<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. ____)*
The Gillette Company
_______________________________________________________________________________
(Name of Issuer)
Common Stock, par value $1.00 per share
_______________________________________________________________________________
(Title of Class of Securities)
375766102
_______________________________________________________________________________
(CUSIP Number)
SCOTT M. STUART, KKR ASSOCIATES, DI ASSOCIATES, L.P., KKR PARTNERS II, L.P.
C/O KOHLBERG KRAVIS ROBERTS & CO. 9 WEST 57TH STREET, NEW YORK, N.Y. 10019
(212) 750-8300
_______________________________________________________________________________
(Name, Address and Telephone Number of Person Authorized to Receive Notices
and Communications)
December 31, 1996
_________________________________________
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to
report the acquisition which is the subject of this Schedule 13D, and is
filing this schedule because of Rule 13d-1(b)(3) or (4), check the following
box / /.
Note: Six copies of this statement, including all exhibits, should be filed
with the Commission. See Rule 13d-1(a) for other parties to whom copies are
to be sent.
*The remainder of this cover page shall be filled out for a reporting
person's initial filing on this form with respect to the subject class of
securities, and for any subsequent amendment containing information which
would alter disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be
deemed to be "filed" for the purpose of Section 18 of the Securities Exchange
Act of 1934 ("Act") or otherwise subject to the liabilities of that section
of the Act but shall be subject to all other provisions of the Act (however,
see the Notes).
PAGE 1 of 14 PAGES
<PAGE>
SCHEDULE 13D
____________________ _____________________________
CUSIP No. 375766102 Page 2 of 14 Pages
____________________ _____________________________
_______________________________________________________________________________
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
KKR ASSOCIATES
_______________________________________________________________________________
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) / /
(b) / /
_______________________________________________________________________________
3 SEC USE ONLY
_______________________________________________________________________________
4 SOURCE OF FUNDS*
OO (see item 3)
_______________________________________________________________________________
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED / /
PURSUANT TO ITEMS 2(d) or 2(e)
_______________________________________________________________________________
6 CITIZENSHIP OR PLACE OF ORGANIZATION
New York
_______________________________________________________________________________
7 SOLE VOTING POWER
0
_______________________________________________________________
NUMBER OF 8 SHARED VOTING POWER
SHARES
BENEFICIALLY 37,154,399
OWNED BY _______________________________________________________________
EACH 9 SOLE DISPOSITIVE POWER
REPORTING
PERSON 0
WITH _______________________________________________________________
10 SHARED DISPOSITIVE POWER
37,154,399
_______________________________________________________________________________
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
37,154,399
_______________________________________________________________________________
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* / /
_______________________________________________________________________________
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
6.67%
_______________________________________________________________________________
14 TYPE OF REPORTING PERSON*
PN
_______________________________________________________________________________
*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE AND THE SIGNATURE ATTESTATION
<PAGE>
SCHEDULE 13D
____________________ _____________________________
CUSIP No. 375766102 Page 3 of 14 Pages
____________________ _____________________________
_______________________________________________________________________________
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
KKR PARTNERS II, L.P.
_______________________________________________________________________________
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) / /
(b) / /
_______________________________________________________________________________
3 SEC USE ONLY
_______________________________________________________________________________
4 SOURCE OF FUNDS*
OO (see item 3)
_______________________________________________________________________________
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED / /
PURSUANT TO ITEMS 2(d) or 2(e)
_______________________________________________________________________________
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
_______________________________________________________________________________
7 SOLE VOTING POWER
817,927
_______________________________________________________________
NUMBER OF 8 SHARED VOTING POWER
SHARES
BENEFICIALLY 0
OWNED BY _______________________________________________________________
EACH 9 SOLE DISPOSITIVE POWER
REPORTING
PERSON 817,927
WITH _______________________________________________________________
10 SHARED DISPOSITIVE POWER
0
_______________________________________________________________________________
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
817,927
_______________________________________________________________________________
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* / /
_______________________________________________________________________________
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
.15%
_______________________________________________________________________________
14 TYPE OF REPORTING PERSON*
PN
_______________________________________________________________________________
*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE AND THE SIGNATURE ATTESTATION
<PAGE>
SCHEDULE 13D
____________________ _____________________________
CUSIP No. 375766102 Page 4 of 14 Pages
____________________ _____________________________
_______________________________________________________________________________
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
DI ASSOCIATES, L.P.
_______________________________________________________________________________
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) / /
(b) / /
_______________________________________________________________________________
3 SEC USE ONLY
_______________________________________________________________________________
4 SOURCE OF FUNDS*
OO (see item 3)
_______________________________________________________________________________
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED / /
PURSUANT TO ITEMS 2(d) or 2(e)
_______________________________________________________________________________
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
_______________________________________________________________________________
7 SOLE VOTING POWER
36,336,472
_______________________________________________________________
NUMBER OF 8 SHARED VOTING POWER
SHARES
BENEFICIALLY 0
OWNED BY _______________________________________________________________
EACH 9 SOLE DISPOSITIVE POWER
REPORTING
PERSON 36,336,472
WITH _______________________________________________________________
10 SHARED DISPOSITIVE POWER
0
_______________________________________________________________________________
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
36,336,472
_______________________________________________________________________________
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* / /
_______________________________________________________________________________
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
6.52%
_______________________________________________________________________________
14 TYPE OF REPORTING PERSON*
PN
_______________________________________________________________________________
*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE AND THE SIGNATURE ATTESTATION
<PAGE> Page 5 of 14 Pages
Item 1. Security and Issuer.
This statement relates to shares of common stock, $1.00 par value
per share, of The Gillette Company ("Issuer Common Stock"), a Delaware
corporation (the "Issuer"). The principal executive offices of the Issuer
are located at Prudential Tower Building, Boston, Massachusetts 02199.
Item 2. Identity and Background.
This statement is being filed jointly by KKR Associates, a New
York limited partnership ("KKR Associates"), DI Associates, L.P., a Delaware
limited partnership ("DI Associates") and KKR Partners II, L.P., a Delaware
limited partnership ("KKR Partners" and, together with KKR Associates and DI
Associates, the "Reporting Persons"). The agreement among the Reporting
Persons relating to the joint filing of this statement is attached as Exhibit
1 hereto.
DI Associates is principally engaged in the business of investing
in securities. KKR Partners is principally engaged in the business of
investing in securities of industrial and other companies. The address of
the principal business and office of each of DI Associates and KKR Partners
is 9 West 57th Street, New York, New York 10019.
The sole general partner of each of DI Associates and KKR Partners
is KKR Associates. KKR Associates is principally engaged in the business of
investing through partnerships in industrial and other companies. The
address of its principal business and office is 9 West 57th Street, New York,
New York 10019.
Messrs. Henry R. Kravis, George R. Roberts,
Robert I. MacDonnell, Paul E. Raether, Michael W. Michelson, James H. Greene,
Jr., Michael T. Tokarz, Perry Golkin, Clifton S. Robbins, Scott M.
<PAGE> Page 6 of 14 Pages
Stuart and Edward A. Gilhuly are the general partners of KKR Associates.
Messrs. Kravis and Roberts are also the members of the Executive Committee of
KKR Associates. Messrs. Kravis, Roberts, MacDonnell, Raether, Michelson,
Greene, Tokarz, Golkin, Robbins, Stuart and Gilhuly are each United States
citizens, and the present principal occupation or employment of each is as a
general partner of KKR & Co. L.L.C., a Delaware limited liability company and
the general partner of Kohlberg Kravis Roberts & Co. L.P. ("KKR"), a private
investment firm, the addresses of which are 9 West 57th Street, New York, New
York 10019, and 2800 Sand Hill Road, Suite 200, Menlo Park, California 94025.
The business address of Messrs. Kravis, Raether, Tokarz, Golkin, Robbins and
Stuart is 9 West 57th Street, New York, New York 10019; the business address
of Messrs. Roberts, MacDonnell, Michelson, Greene and Gilhuly is 2800 Sand
Hill Road, Suite 200, Menlo Park, California 94025.
During the last five years, neither the Reporting Persons nor, to
the best knowledge of the Reporting Persons, any of the other persons named
in this Item 2: (i) has been convicted in a criminal proceeding (excluding
traffic violations or similar misdemeanors); or (ii) was a party to a civil
proceeding of a judicial or administrative body of competent jurisdiction and
as a result of such proceeding was or is subject to a judgment, decree or
final order enjoining future violations of, or prohibiting or mandating
activities subject to, federal or state securities laws or finding any
violation with respect to such laws.
<PAGE> Page 7 of 14 Pages
Item 3. Source and Amount of Funds or Other Consideration.
As described in Item 4 below, no funds were used by any of the
Reporting Persons in connection with the transactions described herein.
Item 4. Purpose of Transaction.
Pursuant to an Agreement and Plan of Merger, dated as of September
12, 1996 (the "Merger Agreement"), among the Issuer, Alaska Acquisition
Corp., a Delaware corporation and a wholly owned subsidiary of the Issuer
("Merger Sub"), and Duracell International Inc. ("Duracell"), on December 31,
1996, Merger Sub was merged (the "Merger") with and into Duracell and
Duracell became a wholly owned subsidiary of the Issuer. In the Merger, each
issued and outstanding share of the common stock, par value $.01 per share,
of Duracell ("Duracell Common Stock"), other than shares owned by the Issuer,
Duracell or any subsidiary of the Issuer, was converted into the right to
receive .904 shares of Issuer Common Stock. Prior to the Merger, DI
Associates and KKR Partners were the record owners of 40,195,213 and 904,787
shares of Duracell Common Stock, respectively, which were converted into
shares of Issuer Common Stock in the Merger.
As a condition to the consummation of the Merger, each of DI
Associates and KKR Partners has agreed not to sell, transfer or exchange or
otherwise, directly or indirectly, dispose of, or reduce the risk of loss (by
short sale or otherwise) or enter into any contract or other arrangement with
respect to, or consent to the sale or exchange of or other disposition of any
interest in, any securities of the Issuer until after such time as the Issuer
has published financial results covering at least 30 days of combined
operations of
<PAGE> Page 8 of 14 Pages
the Issuer and Duracell after the Effective Time of the Merger (as defined in
the Merger Agreement) in the form of a quarterly earnings report, an
effective registration statement filed with the Securities and Exchange
Commission (the "SEC"), a report to the SEC on Form 10-K, 10-Q or 8-K, or any
other public filing or announcement which includes such combined results of
operations.
Concurrently with the execution and delivery of the Merger
Agreement, the Issuer and DI Associates and KKR Partners (collectively, the
"Partnerships") entered into a registration rights agreement, dated as of
September 12, 1996 (the "Registration Rights Agreement").
Pursuant to the Registration Rights Agreement, the Partnerships
have the right to require the Issuer to file a registration statement under
the Securities Act of 1933, as amended (the "Securities Act"), covering the
registration of any or all of the shares of Issuer Common Stock received by
the Partnerships in the Merger (the "Registrable Securities") at any time and
from time to time until the earlier of December 31, 2000 or such time as the
Partnerships own less than $250 million of Registrable Securities. The
Partnerships are entitled to five such "demand" registration rights under the
Registration Rights Agreement. In connection with any demand request, the
Partnerships must register Registrable Securities having a market value of at
least $325 million. The Partnerships also have unlimited "piggyback"
registration rights, exercisable until the earlier of December 31, 2002 or
such time as the Partnerships own less than $250 million of Registrable
Securities, with respect to registrations made by the Issuer, including
registrations made on behalf of other stockholders of the Issuer. The
Partnerships' demand
<PAGE> Page 9 of 14 Pages
and piggyback registration rights are subject to customary restrictions and
limitations.
The Issuer has agreed to pay all registration expenses in
connection with the registration of the Registrable Securities except that
underwriting discounts and commissions will be at the Partnerships' expense.
In addition, in connection with any registration statement filed pursuant to
the Registration Rights Agreement, the Issuer and the Partnerships have
agreed to indemnify each other against certain liabilities, including certain
liabilities under the Securities Act.
The registration rights with respect to the Registrable Securities
may only be transferred to an affiliate of the Partnerships.
Pursuant to the Registration Rights Agreement, the Partnerships
have agreed not to sell shares of any equity securities of the Issuer within
7 days before or 90 days after the effective date of any registration
statement filed by the Issuer in connection with any underwritten public
offering.
Effective January 1, 1997, Henry R. Kravis, a general partner of
KKR Associates and a member of the Executive Committee of KKR Associates, was
appointed to the Board of Directors of the Issuer by the directors of the
Issuer.
The Reporting Persons intend to review on a continuing basis their
investment in the Issuer. Subject to the limitations described above, the
Reporting Persons may decide to increase or decrease their investment in the
Issuer depending upon the price and availability of the Issuer's securities,
subsequent developments affecting the Issuer, the Issuer's business and
prospects, other investment and business
<PAGE> Page 10 of 14 Pages
opportunities available to the Reporting Persons, general stock
market and economic conditions, tax considerations and other factors.
Other than as described above, none of the Reporting Persons has
any present plans or proposals that relate to or would result in any of the
actions described in subparagraphs (a) through (j) of Item 4 of Schedule 13D.
Item 5. Interest in Securities of the Issuer.
(a) and (b) As of January 9, 1997, DI Associates and KKR Partners
were the record owner of 36,336,472 and 817,927 shares of Issuer Common
Stock, respectively, representing 6.52% and .15% of the outstanding shares of
Issuer Common Stock (based on the number of shares of Issuer Common Stock
outstanding as of December 31, 1996, after giving effect to the number of
shares to be issued in the Merger). DI Associates and KKR Partners each have
the sole power to vote or to direct the vote and sole power to dispose or to
direct the disposition of the shares of Issuer Common Stock that it owns.
DI Associates and KKR Partners, acting through their sole general
partner, KKR Associates, each have the power to direct the voting of and
disposition of any shares of Issuer Common Stock owned by it. As a result,
KKR Associates may be deemed to beneficially own any shares of Issuer Common
Stock deemed to be beneficially owned by DI Associates or KKR Partners. Each
of Messrs. Kravis, Roberts, MacDonnell, Raether, Michelson, Greene, Tokarz,
Golkin, Robbins, Stuart and Gilhuly are general partners of KKR Associates,
and each of Messrs. Kravis and Roberts are also the members of the Executive
Committee of KKR Associates. As a result, each of the general partners of
KKR Associates may be deemed to beneficially own any shares of Issuer
<PAGE> Page 11 of 14 Pages
Common Stock that KKR Associates may beneficially own or be deemed to
beneficially own. Neither the filing of this Schedule 13D nor any of its
contents shall be deemed to constitute an admission that any Reporting Person
is the beneficial owner of the Issuer Common Stock referred to in this
paragraph for purposes of Section 13(d) of the Exchange Act or for any other
purpose, and such beneficial ownership is expressly disclaimed.
(c) Except as set forth in Item 4, to the best knowledge of each
of the Reporting Persons, none of the Reporting Persons and no other person
described in Item 2 hereof has beneficial ownership of, or has engaged in any
transaction during the past 60 days in, any shares of Issuer Common Stock.
(d) No person other than DI Associates or KKR Partners has the
right to receive dividends from, or the proceeds from the sale of, the shares
of Issuer Common Stock referred to in this Item 5. To the best knowledge of
the Reporting Persons, no person, other than the respective partners of DI
Associates, KKR Partners and KKR Associates, has the right to receive or the
power to direct the receipt of dividends from, or the proceeds from the sale
of, the Issuer Common Stock.
(e) Not applicable.
Item 6. Contracts, Arrangements or Understandings
with Respect to Securities of the Issuer.
Except as set forth in Item 4 of this Statement, to the best
knowledge of the Reporting Persons, there are no other contracts,
arrangements, understandings or relationships (legal or otherwise) among the
persons named in Item 2 and between such persons and any
<PAGE> Page 12 of 14 Pages
person with respect to any securities of the Issuer, including but not
limited to, transfer or voting of any of the securities of the Issuer, joint
ventures, loan or option arrangements, puts or calls, guarantees of profits,
division of profits or loss, or the giving or withholding of proxies, or a
pledge or contingency the occurrence of which would give another person
voting power over the securities of the Issuer.
Item 7. Material to be Filed as Exhibits.
1. Joint Filing Agreement, dated January 9, 1997, among DI
Associates, L.P., KKR Partners II, L.P. and KKR Associates relating
to the filing of a joint statement on Schedule 13D.
2. Registration Rights Agreement, dated as of September 12, 1996, among
The Gillette Company, DI Associates, L.P. and KKR Partners II, L.P.
3. Agreement and Plan of Merger, dated as of September 12, 1996, among
The Gillette Company, Alaska Acquisition Corp. and Duracell
International Inc.
<PAGE> Page 13 of 14 Pages
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.
KKR ASSOCIATES
By /s/ Scott M. Stuart
-----------------------
Name: Scott M. Stuart
Title: General Partner
DI ASSOCIATES, L.P.
By KKR Associates
General Partner
By: /s/ Scott M. Stuart
-----------------------
Name: Scott M. Stuart
Title: General Partner
KKR PARTNERS II, L.P.
By KKR Associates
General Partner
By: /s/ Scott M. Stuart
-----------------------
Name: Scott M. Stuart
Title: General Partner
DATED: January 9, 1997
<PAGE> Page 14 of 14 Pages
INDEX TO EXHIBITS
Exhibit Number Description of Exhibits
1. Joint Filing Agreement, dated January 9, 1997, among
DI Associates, L.P., KKR Associates and KKR Partners II, L.P.
relating to the filing of a joint statement on Schedule 13D.
2. Registration Rights Agreement, dated as of September 12, 1996,
among The Gillette Company, DI Associates, L.P. and
KKR Partners II, L.P.
3. Agreement and Plan of Merger, dated as of September 12, 1996,
among The Gillette Company, Alaska Acquisition Corp. and
Duracell International Inc.
<PAGE>
EXHIBIT 1
JOINT FILING AGREEMENT
We, the signatories of the statement on Schedule 13D to which this
Agreement is attached, hereby agree that such statement is, and any
amendments thereto filed by any of us will be, filed on behalf of each of us.
KKR ASSOCIATES
By: /s/ Scott M. Stuart
----------------------
Name: Scott M. Stuart
Title: General Partner
DI ASSOCIATES, L.P.
By KKR Associates
General Partner
By /s/ Scott M. Stuart
----------------------
Name: Scott M. Stuart
Title: General Partner
KKR PARTNERS II, L.P.
By KKR Associates
General Partner
By: /s/ Scott M. Stuart
----------------------
Name: Scott M. Stuart
Title: General Partner
Dated: January 9, 1997
<PAGE>
EXHIBIT 2
REGISTRATION RIGHTS AGREEMENT
This REGISTRATION RIGHTS AGREEMENT, dated as of September 12, 1996, is
made and entered into by The Gillette Company, a Delaware corporation (the
"Company"), DI Associates, L.P., a Delaware limited partnership, and KKR
Partners II, L.P., a Delaware limited partnership (collectively, the
"Partnerships").
1. BACKGROUND. The Company has entered into an Agreement and Plan of
Merger, dated as of September 12, 1996, by and among The Gillette Company,
Alaska Acquisition Corp. and Duracell International Inc. (the "Merger
Agreement"), which contemplates that each outstanding share of common stock of
Duracell International Inc. (including such shares held by the Partnerships)
will be converted into the right to receive the number of shares of the
Company's Common Stock, par value $1.00 per share (the "Common Stock"),
specified in the Merger Agreement. This Agreement shall become effective upon
the issuance of the Common Stock to be issued pursuant to the Merger Agreement.
2. DEFINITIONS.
As used in this Agreement, the following capitalized terms shall have
the following respective meanings:
EXCHANGE ACT - The Securities Exchange Act of 1934, as amended.
HOLDER - Subject to Section 8(c) hereof, any party hereto (other than
the Company) and any holder of Registrable Securities who agrees in writing
to be bound by the provisions of this Agreement.
PERSON - Any individual, partnership, joint venture, corporation,
trust, unincorporated organization or government or any department or
agency thereof.
REGISTRABLE SECURITIES - Any Common Stock issued pursuant to the
Merger Agreement and any Common Stock or other securities which may be
issued or distributed in respect thereof by way of stock dividend or stock
split or other distribution, recapitalization or reclassification. As to
any particular Registrable Securities, once issued such Securities shall
cease to be Registrable Securities when (i) a registration statement with
respect to the sale of such Securities shall have become effective under
the Securities Act and such Securities shall have been disposed of in
accordance with such registration statement, (ii) they shall have been
distributed to the public pursuant to Rule 144 (or any successor provision)
under the Securities Act, (iii) they shall have been otherwise transferred,
new certificates for them not bearing a legend restricting further transfer
shall have been delivered by the Company and subsequent disposition of them
shall not require registration or qualification of
<PAGE>
them under the Securities Act or any state securities or blue sky law then
in force, (iv) they shall have ceased to be outstanding, (v) when sold or
otherwise transferred to, any Person who is not a Holder or (vi) the first
date on which the aggregate market value of such Registrable Securities is
less than $250,000,000.
REGISTRATION EXPENSES - Any and all expenses incident to performance
of or compliance with this Agreement, including, without limitation, (i)
all SEC and stock exchange or National Association of Securities Dealers,
Inc. registration and filing fees, (ii) all fees and expenses of complying
with securities or blue sky laws (including fees and disbursements of
counsel for the underwriters in connection with blue sky qualifications of
the Registrable Securities), (iii) all printing, messenger and delivery
expenses, (iv) all fees and expenses incurred in connection with the
listing of the Registrable Securities on any securities exchange pursuant
to clause (viii) of Section 5, (v) the fees and disbursements of counsel
for the Company and of its independent public accountants, including the
expenses of any special audits and/or "cold comfort" letters required by or
incident to such performance and compliance, (vi) the reasonable fees and
disbursements of one counsel selected by the Holders of a majority of the
Registrable Securities being registered to represent all Holders of the
Registrable Securities being registered in connection with each such
registration, and (vii) any fees and disbursements of underwriters
customarily paid by the issuers or sellers of securities, including
liability insurance if the Company so desires or if the underwriters so
require, and the reasonable fees and expenses of any special experts
retained by the Company in connection with the requested registration, but
excluding underwriting discounts and commissions, fees and expenses of
counsel for the underwriters (except as otherwise set forth in clause (ii)
above) and transfer taxes, if any.
SECURITIES ACT - The Securities Act of 1933, as amended.
SEC - The Securities and Exchange Commission or any other federal
agency at the time administering the Securities Act or the Exchange Act.
3. INCIDENTAL REGISTRATIONS.
(a) RIGHT TO INCLUDE REGISTRABLE SECURITIES. If the Company at any
time after the date hereof until December 31, 2002 proposes to register its
Common Stock under the Securities Act (other than a registration on Form S-4 or
S-8, or any successor or other forms promulgated for similar purposes), whether
or not for sale for its own account, pursuant to a registration statement on
which it is permissible to register Registrable Securities for sale to the
public under the Securities Act, it will each such time give prompt written
notice to all Holders of Registrable
-2-
<PAGE>
Securities of its intention to do so and of such Holders' rights under this
Section 3. Upon the written request of any such Holder made within 15 days
after the receipt of any such notice (which request shall specify the
Registrable Securities intended to be disposed of by such Holder), the Company
will use its reasonable efforts to effect the registration under the Securities
Act of all Registrable Securities which the Company has been so requested to
register by the Holders thereof; PROVIDED that (i) if, at any time after giving
written notice of its intention to register any securities and prior to the
effective date of the registration statement filed in connection with such
registration, the Company (or any stockholder of the Company in the case of a
demand registration by such stockholder) shall determine for any reason not to
proceed with the proposed registration of the securities to be sold by it, the
Company may, at its election, give written notice of such determination to each
Holder of Registrable Securities and, thereupon, shall be relieved of its
obligation to register any Registrable Securities in connection with such
registration (but not from its obligation to pay the Registration Expenses in
connection therewith), and (ii) if such registration involves an underwritten
offering, all Holders of Registrable Securities requesting to be included in the
registration must sell their Registrable Securities to the underwriters selected
by the Company (or by any stockholders other than the Holders entitled to select
the underwriters) on the same terms and conditions as apply to the other sellers
included in such registration, with such differences, including any with respect
to indemnification and liability insurance, as may be customary or appropriate
in combined primary and secondary offerings. If a registration requested
pursuant to this Section 3(a) involves an underwritten public offering, any
Holder of Registrable Securities requesting to be included in such registration
may elect, in writing prior to the effective date of the registration statement
filed in connection with such registration, not to register such securities in
connection with such registration.
