holders under certain circumstances.
The LTIPA Committee also may determine to grant an Award in conjunction
with deferral of a Participant's compensation, and in such case, the LTIPA
Committee may provide that amounts be (a) forfeited to the Company and/or to
other holders of Awards under certain circumstances (including, without
limitation, certain types of termination of employment or performance of
services), (b) subject to increase or decrease in value based upon specified
performance measures and/or (c) credited with income equivalents until the date
or dates of payment of the Award.
The LTIPA Committee may permit a Participant to elect to pay taxes required
to be withheld with respect to an Award in any appropriate manner (including,
without limitation, by the surrender to the Company of shares of Common Stock
owned by such person or that would otherwise be distributed, or have been
distributed, as the case may be, pursuant to such Award).
Generally, a Participant's rights and interest under the 1990 LTIC Plan may
not be assigned or transferred in whole or in part, either directly or by
operation of law or otherwise (except in the event of a Participant's death, or
pursuant to a qualified domestic relations order), including, without
limitation, execution, levy, garnishment, attachment, pledge, bankruptcy or in
any other manner.
The 1990 LTIC Plan was adopted and approved by the Company's stockholders
on October 26, 1989 and was made effective as of the date of such adoption and
approval and will terminate on October 29, 1999, unless extended for up to an
additional five (5) years by action of the Board of Directors of the Company.
The Board of Directors may amend the 1990 LTIC Plan at any time and from time to
time for any purpose consistent with the goals of the 1990 LTIC Plan, but no
such amendment shall be effective unless and until the same is approved by the
stockholders of the Company where the absence of stockholder approval would
adversely affect the compliance of the 1990 LTIC Plan with Rule 16b-3
promulgated under the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), or other applicable law or regulation.
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<PAGE> 13
CERTAIN FEDERAL INCOME TAX CONSEQUENCES OF OPTIONS AND SARS
Tax counsel for the Company has advised that under current law the
principal federal income tax consequences to Participants and their employers of
options granted under the 1990 LTIC Plan should generally be as set forth in the
following summary. (For purposes of this discussion, the term "employer" shall
be deemed to include the employer of an employee optionee and the taxpayer for
whom a non-employee optionee performs services.)
An individual to whom a NQSO (which is treated as an option for federal
income tax purposes) is granted will recognize no income at the time of the
grant of such option. When such optionee exercises such NQSO, he will recognize
ordinary compensation income equal to the difference, if any, between the fair
market value of the shares of Common Stock he receives upon exercise and the
exercise price for such shares. If, however, such shares are subject to a
substantial risk of forfeiture and transfer restrictions, as will be the case in
respect of such shares issued to persons who are subject to liability under
Section 16(b) of the Exchange Act, income will not be recognized until such time
as the substantial risks of forfeiture and restrictions (such as Section 16(b)
restrictions) terminate and the amount of such income will be based upon the
fair market value of such shares at such time. In addition, any dividends paid
on such shares that are subject to Section 16(b) restrictions will be taxable as
ordinary compensation income. By filing an election with the Internal Revenue
Service under Section 83(b) of the Internal Revenue Code of 1986, as amended
(the "Code"), no later than thirty (30) days after the date of transfer of such
shares (a "Section 83(b) election"), a person subject to liability under Section
16(b) of the Exchange Act or whose shares are subject to other substantial risks
of forfeiture and transferability restrictions may elect to be taxed at the time
of exercise of such option.
The tax basis of such shares to such optionee will be equal to the exercise
price paid plus the amount includable in his gross income under the foregoing
notes, and his holding period for such shares will commence on the day on which
he recognizes taxable income with respect to such shares or, if he has made a
Section 83(b) election, on the date after such shares are transferred.
Subject to the applicable provisions of the Code and regulations
thereunder, the employer of such optionee will be entitled to a federal income
tax deduction in respect of NQSOs in an amount equal to the ordinary income
recognized by such optionee and in such employer's taxable year in which ends
the taxable year for which the optionee recognizes such income. Any compensation
includable in the gross income of an employee in respect of a NQSO will be
subject to appropriate federal income and employment taxes and withholding.
An employee to whom an ISO which qualifies under Section 422A of the Code
is granted should recognize no income at the time of grant or at the time of
exercise of such option. No federal income tax deduction will be allowable to
such optionee's employer upon the grant or exercise of such option. However,
upon the exercise of an ISO, the excess of the fair market value of the shares
of Common Stock received over the exercise price will be treated as an "item of
tax preference" to such optionee, includable in the alternative minimum taxable
income of such optionee in the year of exercise, and such amount will be added
to the tax basis of such shares for purposes of determining alternative minimum
taxable income in the year or years such shares are sold. When such optionee
sells such shares more than one (1) year after the date of transfer of such
shares and more than two (2) years after the date of grant of such ISO, he will
normally recognize a long-term capital gain or loss equal to the difference, if
any, between the sales price of such shares and the exercise price. If such
optionee does not hold such shares for this period, when he sells such shares he
will recognize ordinary compensation income equal to the lesser of the
difference, if any, between (a) the fair market value of such shares on the date
of exercise and the exercise price, or (b) the sales price and the exercise
price. In addition, such optionee will recognize capital gain or loss, short or
long-term, as the case may be, in an amount equal to the difference, if any,
between the amount recognized by such optionee upon the sale of such shares and
the sum of the exercise price plus the amount of ordinary compensation income,
if any, recognized by such optionee. Subject to applicable provisions of the
Code and regulations thereunder, such optionee's employer will be entitled to a
federal income tax deduction in the amount of such ordinary compensation income
and in such employer's taxable year in which ends the taxable year for which the
optionee recognizes such income.
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<PAGE> 14
An individual to whom an SAR is granted, whether alone or in tandem with an
option or other Award, will recognize no income at the time of the grant.
Further, no federal income tax deduction will be allowable to the individual's
employer upon the grant of the SAR.
Upon the exercise of an SAR by an individual not subject to Section 16(b)
of the Exchange Act, the fair market value of cash, shares of Common Stock, or
other consideration received will be considered compensation income to the
individual subject to the appropriate federal income and employment taxes and
withholding, and the individual's employer will be entitled to a federal income
tax deduction in an equal amount similar to the notes set forth above in
connection with NQSOs.
An individual who is subject to Section 16(b) of the Exchange Act and who
receives cash or property on exercise of an SAR other than Common Stock or other
property subject to Section 16(b) is taxable at the same time and in the same
amount as if he were not subject to Section 16(b). However, if the individual
receives Common Stock or other property subject to Section 16(b) upon the
exercise of an SAR, he will not be considered as having received compensation
until the six (6) month restriction on stock sales, mandated by Section 16(b),
lapses. Similarly, the individual's employer is not entitled to a corresponding
federal income tax deduction until the end of the six (6) month restriction (or
later). However, the individual may make a Section 83(b) election within thirty
(30) days after the transfer of the shares (as described above for options) to
treat the Common Stock subject to Section 16(b) as taxable upon receipt. If the
election is made, the tax treatment of the individual will be the same as the
tax treatment for an individual who is not subject to Section 16(b).
The discussion set forth above does not purport to be a complete analysis
of all potential tax effects relevant to recipients of options or their
employers and does not address Awards other than options. It is based on federal
income tax law and interpretational authorities as of the date of this Proxy
Statement, which are subject to change at any time.
BENEFIT TRUST
The Company has authorized the establishment of a trust in order to secure
payment of certain obligations of the Company to the participants in the Senior
Management Deferred Compensation Plan, the Supplemental Executive Retirement
Plan and the Senior Executive Officer Early Retirement Plan, the Non-Qualified
Stock Option and Incentive Stock Option Plans, and to Mr. Wilkinson with respect
to his employment agreement, in the event of a change in control or a potential
change in control. The Company is to deliver to a trustee an irrevocable letter
of credit in the initial amount of $1,000,000 in order to pay obligations due
under such plans and agreements and certain litigation costs in the event that
after a change in control the Company refuses to pay a claim.
PROPOSAL NO. 2
PROPOSAL TO ADOPT AMENDMENTS TO THE 1990 LTIC PLAN
AMENDMENT TO INCREASE THE NUMBER OF SHARES AUTHORIZED FOR ISSUANCE
The Board of Directors has approved an increase of 500,000 shares in the
number of shares of Common Stock authorized for issuance under the 1990 LTIC
Plan and is recommending this increase to stockholders for their approval. If
approved by the stockholders, the number of shares authorized for grant under
the 1990 LTIC Plan would be increased from 1,338,524 shares to 1,838,524 shares.
As of September 7, 1994, under the 1990 LTIC Plan, options to purchase
1,029,856 shares of Common Stock were outstanding, 143,710 shares had been
issued previously pursuant to grants or exercises of options, and 17,190 shares
had lapsed, and thus, before giving effect to the proposed increase recommended
for approval at this Annual Meeting, only 182,148 shares of Common Stock
remained as authorized and available for issuance under the 1990 LTIC Plan.
20
<PAGE> 1
[CRSS LETTERHEAD] EXHIBIT 3
NEWS RELEASE
CONTACTS
AMERICAN TRACTEBEL: CRSS:
PHILIPPE VAN MARCKE BRUCE WILKINSON
212/751-6333, ext. 16 713/552-2324
GARY GREENBLATT BILL GARDINER
212/751-6333, ext. 15 713/552-2160
FOR IMMEDIATE RELEASE
AMERICAN TRACTEBEL CORPORATION TO ACQUIRE CRSS INC.
THROUGH TENDER OFFER
NEW YORK CITY; HOUSTON, May 17 - American Tractebel Corporation has entered
into a merger agreement with CRSS Inc. (NYSE: CRX) providing for American
Tractebel through a wholly-owned subsidiary to acquire CRSS through a cash
tender offer. The tender offer will commence promptly for all shares of CRSS at
a cash price of $14.50 per share, to be followed by a cash merger at the same
price for shares not tendered. The expiration date of the offer will be twenty
business days following the commencement, unless the offer is extended.
Including all outstanding options, CRSS has approximately 14.2 million shares
outstanding.
Purchase of shares pursuant to the tender offer will be subject to not less
than a majority of the outstanding shares on a fully diluted basis being validly
tendered and not withdrawn prior to the expiration date of the offer. In
addition, the offer is subject to usual and customary conditions, including
expiration of all applicable waiting periods under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976 and the Exon-Florio Amendment.
The tender offer and subsequent cash merger were approved by the Board of
Directors of CRSS by unanimous vote of the directors present. The CRSS Board
determined that the terms of the offer and merger are fair to, and in the best
interests of CRSS shareholders and recommends that existing shareholders tender
their shares.
CRSS is a leading developer and operator of independent power and industrial
energy facilities. CRSS has developed primarily domestic energy projects that
represent a total capital investment of approximately $823
- more -
<PAGE> 2
CRSS Inc.
Page 2
million and produce combined electrical and thermal energy in excess of 1,340
equivalent megawatts for utility and industrial customers.
Commenting on the announced acquisition, Philippe van Marcke, President of
American Tractebel, states, "We are delighted to have the opportunity to
significantly increase our North American assets through CRSS' impressive list
of existing projects and projects under development. The acquisition will allow
a very experienced management and development team and highly skilled staff to
join us in our efforts within our industrial market niche."
Bruce Wilkinson, Chairman and Chief Executive Officer of CRSS, said, "We are
extremely pleased that a merger agreement has been reached with American
Tractebel. This is an outstanding value for our shareholders. Our entire
management team is enthusiastic about becoming part of the Tractebel
organization."
American Tractebel Corporation, based in New York, is an owner, operator and
developer of independent power generation projects in the United States and
Canada. American Tractebel Corporation is a subsidiary of Powerfin S.A. which
is the worldwide developer of independent electricity and gas projects for the
Tractebel Group, a Brussels-based major industrial group. Tractebel Group's
activities throughout the world include generation, transmission and
distribution of electricity, transportation and distribution of natural gas as
well as communications, engineering, technical installations and services to
the community, water treatment, environmental services and real estate.
Goldman, Sachs & Co. are acting as Dealer Managers of the tender offer.
<PAGE> 1
Exhibit 4
================================================================================
RIGHTS AGREEMENT
between
CRS SIRRINE, INC.
and
MORGAN SHAREHOLDER SERVICES TRUST
COMPANY, as
Rights Agent
Dated as of November 29, 1988
================================================================================
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
SECTION PAGE
------- ----
<S> <C> <C>
1 Certain Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2 Appointment of Rights Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
3 Issuance of Rights Certificates . . . . . . . . . . . . . . . . . . . . . . . . . 7
4 Form of Rights Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . 10
5 Countersignature and Registration . . . . . . . . . . . . . . . . . . . . . . . 11
6 Transfer, Split Up, Combination and Exchange of Rights Certificates;
Mutilated, Destroyed, Lost or Stolen Rights Certificates . . . . . . . 12
7 Exercise of Rights; Purchase Price; Expiration Date of Rights . . . . . . . . . 13
8 Cancellation and Destruction of Rights Certificates . . . . . . . . . . . . . . 16
9 Reservation and Availability of Common Stock . . . . . . . . . . . . . . . . . . 16
10 Record Date for Securities Issued Upon Exercise . . . . . . . . . . . . . . . . 18
11 Adjustment of Purchase Price, Number and Kind of Shares or Number of Rights . . 19
12 Certificate of Adjusted Purchase Price or Number of Shares . . . . . . . . . . . 33
13 Consolidation, Merger or Sale or Transfer of Assets or Earning Power . . . . . . 33
14 Fractional Rights, Fractional Shares and Fractional Notes . . . . . . . . . . . 37
</TABLE>
<PAGE> 3
<TABLE>
<CAPTION>
SECTION PAGE
------- ----
<S> <C>
15 Rights of Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
16 Agreement of Rights Holders . . . . . . . . . . . . . . . . . . . . . . . . . . 39
17 Rights Certificate Holder Not Deemed a Stockholder or Noteholder . . . . . . . . 40
18 Concerning the Rights Agent . . . . . . . . . . . . . . . . . . . . . . . . . . 41
19 Merger or Consolidation or Change of Name of Rights Agent . . . . . . . . . . . 41
20 Duties of Rights Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
21 Change of Rights Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
22 Issuance of New Rights Certificates . . . . . . . . . . . . . . . . . . . . . . 46
23 Redemption and Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
24 Notice of Certain Events . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
25 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
26 Supplements and Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
27 Successors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
28 Determinations and Actions by the Board of Directors, etc . . . . . . . . . . . 52
29 Benefits of this Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
30 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
31 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
32 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
33 Descriptive Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
Exhibit A - Form of Rights Certificate
Exhibit B - Form of Summary of Rights
</TABLE>
ii
<PAGE> 4
RIGHTS AGREEMENT
RIGHTS AGREEMENT, dated as of November 29, 1988, between CRS
SIRRINE, INC., a Delaware corporation (the "Company"), and MORGAN SHAREHOLDER
SERVICES TRUST COMPANY, a New York corporation (the "Rights Agent").
W I T N E S S E T H
WHEREAS, on November 29, 1988 (the "Rights Dividend
Declaration Date"), the Executive Committee of the Board of Directors of the
Company authorized and declared a dividend distribution of one Right for each
share of Common Stock (as hereinafter defined) of the Company outstanding at
the Close of Business (as hereinafter defined) on December 12, 1988 (the
"Record Date"), and the Board of Directors of the Company has further
authorized the issuance of one Right (subject to adjustment as provided herein)
for each share of Common Stock of the Company issued between the Record Date
(whether originally issued or delivered from the Company's treasury) and the
earlier of the Distribution Date and the Expiration Date (as hereinafter
defined), each Right initially representing the right to purchase one unit (a
"Unit"), each Unit consisting initially of one-fifth (1/5) share of Common
Stock and a Note (as hereinafter defined) in the principal amount equal to
four-fifths (4/5) of the Current Market Price (as hereinafter defined) of a
share of Common Stock calculated on the date of exercise of the Right with
respect to which such Note is being issued, upon the terms and subject to the
conditions hereinafter set forth (the "Rights");
NOW, THEREFORE, in consideration of the premises and the
mutual agreements herein set forth, the parties hereto hereby agree as follows:
SECTION 1. CERTAIN DEFINITIONS. For purposes of this
Agreement, the following terms have the meanings indicated:
(a) "Acquiring Person" shall mean any Person (as
hereinafter defined) who or which, together with all Affiliates and Associates
(as such terms are hereinafter defined) of such Person, shall be the Beneficial
Owner (as hereinafter defined) of 20% or more of the shares of Common
<PAGE> 5
Stock then outstanding, but shall not include (i) the Company, (ii) any
Subsidiary (as hereinafter defined) of the Company, (iii) any employee benefit
plan of the Company or of any Subsidiary of the Company, (iv) any Person or
entity organized, appointed or established by the Company for or pursuant to
the terms of any such plan.
(b) "Act" shall mean the Securities Act of 1933,
as amended.
(c) "Adjustment Shares" shall have the meaning
set forth in Section 11(a)(ii) hereof.
(d) "Affiliate" and "Associate" shall have the
respective meanings ascribed to such terms in Rule 12b-2 of the General Rules
and Regulations under the Exchange Act (as hereinafter defined), as in effect
on the date of this Agreement.
(e) "Agreement" shall mean this Rights Agreement
as originally executed or as it may from time to time be supplemented or
amended pursuant to the applicable provisions hereof.
(f) A Person shall be deemed the "Beneficial
Owner" of, and shall be deemed to "beneficially own", any securities:
(i) which such Person or any of such
Person's Affiliates or Associates, directly or indirectly, has the
right or obligation to acquire (whether such right is exercisable
immediately or only after the passage of time) pursuant to any
agreement, arrangement or understanding (whether or not in writing) or
upon the exercise of conversion rights, exchange rights, rights,
warrants or options, or otherwise; provided, however, that a Person
shall not be deemed the "Beneficial Owner" of, or to "beneficially
own", (A) securities tendered pursuant to a tender or exchange offer
made by such Person or any of such Person's Affiliates or Associates
until such tendered securities are accepted for purchase or exchange,
or (B) securities issuable upon exercise of Rights at any time prior
to the occurrence of a Triggering Event (as hereinafter defined), or
(C) securities issuable upon exercise of Rights from and after the
occurrence of a Triggering Event which Rights were acquired by such
Person or any of such Person's Affiliates or Associates prior to the
Distribution Date or pursuant to Sections 3(a) or 22 hereof (the
"Original Rights") or pursuant to Section
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<PAGE> 6
11(i) hereof in connection with an adjustment made with respect to any
Original Rights;
(ii) which such Person or any of such
Person's Affiliates or Associates, directly or indirectly, has the
right to vote or dispose of or has "beneficial ownership" of (as
determined pursuant to Rule 13d-3 of the General Rules and Regulations
under the Exchange Act as in effect on the date of this Agreement),
including pursuant to any agreement, arrangement or understanding,
whether or not in writing; provided, however, that a Person shall not
be deemed the "Beneficial Owner" of, or to "beneficially own", any
security under this subparagraph (ii) as a result of an agreement,
arrangement or understanding to vote such security if such agreement,
arrangement or understanding, (A) arises solely from a revocable proxy
given in response to a public proxy or consent solicitation made
pursuant to, and in accordance with, the applicable provisions of the
General Rules and Regulations under the Exchange Act, and (B) is not
also then reportable by such Person on Schedule 13D under the Exchange
Act (or any comparable or successor report); or
(iii) which are beneficially owned,
directly or indirectly, by any other Person (or any Affiliate or
Associate thereof) with which such Person (or any of such Person's
Affiliates or Associates) has any agreement, arrangement or
understanding (whether or not in writing), for the purpose of
acquiring, holding, voting (except pursuant to a revocable proxy as
described in the proviso to subparagraph (ii) of this paragraph (f))
or disposing of any voting securities of the Company; provided,
however, that nothing in this paragraph (f) shall cause a person
engaged in business as an underwriter of securities to be the
"Beneficial Owner" of, or to "beneficially own", any securities
acquired through such person's participation in good faith in a firm
commitment underwriting until the expiration of forty days after the
date of such acquisition.
(g) "Board" shall mean the Board of Directors of
the Company.
(h) "Business Day" shall mean any day other than
a Saturday, Sunday or a day on which banking institutions in the States of
Texas or New York are authorized or obligated by law or executive order to
close.
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<PAGE> 7
(i) "Close of Business" on any given date shall
mean 5:00 P.M., New York time, on such date; provided, however, that if such
date is not a Business Day it shall mean 5:00 P.M., New York time, on the next
succeeding Business Day.
(j) "Common Stock" shall mean the common stock,
par value $1.00 per share, of the Company, except that "Common Stock" when used
with reference to any Person other than the Company shall mean the capital
stock of such Person with the greatest voting power, or the equity securities
or other equity interests having power to control or direct the management, of
such Person, or, if such Person is a Subsidiary of another Person, of the
Person which ultimately controls such first-mentioned Person and which has
issued and outstanding such capital stock, equity securities or equity
interests.
(k) "Common Stock Equivalents" shall have the
meaning set forth in Section 11(a)(iii) hereof.
(l) "Company" shall mean the Person named as the
"Company" in the first paragraph of this Agreement until a successor
corporation shall have become such or until a Principal Party (as hereinafter
defined) shall assume, and thereafter be liable for, all obligations and duties
of the Company hereunder, pursuant to the applicable provisions of this
Agreement, and thereafter "Company" shall mean such successor corporation or
Principal Party.
(m) "Continuing Director" shall mean (i) any
member of the Board, while such Person is a member of the Board, who is not an
Acquiring Person, or an Affiliate or Associate of such Person, or a
representative of any such Acquiring Person or of any such Affiliate or
Associate, and was a member of the Board prior to the date of this Agreement,
or (ii) any Person who subsequently becomes a member of the Board, while such
Person is a member of the Board, who is not an Acquiring Person, or an
Affiliate or Associate of any such Person, or a representative of any such
Acquiring Person or of any such Affiliate or Associate, if such Person's
nomination for election or election to the Board is recommended or approved by
a majority of the Continuing Directors.
(n) "Current Market Price" shall have the meaning
set forth in Section 11(d) hereof.
(o) "Current Value" shall have the meaning set
forth in Section 11(a)(iii) hereof.
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<PAGE> 8
(p) "Distribution Date" shall have the meaning
set forth in Section 3(a) hereof.
(q) "Equivalent Common Stock" shall have the
meaning set forth in Section 11(b) hereof.
(r) "Exchange Act" shall mean the Securities
Exchange Act of 1934, as amended.
(s) "Expiration Date" shall have the meaning set
forth in Section 7(a) hereof.
(t) "Final Expiration Date" shall mean the Close
of Business on December 11, 1998.
(u) "Indenture" shall mean the Indenture, dated
as of November 29, 1988, between the Company and Morgan Guaranty Trust Company
of New York, as trustee, as originally executed or as it may from time to time
be supplemented or amended by one or more indentures supplemental thereto and
shall include the terms of the particular series of securities issued
thereunder, including the Notes.
(v) "Note" shall mean a subordinated note
issuable under the Indenture and pursuant to this Agreement upon the exercise
of any Right prior to the occurrence of any Triggering Event. Each Note shall be
substantially in the form of Exhibit 1 to the Indenture and shall initially be
issuable in the principal amount equal to four-fifths (4/5) of the Current
Market Price of the Common Stock calculated on the date of exercise of the
Right with respect to which such Note is being issued. Each Note shall bear
interest from and after its date of issuance at a rate set at or prior to the
initial issuance of the first Note to be issued by the Board, in its sole
discretion, who may rely on the advice of an independent investment banking
firm. The rate of interest will be designed to have such Note trade immediately
following issuance at par. Notes will be issued only in registered form,
without coupons, in denominations of $10 and integral multiples thereof. The
Notes shall be subject to all the terms and conditions of the Indenture, which
is incorporated herein by reference.
(w) "Original Rights" shall have the meaning set
forth in Section 1(f)(i) hereof.
(x) "Person" shall mean any individual, firm,
corporation, partnership or other entity, as well as any syndicate or group
deemed to be a person under Section 14(d)(2) of the Exchange Act.
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<PAGE> 9
(y) "Principal Party" shall have the meaning set
forth in Section 13(b) hereof.
(z) "Purchase Price" shall have the meaning set
forth in Section 4(a) hereof.
(aa) "Record Date" shall have the meaning set
forth in the preamble to this Agreement.
(bb) "Redemption Price" shall have the meaning set
forth in Section 23(a) hereof.
(cc) "Rights" shall have the meaning set forth in
the preamble to this Agreement.
(dd) "Rights Agent" shall mean the Person named as
the "Rights Agent" in the first paragraph of this Agreement until a successor
Rights Agent shall have become such pursuant to the applicable provisions
hereof, and thereafter "Rights Agent" shall mean such successor Rights Agent.
If at any time there is more than one Person appointed by the Company as Rights
Agent pursuant to the applicable provisions of this Agreement, "Rights Agent"
shall mean and include each such Person.
(ee) "Rights Certificate" shall have the meaning
set forth in Section 3(a) hereof.
(ff) "Rights Dividend Declaration Date" shall have
the meaning set forth in the preamble to this Agreement.
(gg) "Section 11(a)(ii) Event" shall mean any
event described in Section 11(a)(ii) (A), (B) or (C) hereof.
(hh) "Section 11(a)(ii) Trigger Date" shall have
the meaning set forth in Section 11(a)(iii) hereof.
(ii) "Section 13 Event" shall mean any event
described in clauses (x), (y) or (z) of Section 13(a) hereof.
(jj) "Spread" shall have the meaning set forth in
Section 11(a)(iii) hereof.
(kk) "Stock Acquisition Date" shall mean the first
date of public announcement (which, for purposes of this definition, shall
include, without limitation, a report filed pursuant to Section 13(d) under the
Exchange Act or any successor provision) by the Company or an Acquiring Person
that an Acquiring Person has become such.
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<PAGE> 10
(ll) "Subsidiary" shall mean, with reference to
any Person, any corporation of which an amount of voting securities or voting
interests sufficient to elect at least a majority of the directors of such
corporation is beneficially owned, directly or indirectly, by such Person, or
otherwise controlled by such Person.
(mm) "Substitute Consideration" shall have the
meaning set forth in Section 11(a)(iv) hereof.
(nn) "Substitution Period" shall have the meaning
set forth in Section 11(a)(iii) hereof.
(oo) "Summary of Rights" shall have the meaning
set forth in Section 3(b) hereof.
(pp) "Trading Day" shall have the meaning set
forth in Section 11(d) hereof.
(qq) "Triggering Event" shall mean any Section
11(a)(ii) Event or any Section 13 Event.
(rr) "Unit" shall have the meaning set forth in
the preamble to this Agreement.
SECTION 2. APPOINTMENT OF RIGHTS AGENT. The Company hereby
appoints the Rights Agent to act as agent for the Company and the holders of
the Rights (who, in accordance with Section 3 hereof, shall prior to the
Distribution Date also be the holders of the Common Stock) in accordance with
the terms and conditions hereof, and the Rights Agent hereby accepts such
appointment. The Company may from time to time appoint such Co-Rights Agents as
it may deem necessary or desirable and shall give the Rights Agent ten (10)
days prior written notice of any such appointment. In the event the Company
appoints one or more Co-Rights Agents, the respective duties of the Rights
Agent and any Co-Rights Agents shall be as the Company shall determine, with
the consent of the Rights Agent, which shall not be unreasonably withheld. In
no event shall the Rights Agent have any duty to supervise or be liable for the
acts or omissions of any Co-Rights Agent.