(b) EXPENSES. The Company will pay all Registration Expenses in
connection with each registration of Registrable Securities requested pursuant
to this Section 3.
(c) PRIORITY IN INCIDENTAL REGISTRATIONS. If a registration pursuant
to this Section 3 involves an underwritten offering and the managing underwriter
advises the Company in writing that, in its opinion, the number of securities
requested to be included in such registration exceeds the number which can be
sold in such offering, so as to be likely to have an adverse effect on the
successful marketing of such offering (including the price at which such
securities can be sold), then the Company will include in such registration (i)
first, 100% of the securities the Company proposes to sell, (ii) second, up to
100% of the securities requested to be registered by any stockholder exercising
a demand registration right and (iii) third, to the extent of the number of
Registrable Securities (and shares of Common Stock held by other Persons with
similar registration
-3-
<PAGE>
rights) requested to be included in such registration which, in the opinion of
such managing underwriter, can be sold without having the adverse effect
referred to above, the number of Registrable Securities (and such shares of
Common Stock) which the Holders (and such other Persons) have requested to be
included in such registration, such amount to be allocated pro rata among all
requesting Holders (and such other Persons) on the basis of the relative number
of shares of Registrable Securities then held by each such Holder (or shares of
Common Stock then held by such other Person) (provided that any shares thereby
allocated to any such Holder (or such other Person) that exceed such Holder's
(or such other Person's) request will be reallocated among the remaining
requesting Holders (and such other Persons) in like manner).
4. REGISTRATION ON REQUEST.
(a) REQUEST BY HOLDERS. At any time, and from time to time, until
December 31, 2000, upon the written request of any Holder or Holders requesting
that the Company effect the registration under the Securities Act of all or part
of such Holder's or Holders' Registrable Securities (constituting in the
aggregate a number of shares having an aggregate market value of at least
$325,000,000 or such lesser number of Registrable Securities then outstanding)
and specifying the intended method of disposition thereof, the Company will
promptly give written notice of such requested registration to all other Holders
of Registrable Securities, and thereupon will, as expeditiously as possible, use
its reasonable efforts to effect the registration under the Securities Act of:
(i) the Registrable Securities which the Company has been so
requested to register by such Holder or Holders; and
(ii) all other Registrable Securities which the Company has been
requested to register by any other Holder thereof by written request given
to the Company within 15 days after the giving of such written notice by
the Company (which request shall specify the intended method of disposition
of such Registrable Securities),
so as to permit the disposition (in accordance with the intended method thereof
as aforesaid) of the Registrable Securities so to be registered; PROVIDED, that
the Company shall not be obligated to file a registration statement relating to
any registration request under this Section 4(a) (i) unless the aggregate
requests by the Holder or Holders for such registration cover a number of shares
having an aggregate market value of at least $325,000,000 (or such lesser
number of Registrable Securities then outstanding), or (ii) within a period of
180 days after the effective date of any other registration statement relating
to (A) any registration request under this Section 4(a) or (B) any registration
effected under Section 3; PROVIDED, FURTHER, the
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Company shall not be required to effect more than five (5) requested
registrations pursuant to this Section 4.
(b) EXPENSES. The Company will pay all Registration Expenses in
connection with the registrations of Registrable Securities pursuant to this
Section 4 upon the written request of any of the Holders.
(c) EFFECTIVE REGISTRATION STATEMENT. A registration requested
pursuant to this Section 4 will not be deemed to have been effected unless it
has become effective; PROVIDED, that if, within 60 days after it has become
effective, the offering of Registrable Securities pursuant to such registration
is interfered with by any stop order, injunction or other order or requirement
of the SEC or other governmental agency or court, such registration will be
deemed not to have been effected.
(d) SELECTION OF UNDERWRITERS. If a requested registration pursuant
to this Section 4 involves an underwritten offering, the Holders of a majority
of the Registrable Securities to be registered thereunder shall have the right
to select the investment banker or bankers and managers to administer the
offering; PROVIDED, HOWEVER, that such investment banker or bankers and managers
shall be reasonably satisfactory to the Company.
(e) PRIORITY IN REQUESTED REGISTRATIONS. If a requested registration
pursuant to this Section 4 involves an underwritten offering and the managing
underwriter advises the Company in writing that, in its opinion, the number of
securities requested to be included in such registration (including securities
of the Company or other Persons which are not Registrable Securities) exceeds
the number which can be sold in such offering, so as to be likely to have an
adverse effect on the successful marketing of such offering (including the price
at which such securities can be sold), the Company will include in such
registration only the Registrable Securities requested to be included in such
registration. In the event that the number of Registrable Securities requested
to be included in such registration exceeds the number which, in the opinion of
such managing underwriter, can be sold without having the adverse effect
referred to above, the number of such Registrable Securities to be included in
such registration shall be allocated pro rata among all requesting Holders on
the basis of the relative number of shares of Registrable Securities then held
by each such Holder (provided that any shares thereby allocated to any such
Holder that exceed such Holder's request shall be reallocated among the
remaining requesting Holders in like manner). In the event that the number of
Registrable Securities requested to be included in such registration is less
than the number which, in the opinion of the managing underwriter, can be sold
without having the adverse effect referred to above, the Company may include in
such registration the securities the Company (or any other stockholder) proposes
to sell up to the number of securities
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that, in the opinion of the underwriter, can be sold without having the adverse
effect referred to above.
(f) ADDITIONAL RIGHTS. If the Company at any time grants to any other
Holders of Common Stock any rights to request the Company to effect the
registration under the Securities Act of any such shares of Common Stock on
terms more favorable to such Holders than the terms set forth in this Section 4,
the terms of this Section 4 shall be deemed amended or supplemented to the
extent necessary to provide the Holders such more favorable rights and benefits.
(g) COMPANY'S ABILITY TO POSTPONE. (i) If, upon receipt of a
registration request pursuant to Section 4(a), the Company is advised in writing
by a nationally recognized investment banking firm selected by the Company that,
in such firm's opinion, a registration at the time and on the terms requested
would adversely affect any public offering of securities of the Company by the
Company (other than in connection with employee benefit and similar plans) or by
or on behalf of any shareholder of the Company exercising a demand registration
right (collectively, a "Company Offering") with respect to which the Company has
commenced preparations for a registration or received notice of the exercise of
such demand registration right prior to the receipt of a registration request
pursuant to Section 4(a) and the Company furnishes the Holders with a
certificate signed by the Chief Executive Officer or Chief Financial Officer of
the Company to such effect (the "Transaction Delay Notice") promptly after such
request, the Company shall not be required to effect a registration pursuant to
Section 4(a) until the earliest of (A) 30 days after the completion of such
Company Offering, (B) promptly after the abandonment of such Company Offering or
(C) 120 days after the date of the Transaction Delay Notice; PROVIDED, HOWEVER,
that in any event the Company shall not be required to effect any registration
prior to the termination, waiver or reduction of any "blackout period" required
by the underwriters to be applicable to the Holders or the Company, if any, in
connection with any Company Offering.
(ii) If upon receipt of a registration request pursuant to Section
4(a) or while a registration request pursuant to Section 4(a) is pending, the
Company determines in its good faith judgment after consultation with its
principal securities counsel or outside securities counsel that the filing of a
registration statement would require disclosure of material information which
the Company has a bona fide business purpose for preserving as confidential and
the Company provides the Holders written notice (the "Information Delay Notice"
and, together with the Transaction Delay Notice, the "Delay Notice") thereof
promptly after the Company makes such determination, which shall be made
promptly after the receipt of any request, the Company shall not be required to
comply with its obligations under Section 4(a) until the earlier of (A) the date
upon which such material information
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is disclosed to the public or ceases to be material or (B) 90 days after the
Holders' receipt of such notice.
(iii) Notwithstanding the foregoing provisions of this Section 4(h),
the Company shall be entitled to serve only one Delay Notice (i) within any
period of 180 consecutive days or (ii) with respect to any two consecutive
registrations requested pursuant to Section 4(a).
(iv) At any time when a registration statement effected pursuant to
Section 4(a) hereunder relating to Registrable Securities is effective and a
prospectus relating thereto is required to be delivered under the Securities Act
within the appropriate period mentioned in clause (ii) of Section 5 hereunder,
that the Company becomes aware that the prospectus included in such registration
statement, as then in effect, includes an untrue statement of a material fact or
omits to state a material fact required to be stated therein or necessary to
make the statements therein not misleading in the light of the circumstances
then existing, to the extent that the amendment or supplement to such prospectus
necessary to correct such untrue statement of a material fact or omission to
state a material fact would require disclosure of material information which the
Company has a bona fide business purpose for preserving as confidential and the
Company provides the Holders written notice thereof promptly after the Company
makes such determination, the Holders shall suspend sales of Registrable
Securities pursuant to such registration statement and the Company shall not be
required to comply with its obligations under Section 5(vi) until the earlier of
(A) the date upon which such material information is disclosed to the public or
ceases to be material or (B) 90 days after the Holders' receipt of such written
notice. If the Holders' disposition of Registrable Securities is discontinued
pursuant to the foregoing sentence, unless the Company thereafter extends the
effectiveness of the registration statement to permit dispositions of
Registrable Securities by the Holders for an aggregate of 60 days, the
registration statement shall not be counted for purposes of determining the
number of registrations permitted under Section 4 hereof.
5. REGISTRATION PROCEDURES. If and whenever the Company is required
to use its reasonable efforts to effect or cause the registration of any
Registrable Securities under the Securities Act as provided in this Agreement,
the Company will, as expeditiously as possible:
(i) prepare and, in any event within 60 days after the end of the
period within which a request for registration may be given to the Company,
file with the SEC a registration statement with respect to such Registrable
Securities and use its reasonable efforts to cause such registration
statement to become effective; PROVIDED, HOWEVER, that the Company may
discontinue any registration of its securities which is being effected
pursuant to Section 3 at any time prior to the
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effective date of the registration statement relating thereto;
(ii) prepare and file with the SEC such amendments and supplements to
such registration statement and the prospectus used in connection therewith
as may be necessary to keep such registration statement effective for a
period not in excess of 60 days (or such shorter period during which the
distribution of securities thereunder continues) and to comply with the
provisions of the Securities Act with respect to the disposition of all
securities covered by such registration statement during such period in
accordance with the intended methods of disposition by the seller or
sellers thereof set forth in such registration statement (so long as such
intended methods of disposition are commercially reasonable); PROVIDED,
that before filing a registration statement or prospectus, or any
amendments or supplements thereto, the Company will furnish to one counsel
selected by the Holders of a majority of the Registrable Securities covered
by such registration statement to represent all Holders of Registrable
Securities covered by such registration statement, copies of all documents
proposed to be filed, which documents will be subject to the review of such
counsel;
(iii) furnish to each seller of such Registrable Securities such
number of copies of such registration statement and of each amendment and
supplement thereto (in each case including all exhibits), such number of
copies of the prospectus included in such registration statement (including
each preliminary prospectus and summary prospectus), in conformity with the
requirements of the Securities Act, and such other documents as such seller
may reasonably request in order to facilitate the disposition of the
Registrable Securities by such seller;
(iv) use its reasonable efforts to register or qualify such
Registrable Securities covered by such registration statement under such
other securities or blue sky laws of such jurisdictions as each seller
shall reasonably request, and do any and all other acts and things which
may be reasonably necessary or advisable to enable such seller to
consummate the disposition in such jurisdictions of the Registrable
Securities owned by such seller, except that the Company shall not for any
such purpose be required to qualify generally to do business as a foreign
corporation in any jurisdiction where, but for the requirements of this
clause (iv), it would not be obligated to be so qualified, to subject
itself to taxation in any such jurisdiction, or to consent to general
service of process in any such jurisdiction;
(v) use its reasonable efforts to cause such Registrable Securities
covered by such registration statement
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to be registered with or approved by such other governmental agencies or
authorities as may be necessary to enable the seller or sellers thereof to
consummate the disposition of such Registrable Securities;
(vi) notify each seller of any such Registrable Securities covered by
such registration statement, at any time when a prospectus relating thereto
is required to be delivered under the Securities Act within the appropriate
period mentioned in clause (ii) of this Section 5, of the Company's
becoming aware that the prospectus included in such registration statement,
as then in effect, includes an untrue statement of a material fact or omits
to state a material fact required to be stated therein or necessary to make
the statements therein not misleading in the light of the circumstances
then existing, and at the request of any such seller, prepare and furnish
to such seller a reasonable number of copies of an amended or supplemental
prospectus as may be necessary so that, as thereafter delivered to the
purchasers of such Registrable Securities, such prospectus shall not
include an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements
therein not misleading in the light of the circumstances then existing;
(vii) otherwise use its reasonable efforts to comply with all
applicable rules and regulations of the SEC, and make available to its
security holders, as soon as reasonably practicable (but not more than
eighteen months) after the effective date of the registration statement, an
earnings statement which shall satisfy the provisions of Section 11(a) of
the Securities Act and the rules and regulations promulgated thereunder;
(viii) use its reasonable efforts to list such Registrable Securities
on any securities exchange on which the Common Stock is then listed, if
such Registrable Securities are not already so listed and if such listing
is then permitted under the rules of such exchange, and to provide a
transfer agent and registrar for such Registrable Securities covered by
such registration statement not later than the effective date of such
registration statement;
(ix) enter into such customary agreements (including an underwriting
agreement in customary form) and take such other actions as sellers of a
majority of shares of such Registrable Securities or the underwriters, if
any, reasonably request in order to expedite or facilitate the disposition
of such Registrable Securities;
(x) use its reasonable efforts to obtain a "cold comfort" letter or
letter from the Company's independent public accountants in customary form
and covering matters of the type customarily covered by "cold comfort"
letters as the
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seller or sellers of a majority of shares of such Registerable Securities
shall reasonably request (provided that Registrable Securities constitute
at least 25% of the securities covered by such registration statement);
(xi) make available for inspection by representatives of the sellers
of such Registrable Securities covered by such registration statement, by
any underwriter participating in any disposition to be effected pursuant to
such registration statement and by any attorney, accountant or other agent
retained by such sellers or any such underwriter, all pertinent financial
and other records, pertinent corporate documents and properties of the
Company, and cause all of the Company's officers, directors and employees
to supply all information reasonably requested by any such seller,
underwriter, attorney, accountant or agent in connection with such
registration statement (subject to each party referred to in this clause
(xi) entering into customary confidentiality agreements in a form
reasonably acceptable to the Company); and
(xii) use its reasonable efforts (taking into account the interests
of the Company) to make available the senior executive officers of the
Company to participate in customary "road show" presentations that may be
reasonably requested by the Holders and the managing underwriter in any
underwritten offering; provided that the participation of such senior
executive officers shall not interfere with the conduct of their duties to
the Company.
The Company may require each seller of Registrable Securities as to
which any registration is being effected to furnish the Company with such
information regarding such seller and pertinent to the disclosure requirements
relating to the registration and the distribution of such securities as the
Company may from time to time reasonably request in writing.
Each Holder of Registrable Securities agrees that, upon receipt of any
notice from the Company of the happening of any event of the kind described in
clause (vi) of this Section 5, such Holder will forthwith discontinue
disposition of Registrable Securities pursuant to the registration statement
covering such Registrable Securities until such Holder's receipt of the copies
of the supplemented or amended prospectus contemplated by clause (vi) of this
Section 5, and, if so directed by the Company, such Holder will deliver to the
Company (at the Company's expense) all copies, other than permanent file copies
then in such Holder's possession, of the prospectus covering such Registrable
Securities current at the time of receipt of such notice. In the event the
Company shall give any such notice, the period mentioned in clause (ii) of this
Section 5 shall be extended by the number of days during the period from and
including the date of the giving of such notice pursuant to clause (vi) of this
Section 5 and including the date when each seller of Registrable Securities
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covered by such registration statement shall have received the copies of the
supplemented or amended prospectus contemplated by clause (vi) of this
Section 5.
6. INDEMNIFICATION.
(a) INDEMNIFICATION BY THE COMPANY. In the event of any registration
of any securities of the Company under the Securities Act pursuant to Section 3
or 4, the Company will, and it hereby does, indemnify and hold harmless, to the
extent permitted by law, the seller of any Registrable Securities covered by
such registration statement, each affiliate of such seller and their respective
directors and officers or general and limited partners (and the directors,
officers, affiliates and controlling Persons thereof), each other Person who
participates as an underwriter in the offering or sale of such securities and
each other Person, if any, who controls such seller or any such underwriter
within the meaning of the Securities Act (collectively, the "Indemnified
Parties"), against any and all losses, claims, damages or liabilities, joint or
several, and expenses to which such seller, any such director or officer or
general or limited partner or affiliate or any such underwriter or controlling
Person may become subject under the Securities Act, common law or otherwise,
insofar as such losses, claims, damages or liabilities (or actions or
proceedings in respect thereof, whether or not such Indemnified Party is a party
thereto) arise out of or are based upon (a) any untrue statement or alleged
untrue statement of any material fact contained in any registration statement
under which such securities were registered under the Securities Act, any
preliminary, final or summary prospectus contained therein, or any amendment or
supplement thereto, or (b) any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading in the light of the circumstances then existing, and the
Company will reimburse such Indemnified Party for any legal or any other
expenses reasonably incurred by it in connection with investigating or defending
any such loss, claim, liability, action or proceeding; PROVIDED, that the
Company shall not be liable to any Indemnified Party in any such case to the
extent that any such loss, claim, damage, liability (or action or proceeding in
respect thereof) or expense arises out of or is based upon any untrue statement
or alleged untrue statement or omission or alleged omission made in such
registration statement or amendment or supplement thereto or in any such
preliminary, final or summary prospectus in reliance upon and in conformity with
written information with respect to such seller furnished to the Company by such
seller for use in the preparation thereof; and PROVIDED, FURTHER, that the
Company will not be liable to any Indemnified Party (including any person
controlling such Indemnified Party), who is obligated to deliver a prospectus in
transactions in a security as to which a registration statement has been filed
pursuant to the Securities Act, under the indemnity agreement in this Section
6(a) with respect to any preliminary prospectus or the final prospectus or
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the final prospectus as amended or supplemented, as the case may be, to the
extent that any such loss, claim, damage or liability of such Indemnified Party
results from the fact that such Registrable Securities were sold to a person to
whom there was not sent or given, at or prior to the written confirmation of
such sale, a copy of the final prospectus (including any documents incorporated
by reference therein) or of the final prospectus as then amended or supplemented
(including any documents incorporated by reference therein), whichever is most
recent, if the Company has previously furnished copies thereof to such
Indemnified Party. Such indemnity shall remain in full force and effect
regardless of any investigation made by or on behalf of such seller or any
Indemnified Party and shall survive the transfer of such securities by such
seller.
(b) INDEMNIFICATION BY THE SELLERS. In the event of any registration
of any securities of the Company under the Securities Act pursuant to Section 3
or 4, each prospective seller of Registrable Securities and any underwriter
shall indemnify and hold harmless (in the same manner and to the same extent as
set forth in subdivision (a) of this Section 6) the Company and all other
prospective sellers and any underwriter, as the case may be, with respect to any
statement or alleged statement in or omission or alleged omission from such
registration statement, any preliminary, final or summary prospectus contained
therein, or any amendment or supplement, if such statement or alleged statement
or omission or alleged omission was made in reliance upon and in conformity with
written information with respect to such seller or underwriter furnished to the
Company by such seller or underwriter for use in the preparation of such
registration statement, preliminary, final or summary prospectus or amendment or
supplement, or a document incorporated by reference into any of the foregoing.
Such indemnity shall remain in full force and effect regardless of any
investigation made by or on behalf of the Company or any of the prospective
sellers, or any of their respective affiliates, directors, officers or
controlling Persons and shall survive the transfer of such securities by such
seller.
(c) NOTICES OF CLAIMS, ETC. Promptly after receipt by an indemnified
party hereunder of written notice of the commencement of any action or
proceeding with respect to which a claim for indemnification may be made
pursuant to this Section 6, such indemnified party will, if a claim in respect
thereof is to be made against an indemnifying party, give written notice to the
latter of the commencement of such action; PROVIDED, that the failure of the
indemnified party to give notice as provided herein shall not relieve the
indemnifying party of its obligations under the preceding subdivisions of this
Section 6, except to the extent that the indemnifying party is actually
prejudiced by such failure to give notice. In case any such action is brought
against an indemnified party, the indemnifying party will be entitled to
participate in and to assume the defense thereof, jointly with any other
indemnifying party similarly notified to the extent that it may wish, with
counsel reasonably satisfactory to such indemnified
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party, and after notice from the indemnifying party to such indemnified party of
its election so to assume the defense thereof, the indemnifying party will not
be liable to such indemnified party for any legal or other expenses subsequently
incurred by the latter in connection with the defense thereof other than
reasonable costs of investigation, unless in such indemnified party's reasonable
judgment a conflict of interest between such indemnified and indemnifying
parties may exist in respect of such claim (in which event such indemnified
party and any other indemnified party to which such conflict of interest applies
shall be reimbursed for the reasonable expenses incurred in connection with
retaining one separate legal counsel for all such indemnified parties in
connection with any one such action or separate but substantially similar or
related actions in the same jurisdiction arising out of the same general
allegations or circumstances). No indemnifying party will, without the prior
written consent of the indemnified party (which consent shall not be
unreasonably withheld), consent to entry of any judgment or enter into any
settlement in respect of any such indemnifiable claim, unless any such judgment
or settlement includes as an unconditional term thereof, the giving by the
claimant or plaintiff to such indemnified party of a release from all liability
in respect to such claim or litigation.
(d) OTHER INDEMNIFICATION. Indemnification similar to that specified
in the preceding subdivisions of this Section 6 (with appropriate modifications)
shall be given by the Company and each seller of Registrable Securities with
respect to any required registration or other qualification of securities under
any federal or state law or regulation or governmental authority other than the
Securities Act.
(e) NON-EXCLUSIVITY. The obligations of the parties under this
Section 6 shall be in addition to any liability which any party may otherwise
have to any other party.
7. RULE 144. If the Company shall have filed a registration statement
pursuant to the requirements of Section 12 of the Exchange Act or a registration
statement pursuant to the requirements of the Securities Act, the Company
covenants that it will file the reports required to be filed by it under the
Securities Act and the Exchange Act and the rules and regulations adopted by the
SEC thereunder (or, if the Company is not required to file such reports, it
will, upon the request of any Holder of Registrable Securities, make publicly
available such information), and it will take such further action as any Holder
of Registrable Securities may reasonably request, all to the extent required
from time to time to enable such Holder to sell shares of Registrable Securities
without registration under the Securities Act within the limitation of the
exemptions provided by (i) Rule 144 under the Securities Act, as such Rule may
be amended from time to time, or (ii) any similar rule or regulation hereafter
adopted by the SEC. Upon the request of any Holder of Registrable Securities,
the Company will deliver to such Holder a written statement as to
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whether it has complied with such requirements. Notwithstanding anything
contained in this Section 7, the Company may deregister under Section 12 of the
Exchange Act if it then is permitted to do so pursuant to the Exchange Act and
the rules and regulations thereunder.
8. MISCELLANEOUS.
(a) HOLDBACK AGREEMENT. If any registration described in Section 3 or
4 hereof shall be in connection with an underwritten public offering, each
Holder of Registrable Securities agrees (whether or not such Holder participates
in such registration) not to effect any public sale or distribution, including
any sale pursuant to Rule 144 under the Securities Act, or any other sale,
pledge, assignment or other transfer or disposition of any equity securities of
the Company, or of any security convertible into or exchangeable or exercisable
for any equity security of the Company (in each case, other than as part of such
underwritten public offering), within 7 days before or 90 days (or such lesser
period as the managing underwriters may permit) after the effective date of such
registration, and the Company hereby also so agrees.