SECTION 3. ISSUANCE OF RIGHTS CERTIFICATES.
(a) Until the earlier of (i) the Close of
Business on the tenth day after the Stock Acquisition Date (or, if the tenth
day after the Stock Acquisition Date occurs before the Record Date, the Close
of Business on the Record Date), or (ii) the Close of Business on the tenth
Business Day after the date that a tender or exchange offer by any
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<PAGE> 11
Person (other than the Company, any Subsidiary of the Company, any employee
benefit plan of the Company or of any Subsidiary of the Company, or any Person
or entity organized, appointed or established by the Company for or pursuant to
the terms of any such plan) is first published or sent or given within the
meaning of Rule 14d-2(a) of the General Rules and Regulations under the
Exchange Act, or any successor provision, if upon consummation thereof, such
Person would be the Beneficial Owner of 30% or more of the shares of Common
Stock then outstanding (the earlier of (i) and (ii) being herein referred to as
the "Distribution Date"), (x) the Rights will be evidenced (subject to the
provisions of paragraph (b) of this Section 3) by the certificates for shares
of Common Stock registered in the names of the holders of shares of Common
Stock (which certificates for shares of Common Stock shall be deemed also to be
certificates for Rights) and not by separate certificates, and (y) the Rights
(and the right to receive certificates therefor) will be transferable only in
connection with the transfer of the underlying shares of Common Stock
(including a transfer to the Company). As soon as practicable after the
Distribution Date, the Rights Agent will send by first-class, insured, postage
prepaid mail, to each record holder of shares of Common Stock as of the Close
of Business on the Distribution Date, at the address of such holder shown on
the records of the Company, one or more rights certificates, in substantially
the form of Exhibit A hereto (the "Rights Certificates"), evidencing one Right
for each share of Common Stock so held, subject to adjustment as provided
herein. In the event that an adjustment in the number of Rights per share of
Common Stock has been made pursuant to Section 11(a)(i) hereof, at the time of
the distribution of the Rights Certificates, the Company shall make the
necessary and appropriate rounding adjustments (in accordance with Section
14(a) hereof) so that Rights Certificates representing only whole numbers of
Rights are distributed and cash is paid in lieu of any fractional Rights. The
Company shall give prompt written notice of such adjustments to the Rights
Agent. As of and after the Distribution Date, the Rights will be evidenced
solely by such Rights Certificate.
(b) As promptly as practicable following the
Record Date, the Company will send a copy of a Summary of Rights, in
substantially the form attached hereto as Exhibit B (the "Summary of Rights"),
by first-class, postage prepaid mail, to each record holder of the Common Stock
as of the Close of Business on the Record Date, at the address of such holder
shown on the records of the Company. With respect to certificates for the
Common Stock outstanding as of the
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<PAGE> 12
Record Date, until the earlier of the Distribution Date or the Expiration Date,
the Rights will be evidenced by such certificates for the Common Stock and the
registered holders of the Common Stock shall also be the registered holders of
the associated Rights. Until the earlier of the Distribution Date or the
Expiration Date, the transfer of any certificates representing shares of Common
Stock in respect of which Rights have been issued, with or without a copy of
the Summary of Rights attached thereto, shall also constitute the transfer of
the Rights associated with such shares of Common Stock.
(c) Rights shall, without any further action, be
issued in respect of all shares of Common Stock which are issued (whether
originally issued or from the Company's treasury) after the Record Date but
prior to the earlier of the Distribution Date or the Expiration Date.
Certificates representing such shares of Common Stock shall also be deemed to
be certificates for Rights, and shall bear the following legend:
"This certificate also evidences and entitles the holder
hereof to certain Rights as set forth in the Rights Agreement between
CRS Sirrine, Inc. (the "Company") and Morgan Shareholder Services
Trust Company (the "Rights Agent"), dated as of November 29, 1988, as
it may be from time to time amended (the "Rights Agreement"), the
terms of which are hereby incorporated herein by reference and a copy
of which is on file at the principal offices of the Company. Under
certain circumstances, as set forth in the Rights Agreement, such
Rights may be redeemed, may expire, or will be evidenced by separate
certificates and will no longer be evidenced by this certificate. The
Company will mail to the holder of this certificate a copy of the
Rights Agreement, as in effect on the date of mailing, without charge
promptly after receipt of a written request therefor. Under certain
circumstances set forth in the Rights Agreement, Rights issued to, or
held by, any Person who is, was or becomes an Acquiring Person or any
Affiliate or Associate thereof (as such terms are defined in the
Rights Agreement), whether currently held by or on behalf of such
Person or by any subsequent holder, may become null and void."
With respect to such certificates containing the foregoing legend, until the
earlier of (i) the Distribution Date, or (ii) the Expiration Date, the Rights
associated with the Common Stock represented by such certificates shall be
evidenced by such certificates alone and registered holders
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<PAGE> 13
of Common Stock shall also be the registered holders of the associated Rights,
and the transfer of any of such certificates shall also constitute the transfer
of the Rights associated with the Common Stock represented by such certificate.
SECTION 4. FORM OF RIGHTS CERTIFICATES.
(a) The Rights Certificates (and the forms of
election to purchase and of assignment to be printed on the reverse thereof)
shall each be substantially in the form set forth in Exhibit A hereto and may
have such marks of identification or designation and such legends, summaries or
endorsements printed thereon as the Company may deem appropriate and as are not
inconsistent with the provisions of this Agreement, or as may be required to
comply with any applicable law or with any rule or regulation made pursuant
thereto or with any rule or regulation of any stock exchange on which the
Rights may from time to time be listed, or to conform to usage. Subject to the
provisions of Sections 11 and 22 hereof, the Rights Certificates, whenever
distributed, shall be dated as of the Record Date and on their face shall
entitle the holders thereof to purchase such number of Units as shall be set
forth therein at the exercise price per Unit set forth therein (such exercise
price per Unit being hereinafter referred to as the "Purchase Price"), but the
amount and type of securities or other assets purchasable upon the exercise of
each Right and the Purchase Price thereof shall be subject to adjustment as
provided herein.
(b) Notwithstanding any other provisions of this
Agreement, any Rights Certificate issued pursuant to Sections 3(a) or 22 hereof
that represents Rights beneficially owned by: (i) an Acquiring Person or any
Associate or Affiliate of an Acquiring Person, (ii) a transferee of an
Acquiring Person (or of any such Associate or, Affiliate) who becomes a
transferee after the Acquiring Person becomes such, or (iii) a transferee of an
Acquiring Person (or of any such Associate or Affiliate) who becomes a
transferee prior to or concurrently with the Acquiring Person becoming such and
receives such Rights pursuant to either (A) a transfer (whether or not for
consideration) from the Acquiring Person (or any such Associate or Affiliate)
to holders of equity interests in such Acquiring Person (or any such Associate
or Affiliate) or to any Person with whom such Acquiring Person (or any such
Associate or Affiliate) has any continuing agreement, arrangement or
understanding regarding the transferred Rights, shares of Common Stock or the
Company, or (B) a transfer which a majority of the Continuing Directors have
determined is part of a plan, arrangement or
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<PAGE> 14
understanding which has as a primary purpose or effect the avoidance of
Section 7(e) hereof, and any Rights Certificate issued pursuant to Sections 6
or 11 hereof upon transfer, exchange, replacement or adjustment of any other
Rights Certificate referred to in this sentence, shall contain (to the extent
feasible) the following legend in addition to the legend specified in Section
3(c) hereof:
"The Rights represented by this Rights Certificate are or were
beneficially owned by a Person who was or became an Acquiring Person
or an Affiliate or Associate of an Acquiring Person (as such terms are
defined in the Rights Agreement). Accordingly, this Rights
Certificate and the Rights represented hereby may become null and void
in the circumstances specified in Section 7(e) of the Rights
Agreement."
SECTION 5. COUNTERSIGNATURE AND REGISTRATION.
(a) The Rights Certificates shall be executed on
behalf of the Company by its President, any Executive Vice President or any
Vice President, either manually or by facsimile signature, and shall have
affixed thereto the Company's seal or a facsimile thereof which shall be
attested by the Secretary or an Assistant Secretary of the Company, either
manually or by facsimile signature. The Rights Certificates shall be manually
countersigned by an authorized signatory of the Rights Agent (which need not
be the same signatory for all of the Rights Certificates) and shall not be
valid for any purpose unless so countersigned. In case any officer of the
Company who shall have signed any of the Rights Certificates shall cease to be
such officer of the Company before countersignature by the Rights Agent and
issuance and delivery by the Company, such Rights Certificates, nevertheless,
may be countersigned by the Rights Agent and issued and delivered by the
Company with the same force and effect as though the person who signed such
Rights Certificates had not ceased to be such officer of the Company; and any
Rights Certificates may be signed on behalf of the Company by any person who,
at the actual date of the execution of such Rights Certificate, shall be a
proper officer of the Company to sign such Rights Certificate, although at the
date of the execution of this Agreement any such person was not such an
officer. In case any authorized signatory of the Rights Agent who shall have
countersigned any of the Rights Certificates shall cease to be such signatory
before delivery by the Company, such Rights Certificates, nevertheless, may be
issued and delivered by the Company with the same force and effect as though
the person who countersigned such Rights Certificates had not
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<PAGE> 15
ceased to be such signatory; and any Rights Certificate may be countersigned on
behalf of the Rights Agent by any person who, at the actual date of the
countersignature of such Rights Certificate, shall be a proper signatory of the
Rights Agent to countersign such Rights Certificate, although at the date of
the execution of this Agreement any such person was not such a signatory.
(b) Following the Distribution Date, the Rights
Agent will keep or cause to be kept, at its principal shareholder services
office or offices designated as the appropriate place for surrender of Rights
Certificates upon exercise or transfer, books for registration and transfer of
the Rights Certificates issued hereunder. Such books shall show the names and
addresses of the respective holders of the Rights Certificates, the number of
Rights evidenced on its face by each of the Rights Certificates, the
Certificate number, the date of each of the Rights Certificates and the date of
countersignature by the Rights Agent.
SECTION 6. TRANSFER, SPLIT UP, COMBINATION AND EXCHANGE OF
RIGHTS CERTIFICATES; MUTILATED, DESTROYED, LOST OR STOLEN RIGHTS CERTIFICATES.
(a) Subject to the provisions of Sections 4(b), 7(e) and 14 hereof, at any time
after the Close of Business on the Distribution Date, and at or prior to the
Close of Business on the Expiration Date, any Rights Certificate or
Certificates may be transferred, split up, combined or exchanged for another
Rights Certificate or Certificates, entitling the registered holder to purchase
a like number of Units (or, following a Triggering Event, other securities,
cash or other assets, as the case may be) as the Rights Certificate or
Certificates surrendered then entitled such holder (or former holder in the
case of a transfer) to purchase. Any registered holder desiring to transfer,
split up, combine or exchange any Rights Certificate or Certificates shall make
such request in writing delivered to the Rights Agent, and shall surrendered
the Rights Certificate or Certificates to be transferred, split up, combined or
exchanged, with the form of assignment and certificate duly executed and such
other and further documentation as the Rights Agent may reasonably require, at
the principal shareholder services office or offices of the Rights Agent
designated for such purpose. Neither the Rights Agent nor the Company shall be
obligated to take any action whatsoever with respect to the transfer of any
such surrendered Rights Certificate until the registered holder shall have
completed and signed the certificate contained in the form of assignment set
forth on the reverse side of each such Rights Certificate and shall have
provided such additional evidence of identity of the Beneficial Owner (or
former Beneficial
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<PAGE> 16
Owner) or Affiliates or Associates thereof as the Company shall reasonably
request. Thereupon the Rights Agent shall, subject to Sections 4(b), 7(e) and
14 hereof, countersign and deliver to the Person entitled thereto a Rights
Certificate or Rights Certificates, as the case may be, as so requested. The
Company may require payment from such Rights Certificateholders of a sum
sufficient to cover any tax or governmental charge that may be imposed in
connection with any transfer, split up, combination or exchange of Rights
Certificates.
(b) Upon receipt by the Company and the Rights
Agent of evidence reasonably satisfactory to them of the loss, theft,
destruction or mutilation of a Rights Certificate, and, in case of loss, theft
or destruction, of indemnity or security reasonably satisfactory to them, and
reimbursement to the Company and the Rights Agent of all reasonable expenses
incidental thereto, and upon surrender to the Rights Agent, at the principal
shareholder services office or offices of the Rights Agent designated for such
purpose, and cancellation of the Rights Certificate if mutilated (together with
a signature guarantee and such other and further documentation as the Rights
Agent may reasonably require), the Company will execute and deliver a new
Rights Certificate of like tenor to the Rights Agent for countersignature and
delivery to the registered owner in lieu of the Rights Certificate so lost,
stolen, destroyed or mutilated.
SECTION 7. EXERCISE OF RIGHTS; PURCHASE PRICE; EXPIRATION DATE
OF RIGHTS. (a) Subject to Section 7(e) hereof, the registered holder of any
Rights Certificate may exercise the Rights evidenced thereby (except as
otherwise provided herein, including, without limitation, the restrictions on
exercisability set forth in Sections 9(c), 11(a)(iii) and 23(a) hereof) in whole
or in part at any time after the Distribution Date upon surrender of the Rights
Certificate, with the form of election to purchase and the certificate on the
reverse side thereof duly executed, together with such other and further
documentation as the Rights Agent may reasonably require, to the Rights Agent
at the principal office or offices of the Rights Agent designated for such
purpose, together with payment of the aggregate Purchase Price with respect to
the total number of Units (or other securities, cash or other assets, as the
case may be) as to which such surrendered Rights are then exercisable, at or
prior to the earlier of (i) the Final Expiration Date, or (ii) the time at
which the Rights are redeemed as provided in Section 23 hereof (the earlier of
(i) and (ii) being herein referred to as the "Expiration Date").
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<PAGE> 17
(b) The Purchase Price for each Unit pursuant to
the exercise of a Right shall initially be $72.00, and shall be subject to
adjustment from time to time as provided in Sections 11 and 13(a) hereof and
shall be payable in accordance with paragraph (c) of this Section 7.
(c) Upon receipt of a Rights Certificate
representing exercisable Rights, with the form of election to purchase and the
certificate duly executed, accompanied by payment with respect to each Right so
exercised of the Purchase Price for the Units (or, following a Triggering
Event, other securities, cash or other assets, as the case may be) to be
purchased as set forth below and an amount equal to any applicable transfer
tax, together with such other and further documentation as the Rights Agent may
reasonably require, the Rights Agent shall, subject to Section 20(k) hereof,
promptly (i) (A) requisition from any transfer agent of the shares of Common
Stock (or make available, if the Rights Agent is the transfer agent for the
Common Stock) certificates for the total number of one-fifths of a share of
Common Stock which constitute part of the Units to be purchased, and the
Company hereby irrevocably authorizes its transfer agent to comply with all
such requests, or (B) if the Company, in its sole discretion, shall have
elected to deposit the total number of shares of Common Stock issuable as part
of the Units upon exercise of the Rights hereunder with a depositary agent,
requisition from the depositary agent depositary receipts representing such
number of one-fifths of a share of Common Stock as are to be purchased (in
which case certificates for the shares of Common Stock represented by such
receipts shall be deposited by the transfer agent with the depositary agent)
and the Company will direct the depositary agent to comply with such request,
(ii) requisition from any trustee or securities registrar under the Indenture
(or make available, if the Rights Agent is the trustee or securities registrar
under the Indenture) Notes for the total principal amount of Notes which
constitute part of the Units to be purchased (and the Company hereby
irrevocably authorizes the trustee or securities registrar under the Indenture
to comply with all such requests), (iii) requisition from the Company the
amounts of cash, if any, to be paid in lieu of fractional shares of Common
Stock or fractional Notes in accordance with Section 14 hereof, (iv) after
receipt of such certificates or depositary receipts for shares of Common Stock
and such Notes, cause the same to be delivered to or upon the order of the
registered holder of such Rights Certificates, registered in such name or names
as may be designated by such holder, and (v) after receipt thereof, deliver
such cash, if any, to or upon the order of the registered holder of such Rights
Certificate. The payment of the Purchase Price (as such
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amount may be reduced pursuant to Section 11(a)(iii) hereof) and any applicable
transfer tax shall be made in lawful money of the United States of America in
cash or by certified check, cashier's check or bank draft payable to the order
of the Company. In the event that the Company is obligated to issue other
securities of the Company, pay cash and/or distribute other property pursuant
to Section 11(a) hereof, the Company will make all arrangements necessary so
that such other securities, cash and/or other property are available for
distribution by the Rights Agent, if and when appropriate.
(d) In case the registered holder of any Rights
Certificate shall exercise less than all the Rights evidenced thereby, a new
Rights Certificate evidencing Rights equivalent to the Rights remaining
unexercised shall be issued by the Rights Agent and delivered to, or upon the
order of, the registered holder of such Rights Certificate, registered in such
name or names as may be designated by such holder, subject to the provisions of
Section 14 hereof.
(e) Notwithstanding anything in this Agreement
to the contrary, except as provided in Section (a) of this Agreement regarding
Inadvertent Acquisitions, from and after the first occurrence of a Stock
Acquisition Date, any Rights beneficially owned by (i) an Acquiring Person or
an Associate or Affiliate of an Acquiring Person, which a majority of the
Continuing Directors, in their sole discretion, determine is or was involved in
or caused or facilitated, directly or indirectly (including through any change
in the Board), such Section 11(a)(ii) Event, (ii) a transferee of any such
Acquiring Person (or of any such Associate or Affiliate) who becomes a
transferee after such Acquiring Person becomes such, or (iii) a transferee of
any such Acquiring Person (or of any such Associate or Affiliate) who becomes a
transferee prior to or concurrently with such Acquiring Person becoming such
and receives such Rights pursuant to either (A) a transfer (whether or not for
consideration) from the Acquiring Person (or any such Associate or Affiliate)
to holders of equity interests in such Acquiring Person (or any such Associate
or Affiliate) or to any Person with whom such Acquiring Person (or any such
Associate or Affiliate) has any continuing agreement, arrangement or
understanding regarding the transferred Rights, shares of Common Stock or the
Company, or (B) a transfer which a majority of the Continuing Directors have
determined, in their sole discretion, is part of a plan, arrangement or
understanding which has as a primary purpose or effect the avoidance of this
Section 7(e), shall become null and void without any further action, and no
holder of such Rights shall have any rights whatsoever with respect to such
Rights, whether under any provision of this Agreement or
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otherwise. The Company shall use all reasonable efforts to ensure that the
provisions of this Section 7(e) and Section 4(b) hereof are complied with, but
shall have no liability to any holder of Rights Certificates or other Person as
a result of its failure to make any determinations with respect to an Acquiring
Person or any of its Affiliates, Associates or transferees hereunder.
(f) Notwithstanding anything in this Agreement to
the contrary, neither the Rights Agent nor the Company shall be obligated to
undertake any action with respect to a registered holder upon the occurrence of
any purported exercise as set forth in this Section 7 unless such registered
holder shall have (i) completed and signed the certificate following the form
of election to purchase set forth on the reverse side of the Rights Certificate
surrendered for such exercise, and (ii) provided such additional evidence of
the identity of the Beneficial Owner (or former Beneficial Owner) or Affiliates
or Associates thereof as the Company shall reasonably request.
SECTION 8. CANCELLATION AND DESTRUCTION OF RIGHTS
CERTIFICATES. All Rights Certificates surrendered for the purpose of exercise,
transfer, split up, combination or exchange shall, if surrendered to the
Company or any of its agents, be delivered to the Rights Agent for cancellation
or in cancelled form or, if surrendered to the Rights Agent, shall be cancelled
by it, and no Rights Certificates shall be issued in lieu thereof except as
expressly permitted by any of the provisions of this Agreement. The Company
shall deliver to the Rights Agent for cancellation and retirement, and the
Rights Agent shall so cancel and retire, any other Rights Certificate purchased
or acquired by the Company otherwise than upon the exercise thereof. The Rights
Agent shall deliver all cancelled Rights Certificates to the Company, or shall,
at the written request of the Company, destroy such cancelled Rights
Certificates, and in such case shall deliver a certificate of destruction
thereof to the Company.
SECTION 9. RESERVATION AND AVAILABILITY OF COMMON STOCK. (a)
The Company covenants and agrees that it will cause to be reserved and kept
available out of its authorized and unissued shares of Common Stock, or any
authorized and issued shares of Common Stock held in its treasury (and,
following the occurrence of a Triggering Event, out of its authorized and
unissued other securities or securities in its treasury, if appropriate), the
number of shares of Common Stock (and, following the occurrence of a Triggering
Event, other securities) that, as provided in this Agreement,
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including Section 11(a)(iii) hereof, will be sufficient to permit the exercise
in full of all outstanding Rights.
(b) So long as the shares of Common Stock or
Notes (and, following the occurrence of a Triggering Event, other securities)
issuable and deliverable upon the exercise of the Rights may be listed on any
national securities exchange, the Company shall use its best efforts to cause,
from and after such time as the Rights become exercisable, all shares of Common
Stock and Notes (and other securities) issuable to be listed on such exchange
upon official notice of issuance upon such exercise.
(c) The Company shall use its best efforts to
(i) file, as soon as practicable following the earliest date after the first
occurrence of a Section 11(a)(ii) Event on which the consideration to be
delivered by the Company upon exercise of the Rights has been determined in
accordance with Section 11(a)(iii) hereof, or, if so required by law, as soon
as practicable following the Distribution Date, a registration statement under
the Act with respect to the securities purchasable upon exercise of the Rights
on an appropriate form, (ii) cause such registration statement to become
effective as soon as practicable after such filing, and (iii) cause such
registration statement to remain effective (with a prospectus at all times
meeting the requirements of the Act and the rules and regulations thereunder)
until the earlier of (A) the date as of which the Rights are no longer
exercisable for such securities, and (B) the Expiration Date. The Company will
also take such action as may be appropriate under, or to ensure compliance
with, the securities or "blue sky" laws of the various states in connection
with the exercisability of the Rights. The Company may temporarily suspend, for
a period of time not to exceed ninety (90) days after the date set forth in
clause (i) of the first sentence of this Section 9(c), the exercisability of
the Rights in order to prepare and file such registration statement and permit
it to become effective. Upon any such suspension, the Company shall issue a
public announcement stating that the exercisability of the Rights has been
temporarily suspended, as well as a public announcement at such time as the
suspension is no longer in effect. Notwithstanding any provision of this
Agreement to the contrary, the Rights shall not be exercisable in any
jurisdiction if the requisite qualification in such jurisdiction shall not have
been obtained, the exercise thereof shall not be permitted under applicable law
or a registration statement shall not have been declared effective.
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(d) The Company covenants and agrees that it will
take all such action as may be necessary to ensure that all one-fifths of a
share of Common Stock and all Notes (and, following the occurrence of a
Triggering Event, other securities) delivered upon exercise of Rights shall, at
the time of delivery of the certificates for such shares, such Notes or of such
other securities (subject to payment of the Purchase Price), as the case may
be, shall be duly and validly authorized and issued and that all shares shall
be fully paid and nonassessable and all Notes and other forms of indebtedness
shall be valid, binding and effective.
(e) The Company further covenants and agrees that
it will pay when due and payable any and all federal and state transfer taxes
and charges which may be payable in respect of the issuance or delivery of the
Rights Certificates, any certificates for a number of one-fifths of a share of
Common Stock or the Notes (or other securities, as the case may be) upon the
exercise of Rights. The Company shall not, however, be required to pay any
transfer tax which may be payable in respect of any transfer or delivery of
Rights Certificates to a Person other than, or in respect of the issuance or
delivery of a number of one-fifths of a share of Common Stock or Notes (or
other securities, as the case may be) in a name other than that of, the
registered holder of the Rights Certificates evidencing Rights surrendered for
exercise or to issue or deliver any certificates for a number of one-fifths of
a share of Common Stock or any Notes (or other securities, as the case may be)
in a name other than that of the registered holder upon the exercise of any
Rights until such tax shall have been paid (any such tax being payable by the
holder of such Rights Certificate at the time of surrender) or until it has
been established to the Company's satisfaction that no such tax is due.
SECTION 10. RECORD DATE FOR SECURITIES ISSUED UPON EXERCISE. Each
Person in whose name any certificate for a number of one-fifths of a share of
Common Stock and any Note (or other securities, as the case may be) is issued
upon the exercise of Rights shall for all purposes be deemed to have become the
holder of record of such fractional shares of Common Stock and such Notes (or
other securities, as the case may be) represented thereby on, and such
certificate and such Note shall be dated, the date upon which the Rights
Certificate evidencing such Rights was duly surrendered and payment of the
Purchase Price (and all applicable transfer taxes) was made; provided, however,
that if the date of such surrender and payment is a date upon which the Common
Stock or Note (or other securities, as the case may be) transfer books of the
Company are closed, such Person shall be deemed to have
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become the record holder of such shares (fractional or otherwise) or such Notes
(or other securities, as the case may be) on, and such certificate or Note
shall be dated, the next succeeding Business Day on which the Common Stock or
Note (or other securities, as the case may be) transfer books of the Company
are open. Prior to the exercise of the Rights evidenced thereby, the holder of
a Rights Certificate, as such, shall not be entitled to any rights of a
stockholder or holder of Notes of the Company with respect to shares or Notes
for which the Rights shall be exercisable, including, without limitation, the
right to vote, to receive dividends, payments of interest or principal or other
distributions or to exercise any preemptive rights, and shall not be entitled
to receive any notice of any proceedings of the Company, except as provided
herein.
SECTION 11. ADJUSTMENT OF PURCHASE PRICE, NUMBER AND KIND OF
SHARES OR NUMBER OF RIGHTS. The Purchase Price, the number and kind of
securities covered by each Right and the number of Rights outstanding are
subject to adjustment from time to time as provided in this Section 11.
(a) (i) in the event the Company shall at any
time after the date of this Agreement (A) declare a dividend on the
Common Stock payable in shares of Common Stock, (B) subdivide the
outstanding Common Stock, (C) combine the outstanding Common Stock
into a smaller number of shares, or (D) issue any shares of its
capital stock in a reclassification of the Common Stock (including any
such reclassification in connection with a consolidation or merger in
which the Company is the continuing or surviving corporation), except
as otherwise provided in this Section 11(a) and Section 7(e) hereof,
the Purchase Price in effect at the time of the record date for such
dividend or of the effective date of such subdivision, combination or
reclassification, and the number of shares of Common Stock and that
fraction of the Current Market Price which is used to calculate the
principal amount of the Note issuable upon purchase of a Unit on such
date (or the number and kind of other securities, as the case may be),
shall be proportionately adjusted so that the holder of any Right
exercised after such time shall be entitled to receive, upon payment
of the Purchase Price then in effect, the aggregate number of shares
of Common Stock and Notes in an aggregate principal amount (or the
number and kind of other securities, as the case may be) which, if
such Right had been exercised immediately prior to such date and at a
time when the Common Stock and Note (or other capital stock, as the
case may be) transfer books of the
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Company were open, he would have owned upon such exercise and been
entitled to receive by virtue of such dividend, subdivision,
combination or reclassification. If an event occurs which would
require an adjustment under both this Section 11(a)(i) and Section
11(a)(ii) hereof, the adjustment provided for in this Section 11(a)(i)
shall be in addition to, and shall be made prior to, any adjustment
required pursuant to Section 11(a)(ii) hereof.
(ii) In the event:
(A) any Acquiring Person or any
Associate or Affiliate of any Acquiring Person, at any time after the
date of this Agreement, directly or indirectly, (1) shall merge into
the Company or any of its Subsidiaries or otherwise combine with the
Company or any of its Subsidiaries and the Company or such Subsidiary
shall be the continuing or surviving corporation of such merger or
combination and the Common Stock of the Company shall remain
outstanding and unchanged, (2) shall, in one transaction or a series
of transactions, transfer any assets to the Company or any of its
Subsidiaries in exchange (in whole or in part) for shares of Common
Stock, for shares of other equity securities of the Company, or for
securities exercisable for or convertible into shares of equity
securities of the Company (Common Stock or otherwise) or otherwise
obtain from the Company or any of its Subsidiaries, with or without
consideration, any additional shares of such equity securities or
securities exercisable for or convertible into shares of such equity
securities (other than pursuant to a pro rata distribution to all
holders of Common Stock or upon the exercise of a convertible security
of the Company in accordance with its terms), (3) shall sell,
purchase, lease, exchange, mortgage, pledge, transfer or otherwise
acquire or dispose of, in one transaction or a series of transactions,
to, from or with (as the case may be) the Company or any of its
Subsidiaries or any employee benefit plan maintained by the Company or
any of its Subsidiaries or any trustee or fiduciary with respect to
such plan acting in such capacity, assets (including securities) on
terms and conditions less favorable to the Company, such Subsidiary or
such plan than the Company, such Subsidiary or such plan would be able
to obtain in arm's-length negotiation with an unaffiliated third
party, other than pursuant to a transaction set forth in Section 13(a)
hereof, (4) shall sell, purchase, lease, exchange, mortgage, pledge,
transfer or otherwise
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<PAGE> 24
acquire or dispose of in one transaction or a series of transactions,
to, from or with (as the case may be) the Company or any of the
Company's Subsidiaries or any employee benefit plan maintained by the
Company or any of its Subsidiaries or any trustee or fiduciary with
respect to such plan acting in such capacity (other than incidental to
the lines of business, if any, engaged in as of the date hereof
between the Company or any of its Subsidiaries and such Acquiring
Person or Associate or Affiliate), assets (including securities)
having an aggregate fair market value of more than $2,500,000, other
than pursuant to a transaction set forth in Section 13(a) hereof, (5)
shall receive any compensation from the Company or any of the
Company's Subsidiaries other than compensation for full-time
employment as a regular employee at rates in accordance with the
Company's (or its Subsidiaries') past practices, or (6) shall receive
the benefit, directly or indirectly (except proportionately as a
stockholder and except if resulting from a requirement of law or
governmental regulation), of any loans, advances, guarantees, pledges
or other financial assistance or any tax credits or other tax
advantage provided by the Company or any of its Subsidiaries or any
employee benefit plan maintained by the Company or any of its
Subsidiaries, or
(B) any Person (other than the Company,
any Subsidiary of the Company, any employee benefit plan maintained by
the Company or any of its Subsidiaries or any Person or entity
organized, appointed or established by the Company or any of its
Subsidiaries for or pursuant to the terms of any such plan), alone or
together with its Affiliates and Associates, shall, at any time after
the Rights Dividend Declaration Date, become the Beneficial Owner of
30% or more of the shares of Common Stock then outstanding, unless the
event causing the 30% threshold to be crossed is a transaction set
forth in Section 13(a) hereof, or is an acquisition of shares of
Common Stock pursuant to a tender or exchange offer for all
outstanding shares of Common Stock at a price and on terms determined
by a majority of the Continuing Directors, after receiving advice from
one or more investment banking firms, to be (a) at a price which is
fair to stockholders (taking into account all factors which the
Continuing Directors deem relevant including, without limitation,
prices which would reasonably be achieved if the Company or its assets
were sold on an orderly basis designed to realize maximum value), and
(b) otherwise in the best interests of the Company and its
stockholders, or
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(C) during such time as there is an
Acquiring Person, there shall be any reclassification of securities
(including any reverse stock split), or recapitalization of the
Company, or any merger or consolidation of the Company with any of its
Subsidiaries or any other transaction or series of transactions
involving the Company or any of its Subsidiaries, other than a
transaction or transactions to which the provisions of Section 13(a)
apply (whether or not with or into or otherwise involving an Acquiring
Person or any Associate or Affiliate thereof) which has the effect,
directly or indirectly, of increasing by more than 1% the
proportionate share of the outstanding shares of any class of equity
securities of the Company or any of its Subsidiaries which is directly
or indirectly beneficially owned by any Acquiring Person or any
Associate or Affiliate of any Acquiring Person,
then, promptly following five (5) days after the date of the occurrence of an
event described in Section 11(a)(ii)(B) hereof and promptly following the
occurrence of any event described in Section 11(a)(ii)(A) or (C) hereof,
proper provision shall be made so that each holder of a Right (except as
provided below and in Section 7(e) hereof) shall thereafter have the right to
receive, upon exercise thereof at the then current Purchase Price in accordance
with the terms of this Agreement, in lieu of a number of Units for which a
Right was exercisable immediately prior to the first occurrence of a Section
11(a)(ii) Event, such number of shares of Common Stock as shall equal the
result obtained by (x) multiplying the then current Purchase Price by the then
number of one-fifths of a share of Common Stock for which a Right was
exercisable immediately prior to the first occurrence of a Section 11(a)(ii)
Event, and (y) dividing that product (such product thereafter being, for all
purposes of this Agreement other than Section 13 hereof, called the "Purchase
Price") by 50% of the Current Market Price per share of Common Stock on the
date of such first occurrence (such number of shares being referred to as the
"Adjustment Shares").
(iii) In the event that the number of
shares of Common Stock which are authorized by the Company's
Certificate of Incorporation but not outstanding or reserved for
issuance for purposes other than upon exercise of the Rights is not
sufficient to permit the exercise in full of the Rights in accordance
with the foregoing subparagraph (ii) of this Section 11(a), the
Company, by a majority vote of the Continuing Directors, shall: (A)
determine the excess of (1) the
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value of the Adjustment Shares issuable upon the exercise of a Right
(the "Current Value") over (2) the Purchase Price (such excess being
referred to as the "Spread"), and (B) with respect to each Right, make
adequate provision to substitute for the Adjustment Shares, upon
payment of the applicable Purchase Price, (1) cash, (2) a reduction in
the Purchase Price, (3) Common Stock or other equity securities of the
Company (including, without limitation, shares, or units of shares, of
preferred stock which the Board has deemed to have the same value as
shares of Common Stock (such shares of preferred stock being referred
to as "Common Stock Equivalents")), (4) debt securities of the
Company, (5) other assets, or (6) any combination of the foregoing
(whichever substituted, the "Substitute Consideration"), having an
aggregate value equal to the Current Value, where such aggregate
value has been determined by a majority of the Continuing Directors
based upon the advice of a nationally recognized investment banking
firm; provided, however, if the Company shall not have made adequate
provision to deliver value pursuant to clause (B) above within thirty
(30) days following the later of (x) the first occurrence of a Section
11(a)(ii) Event, and (y) the date on which the Company's right of
redemption pursuant to Section 23(a) expires (the later of (x) and (y)
being referred to herein as the "Section 11(a)(ii) Trigger Date"),
then the Company shall be obligated to deliver, upon the surrender for
exercise of a Right and without requiring payment of the Purchase
Price, shares of Common Stock (to the extent available) and then, if
necessary, cash, which shares and/or cash have an aggregate value
equal to the Spread. If the Board, by majority vote of the Continuing
Directors, shall determine in good faith that it is likely that
sufficient additional shares of Common Stock could be authorized for
issuance upon exercise in full of the Rights, the thirty (30) day
period set forth above may be extended to the extent necessary, but
not more than ninety (90) days after the Section 11(a)(ii) Trigger
Date, in order that the Company may seek stockholder approval for the
authorization of such additional shares (such period, as it may be
extended, being referred to herein as the "Substitution Period"). To
the extent that the Company determines that some action need be taken
pursuant to the first and/or second sentences of this Section
11(a)(iii), the Company (x) shall provide, subject to Section 7(e)
hereof, that such action shall apply uniformly to all outstanding
Rights, and (y) may suspend the exercisability of the Rights until the
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expiration of the Substitution Period in order to seek any
authorization of additional shares and/or to decide the appropriate
form of distribution to be made pursuant to such first sentence and to
determine the value thereof. In the event of any such suspension, the
Company shall issue a public announcement stating that the
exercisability of the Rights has been temporarily suspended, as well
as a public announcement at such time as the suspension is no longer
in effect. For purposes of this Section 11(a)(iii), the value of the
Common Stock shall be the Current Market Price per share of the Common
Stock on the Section 11(a)(ii) Trigger Date and the value of any
Common Stock Equivalent shall be deemed to have the same value as the
Common Stock on such date. Notwithstanding any other provision in this
Agreement, the Company shall not be obligated to pay Substitute
Consideration (or shares of Common Stock and/or cash equal to the
value of the Spread) in the event of any exercise of Rights if and to
the extent a determination is made by a majority of the Continued
Directors, acting in their sole discretion, (x) that such payment
would be in violation of applicable law, or (y) that such payment
would result in a decrease in fair market value per share of Common
Stock in excess of that which would have occurred if sufficient Common
Stock were authorized to permit exercise in full of the Rights in
accordance with subparagraph (ii) of this Section 11(a) and such
Rights were so exercised in full for such shares of Common Stock.
(iv) If the rules of the national
securities exchange, registered as such pursuant to Section 6 of the
Exchange Act, or of the national securities association, registered as
such pursuant to Section 15A of the Exchange Act, on which the Common
Stock is principally traded would prohibit such exchange or
association from listing or continuing to list, or from authorizing
for or continuing quotation and/or transaction reporting through an
inter-dealer quotation system, the Common Stock or other equity
securities of the Company if the Rights were to be exercised for
shares of Common Stock in accordance with subparagraph (ii) of this
Section 11(a) because such issuance would nullify, restrict or
disparately reduce the per share voting rights of holders of Common
Stock, the Company, by a majority vote of the Continuing Directors,
shall: (A) determine the Spread, and (B) with respect to each Right,
make adequate provision to substitute for the Adjustment Shares, upon
payment of the applicable Purchase Price, (1) cash, (2) a reduction of
the
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Purchase Price, (3) equity securities of the Company, including,
without limitation, Common Stock Equivalents, other than securities
which would have the effect of nullifying, restricting or disparately
reducing the per share voting rights of holders of Common Stock, (4)
debt securities of the Company, (5) other assets, or (6) any
combination of the foregoing (whichever substituted, the "Substitute
Consideration"), having an aggregate value equal to the Current Value,
where such aggregate value has been determined by the Board, by a
majority vote of the Continuing Directors, based upon the advice of a
nationally recognized investment banking firm; provided, however, if
the Company shall not have made adequate provision to deliver value
pursuant to clause (B) above within thirty (30) days following the
Section 11(a)(ii) Trigger Date, then the Company shall be obligated to
deliver, upon the surrender for exercise of a Right and without
requiring payment of the Purchase Price, cash having an aggregate
value equal to the Spread. To the extent that the Company determines
that some action need be taken pursuant to the first sentence of this
Section 11(a)(iv), the Company (x) shall provide, subject to Section
7(e) hereof, that such action shall apply uniformly to all outstanding
Rights, and (y) may suspend the exercisability of the Rights, but not
longer than ninety (90) days after the Section 11(a)(ii) Trigger Date,
in order to decide the appropriate form of distribution to be made
pursuant to such first sentence and to determine the value thereof.
In the event of any such suspension, the Company shall issue a public
announcement stating that the exercisability of the Rights has been
temporarily suspended, as well as a public announcement at such time
as the suspension is no longer in effect. For purposes of this Section
11(a)(iv), the value of the Common Stock shall be the Current Market
Price per share of the Common Stock on the Section 11(a)(ii) Trigger
Date and the value of any Common Stock Equivalent shall be deemed to
have the same value as the Common Stock on such date. Notwithstanding
any other provision in this Agreement, the Company shall not be
obligated to pay Substitute Consideration (or shares of Common Stock
and/or cash equal to the value of the Spread) in the event of any
exercise of Rights if and to the extent a determination is made by a
majority of the Continuing Directors, acting in their sole
discretion, (x) that such payment would be in violation of
applicable law, or (y) that such payment would result in a decrease in
fair market value per share of Common Stock in excess of that which
would have occurred if Common Stock were issued on the exercise in
full of the
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Rights in accordance with subparagraph (ii) of Section 11(a).
(b) In case the Company shall fix a record day
for the issuance of rights, options or warrants to all holders of Common Stock
entitling them to subscribe for or purchase (for a period expiring within
forty-five (45) calendar days after such record date) Common Stock (or shares
having the same rights, privileges and preferences as the shares of Common
Stock ("Equivalent Common Stock")) or securities convertible into Common Stock
or Equivalent Common Stock at a price per share of Common Stock or per share of
Equivalent Common Stock (or having a conversion price per share, if a security
convertible into Common Stock or Equivalent Common Stock) less than the Current
Market Price per share of Common Stock on such record date, the Purchase Price
to be in effect after such record date shall be determined by multiplying the
Purchase Price in effect immediately prior to such record date by a fraction,
the numerator of which shall be the number of shares of Common Stock
outstanding on such record date, plus the number of shares of Common Stock
which the aggregate offering price of the total number of shares of Common
Stock and/or Equivalent Common Stock so to be offered (and/or the aggregate
initial conversion price of the convertible securities so to be offered) would
purchase at such Current Market Price, and the denominator of which shall be
the number of shares of Common Stock outstanding on such record date, plus the
number of additional shares of Common Stock and/or Equivalent Common Stock to
be offered for subscription or purchase (or into which the convertible
securities so to be offered are initially convertible). In case such
subscription price may be paid by delivery of consideration part or all of
which may be in a form other than cash, the value of such consideration shall
be as determined in good faith by a majority of the Continuing Directors, whose
determination shall be described in a statement filed with the Rights Agent and
shall be binding on the Rights Agent and the holders of the Rights. Shares of
Common Stock owned by or held for the account of the Company shall not be
deemed outstanding for the purpose of any such computation. Such adjustment
shall be made successively whenever such a record date is fixed, and in the
event that such rights or warrants are not so issued, the Purchase Price shall
be adjusted to be the Purchase Price which would then be in effect if such
record date had not been fixed.
(c) In case the Company shall fix a record date
for a distribution to all holders of Common Stock (including any such
distribution made in connection with a
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consolidation or merger in which the Company is the continuing or surviving
corporation) of evidences of indebtedness, cash (other than a regular quarterly
cash dividend out of the earnings or retained earnings of the Company), assets
(other than a dividend payable in Common Stock, but including any dividend
payable in stock other than Common Stock) or subscription rights or warrants
(excluding those referred to in Section 11(b) hereof), the Purchase Price to
be in effect after such record date shall be determined by multiplying the
Purchase Price in effect immediately prior to such record date by a fraction,
the numerator of which shall be the Current Market Price per share of Common
Stock on such record date, less the fair market value (as determined in good
faith a majority of the Continuing Directors, whose determination shall be
described in a statement filed with the Rights Agent and shall be binding on
the Rights Agent and the holders of the Rights) of the portion of the cash,
assets or evidences of indebtedness so to be distributed or of such
subscription rights or warrants applicable to a share of Common Stock and the
denominator of which shall be such Current Market Price per share of Common
Stock. Such adjustments shall be made successively whenever such a record date
is fixed, and in the event that such distribution is not so made, the Purchase
Price shall again be adjusted to be the Purchase Price which would have been in
effect if such record date had not been fixed.
(d) For the purpose of any computation hereunder,
other than computations made pursuant to Section 11(a)(iii) hereof, the Current
Market Price per share of Common Stock on any date shall be deemed to be the
average of the daily closing prices per share of such Common Stock for the
thirty (30) consecutive Trading Days immediately prior to such date, and for
purposes of computations made pursuant to Section 11(a)(iii) hereof, the
Current Market Price per share of Common Stock on any date shall be deemed to
be the average of the daily closing prices per share of such Common Stock for
the ten (10) consecutive Trading Days immediately following such date;
provided, however, that in the event that the Current Market Price per share of
the Common Stock is determined during a period following the announcement by
the issuer of such Common Stock of (i) a dividend or distribution on such
Common Stock payable in shares of such Common Stock or securities convertible
into shares of such Common Stock (other than the Rights), or (ii) any
subdivision, combination or reclassification of such Common Stock, and prior to
the expiration of the requisite thirty (30) Trading Day or ten (10) Trading Day
period, as set forth above, after the ex-dividend date for such dividend or
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distribution, or the record date for such subdivision, combination or
reclassification, then, and in each such case, the Current Market Price shall
be properly adjusted to take into account ex-dividend trading. The closing
price for each day shall be the last sale price, regular way, or, in case no
such sale takes place on such day, the average of the closing bid and asked
prices, regular way, in either case as reported in the principal consolidated
transaction reporting system with respect to securities listed or admitted to
trading on the New York Stock Exchange or, if the shares of Common Stock are
not listed or admitted to trading on the New York Stock Exchange, as reported
in the principal consolidated transaction reporting system with respect to
securities listed on the principal national securities exchange on which the
shares of Common Stock are listed or admitted to trading or, if the shares of
Common Stock are not listed or admitted to trading on any national securities
exchange, the last quoted price or, if not so quoted, the average of the high
bid and low asked prices in the over-the-counter market, as reported by the
National Association of Securities Dealers, Inc. Automated Quotation System
("NASDAQ") or such other system then in use, or, if on any such date the shares
of Common Stock are not quoted by any such organization, the average of the
closing bid and asked prices as furnished by a professional market maker making
a market in the Common Stock selected by a majority of the Continuing
Directors. If on any such date no market maker is making a market in the Common
Stock, the fair value of such shares on such date as determined in good faith
by a majority of the Continuing Directors shall be used, whose determination
shall be described in a statement filed with the Rights Agent and shall be
binding on the Rights Agent and the holders of Rights. The term "Trading Day"
shall mean a day on which the principal national securities exchange on which
the shares of Common Stock are listed or admitted to trading is open for the
transaction of business or, if the shares of Common Stock are not listed or
admitted to trading on any national securities exchange, a Business Day. If the
Common Stock is not publicly held or not so listed or traded, Current Market
Price per share shall mean the fair value per share as determined in good faith
by a majority of the Continuing Directors, whose determination shall be
described in a statement filed with the Rights Agent and shall be conclusive
for all purposes.
(e) Anything herein to the contrary
notwithstanding, no adjustment in the Purchase Price shall be required unless
such adjustment would require an increase or decrease of at least one percent
(1%) in the Purchase Price; provided, however, that any adjustments which by
reason of
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this Section 11(e) are not required to be made shall be carried forward and
taken into account in any subsequent adjustment. All calculations under this
Section 11 shall be made to the nearest cent or to the nearest ten-thousandth
of a share, as the case may be. Notwithstanding the first sentence of this
Section 11(e), any adjustment required by this Section 11 shall be made no
later than the earlier of (i) three (3) years from the date of the transaction
which mandates such adjustment, or (ii) the Expiration Date.
(f) If as a result of an adjustment made pursuant
to Section 11(a)(ii) or Section 13(a) hereof, the holder of any Right
thereafter exercised shall become entitled to receive any shares of capital
stock other than Common Stock, thereafter the number of such other shares so
receivable upon exercise of any Right and the Purchase Price thereof shall be
subject to adjustment from time to time in a manner and on terms as nearly
equivalent as practicable to the provisions with respect to the Common Stock
contained in Sections 11(a), (b), (c), (e), (g), (h), (i), (j), (k) and (m),
and the provisions of Sections 7, 9, 10, 13 and 14 hereof with respect to the
Common Stock shall apply on like terms to any such other shares.
(g) All Rights originally issued by the Company
subsequent to any adjustment made to the Purchase Price hereunder shall
evidence the right to purchase, at the adjusted Purchase Price, one Unit,
consisting of that number of shares of Common Stock and a Note in a principal
amount equal to that fraction of the Current Market Price of the Common Stock
on the date of exercise (or other securities or cash or combination thereof)
purchasable from time to time hereunder upon exercise of the Rights, all
subject to further adjustment as provided herein.
(h) Unless the Company shall have exercised its
election as provided in Section 11(i), upon each adjustment of the Purchase
Price as a result of the calculations made in Sections 11(b) and (c), each
Right outstanding immediately prior to the making of such adjustment shall
thereafter evidence the right to purchase, at the adjusted Purchase Price, one
Unit, consisting of that number of shares of Common Stock (calculated to the
nearest ten-thousandth) obtained by (i) multiplying (x) the number of shares
covered by a Right immediately prior to this adjustment, by (y) the Purchase
Price in effect immediately prior to such adjustment of the Purchase Price, and
(ii) dividing the product so obtained by the Purchase Price in effect
immediately after such adjustment of the Purchase Price, and one Note in the
principal amount equal to that fraction (calculated to the
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nearest ten-thousandth) of the Current Market Value of the Common Stock on the
date of exercise obtained by (1) multiplying (z) such fraction of the Current
Market Price as was applicable immediately prior to this adjustment, by (zz)
the Purchase Price in effect immediately prior to such adjustment of the
Purchase Price, and (2) dividing the product so obtained by the Purchase Price
in effect immediately after such adjustment of the Purchase Price.
(i) The Company may elect on or after the date of
any adjustment of the Purchase Price to adjust the number of Rights, in lieu of
any adjustment in the number of shares of Common Stock and in the fraction of
the Current Market Price of the Common Stock on the date of exercise used to
calculate the principal amount of the Note purchasable as a Unit upon the
exercise of a Right. Each of the Rights outstanding after the adjustment in the
number of Rights shall be exercisable for one Unit, consisting of that number
of shares of Common Stock and a Note in the principal amount equal to that
fraction of the Current Market Price of the Common Stock on the date of
exercise for which a Right was exercisable immediately prior to such
adjustment. Each Right held of record prior to such adjustment of the number of
Rights shall become that number of Rights (calculated to the nearest
one-ten-thousandth) obtained by dividing the Purchase Price in effect
immediately prior to adjustment of the Purchase Price by the Purchase Price in
effect immediately after adjustment of the Purchase Price. The Company shall
make a public announcement of its election to adjust the number of Rights,
indicating the record date for the adjustment, and, if known at the time, the
amount of the adjustment to be made. This record date may be the date on which
the Purchase Price is adjusted or any day thereafter, but, if the Rights
Certificates have been issued, shall be at least ten (10) days later than the
date of the public announcement. If Rights Certificates have been issued, upon
each adjustment of the number of Rights pursuant to this Section 11(i), the
Company shall, as promptly as practicable, cause to be distributed to holders
of record of Rights Certificates on such record date Rights Certificates
evidencing, subject to Section 14 hereof, the additional Rights to which such
holders shall be entitled as a result of such adjustment, or, at the option of
the Company, shall cause to be distributed to such holders of record in
substitution and replacement for the Rights Certificates held by such holders
prior to the date of adjustment, and upon surrender thereof, if required by the
Company, new Rights Certificates evidencing all the Rights to which such
holders shall be entitled after such adjustment. Rights Certificates so to be
distributed shall be issued, executed and
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countersigned in the manner provided for herein (and may bear, at the option of
the Company, the adjusted Purchase Price) and shall be registered in the names
of the holders of record of Rights Certificates on the record date specified in
the public announcement.
(j) Irrespective of any adjustment or change in
the Purchase Price or the Units issuable upon the exercise of the Rights, the
Rights Certificates theretofore and thereafter issued may continue to express
the Purchase Price per Unit and the Units which were expressed in the initial
Rights Certificates issued hereunder.
(k) Before taking any action that would cause an
adjustment reducing the Purchase Price below the then par value, if any, of the
number of shares of Common Stock or other securities issuable upon exercise of
the Rights, the Company shall take any corporate action which may, in the
opinion of its counsel, be necessary in order that the Company may validly and
legally issue fully paid and nonassessable shares of Common Stock or other
securities at such adjusted Purchase Price.
(l) In any case in which this Section 11 shall
require that an adjustment in the Purchase Price be made effective as of a
record date for a specified event, the Company may elect to defer until the
occurrence of such event the issuance to the holder of any Right exercised
after such record date the shares of Common Stock and Notes and other capital
stock or securities of the Company, if any, issuable upon such exercise over
and above the shares of Common Stock and Notes and other capital stock or
securities of the Company, if any, issuable upon such exercise on the basis of
the Purchase Price in effect prior to such adjustment; provided, however, that
the Company shall deliver to such holder a due bill or other appropriate
instrument evidencing such holder's right to receive such additional shares
(fractional or otherwise) or Notes or securities upon the occurrence of the
event requiring such adjustment.
(m) Anything in this Section 11 to the contrary
notwithstanding, the Company shall be entitled to make such reductions in the
Purchase Price, in addition to those adjustments expressly required by this
Section 11, as and to the extent that in its good faith judgment the Board
shall determine to be advisable in order that any (i) consolidation or
subdivision of the Common Stock, (ii) issuance wholly for cash of any shares of
Common Stock at less than the Current Market Price, (iii) issuance wholly for
cash of shares of Common Stock or securities which by their
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terms are convertible into or exchangeable for shares of Common Stock, (iv)
stock dividends or (v) issuance of rights, options or warrants referred to in
this Section 11, hereafter made by the Company to holders of its Common Stock
shall not be taxable to such stockholders or shall reduce the taxes payable by
such holders.
(n) The Company covenants and agrees that it
shall not, at any time after the Distribution Date, (i) consolidate with any
other Person (other than a Subsidiary of the Company in a transaction which
complies with Section 11(o) hereof), (ii) merge with or into any other Person
(other than a Subsidiary of the Company in a transaction which complies with
Section 11(o) hereof), or (iii) sell or transfer (or permit any Subsidiary to
sell or transfer), in one transaction or a series of related transactions,
assets or earning power aggregating more than 50% of the assets or earning
power of the Company and its Subsidiaries (taken as a whole) to any other
Person or Persons (other than the Company and/or any of its Subsidiaries in one
or more transactions each of which complies with Section 11(o) hereof), if (x)
at the time of or immediately after such consolidation, merger or sale there
are any charter or by-law provisions or any rights, warrants or other
instruments or securities outstanding or agreements in effect which would
substantially diminish or otherwise eliminate the benefits intended to be
afforded by the Rights, or (y) prior to, simultaneously with or immediately
after such consolidation, merger or sale, the stockholders of the Person who
constitutes, or would constitute, the "Principal Party" for purposes of Section
13(a) hereof shall have received a distribution of Rights previously owned by
such Person or any of its Affiliates and Associates; provided, however, this
Section 11(n) shall not affect the ability of any Subsidiary of the Company to
consolidate with, merge with or into, or sell or transfer assets or earning
power to, any other Subsidiary of the Company. The Company shall not consummate
any consolidation, merger, sale or transfer of assets or earning power unless
prior thereto the Company and such other Person shall have executed and
delivered to the Rights Agent a supplemental agreement evidencing compliance
with this Section 11(n). The provisions of this Section 11(n) shall similarly
apply to successive mergers, consolidations, sales or other transfers.