(b) AMENDMENTS AND WAIVERS. This Agreement may be amended and the
Company may take any action herein prohibited, or omit to perform any act herein
required to be performed by it, only if the Company shall have obtained the
written consent to such amendment, action or omission to act, of the Holders of
a majority of the Registrable Securities then outstanding. Each Holder of any
Registrable Securities at the time or thereafter outstanding shall be bound by
any consent authorized by this Section 8(b), whether or not such Registrable
Securities shall have been marked to indicate such consent.
(c) SUCCESSORS, ASSIGNS AND TRANSFEREES. This Agreement shall be
binding upon and shall inure to the benefit of the parties hereto and their
respective successors and permitted assigns. Whether or not any express
assignment shall have been made, the provisions of this Agreement which are for
the benefit of the parties hereto other than the Company may only be assigned
to, and shall also be for the benefit of and enforceable by, any subsequent
Holder of any Registrable Securities, which is an affiliate of the Partnerships,
subject to the provisions contained herein.
(d) NOTICES. All notices and other communications provided for
hereunder shall be in writing and shall be sent by first class mail, telex,
telecopier or hand delivery:
(i) if to the Company, to:
The Gillette Company
Prudential Tower Building
Boston, Massachusetts 02199
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Attention: Len Spalding
Telecopier: (617) 421-7866
Telephone: (617) 421-7875
With a copy to:
David C. Chapin, Esq.
Ropes & Gray
One International Place
Boston, Massachusetts 02110
Telecopier No.: (617) 951-7050
Telephone No.: (617) 951-7371
(ii) if to any of the partnerships, to:
KKR Partners II, L.P. or
DI Associates, L.P.,
c/o Kohlberg Kravis Roberts & Co.
9 West 57th Street
Suite 4250
New York, New York 10019
Attention: Scott Stuart
Telecopier: (212) 750-0003
Telephone: (212) 750-8300
With a copy to:
Charles I. Cogut, Esq.
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, New York 10017
Telecopier No.: (212) 455-2502
Telephone No.: (212) 455-2000
(iii) if to any other holder of Registrable Securities, to the address
of such other holder as shown in the stock record book of the
Company, or to such other address as any of the above shall have
designated in writing to all the other above.
All such notices and communications shall be deemed to have been given or made
(1) when delivered by hand, (2) five business days after being deposited in the
mail, postage prepaid, (3) when telexed, answer-back received or (4) when
telecopied, receipt acknowledged.
(e) DESCRIPTIVE HEADINGS. The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning of terms contained herein.
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(f) SEVERABILITY. In the event that any one or more of the
provisions, paragraphs, words, clauses, phrases or sentences contained herein,
or the application thereof in any circumstances, is held invalid, illegal or
unenforceable in any respect for any reason, the validity, legality and
enforceability of any such provision, paragraph, word, clause, phrase or
sentence in every other respect and of the remaining provisions, paragraphs,
words, clauses, phrases or sentences hereof shall not be in any way impaired, it
being intended that all rights, powers and privileges of the parties hereto
shall be enforceable to the fullest extent permitted by law.
(g) COUNTERPARTS. This Agreement may be executed in two or more
counterparts, and by different parties on separate counterparts, each of which
shall be deemed an original, but all such counterparts shall together constitute
one and the same instrument, and it shall not be necessary in making proof of
this Agreement to produce or account for more than one such counterpart.
(h) GOVERNING LAW. This Agreement shall be governed by and construed
and enforced in accordance with the laws of the State of Delaware applicable to
contracts made and to be performed therein. The parties to this Agreement
hereby agree to submit to the non-exclusive jurisdiction of the courts of the
State of Delaware in any action or proceeding arising out of or relating to this
Agreement.
(i) SPECIFIC PERFORMANCE. The parties hereto acknowledge and 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. Accordingly, it is agreed that they shall be entitled
to an injunction or injunctions to prevent breaches of the provisions of this
Agreement and to enforce specifically the terms and provisions hereof in any
court of competent jurisdiction in the United States or any state thereof, in
addition to any other remedy to which they may be entitled at law or equity.
(j) OTHER AGREEMENTS. No provision of this Agreement will require
the Company to take any action or omit to take any action that would be in
violation of that certain letter agreement dated as of July 20, 1989 between the
Company and Berkshire Hathaway Inc.
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IN WITNESS WHEREOF, each of the undersigned has executed this
Agreement or caused this Agreement to be executed on its behalf as of the date
first written above.
THE GILLETTE COMPANY
By: /s/ Kenneth F. Kames
---------------------------------
Title: Vice President
KKR PARTNERS II, L.P.
By: KKR Associates,
Its General Partner
By: /s/ Scott M. Stuart
---------------------------------
Name: Scott M. Stuart
Title: General Partner
DI ASSOCIATES, L.P.
By: KKR Associates
Its General Partner
By: /s/ Scott M. Stuart
---------------------------------
Name: Scott M. Stuart
Title: General Partner
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CONFORMED COPY
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
THE GILLETTE COMPANY
ALASKA ACQUISITION CORP.
and
DURACELL INTERNATIONAL INC.
Dated as of September 12, 1996
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TABLE OF CONTENTS
ARTICLE I.................................................................... 2
THE MERGER................................................................... 2
SECTION 1.1 THE MERGER.......................................... 2
SECTION 1.2 EFFECTIVE TIME...................................... 2
SECTION 1.3 EFFECT OF THE MERGER................................ 2
SECTION 1.4 CERTIFICATE OF INCORPORATION, BY-LAWS............... 2
SECTION 1.5 DIRECTORS AND OFFICERS.............................. 3
SECTION 1.6 EFFECT ON CAPITAL STOCK. .......................... 3
SECTION 1.7 EXCHANGE OF CERTIFICATES............................ 5
SECTION 1.8 STOCK TRANSFER BOOKS................................ 6
SECTION 1.9 NO FURTHER OWNERSHIP RIGHTS IN COMPANY COMMON STOCK. 7
SECTION 1.10 LOST, STOLEN OR DESTROYED CERTIFICATES............. 7
SECTION 1.11 TAX AND ACCOUNTING CONSEQUENCES.................... 7
SECTION 1.12 TAKING OF NECESSARY ACTION; FURTHER ACTION......... 7
SECTION 1.13 MATERIAL ADVERSE EFFECT............................ 7
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE COMPANY................................ 8
SECTION 2.1 ORGANIZATION AND QUALIFICATION; SUBSIDIARIES........ 8
SECTION 2.2 CERTIFICATE OF INCORPORATION AND BY-LAWS............ 8
SECTION 2.3 CAPITALIZATION...................................... 8
SECTION 2.4 AUTHORITY RELATIVE TO THIS AGREEMENT................ 9
SECTION 2.5 NO CONFLICT; REQUIRED FILINGS AND CONSENTS......... 10
SECTION 2.6 COMPLIANCE, PERMITS................................ 11
SECTION 2.7 SEC FILINGS; FINANCIAL STATEMENTS.................. 12
SECTION 2.8 ABSENCE OF CERTAIN CHANGES OR EVENTS............... 12
SECTION 2.9 NO UNDISCLOSED LIABILITIES......................... 13
SECTION 2.10 ABSENCE OF LITIGATION............................. 13
SECTION 2.11 EMPLOYEE BENEFIT PLANS, EMPLOYMENT AGREEMENTS..... 13
SECTION 2.12 LABOR MATTERS..................................... 14
SECTION 2.13 REGISTRATION STATEMENT, JOINT PROXY
STATEMENT/PROSPECTUS.............................. 15
SECTION 2.14 [Intentionally Omitted]........................... 15
SECTION 2.15 TITLE TO PROPERTY................................. 15
SECTION 2.16 TAXES............................................. 16
SECTION 2.17 ENVIRONMENTAL MATTERS............................. 17
SECTION 2.18 INTELLECTUAL PROPERTY............................. 17
SECTION 2.19 INTERESTED PARTY TRANSACTIONS..................... 18
SECTION 2.20 INSURANCE......................................... 18
SECTION 2.21 POOLING MATTERS................................... 19
SECTION 2.22 OPINION OF FINANCIAL ADVISOR...................... 19
SECTION 2.23 BROKERS........................................... 19
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SECTION 2.24 CHANGE IN CONTROL PAYMENTS........................ 19
SECTION 2.25 EXPENSES.......................................... 19
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB..................... 19
SECTION 3.1 ORGANIZATION AND QUALIFICATION; SUBSIDIARIES....... 20
SECTION 3.2 CHARTER AND BY-LAWS................................ 20
SECTION 3.3 CAPITALIZATION..................................... 20
SECTION 3.4 AUTHORITY RELATIVE TO THIS AGREEMENT............... 21
SECTION 3.5 NO CONFLICT, REQUIRED FILINGS AND CONSENTS......... 21
SECTION 3.6 COMPLIANCE; PERMITS................................ 22
SECTION 3.7 SEC FILINGS; FINANCIAL STATEMENTS.................. 23
SECTION 3.8 ABSENCE OF CERTAIN CHANGES OR EVENTS............... 23
SECTION 3.9 NO UNDISCLOSED LIABILITIES......................... 24
SECTION 3.10 ABSENCE OF LITIGATION............................. 24
SECTION 3.11 LABOR MATTERS..................................... 24
SECTION 3.12 REGISTRATION STATEMENT; JOINT PROXY
STATEMENT/PROSPECTUS.............................. 24
SECTION 3.13 [Intentionally Omitted]........................... 25
SECTION 3.14 TITLE TO PROPERTY................................. 25
SECTION 3.15 TAXES............................................. 25
SECTION 3.16 ENVIRONMENTAL MATTERS............................. 26
SECTION 3.17 INTELLECTUAL PROPERTY............................. 26
SECTION 3.18 INTERESTED PARTY TRANSACTIONS..................... 27
SECTION 3.19 INSURANCE......................................... 27
SECTION 3.20 POOLING MATTERS................................... 28
SECTION 3.21 OPINION OF FINANCIAL ADVISOR...................... 28
SECTION 3.22 BROKERS........................................... 28
SECTION 3.23 OWNERSHIP OF MERGER SUB; NO PRIOR ACTIVITIES...... 28
ARTICLE IV
CONDUCT OF BUSINESS PENDING THE MERGER...................................... 29
SECTION 4.1 CONDUCT OF BUSINESS BY THE COMPANY PENDING THE
MERGER............................................. 29
SECTION 4.2 NO SOLICITATION.................................... 31
SECTION 4.3 CONDUCT OF BUSINESS BY PARENT PENDING THE MERGER... 32
ARTICLE V
ADDITIONAL AGREEMENTS....................................................... 33
SECTION 5.1 HSR ACT; ETC....................................... 33
SECTION 5.2 JOINT PROXY STATEMENT PROSPECTUS; REGISTRATION
STATEMENT.......................................... 33
SECTION 5.3 STOCKHOLDERS MEETINGS.............................. 34
SECTION 5.4 ACCESS TO INFORMATION; CONFIDENTIALITY............. 34
SECTION 5.5 CONSENTS; APPROVALS................................ 34
SECTION 5.6 AGREEMENTS WITH RESPECT TO AFFILIATES. ........... 35
SECTION 5.7 INDEMNIFICATION AND INSURANCE...................... 35
SECTION 5.7A EMPLOYMENT AND BENEFIT MATTERS.................... 36
SECTION 5.8 NOTIFICATION OF CERTAIN MATTERS.................... 37
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SECTION 5.9 FURTHER ACTION/TAX TREATMENT....................... 37
SECTION 5.10 PUBLIC ANNOUNCEMENTS. ............................ 37
SECTION 5.11 CONVEYANCE TAXES.................................. 38
SECTION 5.12 ACCOUNTANTS' LETTERS.............................. 38
SECTION 5.13 POOLING ACCOUNTING TREATMENT...................... 38
SECTION 5.14 NYSE LISTING...................................... 38
SECTION 5.15 LISTING OF PARENT SHARES.......................... 38
ARTICLE VI
CONDITIONS TO THE MERGER.................................................... 38
SECTION 6.1 CONDITIONS TO OBLIGATION OF EACH PARTY TO EFFECT THE
MERGER............................................. 38
SECTION 6.2 ADDITIONAL CONDITIONS TO OBLIGATIONS OF PARENT AND
MERGER SUB......................................... 39
SECTION 6.3 ADDITIONAL CONDITIONS TO OBLIGATION OF THE COMPANY. 40
ARTICLE VII
TERMINATION................................................................. 41
SECTION 7.1 TERMINATION........................................ 41
SECTION 7.2 EFFECT OF TERMINATION.............................. 42
SECTION 7.3 FEES AND EXPENSES.................................. 42
ARTICLE VIII
GENERAL PROVISIONS.......................................................... 44
SECTION 8.1 EFFECTIVENESS OF REPRESENTATIONS, WARRANTIES AND
AGREEMENTS, ETC. .................................. 44
SECTION 8.2 NOTICES............................................ 44
SECTION 8.3 CERTAIN DEFINITIONS................................ 46
SECTION 8.4 AMENDMENT.......................................... 47
SECTION 8.5 WAIVER............................................. 47
SECTION 8.6 HEADINGS........................................... 47
SECTION 8.7 SEVERABILITY....................................... 47
SECTION 8.8 ENTIRE AGREEMENT................................... 47
SECTION 8.9 ASSIGNMENT; GUARANTEE OF MERGER SUB................ 48
SECTION 8.10 PARTIES IN INTEREST............................... 48
SECTION 8.11 FAILURE OR INDULGENCE NOT WAIVER; REMEDIES
CUMULATIVE........................................ 48
SECTION 8.12 GOVERNING LAW..................................... 48
SECTION 8.13 COUNTERPARTS...................................... 48
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of September 12, 1996 (this
"AGREEMENT"), among The Gillette Company, a Delaware corporation ("PARENT"),
Alaska Acquisition Corp., a Delaware corporation and a wholly owned subsidiary
of Parent ("MERGER SUB"), and Duracell International Inc., a Delaware
corporation (the "COMPANY").
WITNESSETH:
WHEREAS, the Boards of Directors of Parent, Merger Sub and the Company
have each determined that it is advisable and in the best interests of their
respective stockholders for Parent to enter into a business combination with the
Company upon the terms and subject to the conditions set forth herein;
WHEREAS, as a condition and inducement to Parent's and Merger Sub's
entering into this Agreement and incurring the obligations set forth herein,
concurrently with the execution and delivery of this Agreement, Parent is
entering into a Stockholders Agreement (the "Stockholders Agreement") with each
of KKR Partners II, L.P. and DI Associates, L.P. (collectively, the
"Stockholders"), pursuant to which, among other things, the Stockholders,
severally and not jointly, have agreed to vote the shares of Company Common
Stock (as defined below) then owned by them in favor of the Merger; and
WHEREAS, in furtherance of such combination, the Boards of Directors of
Parent, Merger Sub and the Company have each approved the merger (the
"MERGER") of Merger Sub with and into the Company in accordance with the
applicable provisions of the Delaware General Corporation Law (the "DGCL"),
and upon the terms and subject to the conditions set forth herein and the Board
of Directors of the Company has approved the transactions contemplated by this
Agreement and the Stockholders Agreement in accordance with the provisions of
Section 203 of the DGCL;
WHEREAS, Parent, Merger Sub and the Company intend, by approving
resolutions authorizing this Agreement, to adopt this Agreement as a plan of
reorganization within the meaning of Section 368(a) of the Internal Revenue Code
of 1986, as amended (the "CODE"), and the regulations promulgated thereunder;
and
WHEREAS, pursuant to the Merger, each outstanding share (a "SHARE") of
the Company's common stock, $.01 par value (the "COMPANY COMMON STOCK"), shall
be converted into the right to receive the Merger Consideration (as defined in
Section 1.7(b)), upon the terms and subject to the conditions set forth herein;
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
and agreements herein contained, and intending to be legally bound hereby,
Parent, Merger Sub and the Company hereby agree as follows:
<PAGE>
ARTICLE I
THE MERGER
SECTION 1.1 THE MERGER.
(a) EFFECTIVE TIME. At the Effective Time (as defined in Section 1.2),
and subject to and upon the terms and conditions of this Agreement and the DGCL,
Merger Sub shall be merged with and into the Company, the separate corporate
existence of Merger Sub shall cease, and the Company shall continue as the
surviving corporation. The Company as the surviving corporation after the
Merger is hereinafter sometimes referred to as the "SURVIVING CORPORATION."
(b) CLOSING. Unless this Agreement shall have been terminated and the
transactions herein contemplated shall have been abandoned pursuant to Section
7.1 and subject to the satisfaction or waiver of the conditions set forth in
Article VI, the consummation of the Merger will take place as promptly as
practicable (and in any event within two business days) after satisfaction or
waiver of the conditions set forth in Article VI, at the offices of Ropes &
Gray, One International Place, Boston, Massachusetts, unless another date, time
or place is agreed to in writing by the parties hereto.
SECTION 1.2 EFFECTIVE TIME. As promptly as practicable after the
satisfaction or waiver of the conditions set forth in Article VI, the parties
hereto shall cause the Merger to be consummated by filing a certificate of
merger as contemplated by the DGCL (the "CERTIFICATE OF MERGER"), together
with any required related certificates, with the Secretary of State of the State
of Delaware, in such form as required by, and executed in accordance with the
relevant provisions of, the DGCL (the time of such filing being the "EFFECTIVE
Time").
SECTION 1.3 EFFECT OF THE MERGER. At the Effective Time, the effect of
the Merger shall be as provided in this Agreement, the Certificate of Merger and
the applicable provisions of the DGCL. Without limiting the generality of the
foregoing, and subject thereto, at the Effective Time, all the property, rights,
privileges, powers and franchises of the Company and Merger Sub shall vest in
the Surviving Corporation, and all debts, liabilities and duties of the Company
and Merger Sub shall become the debts, liabilities and duties of the Surviving
Corporation.
SECTION 1.4 CERTIFICATE OF INCORPORATION, BY-LAWS.
(a) CERTIFICATE OF INCORPORATION. At the Effective Time the Certificate
of Incorporation of the Company, as in effect immediately prior to the Effective
Time, shall be the Certificate of Incorporation of the Surviving Corporation
until thereafter amended in accordance with the DGCL and such Certificate of
Incorporation.
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(b) BY-LAWS. The By-Laws of the Company, as in effect immediately
prior to the Effective Time, shall be the By-Laws of the Surviving
Corporation until thereafter amended in accordance with the DGCL, the
Certificate of Incorporation of the Surviving Corporation and such By-Laws;
PROVIDED, HOWEVER, that the Board of Directors of the Surviving Corporation
shall consist of the same number of directors as the number of directors of
Merger Sub at the Effective Time.
SECTION 1.5 DIRECTORS AND OFFICERS. The directors of Merger Sub
immediately prior to the Effective Time shall be the initial directors of the
Surviving Corporation, each to hold office in accordance with the Certificate of
Incorporation and By-Laws of the Surviving Corporation, and the officers of the
Company immediately prior to the Effective Time shall be the initial officers of
the Surviving Corporation, in each case until their respective successors are
duly elected or appointed and qualified.
SECTION 1.6 EFFECT ON CAPITAL STOCK. At the Effective Time, by virtue
of the Merger and without any action on the part of the Parent, Merger Sub, the
Company or the holders of any of the following securities:
(a) CONVERSION OF SECURITIES. Each Share issued and outstanding
immediately prior to the Effective Time (excluding any Shares to be canceled
pursuant to Section 1.6(b)) shall be converted, subject to Section 1.6(f), into
the right to receive 0.904 shares (the "EXCHANGE RATIO") of validly issued,
fully paid and nonassessable shares ("PARENT SHARES") of the Common Stock,
$1.00 par value, of Parent ("PARENT COMMON STOCK") (together with the
preferred stock purchase right attached thereto).
(b) CANCELLATION. Each Share held in the treasury of the Company and
each Share owned by Parent, Merger Sub or any direct or indirect wholly owned
subsidiary of the Company or Parent immediately prior to the Effective Time
shall, by virtue of the Merger and without any action on the part of the holder
thereof, cease to be outstanding, be canceled and retired without payment of any
consideration therefor and cease to exist.
(c) STOCK OPTIONS.
(i) At the Effective Time, each outstanding option to purchase
Company Common Stock (a "STOCK OPTION") granted under (a) the Duracell
Shares Plan, or (b) the Company's Stock Option Plan for Key Employees
(collectively, the "COMPANY STOCK OPTION PLANS"), whether vested or
unvested, shall be deemed assumed by Parent and deemed to constitute an
option to acquire, on the same terms and conditions as were applicable
under such Stock Option prior to the Effective Time, the number (rounded
to the nearest whole number) of Parent Shares as the holder of such Stock
Option would have been entitled to receive pursuant to the Merger had such
holder exercised such option in full immediately prior to the Effective
Time (not taking into
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account whether or not such option was in fact
exercisable), at a price per share equal to (x) the aggregate exercise
price for Company Common Stock otherwise purchasable pursuant
to such Stock Option divided by (y) the number of
Parent Shares deemed purchasable pursuant to such Stock Option.
(ii) As soon as practicable after the Effective Time, Parent shall
deliver to each holder of an outstanding Stock Option an appropriate
notice setting forth such holder's rights pursuant thereto, and such Stock
Option shall continue in effect on the same terms and conditions
(including antidilution provisions).
(iii) Parent shall take all corporate action necessary to reserve
for issuance a sufficient number of Parent Shares for delivery pursuant to
the terms set forth in this Section 1.6(c).
(iv) Subject to any applicable limitations under the Securities Act
of 1933, as amended, and the rules and regulations thereunder (the
"SECURITIES ACT"), Parent shall either (a) file a Registration Statement
on Form S-8 (or any successor form), effective as of the Effective Time,
with respect to the shares of Parent Common Stock issuable upon exercise
of the Stock Options, or (b) file any necessary amendments to the
Company's previously-filed Registration Statement(s) on Form S-8 in order
that the Parent will be deemed a "successor registrant" thereunder, and,
in either event the Parent shall use all reasonable efforts to maintain
the effectiveness of such registration statement(s) (and maintain the
current status of the prospectus or prospectuses relating thereto) for so
long as such options shall remain outstanding.
(d) CAPITAL STOCK OF MERGER SUB. Each share of common stock, $.01 par
value, of Merger Sub issued and outstanding immediately prior to the Effective
Time shall be converted into and exchanged for one validly issued, fully paid
and nonassessable share of common stock, $.01 par value, of the Surviving
Corporation.
(e) ADJUSTMENTS TO EXCHANGE RATIO. The Exchange Ratio shall be
adjusted to reflect fully the effect of any stock split, reverse split, stock
dividend (including any dividend or distribution of securities convertible into
Parent Common Stock or Company Common Stock), reorganization, recapitalization
or other like change with respect to Parent Common Stock or Company Common Stock
occurring after the date hereof and prior to the Effective Time.
(f) FRACTIONAL SHARES. No certificates or scrip representing less than
one Parent Share shall be issued upon the surrender for exchange of a
certificate or certificates which immediately prior to the Effective Time
represented outstanding Shares (the "CERTIFICATES"). In lieu of any such
fractional share, each holder of Shares who would otherwise have been entitled
to a fraction of a Parent Share upon surrender of Certificates for exchange
shall be paid upon such surrender cash equal to the product of (i) such
fraction, multiplied by (ii) the closing price per share on the New York Stock
Exchange ("NYSE") of Parent Common Stock
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as reported in the Eastern Edition of the WALL STREET JOURNAL on the
trading date prior to the date on which the Effective Time occurs.
SECTION 1.7 EXCHANGE OF CERTIFICATES.
(a) EXCHANGE AGENT. At or prior to the Effective Time Parent shall
supply, or shall cause to be supplied, to or for the account of The First
National Bank of Boston, or such other bank or trust company as shall be
designated by Parent (the "EXCHANGE AGENT"), in trust for the benefit of the
holders of Company Common Stock, for exchange in accordance with this Section
1.7, through the Exchange Agent, certificates evidencing the Parent Shares
issuable pursuant to Section 1.6 in exchange for outstanding Shares. Parent
agrees to make available to the Exchange Agent from time to time as needed, cash
sufficient to pay cash in lieu of fractional shares and any dividends and
distributions.