(o) The Company covenants and agrees that, after
the Distribution Date, it will not, except as permitted by Sections 23 or 26
hereof, take (or permit any Subsidiary to take) any action if at the time such
action is taken it is reasonably foreseeable that such action will diminish
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substantially or otherwise eliminate the benefits intended to be afforded by
the Rights.
SECTION 12. CERTIFICATE OF ADJUSTED PURCHASE PRICE OR NUMBER
OF SHARES. Whenever an adjustment is made as provided in Sections 11 and 13
hereof, the Company shall (a) promptly prepare a certificate setting forth such
adjustment and a brief statement of the facts accounting for such adjustment,
(b) promptly file with the Rights Agent, and with each transfer agent for the
Common Stock and each trustee under the Indenture, a copy of such certificate,
and (c) mail a brief summary thereof to each holder of a Rights Certificate
(or, if prior to the Distribution Date, to each holder of a certificate
representing shares of Common Stock) in accordance with Section 25 hereof. The
Rights Agent shall be fully protected in relying on any such certificate and on
any adjustment therein contained and shall not be deemed to have knowledge of
any such adjustment unless and until it shall have received such certificate.
SECTION 13. CONSOLIDATION, MERGER OR SALE OR TRANSFER OF
ASSETS OR EARNING POWER.
(a) In the event that, following the Stock
Acquisition Date, directly or indirectly, (x) the Company shall consolidate
with, or merge with and into, any other Person (other than a Subsidiary of the
Company in a transaction which complies with Section 11(o) hereof), and the
Company shall not be the continuing or surviving corporation of such
consolidation or merger, (y) any Person (other than a Subsidiary of the Company
in a transaction which complies with Section 11(o) hereof) shall consolidate
with, or merge with or into, the Company, and the Company shall be the
continuing or surviving corporation of such consolidation or merger and, in
connection with such consolidation or merger, all or part of the outstanding
shares of Common Stock shall be changed into or exchanged for stock or other
securities of any other Person or cash or any other property, or (z) the
Company shall sell, mortgage or otherwise transfer (or one or more of its
Subsidiaries shall sell, mortgage or otherwise transfer), in one transaction or
a series of related transactions, assets or earning power aggregating more than
50% of the assets or earning power of the Company and its Subsidiaries (taken
as a whole) to any Person or Persons (other than the Company or any Subsidiary
of the Company in one or more transactions each of which complies with Section
11(o) hereof) (any such event being called a "Section 13 Event"), then, and in
each such case, except as may be contemplated by Section 13(e) hereof, proper
provision shall be made so that: (i) each holder of a Right, except as
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provided in Section 7(e) hereof, shall thereafter have the right to receive,
upon the exercise thereof at the then current Purchase Price in accordance with
the terms of this Agreement, such number of validly authorized and issued,
fully paid, nonassessable and freely tradeable shares of Common Stock of the
Principal Party (as such term is hereinafter defined), not subject to any
liens, encumbrances, transfer restrictions, rights of call or first refusal or
other adverse claims, as shall be equal to the amount obtained by (1)
multiplying the then current Purchase Price by the number of one-fifths of a
share of Common Stock for which a Right is exercisable immediately prior to the
first occurrence of a Section 13 Event (or, if a Section 11(a)(ii) Event has
occurred prior to the first occurrence of a Section 13 Event, multiplying the
number of one-fifths of a share of Common Stock for which a Right was
exercisable immediately prior to the first occurrence of a Section 11(a)(ii)
Event by the Purchase Price in effect immediately prior to such first
occurrence), and dividing that product (which, following the first occurrence
of a Section 13 Event, shall be referred to as the "Purchase Price" for each
Right and for all purposes of this Agreement) by (2) 50% of the Current Market
Price per share of the Common Stock of such Principal Party on the date of
consummation of such Section 13 Event; (ii) such Principal Party shall
thereafter be liable for, and shall assume, by virtue of such Section 13 Event,
all the obligations and duties of the Company pursuant to this Agreement; (iii)
the term "Company" shall thereafter be deemed to refer to such Principal Party,
it being specifically intended that the provisions of Section 11 hereof shall
apply only to such Principal Party following the first occurrence of a Section
13 Event; (iv) such Principal Party shall take such steps (including, but not
limited to, the reservation of a sufficient number of shares of its Common
Stock) in connection with the consummation of any such transaction as may be
necessary to assure that the provisions hereof shall thereafter be applicable,
as nearly as reasonably may be, in relation to its shares of Common Stock
thereafter deliverable upon the exercise of the Rights; and (v) the provisions
of Section 11(a)(ii) hereof shall be of no effect following the first
occurrence of any Section 13 Event.
(b) "Principal Party" shall mean
(i) in the case of any transaction
described in clause (x) or (y) of the first sentence of Section 13(a),
(A) the Person that is the issuer of any securities into which shares
of Common Stock of the Company are converted in such merger or
consolidation, or, if there is more than one such issuer, the issuer
of
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Common Stock that has the largest aggregate Current Market Price, and
(B) if no securities are so issued, the Person that is the other party
to such merger or consolidation, or, if there is more than one such
Person, the Person the Common Stock of which has the highest aggregate
Current Market Price; and
(ii) in the case of any transaction
described in clause (z) of the first sentence of Section 13(a), the
Person that is the party receiving the greatest portion of the assets
or earning power transferred pursuant to such transaction or
transactions, or, if each Person that is a party to such transaction
or transactions receives the same portion of the assets or earning
power transferred pursuant to such transaction or transactions or if
the Person receiving the largest portion of the assets or earning
power cannot be determined, whichever Person the Common Stock of which
has the highest aggregate Current Market Price;
provided, however, that in any such case, (1) if the Common Stock of such
Person is not at such time and has not been continuously over the preceding
twelve (12) month period registered under Section 12 of the Exchange Act, or
such Person is not a corporation, and such Person is a direct or indirect
Subsidiary or Affiliate of another Person the Common Stock of which is and has
been so registered, "Principal Party" shall refer to such other Person; (2) in
case such Person is a Subsidiary, directly or indirectly, or Affiliate of more
than one Person, the Common Stocks of two or more of which are and have been so
registered, "Principal Party" shall refer to whichever of such Persons is the
issuer of the Common Stock having the greatest aggregate Current Market Price;
and (3) in case such Person is owned, directly or indirectly, by an entity
other than a corporation formed by two or more Persons that are not owned,
directly or indirectly, by the same Person, the rules set forth in (1) and (2)
above shall apply to each of the chains of ownership having an interest in such
entity as if such party were a "Subsidiary" of both or all of the participants
in such entity and the Principal Parties in each such chain shall bear the
obligations set forth in this Section 13 in the same ratio as their direct or
indirect interests in such Person bear to the total of such interests.
(c) The Company shall not consummate any such
consolidation, merger, sale or transfer unless the Principal Party shall have a
sufficient number of authorized shares of its Common Stock which have not been
issued or reserved for issuance to permit the exercise in full of the Rights in
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accordance with this Section 13, and unless prior thereto the Company and each
Principal Party and each other Person who may become a Principal Party as a
result of such consolidation, merger, sale or transfer shall have executed and
delivered to the Rights Agent a supplemental agreement providing for the terms
set forth in paragraphs (a) and (b) of this Section 13 and further providing
that, as soon as practicable after the date of any consolidation merger, sale
or transfer of assets mentioned in paragraph (a) of this Section 13, the
Principal Party at its own expense will:
(i) (A) prepare and file a registration
statement under the Act with respect to the Rights and the securities
purchasable upon exercise of the Rights on an appropriate form, and
will use its best efforts to cause such registration statement to (x)
become effective as soon as practicable after such filing, and (y)
remain effective (with a prospectus at all times meeting the
requirements of the Act) until the Expiration Date, and (B) use its
best efforts to qualify or register the Rights and the securities
purchasable upon exercise of the Rights under the "blue sky" laws of
such jurisdictions as may be necessary or appropriate; and
(ii) will deliver to holders of the
Rights historical financial statements for the Principal Party and
each of its Affiliates which comply in all respects with the
requirements for registration on Form 10 under the Exchange Act.
The provisions of this Section 13 shall similarly apply to successive mergers
or consolidations or sales or other transfers. In the event that a Section 13
Event shall occur at any time after the occurrence of a Section 11(a)(ii)
Event, the Rights which have not theretofore been exercised shall thereafter
become exercisable in the manner described in Section 13(a).
(d) In case the Principal Party which is to be a
party to a transaction referred to in this Section 13 has provision in any of
its authorized securities or in its Certificate of Incorporation or By-laws or
other instrument governing its corporate affairs, which provision would have
the effect of (i) causing such Principal Party to issue, in connection with, or
as a consequence of, the consummation of a transaction referred to in this
Section 13, shares of Common Stock of such Principal Party at less than the
then Current Market Price per share or securities exercisable for, or
convertible into, Common Stock of such Principal Party at less than such
Current Market Price (other than to holders of
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Rights pursuant to this Section 13), or (ii) providing for any special payment,
tax or similar provisions in connection with the issuance of the Common Stock
of such Principal Party pursuant to the provisions of Section 13; then, in such
event, the Company shall not consummate any such transaction unless prior
thereto the Company and such Principal Party shall have executed and delivered
to the Rights Agent a supplemental agreement providing that the provision in
question of such Principal Party shall have been cancelled, waived or amended,
or that the authorized securities shall be redeemed, so that the applicable
provision will have no effect in connection with, or as a consequence of, the
consummation of the proposed transaction.
(e) Notwithstanding anything in this Agreement to
the contrary, Section 13 shall not be applicable to a transaction described in
subparagraphs (x) and (y) of Section 13(a) if (i) such transaction is
consummated with a Person or Persons who acquired shares of Common Stock
pursuant to a cash tender offer for all outstanding shares of Common Stock
which complies with the provisions of Section 11(a)(ii)(B) hereof (or a wholly
owned Subsidiary of any such Person or Persons), (ii) the price per share of
Common Stock offered in such transaction is not less than the price per share
of Common Stock paid to all holders of shares of Common Stock whose shares were
purchased pursuant to such cash tender offer; and (iii) the form of
consideration being offered to the remaining holders of shares of Common Stock
pursuant to such transaction is the same as the form of consideration paid
pursuant to such cash tender offer. Upon consummation of any such transaction
contemplated the preceding sentence of this Section 13(e), all Rights hereunder
shall expire.
SECTION 14. FRACTIONAL RIGHTS, FRACTIONAL SHARES AND
FRACTIONAL NOTES.
(a) The Company shall not be required to issue
fractions of Rights or to distribute Rights Certificates which evidence
fractional Rights. In lieu of such fractional Rights, there shall be paid to
the registered holders of the Rights Certificates with regard to which such
fractional Rights would otherwise be issuable, an amount in cash equal to the
same fraction of the current market value of a whole Right. For purposes of
this Section 14(a), the current market value of a whole Right shall be the
closing price of the Rights for the Trading Day immediately prior to the date
on which such fractional Rights would have been otherwise issuable. The closing
price of the Rights for any day shall be the last sale price, regular way, or,
in case no such sale takes place on such day, the average of the closing
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bid and asked prices, regular way, in either case as reported in the principal
consolidated transaction reporting system with respect to securities listed or
admitted to trading on the New York Stock Exchange or, if the Rights are not
listed or admitted to trading on the New York Stock Exchange, as reported in
the principal consolidated transaction reporting system with respect to
securities listed on the principal national securities exchange on which the
Rights are listed or admitted to trading, or if the Rights are not listed or
admitted to trading on any national securities exchange, the last quoted price
or, if not so quoted, the average of the high bid and low asked prices in the
over-the-counter market, as reported by NASDAQ or such other system then in use
or, if on any such date the Rights are not quoted by any such organization, the
average of the closing bid and asked prices as furnished by a professional
market maker making a market in the Rights selected by the Board. If on any
such date no such market maker is making a market in the Rights, the fair value
of the Rights on such date as determined in good faith by the Board shall be
used and such determination shall be described in a statement filed with the
Rights Agent and the holders of the Rights and shall be binding on the Rights
Agent and the holders of the Rights.
(b) The Company shall not be required to issue
fractions of shares of Common Stock (or other securities) upon exercise of the
Rights or to distribute certificates which evidence fractional shares of Common
Stock (or other securities). In lieu of fractional shares of common Stock (or
other securities), the Company may pay to the registered holders of Rights
Certificates at the time such Rights are exercised as herein provided an amount
in cash equal to the same fraction of the current market value of a share of
Common Stock or such other securities. For purposes of this Section 14(b), the
current market value of one share of Common Stock or other securities shall be
the closing price per share of Common Stock or other securities (as determined
pursuant to Section 11(d) hereof) for the Trading Day immediately prior to the
date of such exercise.
(c) Notwithstanding anything to the contrary
contained herein, the Company shall not be required to issue Notes in
denominations other than $10 or integral multiple thereof and the Company may
pay cash in lieu of issuing Notes in denominations other than $10 or integral
multiples thereof in an amount equal the difference between the principal
amount of the Notes otherwise issuable and the integral multiple of $10 which
is nearest to, but not in excess of, such amount.
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(d) The holder of a Right by the acceptance of
the Right expressly waives his right to receive any fractional Rights or any
fractional shares or any fractional Notes upon the exercise of a Right.
SECTION 15. RIGHTS OF ACTION. All rights of action in respect
of this Agreement, other than rights of action expressly vested in the Rights
Agent pursuant to Section 18 hereof, are vested in the respective registered
holders of the Rights Certificates (and, prior to the Distribution Date, the
registered holders of the Common Stock); and any registered holder of any
Rights Certificate (or, prior to the Distribution Date, of the Common Stock),
without the consent of the Rights Agent or of the holder of any other Rights
Certificate (or, prior to the Distribution Date, of the Common Stock), may, in
his own behalf and for his own benefit, enforce, and may institute and maintain
any suit, action or proceeding against the Company or any other Person to
enforce, or otherwise act in respect of, his right to exercise the Rights
evidenced by such Rights Certificate in the manner provided in such Rights
Certificate and in this Agreement. Without limiting the foregoing or any
remedies available to the holders of Rights, it is specifically acknowledged
that the holders of Rights would not have an adequate remedy at law for any
breach of this Agreement and shall be entitled to specific performance of the
obligations hereunder and injunctive relief against actual or threatened
violations of the obligations hereunder of any Person subject to this
Agreement. Holders of Rights shall be entitled to receive the reasonable costs
and expenses, including attorneys' fees, incurred by them in any action to
enforce the provisions of this Agreement.
SECTION 16. AGREEMENT OF RIGHTS HOLDERS. Every holder of a
Right by accepting the same consents and agrees with the Company and the Rights
Agent and with every other holder of a Right that:
(a) prior to the Distribution Date, the Rights
will be transferable only in connection with the transfer of Common Stock;
(b) after the Distribution Date, the Rights
Certificates are transferable only on the registry books of the Rights Agent if
surrendered at the principal shareholder services office or offices of the
Rights Agent designated for such purposes, duly endorsed or accompanied by a
proper duly executed instrument of transfer and with the appropriate forms and
certificates fully executed (including signature guarantees);
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(c) subject to Sections 6(a) and 7(f) hereof, the
Company and the Rights Agent may deem and treat the Person in whose name a
Rights Certificate (or, prior to the Distribution Date, the associated Common
Stock certificate) is registered as the absolute owner thereof and of the
Rights evidenced thereby (notwithstanding any notations of ownership or writing
on the Rights Certificates or the associated Common Stock certificate made by
anyone other than the Company or the Rights Agent) for all purposes whatsoever,
and neither the Company nor the Rights Agent, subject to the last sentence of
Section 7(e) hereof, shall be required to be affected by any notice to the
contrary; and
(d) notwithstanding anything in this Agreement to
the contrary, neither the Company nor the Rights Agent shall have any liability
to any holder of a Right or other Person as a result of its inability to
perform any of its obligations under this Agreement by reason of any
preliminary or permanent injunction or other order, decree or ruling issued by
a court of competent jurisdiction or by a governmental, regulatory or
administrative agency or commission, or any statute, rule, regulation or
executive order promulgated or enacted by any governmental authority,
prohibiting or otherwise restraining performance of such obligation; provided,
however, the Company must use its best efforts to have any such order, decree
or ruling lifted or otherwise overturned as soon as possible.
SECTION 17. RIGHTS CERTIFICATE HOLDER NOT DEEMED A STOCKHOLDER
OR NOTEHOLDER. No holder, as such, of any Rights Certificate shall be entitled
to vote, receive dividends or payments of principal or interest or be deemed
for any purpose the holder of the number of shares of Common Stock or any Note
or any other securities of the Company which may at any time be issuable on the
exercise of the Rights represented thereby, nor shall anything contained herein
or in any Rights Certificate be construed to confer upon the holder of any
Rights Certificate, as such, any of the rights of a stockholder or a holder of
a Note of the Company or any right to vote for the election of directors or
upon any matter submitted to stockholders at any meeting thereof, or to give or
withhold consent to any corporate action, or to receive notice of meetings or
other actions affecting stockholders or holders of Notes (except as provided in
Section 24 hereof), or to receive dividends, subscription rights or payments of
principal or interest, or otherwise, until the Right or Rights evidenced by
such Rights Certificate shall have been exercised in accordance with the
provisions hereof.
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SECTION 18. CONCERNING THE RIGHTS AGENT.
(a) The Company agrees to pay to the Rights Agent
reasonable compensation for all services rendered by it hereunder and, from
time to time, on demand of the Rights Agent, its reasonable expenses and
counsel fees and disbursements and other disbursements incurred in the
administration and execution of this Agreement and the exercise and performance
of its duties hereunder. The Company also agrees to indemnify the Rights Agent
for, and to hold it harmless against, any loss, liability, or expense, incurred
without negligence, bad faith or willful misconduct on the part of the Rights
Agent, for anything done or omitted by the Rights Agent in connection with the
acceptance and administration of this Agreement, including the costs and
expenses of defending against any claim of liability arising therefrom,
directly or indirectly.
(b) The Rights Agent shall be protected and shall
incur no liability for or in respect of any action taken, suffered or omitted
by it in connection with its administration of this Agreement in reliance upon
any Rights Certificate or certificate for Common Stock or Note or for other
securities of the Company, instrument of assignment or transfer, power of
attorney, endorsement, affidavit, letter, notice, notice of adjustment,
instruction, direction, consent, certificate, statement, or other paper or
document believed by it to be genuine and to be signed, executed and, where
necessary, verified or acknowledged, by the proper Person or Persons.
SECTION 19. MERGER OR CONSOLIDATION OR CHANGE OF NAME OF
RIGHTS AGENT.
(a) Any corporation into which the Rights Agent
or any successor Rights Agent may be merged or with which it may be
consolidated, or any corporation resulting from any merger or consolidation to
which the Rights Agent or any successor Rights Agent shall be a party, or any
corporation succeeding to the corporate trust or stock transfer business of the
Rights Agent or any successor Rights Agent, shall be the successor to the
Rights Agent under this Agreement without the execution or filing of any paper
or document or any further act on the part of any of the parties hereto;
provided, however, that such corporation would be eligible for appointment as a
successor Rights Agent under the provisions of Section 21 hereof. In case at
the time such successor Rights Agent shall succeed to the agency created by
this Agreement, any of the Rights Certificates shall have been countersigned
but not delivered, any such
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successor Rights Agent may adopt the countersignature of a predecessor Rights
Agent and deliver such Rights Certificates so countersigned; and in case at
that time any of the Rights Certificates shall not have been countersigned, any
successor Rights Agent may countersign such Rights Certificates either in the
name of the predecessor or in the name of the successor Rights Agent; and in
all such cases such Rights Certificates shall have the full force provided in
the Rights Certificates and in this Agreement.
(b) In case at any time the name of the Rights
Agent shall be changed and at such time any of the Rights Certificates shall
have been countersigned but not delivered, the Rights Agent may adopt the
countersignature under its prior name and deliver Rights Certificates so
countersigned; and in case at that time any of the Rights Certificates shall
not have been countersigned, the Rights Agent may countersign such Rights
Certificates either in its prior name or in its changed name; and in all such
cases such Rights Certificates shall have the full force provided in the Rights
Certificates and in this Agreement.
SECTION 20. DUTIES OF RIGHTS AGENT. The Rights Agent
undertakes the duties and obligations imposed by this Agreement upon the
following terms and conditions, by all of which the Company and the holders of
Rights Certificates, by their acceptance thereof, shall be bound:
(a) The Rights Agent may consult with legal
counsel selected by it (who may be legal counsel for the Company), and the
opinion of such counsel shall be full and complete authorization and protection
to the Rights Agent as to any action taken or omitted by it in good faith and
in accordance with such opinion.
(b) Whenever in the performance of its duties
under this Agreement, the Rights Agent shall deem it necessary or desirable
that any fact or matter (including, without limitation, the identity of any
Acquiring Person or any Affiliate or Associate thereof and the determination of
Current Market Price) be proved or established by the Company prior to taking
or suffering any action hereunder, such fact or matter (unless other evidence
in respect thereof be herein specifically prescribed) may be deemed to be
conclusively proved and established by a certificate signed by the Chairman of
the Board, the President, any Executive Vice President, any Vice President, the
Treasurer, any Assistant Treasurer, the Secretary or any Assistant Secretary of
the Company and delivered to the Rights Agent; and such certificate shall be
full authorization to the Rights Agent
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for any action taken or suffered in good faith by it under the provisions of
this Agreement in reliance upon such certificate.
(c) The Rights Agent shall be liable hereunder
only for its own negligence, bad faith or willful misconduct.
(d) The Rights Agent shall not be liable for or
by reason of any of the statements of fact or recitals contained in this
Agreement or in the Rights Certificates or be required to verify the same
(except as to its countersignature on such Rights Certificates), but all such
statements and recitals are and shall be deemed to have been made by the
Company only.
(e) The Rights Agent shall not be under any
responsibility in respect of the validity of this Agreement or the execution
and delivery hereof (except the due execution hereof by the Rights Agent) or in
respect of the validity or execution of any Rights Certificate (except its
countersignature thereof); nor shall it be responsible for any breach by the
Company of any covenant or condition contained in this Agreement or in any
Rights Certificate; nor shall it be responsible for any adjustment required
under the provisions of Sections 11 or 13 hereof or responsible for the manner,
method or amount of any such adjustment or the ascertaining of the existence of
facts that would require any such adjustment (except with respect to the
exercise of Rights evidenced by Rights Certificates after actual notice of any
such adjustment); nor shall it by any act hereunder be deemed to make any
representation or warranty as to the authorization or reservation of any shares
of Common Stock or other securities or the authorization of any Notes, to be
issued pursuant to this Agreement or any Rights Certificate or as to whether
any shares of Common Stock or other securities will, when so issued, be validly
authorized and issued, fully paid and nonassessable or any Notes will, when so
issued, be validly authorized and issued, binding and enforceable.
(f) The Company agrees that it will perform,
execute, acknowledge and deliver or cause to be performed, executed,
acknowledged and delivered all such further and other acts, instruments and
assurances as may reasonably be required by the Rights Agent for the carrying
out or performing by the Rights Agent of the provisions of this Agreement.
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(g) The Rights Agent is hereby authorized and
directed to accept instructions with respect to the performance of its duties
hereunder and certificates delivered pursuant to any provision hereof from the
Chairman of the Board, the President, any Executive Vice President, any Vice
President, the Secretary, any Assistant Secretary, the Treasurer or any
Assistant Treasurer of the Company, and is authorized to apply to such officers
for advice or instructions in connection with its duties, and it shall not be
liable for any action taken or suffered to be taken by it in good faith in
accordance with instructions of any such officer; provided, however, that so
long as any Person is an Acquiring Person hereunder, the Rights Agent shall
accept such instructions and advice only from a majority of the Continuing
Directors and shall not be liable for any action taken or suffered to be taken
by it in good faith in accordance with such instructions of a majority of the
Continuing Directors. Any application by the Rights Agent for written
instructions from the Company may, at the Rights Agent's option, set forth in
writing any action proposed to be taken or omitted by the Rights Agent with
respect to its duties and obligations under this Agreement and the date on
and/or after which such action shall be taken or such omission shall be
effective. The Rights Agent shall not be liable for any action taken or omitted
by the Rights Agent in accordance with a proposal included in any such
application on or after the date specified in such application (which date
shall not be less than five Business Days after the date any officer of the
Company actually receives such application, unless the Company shall have
consented in writing to an earlier date) without the Company's consent unless,
prior to taking any such action (or the effective date in the case of an
omission), the Rights Agent shall have received written instructions in
response to such application specifying the action to be taken or omitted.
(h) The Rights Agent and any stockholder,
director, officer or employee of the Rights Agent may buy, sell or deal in any
of the Rights or other securities of the Company or become pecuniarily
interested in any transaction in which the Company may be interested, or
contract with or lend money to the Company or otherwise act as fully and freely
as though it were not Rights Agent under this Agreement. Nothing herein shall
preclude the Rights Agent from acting in any other capacity for the Company or
for any other legal entity.
(i) The Rights Agent may execute and exercise any
of the rights or powers hereby vested in it or perform any duty hereunder
either itself or by or through its
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attorneys or agents, and the Rights Agent shall not be answerable or
accountable for any act, omission, default, neglect or misconduct of any such
attorneys or agents or for any loss to the Company resulting from any such act,
omission, default, neglect or misconduct; provided, however, that reasonable
care was exercised in the selection and continued employment thereof.
(j) No provision of this Agreement shall require
the Rights Agent to expend or risk its own funds or otherwise incur any
financial liability in the performance of any of its duties hereunder or in the
exercise of its rights if there shall be reasonable grounds for believing that
repayment of such funds or adequate indemnification against such risk or
liability is not reasonably assured to it.
(k) If, with respect to any Rights Certificate
surrendered to the Rights Agent for exercise or transfer, the certificate
attached to the form of assignment or form of election to purchase, as the case
may be, has either not been completed or indicates an affirmative response to
clause 1 and/or 2 thereof, the Rights Agent shall not take any further action
with respect to such requested exercise or transfer without first consulting
with the Company.
SECTION 21. CHANGE OF RIGHTS AGENT. The Rights Agent or any
successor Rights Agent may resign and be discharged from its duties under this
Agreement upon thirty (30) days' notice in writing mailed to the Company and to
each transfer agent of the Common Stock, by registered or certified mail, and
to the holders of the Rights Certificates by first-class mail. The Company may
remove the Rights Agent or any successor Rights Agent upon thirty (30) days'
notice in writing mailed to the Rights Agent or successor Rights Agent, as the
case may be, and to each transfer agent of the Common Stock, by registered or
certified mail, and to the holders of the Rights Certificates by first-class
mail. If the Rights Agent shall resign or be removed or shall otherwise become
incapable of acting, the Company shall appoint a successor to the Rights Agent.
If the Company shall fail to make such appointment within a period of thirty
(30) days after giving notice of such removal or after it has been notified in
writing of such resignation or incapacity by the resigning or incapacitated
Rights Agent or by the holder of a Rights Certificate (who shall, with such
notice, submit his Rights Certificate for inspection by the Company), then the
Company shall become the temporary Rights Agent and any registered holder of
any Rights Certificate may apply to any court of competent jurisdiction for the
appointment of a new
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Rights Agent. Any successor Rights Agent, whether appointed by the Company or
by such a court, shall be (a) a corporation organized and doing business under
the laws of the United States or of the States of Texas or New York (or of any
other state of the United States so long as such corporation is authorized to
do business as a banking institution in the States of Texas or New York), in
good standing, having a principal office in the States of Texas or New York,
which is authorized under such laws to exercise corporate trust or stock
transfer powers and is subject to supervision or examination by federal or
state authority and which has at the time of its appointment as Rights Agent a
combined capital and surplus of at least $50,000,000, or (b) an Affiliate of a
corporation described in clause (a) of this sentence. After appointment, the
successor Rights Agent shall be vested with the same powers, rights, duties and
responsibilities as if it had been originally named as Rights Agent without
further act or deed; but the predecessor Rights Agent shall deliver and
transfer to the successor Rights Agent any property at the time held by it
hereunder, and execute and deliver any further assurance, conveyance, act or
deed necessary for the purpose. Not later than the effective date of any such
appointment, the Company shall file notice thereof in writing with the
predecessor Rights Agent and each transfer agent of the Common Stock, and mail
a notice thereof in writing to the registered holders of the Rights
Certificates. Failure to give any notice provided for in this Section 21,
however, or any defect therein, shall not affect the legality or validity of
the resignation or removal of the Rights Agent or the appointment of the
successor Rights Agent, as the case may be.
SECTION 22. ISSUANCE OF NEW RIGHTS CERTIFICATES.
Notwithstanding any of the provisions of this Agreement or of the Rights to the
contrary, the Company may, at its option, issue new Rights Certificates
evidencing Rights in such form as may be approved by a majority of the
Continuing Directors to reflect any adjustment or change in the Purchase Price
and the number or kind or class of shares or other securities or property
purchasable under the Rights Certificates made in accordance with the
provisions of this Agreement. In addition, in connection with the issuance or
sale of shares of Common Stock following the Distribution Date and prior to the
Expiration Date, the Company (a) shall, with respect to shares of Common Stock
so issued or sold pursuant to the exercise of stock options or under any
employee plan or arrangement, or upon the exercise, conversion or exchange of
securities hereinafter issued by the Company, and (b) may, in any other case,
if deemed necessary or appropriate by a majority of the Continuing Directors,
issue Rights
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Certificates representing the appropriate number of Rights in connection with
such issuance or sale; provided, however, that (i) no such Rights Certificate
shall be issued if, and to the extent that, the Company shall be advised by
counsel that such issuance would create a significant risk of material adverse
tax consequences to the Company or the Person to whom such Rights Certificate
would be issued, and (ii) no such Rights Certificate shall be issued if, and to
the extent that, appropriate adjustment shall otherwise have been made in lieu
of the issuance thereof.
SECTION 23. REDEMPTION AND TERMINATION.
(a) The Board may, at its option, at any time
prior to the earlier of (i) the Close of Business on the tenth day following
the Stock Acquisition Date (or, if the Stock Acquisition Date shall have
occurred prior to the Record Date, the Close of Business on the tenth day
following the Record Date), or (ii) the Final Expiration Date, redeem all but
not less than all of the then outstanding Rights at a redemption price of $.01
per Right, as such amount may be appropriately adjusted to reflect any stock
split, stock dividend or similar transaction occurring after the date hereof
(such redemption price being hereinafter referred to as the "Redemption
Price"); provided, however, if the Board authorizes redemption of the Rights in
either of the circumstances set forth in clauses (i) and (ii) below, then there
must be Continuing Directors then in office and such authorization shall
require the concurrence of a majority of the Continuing Directors: (i) such
authorization occurs on or after the time a Person becomes an Acquiring Person,
or (ii) such authorization occurs on or after the date of a change (resulting
from a proxy or consent solicitation) in a majority of the directors in office
at the commencement of such solicitation if any Person who is a participant in
such solicitation has stated (or, if upon the commencement of such
solicitation, a majority of the Continuing Directors has determined in good
faith) that such Person (or any of its Affiliates or Associates) intends to
take, or may consider taking, any action which would result in such Person
becoming an Acquiring Person or which would cause the occurrence of a
Triggering Event. If, following the occurrence of a Stock Acquisition Date and
following the expiration of the right of redemption hereunder but prior to any
Triggering Event, (A) (i) a Person who is an Acquiring Person shall have
transferred or otherwise disposed of a number of shares of Common Stock in one
transaction or series of transactions, not directly or indirectly involving the
Company or any of its Subsidiaries, which did not result in the occurrence of a
Triggering Event, such that such Person is thereafter a
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Beneficial owner of 5% of the outstanding shares of Common Stock, (ii) there
are no other Persons, immediately following the occurrence of the event
described in clause (i), who are Acquiring Persons, and (iii) the Board (with
the concurrence of a majority of the Continuing Directors) shall so approve, or
(B) (i) in connection with any event specified in Sections 11(a)(ii)(A)(1)or
13(a) in which all holders of Common Stock are treated alike and not involving
an Acquiring Person or an Affiliate or Associate of an Acquiring Person or any
other Person in which such Acquiring Person, Affiliate or Associate is the
beneficial owner of securities representing more than 5% of the voting power,
or representing more than 5% of any other equity interest having power to
control or direct the management of, such other Person, or any other Person
acting directly or indirectly on behalf of or in association with any such
Acquiring Person, Affiliate or Associate, and (ii) the Board (with the
concurrence of a majority of the Continuing Directors), as part of the approval
of an event described in the preceding clause (B)(i) approves the reinstatement
of the right of redemption, then in either case the right of redemption shall
be reinstated and thereafter be subject to the provisions of this Section 23.
Notwithstanding anything contained in this Agreement to the contrary, the
Rights shall not be exercisable after the first occurrence of a Section
11(a)(ii) Event until such time as the Company's right of redemption hereunder
has expired. The Company may, at its option, pay the Redemption Price in cash,
shares of Common Stock (based on the Current Market Price of the Common Stock
at the time of redemption) or any other form of consideration deemed
appropriate by the Board.
(b) Immediately upon the action of the Board
ordering the redemption of the Rights under the provisions of Section 23(a)
hereof, evidence of which shall have been filed with the Rights Agent, and
without any further action and without any notice, the right to exercise the
Rights will terminate and the only right thereafter of the holders of Rights
shall be to receive the Redemption Price for each Right so held. Promptly after
the action of the Board ordering the redemption of the Rights under the
provisions of Section 23(a) hereof, the Company shall give notice of such
redemption to the Rights Agent and the holders of the then outstanding Rights
by mailing such notice to all such holders at each holder's last address as it
appears upon the registry books of the Rights Agent or, prior to the
Distribution Date, on the registry books of the Transfer Agent for the Common
Stock. Any notice which is mailed in the manner herein provided shall be deemed
given, whether or not the holder receives the notice. Each such notice of
redemption will state the method by which the payment of the Redemption Price
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will be made. The Company may, at its option, discharge all of its obligations
with respect to the Rights by (i) issuing a press release announcing the manner
of redemption of the Rights, (ii) depositing with a bank or trust company in
the Borough of Manhattan, City of New York, State of New York, having a capital
and surplus of at least $25,000,000, funds necessary for such redemption, in
trust, to be applied to the redemption of the Rights so called for redemption,
and (iii) arranging for the mailing of the Redemption Price to the registered
holders of the Rights; then, and upon such action, all outstanding Rights
Certificates shall be null and void without any further action by the Company.
SECTION 24. NOTICE OF CERTAIN EVENTS.
(a) In case the Company shall propose, at any
time after the Distribution Date, (i) to pay any dividend payable in stock of
any class to the holders of Common Stock or to make any other distribution to
the holders of Common Stock (other than a regular quarterly cash dividend out
of earnings or retained earnings of the Company), or (ii) to offer to the
holders of Common Stock rights or warrants to subscribe for or to purchase any
additional shares of Common Stock or shares of stock of any class or any other
securities, rights or options, or (iii) to effect any reclassification of its
Common Stock (other than a reclassification involving only the subdivision of
outstanding shares of Common Stock), or (iv) to effect any consolidation or
merger into or with any other Person (other than a Subsidiary of the Company in
a transaction which complies with Section 11(o) hereof), or to effect any sale
or other transfer (or to permit one or more of its Subsidiaries to effect any
sale or other transfer), in one transaction or a series of related
transactions, of more than 50% of the assets or earning power of the Company
and its Subsidiaries (taken as a whole) to any other Person or Persons (other
than the Company and/or any of its Subsidiaries in one or more transactions
each of which complies with Section 11(o) hereof), or (v) to effect the
liquidation, dissolution or winding up of the Company, then, in each such case,
the Company shall give to each holder of a Rights Certificate, to the extent
feasible and in accordance with Section 25 hereof, and to the Rights Agent, a
notice of such proposed action, which shall specify the record date for the
purposes of such stock dividend, distribution of rights or warrants, or the
date on which such reclassification, consolidation, merger, sale, transfer,
liquidation, dissolution, or winding up is to take place and the date of
participation therein by the holders of the shares of Common Stock, if any such
date is to be fixed, and such notice shall be so given in the case of any
action covered by clause (i)
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or (ii) above at least twenty (20) days prior to the record date for
determining holders of the shares of Common Stock for purposes of such action,
and in the case of any such other action, at least twenty (20) days prior to
the date of the taking of such proposed action or the date of participation
therein by the holders of the shares of Common Stock, whichever shall be the
earlier; provided, however, that no such notice shall be required pursuant to
this Section 24 if any Subsidiary of the Company effects a consolidation or
merger with or into, or effects a sale or other transfer of assets or earnings
power to, any other Subsidiary of the Company.
(b) In case any Section 11(a)(ii) Event shall
occur, then, in any such case, (i) the Company shall as soon as practicable
thereafter give to each holder of a Rights Certificate, to the extent feasible
and in accordance with Section 25 hereof, and to the Rights Agent, a notice of
the occurrence of such event, which shall specify the event and the
consequences of the event to holders of Rights under Section 11(a)(ii) hereof,
and (ii) all references in the preceding paragraph to Common Stock shall, to
the extent appropriate, also be deemed thereafter to refer to other securities.
SECTION 25. NOTICES. Notices or demands authorized by this
Agreement to be given or made by the Rights Agent or by the holder of any
Rights Certificate to or on the Company shall be in writing and shall be
sufficiently given or made if sent by first-class mail, postage prepaid,
addressed (until another address is filed in writing with the Rights Agent) as
follows:
CRS Sirrine, Inc.
1177 West Loop South
P.O. Box 22427
Houston, Texas 77227
Attention: Secretary
Subject to the provisions of Section 21, any notice or demand authorized by
this Agreement to be given or made by the Company or by the holder of any
Rights Certificate to or on the Rights Agent shall be sufficiently given or
made if sent by first-class mail, postage prepaid, addressed (until another
address is filed in writing with the Company) as follows:
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Morgan Shareholder Services Trust
Company
30 West Broadway
New York, New York 10007
Attention: Tenders and Exchanges
Administration
Notices or demands authorized by this Agreement to be given or made by the
Company or the Rights Agent to the holder of any Rights Certificate (or, if
prior to the Distribution Date, to the holder of certificates representing
shares of Common Stock) shall be sufficiently given or made if sent by
first-class mail, postage prepaid, addressed to such holder at the address of
such holder as shown on the registry books of the Company.
SECTION 26. SUPPLEMENTS AND AMENDMENTS. Prior to the
Distribution Date and subject to the penultimate sentence of this Section 26,
the Company and the Rights Agent shall, if the Company so directs, supplement
or amend any provision of this Agreement without the approval of any holders of
certificates representing shares of Common Stock. From and after the
Distribution Date and subject to the penultimate sentence of this Section 26,
the Company and the Rights Agent shall, if the Company so directs, supplement
or amend this Agreement without the, approval of any holders of Rights
Certificates in order (i) to cure any ambiguity, (ii) to correct or supplement
any provision contained herein which may be defective or inconsistent with any
other provisions herein, (iii) to shorten or lengthen any time period hereunder
(which lengthening or shortening, following the first occurrence of an event
set forth in clauses (i) and (ii) of the first proviso to Section 23(a) hereof,
shall be effective only if there are Continuing Directors and shall require the
concurrence of a majority of the Continuing Directors), or (iv) to change or
supplement the provisions hereunder in any manner which the Company may deem
necessary or desirable and which shall not adversely affect the interests of
the holders of Rights Certificates (other than an Acquiring Person or an
Affiliate or Associate of any such Person); provided, however, this Agreement
may not be supplemented or amended to lengthen, pursuant to clause (iii) of
this sentence, (A) subject to Section 30 hereof, a time period relating to when
the Rights may be redeemed at such time as the Rights are not then redeemable,
or (B) any other time period unless such lengthening is for the purpose of
protecting, enhancing or clarifying the rights of, and/or the benefits to, the
holders of Rights. Upon the delivery of a certificate from an appropriate
officer of the Company or, so long as any Person is an Acquiring Person
hereunder, from a
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majority of the Continuing Directors, which states that the proposed supplement
or amendment is in compliance with the terms of this Section 26, the Rights
Agent shall execute such supplement or amendment. Notwithstanding anything
contained in this Agreement to the contrary, no supplement or amendment shall
be made which changes the Redemption Price, the Final Expiration Date, the
Purchase Price or the number of Units, or the number of shares of Common Stock
or the calculation of the principal amount or interest rate of the Notes
constituting such Units, for which a Right is exercisable, without the approval
of a majority of the Continuing Directors. Prior to the Distribution Date, the
interests of the holders of Rights shall be deemed coincident with the
interests of the holders of Common Stock.
SECTION 27. SUCCESSORS. All the covenants and provisions of
this Agreement by or for the benefit of the Company or the Rights Agent shall
bind and inure to the benefit of their respective successors and assigns
hereunder.
SECTION 28. DETERMINATIONS AND ACTIONS BY THE BOARD OF
DIRECTORS, ETC. For all purposes of this Agreement, any calculation of the
number of shares of Common Stock outstanding at any particular time, including
for purposes of determining the particular percentage of such outstanding
shares of Common Stock or any other securities of which any Person is the
Beneficial Owner, shall be made in accordance with the last sentence of Rule
13d-3(d)(1)(i) of the General Rules and Regulations under the Exchange Act as
in effect on the date of this Agreement. The Board (with, where specifically
provided for herein, the concurrence of the Continuing Directors) shall have
the exclusive power and authority to administer this Agreement and to exercise
all rights and powers specifically granted to the Board (with, where
specifically provided for herein, the concurrence of the Continuing Directors)
or to the Company, or as may be necessary or advisable in the administration of
this Agreement, including, without limitation, the right and power to (i)
interpret the provisions of this Agreement, and (ii) make all determinations
deemed necessary or advisable for the administration of this Agreement
(including a determination to redeem or not redeem the Rights, to amend this
Agreement or to limit the Substitute Consideration or Spread payable). All such
actions, calculations, interpretations and determinations (including, for
purposes of clause (y) below, all omissions with respect to the foregoing)
which are done or made by the Board (with, where specifically provided for
herein, the concurrence of the Continuing Directors) in good faith, shall (x)
be final, conclusive and binding on the Company, the Rights Agent, the holders
of the Rights and all
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other parties, and (y) not subject the Board or the Continuing Directors to any
liability to the holders of the Rights.
SECTION 29. BENEFITS OF THIS AGREEMENT. Nothing in this
Agreement shall be construed to give to any Person other than the Company, the
Rights Agent and the registered holders of the Rights Certificates (and, prior
to the Distribution Date, the registered holders of the Common Stock) any legal
or equitable right, remedy or claim under this Agreement; but this Agreement
shall be for the sole and exclusive benefit of the Company, the Rights Agent
and the registered holders of the Rights Certificates (and, prior to the
Distribution Date, the registered holders of the Common Stock).
SECTION 30. SEVERABILITY. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction or
other authority to be invalid, void or unenforceable, the remainder of the
terms, provisions, covenants and restrictions of this Agreement shall remain in
full force and effect and shall in no way be affected, impaired or invalidated;
provided, however, that notwithstanding anything in this Agreement to the
contrary, if any such term, provision, covenant or restriction is held by such
court or authority to be invalid, void or unenforceable and a majority of the
Continuing Directors, in their good faith judgment, determine that severing the
invalid language from this Agreement would adversely affect the purpose or
effect of this Agreement, the right of redemption set forth in Section 23
hereof shall be reinstated and shall not expire until the Close of Business on
the tenth day following the date of such determination by the Continuing
Directors.
SECTION 31. GOVERNING LAW. This Agreement, each Right and each
Rights Certificate issued hereunder shall be deemed to be a contract made under
the laws of the State of Delaware and for all purposes shall be governed by and
construed in accordance with the laws of such State applicable to contracts
made and to be performed entirely within such State.
SECTION 32. COUNTERPARTS. This Agreement may be executed in
any number of counterparts and each of such counterparts shall for all purposes
be deemed to be an original, and all such counterparts shall together
constitute but one and the same instrument.
-53-
<PAGE> 57
SECTION 33. DESCRIPTIVE HEADINGS. Descriptive headings of the
several Sections of this Agreement are inserted for convenience only and shall
not control or affect the meaning or construction of any of the provisions
hereof.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed, all as of the day and year first above written.
Attest: CRS SIRRINE, INC.
[SEAL]
/s/ FRANK PERRONE By: /s/ BRUCE W. WILKINSON
- - -------------------------------- --------------------------
Name: Frank Perrone Name: Bruce W. Wilkinson
Title: Secretary Title: President/CEO
Attest: MORGAN SHAREHOLDER SERVICES
TRUST COMPANY
[SEAL]
/s/ By: /s/
- - -------------------------------- --------------------------
Name: Name:
Title: Secretary Title: Vice President
-54-
<PAGE> 58
EXHIBIT A
(Form of Rights Certificate]
Certificate No. R- _________________Rights
NOT EXERCISABLE AFTER DECEMBER 11, 1998 OR EARLIER IF REDEEMED
BY THE COMPANY. THE RIGHTS ARE SUBJECT TO REDEMPTION, AT THE
OPTION OF THE COMPANY, AT $.01 PER RIGHT ON THE TERMS SET
FORTH IN THE RIGHTS AGREEMENT. UNDER CERTAIN CIRCUMSTANCES
(SPECIFIED IN THE RIGHTS AGREEMENT), RIGHTS BENEFICIALLY OWNED
BY AN ACQUIRING PERSON (AS SUCH TERM IS DEFINED IN THE RIGHTS
AGREEMENT) OR ANY SUBSEQUENT HOLDER OF SUCH RIGHTS MAY BECOME
NULL AND VOID. [THE RIGHTS REPRESENTED BY THIS RIGHTS
CERTIFICATE ARE OR WERE BENEFICIALLY OWNED BY A PERSON WHO WAS
OR BECAME AN ACQUIRING PERSON OR AN AFFILIATE OR ASSOCIATE OF
AN ACQUIRING PERSON (AS SUCH TERMS ARE DEFINED IN THE RIGHTS
AGREEMENT). ACCORDINGLY, THIS RIGHTS CERTIFICATE AND THE
RIGHTS REPRESENTED HEREBY MAY BECOME NULL AND VOID IN THE
CIRCUMSTANCES SPECIFIED IN SECTION 7(e) OF SUCH AGREEMENT.]*
RIGHTS CERTIFICATE
CRS SIRRINE, INC.
This certifies that ,
or registered assigns, is the registered owner of the number of Rights set
forth above, each of which entitles the owner thereof, subject to the terms,
provisions and conditions of the Rights Agreement, dated as of November 29,
1988 (the "Rights Agreement"), between CRS Sirrine, Inc., a Delaware
__________________________________
* The portion of the legend in brackets shall be inserted only
if applicable and shall replace the preceding sentence.
<PAGE> 59
corporation (the "Company"), and Morgan Shareholder Services Trust Company, a
New York corporation (the "Rights Agent"), to purchase from the Company at any
time after the Distribution Date (as defined in the Rights Agreement) and prior
to the Expiration Date (as defined in the Rights Agreement) at the office or
offices of the Rights Agent designated for such purpose, or its successors as
Rights Agent, one Unit, consisting initially of one-fifth of a fully paid and
nonassessable share of common stock, par value $1.00 per share (the "Common
Stock"), of the Company and one Note (as defined in the Rights Agreement) in
the principal amount equal to four-fifths of the Current Market Price (as
defined in the Rights Agreement) of a share of Common Stock calculated on the
date of exercise of the Right with respect to which such Note is being issued,
at a purchase price of $72.00 per Unit (the "Purchase Price"), upon
presentation and surrender of this Rights Certificate with the Form of Election
to Purchase and related Certificate duly executed. The Notes forming part of
the Units are issuable under, and subject to the terms and conditions of, an
Indenture, dated as of November 29, 1988 (the "Indenture") between the Company
and Morgan Guaranty Trust Company of New York, as Trustee. The number of Rights
evidenced by this Rights Certificate (and the amount of securities constituting
a Unit which may be purchased upon exercise thereof) set forth above, and the
Purchase Price set forth above, are the amount of securities constituting a
Unit and the Purchase Price as of December 12, 1988, based on the Common Stock
as constituted as such date.
Upon the occurrence of a Section 11(a)(ii) Event (as defined
in the Rights Agreement), if the Rights evidenced by this Rights Certificate
are beneficially owned by (i) an Acquiring Person or an Associate or Affiliate
of any such Person (as such terms are defined in the Rights Agreement), which
the Company's Continuing Directors (as defined in the Rights Agreement), in
their sole discretion, determine is or was involved in or caused or
facilitated, directly or indirectly (including through any change in the Board
of Directors of the Company), such Section 11(a)(ii) Event, (ii) a transferee
of any such Acquiring Person, Associate or Affiliate who becomes a transferee
after such Acquiring Person, Associate or Affiliate becomes such, or (iii)
under certain circumstances specified in the Rights Agreement, a transferee of
any such Acquiring Person, Associate or Affiliate who becomes a transferee
prior to or concurrently with such Acquiring Person becoming such, such Rights
shall become null and void and no holder hereof shall have any right with
respect to such Rights from and after the occurrence of such Section 11(a)(ii)
Event.
A-2
<PAGE> 60
As provided in the Rights Agreement, the Purchase Price and
the number and kind of shares of Common Stock, Notes or other securities which
may be purchased upon the exercise of the Rights evidenced by this Rights
Certificate are subject to modification and adjustment upon the happening of
certain events, including Triggering Events (as defined in the Rights
Agreement).
This Rights Certificate is subject to all the terms,
provisions and conditions of the Rights Agreement, which terms, provisions and
conditions are hereby incorporated herein by reference and made a part hereof
and to which Rights Agreement reference is hereby made for a full description
of the rights, limitations of rights, obligations, duties and immunities
hereunder of the Rights Agent, the Company and the holders of the Rights
Certificates, which limitations of rights include the temporary suspension of
the exercisability of such Rights under the specific circumstances set forth in
the Rights Agreement. Copies of the Rights Agreement and the Indenture are on
file at the principal office of the Company and are also available upon written
request to the Rights Agent or the Company.
This Rights Certificate, with or without other Rights
Certificates, upon surrender at the principal office or offices of the Rights
Agent designated for such purpose, may be exchanged for another Rights
Certificate or Rights Certificates of like tenor and date evidencing Rights
entitling the holder to purchase a like aggregate number of Units as the Rights
evidenced by the Rights Certificate or Rights Certificates surrendered shall
have entitled such holder to purchase. If this Rights Certificate shall be
exercised in part, the holder shall be entitled to receive upon surrender
hereof another Rights Certificate or Rights Certificates for the number of
whole Rights not exercised.
Subject to the provisions of the Rights Agreement, the Rights
evidenced by this Certificate may be redeemed by the Company at its option at a
redemption price of $.01 per Right at any time prior to the earlier of the
close of business on (i) the tenth day following the Stock Acquisition Date
(as defined in the Rights Agreement and as such time period may be extended
pursuant to the Rights Agreement), and (ii) the Final Expiration Date (as
defined in the Rights Agreement). Under certain circumstances set forth in the
Rights Agreement, the decision to redeem shall require the concurrence of a
majority of the Continuing Directors. After the expiration of the redemption
period, the Company's right of redemption may be reinstated under the
circumstances described in the Rights Agreement.
A-3
<PAGE> 61
The Company is not required to issue fractional shares of
Common Stock or Notes in denominations other than $10 or integral multiples
thereof upon the exercise of any Right or Rights evidenced hereby, but in lieu
thereof a cash payment will be made, as provided in the Rights Agreement.
No holder of this Rights Certificate, as such, shall be
entitled to vote or receive dividends or payments of principal or interest or
be deemed for any purpose the holder of shares of Common Stock or Notes or any
other securities of the Company which may at any time be issuable on the
exercise hereof, nor shall anything contained in the Rights Agreement or herein
be construed to confer upon the holder hereof, as such, any of the rights of a
stockholder or Noteholder of the Company or any right to vote for the election
of directors or upon any matter submitted to stockholders at any meeting
thereof, or to give or withhold consent to any corporate action, or to receive
notice of meetings or other actions affecting stockholders or Noteholders
(except as provided in the Rights Agreement), or to receive dividends,
subscription rights, or payments of principal or interest or otherwise, until
the Right or Rights evidenced by this Rights Certificate shall have been
exercised as provided in the Rights Agreement.
This Rights Certificate shall not be valid or obligatory for
any purpose until it shall have been countersigned by the Rights Agent.
WITNESS the facsimile signature of the proper officers of the
Company and its corporate seal. Dated as of ____________, 19___.
ATTEST: CRS SIRRINE, INC.
By
- - -------------------------------- -----------------------------
Name: Name:
Title: Title:
Countersigned:
MORGAN SHAREHOLDER SERVICES
TRUST COMPANY
By
-----------------------
Authorized Signature
Date:
-----------------
A-4
<PAGE> 62
[Form of Reverse Side of Rights Certificate]
FORM OF ASSIGNMENT
(To be executed by the registered holder if such
holder desires to transfer the Rights Certificate.)
FOR VALUE RECEIVED
--------------------------------------------------------------
hereby sells, assigns and transfers unto
---------------------------------------
- - --------------------------------------------------------------------------------
(Please print name and address of transferee)
- - --------------------------------------------------------------------------------
this Rights Certificate, together with all right, title and interest therein,
and does hereby irrevocably constitute and appoint _____________ Attorney, to
transfer the within Rights Certificate on the books of the within-named Company,
with full power of substitution.
Dated: , 19
---------------- ---
-----------------------------------
Signature
Signature Guaranteed:
(Signatures must be guaranteed
by a commercial bank or trust
company or a member firm of the
New York Stock Exchange.)
<PAGE> 63
Certificate
The undersigned hereby certifies by checking the appropriate
boxes that:
(1) this Rights Certificate [ ] is [ ] not being sold,
assigned and transferred by or on behalf of a Person who is or was an
Acquiring Person or an Affiliate or Associate of any such Person (as such
terms are defined in the Rights Agreement); and
(2) after due inquiry and to the best knowledge of the
undersigned, it [ ] did [ ] did not acquire the Rights evidenced by this Rights
Certificate from any Person who is, was or subsequently became an Acquiring
Person or an Affiliate or Associate of any such Person.
Dated: , 19
----------------- ---- ------------------------------------
Signature
Signature Guaranteed:
(Signatures must be guaranteed by a
commercial bank or trust company or a
member firm of the New York Stock Exchange.)
NOTICE
The signature to the foregoing Assignment and Certificate must
correspond to the name as written upon the face of this Rights Certificate in
every particular, without alteration or enlargement or any change whatsoever.