(b) EXCHANGE PROCEDURES. As soon as reasonably practicable after the
Effective Time, Parent will instruct the Exchange Agent to mail to each holder
of record of Certificates (i) a letter of transmittal (which shall specify that
delivery shall be effected, and risk of loss and title to the Certificates shall
pass, only upon proper delivery of the Certificates to the Exchange Agent and
shall be in such form and have such other provisions as Parent may reasonably
specify), and (ii) instructions to effect the surrender of the Certificates in
exchange for the certificates evidencing Parent Shares. Upon surrender of a
Certificate for cancellation to the Exchange Agent together with such letter of
transmittal, duly executed, and such other customary documents as may be
required pursuant to such instructions, the holder of such Certificate shall be
entitled to receive in exchange therefor (a) certificates evidencing that number
of whole Parent Shares which such holder has the right to receive in accordance
with the Exchange Ratio in respect of the Shares formerly evidenced by such
Certificate, (b) any dividends or other distributions to which such holder is
entitled pursuant to Section 1.7(c), and (c) cash in respect of fractional
shares as provided in Section 1.6(f) (the Parent Shares, dividends,
distributions and cash being, collectively, the "MERGER CONSIDERATION"), and
the Certificate so surrendered shall forthwith be canceled. In the event of a
transfer of ownership of Shares which is not registered in the transfer records
of the Company as of the Effective Time, Parent Shares, dividends and
distributions may be issued and paid in accordance with this Article I to a
transferee if the Certificate evidencing such Shares is presented to the
Exchange Agent, accompanied by all documents required to evidence and effect
such transfer pursuant to this Section 1.7(b) and by evidence that any
applicable stock transfer taxes have been paid. Until so surrendered, each
outstanding Certificate that, prior to the Effective Time, represented Shares of
Company Common Stock will be deemed from and after the Effective Time, for all
corporate purposes, other than the payment of dividends and subject to Section
1.6(f), to evidence the ownership of the number of full Parent Shares into which
such shares of Company Common Stock shall have been so converted.
(c) DISTRIBUTIONS WITH RESPECT TO UNEXCHANGED PARENT SHARES. No
dividends or other distributions declared or made after the Effective Time with
respect to Parent Shares with a
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<PAGE>
record date after the Effective Time shall be paid to the holder of any
unsurrendered Certificate with respect to the Parent Shares they are entitled
to receive until the holder of such Certificate shall surrender such
Certificate. Subject to applicable law and the provisions of Section 1.7(e)
below, following surrender of any such Certificate, there shall be paid to the
record holder of the certificates representing whole Parent Shares issued in
exchange therefor, without interest, at the time of such surrender, the
amount of dividends or other distributions with a record date after the
Effective Time theretofore paid with respect to such whole Parent Shares.
(d) TRANSFERS OF OWNERSHIP. If any certificate for Parent Shares is
to be issued in a name other than that in which the Certificate surrendered
in exchange therefor is registered, it will be a condition to the issuance
thereof that the Certificate so surrendered will be properly endorsed and
otherwise in proper form for transfer and that the person requesting such
exchange will have paid to Parent or any agent designated by it any transfer
or other taxes required by reason of the issuance of a certificate for Parent
Shares in any name other than that of the registered holder of the
certificate surrendered, or have established to the satisfaction of Parent or
any agent designated by it that such tax has been paid or is not payable.
(e) NO LIABILITY. At any time following one year after the effective
time, parent shall be entitled to require the exchange agent to deliver to
parent any merger consideration which had been made available to the exchange
agent by or on behalf of parent and which has not been disbursed to holders of
certificates, and thereafter such holders shall be entitled to look to parent
only as general creditors thereof with respect to the merger consideration
payable upon due surrender of their certificates. Notwithstanding the
foregoing, neither Parent, Merger Sub nor the Company shall be liable to any
holder of Company Common Stock for any Merger Consideration delivered to a
public official pursuant to any applicable abandoned property, escheat or
similar law.
(f) WITHHOLDING RIGHTS. Parent or the Exchange Agent shall be entitled
to deduct and withhold from the Merger Consideration otherwise payable pursuant
to this Agreement to any holder of Company Common Stock such amounts as Parent
or the Exchange Agent is required to deduct and withhold with respect to the
making of such payment under the Code, or any provision of state, local or
foreign tax law. To the extent that amounts are so withheld by Parent or the
Exchange Agent, such withheld amounts shall be treated for all purposes of this
Agreement as having been paid to the holder of the Shares in respect of which
such deduction and withholding was made by Parent or the Exchange Agent.
SECTION 1.8 STOCK TRANSFER BOOKS. At the Effective Time, the stock
transfer books of the Company shall be closed, and there shall be no further
registration of transfers of Company Common Stock thereafter on the records of
the Company.
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SECTION 1.9 NO FURTHER OWNERSHIP RIGHTS IN COMPANY COMMON STOCK. The
Merger Consideration delivered upon the surrender for exchange of Shares in
accordance with the terms hereof shall be deemed to have been issued in full
satisfaction of all rights pertaining to such Shares, and there shall be no
further registration of transfers on the records of the Surviving Corporation of
Shares which were outstanding immediately prior to the Effective Time. If,
after the Effective Time, Certificates are presented to the Surviving
Corporation for any reason, they shall be canceled and exchanged as provided in
this Article I.
SECTION 1.10 LOST, STOLEN OR DESTROYED CERTIFICATES. In the event any
Certificates shall have been lost, stolen or destroyed, the Exchange Agent shall
issue in exchange for such lost, stolen or destroyed Certificates, upon the
making of an affidavit of that fact by the holder thereof and delivery of bond
in such sum as it may reasonably direct as indemnity against any claim that may
be made against Parent or the Exchange Agent with respect to the Certificates
alleged to have been lost, stolen or destroyed, such Parent Shares as may be
required pursuant to Section 1.6.
SECTION 1.11 TAX AND ACCOUNTING CONSEQUENCES. It is intended by the
parties hereto that the Merger shall (i) constitute a reorganization within the
meaning of Section 368 of the Code and (ii) qualify for accounting treatment as
a pooling of interests. The parties hereto hereby adopt this Agreement as a
"plan of reorganization" within the meaning of Sections 1.368-2(g) and
1.368-3(a) of the United States Treasury Regulations.
SECTION 1.12 TAKING OF NECESSARY ACTION; FURTHER ACTION. Each of
Parent, Merger Sub and the Company will take all such reasonable and lawful
action as may be necessary or appropriate in order to effectuate the Merger in
accordance with this Agreement as promptly as possible. If, at any time after
the Effective Time, any such further action is necessary or desirable to carry
out the purposes of this Agreement and to vest the Surviving Corporation with
full right, title and possession to all assets, property, rights, privileges,
powers and franchises of the Company and Merger Sub, the officers and directors
of the Company and Merger Sub immediately prior to the Effective Time are fully
authorized in the name of their respective corporations or otherwise to take,
and will take, all such lawful and necessary action.
SECTION 1.13 MATERIAL ADVERSE EFFECT. When used in connection with the
Company or any of its subsidiaries, or Parent or any of its subsidiaries, as the
case may be, the term "MATERIAL ADVERSE EFFECT" means any change, effect or
circumstance that, individually or when taken together with all other such
changes, effects or circumstances that have occurred prior to the date of
determination of the occurrence of the Material Adverse Effect, (a) is or is
reasonably likely to be materially adverse to the business, assets (including
intangible assets), financial condition or results of operations of the Company
and its subsidiaries or Parent and its subsidiaries, as the case may be, in each
case taken as a whole, or (b) does or is reasonably likely to delay or prevent
the consummation of the transactions contemplated hereby.
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<PAGE>
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to Parent and Merger Sub as
follows:
SECTION 2.1 ORGANIZATION AND QUALIFICATION; SUBSIDIARIES. Each of the
Company and each of its significant subsidiaries (as defined in Section 8.3
or listed in Section 2.1 of the Company Disclosure Schedule (as defined
below)) is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation and has the
requisite corporate power and authority and is in possession of all
franchises, grants, authorizations, licenses, permits, easements, consents,
certificates, approvals and orders ("APPROVALS") necessary to own, lease and
operate the properties it purports to own, operate or lease and to carry on
its business as it is now being conducted, except where the failure to be so
organized, existing and in good standing or to have such power, authority and
Approvals does not constitute a Material Adverse Effect. Each of the Company
and each of its significant subsidiaries is duly qualified or licensed as a
foreign corporation to do business, and is in good standing, in each
jurisdiction where the character of its properties owned, leased or operated
by it or the nature of its activities makes such qualification or licensing
necessary, except for such failures to be so duly qualified or licensed and
in good standing that do not constitute a Material Adverse Effect.
Substantially all of the business and operations of the Company and its
subsidiaries are conducted through, and substantially all of the properties
and assets of the Company and its subsidiaries are owned by, the Company and
its significant subsidiaries.
SECTION 2.2 CERTIFICATE OF INCORPORATION AND BY-LAWS. The Company has
heretofore furnished to Parent a complete and correct copy of its Certificate of
Incorporation and By-Laws as most recently restated and subsequently amended to
date. Such Certificate of Incorporation and By-Laws are in full force and
effect. The Company is not in violation of any of the provisions of its
Certificate of Incorporation or By-Laws.
SECTION 2.3 CAPITALIZATION. The authorized capital stock of the
Company consists of (1) 150,000,000 shares of Company Common Stock and (ii)
100,000,000 shares of preferred stock, $.01 par value per share, none of which
is issued and outstanding and none of which is held in treasury. As of August
31, 1996, (i) 119,376,762 shares of Company Common Stock were issued and
outstanding, all of which are validly issued, fully paid and nonassessable, and
1,000,000 shares of Company Common Stock were held in treasury, (ii) no shares
of Company Common Stock were held by subsidiaries of the Company, and (iii)
6,783,421 shares of Company Common Stock were reserved for future issuance
pursuant to outstanding stock options granted under the Company Stock Option
Plans. No material change in such capitalization has occurred between August
31, 1996 and the date hereof. Except as set forth in this Section 2.3, Section
2.3 or Section 2.11 of the written disclosure
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schedule delivered on or prior to the date hereof by the Company to Parent
that is arranged in paragraphs corresponding to the numbered and lettered
paragraphs contained in this Article II (the "Company Disclosure Schedule"),
there are no options, warrants or other rights, agreements, arrangements or
commitments of any character relating to the issued or unissued capital stock
of the Company or any of its significant subsidiaries or obligating the Company
or any of its subsidiaries to issue or sell any shares of capital stock of,
or other equity interests in, the Company or any of its significant
subsidiaries. None of the options, warrants, rights, agreements, arrangements
or commitments identified in Section 2.3 or Section 2.11 of
the Company Disclosure Schedule provide that, absent action by the Board of
Directors or a committee thereof, upon exercise or conversion the holder
thereof shall receive cash, and no such action of the Board of Directors or a
committee thereof has been taken. All shares of Company Common Stock subject
to issuance as aforesaid, upon issuance on the terms and conditions specified
in the instruments pursuant to which they are issuable, shall be duly
authorized, validly issued, fully paid and nonassessable. Except as
disclosed in Section 2.3 of the Company Disclosure Schedule, there are no
obligations, contingent or otherwise, of the Company or any of its
significant subsidiaries to repurchase, redeem or otherwise acquire any
shares of Company Common Stock or the capital stock of any significant
subsidiary or to provide funds to or make any investment (in the form of a
loan, capital contribution, guaranty or otherwise) in any such subsidiary or
any other entity. Except as set forth in Section 2.3 of the Company
Disclosure Schedule, all of the outstanding shares of capital stock of each
of the Company's significant subsidiaries is duly authorized, validly issued,
fully paid and nonassessable, and all such shares (other than directors'
qualifying shares) are owned by the Company or another subsidiary of the
Company free and clear of all security interests, liens, claims, pledges,
agreements, limitations in the Company's voting rights, charges or other
encumbrances of any nature whatsoever (collectively, "LIENS").
SECTION 2.4 AUTHORITY RELATIVE TO THIS AGREEMENT.
(a) The Company has all necessary corporate power and authority to
execute and deliver this Agreement and to perform its obligations hereunder and
to consummate the transactions contemplated hereby. The execution and delivery
of this Agreement by the Company and the consummation by the Company of the
transactions contemplated hereby have been duly and validly authorized by all
necessary corporate action, and no other corporate proceedings on the part of
the Company are necessary to authorize this Agreement or to consummate the
transactions so contemplated (other than the adoption of this Agreement by the
holders of at least a majority of the outstanding shares of Company Common Stock
entitled to vote in accordance with the DGCL and the Company's Certificate of
Incorporation and By-Laws). This Agreement has been duly and validly executed
and delivered by the Company and, assuming the due authorization, execution and
delivery by Parent and Merger Sub, as applicable, constitutes a legal, valid and
binding obligation of the Company enforceable against the Company in accordance
with its terms.
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(b) The Board of Directors of the Company has duly and validly approved
and taken all corporate action required to be taken by the Board of Directors
for the consummation of the transactions contemplated by this Agreement and the
Stockholders Agreement, including, but not limited to, all actions necessary to
render the provisions of Section 203 of the DGCL inapplicable to this Agreement,
the Merger and the Stockholders Agreement. The Board of Directors of the
Company has determined that it is advisable and in the best interest of the
Company's stockholders for the Company to enter into a business combination with
Parent upon the terms and subject to the conditions of this Agreement, and has
recommended that the Company's stockholders approve and adopt this Agreement and
the Merger.
SECTION 2.5 NO CONFLICT; REQUIRED FILINGS AND CONSENTS.
(a) The exhibit index to the Company's most recently filed Annual Report
on Form 10-K, as supplemented by Section 2.5(a) of the Company Disclosure
Schedule, includes each agreement, contract or other instrument (including all
amendments thereto) to which the Company or any of its subsidiaries is a party
or by which any of them is bound and which would be required pursuant to the
Exchange Act and the rules and regulations thereunder to be filed as an exhibit
to an Annual Report on Form 10-K, a Quarterly Report on Form 10-Q or a Current
Report on Form 8-K. The Company has made available to the Parent on or prior to
the date hereof true, correct and complete copies in all material respects of
each such agreement, contract, instrument and amendment.
(b) Except as disclosed in Section 2.5(b) of the Company Disclosure
Schedule, (i) neither the Company nor any of its subsidiaries has breached,
is in default under, or has received written notice of any breach of or
default under, any of the agreements, contracts or other instruments referred
to in Section 2.5(a), (ii) to the best knowledge of the Company, no other
party to any of the agreements, contracts or other instrument referred to in
Section 2.5 (a) has breached or is in default of any of its obligations
thereunder, and (iii) each of the agreements, contracts and other instruments
referred to in Section 2.5(a) is in full force and effect, except in any such
case for breaches, defaults or failures to be in full force and effect that
do not constitute a Material Adverse Effect.
(c) Except as set forth in Section 2.5(c) of the Company Disclosure
Schedule, the execution and delivery of this Agreement by the Company does not,
and the performance of this Agreement by the Company and the consummation of the
transactions contemplated hereby will not, (i) conflict with or violate the
Certificate of Incorporation or By-Laws of the Company, (ii) conflict with or
violate any federal, foreign, state or provincial law, rule, regulation, order,
judgment or decree (collectively, "LAWS") applicable to the Company or any of
its significant subsidiaries or by which its or any of their respective
properties is bound or affected, or (iii) result in any breach of or constitute
a default (or an event that with notice or lapse of time or both would become a
default) under, or impair the Company's or any of its significant subsidiaries'
rights or alter the rights or obligations of any third party under, or give to
others any rights of termination, amendment, acceleration or cancellation of, or
result
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in the creation of a Lien on any of the properties or assets of the
Company or any of its significant subsidiaries pursuant to, any note, bond,
mortgage, indenture, contract, agreement, lease, license, permit, franchise or
other instrument or obligation to which the Company or any of its significant
subsidiaries is a party or by which the Company or any of its significant
subsidiaries or its or any of their respective properties is bound or affected,
except in the case of clauses (ii) and (iii) for any such conflicts, violations,
breaches, defaults or other occurrences that do not constitute a Material
Adverse Effect.
(d) The execution and delivery of this Agreement by the Company does not,
and the performance of this Agreement by the Company will not, require any
consent, approval, authorization or permit of, or filing with or notification
to, any domestic or foreign governmental or regulatory authority except
(i) for applicable requirements, if any, of the Securities Act,
the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
state securities laws ("BLUE SKY Laws"), the pre-merger notification
requirements of the Hart-Scott-Rodino Antitrust Improvements Act of 1976,
as amended (the "HSR ACT"), the premerger notification
requirements of the European Community and other requirements of
foreign jurisdictions and the filing and recordation of appropriate merger or
other documents as required by the DGCL, and (ii) where the failure to obtain
such consents, approvals, authorizations or permits, and to make such filings
or notifications, would not prevent or delay consummation of the Merger, and
otherwise prevent or delay the Company from performing its obligations under
this Agreement, and do not constitute a Material Adverse Effect.
SECTION 2.6 COMPLIANCE, PERMITS.
(a) Except as disclosed in Section 2.6(a) of the Company Disclosure
Schedule, neither the Company nor any of its significant subsidiaries is in
conflict with, or in default or violation of, (i) any Law applicable to the
Company or any of its significant subsidiaries or by which its or any of
their respective properties is bound or affected or (ii) any note, bond,
mortgage, indenture, contract, agreement, lease, license, permit, franchise
or other instrument or obligation to which the Company or any of its
significant subsidiaries is a party or by which the Company or any of its
subsidiaries or its or any of their respective properties is bound or
affected, except, in each case, for any such conflicts, defaults or
violations which do not constitute a Material Adverse Effect.
(b) Except as disclosed in Section 2.6(b) of the Company Disclosure
Schedule, the Company and its significant subsidiaries hold all permits,
licenses, easements, variances, exemptions, consents, certificates, orders and
approvals from governmental authorities which are material to the operation of
the business of the Company and its subsidiaries taken as a whole as it is now
being conducted (collectively, the "COMPANY PERMITS"). The Company and its
significant subsidiaries are in compliance with the terms of the Company
Permits, except where the failure to so comply does not constitute a Material
Adverse Effect.
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SECTION 2.7 SEC FILINGS; FINANCIAL STATEMENTS.
(a) The Company has filed all forms, reports and documents required to be
filed with the Securities and Exchange Commission (the "SEC") and has made
available to Parent (i) its Annual Report on Form 10-K for the fiscal year ended
June 30, 1995, (ii) its Quarterly Reports on Form 10-Q for the quarters ended
September 30, 1995, December 31, 1995 and March 31, 1996, (iii) all other
reports or registration statements filed by the Company with the SEC since July
1, 1995, (iv) all proxy statements relating to the Company's meetings of
stockholders (whether annual or special) since July 1, 1995, and (v) all
amendments and supplements to all such reports and registration statements filed
by the Company with the SEC pursuant to the requirements of the Exchange Act
((i)-(v) collectively, the "COMPANY SEC REPORTS"). Except as disclosed in
Section 2.7 of the Company Disclosure Schedule, the Company
SEC Reports (i) were prepared in all material respects in accordance
with the requirements of the Securities Act or the Exchange Act, as the case
may be, and (ii) did not at the time they were filed (or if amended or
superseded by a filing prior to the date of this Agreement, then on the date
of such filing) 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 therein, in the light of the circumstances under which
they were made, not misleading. None of the Company's subsidiaries is
required to file any forms, reports or other documents with the SEC.
(b) Each of the consolidated financial statements (including, in each
case, any related notes thereto) contained in the Company SEC Reports was
prepared in accordance with generally accepted accounting principles applied on
a consistent basis throughout the periods involved (except as may be indicated
in the notes thereto), and each fairly presents in all material respects the
consolidated financial position of the Company and its subsidiaries as at the
respective dates thereof and the consolidated results of its operations and cash
flows and stockholder equity for the periods indicated, except that the
unaudited interim financial statements were or are subject to normal and
recurring year-end adjustments which were not or are not expected to be material
in amount.
SECTION 2.8 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as set forth
in Section 2.8(a) through Section 2.8(g) of the Company Disclosure Schedule or
the Company SEC Reports, since July 1, 1995, the Company has conducted its
business in the ordinary course and there has not occurred: (a) any Material
Adverse Effect; (b) any amendments or changes in the Certificate of
Incorporation or By-laws of the Company or similar organizational documents of
its significant subsidiaries; (c) any damage to, destruction or loss of any
asset of the Company or any of its subsidiaries (whether or not covered by
insurance) that constitutes a Material Adverse Effect; (d) any material change
by the Company in its accounting methods, principles or practices except as
required by any change in generally accepted accounting principles; (e) any
material revaluation by the Company of any of its or any of its subsidiaries'
assets, including, without limitation, writing down the value of
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inventory or writing off notes or accounts receivable other than in the
ordinary course of business; (f) any sale, pledge, disposition of or
encumbrance upon any assets of the Company or any of its subsidiaries
(except (i) sales of assets in the ordinary course of business and in a
manner consistent with past practice, (ii) dispositions of obsolete or
worthless assets and (iii) sales of immaterial assets not in excess of
$10,000,000 in the aggregate); or (g) any other action or event that would
have required the consent of Parent pursuant to any of the following provisions
of Section 4.1 had such action or event occurred after the date of this
Agreement: Section 4.1(d) (except that for purpose of this Section
2.8(g), clause (ii) of Section 4.1(d) shall not apply to subsidiaries of the
Company and clause (iii) of Section 4.1(d) shall not apply to the repurchase in
the ordinary course of any options from any employee of the Company or any of
its subsidiaries who is not an officer or director and shall apply only to the
Company and any subsidiary of the Company that is not a wholly owned subsidiary
of the Company), Section 4.1(e)(i), Section 4.1(e)(ii), Section 4.1(e)(iv),
Section 4.1(e)(v) (but only insofar as applicable to clauses (i), (ii) and (iv)
of Section 4.1(e)), Section 4.1(f)(i) (but only insofar as any of
the actions described therein benefit any director or officer of the
Company), Section 4.1(f)(ii) (but only insofar as any of the actions described
therein benefit any director or officer of the Company), Section 4.1(f)(iii),
Section 4.1(g), Section 4.1(h), Section 4.1(i), and Section 4.1(j).
SECTION 2.9 NO UNDISCLOSED LIABILITIES. Except as is disclosed in
Section 2.9 of the Company Disclosure Schedule, neither the Company nor any of
its subsidiaries has any liabilities (absolute, accrued, contingent or
otherwise), except liabilities (a) in the aggregate adequately provided for in
the Company's audited balance sheet (including any related notes thereto) for
the fiscal year ended June 30, 1995 included in the Company's 1995 Annual Report
on Form 10-K (the "1995 COMPANY BALANCE SHEET"), (b) incurred in the ordinary
course of business and not required under generally accepted accounting
principles to be reflected on the 1995 Company Balance Sheet, (c) incurred since
June 30, 1995 in the ordinary course of business consistent with past practice,
(d) incurred in connection with this Agreement, or (e) which do not constitute a
Material Adverse Effect.
SECTION 2.10 ABSENCE OF LITIGATION. Except as set forth in Section
2.10 of the Company Disclosure Schedule, there are no claims, actions, suits,
proceedings or investigations pending or, to the knowledge of the Company,
threatened against the Company or any of its subsidiaries, or any properties
or rights of the Company or any of its subsidiaries, before any court,
arbitrator or administrative, governmental or regulatory authority or body,
domestic or foreign, that constitute a Material Adverse Effect.