In the event the certification set forth above is not
completed, the Company will deem the beneficial owner of the Rights evidenced
by this Rights Certificate to be an Acquiring Person or an Affiliate or
Associate thereof (as defined in the Rights Agreement) and, in the case of an
Assignment, will affix a legend to that effect on any Rights Certificates
issued in exchange for this Rights Certificate.
<PAGE> 64
FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to exercise
Rights represented by the Rights Certificate.)
To: CRS SIRRINE, INC.
The undersigned hereby irrevocably elects to exercise ________
Rights represented by this Rights Certificate to purchase the Units issuable
upon the exercise of the Rights (or such other securities of the Company or of
any other person which may be issuable upon the exercise of the Rights) and
requests that the certificates for shares of Common Stock and the notes (or
other securities) constituting such Units be issued in the name of and
delivered to:
Please insert social security or other
taxpayer identification number:
------------------------------------------------
- - --------------------------------------------------------------------------------
(Please print name and address)
- - --------------------------------------------------------------------------------
- - --------------------------------------------------------------------------------
If such number of Rights shall not be all the Rights evidenced
by this Rights Certificate, a new Rights Certificate for the balance of such
Rights shall be registered in the name of and delivered to:
Please insert social security or other
taxpayer identification number:
-----------------------------------------------
- - --------------------------------------------------------------------------------
(Please print name and address)
- - --------------------------------------------------------------------------------
Dated: , 19
----------------- -----
----------------------------------------
Signature
Signature Guaranteed:
(Signatures must be guaranteed by a
commercial bank or trust company or a
member firm of the New York Stock Exchange.)
<PAGE> 65
Certificate
The undersigned hereby certifies by checking the appropriate
boxes that:
(1) the Rights evidenced by this Rights Certificate [ ]
are [ ] are not being exercised by or on behalf of a Person who is or was an
Acquiring Person or an Affiliate or Associate of any such Person (as such terms
are defined in the Rights Agreement); and
(2) after due inquiry and to the best knowledge of the
undersigned, it [ ] did [ ] did not acquire the Rights evidenced by
this Rights Certificate from any Person who is, was or became an Acquiring
Person or an Affiliate or Associate of any such Person.
Dated: , 19
--------------- ---- ------------------------------------
Signature
Signature Guaranteed:
(Signatures must be guaranteed by a
commercial bank or trust company or a
member firm of the New York Stock Exchange.)
NOTICE
The signature to the foregoing Election to Purchase and
Certificate must correspond to the name as written upon the face of this Rights
Certificate in every particular, without alteration or enlargement or any
change whatsoever.
In the event the certification set forth above is not
completed, the Company will deem the beneficial owner of the Rights evidenced
by this Rights Certificate to be an Acquiring Person or an Affiliate or
Associate thereof (as defined in the Rights Agreement) subject to the
applicable provisions of the Rights Agreement, and, in the event that all of
the Rights evidenced by the Rights Certificate have not been exercised, the
Company will affix a legend to that effect on the Rights Certificates issued
for the balance of the Rights, whether registered in the name of the holder or
assigned.
<PAGE> 66
EXHIBIT B
SUMMARY OF RIGHTS TO PURCHASE COMMON STOCK AND NOTES
On November 29, 1988, the Executive Committee of the Board of
Directors of CRS Sirrine, Inc. (the "Company") declared a dividend distribution
of one Right for each outstanding share of the Company's Common Stock, par
value $1.00 per share ("Common Stock"), to stockholders of record at the close
of business on December 12, 1988 (the "Record Date"). Each Right entitles the
registered holder to purchase from the Company one unit (a "Unit"), consisting
initially of one-fifth of a share of Common Stock and one note (a "Note") in
the principal amount equal to four-fifths of the current market price of the
Common Stock on the date of exercise, at a Purchase Price of $72.00 in cash per
Unit, subject to adjustment. The description and terms of the Rights are set
forth in a Rights Agreement (the "Rights Agreement"), dated as of November 29,
1988, between the Company and Morgan Shareholder Services Trust Company, as
Rights Agent. The Notes are issuable under, and subject to the terms and
conditions of, an Indenture (the "Indenture"), dated as of November 29, 1988,
between the Company and Morgan Guaranty Trust Company of New York, as Trustee.
Initially, the Rights will be attached to all Common Stock
certificates representing shares then outstanding, and no separate Rights
Certificates will be distributed. The Rights will separate from the Common
Stock upon the date which is the earlier of (i) 10 days following a public
announcement that a person or group of affiliated or associated persons (an
"Acquiring Person") has acquired, or obtained the right to acquire, beneficial
ownership of 20% or more of the outstanding shares of Common Stock (the "Stock
Acquisition Date"), or (ii) 10 business days following the commencement of a
tender offer or exchange offer that would result in a person or group
beneficially owning 30% or more of such outstanding shares of Common Stock (the
earlier of said dates being called the "Distribution Date").
Until the Distribution Date, (i) the Rights will be evidenced
by the Common Stock certificates and will be transferred with and only with
such Common Stock certificates, (ii) new Common Stock certificates issued after
the Record Date will contain a notation incorporating the Rights Agreement by
reference, and (iii) the surrender for transfer of any certificates for Common
Stock outstanding will also constitute the transfer of the Rights associated
with the Common Stock represented by such certificate.
<PAGE> 67
The Rights are not exercisable until the Distribution Date and
will expire at the close of business on December 11, 1998, unless earlier
redeemed by the Company as described below.
As soon as practicable after the Distribution Date, Rights
Certificates will be mailed to holders of record of the Common Stock as of the
close of business on the Distribution Date and, thereafter, the separate Rights
Certificates alone will represent the Rights. Except as otherwise determined by
the Board of Directors, only shares of Common stock issued prior to the
Distribution Date will be issued with Rights.
In the event that at any time following the Distribution Date,
(i) the Company is the surviving corporation in a merger with an Acquiring
Person and its Common Stock is not changed or exchanged, (ii) a Person becomes
the beneficial owner of 30% or more of the then outstanding shares of Common
Stock (except pursuant to an offer for all outstanding shares of Common Stock
which the Continuing Directors (as defined below) determine to be fair and
otherwise in the best interests of the Company and its stockholders), (iii) an
Acquiring Person engages in one or more "self-dealing" transactions as set
forth in the Rights Agreement, or (iv) during such time as there is an
Acquiring Person, an event occurs which results in such Acquiring Person's
ownership interest being increased by more than 1% (e.g., a reverse stock
split), each holder of a Right will thereafter have the right to receive, upon
exercise, Common Stock (or, in certain circumstances, cash, property or other
securities of the Company, subject to certain limitations) having a value equal
to two times the exercise price of the Right. Notwithstanding any of the
foregoing, following the occurrence of any of the events set forth in this
paragraph, all Rights that are, or (under certain circumstances specified in
the Rights Agreement) were, beneficially owned by any Acquiring Person will be
null and void. However, Riqhts are not exercisable following the occurrence of
any of the events set forth above until such time as the Rights are no longer
redeemable by the Company as set forth below.
For example, at an exercise price of $72.00 per Right, each
Right not owned by an Acquiring Person (or by certain related parties)
following an event set forth in the preceding paragraph would entitle its
holder to purchase $144.00 worth of Common Stock (or other consideration, as
noted above) for $72.00. Assuming that the Common Stock had a per share value
of $24.00 at such time, the holder of each valid Right would be entitled to
purchase 6 shares of Common Stock for $72.00.
B-2
<PAGE> 68
In the event that, at any time following the Stock Acquisition
Date, (i) the Company is acquired in a merger or other business combination
transaction in which the Company is not the surviving corporation or where the
Company is the surviving corporation and all or part of the outstanding shares
of Common Stock are changed into or exchanged for stock or other securities of
any other person or cash or any other property (other than a merger described
in the second preceding paragraph or a merger which follows an offer described
in the second preceding paragraph (more of the Company's asset or earning
power is sold or transferred, each holder of a Right (except Rights which
previously have been voided as set forth above) shall thereafter have the right
to receive, upon exercise, common stock of the acquiring company having a value
equal to two times the exercise price of the Right.
For example, at an exercise price of $72.00 per Right, each
Right following an event set forth in the preceding paragraph would entitle its
holder to purchase $144.00 worth of common stock of the acquiring company for
$72.00. Assuming that the common stock of the acquiring company had a per share
value of $24.00 at such time, the holder of each issued Right would be entitled
to purchase 6 shares of the common stock of the acquiring company for $72.00.
The Purchase Price payable, and the number of shares of
Common Stock and principal amount of the Notes (or the number and kind of other
securities or property, as the case may be) issuable, upon exercise of the
Rights are subject to adjustment from time to time to prevent dilution (i) in
the event of a stock dividend on, or a subdivision, combination or
reclassification of, the Common Stock, (ii) if holders of the Common Stock are
granted certain rights or warrants to subscribe for Common Stock or convertible
securities at less than the current market price of the Common Stock, or (iii)
upon the distribution to holders of the Common Stock of evidences of
indebtedness or assets (excluding regular quarterly cash dividends) or of
subscription rights or warrants (other than those referred to above).
With certain exceptions, no adjustment in the Purchase Price
will be required until cumulative adjustments amount to at least 1% of the
Purchase Price. The Company is not required to issue fractional shares of
Common Stock or Notes other than in denominations of $10 or integral multiples
thereof and in lieu thereof an adjustment in cash will be made. For fractional
shares of Common Stock, the adjustment will be based on the market price of the
Common Stock on the last trading date prior to the date of exercise.
B-3
<PAGE> 69
In general, the Company may redeem the Rights in whole, but
not in part, at any time until ten days following the Stock Acquisition Date,
at a price of $.01 per Right (payable in cash, Common Stock or other
consideration deemed appropriate by the Board of Directors). Under certain
circumstances set forth in the Rights Agreement, the decision to redeem
requires the concurrence of a majority of the Continuing Directors. After the
redemption period has expired, the Company's right of redemption may be
reinstated, with the concurrence of a majority of the Continuing Directors, (i)
if an Acquiring Person reduces its beneficial ownership to 5% or less of the
outstanding shares of Common Stock in a transaction or series of transactions
not involving the Company, or (ii) provided that such redemption is incidental
to a merger or other business combination transaction or series of transactions
involving the Company but not involving an Acquiring Person or any person who
was an Acquiring Person or any affiliate or associate thereof. Immediately upon
the action of the Board of Directors ordering redemption of the Rights with,
where required, the concurrence of the Continuing Directors, the Rights will
terminate and the only right of the holders of Rights will be to receive the
$.01 per Right redemption price.
The term "Continuing Directors" means any member of the Board
of Directors of the Company who was a member of the Board prior to the date of
the Rights Agreement, and any person who is subsequently elected to the Board
if such person is recommended or approved by a majority of the Continuing
Directors, but shall not include an Acquiring Person or an affiliate or
associate of an Acquiring Person or any representative of the foregoing
entities.
Until a Right is exercised, the holder thereof, as such, will
have no rights as stockholder or noteholder of the Company, including, without
limitation, the right to vote or to receive dividends or payments of principal
or interest. While the distribution of the Rights will not be taxable to
stockholders or to the Company, stockholders may, depending upon the
circumstances, recognize taxable income in the event that the Rights become
exercisable for Common Stock and Notes (or other consideration) of the Company
or for common stock of an acquiring company as set forth above.
Any of the provisions of the Rights Agreement may be amended
by the Board of Directors of the Company prior to the Distribution Date, but
amendments of those provisions relating to the principal economic terms of the
Rights require approval of a majority of the Continuing Directors. After the
Distribution Date, the provisions of the Rights Agreement may be amended by the
Board (in certain circumstances, with the concurrence of the Continuing
Directors) in
B-4
<PAGE> 70
order to cure any ambiguity, to make changes which do not adversely affect the
interests of holders of Rights (excluding the interests of any Acquiring
Person), or to shorten or lengthen any time period under the Rights Agreement;
provided, however, that no amendment to adjust the time period governing
redemption shall be made at such time as the Rights are not redeemable.
The Notes issuable upon exercise of the Rights will be subject
to the terms and conditions of the Indenture. Each Note will be subordinated to
Senior Indebtedness (as defined) and will initially be issuable in the
principal amount equal to four-fifths of the current market price of the
Common Stock on the date of exercise of the Right with respect to which such
Note is being issued. Each Note will bear interest from the date of issuance at
a rate set prior to the initial issuance of the first Note by the Board of
Directors, who may rely on the advice of an independent investment banking
firm. Notes will be issued only in registered form, without coupons, in
denominations of $10 and integral multiples thereof.
Copies of the Rights Agreement and the Indenture have been
filed with the Securities and Exchange Commission as an Exhibit to a
Registration Statement on Form 8-A. Copies of the Rights Agreement and the
Indenture are available free of charge from the Company. This summary
description of the Rights and the Notes does not purport to be complete and is
qualified in its entirety by reference to the Rights Agreement and the
Indenture, which are incorporated herein by reference.
B-5
<PAGE> 71
AMENDMENT NO. 2 dated as of October 24, 1990 ("Amendment No.
2"), by and between CRSS INC., a Delaware corporation (the "Company"), and
BRUCE W. WILKINSON (the "Executive"), parties to the Agreement of June 30,
1988, as amended.
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the Company and the Executive are parties to an
Amended and Restated Employment Agreement, dated as of June 30, 1988 (the
"Agreement"), as amended; and
WHEREAS, the Board of Directors of the Company recognizes the
valuable and important contribution that the Executive has made to the growth
and success of the Company and desires to assure itself of the continued
services of the Executive in an executive capacity;
NOW, THEREFORE, the Company and the Executive hereby agree as
follows:
1. Section 1.3 to be replaced with the following:
Section 1.3. Position and Duties. On and after the Operative
Date, the Executive shall serve as Chief Executive Officer of
the Company, reporting only to the Board, and shall have the
powers, duties and responsibilities of Chief Executive Officer
of the Company, and shall have such other powers, duties and
responsibilities as may from time to time be assigned to him
by the Board, provided that such duties are consistent with
the Executive's present duties and with his position as Chief
Executive Officer of the Company. The Executive shall devote
such time and effort to the business and affairs of the
Company as is normally required at such time under generally
accepted practices for executives with his position,
responsibilities, powers and duties.
2. Except as herein amended or modified, the terms and
provisions of the Agreement shall continue in full force and effect.
IN WITNESS WHEREOF, the parties hereto have executed this
Amendment No. 2 as of the date first above written.
ATTESTED BY: CRSS INC.
/s/ FRANK PERRONE By: /s/ RICHARD DAERR
- - ---------------------------- -----------------------------------
Secretary Title: President
(Seal) /s/ BRUCE WILKINSON
----------------------------------------
Executive
<PAGE> 72
AMENDMENT NO. 1 dated as of July 1, 1989 ("Amendment No. 1"),
by and between CRS SIRRINE, INC., a Delaware corporation (the "Company"), and
BRUCE W. WILKINSON (the "Executive"), parties to the Agreement of June 30,
1988.
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the Company and the Executive are parties to an
Amended and Restated Employment Agreement, dated as of June 30, 1988 (the
"Agreement"); and
WHEREAS, the Board of Directors of the Company recognizes the
valuable and important contribution that the Executive has made to the growth
and success of the Company and desires to assure itself of the continued
services of the Executive in an executive capacity by activating Articles I
through VI of the Agreement;
NOW, THEREFORE, the Company and the Executive hereby agree as
follows:
1. The definition of "Operative Date" is hereby amended
to read as follows:
"Operative Date" shall mean July 1, 1989.
2. The definition of "Term" is hereby amended to read as
follows:
"Term" as used in this Agreement shall mean the period
commencing on June 30, 1988 and expiring on June 30, 1991
(unless sooner terminated or extended as hereinafter set
forth); provided, however, that
(a) upon the occurrence of a Change in Control,
the term of this Agreement shall be extended automatically
until the third anniversary of the date on which the Change in
Control occurs (unless the term of the Agreement has expired
prior to such third anniversary in accordance with the
provisions of paragraph (c) of this definition);
(b) commencing on June 30, 1989 and each June
30th thereafter, the term of this Agreement shall be extended
automatically for one additional year unless (i) the term of
the Agreement has previously expired in accordance with the
provisions of paragraph (c) of this definition, or (ii) not
later than the May 1st immediately preceding such June 30th,
the Company shall have delivered to the Executive or the
Executive shall have delivered to the Company written notice
that the term of this Agreement will not be extended; and
<PAGE> 73
(c) the term of this Agreement shall expire upon
the Company's termination of the Executive's employment for
Cause, or the Executive's resignation for other than Good
Reason.
The Company shall notify the Executive in writing of the
occurrence of a Change in Control within two weeks
thereafter.
3. The Agreement is to be interpreted and construed so
that the phrase "employee benefit plans, programs and arrangements" in Section
1.6(d)(i) (B) shall be deemed to include the Executive's participation in the
CRS Sirrine, Inc. Senior Management Incentive Award Plan and Discretionary
Bonus Plan, the CRS Sirrine, Inc. Employee Bonus Plan, the CRS Sirrine, Inc.
Employee Incentive Stock Option Plan, the CRS Sirrine, Inc. Employee
Non-Qualified Stock Option Plan and the CRS Sirrine, Inc. Supplemental
Executive Retirement Plan and any other Company incentive compensation plans
and arrangements in effect immediately prior to the Operative Date or the
Change of Control, as the case may be (or other plans or arrangements providing
the Executive with substantially equivalent benefits).
4. Except as herein amended or modified, the terms and
provisions of the Agreement shall continue in full force and effect.
IN WITNESS WHEREOF, the parties hereto have executed this
Amendment No. 1 as of the date first above written.
ATTESTED BY: CRS SIRRINE, INC.
/s/ FRANK PERRONE By: /s/ FRANK DAERR
- - ---------------------------- ---------------------------
Secretary Title: Executive Vice President
(Seal) /s/ BRUCE WILKINSON
-------------------------------
Executive
<PAGE> 1
Exhibit 5
AMENDMENT TO RIGHTS AGREEMENT
This Amendment to Rights Agreement (the "Amendment") is entered into
by CRSS Inc., a Delaware corporation ("CRSS"), and First Chicago Trust Company
of New York (formerly known as Morgan Shareholder Services Trust Company) (the
"Rights Agent"), effective as of January 27, 1994 (provided that this Amendment
is effective as of January 1, 1994 with respect to the amendment in paragraph 6
herein ("Amendment No. 6")), and amends that certain Rights Agreement between
CRSS and the Rights Agent, dated as of November 29, 1988 (the "Rights
Agreement").
BACKGROUND
CRSS and the Rights Agent entered into the Rights Agreement to provide
for the issuance and distribution of one Right (as defined in the Rights
Agreement) for each share of Common Stock of CRSS. CRSS and the Rights Agent
agree that certain changes should be made to the Rights Agreement to clarify
certain ambiguities, correct certain inconsistencies, reflect a change of name
of the Rights Agent and make certain other desired minor modifications. This
Amendment provides for those changes. This Amendment is entered into pursuant
to Section 26 of the Rights Agreement, which authorizes CRSS and the Rights
Agent, if CRSS so directs, to supplement or amend any provision of the Rights
Agreement without the approval of any holders of CRSS's Common Stock.
AMENDMENTS
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein set forth the parties hereto agree as follows:
1. Section 1(a) is hereby amended and restated in its entirety to
read as follows:
"(a) "Acquiring Person" shall mean any Person (as
hereinafter defined) who or which, together with all
Affiliates and Associates (as such terms are hereinafter
defined) of such Person, shall be the Beneficial Owner (as
hereinafter defined) of 20% or more of the shares of Common
Stock then outstanding, but shall not include (i) the Company,
(ii) any Subsidiary (as hereinafter defined) of the Company,
(iii) any employee benefit plan of the Company or of any
Subsidiary of the Company, (iv) any Person or entity
organized, appointed or established by the Company for or
pursuant to the terms of any such plan, (v) any Person who
notifies the Board of Directors in writing within five days
after the acquisition making such Person the Beneficial Owner
of 20% or more of the shares of Common Stock then outstanding
that such acquisition was inadvertent, and who within two days
after such notification divests a sufficient number of shares
of Common Stock so that such Person is no longer the
Beneficial Owner of 20% or more of the shares of Common Stock
then outstanding ("Inadvertent Acquisition"), or (vi) an
underwriter that acquires such percentage of the shares
<PAGE> 2
of Common Stock pursuant to a customary agreement in a public
offering of such Common Stock. If any of these exceptions to
the definition of an Acquiring Person apply, then the Person
to whom the exception pertains shall not be an Acquiring
Person for any purpose under this Agreement, including without
limitation with respect to the definition of Stock Acquisition
Date."
2. Section 7(e) is hereby amended and restated in its entirety to
read as follows:
"(e) Notwithstanding anything in this Agreement to
the contrary, from and after the first occurrence of a
Triggering Event, any Rights beneficially owned by (i) an
Acquiring Person or an Associate or Affiliate of an Acquiring
Person, which a majority of the Continuing Directors, in their
sole discretion, determine is or was involved in or caused or
facilitated, directly or indirectly (including through any
change in the Board), such Section 11(a)(ii) Event, (ii) a
transferee of any such Acquiring Person (or of any such
Associate or Affiliate) who becomes a transferee after such
Acquiring Person becomes such, or (iii) a transferee of any
such Acquiring Person (or of any such Associate or Affiliate)
who becomes a transferee prior to or concurrently with such
Acquiring Person becoming such and receives such Rights
pursuant to either (A) a transfer (whether or not for
consideration) from the Acquiring Person (or any such
Associate or Affiliate) to holders of equity interests in such
Acquiring Person (or any such Associate or Affiliate) or to
any Person with whom such Acquiring Person (or any such
Associate or Affiliate) has any continuing agreement,
arrangement or understanding regarding the transferred Rights,
shares of Common Stock or the Company, or (B) a transfer which
a majority of the Continuing Directors have determined, in
their sole discretion, is part of a plan, arrangement or
understanding which has as a primary purpose or effect the
avoidance of this Section 7(e), shall become null and void
without any further action, and no holder of such Rights shall
have any rights whatsoever with respect to such Rights,
whether under any provision of this Agreement or otherwise.
The Company shall use all reasonable efforts to ensure that
the provisions of this Section 7(e) and Section 4(b) hereof
are complied with, but shall have no liability to any holder
of Rights Certificates or other Person as a result of its
failure to make any determinations with respect to an
Acquiring Person or any of its Affiliates, Associates or
transferees hereunder."
3. Sections 13(a)(v) is hereby amended and restated in its
entirety to read as follows:
"(v) the provisions of Section 11(a)(ii) hereof shall be
of no effect following the first occurrence of any Section 13 Event described
in subparagraphs (x) and (y), but not subparagraph (z), of this Section 13(a)."
Section 13(a) also is hereby amended by the addition of the
following to the end of such Section:
"Notwithstanding any of the foregoing, upon the occurrence of
a Section 13 Event
<PAGE> 3
described in subparagraph (z) of this Section 13(a), while
subparagraphs (i) through (v) above shall apply as indicated
to require the Principal Party to assume the Company's
obligations and duties under this Agreement, the provisions of
the Rights Agreement, including without limitation Section 11,
also shall continue to apply in full to the Company, and
the Company shall continue to have the same liabilities,
duties and obligations under this Agreement as it would have
if such Section 13 Event had not occurred."
4. Section 13(e) is hereby amended and restated in its entirety
to read as follows:
"(e) Notwithstanding anything in this Agreement to
the contrary, Section 13 shall not be applicable to a
transaction described in subparagraphs (x) and (y) of Section
13(a) if (i) such transaction is consummated with a Person or
Persons who acquired shares of Common Stock pursuant to a cash
tender offer for all outstanding shares of Common Stock which
complies with the provisions of Section 11(a)(ii)(B) hereof
(or a wholly owned Subsidiary of any such Person or Persons),
(ii) the price per share of Common Stock offered in such
transaction is not less than the price per share of Common
Stock paid to all holders of shares of Common Stock whose
shares were purchased pursuant to such cash tender offer; and
(iii) the form of consideration being offered to the remaining
holders of shares of Common Stock pursuant to such transaction
is the same as the form of consideration paid pursuant to such
cash tender offer. Upon consummation of any transaction
contemplated by the preceding sentence of this Section 13(e),
all Rights hereunder shall expire. Furthermore,
notwithstanding anything in this Agreement to the contrary,
Section 13 shall not be applicable to a transaction described
in subparagraph (z) of Section 13(a) if such transaction is
determined by a majority of the Continuing Directors to be (a)
at a price which is fair to stockholders and (b) otherwise in
the best interests of the Company and its stockholders. The
Rights hereunder shall not expire upon consummation of any
transaction contemplated by the immediately preceding sentence
of this Section 13(e)."
5. Section 28 is hereby amended by adding the following language
to the end of such Section:
"The Board (with the concurrence of a majority of the
Continuing Directors) shall be authorized to appoint a Committee and delegate
to it the authority to exercise the power and authority of the Board and of the
Continuing Directors under this Agreement."
6. The Rights Agreement and each exhibit thereto are hereby
amended by replacing "Morgan Shareholder Services Trust Company" with "First
Chicago Trust Company of New York" in each place such term appears.
Except as specifically provided herein, the Rights Agreement shall
continue in full force and effect in accordance with its terms without
amendment or modification.
<PAGE> 4
IN WITNESS WHEREOF, the undersigned parties hereby execute and agree
to be bound by this Amendment, effective as of January 27, 1994 (provided that
Amendment No. 6 is effective as of January 1, 1994).
ATTEST: CRSS INC.
Signature: ____________________________ By: ______________________________
Printed Name:__________________________ Name: ____________________________
Title: ___________________________
Countersigned:
FIRST CHICAGO TRUST COMPANY OF
NEW YORK, formerly known as Morgan
Shareholder Services Trust Company
By:____________________________________
Name:__________________________________
Title:_________________________________
<PAGE> 1
Exhibit 6
SECOND AMENDMENT TO RIGHTS AGREEMENT
THIS SECOND AMENDMENT TO RIGHTS AGREEMENT (this "Amendment") is
entered into by CRSS Inc., a Delaware corporation ("CRSS"), and First Chicago
Trust Company of New York (the "Rights Agent"), effective as of May 16,
1995, immediately after the execution of the Merger Agreement (as defined
below).
WHEREAS, CRSS and the Rights Agent entered into that certain Rights
Agreement dated as of November 29, 1988, as amended by Amendment to Rights
Agreement effective as of January 27, 1994 (the "Agreement"), and all
capitalized terms not defined herein shall have the meanings given to such
terms in the Agreement; and
WHEREAS, CRSS and the Rights Agent desire to amend the Agreement as
provided herein pursuant to Section 26 of the Agreement, which authorizes CRSS
and the Rights Agent, if CRSS so directs, to supplement or amend any provision
of the Agreement without the approval of any holders of CRSS's Common Stock.