SECTION 2.11 EMPLOYEE BENEFIT PLANS, EMPLOYMENT AGREEMENTS. Except in
each case as set forth in Section 2.11 of the Company Disclosure Schedule or
where the liability, individually or in the aggregate with respect to the
following, does not constitute a Material Adverse Effect, (i) there has been no
"prohibited transaction," as such term is defined in Section 406 of ERISA and
Section 4975 of the Code, with respect to any employee pension plans (as defined
in Section 3(2) of the Employee Retirement Income Security Act of 1974, as
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amended ("ERISA"), any material employee welfare plans (as defined in Section
3(1) of ERISA), or any material bonus, stock option, stock purchase, incentive,
deferred compensation, supplemental retirement, severance and other similar
fringe or employee benefit plans, programs or arrangements (collectively, the
"COMPANY EMPLOYEE PLANS"), which could result in any liability of the Company
or any of its subsidiaries; (ii) all Company Employee Plans are in compliance in
all respects with the requirements prescribed by any and all Laws (including
ERISA and the Code), currently in effect with respect thereto (including all
applicable requirements for notification to participants or the Department of
Labor, Pension Benefit Guaranty Corporation (the "PBGC"), Internal Revenue
Service (the "IRS") or Secretary of the Treasury), and the Company and each of
its subsidiaries have performed all material obligations required to be
performed by them under, are not in any respect in default under or violation
of, and have no knowledge of any material default or violation by any other
party to, any of the Company Employee Plans; (iii) each Company Employee Plan
intended to qualify under Section 401(a) of the Code and each trust intended to
qualify under Section 501(a) of the Code is the subject of a favorable
determination letter from the IRS, and nothing has occurred
which may reasonably be expected to impair such determination;
(iv) all contributions required to be made to any Company
Employee Plan pursuant to Section 412 of the Code, or the terms of the
Company Employee Plan or any collective bargaining agreement, have been made
on or before their due dates; (v) with respect to each Company Employee Plan,
no "reportable event" within the meaning of Section 4043 of ERISA (excluding
any such event for which the 30-day notice requirement has been waived under
the regulations to Section 4043 of ERISA) nor any event described in Section
4062, 4063 or 4041 of ERISA has occurred; (vi) no withdrawal (including a
partial withdrawal) has occurred with respect to any multiemployer plan
within the meaning set forth in Section 3(37) of ERISA that has resulted in,
or could reasonably be expected to result in, any withdrawal liability for
the Company or any of its subsidiaries; and (vii) neither the Company nor any
of its subsidiaries has incurred, or reasonably expects to incur, any
liability under Title IV of ERISA (other than liability for premium payments
to the PBGC, and contributions not in default to the respective plans,
arising in the ordinary course).
SECTION 2.12 LABOR MATTERS. Except as set forth in Section 2.12 of
the Company Disclosure Schedule: (i) there are no claims or proceedings
pending or, to the knowledge of the Company or any of its subsidiaries,
threatened, between the Company or any of its subsidiaries and any of their
respective employees, which claims or proceedings constitute a Material
Adverse Effect; (ii) neither the Company nor any of its subsidiaries is a
party to any collective bargaining agreement or other labor union contract
applicable to persons employed by the Company or its subsidiaries, nor does
the Company or any of its subsidiaries know of any activities or proceedings
of any labor union to organize any such employees; and (iii) neither the
Company nor any of its subsidiaries has any knowledge of any strikes,
slowdowns, work stoppages, lockouts, or threats thereof, by or with respect
to any employees of the Company or any of its subsidiaries.
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SECTION 2.13 REGISTRATION STATEMENT, JOINT PROXY STATEMENT/PROSPECTUS.
The information supplied by the Company for inclusion or incorporation by
reference in the Registration Statement (as defined in Section 3.12) shall not
at the time the Registration Statement (including any amendments and supplements
thereto) is declared effective by the SEC 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 not misleading. The
information supplied by the Company for inclusion or incorporation by reference
in the joint proxy statement/prospectus to be sent to the stockholders of the
Company in connection with the meeting of the stockholders of the Company to
consider the Merger (the "COMPANY STOCKHOLDERS MEETING") and to be sent to the
stockholders of Parent in connection with the meeting of the stockholders of
Parent to consider the Merger (the "PARENT STOCKHOLDERS MEETING," and together
with the Company Stockholder Meeting, the "STOCKHOLDERS MEETINGS") (such joint
proxy statement/prospectus as amended or supplemented is referred to herein as
the "JOINT PROXY STATEMENT/PROSPECTUS"), will not, on the date the Joint Proxy
Statement/Prospectus (or any amendment thereof or supplement thereto) is first
mailed to stockholders, at the time of the Stockholders Meetings, or at the
Effective Time, contain any statement which, at such time and in light of the
circumstances under which it shall be made, is false or
misleading with respect to any material fact, or shall omit to
state any material fact necessary in order to make the statements made
therein not false or misleading, or omit to state any material fact necessary
to correct any statement in any earlier communication with respect to the
solicitation of proxies for the Stockholders Meetings which has become false
or misleading. If at any time prior to the Effective Time any event relating
to the Company or any of its respective affiliates, officers or directors
should be discovered by the Company which should be set forth in an amendment
to the Registration Statement or a supplement to the Joint Proxy
Statement/Prospectus, the Company shall promptly inform Parent and Merger
Sub. Notwithstanding the foregoing, the Company makes no representation or
warranty with respect to any information supplied by Parent or Merger Sub
which is contained or incorporated by reference in any of the foregoing
documents.
SECTION 2.14 [Intentionally Omitted]
SECTION 2.15 TITLE TO PROPERTY. Except as set forth in Section 2.15
of the Company Disclosure Schedule, the Company and each of its subsidiaries
have good and defensible title to all of their properties and assets, free
and clear of all liens, charges and encumbrances, except liens for taxes not
yet due and payable and such liens or other imperfections of title, which do
not constitute a Material Adverse Effect; and, to the knowledge of the
Company, all leases pursuant to which the Company or any of its subsidiaries
lease from others material amounts of real or personal property, are in good
standing, valid and effective in accordance with their respective terms, and
there is not, to the knowledge of the Company, under any of such leases, any
existing material default or event of default (or event which with notice or
lapse of time, or both, would constitute a material default), except where
the lack of such good standing, validity and effectiveness or the existence
of such default or event of default does not constitute a Material Adverse
Effect.
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SECTION 2.16 TAXES.
(a) For purposes of this Agreement, "TAX" or "TAXES" shall mean
taxes, fees, levies, duties, tariffs, imposts, and governmental impositions or
charges of any kind in the nature of (or similar to) taxes, payable to any
federal, state, local or foreign taxing authority, including (without
limitation) (i) income, franchise, profits, gross receipts, AD VALOREM, net
worth, value added, sales, use, service, real or personal property, special
assessments, capital stock, license, payroll, withholding, employment, social
security, workers' compensation, unemployment compensation, utility, severance,
production, excise, stamp, occupation, premiums, windfall profits, transfer and
gains taxes, and (ii) interest, penalties, additional taxes and additions to tax
imposed with respect thereto; and "TAX RETURNS" shall mean returns, reports,
and information statements with respect to Taxes required to be filed with the
IRS or any other federal, foreign, state or provincial taxing authority,
domestic or foreign, including, without limitation, consolidated, combined and
unitary tax returns.
(b) Other than as disclosed in Section 2.16(b) of the Company Disclosure
Schedule, (i) the Company and its subsidiaries have filed all United States
federal income Tax Returns and all other material Tax Returns required to be
filed by them, (ii) the Company and its subsidiaries have paid and discharged
all Taxes due in connection with or with respect to the periods or transactions
covered by such Tax Returns and have paid all other Taxes as are due, except
such as are being contested in good faith by appropriate proceedings
(to the extent that any such proceedings are required) and with respect to
which the Company is maintaining adequate reserves, and (iii) there are no
other Taxes that would be due if asserted by a taxing authority, except
with respect to which the Company is maintaining reserves to the extent
currently required unless the failure to do so does not constitute a
Material Adverse Effect. Except as does not involve or would not result
in liability to the Company or any of its subsidiaries that constitutes
a Material Adverse Effect: (i) there are no tax liens on any assets
of the Company or any subsidiary thereof; and (ii) neither the Company
nor any of its subsidiaries has granted any waiver of any statute of
limitations with respect to, or any extension of a period for the
assessment of, any Tax. The accruals and reserves for Taxes (including
deferred taxes) reflected in the balance sheet of the Company as at March 31,
1996 included in the Company's Quarterly Report on Form 10-Q for the quarter
ended March 31, 1996 are in all material respects adequate to cover all Taxes
required to be accrued through the date thereof (including interest and
penalties, if any, thereon and Taxes being contested) in accordance with
generally accepted accounting principles applied on a consistent basis with
the 1995 Company Balance Sheet, and the accrual and reserves for Taxes
(including deferred taxes) reflected in the books and records of the Company
as at the last day of the Company's most recently completed fiscal month end
are in all material respects adequate to cover all Taxes required to be
accrued through such date (including interest and penalties, if any, thereon
and Taxes being contested) in accordance with generally accepted accounting
principles applied on a consistent basis with the 1995 Company Balance Sheet.
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(c) The Company is not, and has not been, a United States real property
holding corporation (as defined in Section 897(c)(2) of the Code) during the
applicable period specified in Section 897(c)(1)(a)(ii) of the Code. To the
best knowledge of the Company, neither the Company nor any of its subsidiaries
owns any property of a character, the indirect transfer of which, pursuant to
this Agreement, would give rise to any material documentary, stamp or other
transfer tax.
SECTION 2.17 ENVIRONMENTAL MATTERS. Except as set forth in Section
2.17 of the Company Disclosure Schedule, and except in all cases as, in the
aggregate, does not constitute a Material Adverse Effect, the Company and each
of its subsidiaries: (i) have obtained all Approvals which are required to be
obtained under all applicable federal, state, foreign or local laws or any
regulation, code, plan, order, decree, judgment, notice or demand letter issued,
entered, promulgated or approved thereunder relating to pollution or protection
of the environment, including laws relating to emissions, discharges, releases
or threatened releases of pollutants, contaminants, or hazardous or toxic
materials or wastes into ambient air, surface water, ground water, or land or
otherwise relating to the manufacture, processing, distribution, use, treatment,
storage, disposal, transport, or handling of pollutants, contaminants or
hazardous or toxic materials or wastes ("ENVIRONMENTAL LAWS") by the Company
or its subsidiaries or their respective agents; (ii) are in compliance with all
terms and conditions of such required Approvals, and also are in
compliance with all other limitations, restrictions, conditions,
standards, prohibitions, requirements, obligations, schedules and
timetables contained in applicable Environmental Laws; (iii) as of the
date hereof, are not aware of nor have received notice of any
past or present violations of Environmental Laws or any event,
condition, circumstance, activity, practice, incident, action or plan which
is reasonably likely to interfere with or prevent continued compliance with
Environmental Laws or which would give rise to any common law or statutory
liability, or otherwise form the basis of any claim, action, suit or
proceeding, against the Company or any of its subsidiaries based on or
resulting from the manufacture, processing, distribution, use, treatment,
storage, disposal, transport or handling, or the emission, discharge or
release into the environment, of any pollutant, contaminant or hazardous or
toxic material or waste; and (iv) have taken all actions necessary under
applicable Environmental Laws to register any products or materials required
to be registered by the Company or its subsidiaries (or any of their
respective agents) thereunder.
SECTION 2.18 INTELLECTUAL PROPERTY.
(a) The Company, directly or indirectly, owns, or is licensed or
otherwise possesses legally enforceable rights to use, all patents, trademarks,
trade names, service marks, copyrights, and any applications therefor,
technology, know-how and tangible or intangible proprietary information or
material that are material to the business of the Company and its subsidiaries
as currently conducted by the Company or its subsidiaries (the "COMPANY
INTELLECTUAL PROPERTY RIGHTS").
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(b) Either the Company or one of its subsidiaries is the sole and
exclusive owner of, or the exclusive or non-exclusive licensee of, with all
right, title and interest in and to (free and clear of any liens or
encumbrances), the Company Intellectual Property Rights, and, in the case of
Company Intellectual Property Rights owned by the Company or any of its
subsidiaries, has sole and exclusive rights (and is not contractually
obligated to pay any compensation to any third party in respect thereof) to
the use thereof or the material covered thereby in connection with the
services or products in respect of which the Company Intellectual Property
Rights are being used. Except as set forth in Section 2.18(b) of the Company
Disclosure Schedule, no claims with respect to the Company Intellectual
Property Rights have been asserted or, to the knowledge of the Company, are
threatened by any person that constitute a Material Adverse Effect (i) to the
effect that the manufacture, sale, licensing, or use of any of the products
of the Company or any of its subsidiaries as now manufactured, sold or
licensed or used or proposed for manufacture, use, sale or licensing by the
Company or any of its subsidiaries infringes on any copyright, patent, trade
mark, service mark or trade secret, (ii) against the use by the Company or
any of its subsidiaries of any trademarks, service marks, trade names, trade
secrets, copyrights, patents, technology or know-how and applications used in
the business of the Company and its subsidiaries as currently conducted or as
proposed to be conducted, or (iii) challenging the ownership by the Company
or any of its subsidiaries or the validity of any of the Company Intellectual
Property Rights. All registered trademarks, service marks and copyrights
held by the Company are valid and subsisting, except to the extent any
failure does not constitute a Material Adverse Effect. Except as set
forth on Schedule 2.18(b), to the knowledge of the Company, there
is no unauthorized use, infringement or misappropriation of any
of the Company Intellectual Property Rights by any third party,
including any employee or former employee of the Company or any of its
subsidiaries. No Company Intellectual Property Right or product of the
Company or any of its subsidiaries is subject to any outstanding decree,
order, judgment, or stipulation restricting in any manner the licensing
thereof by the Company or any of its subsidiaries, except to the extent any
such restriction does not constitute a Material Adverse Effect. Neither the
Company nor any of its subsidiaries has entered into any agreement (other
than exclusive distribution agreements) under which the Company or its
subsidiaries is restricted from selling, licensing or otherwise distributing
any of its products to any class of customers, in any geographic area, during
any period of time or in any segment of the market, except to the extent any
such restriction does not constitute a Material Adverse Effect.
SECTION 2.19 INTERESTED PARTY TRANSACTIONS. Except as set forth in
Section 2.19 of the Company Disclosure Schedule, since the date of the Company's
proxy statement dated September 22, 1995, no event has occurred that would be
required to be reported as a Certain Relationship or Related Transaction,
pursuant to Item 404 of Regulation S-K promulgated by the SEC.
SECTION 2.20 INSURANCE. The Company maintains fire and casualty,
general liability, business interruption, product liability, professional
liability and sprinkler and water damage insurance policies with reputable
insurance carriers, which provide full and adequate
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coverage for all normal risks incident to the business of the Company and
its subsidiaries and their respective properties and assets and are in
character and amount similar to that carried by entities engaged in similar
business and subject to the same or similar perils or hazards.
SECTION 2.21 POOLING MATTERS. Neither the Company nor any of its
affiliates has taken or agreed to take any action that could affect the ability
of Parent to account for the business combination to be effected by the Merger
as a pooling of interests.
SECTION 2.22 OPINION OF FINANCIAL ADVISOR. The Company has been
advised by its financial advisor, Morgan Stanley & Co. Incorporated, that in its
opinion, as of the date hereof, the Exchange Ratio set forth herein is fair to
the holders of Shares from a financial point of view.
SECTION 2.23 BROKERS. Except as set forth in Section 2.23 of the
Company Disclosure Schedule, no broker, finder or investment banker or other
party is entitled to any brokerage, finder's or other similar fee or commission
in connection with the transactions contemplated by this Agreement based upon
arrangements made by or on behalf of the Company or its subsidiaries or
affiliates. The fees and expenses of the entities listed on Section 2.23 of the
Company Disclosure Schedule will be paid by the Company. The Company has
heretofore furnished to Parent a complete and correct copy of all agreements
between the Company and the entities listed on Section 2.23 of the Company's
Disclosure Schedule pursuant to which such entities would be entitled to any
payment relating to the transactions contemplated hereunder.
SECTION 2.24 CHANGE IN CONTROL PAYMENTS. Except as set forth on
Section 2.24 of the Company Disclosure Schedule, neither the Company nor any of
its subsidiaries have any plans, programs or agreements to which they are
parties, or to which they are subject, pursuant to which payments (or
acceleration of benefits) may be required upon, or may become payable directly
or indirectly as a result of, a change of control of the Company.
SECTION 2.25 EXPENSES. The Company has provided to Parent a good faith
estimate and description of the expenses of the Company and its subsidiaries
which the Company expects to incur, or has incurred, in connection with the
transactions contemplated by this Agreement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
Parent and Merger Sub hereby jointly and severally represent and warrant
to the Company as follows:
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SECTION 3.1 ORGANIZATION AND QUALIFICATION; SUBSIDIARIES. Each of
Parent and each of its significant subsidiaries is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation and has the requisite corporate power and
authority and is in possession of all Approvals necessary to own, lease and
operate the properties it purports to own, operate or lease and to carry on
its business as it is now being conducted, except where the failure to be so
organized, existing and in good standing or to have such power, authority and
Approvals does not constitute a Material Adverse Effect. Each of Parent and
each of its significant subsidiaries is duly qualified or licensed as a
foreign corporation to do business, and is in good standing, in each
jurisdiction where the character of its properties owned, leased or operated
by it or the nature of its activities makes such qualification or licensing
necessary, except for such failures to be so duly qualified or licensed and
in good standing that do not constitute a Material Adverse Effect.
Substantially all of the business and operations of Parent and its
subsidiaries are conducted through, and substantially all of the properties
and assets of Parent and its subsidiaries are owned by, Parent and its
significant subsidiaries.
SECTION 3.2 CHARTER AND BY-LAWS. Parent has heretofore furnished to
the Company a complete and correct copy of its Certificate of Incorporation and
By-Laws, as most recently restated and subsequently amended to date. Such
Certificate of Incorporation and By-Laws are in full force and effect. Parent
is not in violation of any of the provisions of its Certificate of Incorporation
or By-Laws.
SECTION 3.3 CAPITALIZATION. As of August 31, 1996, the authorized
capital stock of Parent consisted of (i) 1,160,000,000 shares of Parent Common
Stock of which 445,784,108 shares were issued and outstanding, all of which are
validly issued, fully paid and nonassessable, 115,398,992 shares were held in
treasury, and 23,925,438 shares were reserved for future issuance under Parent's
stock option and employee stock purchase plans, (ii) 55,723,013.5 preferred
stock purchase rights (the "Rights") were issued and outstanding and attached to
each outstanding share of Parent Common Stock and (iii) 5,000,000 shares of
preferred stock, without par value per share, of which 159,057.2537 shares of
8.0% Cumulative Series C ESOP Convertible Preferred were issued and outstanding,
none of which were held in treasury, and 400,000 shares of Series A Junior
Participating Preferred Stock were reserved for issuance upon exercise of the
Rights. No material change in such capitalization has occurred between August
31, 1996 and the date hereof. Except as set forth in this Section 3.3, in
Section 3.3 of the written disclosure schedule delivered on or prior to the date
hereof by Parent to the Company that is arranged in paragraphs corresponding to
the numbered and lettered paragraphs contained in this Article III (the "Parent
Disclosure Schedule") or as set forth in the Parent SEC Reports, there are no
options, warrants or other rights, agreements, arrangements or commitments of
any character outstanding on the date hereof obligating Parent to issue or sell
any shares of capital stock of, or other equity interests in, Parent, other than
options or similar rights outstanding on the date hereof to purchase an
aggregate of 15,508,457 shares of Parent Common Stock.
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SECTION 3.4 AUTHORITY RELATIVE TO THIS AGREEMENT. Each of Parent and
Merger Sub has all necessary corporate power and authority to execute and
deliver this Agreement and to perform its obligations hereunder and to
consummate the transactions contemplated hereby. The execution and delivery
of this Agreement by Parent and Merger Sub and the consummation by Parent and
Merger Sub of the transactions contemplated hereby have been duly and validly
authorized by all necessary corporate action on the part of Parent and Merger
Sub, and no other corporate proceedings on the part of Parent or Merger Sub
(other than the approval of the issuance of Parent Common Stock in the Merger
by the affirmative vote of the holders of a majority of the voting power of
the shares of the Parent Common Stock present in person, or represented by
proxy, and entitled to vote thereon at the meeting of holders of Parent
Common Stock to be called therefor, provided that the shares so present or
represented constitute a majority of the outstanding shares of Parent Common
Stock) are necessary to authorize this Agreement or to consummate the
transactions contemplated thereby. The Board of Directors of Parent has
determined that it is advisable and in the best interest of Parent's
stockholders for Parent to enter into a business combination with the Company
upon the terms and subject to the conditions of this Agreement. This
Agreement has been duly and validly executed and delivered by Parent and
Merger Sub and, assuming the due authorization, execution and delivery by the
Company, constitutes a legal, valid and binding obligation of Parent and
Merger Sub enforceable against each of them in accordance with its terms.
SECTION 3.5 NO CONFLICT, REQUIRED FILINGS AND CONSENTS.
(a) The exhibit index to the Parent's most recently filed Annual Report
on Form 10-K, as supplemented by Section 3.5(a) of the written disclosure
schedule delivered on or prior to the date hereof by Parent to the Company that
is arranged in paragraphs corresponding to the numbered and lettered paragraphs
contained in this Article III (the "Parent Disclosure Schedule"), includes each
material agreement, contract or other instrument (including all amendments
thereto) to which Parent or any of its subsidiaries is a party or by which any
of them is bound and which would be required pursuant to the Exchange Act and
the rules and regulations thereunder to be filed as an exhibit to an Annual
Report on Form 10-K, a Quarterly Report on Form 10-Q or a Current Report on Form
8-K. Parent has made available to the Company, or there have been filed with
the SEC pursuant to the periodic reporting requirements of the Exchange Act, on
or prior to the date hereof true, correct and complete copies in all material
respects of each such agreement, contract, instrument and amendment.
(b) Except as disclosed in Section 3.5(b) of the Parent Disclosure
Schedule, (i) neither the Parent nor any of its subsidiaries has breached, is in
default under, or has received written notice of any breach of or default under,
any of the agreements, contracts or other instruments referred to in Section
3.5(a), (ii) to the best knowledge of Parent, no other party to any of the
agreements, contracts or other instrument referred to in Section 3.5(a) has
breached or is in default of any of its obligations thereunder, and (iii) each
of the agreements, contracts and other instruments referred to in Section 3.5(a)
is in full force and effect, except in any such
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case for breaches, defaults or failures to be in full force and effect that
do not constitute a Material Adverse Effect.
(c) Except as set forth in Section 3.5(c) of the Parent Disclosure
Schedule, the execution and delivery of this Agreement by Parent and Merger
Sub do not, and the performance of this Agreement by Parent and Merger Sub
and the consummation of the transactions contemplated hereby will not, (i)
conflict with or violate the Certificate of Incorporation or By-Laws of
Parent or Merger Sub, (ii) conflict with or violate any Laws applicable to
Parent or any of its significant subsidiaries or by which its or their
respective properties are bound or affected, or (iii) result in any breach of
or constitute a default (or an event which with notice or lapse of time or
both would become a default) under, or impair Parent's or any of its
significant subsidiaries' rights or alter the rights or obligations of any
third party under, or give to others any rights of termination, amendment,
acceleration or cancellation of, or result in the creation of a Lien on any
of the properties or assets of Parent or any of its significant subsidiaries
pursuant to, any note, bond, mortgage, indenture, contract, agreement, lease,
license, permit, franchise or other instrument or obligation to which Parent
or any of its significant subsidiaries is a party or by which Parent or any
of its significant subsidiaries or its or any of their respective properties
are bound or affected, except in the case of clauses (ii) or (iii) for any
such conflicts, violations, breaches, defaults or other occurrences that do
not constitute a Material Adverse Effect.
(d) The execution and delivery of this Agreement by Parent and Merger Sub
does not, and the performance of this Agreement by Parent and Merger Sub will
not, require any consent, approval, authorization or permit of, or filing with
or notification to, any governmental or regulatory authority, domestic or
foreign, except (i) for applicable requirements, if any, of the Securities Act,
the Exchange Act, the Blue Sky Laws, the pre-merger notification requirements of
the HSR Act, the premerger notification requirements of the European Community
and any other requirements of foreign jurisdictions and the filing and
recordation of appropriate merger or other documents as required by the DGCL,
and (ii) where the failure to obtain such consents, approvals, authorizations or
permits, or to make such filings or notifications, would not prevent or delay
consummation of the Merger, and otherwise prevent Parent or Merger Sub from
performing their respective obligations under this Agreement, and do not
constitute a Material Adverse Effect.
SECTION 3.6 COMPLIANCE; PERMITS.