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein set forth the parties hereto agree as follows:
1. Section 1(a) of the Agreement is hereby amended and restated
in its entirety to read as follows:
(a) "Acquiring Person" shall mean any Person (as
hereinafter defined) who or which, together with all Affiliates and
Associates (as such terms are hereinafter defined) of such Person,
shall be the Beneficial Owner (as hereinafter defined) of 20% or more
of the shares of Common Stock then outstanding, but shall not include
(i) the Company, (ii) any Subsidiary (as hereinafter defined) of the
Company, (iii) any employee benefit plan of the Company or of any
Subsidiary of the Company, (iv) any Person or entity organized,
appointed or established by the Company for or pursuant to the terms
of any such plan, (v) any Person who notifies the Board of Directors
in writing within five days after the acquisition making such Person
the Beneficial Owner of 20% or more of the shares of Common Stock then
outstanding that such acquisition was inadvertent, and who within two
days after such notification divests a sufficient number of shares of
Common Stock so that such Person is no longer the Beneficial Owner of
20% or more of the shares of Common Stock then outstanding
("Inadvertent Acquisition"), (vi) an underwriter that acquires such
percentage of the shares of Common Stock pursuant to a customary
agreement in a public offering of such Common Stock, or (vii) American
Tractebel Corporation, a Delaware corporation ("Tractebel"), and any
Affiliate of Tractebel, so long as neither Tractebel nor any Affiliate
of Tractebel is the Beneficial Owner of more than 1% of the issued and
outstanding capital stock of the Company other than capital stock of
the Company of which Tractebel or any Affiliate of Tractebel is the
Beneficial Owner solely by reason of (A) the Agreement of Merger dated
May 16, 1995 between the Company and Tractebel, as amended from time
to time (the "Merger
<PAGE> 2
Agreement"), or (B) the acquisition of shares of Common Stock pursuant
to the Offer (as defined in the Merger Agreement), or (C) both. If
any of these exceptions to the definition of an Acquiring Person
apply, then the Person to whom the exception pertains shall not be an
Acquiring Person for any purpose under this Agreement, including,
without limitation, with respect to the definitions of Distribution
Date, Section 11(a)(ii) Event, Section 13 Event, Stock Acquisition
Date and Triggering Event.
Notwithstanding any provision of this Agreement to the
contrary, (1) no Distribution Date, Section 11(a)(ii) Event, Section
13 Event, Stock Acquisition Date or Triggering Event shall be deemed
to have occurred, (2) neither Tractebel nor any Affiliate of Tractebel
shall be deemed to have become an Acquiring Person, and (3) no holder
of Rights shall be entitled to exercise such Rights under, or be
entitled to any other rights pursuant to, this Agreement solely by
reason of (x) the approval, execution or delivery of the Merger
Agreement, (y) the acquisition of shares of Common Stock pursuant to
the Offer (as defined in the Merger Agreement), or (z) the
consummation of the Merger (as defined in the Merger Agreement);
provided, however, that in the event Tractebel or any Affiliate of
Tractebel becomes the Beneficial Owner after the date hereof of any
shares of Common Stock in any manner other than as set forth in
Section 1(a)(vii)(A), (B) or (C) above, the provisions of this
sentence (other than this proviso) shall not be applicable; and
provided, further, that, notwithstanding Section 26 of this Agreement,
any supplement or amendment to this Agreement can, in the Company's
discretion, have retroactive effect with respect to Tractebel and its
Affiliates, regardless of whether Tractebel and its Affiliates
consent, and regardless of whether the supplement or amendment has an
adverse affect on Tractebel or its Affiliates.
2. Section 13(e) of the Agreement is hereby amended and restated
in its entirety to read as follows:
(e) Notwithstanding anything in this Agreement to the
contrary, Section 13 shall not be applicable to a transaction
described in subparagraphs (x) and (y) of Section 13(a) if (i) such
transaction is consummated with a Person or Persons who acquired
shares of Common Stock pursuant to a tender or exchange offer for all
outstanding shares of Common Stock which complies with the provisions
of Section 11(a)(ii)(B) hereof (or a wholly owned Subsidiary of any
such Person or Persons), (ii) the price per share of Common Stock
offered in such transaction is not less than the price per share of
Common Stock paid to all holders of shares of Common Stock whose
shares were purchased pursuant to such tender or exchange offer; and
(iii) the form of consideration being offered to the remaining holders
of shares of Common Stock pursuant to such transaction is the same as
the form of consideration paid pursuant to such tender or exchange
offer. Upon consummation of any transaction contemplated by the
preceding sentence of this Section 13(e), all Rights hereunder shall
expire. Furthermore, notwithstanding anything in this Agreement to
the contrary, Section 13 shall not
-2-
<PAGE> 3
be applicable to a transaction described in subparagraph (z) of
Section 13(a) if such transaction is determined by a majority of the
Continuing Directors to be (a) at a price which is fair to
stockholders and (b) otherwise in the best interests of the Company
and its stockholders. The Rights hereunder shall not expire upon
consummation of any transaction contemplated by the immediately
preceding sentence of this Section 13(e).
3. Except as specifically provided herein, the Agreement shall
continue in full force and effect in accordance with its terms without
amendment or modification.
IN WITNESS WHEREOF, the undersigned parties hereby execute and agree
to be bound by this Amendment, effective as of May 16, 1995.
Attest: CRSS INC.
By: /s/ TIMOTHY DUNNE By: /s/ BRUCE WILKINSON
_______________________________ ______________________________
Name: Timothy Dunne Name: Bruce Wilkinson
_____________________________ ____________________________
Title: President and CEO
___________________________
Countersigned:
FIRST CHICAGO TRUST
COMPANY OF NEW YORK
By: /s/ RALPH P. PERSICO
_______________________________
Name: Ralph P. Persico
_____________________________
Title: Customer Service Officer
____________________________
-3-
<PAGE> 1
Exhibit 7
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
AMENDED AND RESTATED EMPLOYMENT AGREEMENT, dated as of June
30, 1988 (the "Agreement"), by and between CRS SIRRINE, INC., a Delaware
corporation (the "Company"), and BRUCE W. WILKINSON (the "Executive").
W I T N E S S E T H:
WHEREAS, the Executive is President and Chief Executive
Officer of the Company; and
WHEREAS, the Board of Directors of the Company recognizes the
valuable and important contribution that the Executive has made to the growth
and success of the Company and desires to assure the Executive of his continued
employment by the Company in an executive capacity following the Operative Date
(as hereinafter defined) or in the event of a Change in Control (as hereinafter
defined), and to compensate the Executive therefor; and
WHEREAS, the Executive desires to commit himself to serve the
Company following the Operative Date or a Change in Control on the terms herein
provided; and
WHEREAS, the Company and the Executive entered into
<PAGE> 2
an Employment Agreement, dated as of February 25, 1988, as amended by an
Amendment, dated as of February 25, 1988 (the "Employment Agreement"), and the
Company and the Executive now desire to amend and restate the Employment
Agreement in its entirety as set forth herein;
NOW, THEREFORE, in consideration of the Executive's continued
service to the Company in accordance with the Company's policies, procedures
and practices prior to the earlier to occur of the Operative Date or a Change
in Control and the mutual covenants and agreements herein contained, the
Company and the Executive hereby agree as follows:
The Employment Agreement is hereby amended and restated in its
entirety to be and read as hereinafter set forth, to be effective as of the
date hereof (the "Effective Date") and the provisions of Articles I through VI
hereof to be operative and the Executive to be subject to the obligations and
entitled to the benefits thereof only on and after the Operative Date or a
Change in Control (provided that the Executive is then in the employ of the
Company), it being understood that prior to the Operative Date or a Change in
Control, the Executive's employment with the Company may be terminated by the
Company at any time at the convenience of the Board of Directors of the Company
in conformity with past practices of the Board and without any obligation or
2
<PAGE> 3
liability to the Executive under this Agreement, in which event this Agreement
shall thereupon terminate and be of no further force or effect.
"Term" as used in this Agreement shall mean the period
commencing on June 30, 1988 and expiring on June 30, 1991 (unless sooner
terminated or extended as hereinafter set forth); provided, however, that
(a) upon the occurrence of a Change in Control, the term
of this Agreement shall be extended automatically until the third
anniversary of the date on which the Change in Control occurs (unless
the term of the Agreement has expired prior to such third anniversary
in accordance with the provisions of paragraph (c) of this
definition);
(b) commencing on June 30, 1988 and each June 30th
thereafter, the term of this Agreement shall be extended automatically
for one additional year unless (i) the term of the Agreement has
previously expired in accordance with the provisions of paragraph (c)
of this definition, or (ii) not later than the May 1st immediately
preceding such June 30th, the Company shall have delivered to the
Executive or the Executive shall have delivered to the Company written
notice that the term of this Agreement will not be extended; and
3
<PAGE> 4
(c) the term of this Agreement shall expire upon the
earlier to occur of (i) the Company's termination of the Executive's
employment pursuant to the provisions of the preceding paragraph prior
to the Operative Date or a Change in Control, or (ii) the Company's
termination of the Executive's employment for Cause, or the
Executive's resignation for other than Good Reason, in either case
following the Operative Date, or a Change in Control.
The Company shall notify the Executive in writing of the
occurrence of the Operative Date or a Change in Control within two
weeks thereafter.
ARTICLE I
BASIC TERMS
SECTION 1.1. DEFINED TERMS. The defined terms in Schedule A
hereto are incorporated herein by reference as if fully set forth herein.
SECTION 1.2. TERM. The Company hereby agrees to continue to
employ the Executive, and the Executive hereby agrees to continue to serve the
Company, on the terms and conditions set forth herein, for the Term of this
Agreement.
SECTION 1.3. POSITION AND DUTIES. On and after the Operative
Date or a Change in Control, as the case may be, the Executive shall serve as
President and Chief
4
<PAGE> 5
Executive Officer of the Company, reporting only to the Board, and shall have
the powers, duties and responsibilities of Chief Executive Officer of the
Company, and shall have such other powers, duties and responsibilities as may
from time to time be assigned to him by the Board, provided that such duties
are consistent with the Executive's present duties and with his position as
Chief Executive Officer of the Company. Notwithstanding the foregoing, if
immediately prior to the Operative Date or a Change in Control, as the case may
be, the Executive shall occupy a different executive position with the Company
having supervision and control over, and responsibility for, different or
additional operations of the Company with different or additional powers,
duties and responsibilities, then, following the Operative Date or the Change
in Control, as the case may be, the Executive shall serve in such executive
position and shall have supervision and control over, and responsibility for,
such operations of the Company and shall have such other powers, duties and
responsibilities as may from time to time be assigned to him by the Board,
provided that such duties are consistent with the Executive's duties and his
executive position immediately prior to the Operative Date or the Change in
Control, as the case may be. The Executive shall devote such time and effort to
the business and affairs of
5
<PAGE> 6
the Company as is normally required at such time under generally accepted
practices for executives with his position, responsibilities, powers and
duties.
SECTION 1.4. COMPENSATION AND BENEFITS. Effective on and after
the Operative Date or a Change in Control, as the case may be, the Executive
shall be entitled to the following compensation and benefits throughout the
Term, except as otherwise provided in this Agreement:
(a) Base Salary;
(b) prompt reimbursement for all reasonable expenses
incurred by the Executive (in accordance with the Company's policy for senior
executives) in performing services hereunder and receipt of those fringe
benefits and perquisites that are determined by the Company to be commensurate
with the Executive's position;
(c) continuing participation (consistent with past
practices but providing proportional participation in any awards covering
periods extending beyond the Term) in the CRS Sirrine, Inc. Senior Management
Incentive Award Plan and Discretionary Bonus Plan, CRS Sirrine, Inc. Employee
Bonus Plan, and any other Company incentive compensation plans and arrangements
in effect immediately prior to the Operative Date or the Change in
6
<PAGE> 7
Control, as the case may be (or plans or arrangements providing the Executive
with substantially equivalent benefits);
(d) continuing participation in, and continuation of the
Executive's rights under, the CRS Sirrine, Inc. Senior Management Deferred
Compensation Plan, the CRS Sirrine, Inc. Employee Incentive Stock Option Plan,
the CRS Sirrine, Inc. Employee Non-Qualified Stock Option Plan, and the CRS
Sirrine, Inc. Supplemental Executive Retirement Plan, in each case as in effect
immediately prior to the Operative Date or the Change in Control, as the case
may be (or plans or arrangements providing the Executive with substantially
equivalent benefits); and
(e) continuing participation, consistent with past
practices, in all other employee benefit plans and programs of the Company
(including, without limitation, life, long-term disability and accident
insurance, and medical, dental, hospitalization, health, cafeteria and other
welfare plans) that are available to employees generally or to key management
employees, and that are in effect immediately prior to the Operative Date or
the Change in Control, as the case may be (or plans or arrangements providing
the Executive with substantially equivalent benefits).
7
<PAGE> 8
Amounts paid to the Executive under subsections (b) through (e) of this Section
1.4 shall be in addition to the compensation required by subsection (a) of this
Section 1.4.
SECTION 1.5. TERMINATION.
(a) Death. The Executive's employment hereunder shall
terminate upon his death.
(b) Disability. The Executive's employment hereunder
shall terminate effective upon the Date of Termination on account of
his Disability.
(c) Retirement. The Executive's employment hereunder
shall terminate effective upon the Date of Termination on account of
his Retirement.
(d) Cause. The Company may terminate the Executive's
employment hereunder for Cause effective as of the Date of Termination
on account of such termination for Cause.
(e) Resignation by the Executive. The Executive's
employment hereunder shall terminate effective upon the Date of
Termination on account of the Executive's resignation, whether or not
for Good Reason. Resignation for Good Reason shall not be deemed a
voluntary termination for the purposes of any plan, program, or
arrangement that excludes (or denies or reduces benefits for)
employees who voluntarily
8
<PAGE> 9
terminate their employment.
(f) Expiration of Term. If not earlier terminated, the
Executive's employment hereunder shall terminate upon the expiration
of the Term.
SECTION 1.6. COMPENSATION UPON TERMINATION.
(a) Death. If the Executive's employment is terminated by
reason of his death, the Company shall have, by reason of the
Executive's death, no further obligations to the Executive, his
spouse, his beneficiaries, his heirs, or his estate under this
Agreement, and the rights of the Executive and his spouse,
beneficiaries, heirs, and estate after the Date of Termination shall be
determined in accordance with the Company's employee benefit plans and
insurance and other programs then in effect.
(b) Disability. If the Executive's employment is
terminated by reason of his Disability, the Company shall have, by
reason of his termination on account of Disability, no further
obligations to the Executive under this Agreement, and the rights of
the Executive shall be determined in accordance with the Company's
employee benefit plans and programs then in effect, including without
limitation any short-term disability plan and long-term disability
plan.
9
<PAGE> 10
(c) Retirement; Resignation for other than Good Reason;
Termination for Cause. If the Executive's employment is terminated by
Retirement, or if the Executive resigns from his employment other than
for Good Reason, or if the Executive's employment is terminated for
Cause, the Company shall pay the Executive his full Base Salary
through the Date of Termination at the rate in effect at the time
Notice of Termination is given, and the Company shall have, by reason
of such Retirement, resignation, or termination, no further
obligations to the Executive under this Agreement. The Executive's
rights after the Date of Termination shall be determined in accordance
with the Company's employee benefit plans then in effect.
(d) Termination without Cause Other than a Qualifying
Termination; Resignation for Good Reason Other than a Qualifying
Termination. (i) If at any time after the Operative Date but prior to
a Change in Control or if at any time following three years after a
Change in Control the Company terminates the Executive's employment
other than for Cause, or the Executive terminates employment with the
Company for Good Reason within six months after such Good Reason
arises or prior to the expiration of the Term of this Agreement,
10
<PAGE> 11
whichever occurs first, then in either such event:
(A) the Company shall continue to pay the
Executive his full Base Salary for the duration of the Term of
this Agreement, but in no event for a period of less than 12
months following the Date of Termination;
(B) the Company shall maintain in full force and
effect for the Executive's continued benefit, for the duration
of the Term of this Agreement, but in no event for a period of
less than 12 months following the Date of Termination, all
employee benefit plans, programs, and arrangements in which
the Executive was entitled to participate immediately prior to
the Date of Termination, and coverage, credits, benefit
accrual, and vesting, as applicable, shall continue in respect
of the Executive under such plans, programs, and arrangements.
However, to the extent that the foregoing is not possible or
permissible under the general terms and provisions of any such
plan, program, or arrangement, the Company shall arrange, for
the duration of the Term of this Agreement,
11
<PAGE> 12
but in no event for a period of less than 12 months following
the Date of Termination, to provide the Executive with
benefits substantially similar and economically equivalent to
those that the Executive is entitled to receive under such
plans, programs, and arrangements. For this purpose, economic
equivalence shall be determined by an independent actuarial or
benefits consultant retained by the Company.
(ii) The Executive shall not be required to mitigate the
amount of any payment or benefit provided for under this subsection
(d) by seeking other employment or otherwise, provided, however, that:
(A) to the extent that the Executive
shall receive compensation and benefits after the first
anniversary of the Date of Termination from full-time
employment, including self-employment, the payments to be made
by the Company under paragraph (i)(A) of this subsection (d)
and the benefits to be provided by the Company under paragraph
(i)(B) of this subsection (d) shall be correspondingly
12
<PAGE> 13
reduced to reflect compensation and benefits from such
employment; and to the extent the Executive receives payments
under a disability insurance policy, whether such policy is
owned by the Company or by the Executive, the payments to be
made by the Company under paragraph (i)(A) of this subsection
(d) shall be correspondingly reduced to reflect such
disability insurance payments; and
(B) such reductions shall, in the event of any
question, be determined jointly by the firm of certified
public accountants regularly employed by the Company and a
firm of certified public accountants selected by the
Executive, in each case upon the advice of actuaries to the
extent the firms of certified public accountants consider such
advice necessary, and, in the event such accounting firms are
unable to agree on a resolution of the reduction issue, such
reductions shall be determined by an independent firm of
certified public accountants selected jointly by both
accounting firms, and in the absence of such designation, such
reductions shall be
13
<PAGE> 14
determined by an independent firm of certified public
accountants selected as provided in the Commercial Arbitration
Rules of the American Arbitration Association for the
appointment of a neutral arbitrator. Each accounting firm
shall simultaneously furnish to the Company and the Executive
a written report of the reductions, including a specific
explanation of how the reductions were determined. All
expenses incurred in determining such reductions (including
without limitation any fees or amounts payable to the American
Arbitration Association), whether incurred by the accounting
firms, by the Company, or by the Executive, shall be paid
directly by the Company.
(e) Qualifying Termination. (i) If within three years after a
Change in Control, the Company terminates the Executive's employment
other than for Cause, or the Executive terminates employment with the
Company for Good Reason within the earlier to occur of six months
after such Good Reason arises or three years after the Change in
Control, then a "Qualifying Termination" shall have
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occurred, provided, however, that a Qualifying Termination shall not
occur if the Executive's employment with the Company terminates by
reason of the Executive's Retirement, Disability or death. A
Qualifying Termination may occur even though the Executive retires
from employment with the Company other than by reason of Retirement or
Disability.
(ii) In the event of a Qualifying Termination the Company
shall pay to the Executive a cash amount equal to the sum of:
(A) 2.5 multiplied by the Base Amount, plus
(B) the Reimbursement Amount, where the Base
Amount shall be an amount equal to the greater of:
(1) the sum of
(a) the Executive's Base Salary,
plus
(b) the Aggregate Bonus earned by
the Executive
for the twelve month period ending immediately prior to
the Change in Control; or
(2) the sum of
(a) the Executive's Base
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Salary, plus
(b) the Aggregate Bonus earned by
the Executive,
for the twelve-month period ending immediately prior
to the occurrence of the Qualifying Termination.
(iii) The Company shall make the payment to the
Executive pursuant to this subsection (e) in a lump sum within
30 days of the Qualifying Termination; provided that if before
the Change in Control the Executive elects in writing to have
such payment made in installments, the Company shall make the
payment in either 24 or 36 consecutive monthly installments,
as elected by the Executive. The monthly installments shall
begin on the first day of the first month that commences after
the Qualifying Termination occurs. If the Company makes
installment payments to the Executive in accordance with this
subsection (e), interest shall accrue on the unpaid balance of
the installments, commencing on the date of the Qualifying
Termination. The interest shall accrue and be compounded
monthly. The interest rate shall be equal to 120 percent of
the publicly announced
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prime rate of Texas Commerce Bank prevailing on the first
business day of each month, effective for the ensuing month,
but not in excess of any legally permitted rate. The interest
rate shall be adjusted at the beginning of each month. The
amount of each installment shall be equal to (A) the unpaid
balance of the payment prescribed by paragraph (ii) of this
subsection (e), plus the interest that has accrued thereon as
of the close of the preceding month, divided by (B) the number
of monthly installments that have not yet been paid pursuant
to this paragraph (iii) of this subsection (e).
(iv) The Executive also may elect, before the
Change in Control, to have only a portion of the payment
prescribed by paragraph (ii) of this subsection (e) paid in
installments, and if he makes such an election, the amount of
the lump-sum payment and the amount of each installment (as
each would otherwise be determined in accordance with the
preceding provisions of this subsection (e) if the payment
were made entirely in a lump sum or entirely in installments,
respectively) shall each be reduced pro tanto.
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(v) The Executive may revoke or modify any
election made under paragraph (iii) or (iv) of this subsection
(e) before the Change in Control.
(vi) If the Executive incurs a Qualifying
Termination, the Company shall provide the Executive, at the
Company's expense, for a period beginning on the date of the
Qualifying Termination, the same medical insurance and life
insurance coverage as was in effect immediately prior to the
Change in Control (or, if greater, as in effect immediately
prior to the occurrence of the Qualifying Termination); such
coverage shall end upon the earlier of (A) the expiration of
36 months after the Qualifying Termination, or (B)(1) with
respect to medical insurance coverage, the date on which the
Executive first becomes eligible for comparable medical
insurance coverage provided by a firm that employs him
following the Qualifying Termination, or (2) with respect to
life insurance coverage, the date on which the Executive first
becomes eligible for comparable life insurance coverage
provided by such firm.
(vii) If the Executive incurs a Qualifying
Termination, the Executive shall receive 36 months
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of additional service credit, for the purpose of receiving
benefits and for vesting, retirement eligibility, benefit
accrual, and all other purposes, under all employee benefit
plans sponsored by the Company (including, but not limited to,
health, life insurance, pension, savings, stock, stock option,
and stock ownership plans, but excluding the Company's
short-term and long-term disability plans and its Supplemental
Executive Retirement Plan) in which he participated
immediately prior to the Change in Control.
(viii) The Executive shall not be required to
mitigate the amount of any payment or benefit provided for in
this subsection (e) either by seeking other employment or
otherwise. The amount of any payment or benefit provided for
in this subsection (e) shall not be reduced by any
remuneration or benefit that the Executive may earn or receive
from employment with another employer or otherwise following
his Qualifying Termination, except, with respect to insurance,
as specifically provided in paragraph (vi)(B)(1) and (2) of
this subsection (e).
SECTION 1.7. REIMBURSEMENT OF EXECUTIVE BY THE
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COMPANY FOR CERTAIN TAXES.
(a) Excess Parachute Payments. If the payments and
benefits provided for the Executive under this Agreement and, whether
or not the Executive's employment is terminated, any other payments
and benefits that the Executive may have a right to receive from the
Company and/or any other person or entity, would result in "excess
parachute payments" (as defined in Section 280G of the Internal
Revenue Code of 1986, as amended from time to time (the "Code")), and
the Executive would be required to pay an excise tax pursuant to
Section 4999 (or any successor section) of the Code in respect of such
excess parachute payments, the Company shall pay the Executive an
additional amount (the "Reimbursement Amount") such that, after the
payment by the Executive of such excise tax, and all federal, state
and local taxes and any and all excise taxes that may be imposed on
the receipt by the Executive of such Reimbursement Amount, the
Executive would retain the amount of such excess parachute payments
(subject to payment of applicable federal, state and local income
taxes thereon) as if such excise tax had not been payable thereon. In
calculating the Reimbursement Amount, it is to be assumed that the
highest marginal combined
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federal, state and local income tax rates payable by the Executive are
applicable to the income for which the calculation is being made. The
Reimbursement Amount shall, in the event of any question, be
determined jointly by the firm of certified public accountants
regularly employed by the Company and a firm of certified public
accountants selected by the Executive, in each case upon the advice of
actuaries to the extent the firms of certified public accountants
consider such advice necessary, and, in the event such accounting
firms are unable to agree on a resolution of the Reimbursement Amount
payable, such Reimbursement Amount shall be determined by an
independent firm of certified public accountants designated jointly by
both accounting firms, and in the absence of such designation, such
Reimbursement Amount shall be determined by an independent firm of
certified public accountants selected as provided in the Commercial
Arbitration Rules of the American Arbitration Association for the
appointment of a neutral arbitrator. Each accounting firm shall
simultaneously furnish to the Company and the Executive a written
report of the Reimbursement Amount it calculated, including a specific
explanation of how the Reimbursement Amount was determined. All
expenses
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incurred in determining such Reimbursement Amount (including without
limitation any fees or amounts payable to the American Arbitration
Association), whether incurred by the accounting firms, by the Company
or by the Executive, shall be paid directly by the Company. In
determining the Reimbursement Amount, the accounting firms shall take
into account any and all compensation and benefits to which the
Executive may be entitled, to the extent that such compensation and
benefits are to be taken into account under applicable law in making
such a determination, and shall take into account and apply, to the
extent permissible under applicable law, the provisions of Section
280G of the Code relating to reasonable compensation for personal
services.
(b) Subsequent Adjustments. If at a later date it is
determined (pursuant to final regulations or published rulings of the
Internal Revenue Service or assessment by the Internal Revenue Service
or final judgment of a court of competent jurisdiction or otherwise)
that the amount of excise taxes payable by the Executive is greater
than the amount initially so determined, then the Company (or its
successor) shall pay the Executive an amount equal to the sum of (x)
such
22
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additional excise taxes, (y) any interest, fines and penalties
resulting from such underpayment, plus (z) an amount necessary to
reimburse the Executive for any income, excise or other taxes and any
interest, fines and penalties payable by the Executive with respect to
the amounts specified in (x) and (y) above and the reimbursement
provided by (z), to the end that there shall be no out-of-pocket cost
to the Executive as a result of any such underpayment and
consequential interest, fines or penalties or income, excise or other
taxes.
ARTICLE II
NONDUPLICATION
SECTION 2.1. EFFECT ON SEVERANCE POLICY. If the Executive
becomes entitled to receive benefits under subsections (d) and (e) of Section
1.6 of this Agreement, the Executive shall not be entitled to any benefits
under any Company severance or salary continuation policy. For this purpose,
the Company's Supplemental Executive Retirement Plan shall not be deemed to be
a "severance or salary continuation policy".
SECTION 2.2. GENERAL NONDUPLICATION. Nothing in this Agreement
shall require the Company to make any payment
23
<PAGE> 24
or to provide any benefit or service credit that the Company is otherwise
required to provide and does in fact provide under any other contract,
agreement, policy, plan or arrangement.
ARTICLE III
TAX MATTERS
SECTION 3.1. WITHHOLDING. The Company may withhold from any
amounts payable to the Executive hereunder all federal, state, city or other
taxes that the Company may reasonably determine are required to be withheld
pursuant to any applicable law or regulation.
ARTICLE IV
OTHER OBLIGATIONS OF EXECUTIVE
SECTION 4.1. CONFIDENTIALITY. Except as may be required by
order of a court or governmental authority, the Executive shall not, without
the written consent of the Company, disclose, or authorize or permit anyone
under his direction to disclose, to any other person, firm, or corporation not
properly entitled thereto, any confidential information relative to the
business, products, services, sales, or financial condition of the Company. For
purposes of the preceding sentence, persons properly entitled to such
24
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information shall be the Board and such officers, employees, and agents of the
Company to whom such information is furnished in the normal course of business
under established policies of the Company.