(a) Except as disclosed in Section 3.6(a) of the Parent Disclosure
Schedule, neither Parent nor any of its subsidiaries is in conflict with, or in
default or violation of, (i) any Law applicable to Parent or any of its
significant subsidiaries or by which its or any of their respective properties
is bound or affected or (ii) any note, bond, mortgage, indenture, contract,
agreement, lease, license, permit, franchise or other instrument or obligation
to which Parent or any of its significant subsidiaries is a party or by which
Parent or any of its significant subsidiaries or its or any of their respective
properties is bound or affected, except,
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in each case, for any such conflicts, defaults or violations which do not
constitute a Material Adverse Effect.
(b) Except as disclosed in Section 3.6(b) of the Parent Disclosure
Schedule, Parent and its significant subsidiaries hold all permits, licenses,
easements, variances, exemptions, consents, certificates, orders and approvals
from governmental authorities which are material to the operation of the
business of the Parent and its subsidiaries taken as a whole as it is now being
conducted (collectively, the "PARENT PERMITS"). Parent and its significant
subsidiaries are in compliance with the terms of the Parent Permits, except
where the failure to so comply does not constitute a Material Adverse Effect.
SECTION 3.7 SEC FILINGS; FINANCIAL STATEMENTS.
(a) Parent has filed all forms, reports and documents required to be
filed with the SEC and has heretofore delivered to the Company, in the form
filed with the SEC, (i) its Annual Reports on Form 10-K for the fiscal year
ended December 31, 1995, (ii) its Quarterly Reports on Form 10-Q for the
periods ended March 31, 1996 and June 30, 1996, (iii) all proxy statements
relating to Parent's meetings of stockholders (whether annual or special)
since January 1, 1995, (iv) all other reports or registration statements
(other than Reports on Form 10-Q not referred to in clause (ii) above)
filed by Parent with the SEC since January 1, 1996, and (v) all
amendments and supplements to all such reports and registration statements
filed by Parent with the SEC ((i)-(v) collectively, the
"PARENT SEC REPORTS"). The Parent SEC Reports (i) were prepared
in all material respects in accordance with the requirements of the
Securities Act or the Exchange Act, as the case may be, and (ii) did not at
the time they were filed (or if amended or superseded by a filing prior to
the date of this Agreement, then on the date of such filing) 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 therein, in
the light of the circumstances under which they were made, not misleading.
None of Parent's subsidiaries is required to file any forms, reports or other
documents with the SEC.
(b) Each of the consolidated financial statements (including, in each
case, any related notes thereto) contained in the Parent SEC Reports has been
prepared in accordance with generally accepted accounting principles applied on
a consistent basis throughout the periods involved (except as may be indicated
in the notes thereto) and each fairly presents in all material respects the
consolidated financial position of Parent and its subsidiaries as at the
respective dates thereof and the consolidated results of its operations and cash
flows and stockholders equity for the periods indicated, except that the
unaudited interim financial statements were or are subject to normal and
recurring year-end adjustments which were not or are not expected to be material
in amount.
SECTION 3.8 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as set forth
in Section 3.8 of the Parent Disclosure Schedule or in the Parent SEC Reports,
since January 1, 1996, Parent has conducted its business in the ordinary course
and there has not occurred: (i) any
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Material Adverse Effect; (ii) any amendments or changes in the Certificate
of Incorporation or By-Laws of Parent (except as contemplated by
Section 4.3(c)); (iii) any damage to, destruction or loss of any
assets of the Parent or any of its subsidiaries (whether or not covered by
insurance) that constitutes a Material Adverse Effect; (iv) any material change
by Parent in its accounting methods, principles or practices except as required
by any change in generally accepted accounting principles; (v) any material
revaluation by Parent of any of its or any of its subsidiaries' assets,
including without limitation, writing down the value of inventory or writing off
notes or accounts receivable other than in the ordinary course of business; (vi)
any other action or event that would have required the consent of the Company
pursuant to Section 4.3 had such action or event occurred after the date of this
Agreement; or (vii) any sale of a material amount of assets of Parent or any of
its subsidiaries except in the ordinary course of business.
SECTION 3.9 NO UNDISCLOSED LIABILITIES. Except as is disclosed in
Section 3.9 of the Parent Disclosure Schedule, neither Parent nor any of its
subsidiaries has any liabilities (absolute, accrued, contingent or otherwise),
except liabilities (a) adequately provided for in Parent's audited balance sheet
(including any related notes thereto) as of December 31, 1995 included in the
Parent's 1995 Annual Report on Form 10-K (the "PARENT BALANCE SHEET"), (b)
incurred in the ordinary course of business and not required under generally
accepted accounting principles to be reflected on the Parent Balance Sheet,
(c) incurred since December 31, 1995 in the ordinary course of business
and consistent with past practice, (d) incurred in connection with this
Agreement, or (e) which do not constitute a Material Adverse Effect.
SECTION 3.10 ABSENCE OF LITIGATION. Except as set forth in Section
3.10 of the Parent Disclosure Schedule, there are no claims, actions, suits,
proceedings or investigations pending or, to the knowledge of the Parent,
threatened against the Parent or any of its subsidiaries, or any properties or
rights of the Parent or any of its subsidiaries, before any court, arbitrator or
administrative, governmental or regulatory authority or body, domestic or
foreign, that constitute a Material Adverse Effect.
SECTION 3.11 LABOR MATTERS. Except as set forth in Section 3.11 of the
Parent Disclosure Schedule: (i) there are no claims or proceedings pending or,
to the knowledge of Parent or any of its subsidiaries, threatened, between
Parent or any of its subsidiaries and any of their respective employees, which
claims or proceedings constitute a Material Adverse Effect; and (ii) neither
Parent nor any of its subsidiaries has any knowledge of any strikes, slowdowns,
work stoppages, lockouts, or threats thereof, by or with respect to any
employees of Parent or any of its subsidiaries which constitute a Material
Adverse Effect.
SECTION 3.12 REGISTRATION STATEMENT; JOINT PROXY STATEMENT/PROSPECTUS.
Subject to the accuracy of the representations of the Company in Section 2.13,
the registration statement (the "REGISTRATION STATEMENT") pursuant to which
the Parent Common Stock to be issued in the Merger will be registered with the
SEC shall not, at the time the Registration Statement (including any amendments
or supplements thereto) is declared effective by the SEC, contain
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any untrue statement of a material fact or omit to state any material
fact necessary in order to make the statements included therein not
misleading. The information supplied by Parent for inclusion or
incorporation by reference in the Joint Proxy Statement/Prospectus
will not, on the date the Joint Proxy Statement/Prospectus is first
mailed to stockholders, at the time of the Stockholders Meetings and
at the Effective Time, contain any statement which, at such time
and in light of the circumstances under which it shall be made, is
false or misleading with respect to any material fact, or will omit to state any
material fact necessary in order to make the statements therein not false or
misleading; or omit to state any material fact necessary to correct any
statement in any earlier communication with respect to the solicitation of
proxies for the Stockholders Meetings which has become false or misleading. If
at any time prior to the Effective Time any event relating to Parent, Merger Sub
or any of their respective affiliates, officers or directors should be
discovered by Parent or Merger Sub which should be set forth in an amendment to
the Registration Statement or a supplement to the Joint Proxy
Statement/Prospectus, Parent or Merger Sub will promptly inform the Company.
Notwithstanding the foregoing, Parent and Merger Sub make no representation or
warranty with respect to any information supplied by the Company which is
contained or incorporated by reference in any of the foregoing documents.
SECTION 3.13 [Intentionally Omitted]
SECTION 3.14 TITLE TO PROPERTY. Except as disclosed in Section 3.14 of
the Parent Disclosure Schedule, Parent and each of its subsidiaries have good
and defensible title to all of their properties and assets, free and clear of
all liens, charges and encumbrances, except liens for taxes not yet due and
payable and such liens or other imperfections of title, which do not constitute
a Material Adverse Effect; and, to Parent's knowledge, all leases pursuant to
which Parent or any of its subsidiaries lease from others material amounts of
real or personal property are in good standing, valid and effective in
accordance with their respective terms, and there is not, to the knowledge of
Parent, under any of such leases, any existing material default or event of
default (or event which with notice or lapse of time, or both, would constitute
a material default) except where the lack of such good standing, validity and
effectiveness or the existence of such default or event of default does not
constitute a Material Adverse Effect.
SECTION 3.15 TAXES. Other than as disclosed in Section 3.15 of the
Parent Disclosure Schedule, (i) Parent and its subsidiaries have filed all
United States federal income Tax Returns and all other material Tax Returns
required to be filed by them, (ii) Parent and its subsidiaries have paid and
discharged all Taxes due in connection with or with respect to the periods or
transactions covered by such Tax Returns and have paid all other Taxes as are
due, except such as are being contested in good faith by appropriate proceedings
(to the extent that any such proceedings are required) and with respect to which
Parent is maintaining adequate reserves, and (iii) there are no other Taxes that
would be due if asserted by a taxing authority, except with respect to which
Parent is maintaining reserves to the extent currently required unless the
failure to do so does not constitute a Material Adverse Effect. Except as does
not
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involve or would not result in liability to Parent that constitutes a
Material Adverse Effect: (i) there are no tax liens on any assets of Parent or
any subsidiary thereof; and (ii) neither Parent nor any of its subsidiaries has
granted any waiver of any statute of limitations with respect to, or any
extension of a period for the assessment of, any Tax. The accruals and reserves
for Taxes (including deferred taxes) reflected in the balance sheet of Parent as
at June 30, 1996 included in the Parent's Quarterly Report on Form 10-Q for the
quarter ended June 30, 1996 are in all material respects adequate to cover all
Taxes required to be accrued through the date thereof (including interest and
penalties, if any, thereon and Taxes being contested) in accordance with
generally accepted accounting principles applied on a consistent basis with the
Parent Balance Sheet, and the accruals and reserves for Taxes (including
deferred taxes) reflected in the books and records of Parent as at the last day
of Parent's most recently completed fiscal month end are in all material
respects adequate to cover all Taxes required to be accrued through such date
(including interest and penalties, if any, thereon and Taxes being contested) in
accordance with generally accepted accounting principles applied on a consistent
basis with the Parent Balance Sheet.
SECTION 3.16 ENVIRONMENTAL MATTERS. Except as set forth in Section
3.16 of the Parent Disclosure Schedule, and except in all cases as, in the
aggregate, does not constitute a Material Adverse Effect, Parent and each of its
subsidiaries: (i) have obtained all Approvals which are required to be obtained
under all applicable Environmental Laws by Parent or its subsidiaries (or their
respective agents); (ii) are in compliance with all terms and conditions of
such required permits, licenses and authorization, and also are in compliance
with all other limitations, restrictions, conditions, standards,
prohibitions, requirements, obligations, schedules and timetables contained
in applicable Environmental Laws; (iii) as of the date hereof are not aware
of nor have received notice of any past or present violations of
Environmental Laws, or any event, condition, circumstance, activity,
practice, incident, action or plan which is reasonably likely to interfere
with or prevent continued compliance with Environmental Laws or which would
give rise to any common law or statutory liability, or otherwise form the
basis of any claim, action, suit or proceeding, against Parent or any of its
subsidiaries based on or resulting from the manufacture, processing,
distribution, use, treatment, storage, disposal, transport, or handling, or
the emission, discharge or release into the environment, of any pollutant,
contaminant or hazardous or toxic material or waste; and (iv) have taken all
actions necessary under applicable Environmental Laws to register any
products or materials required to be registered by Parent or its subsidiaries
(or any of their respective agents) thereunder.
SECTION 3.17 INTELLECTUAL PROPERTY. Parent, directly or indirectly,
owns, or is licensed or otherwise possesses legally enforceable rights to use,
all patents, trademarks, trade names, services marks, copyrights, and any
applications therefor, technology, know-how and tangible or intangible
proprietary information or material that are material to the business of Parent
and its subsidiaries as currently conducted by Parent and its subsidiaries (the
"PARENT INTELLECTUAL PROPERTY RIGHTS"). Either Parent or one of its
subsidiaries is the sole and exclusive owner of, or the exclusive or
non-exclusive licensee of, with all right, title and
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interest in and to (free and clear of any liens or encumbrances), Parent
Intellectual Property Rights, and, in the case of Parent Intellectual
Property Rights owned by Parent or any of its subsidiaries, has sole
and exclusive rights (and is not contractually obligated to pay any
compensation to any third party in respect thereof) to the use thereof
or the material covered thereby in connection with the services or
products in respect of which Parent Intellectual Property Rights are being used.
Except as set forth in Section 3.17 of the Parent Disclosure Schedule, no claims
with respect to Parent Intellectual Property Rights have been asserted or, to
the knowledge of Parent, are threatened by any person that constitute a Material
Adverse Effect, (i) to the effect that the manufacture, sale, licensing or use
of any product of Parent or any of its subsidiaries as now manufactured, used,
sold or licensed or proposed for manufacture, use, sale or license by Parent or
any of its subsidiaries infringes on any copyright, patent, trade mark, service
mark or trade secret, (ii) against the use by Parent or any of its subsidiaries
of any trademarks, trade names, trade secrets, copyrights, patents, technology,
know-how or computer software programs and applications used in Parent's or its
subsidiaries' business as currently conducted or as proposed to be conducted, or
(iii) challenging the ownership or validity of any of Parent Intellectual
Property Rights. All registered trademarks, service marks and copyrights held
by Parent or any of its subsidiaries are valid and subsisting, except to the
extent any failure to be so valid and subsisting does not constitute a Material
Adverse Effect. To the knowledge of Parent, there is no unauthorized use,
infringement or misappropriation of any Parent Intellectual Property Rights by
any third party, including any employee or former employee of Parent or any of
its subsidiaries. No Parent Intellectual Property Right or product of Parent or
any of its subsidiaries is subject to any outstanding
decree, order, judgment, or stipulation restricting in any
manner the licensing thereof by Parent or any of its subsidiaries, except to
the extent any such restriction does not constitute a Material Adverse
Effect. Neither Parent nor any of its subsidiaries has entered into any
agreement (other than exclusive distribution agreements) under which Parent
or any of its subsidiaries is restricted from selling, licensing or otherwise
distributing any of its products to any class of customers, in any geographic
area, during any period of time or in any segment of the market, except to the
extent any such restriction does not constitute a Material Adverse Effect.
SECTION 3.18 INTERESTED PARTY TRANSACTIONS. Except as set forth in
Section 3.18 of the Parent Disclosure Schedule, since the date of Parent's proxy
statement dated March 14, 1996 no event has occurred that would be required to
be reported as a Certain Relationship or Related Transaction, pursuant to Item
404 of Regulation S-K promulgated by the SEC.
SECTION 3.19 INSURANCE. All material fire and casualty, general
liability, business interruption, product liability, professional liability and
sprinkler and water damage insurance policies maintained by Parent or any of its
subsidiaries are with reputable insurance carriers, provide full and adequate
coverage for all normal risks incident to the business of Parent and its
subsidiaries and their respective properties and assets and are in character and
amount at least equivalent to that carried by entities engaged in similar
businesses and subject to the same
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or similar perils or hazards, except as could not reasonably be expected
to have a Material Adverse Effect.
SECTION 3.20 POOLING MATTERS. Neither Parent nor any of its affiliates
has taken or agreed to take any action that could affect the ability of Parent
to account for the business combination to be effected by the Merger as a
pooling of interests.
SECTION 3.21 OPINION OF FINANCIAL ADVISOR. Parent has received the
separate opinions of its financial advisors, Merrill Lynch & Co. and J.P. Morgan
& Co. Incorporated, that, as of the date hereof, the Exchange Ratio is fair to
Parent and Parent's stockholders from a financial point of view.
SECTION 3.22 BROKERS. Except as set forth on Section 3.22 of the
Parent Disclosure Schedule, no broker, finder or investment banker or other
party is entitled to any brokerage, finder's or other similar fee or commission
in connection with the transactions contemplated by this Agreement based upon
arrangements made by or on behalf of Parent or Merger Sub or any of their
subsidiaries or affiliates. The fees and expenses of the entities listed on
Section 3.22 of the Parent Disclosure Schedule will be paid by Parent. Parent
has heretofore furnished to the Company a complete and correct copy of all
agreements between Parent and the entities listed on Section 3.22 of the Parent
Disclosure Schedule pursuant to which such firms would be entitled to any
payment relating to the transactions contemplated hereunder.
SECTION 3.23 OWNERSHIP OF MERGER SUB; NO PRIOR ACTIVITIES.
(a) Merger Sub was formed solely for the purpose of engaging in the
transactions contemplated by this Agreement.
(b) As of the date hereof and the Effective Time, except for
obligations or liabilities incurred in connection with its incorporation or
organization and the transactions contemplated by this Agreement and except
for this Agreement and any other agreements or arrangements contemplated by
this Agreement, Merger Sub has not and will not have incurred, directly or
indirectly, through any subsidiary or affiliate, any obligations or
liabilities or engaged in any business activities of any type or kind
whatsoever or entered into any agreements or arrangements with any person.
SECTION 3.24 BATTERY GROUP HEADQUARTERS. Parent's present intention is
to maintain the headquarters of the battery group of the Surviving Corporation
in Bethel, Connecticut.
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ARTICLE IV
CONDUCT OF BUSINESS PENDING THE MERGER
SECTION 4.1 CONDUCT OF BUSINESS BY THE COMPANY PENDING THE MERGER. The
Company covenants and agrees that, during the period from the date of this
Agreement and continuing until the earlier of the termination of this Agreement
or the Effective Time, unless Parent shall otherwise agree in writing, the
Company shall conduct its business and shall cause the businesses of its
subsidiaries to be conducted only in, and the Company and its subsidiaries shall
not take any action except in, the ordinary course of business and in a manner
consistent with past practice; and the Company shall use all reasonable efforts
to preserve substantially intact the business organization of the Company and
its subsidiaries, to keep available the services of the present officers,
employees and consultants of the Company and its subsidiaries and to preserve
the present relationships of the Company and its subsidiaries with customers,
suppliers and other persons with which the Company or any of its subsidiaries
has significant business relations. By way of amplification and not limitation,
except as contemplated by this Agreement, neither the Company nor any of its
subsidiaries shall, during the period from the date of this Agreement and
continuing until the earlier of the termination of this Agreement or the
Effective Time, directly or indirectly do, or propose to do, any of the
following without the prior written consent of Parent:
(a) amend or otherwise change the Certificate of Incorporation or By-Laws
of the Company or similar organizational documents of any of its subsidiaries;
(b) issue, sell, pledge, dispose of or encumber, or authorize the
issuance, sale, pledge, disposition or encumbrance of, any shares of capital
stock of any class, or any options, warrants, convertible securities or other
rights of any kind to acquire any shares of capital stock, or any other
ownership interest (including, without limitation, any phantom interest) in the
Company or any of its subsidiaries (except for (i) the issuance of shares of
Company Common Stock issuable pursuant to Stock Options which were
granted under the Company Stock Option Plans and are outstanding on the
date hereof and (ii) grants of Stock Options under the Company Stock
Option Plans for the purchase of a maximum of 25,000 shares of Company
Common Stock granted to the individuals identified in Section 4.1(b) of the
Company Disclosure Schedule).
(c) sell, pledge, dispose of or encumber any assets of the Company or
any of its subsidiaries (except for (i) sales of assets in the ordinary
course of business and in a manner consistent with past practice, (ii)
dispositions of obsolete or worthless assets, and (iii) sales of immaterial
assets not in excess of $10,000,000 in the aggregate);
(d) (i) declare, set aside, make or pay any dividend or other
distribution (whether in cash, stock or property or any combination thereof) in
respect of any of its capital stock, other than regular quarterly cash dividends
of $0.29 per share in accordance with past practice (and
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provided that if the Effective Time shall occur on a date in any quarter
which is subsequent to the record date for the regular quarterly cash
dividend on Parent Common Stock and prior to the customary record date
for the regular quarterly cash dividend on the Company Common Stock,
the Company shall be permitted to declare and pay its dividend in
the customary amount for such quarter prior to the Effective Time),
except that a wholly owned subsidiary of the Company may declare and pay a
dividend to its parent, (ii) split, combine or reclassify any of its capital
stock or issue or authorize or propose the issuance of any other securities or
property in respect of, in lieu of or in substitution for shares of its capital
stock, or (iii) amend the terms or change the period of exercisability of,
purchase, repurchase, redeem or otherwise acquire, or permit any subsidiary to
purchase, repurchase, redeem or otherwise acquire, any of its securities or any
securities of its subsidiaries, including, without limitation, shares of Company
Common Stock or any option, warrant or right, directly or indirectly, to acquire
shares of Company Common Stock, or provide that upon the exercise or conversion
of any such option, warrant or right the holder thereof shall receive cash, or
propose to do any of the foregoing;
(e) (i) acquire (by merger, consolidation, or acquisition of stock or
assets) any corporation, partnership or other business organization or division
thereof other than those listed on Section 4.1(e) of the Company Disclosure
Schedule; (ii) incur any indebtedness for borrowed money or issue any debt
securities, except for short-term, working capital and commercial paper
borrowings not in excess of $800 million in the aggregate at any one time
outstanding incurred in the ordinary course of business consistent with past
practice and except for intercompany indebtedness between the Company and any of
its wholly owned subsidiaries or between such wholly owned subsidiaries, or
assume, guarantee or endorse or otherwise as an accommodation become responsible
for, the obligations of any person or, except in the ordinary course of business
consistent with past practice, make any loans or advances; (iii) enter into or
amend any material contract or agreement (except as described on Section 4.1(e)
of the Company Disclosure Schedule); (iv) authorize any capital expenditures or
purchase of fixed assets which are, in the aggregate, in excess of $10,000,000
for the Company and its subsidiaries taken as a whole; or (v) enter into or
amend any contract, agreement, commitment or arrangement to effect any
of the matters prohibited by this Section 4.1(e);
(f) (i) increase the compensation payable or to become payable to its
officers or employees, except for increases in salary or wages of employees
of the Company or its subsidiaries who are not officers of the Company in the
ordinary course of business in accordance with past practice; (ii) grant any
severance or termination pay to, or enter into any employment or severance
agreement with any director, officer or other employee of the Company or any
of its subsidiaries; or (iii) establish, adopt, enter into or amend any
collective bargaining, bonus, profit sharing, thrift, compensation, stock
option, restricted stock, pension, retirement, deferred compensation,
employment, termination, severance or other plan, agreement, trust, fund,
policy or arrangement for the benefit of any current or former directors,
officers or employees, except, in each case, as may be required by law;
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(g) except as may be required as a result of a change in law or in
generally accepted accounting principles, take any action to change accounting
policies or procedures (including, without limitation, procedures with respect
to revenue recognition, payments of accounts payable and collection of accounts
receivable);
(h) make any material tax election inconsistent with past practice or
settle or compromise any material federal, state, local or foreign tax liability
or agree to an extension of a statute of limitations;
(i) pay, discharge or satisfy any claims, liabilities or obligations
(absolute, accrued, asserted or unasserted, contingent or otherwise), other than
the payment, discharge or satisfaction in the ordinary course of business and
consistent with past practice of liabilities reflected or reserved against in
the financial statements contained in the Company SEC Reports filed prior to the
date of this Agreement or incurred in the ordinary course of business and
consistent with past practice; or
(j) take, or agree in writing or otherwise to take, any of the actions
described in Sections 4.1 (a) through (i) above, or any action which would make
any of the representations or warranties of the Company contained in this
Agreement untrue or incorrect or prevent the Company from performing or cause
the Company not to perform its covenants hereunder.
SECTION 4.2 NO SOLICITATION.
(a) The Company shall not, directly or indirectly, through any officer,
director, employee, representative or agent of the Company or any of its
subsidiaries, (i) solicit, initiate or encourage the initiation of any inquiries
or proposals regarding any merger, sale of substantial assets, sale of shares of
capital stock (including without limitation by way of a tender offer) or similar
transactions involving the Company or any significant subsidiaries of the
Company other than the Merger (any of the foregoing inquiries or proposals being
referred to herein as an "ACQUISITION PROPOSAL"), (ii) engage in negotiations
or discussions concerning, or provide any nonpublic information to any
person relating to, any Acquisition Proposal or (iii) agree to, approve or
recommend any Acquisition Proposal. Nothing contained in this
Section 4.2(a) shall prevent the Board of Directors of the Company from
considering, negotiating, discussing, approving and recommending to the
stockholders of the Company a bona fide Acquisition Proposal not solicited in
violation of this Agreement, provided the Board of Directors of the Company
determines in good faith (upon advice of outside counsel) that it is required
to do so in order to discharge properly its fiduciary duties. Nothing
contained in this Section 4.2 shall prohibit the Board of Directors of the
Company from complying with Rule 14e-2 promulgated under the
Exchange Act with regard to a tender or exchange offer.