SECTION 4.2. NON-COMPETITION. Until the first to occur of: (a)
the Executive's Retirement; (b) the Executive's termination without Cause; (c)
the resignation of the Executive for Good Reason; (d) a breach by the Company
of any provision of this Agreement; (e) the first anniversary of a voluntary
termination of employment by the Executive (other than a resignation for Good
Reason or a termination without Cause, whether or not a Qualifying
Termination); (f) the later of the first anniversary following a termination
for Cause or the date on which the Term would have expired but for such
termination for Cause; or (g) the expiration of the Term of this Agreement
(other than due to termination for Cause or resignation for Good Reason), the
Executive shall not, within a radius of 100 miles of Houston, Texas, engage in
any business that is directly competitive with the Company.
ARTICLE V
COLLATERAL MATTERS
SECTION 5.1. NATURE OF PAYMENTS. All payments to
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<PAGE> 26
the Executive under this Agreement shall be considered either payments in
consideration of his continued service to the Company or severance payments in
consideration of his past services thereto.
SECTION 5.2. LEGAL EXPENSES. The Company shall pay directly
all legal fees and expenses (a) that the Executive may incur as a result of the
Company's contesting the validity, the enforceability or the Executive's
interpretation of, or determinations under, this Agreement, (b) that the
Executive may incur in order to enforce the provisions or defend the validity
of this Agreement, or (c) that the Executive may incur in arbitrating disputes
or controversies arising under or in connection with this Agreement (including
without limitation any fees or amounts payable to the American Arbitration
Association).
SECTION 5.3. INTEREST. If the Company fails to make, or cause
to be made, any payment provided for herein within 30 days of the date on
which the payment is due, the Company shall make such payment together with
interest thereon. The interest shall accrue and be compounded monthly. The
interest rate shall be equal to 120 percent of the publicly announced prime
rate of Texas Commerce Bank prevailing on the first business day of each month,
effective for the ensuing month, but not in excess of any legally
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<PAGE> 27
permitted rate. The interest rate shall be adjusted at the beginning of each
month.
SECTION 5.4. AUTHORITY. The execution of this Agreement has
been authorized by the Board.
ARTICLE VI
GENERAL PROVISIONS
SECTION 6.1. TERM OF AGREEMENT. Articles I through VI of this
Agreement shall become operative and the Executive shall become subject to the
obligations and entitled to the benefits of Articles I through VI of this
Agreement on and after the first to occur of the Operative Date or a Change in
Control. The Term of this Agreement shall be as described in the definition of
"Term" in the provisions of this Agreement preceding Article I. However,
notwithstanding any provision in Articles I through VI of this Agreement to the
contrary, this Agreement shall not terminate or cease to have effect before
both the Company and the Executive have fulfilled all of their obligations
hereunder.
SECTION 6.2. GOVERNING LAW. EXCEPT AS OTHERWISE EXPRESSLY
PROVIDED HEREIN, THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS HEREUNDER SHALL
BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE.
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SECTION 6.3. SUCCESSORS TO THE COMPANY. This Agreement shall
inure to the benefit of and shall be binding upon and enforceable by and
against the Company and any successor thereto, including, without limitation,
any corporation or corporations acquiring directly or indirectly all or
substantially all of the business or assets of the Company, whether by merger,
consolidation, sale or otherwise, but shall not otherwise be assignable by the
Company and, without limitation of the foregoing, the Company shall require any
successor (whether direct or indirect, by merger, consolidation, sale or
otherwise) to all or substantially all of the business or assets of the
Company, by agreement in form and substance satisfactory to the Executive, to
assume expressly, absolutely and unconditionally, and to agree to perform, this
Agreement in the same manner and to the same extent as the Company would have
been required to perform it if no such succession had taken place; provided,
however, that in the event of a disposition by the Company of all or
substantially all of the business and assets of the architectural, engineering
and construction businesses of the Company (herein called "Services"), the
Executive may elect that this Agreement not be assigned to and assumed by the
successor to Services, in which event this Agreement shall not be assigned to
and assumed by the successor to Services
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but shall continue to be binding upon and enforceable against the Company. As
used in this Agreement, "Company" shall mean the Company as heretofore defined
and any successor to all or substantially all of its business or assets that
executes and delivers the agreement provided for in this Section 6.3 or that
becomes bound by this Agreement either pursuant to this Agreement or by
operation of law.
SECTION 6.4. NONCORPORATE ENTITIES. If any provision of this
Agreement refers to the board of directors of an entity that has no board of
directors, the reference to board of directors shall be deemed to refer to the
body, committee or person that has duties and responsibilities with respect to
the entity that most closely approximate those of a board of directors of a
corporation.
SECTION 6.5. SUCCESSOR TO THE EXECUTIVE. This Agreement shall
inure to the benefit of and shall be binding upon and enforceable by and
against the Executive and his personal and legal representatives, executors,
administrators, heirs, distributees, legatees and, subject to Section 6.6
hereof, his designees ("Successors"). If the Executive dies while amounts are
or may be payable to him under this Agreement, references hereunder to the
"Executive" shall, where appropriate, be deemed to refer to his Successors;
provided that nothing in this Section 6.5 shall
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supersede the terms of any plan or arrangement (other than this Agreement) that
is affected by this Agreement.
SECTION 6.6. NONALIENABILITY. No right of or amount payable to
the Executive under this Agreement shall be subject in any manner to
anticipation, alienation, sale, transfer, assignment, pledge, hypothecation,
encumbrance, charge, execution, attachment, levy or similar process or to
setoff against any obligations or to assignment by operation of law. Any
attempt, voluntary or involuntary, to effect any action specified in the
immediately preceding sentence shall be void. However, this Section 6.6 shall
not prohibit the Executive from designating one or more persons, on a form
reasonably satisfactory to the Company, to receive amounts payable to him under
this Agreement in the event that he dies before receiving them.
SECTION 6.7. NOTICES. All notices or elections provided for in
this Agreement shall be in writing. Notices to the Company or elections by the
Executive shall be deemed given when personally delivered against written
receipt or sent by certified or registered mail or overnight delivery service,
return receipt or written receipt requested, as the case may be, to CRS
Sirrine, Inc., Suite 900, 1177 West Loop South, Houston, Texas 77027,
Attention: Corporate Secretary. Notices to the Executive shall be deemed given
when
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personally delivered against written receipt or sent by certified or registered
mail or overnight delivery service, return receipt or written receipt
requested, as the case may be, to the last address for the Executive shown on
the records of the Company. Either the Company or the Executive may, by notice
to the other, designate an address other than the foregoing for the receipt of
subsequent notices.
SECTION 6.8. ARBITRATION.
(a) Binding Arbitration. Except as otherwise provided in
this Agreement, any dispute, claim or controversy arising out of or in relation
to this Agreement or the interpretation or breach thereof shall be arbitrated
in accordance with this Section 6.8 and pursuant to the Federal Arbitration
Act (9 U.S.C Section 1 et seq.) (the "Act") to the extent not inconsistent
herewith. Any determination of the arbitrators shall be binding and conclusive
upon the parties hereto. Judgment upon the award of the arbitrators may be
entered in any court having jurisdiction thereof or application may be made to
such court for a judicial confirmation of the award and an order of
enforcement, as the case may be.
(b) Arbitration Panel. The arbitration panel shall
consist of three arbitrators, one of whom shall be appointed by each of the
Company and the Executive. The two
31
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arbitrators thus appointed shall choose the third arbitrator; provided,
however, that if the two arbitrators are unable to agree on the appointment of
the third arbitrator, such arbitrator shall be designated as provided in the
Commercial Arbitration Rules of the American Arbitration Association for the
appointment of a neutral arbitrator. If any arbitrator resigns or is unable to
continue serving as such, the successor to such arbitrator shall be appointed
by the party who appointed such arbitrator or by the remaining arbitrators if
they had appointed such arbitrator, or as provided in the Commercial
Arbitration Rules of the American Arbitration Association for the appointment
of a neutral arbitrator, as the case may be. A stenographic record of the
arbitration proceedings shall be made and in the event a successor arbitrator
must be appointed he may rely on such record and no rehearing shall be
required.
(c) Venue. The place of arbitration shall be Houston,
Texas.
(d) Limitations. Notwithstanding the foregoing, it is
hereby agreed that no arbitration panel shall have any power to add to, alter
or modify the terms and conditions of this Agreement or to decide any issue
which does not arise from the interpretation or application of the provisions
of this Agreement.
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(e) Continuation of Compensation During Arbitration.
Notwithstanding the pendency of any such dispute or controversy, the Company
shall continue to provide to the Executive his full compensation, in accordance
with this Agreement as in effect when the notice of dispute is given, until
such time as the dispute is resolved or the Agreement is earlier terminated as
provided herein. Judgment may be entered on the arbitrator's award in any court
having jurisdiction; provided, however, that the Executive shall be entitled to
specific performance of his right to be paid during the pendency of any dispute
or controversy arising under or in connection with this Agreement.
SECTION 6.9. AMENDMENT. No amendment to this Agreement shall
be effective unless in writing and signed by both the Company and the
Executive.
SECTION 6.10. WAIVERS. No waiver of any provision of this
Agreement shall be valid unless approved in writing by the party giving such
waiver. No waiver of a breach under any provision of this Agreement shall be
deemed to be a waiver of such provision or any other provision of this
Agreement or any subsequent breach. No failure on the part of either the
Company or the Executive to exercise, and no delay in exercising, any right or
remedy conferred by law or this Agreement shall operate as a waiver of such
right or
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remedy, and no exercise or waiver, in whole or in part, of any right or remedy
conferred by law or herein shall operate as a waiver of any other right or
remedy.
SECTION 6.11. SEVERABILITY. If any provision of this Agreement
shall be held unlawful or otherwise invalid or unenforceable in whole or in
part, such unlawfulness, invalidity or unenforceability shall not affect any
other provision of this Agreement or part thereof, each of which shall remain
in full force and effect. If the making of any payment or the provision of any
other benefit required under this Agreement shall be held unlawful or otherwise
invalid or unenforceable, such unlawfulness, invalidity or unenforceability
shall not prevent any other payment or benefit from being made or provided
under this Agreement, and if the making of any payment in full or the provision
of any other benefit required under this Agreement in full would be unlawful or
otherwise invalid or unenforceable, then such unlawfulness, invalidity or
unenforceability shall not prevent such payment or benefit from being made or
provided in part, to the extent that it would not be unlawful, invalid or
unenforceable, and the maximum payment or benefit that would not be unlawful,
invalid or unenforceable shall be made or provided under this Agreement.
SECTION 6.12. AGENTS. The Company may make
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arrangements to cause any agent or other party, including an affiliate of the
Company, to make any payment or to provide any benefit that the Company is
required to make or to provide hereunder; provided, that no such arrangement
shall relieve or discharge the Company of its obligations hereunder except to
the extent that such payments or benefits are actually made or provided.
SECTION 6.13. Captions. The captions to the respective
articles and sections of this Agreement are intended for convenience of
reference only and have no substantive significance.
SECTION 6.14. Counterparts. This Agreement may be executed
in any number of counterparts, each of which shall be deemed to be an original
but all of which together shall constitute a single instrument.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first above written.
ATTESTED BY: CRS SIRRINE, INC.
/s/ FRANK PERRONE By: /s/ RICHARD DAERR
- - ---------------------------- ----------------------------
Secretary
(Seal)
By: /s/ BRUCE W. WILKINSON
----------------------------
Bruce W. Wilkinson
-------------------------------
EXECUTIVE
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SCHEDULE A
DEFINITIONS
As used in this Amended and Restated Employment Agreement,
dated as of June 30, 1988, between the Company and Bruce W. Wilkinson (the
"Agreement"), of which this Schedule A forms a part, references to sections
below shall be references to sections in the Agreement, capitalized terms not
otherwise defined below shall have the meanings ascribed thereto in the
Agreement, including this Schedule A, and the following terms shall have the
meanings set forth below:
"Aggregate Bonus" shall mean the total of the incentive
compensation and bonuses earned by the Executive for a particular year
(including, but not limited to, the sum of his bonuses, incentive compensation,
and other awards under the CRS Sirrine, Inc. Senior Management Incentive Award
Plan, as amended from time to time, or any successor thereto, the CRS Sirrine,
Inc. Discretionary Bonus Plan, as amended from time to time, or any successor
thereto, and any other bonuses or incentive compensation).
"Base Salary" shall mean a base salary at the annual rate of
at least $280,000.00 for the 1988 fiscal year and thereafter at an annual rate
of not less than $280,000.00, or at such greater rate as the Compensation
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Committee of the Board with the approval of the Board shall from time to time
determine, payable in substantially equal monthly installments.
"Board" or "Board of Directors" shall mean the Board of
Directors of the Company.
"Change in Control" shall be deemed to occur when and only
when any of the following events first occurs:
(a) any person becomes the beneficial owner, directly or
indirectly, of securities of the Company representing 25 percent or
more of the combined voting power of the Company's then outstanding
voting securities; or
(b) three or more directors, whose election or nomination
for election is not approved by a majority of the Incumbent Board (as
hereinafter defined), are elected within any single 24-month period to
serve on the Board of Directors of the Company; or
(c) members of the Incumbent Board cease to constitute a
majority of the Board of Directors without the approval of the
remaining members of the Incumbent Board; or
(d) any merger (other than a merger in which the Company
is the survivor and there is no accompanying Change in Control under
paragraphs (a), (b) or (c)
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above), consolidation, liquidation or dissolution of the Company or
the sale of all or substantially all of the assets of the Company.
Notwithstanding the foregoing, a Change of Control shall not
be deemed to occur pursuant to paragraph (a) above (i) solely because 25
percent or more of the combined voting power of the Company's outstanding
securities is acquired by one or more employee benefit plans maintained by the
Company or by any other employer the majority interest in which is held,
directly or indirectly, by the Company; and (ii) with respect to any
disposition by the Company of all or substantially all of the business and
assets of Services if the Executive elects prior to such disposition pursuant
to Section 6.3 that this Agreement not be assigned to and assumed by the
successor to Services. For purposes of this definition of Change in Control,
the terms "person" and "beneficial owner" shall have the meanings set forth in
Sections 3(a) and 13(d) of the Securities Exchange Act of 1934, as amended, and
in the regulations promulgated thereunder, as in effect on June 30, 1988; and
the term "Incumbent Board" shall mean (i) the members of the Board of Directors
of the Company on June 30, 1988, to the extent that they continue to serve as
members of the Board of Directors, and (ii) any individual who becomes a member
of the Board of
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Directors after June 30, 1988, if his election or nomination for election as a
director was approved by a vote of at least three-quarters of the then
Incumbent Board.
"Date of Termination" shall mean:
(a) if the Executive's employment is terminated by his
death, the date of his death;
(b) if the Executive's employment is terminated for
Disability, thirty (30) days after Notice of Termination is given;
(c) if the Executive's employment is terminated by
Retirement, the date specified in the Notice of Termination;
(d) if the Executive's employment is terminated for
Cause, the date specified in the Notice of Termination;
(e) if the Executive's employment is terminated for any
other reason, the date on which a Notice of Termination is given; and
(f) if the Executive terminates his employment by
resignation, whether or not for Good Reason, the date on which a
Notice of Termination is given;
provided that, in each such case, if within thirty (30) days after any Notice
of Termination is given the party receiving such Notice of Termination notifies
the other party that a dispute exists concerning the termination, the Date of
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Termination (if any) shall be the date determined either by mutual written
agreement of the parties, by arbitration as provided in Section 6.8 of the
Agreement, or by a final judgment, order, or decree of a court of competent
jurisdiction (the time for appeal therefrom having expired and no appeal having
been perfected), and provided that, during the pendency of any such dispute,
the Company shall continue to provide to the Executive his full compensation in
accordance with this Agreement as in effect when the notice of dispute is given
until the resolution of the dispute or the expiration of the Term, whichever
occurs earlier.
"Disability" shall mean an illness or injury that prevents the
Executive from performing his duties with the Company (as they existed
immediately before the illness or injury) on a full time basis for twelve (12)
consecutive months.
"Notice of Termination" shall mean a notice that shall
indicate the specific termination provision relied upon and shall set forth in
reasonable detail the facts and circumstances claimed to provide a basis for
termination of the Executive's employment under the provision so indicated.
"Operative Date" shall mean the date on which the Board of
Directors of the Company is not comprised of individual Directors at least
seventy-five percent (75%) of
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whom were members of the Board on June 30, 1988.
"Retirement" shall mean the Executive's termination of
employment upon or after attaining age 65.
Termination "for Cause" shall mean termination of employment
of the Executive by the Company hereunder if and only if the Executive (a)
engages in unlawful acts that violate laws of the United States or of any state
thereof and that are intended to result in the substantial personal enrichment
of the Executive at the Company's expense, or (b) engages (except by reason of
incapacity due to illness or injury) in a material willful violation of his
responsibilities to the Company that results in a material injury to the
Company. Notwithstanding the foregoing, the Executive shall not be deemed to
have been terminated for Cause unless and until there shall have been delivered
to him a Notice of Termination, consisting of a copy of a resolution duly
adopted by the affirmative vote of not less than three quarters of the entire
membership of the Board of Directors at a duly held meeting of the Board of
Directors (with reasonable notice to the Executive and an opportunity for the
Executive, together with counsel, to be heard before the Board of Directors),
finding that the Executive has engaged in the conduct set forth above in this
definition of termination for Cause and specifying the particulars thereof
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<PAGE> 42
in detail. The Board of Directors may not delegate or assign its duties
respecting the resolution required in a Notice of Termination.
Termination or resignation "for Good Reason" shall mean
termination of employment of the Executive by the Executive hereunder if and
only if one or more of the following occurs after the Operative Date or a
Change in Control, as the case may be:
(a) a change in the Executive's status or position(s) with
the Company that, in the Executive's reasonable judgment, represents a
demotion from the Executive's status or position(s) in effect
immediately prior to the Operative Date or the Change in Control, as
the case may be;
(b) the assignment to the Executive of any duties or
responsibilities that, in the Executive's reasonable judgment, are
inconsistent with the Executive's status or position(s) in effect
immediately prior to the Operative Date or the Change in Control, as
the case may be;
(c) layoff or involuntary termination of the Executive's
employment, except in connection with the termination of the
Executive's employment for Cause or as a result of the Executive's
Retirement, Disability or
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<PAGE> 43
death;
(d) a reduction by the Company in the Executive's total
compensation (which shall be deemed, for this purpose, to be equal to
the Base Salary that he earned for the year preceding the Operative
Date or the Change in Control, as the case may be, plus the Aggregate
Bonus that he would have earned for the current year under the same
criteria that were in effect for such preceding year);
(e) a material increase in the Executive's
responsibilities or duties without a commensurate increase in total
compensation;
(f) the failure by the Company to continue in effect any
Plan (as defined below) in which the Executive is participating
immediately prior to the Operative Date or the Change in Control, as
the case may be (or plans or arrangements providing the Executive with
substantially equivalent benefits), other than as a result of the
normal expiration of any such Plan in accordance with its terms as in
effect immediately prior to the Operative Date or the Change in
Control, as the case may be;
(g) any action or inaction by the Company that would
adversely affect the Executive's continued
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<PAGE> 44
participation in any Plan on at least as favorable a basis as was the
case immediately prior to the Operative Date or the Change in Control,
as the case may be, or that would materially reduce the Executive's
benefits in the future under the Plan or deprive him of any material
benefits that he enjoyed immediately prior to the Operative Date or
the Change in Control, as the case may be, except to the extent that
such action or inaction by the Company is required by the terms of the
Plan as in effect immediately prior to the Operative Date or the
Change in Control, as the case may be, or is necessary to comply with
applicable law or to preserve the qualification of the Plan under
section 401(a) of the Code, and except to the extent that the Company
provides the Executive with substantially equivalent benefits;
(h) the Company's failure to provide and credit the
Executive with the number of days of paid vacation, holiday or leave
to which he is then entitled in accordance with the Company's normal
vacation, holiday or leave policy in effect immediately prior to the
Operative Date or the Change in Control, as the case may be;
(i) the imposition of any requirement that the Executive
be based anywhere other than within 25 miles
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<PAGE> 45
of where his principal office was located immediately prior to the
Operative Date or the Change in Control, as the case may be;
(j) a material increase in the frequency or duration of
the Executive's business travel;
(k) the Company's failure to obtain the express
assumption of this Agreement by any successor to the Company as
provided by Section 6.3 hereof;
(l) any attempt by the Company to terminate the
Executive's employment that is not effected pursuant to a Notice of
Termination and otherwise constituting a termination other than for
Cause or that does not afford the Executive the procedural protections
prescribed under the definition of Termination for Cause in this
Schedule A; or
(m) any violation by the Company of any agreement
(including this Agreement) between it and the Executive.
Notwithstanding the foregoing, no action by the Company shall give rise to a
Good Reason if it results from the Executive's termination for Cause,
Retirement, or death, and no action by the Company specified in paragraphs (a)
through (d) above shall give rise to a Good Reason if it results from the
Executive's Disability. A Good Reason shall not be deemed to be waived by
reason of the Executive's continued employment
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<PAGE> 46
as long as the termination of the Executive's employment occurs within the
earliest of (i) six months after the Good Reason arises, (ii) three years after
the Change in Control, or (iii) the end of the Term of the Agreement. For
purposes of this definition of termination for Good Reason, "Plan" means any
compensation plan, such as an incentive, stock option, or restricted stock
plan, or any employee benefit plan, such as a thrift, pension, profit-sharing,
stock bonus, long-term performance award, medical, disability, accident, or
life insurance plan, or a relocation plan or policy, or any other plan, program
or policy of the Company that is intended to benefit employees.
A-11
<PAGE> 1
Exhibit 8
[MORGAN STANLEY & CO. INCORPORATED LETTERHEAD]
May 16, 1995
Board of Directors
CRSS Inc.
1177 West Loop South
Houston, TX 77027
Gentlemen:
We understand that CRSS Inc. ("CRSS" or the "Company"), American Tractebel
Corporation ("ATC") and ATC Acquisition Corp., a wholly owned subsidiary of ATC
("Acquisition Sub") have entered into an Agreement of Merger, dated as of May
16, 1995 (the "Merger Agreement"), which provides, among other things, for (i)
the commencement by Acquisition Sub of a tender offer (the "Tender Offer") for
all outstanding shares of common stock, par value $1.00 per share (the "Common
Stock") of CRSS for $14.50 per share net to the seller in cash, and (ii) the
subsequent merger (the "Merger") of Acquisition Sub with and into CRSS. Pursuant
to the Merger, CRSS will become a wholly owned subsidiary of ATC and each
outstanding share of Common Stock, other than shares held in treasury or held
by ATC or any affiliate of ATC or as to which dissenters' rights have been
perfected, will be converted into the right to receive $14.50 per share in
cash. The terms and conditions of the Tender Offer and the Merger are more
fully set forth in the Merger Agreement.
You have asked for our opinion as to whether the consideration to be received
by the holders of shares of Common Stock pursuant to the Merger Agreement is
fair from a financial point of view to such holders (other than ATC and its
affiliates).
For purposes of the opinion set forth herein, we have:
(i) analyzed certain publicly available financial statements and other
information of the Company;
(ii) analyzed certain internal financial statements and other financial
and operating data concerning the Company prepared by the
management of the Company;
(iii) analyzed certain financial projections prepared by the management
of the Company;
(iv) discussed the past and current operations and financial condition
and the prospects of the Company with senior executives of the
Company;
(v) reviewed the reported prices and trading activity for the Common
Stock;
(vi) compared the financial performance of the Company and the prices
and trading activity of the Common Stock with that of certain other
comparable publicly-traded companies and their securities;
<PAGE> 2
(vii) reviewed the financial terms, to the extent publicly available, of
certain comparable transactions;
(viii) participated in discussions and negotiations among representatives of
the Company and ATC and their financial and legal advisors;
(ix) reviewed the Merger Agreement and certain related documents; and
(x) performed such other analyses as we deemed appropriate.
We have assumed and relied upon, without independent verification, the accuracy
and completeness of the information reviewed by us for the purposes of this
opinion. With respect to the financial projections, we have assumed that they
have been reasonably prepared on bases reflecting the best currently available
estimates and judgments of the future financial performance of the Company. We
have not made any independent valuation or appraisal of the assets or
liabilities of the Company, nor have we been furnished with any such
appraisals. Our opinion is necessarily based on economic, market and other
conditions as in effect on, and the information made available to us as of, the
date hereof.
We have acted as financial advisor to the Board of Directors of the Company in
connection with this transaction and will receive a fee for our services.
It is understood that this letter is for the information of the Board of
Directors of CRSS only and may not be used for any other purpose without our
prior written consent. We hereby consent, however, to the inclusion of this
opinion as an exhibit to any proxy, registration statement or other documents
filed with the Securities and Exchange Commission in connection with the Tender
Offer or the Merger.
Based on the foregoing, we are of the opinion on the date hereof that the
consideration to be received by the holders of shares of Common Stock pursuant
to the Merger Agreement is fair from a financial point of view to such holders
(other than ATC and its affiliates).
Very truly yours,
MORGAN STANLEY & CO. INCORPORATED
By: /s/ KENNETH R. MARKS
----------------------------------
Kenneth R. Marks
Principal
<PAGE> 1
Exhibit 9
Proposed President's Letter for 14D-9
May 18, 1995
Dear Stockholder:
I am very pleased to announce that on May 16, 1995, CRSS Inc. ("CRSS"),
American Tractebel Corporation ("Tractebel") and ATC Acquisition Corp., a
wholly owned subsidiary of Tractebel ("ATC"), entered into a merger agreement
(the "Merger Agreement") pursuant to which Tractebel has agreed to acquire
CRSS. Pursuant to the Merger Agreement, ATC has today commenced a tender offer
for all outstanding shares of the Common Stock, par value $1.00 per share, of
CRSS at $14.50 cash per share. The shares of Common Stock of CRSS not acquired
in the tender offer will be converted into the right to receive $14.50 per
share in cash pursuant to a merger of ATC with and into CRSS. The tender offer
is conditioned, among other things, on at least a majority of the shares
outstanding on a fully diluted basis being validly tendered.
THE TENDER OFFER AND THE MERGER WERE UNANIMOUSLY APPROVED BY ALL DIRECTORS
PRESENT AT THE BOARD MEETING WHICH CONSIDERED THE TRANSACTION, AND SUCH
DIRECTORS UNANIMOUSLY RECOMMENDED THAT STOCKHOLDERS ACCEPT THE OFFER AND TENDER
THEIR SHARES. YOUR BOARD OF DIRECTORS BELIEVES THAT THE PROPOSED ACQUISITION OF
CRSS BY TRACTEBEL IS FAIR AND IN THE BEST INTERESTS OF CRSS AND ITS
STOCKHOLDERS.
Enclosed for your consideration are copies of the tender offer materials
and CRSS' Schedule 14D-9 being filed today with the Securities and Exchange
Commission. These documents should be read carefully. In particular, I call
your attention to Item 4 of the Schedule 14D-9, which describes both the
reasons for the Board's recommendation and certain additional information that
stockholders may wish to consider before taking action with respect to the
offer.
Sincerely,
Bruce W. Wilkinson
Chairman of the Board and
Chief Executive Officer