(b) The Company shall immediately notify Parent after receipt of any
Acquisition Proposal, or any modification of or amendment to any Acquisition
Proposal, or any request
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for nonpublic information relating to the Company or any of its
subsidiaries in connection with an Acquisition Proposal or for access
to the properties, books or records of the Company or any subsidiary by any
person or entity that informs the Board of Directors of the Company or such
subsidiary that it is considering making, or has made, an Acquisition Proposal.
Such notice to Parent shall be made orally and in writing, and shall indicate
whether the Company is providing or intends to provide the person making the
Acquisition Proposal with access to information concerning the Company as
provided in Section 4.2(c).
(c) If the Board of Directors of the Company receives a request for
material nonpublic information by a person who makes, or indicates that it is
considering making, a bona fide Acquisition Proposal, and the Board of Directors
determines in good faith and upon the advice of outside counsel that it is
required to cause the Company to act as provided in this Section 4.2(c) in order
to discharge properly the directors' fiduciary duties, then, provided such
person has executed a confidentiality agreement substantially similar to the one
then in effect between the Company and Parent (other than for any provisions
similar to the provisions of Sections 7 and 8 of the Confidentiality Letter),
the Company may provide such person with access to information regarding the
Company.
(d) The Company shall immediately cease and cause to be terminated any
existing discussions or negotiations with any persons (other than Parent and
Merger Sub) conducted heretofore with respect to any of the foregoing. The
Company agrees not to release any third party from the confidentiality
provisions of any confidentiality agreement to which the Company is a party.
(e) The Company shall ensure that the officers, directors and employees
of the Company and its subsidiaries and any investment banker or other advisor
or representative retained by the Company are aware of the restrictions
described in this Section 4.2.
SECTION 4.3 CONDUCT OF BUSINESS BY PARENT PENDING THE MERGER. During
the period from the date of this Agreement and continuing until the earlier of
the termination of this Agreement or the Effective Time, Parent covenants and
agrees that, unless the Company shall otherwise agree in writing,
Parent shall conduct its business, and cause the businesses of its
subsidiaries to be conducted, in the ordinary course, other
than actions taken by Parent or its subsidiaries in contemplation of the
Merger, and Parent shall use all reasonable efforts to preserve substantially
intact the business organization of Parent and its subsidiaries, to keep
available all services of the present officers, employees and consultants of
Parent and its subsidiaries and to preserve the present relationships of the
Parent and its subsidiaries with customers, suppliers and other persons with
which Parent or any of its subsidiaries has significant business relations.
By way of amplification and not limitation, except as contemplated by this
Agreement, neither Parent nor any of its subsidiaries shall, during the
period from the date of this Agreement and continuing until the earlier of
the termination of this Agreement or the Effective Time, directly or
indirectly do, or propose to do, any of the following without the prior
written consent of the Company:
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(a) declare, set aside, make or pay any dividend or other distribution
(whether in cash, stock or property or any combination thereof) in respect of
any of its capital stock, other than regular quarterly cash dividends of $0.18
per share consistent with past practices and except that a wholly owned
subsidiary of Parent may declare and pay a dividend to its parent;
(b) take or agree in writing or otherwise to take any action which would
make any of the representations or warranties of Parent contained in this
Agreement untrue or incorrect or prevent Parent from performing or cause Parent
not to perform its covenants hereunder; or
(c) amend or otherwise change the Certificate of Incorporation or By-Laws
of Parent in a manner that would be materially adverse to the holders of Parent
Common Stock (it being understood that any such amendment made to implement a
so-called "shareholder rights plan" as described in the footnotes to the
financial statements included in or incorporated by reference into the Annual
Report of Parent on Form 10-K for the fiscal year ended December 31, 1995 shall
not be deemed to be materially adverse to the holders of Parent Common Stock).
ARTICLE V
ADDITIONAL AGREEMENTS
SECTION 5.1 HSR ACT; ETC. As promptly as practicable after the date of
the execution of this Agreement, the Company and Parent shall file notifications
under and in accordance with the HSR Act and the legal requirements of the
European Community and any other foreign jurisdictions requiring notification in
connection with the Merger and the transactions contemplated hereby. The
Company and Parent shall respond as promptly as practicable to any inquiries
received from the Federal Trade Commission (the "FTC") and the Antitrust
Division of the Department of Justice (the "ANTITRUST DIVISION") for
additional information or documentation and shall respond as promptly as
practicable to all inquiries and requests received from any State Attorney
General or other governmental authority (foreign or domestic) in connection with
antitrust matters.
SECTION 5.2 JOINT PROXY STATEMENT PROSPECTUS; REGISTRATION STATEMENT.
As promptly as practicable after the execution of this Agreement, the Company
and Parent shall prepare and file with the SEC preliminary proxy materials which
shall constitute the Joint Proxy Statement/Prospectus and the Registration
Statement of the Parent with respect to the Parent Common Stock to be issued in
connection with the Merger. As promptly as practicable after comments are
received from the SEC thereon and after the furnishing by the Company and Parent
of all information required to be contained therein, the Company and Parent
shall file with the SEC a combined proxy and Registration Statement on Form S-4
(or on such other form as shall be appropriate) relating to the adoption of this
Agreement and approval of the transactions contemplated hereby by the
stockholders of the Company and the approval by the
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stockholders of Parent of the issuance of Parent Company Stock in the
Merger pursuant to this Agreement, and shall use all reasonable efforts
to cause the Registration Statement to become effective, and to mail
the Joint Proxy Statement/Prospectus to their respective shareholders,
as soon thereafter as practicable.
SECTION 5.3 STOCKHOLDERS MEETINGS. The Company and Parent shall call
and hold their respective Stockholders Meetings as promptly as practicable and
in accordance with applicable laws for the purpose of voting upon the approval
of the Merger and the adoption of the Merger Agreement, in the case of the
Company's stockholders, and the issuance of Parent Common Stock, in the case of
Parent's stockholders, and Parent and the Company shall use their reasonable
best efforts to hold the Stockholders Meetings on the same day (and at the same
time of such day) and as soon as practicable after the date on which the
Registration Statement becomes effective. Unless otherwise required under the
applicable fiduciary duties of the respective directors of the Company and
Parent, as determined by such directors in good faith after consultation with
and based upon the written advice of their respective outside legal counsel, the
Company and Parent shall (i) recommend approval of the transactions contemplated
by this Agreement by the stockholders of the Company and Parent, respectively,
and include in the Joint Proxy Statement/Prospectus such recommendation and (ii)
use all reasonable efforts to solicit from their respective stockholders proxies
in favor of adoption of this Agreement and approval of the transactions
contemplated hereby or approval of the issuance of Parent Common Stock in the
Merger pursuant to this Agreement, as the case may be, and shall take all other
action necessary or advisable to secure the vote or consent of stockholders to
obtain such approvals.
SECTION 5.4 ACCESS TO INFORMATION; CONFIDENTIALITY. Upon reasonable
notice and subject to restrictions contained in confidentiality agreements to
which such party is subject (from which such party shall use reasonable efforts
to be released), the Company and Parent shall each (and shall cause each of
their subsidiaries to) afford to the officers, employees, accountants, counsel
and other representatives of the other, reasonable access, during the period
prior to the Effective Time, to all its properties, books, contracts,
commitments and records and, during such period, the Company and Parent each
shall (and shall cause each of their subsidiaries to) furnish promptly to the
other all information concerning its business, properties and personnel as such
other party may reasonably request, and each shall make available to the other
the appropriate individuals (including attorneys, accountants and other
professionals) for discussion of the other's business, properties and personnel
as either Parent or the Company may reasonably request. Each party shall keep
such information confidential in accordance with the terms of the
confidentiality letter, dated August 30, 1996 (the "CONFIDENTIALITY LETTER"),
between Parent and the Company.
SECTION 5.5 CONSENTS; APPROVALS. The Company and Parent shall each use
all reasonable efforts to obtain all consents, waivers, approvals,
authorizations or orders (including, without
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limitation, all United States and foreign governmental and regulatory
rulings and approvals), and the Company and Parent shall make all filings
(including, without limitation, all filings with United States
and foreign governmental or regulatory agencies) required in
connection with the authorization, execution and delivery of this Agreement by
the Company and Parent and the consummation by them of the transactions
contemplated hereby, in each case as promptly as practicable. The Company and
Parent shall furnish promptly all information required to be included in the
Joint Proxy Statement/Prospectus and the Registration Statement, or for any
application or other filing to be made pursuant to the rules and regulations of
any United States or foreign governmental body in connection with the
transactions contemplated by this Agreement.
SECTION 5.6 AGREEMENTS WITH RESPECT TO AFFILIATES. Each of Parent and
the Company shall deliver to the other, prior to the date the Registration
Statement becomes effective under the Securities Act, a letter (the "AFFILIATE
Letters") identifying all persons who are, at the time of the Parent
Stockholders Meeting or Company Stockholders Meeting, as the case may be,
"affiliates" of the Parent or the Company, respectively, for purposes of Rule
145 under the Securities Act ("RULE 145"). Each of Parent and the Company
shall use its best efforts to cause each person who is identified as an
"affiliate" in its Affiliate Letter to deliver, on or before the date which is
30 days prior to the Effective Time, a written agreement (an "AFFILIATE
Agreement") in connection with restrictions on affiliates under Rule 145 and
pooling of interests accounting treatment, in substantially the form of Exhibit
5.6.
SECTION 5.7 INDEMNIFICATION AND INSURANCE.
(a) The By-Laws of the Surviving Corporation shall contain the provisions
with respect to indemnification set forth in the By-Laws of the Company on the
date hereof, which provisions shall not be amended, repealed or otherwise
modified for a period of six years from the Effective Time in any manner that
would adversely affect the rights thereunder of individuals who on or prior to
the Effective Time were directors, officers, employees or agents of the Company,
unless such modification is required by law.
(b) The Company shall, to the fullest extent permitted under applicable
law or under the Company's Certificate of Incorporation or By-Laws and
regardless of whether the Merger becomes effective, indemnify and hold harmless,
and, after the Effective Time, Parent and the Surviving Corporation shall, to
the fullest extent permitted under applicable law or under the Surviving
Corporation's Certificate of Incorporation or By-Laws as in effect at the
Effective Time, indemnify and hold harmless, each present and former director,
officer or employee of the Company or any of its subsidiaries
(collectively, the "INDEMNIFIED PARTIES") against any costs or expenses
(including attorneys' fees), judgments, fines, losses, claims, damages,
liabilities and amounts paid in settlement in connection with any claim,
action, suit, proceeding or investigation, whether civil, criminal,
administrative or investigative, (x) arising out of or pertaining to the
transactions contemplated by this Agreement or (y) otherwise with respect
to any acts or omissions occurring at or prior to the Effective Time,
to the same extent as provided in the Company's Certificate of
Incorporation or By-Laws or any applicable contract or agreement as in
effect on the date hereof, in each case for a period of six years after
the
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date hereof. In the event of any such claim, action, suit, proceeding or
investigation (whether arising before or after the Effective Time), (i) any
counsel retained by the Indemnified Parties for any period after the Effective
Time shall be reasonably satisfactory to the Surviving Corporation, (ii) after
the Effective Time, the Surviving Corporation shall pay the reasonable fees
and expenses of such counsel, promptly after statements therefor are received,
and (iii) the Surviving Corporation will cooperate in the defense of any such
matter; PROVIDED, HOWEVER, that the Surviving Corporation shall not be liable
for any settlement effected without its written consent (which consent shall
not be unreasonably withheld); and PROVIDED, FURTHER, that, in the event that
any claim or claims for indemnification are asserted or made within such six-
year period, all rights to indemnification in respect of any such claim or
claims shall continue until the disposition of any and all such claims. The
Indemnified Parties as a group may retain only one law firm to represent them
with respect to any single action unless there is, under applicable standards
of professional conduct, a conflict on any significant issue between the
positions of any two or more Indemnified Parties.
(c) Parent and the Surviving Corporation shall honor and fulfill in all
respects the obligations of the Company pursuant to indemnification agreements
with the Company's directors and officers existing at or before the Effective
Time.
(d) For a period of six years after the Effective Time, Parent shall
cause the Surviving Corporation to maintain in effect, if available, directors'
and officers' liability insurance covering those persons who are currently
covered by the Company's directors' and officers' liability insurance policy (a
copy of which has been made available to Parent) on terms comparable to those
now applicable to directors and officers of the Company; PROVIDED, HOWEVER,
that in no event shall Parent or the Surviving Corporation be required to
expend in excess of 150% of the annual premium currently paid by the Company for
such coverage; and PROVIDED FURTHER, that if the premium for such coverage
exceeds such amount, Parent or the Surviving Corporation shall purchase a policy
with the greatest coverage available for such 150% of the annual premium.
(e) This Section shall survive the consummation of the Merger at the
Effective Time, is intended to benefit the Company, the Surviving Corporation
and the Indemnified Parties, shall be binding on all successors and assigns of
Parent and the Surviving Corporation and shall be enforceable by the Indemnified
Parties.
SECTION 5.7A EMPLOYMENT AND BENEFIT MATTERS.
(a) The Surviving Corporation shall for a period of one (1) year
following the Effective Time maintain the contractual benefit programs
identified in Schedule 5.7A(a) (each, a "Benefit Plan") other than severance
plans and agreements for which those provided in Schedule 5.7A(b) shall be
substituted; provided, however, that nothing herein shall affect Parent's rights
to modify or terminate any such Benefit Plan at or after the end of such one (1)
year period. On and after the Effective Time, employees of the Surviving
Corporation who
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were employees on the Effective Date will be eligible to participate
in Parent's stock option and annual incentive plans as in effect
from time to time at levels commensurate with their responsibilities and
consistent with the terms of such plans.
(b) Effective no later than the Effective Time, the Company shall enter
into agreements and adopt plans or programs in forms satisfactory to Parent, the
terms and conditions of which shall be consistent in all material respects with
those set forth in Schedule 5.7A(b) to provide in a manner consistent with the
transaction contemplated hereby the benefits and payments to each person or
category of persons identified on such Schedule 5.7A(b).
SECTION 5.8 NOTIFICATION OF CERTAIN MATTERS. The Company shall give
prompt notice to Parent, and Parent shall give prompt notice to the Company,
of (i) the occurrence or nonoccurrence of any event the occurrence or
nonoccurrence of which would be likely to cause any representation or
warranty contained in this Agreement to become materially untrue or
inaccurate, or (ii) any failure of the Company, Parent or Merger Sub, as the
case may be, materially to comply with or satisfy any covenant, condition or
agreement to be complied with or satisfied by it hereunder; PROVIDED,
HOWEVER, that the delivery of any notice pursuant to this Section shall not
limit or otherwise affect the remedies available hereunder to the party
receiving such notice; and PROVIDED FURTHER that failure to give such notice
shall not be treated as a breach of covenant for the purposes of Sections
6.2(a) or 6.3(a) unless the failure to give such notice results in material
prejudice to the other party.
SECTION 5.9 FURTHER ACTION/TAX TREATMENT. Upon the terms and subject
to the conditions hereof each of the parties hereto shall use all reasonable
efforts to take, or cause to be taken, all actions and to do, or cause to be
done, all other things necessary, proper or advisable to consummate and make
effective as promptly as practicable the transactions contemplated by this
Agreement, to obtain in a timely manner all necessary waivers, consents and
approvals and to effect all necessary registrations and filings, and otherwise
to satisfy or cause to be satisfied all conditions precedent to its obligations
under this Agreement. Each of Parent, Merger Sub and the Company shall use its
best efforts to cause the Merger to qualify, and will not (both before and after
consummation of the Merger) take any actions which to its knowledge could
reasonably be expected to prevent the Merger from qualifying, as a
reorganization under the provisions of Section 368 of the Code.
SECTION 5.10 PUBLIC ANNOUNCEMENTS. Parent and the Company shall
consult with each other before issuing any press release with respect to the
Merger or this Agreement and shall not issue any such press release or make any
such public statement without the prior consent of the other party, which shall
not be unreasonably withheld; PROVIDED, HOWEVER, that a party may, without the
prior consent of the other party, issue such press release or make such public
statement as may upon the advice of outside counsel be required by law or the
rules and regulations of the NYSE.
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SECTION 5.11 CONVEYANCE TAXES. Parent and the Company shall cooperate
in the preparation, execution and filing of all returns, questionnaires,
applications, or other documents regarding any real property transfer or gains,
sales, use, transfer, value added, stock transfer and stamp taxes, any transfer,
recording, registration and other fees, and any similar taxes which become
payable in connection with the transactions contemplated hereby that are
required or permitted to be filed at or before the Effective Time.
SECTION 5.12 ACCOUNTANTS' LETTERS. Upon reasonable notice from the
other, the Company and Parent shall use their respective best efforts to
cause Deloitte & Touche LLP or KPMG Peat Marwick LLP, respectively, to
deliver to Parent or the Company, as the case may be, a letter, dated within
2 business days of the Effective Date of the Registration Statement covering
such matters as are requested by Parent or the Company, as the case may be,
and as are customarily addressed in accountant's "comfort" letters. In
connection with Parent's efforts to obtain such letter, if requested by KPMG
Peat Marwick LLP, the Company shall provide a representation letter to KPMG
Peat Marwick LLP complying with the statement on Auditing Standards No. 72
("SAS 72"), if then required. In connection with the Company's efforts to
obtain such letter, if requested by Deloitte & Touche, LLP, Parent shall
provide a representation letter to Deloitte & Touche LLP complying with SAS
72, if then required.
SECTION 5.13 POOLING ACCOUNTING TREATMENT. Each of Parent and the
Company agrees not to take any action that to its knowledge could reasonably be
expected to adversely affect the ability of Parent to treat the Merger as a
pooling of interests, and each of Parent and the Company agrees to take such
action as may be reasonably required to negate the impact of any past actions
which to its knowledge could reasonably be expected to adversely impact the
ability of Parent to treat the Merger as a pooling of interests. .
SECTION 5.14 NYSE LISTING. The Company shall use its best efforts to
continue the listing of the Company Common Stock on the NYSE during the term of
this Agreement.
SECTION 5.15 LISTING OF PARENT SHARES. Parent shall use its best
efforts to cause the Parent Shares to be issued in the Merger to be approved for
listing, upon official notice of issuance, on the NYSE.
ARTICLE VI
CONDITIONS TO THE MERGER
SECTION 6.1 CONDITIONS TO OBLIGATION OF EACH PARTY TO EFFECT THE MERGER.
The respective obligations of each party to effect the Merger shall be subject
to the satisfaction at or prior to the Effective Time of the following
conditions:
(a) EFFECTIVENESS OF THE REGISTRATION STATEMENT. The Registration
Statement shall have been declared effective by the SEC under the Securities
Act. No stop order suspending the
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effectiveness of the Registration Statement shall have been issued by
the SEC and no proceedings for that purpose and no similar proceeding in
respect of the Joint Proxy Statement/Prospectus shall have been initiated
or threatened by the SEC;
(b) STOCKHOLDER APPROVAL. This Agreement and the Merger shall have
been approved and adopted by the requisite vote of the stockholders of the
Company and the issuance of shares of Parent Company Stock in the Merger
pursuant to this Agreement shall have been approved by the requisite vote of the
stockholders of Parent;
(c) HSR ACT, ETC. The waiting period applicable to the consummation of
the Merger under the HSR Act and under any legal requirement of the European
Community shall have expired or been terminated, and any requirements of other
foreign jurisdictions applicable to the consummation of the Merger shall have
been satisfied unless the failure of such requirements of other foreign
jurisdictions to be satisfied does not constitute a Material Adverse Effect in
respect of either the Company and its subsidiaries or the Parent and its
subsidiaries;
(d) NO INJUNCTIONS OR RESTRAINTS; ILLEGALITY. No statute, rule,
regulation, executive order, decree, ruling, temporary restraining order,
preliminary or permanent injunction or other order shall have been enacted,
entered, promulgated, enforced or issued by any court or governmental
authority of competent jurisdiction or shall otherwise be in effect which
prohibits, restrains, enjoins or restricts the consummation of the Merger;
(e) STOCKHOLDERS AGREEMENT. The Stockholders Agreement shall be in
full force and effect at and as of the Effective Time;
(f) BLUE SKY LAWS. All material permits and other authorizations
necessary under the Blue Sky Laws to issue shares of Parent Common Stock
pursuant to the Merger shall have been obtained; and
(g) NYSE LISTING. The Parent Shares to be issued in the Merger shall
have been approved upon official notice of issuance for listing on the NYSE.
SECTION 6.2 ADDITIONAL CONDITIONS TO OBLIGATIONS OF PARENT AND MERGER
Sub. The obligations of Parent and Merger Sub to effect the Merger are also
subject to the following conditions:
(a) REPRESENTATIONS AND WARRANTIES. The representations and warranties
of the Company contained in this Agreement shall be true and correct in all
respects at and as of the Effective Time as if made at and as of such time,
except for (i) changes contemplated by this Agreement, (ii) those
representations and warranties which address matters only as of a particular
date (which shall have been true and correct as of such date, subject to clause
(iii)), and (iii) where the failure to be true and correct shall not constitute
a Material Adverse Effect,
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with the same force and effect as if made at and as of the Effective
Time, and Parent and Merger Sub shall have received a certificate
to such effect signed by the Chief Executive Officer and the Chief
Financial Officer of the Company;
(b) AGREEMENTS AND COVENANTS. The Company shall have performed or
complied in all material respects with all agreements and covenants required by
this Agreement to be performed or complied with by it at or prior to the
Effective Time, and Parent and Merger Sub shall have received a certificate to
such effect signed by the Chief Executive Officer and the Chief Financial
Officer of the Company;
(c) OPINION OF COUNSEL. Parent shall have received a written opinion
from Ropes & Gray, in form and substance reasonably satisfactory to Parent, to
the effect that the Merger will constitute a reorganization within the meaning
of Section 368 of the Code;
(d) OPINION OF ACCOUNTANTS. Parent shall have received an opinion of
each of KPMG Peat Marwick LLP and Deloitte & Touche LLP, independent certified
public accountants, to the effect that the Merger qualifies for pooling of
interests accounting treatment if consummated in accordance with this Agreement;
and
(e) AFFILIATE AGREEMENTS. Parent shall have received from each person
who is identified in the Affiliate Letters as an "affiliate" of the Company, an
Affiliate Agreement, and such Affiliate Agreement shall be in full force and
effect.
SECTION 6.3 ADDITIONAL CONDITIONS TO OBLIGATION OF THE COMPANY. The
obligation of the Company to effect the Merger is also subject to the following
conditions:
(a) REPRESENTATIONS AND WARRANTIES. The representations and warranties
of Parent and Merger Sub contained in this Agreement shall be true and correct
in all respects on and as of the Effective Time, except for (i) changes
contemplated by this Agreement, (ii) those representations and warranties which
address matters only as of a particular date (which shall have been true and
correct as of such date, subject to clause (iii)), and (iii) where the failure
to be true and correct shall not constitute a Material Adverse Effect, with the
same force and effect as if made on and as of the Effective Time, and the
Company shall have received a certificate to such effect signed by the Chief
Executive Officer and the Chief Financial Officer of Parent;
(b) AGREEMENTS AND COVENANTS. Parent and Merger Sub shall have
performed or complied in all material respects with all agreements and covenants
required by this Agreement to be performed or complied with by them on or
prior to the Effective Time, and the Company shall have received a certificate
to such effect signed by the Chief Executive Officer and the Chief Financial
Officer of Parent;
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(c) TAX OPINIONS. The Company shall have received a written opinion of
Simpson Thacher & Bartlett, in form and substance reasonably satisfactory to the
Company, to the effect that the Merger will constitute a reorganization within
the meaning of Section 368 of the Code; and
(d) OPINION OF ACCOUNTANTS. The Company shall have received a copy of
the opinions referred to in Section 6.2(d) above.
ARTICLE VII
TERMINATION
SECTION 7.1 TERMINATION. This Agreement may be terminated at any time
prior to the Effective Time, notwithstanding approval thereof by the
stockholders of the Company or Parent:
(a) by mutual written consent duly authorized by the Boards of Directors
of Parent and the Company; or
(b) by either Parent or the Company if the Merger shall not have been
consummated by March 31, 1997 (provided that the right to terminate this
Agreement under this Section 7.1(b) shall 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 Merger to occur on or before such date); or
(c) by either Parent or the Company if a court of competent
jurisdiction or governmental, regulatory or administrative agency or
commission shall have issued a nonappealable final order, decree or ruling or
taken any other action having the effect of permanently restraining,
enjoining or otherwise prohibiting the Merger (provided that the right to
terminate this Agreement under this Section 7.1(c) shall not be available to
any party who has not complied with its obligations under Section 5.9 and
such noncompliance materially contributed to the issuance of any such order,
decree or ruling or the taking of such action); or
(d) (i) by Parent, if the requisite vote of the stockholders of the
Company shall not have been obtained at a duly held meeting of such stockholders
or any adjournment thereof by March 31, 1997 or (ii) by the Company, if the
requisite vote of the stockholders of Parent shall not have been obtained at a
duly held meeting of such stockholders or any adjournment thereof by March 31,
1997; or
(e) by Parent or the Company, if: (i) the Board of Directors of the
Company shall withdraw, modify or change its approval or recommendation of this
Agreement or the Merger in a manner adverse to Parent or shall have resolved to
do so in accordance with Section 5.3 hereof; (ii) the Board of Directors of the
Company shall have recommended to the
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stockholders of the Company an Alternative Transaction (as defined below);
or (iii) a tender offer or exchange offer for 15% or more of the
outstanding shares of Company Common Stock is commenced (other than
by Parent or an affiliate of Parent) and the Board of Directors of
the Company recommends that the stockholders of the Company tender their shares
in such tender or exchange offer; PROVIDED, THAT, the Company shall not be
entitled to exercise any termination rights under clause (ii) or (iii) of this
Section 7.1(e) unless (x) any action of the Board of Directors of the Company
referred to in either such clause is required to be taken by the Board of
Directors in order to properly discharge its fiduciary duties and (y) the
Company has complied with its obligations in Section 4.2; or
(f) by the Company, if the Board of Directors of Parent shall withdraw,
modify or change its approval or recommendation of this Agreement or the Merger
in a manner adverse to the Company or shall have resolved to do so in accordance
with Section 5.3 hereof.
As used herein, "Alternative Transaction" means any of (i) a transaction
or series of transactions pursuant to which any person (or group of persons)
other than Parent or its subsidiaries and other than Kohlberg Kravis Roberts &
Co. and its affiliates (a "THIRD PARTY") acquires or would acquire more than
15% of the outstanding Shares, whether from the Company or pursuant to a tender
offer or exchange offer or otherwise, (ii) any acquisition or proposed
acquisition of the Company or any of its significant subsidiaries by a merger or
other business combination (including any so-called "merger of equals" and
whether or not the Company or any of its significant subsidiaries is the entity
surviving any such merger or business combination) or (iii) any other
transaction pursuant to which any Third Party acquires or would acquire control
of assets (including for this purpose the outstanding equity securities of
subsidiaries of the Company and any entity surviving any merger or business
combination including any of them) of the Company or any of its subsidiaries
having a fair market value equal to more than 35% of the fair market value of
all the assets of the Company and its subsidiaries, taken as a whole,
immediately prior to such transaction.
SECTION 7.2 EFFECT OF TERMINATION. In the event of the termination of
this Agreement pursuant to Section 7.1, this Agreement shall forthwith become
void and there shall be no liability on the part of any party hereto or any of
its affiliates, directors, officers or stockholders except (i) as set forth in
Section 7.3 hereof, and (ii) nothing herein shall relieve any party from
liability for any breach hereof occurring prior to termination. The
Confidentiality Letter shall survive termination of this Agreement as set forth
therein.
SECTION 7.3 FEES AND EXPENSES.
(a) Except as set forth in this Section 7.3, all fees and expenses
incurred in connection with this Agreement and the transactions contemplated
hereby shall be paid by the party incurring such expenses, whether or not
the Merger is consummated; PROVIDED, HOWEVER, that Parent and the Company
shall share equally all fees and expenses, other than accountants'
and attorneys' fees, incurred in connection with the printing and
filing of the Joint Proxy
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Statement/Prospectus (including any preliminary materials related thereto)
and the Registration Statement (including financial statements and exhibits)
and any amendments or supplements thereto.
(b) The Company shall pay Parent a fee of $150 million (the "FEE"),
plus actual, documented and reasonable out-of-pocket expenses of Parent relating
to the transactions contemplated by this Agreement not in excess of $15 million
in the aggregate (including, but not limited to, reasonable fees and expenses of
Parent's counsel, accountants and financial advisers) ("EXPENSES"), upon the
termination of this Agreement by Parent or the Company pursuant to Section
7.1(e)(ii) or Section 7.1(e)(iii).
(C) The Company shall pay parent the fee plus the expenses if all of the
following events have occurred:
(i) a bona fide alternative transaction is publicly commenced,
publicly disclosed, publicly proposed or publicly communicated to the
company at any time on or after the date of this agreement and on or prior
to the date of the meeting of the stockholders of the company referred to
in Section 5.3 hereof (including the last date on which any adjourned
session thereof is reconvened);
(ii) Either parent or the company terminates this agreement
pursuant to Section 7.1(b) or parent terminates this agreement pursuant to
Section 7.1(d)(i) if, in the case of termination under either such
section, the requisite vote for approval and adoption of the merger
agreement by the stockholders of the Company shall not have been obtained
by March 31, 1997; and
(iii) Thereafter on or prior to the second anniversary of the date
of termination, (a) such alternative transaction is consummated or (b)
there is consummated any transaction, whether or not commenced, publicly
disclosed, publicly proposed or communicated to the Company prior to such
termination, that would constitute an alternative transaction (provided
that for purposes of this clause (iii)(b) of Section 7.3(c) the reference
to the percentage of outstanding shares in clause (i) of the definition of
alternative transaction shall be 50% instead of 15%).
(d) The Company shall pay parent the fee plus the expenses if parent or
the company terminates this agreement pursuant to clause (i) of Section 7.1(e)
and thereafter on or prior to the second anniversary of the date of termination
there is consummated a transaction that would constitute an alternative
transaction (provided that for purposes of this Section 7.3(d) the reference to
the percentage of outstanding shares in clause (i) of the definition of
alternative transaction shall be 50% instead of 15%);
(e) The Fee and Expenses payable pursuant to Section 7.3(b) shall be paid
within one business day after the first to occur of any of the events described
in Section 7.3(b). The Fee and Expenses payable pursuant to Section 7.3(c) or
7.3(d) shall be paid within one business
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day following the consummation of any such Alternative Transaction.
Notwithstanding the preceding sentences, in no event shall the Company
be required to pay any such Fee and Expenses to Parent if,
immediately prior to the termination of this Agreement, Parent was in
material breach of its obligations under this Agreement.
ARTICLE VIII
GENERAL PROVISIONS
SECTION 8.1 EFFECTIVENESS OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS,
Etc.
(a) Except as otherwise provided in this Section 8.1, the
representations, warranties and agreements of each party hereto shall remain
operative and in full force and effect regardless of any investigation made by
or on behalf of any other party hereto, any person controlling any such party or
any of their officers or directors, whether prior to or after the execution of
this Agreement. The representations, warranties and agreements in this
Agreement shall terminate at the Effective Time or upon the termination of this
Agreement pursuant to Section 7.1, as the case may be, except that the
agreements set forth in Article I and Section 5.7 shall survive the Effective
Time indefinitely and those set forth in Section 7.3 shall survive such
termination indefinitely. Nothing in this Section 8.1(a) shall relieve any
party for any breach of any representation, warranty or agreement in this
Agreement occurring prior to termination.
(b) Any disclosure made with reference to one or more sections of the
Company Disclosure Schedule or the Parent Disclosure Schedule shall be deemed
disclosed only with respect to such section unless such disclosure is made in
such a way as to make its relevance to the information called for by another
Section of such schedule readily apparent in which case, such disclosure shall
be deemed to have been included in such other Section, notwithstanding the
omission of a cross reference thereto.
SECTION 8.2 NOTICES. All notices and other communications given or
made pursuant hereto shall be in writing and shall be deemed to have been duly
given or made if and when delivered personally or by overnight courier to the
parties at the following addresses or sent by electronic transmission, with
confirmation of receipt, to the telecopy numbers specified below (or at such
other address or telecopy number for a party as shall be specified by like
notice):
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(a) If to Parent or Merger Sub:
The Gillette Company
Prudential Tower Building
39th Floor
Boston, MA 02199
Telecopier No.: (617) 421-7866
Telephone No.: (617) 421-7875
Attention: Deputy General Counsel
With a copy to:
David C. Chapin, Esq.
Ropes & Gray
One International Place
Boston, MA 02110
Telecopier No.: (617) 951-7050
Telephone No.: (617) 951-7371
(b) If to the Company:
Duracell International Inc.
Berkshire Corporate Park
Bethel, CT 06801
Telecopier No.: (203) 796-4518
Telephone No.: (203) 796-4158
Attention: General Counsel
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With a copy to:
Charles I. Cogut, Esq.
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, NY 10017
Telecopier No.: (212) 455-2502
Telephone No.: (212) 455-2000
SECTION 8.3 CERTAIN DEFINITIONS. For purposes of this Agreement, the
term:
(a) "affiliates" means a person that directly or indirectly, through one
or more intermediaries, controls, is controlled by, or is under common control
with, the first mentioned person;
(b) "beneficial owner" with respect to any shares of Company Common Stock
means a person who shall be deemed to be the beneficial owner of such shares (i)
which such person or any of its affiliates or associates (as such term is
defined in Rule 12b-2 of the Exchange Act) beneficially owns, directly or
indirectly, (ii) which such person or any of its affiliates or associates has,
directly or indirectly, (a) the right to acquire (whether such right is
exercisable immediately or subject only to the passage of time), pursuant to
any agreement, arrangement or understanding or upon the exercise of conversion
rights, exchange rights, warrants or options, or otherwise, or (b) the right
to vote pursuant to any agreement, arrangement or understanding, or (iii)
which are beneficially owned, directly or indirectly, by any other persons
with whom such person or any of its affiliates or associates has any
agreement, arrangement or understanding for the purpose of acquiring,
holding, voting or disposing of any shares;
(c) "business day" means any day other than a day on which banks in The
Commonwealth of Massachusetts are required or authorized to be closed;
(d) "control" (including the terms "controlled by" and "under common
control with") means the possession, directly or indirectly or as trustee or
executor, of the power to direct or cause the direction of the management or
policies of a person, whether through the ownership of stock, as trustee or
executor, by contract or credit arrangement or otherwise;
(e) "generally accepted accounting principles" shall mean United States
generally accepted accounting principles.
(f) "person" means an individual, corporation, partnership, association,
trust, unincorporated organization, other entity or group (as defined in Section
13(d)(3) of the Exchange Act);
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(g) "significant subsidiary" means any subsidiary of the Company or
Parent, as the case may be, that constitutes a significant subsidiary within the
meaning of Rule 1-02 of Regulation S-X of the SEC; and
(h) "subsidiary" or "subsidiaries" of the Company, Parent or any other
person means any corporation, partnership, joint venture or other legal entity
of which the Company, the Surviving Corporation, Parent or such other person, as
the case may be (either alone or through or together with any other subsidiary),
owns, directly or indirectly, more than 50% of the stock or other equity
interests the holders of which are generally entitled to vote for the election
of the board of directors or other governing body of such corporation or other
legal entity.
SECTION 8.4 AMENDMENT. This Agreement may be amended by the parties
hereto by action taken by or on behalf of their respective Boards of Directors
at any time prior to the Effective Time; PROVIDED, HOWEVER, that, after
approval of the Merger by the stockholders of the Company, no amendment may be
made which by law requires further approval by such stockholders without such
further approval. This Agreement may not be amended except by an instrument in
writing signed by the parties hereto.
SECTION 8.5 WAIVER. At any time prior to the Effective Time, any party
hereto may with respect to any other party hereto (a) extend the time for the
performance of any of the obligations or other acts, (b) waive any inaccuracies
in the representations and warranties contained herein or in any document
delivered pursuant hereto, or (c) waive compliance with
any of the agreements or conditions contained herein. Any such extension or
waiver shall be valid only if set forth in an instrument in writing signed by
the party or parties to be bound thereby.
SECTION 8.6 HEADINGS. The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
SECTION 8.7 SEVERABILITY. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of
law, or public policy, all other conditions and provisions of this Agreement
shall nevertheless remain in full force and effect so long as the economic or
legal substance of the transactions contemplated hereby is not affected in
any manner adverse to any party. Upon such determination that any term or
other provision is invalid, illegal or incapable of being enforced, the
parties hereto shall negotiate in good faith to modify this Agreement so as
to effect the original intent of the parties as closely as possible in an
acceptable manner to the end that the transactions contemplated hereby are
fulfilled to the fullest extent possible.
SECTION 8.8 ENTIRE AGREEMENT. This Agreement constitutes the entire
agreement and supersedes all prior agreements and undertakings (other than the
Confidentiality Letter),
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both written and oral, among the parties, or any of them, with
respect to the subject matter hereof.
SECTION 8.9 ASSIGNMENT; GUARANTEE OF MERGER SUB OBLIGATIONS. This
Agreement shall not be assigned by operation of law or otherwise, except that
Parent and Merger Sub may assign all or any of their rights hereunder to any
direct wholly owned subsidiary of Parent provided that no such assignment shall
relieve the assigning party of its obligations hereunder. Parent guarantees the
full and punctual performance by Merger Sub of all the obligations hereunder of
Merger Sub or any such assignees.
SECTION 8.10 PARTIES IN INTEREST. This Agreement shall be binding upon
and inure solely to the benefit of each party hereto, and nothing in this
Agreement, express or implied, is intended to or shall confer upon any other
person any right, benefit or remedy of any nature whatsoever under or by reason
of this Agreement, including, without limitation, by way of subrogation, other
than Section 5.7 (which is intended to be for the benefit of the Indemnified
Parties and may be enforced by such Indemnified Parties).
SECTION 8.11 FAILURE OR INDULGENCE NOT WAIVER; REMEDIES CUMULATIVE. No
failure or delay on the part of any party hereto in the exercise of any right
hereunder shall impair such right or be construed to be a waiver of, or
acquiescence in, any breach of any representation, warranty or agreement herein,
nor shall any single or partial exercise of any such right preclude any other or
further exercise thereof or of any other right. All rights and remedies
existing under this Agreement are cumulative to, and not exclusive of, any
rights or remedies otherwise available.
SECTION 8.12 GOVERNING LAW. This Agreement shall be governed by, and
construed in accordance with, the internal laws of the State of Delaware
applicable to contracts executed and fully performed within the State of
Delaware.
SECTION 8.13 COUNTERPARTS. This Agreement may be executed in one or
more counterparts, and by the different parties hereto in separate counterparts,
each of which when executed shall be deemed to be an original but all of which
taken together shall constitute one and the same agreement.
SECTION 8.14 CONSENT TO JURISDICTION. EACH OF THE PARTIES HERETO:
(a) consents to submit itself to the personal jurisdiction of (i)
the United States District Court for the southern district of New York
in the event any dispute arises out of this agreement or any of the
transactions contemplated by this agreement to the extent such court would
have subject matter jurisdiction with respect to such dispute and (ii) the
Chancery or other courts of the State of Delaware otherwise;
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(b) agrees that it will not attempt to deny or defeat such personal
jurisdiction or venue by motion or other request for leave from any such
court;
(c) agrees that it will not bring any action relating to this
agreement or any of the transactions contemplated by this agreement in any
court other than such courts;
(d) agrees that service of process in any such action or proceeding
may be effected by mailing a copy thereof by registered or certified mail
(or any substantially similar form of mail), postage prepaid, to a party
at its address set forth in Section 8.2 or at such other address of which
a party shall have been notified pursuant thereto; and
(e) agrees that nothing herein shall affect the right to effect
service of process in any other manner permitted by law.
[This space intentionally left blank.]
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IN WITNESS WHEREOF, Parent, Merger Sub and the Company have caused this
Agreement to be executed as of the date first written above by their respective
officers thereunto duly authorized.
THE GILLETTE COMPANY
By:/s/ Kenneth F. Kames
---------------------------------------
Name: Kenneth F. Kames
Title: Vice President
ALASKA ACQUISITION CORP.
By:/s/ Kenneth F. Kames
---------------------------------------
Name: Kenneth F. Kames
Title: Vice President
DURACELL INTERNATIONAL INC.
By:/s/ Charles R. Perrin
----------------------------------------
Name: Charles R. Perrin
Title: Chairman of the Board and
Chief Executive Officer
<PAGE>
Exhibit 5.6 to Merger Agreement
_____________, 1996
The Gillette Company
Prudential Tower Building
Boston, MA 02199
Re: Merger Agreement
Ladies and Gentlemen:
The Gillette Company, a Delaware corporation ("Parent"), Alaska Acquisition
Corp., a wholly-owned subsidiary of Parent ("Merger Sub"), and Duracell
International Inc., a Delaware corporation (the "Company"), have entered into an
Agreement and Plan of Merger dated September 12, 1996 (the "Merger Agreement"),
pursuant to which Merger Sub would be merged with and into the Company (the
"Merger"), and each outstanding share of Company Common Stock would be converted
into the right to receive shares of Parent Common Stock. Capitalized terms used
herein and not defined have the meanings assigned to them in the Merger
Agreement.
The undersigned has been advised that as of the date the Merger is
submitted to stockholders of the Company for approval, the undersigned may be an
"affiliate" of the Company, as the term is defined for purposes of paragraph (c)
of Rule 145 of the Securities and Exchange Commission (the "SEC") under the
Securities Act of 1933, as amended (the "Securities Act") and may be deemed an
"affiliate" of the Company for purposes of qualifying the Merger for pooling of
interests accounting treatment under Opinion 16 of the Accounting Principles
Board and applicable SEC rules and regulations, although nothing contained
herein shall be construed as an admission of either such fact.
Parent has requested the undersigned to represent and agree, and the
undersigned represents and agrees, with Parent as follows:
1. POOLING.
From and after 30 days prior to the Effective Time of the Merger, the
undersigned will not sell, transfer, exchange or otherwise, directly or
indirectly, dispose of, or reduce the risk of loss (by short sale or otherwise)
or enter into any contract or other arrangement with respect to, or consent to
the sale or exchange of or other disposition of any interest in, any securities
of the Company or Parent until after such time as Parent has published financial
results covering at least 30 days of combined operations of Parent and the
Company after the Effective Time of the Merger in the form of a quarterly
earnings report, an effective registration statement filed with the SEC, a
<PAGE>
2
report to the SEC on Form 10-K, 10-Q or 8-K, or any other public filing or
announcement which includes such combined results of operations. The undersigned
understands that certificates representing the shares of Parent Common Stock, if
any, received by the undersigned in the Merger will be placed on the "stop-
transfer list" maintained by Parent's transfer agent and will remain so listed
until the publication of such financial results and that there will be placed on
the certificate(s) representing such stock, or any certificates delivered in
substitution therefor, a legend stating in substance:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE MAY BE TRANSFERRED ONLY IN
COMPLIANCE WITH THE CONDITIONS SPECIFIED IN A LETTER AGREEMENT DATED AS OF
_________, 1996 RELATING THERETO, A COPY OF WHICH IS ON FILE WITH THE
SECRETARY OF THE GILLETTE COMPANY."
Parent agrees and covenants that (i) Parent will use its reasonable best
efforts to publish financial results covering at least 30 days of combined
operations of Parent and the Company after the Effective Time of the Merger, as
soon as practicable and in no event later than 45 days after the end of the
first fiscal quarter which includes at least 30 days of such combined operations
after the Effective Time if such 30 days is included in any of the first three
fiscal quarters of Parent, and in no event later than 60 days after the end of
the first fiscal quarter which includes at least 30 days of combined operations
of Parent and the Company if such 30 days is included in the fourth fiscal
quarter of Parent; and (ii) promptly after such publication the stop transfer
instructions and legends referred to above shall be terminated or removed.
2. RULE 145.
The undersigned has been advised that the issuance of shares of Parent
Common Stock pursuant to the Merger will be registered under the Securities Act
pursuant to a registration statement on Form S-4. The undersigned has also been
advised that, if the undersigned is in fact an "affiliate" of the Company at the
time the Merger is submitted to a vote of the stockholders of the Company,
Rule 145 under the Securities Act will restrict the undersigned's sales of
shares of Parent Common Stock, if any, received in the Merger. The undersigned
has been advised that if the undersigned is so subject to Rule 145, the
undersigned may not sell or otherwise dispose of any shares of Parent Common
Stock except in accordance with Rule 145(d) under the Securities Act or pursuant
to an effective registration statement under the Securities Act or an exemption
from the registration requirements of the Securities Act.
The undersigned understands and agrees that:
(i) Parent is under no obligation to register the sale, transfer or
other disposition of the shares of Parent
<PAGE>
3
Common Stock to be received by the undersigned in the Merger except as set
forth in written agreements, if any, with the undersigned which have been
entered into by Parent or which have been specifically assumed by Parent.
(ii) Stop transfer instructions will be given to the transfer agent
of Parent with respect to the shares of Parent Common Stock to be received
by the undersigned in the Merger, and there will be placed on the
certificate representing such stock, or any certificates delivered in
substitution therefor, a legend stating in substance:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE WERE ISSUED IN A
TRANSACTION TO WHICH RULE 145 UNDER THE SECURITIES ACT OF 1933 (THE "ACT")
APPLIES. THE SECURITIES REPRESENTED BY THIS CERTIFICATE MAY BE TRANSFERRED
ONLY IN ACCORDANCE WITH RULE 145(D) OR PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT OR EXEMPTION FROM REGISTRATION UNDER THE ACT."
(iii) Unless the transfer by the undersigned of the shares of Parent
Common Stock is a sale made in conformity with the provisions of
Rule 145(d), or is made pursuant to a registration statement under the
Securities Act, Parent reserves the right to put an appropriate legend on
the certificate issued to a transferee.
In connection with the foregoing, Parent agrees as follows:
(i) For so long as and to the extent necessary to permit the
undersigned to sell the shares of Parent Common Stock pursuant to Rule 145
and, to the extent applicable, Rule 144 under the Securities Act, Parent
shall use reasonable best efforts to file, on a timely basis, all reports
required to be filed with the Securities and Exchange Commission ("SEC") by
it pursuant to Section 13 of the Exchange Act, so long as it is subject to
such requirement, furnish to the undersigned upon request a written
statement as to whether Parent has complied with such reporting
requirements during the 12 months preceding any proposed sale under Rule
145 and otherwise use its reasonable efforts to permit such sales pursuant
to Rule 145 and Rule 144. Parent has filed, on a timely basis, all reports
required to be filed with the SEC under Section 13 of the Securities
Exchange Act of 1934, as amended, during the preceding 12 months.
(ii) Parent agrees that the stop transfer instructions and legends
referred to above shall be terminated or removed if the undersigned shall
have delivered to Parent a copy of a letter from the staff of the SEC or an
opinion of counsel with recognized expertise in securities law matters, in
form and substance satisfactory to Parent, to the effect that such
instructions and legends are not required for the purposes of the
Securities Act.
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4
This letter agreement shall be governed by and construed in accordance with
the laws of the State of Delaware.
This letter agreement shall terminate if and when the Merger Agreement is
terminated according to its terms.
* * *
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5
Please indicate your agreement with the foregoing by signing the
acknowledgment below on the enclosed copies of this letter, and returning the
same to the undersigned, whereupon this letter agreement shall become an
effective agreement between Parent and the undersigned.
Very truly yours,
____________________________
By:_________________________
Name:
Title:
Acknowledged and agreed as of
the date hereof.
THE GILLETTE COMPANY
By_________________________
Name:
Title:
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