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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): January 30, 1999
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Aeroquip-Vickers, Inc.
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(Exact Name of Registrant as Specified in Charter)
Ohio 1-924 36-4288310
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(State or Other (Commission (I.R.S. Employer
Jurisdiction of File Number) Identification No.)
Incorporation)
3000 Strayer, Maumee, Ohio 43537-0050
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (419) 867-2200
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Not Applicable
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(Former Name or Former Address, if Changed Since Last Report)
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ITEM 5. OTHER EVENTS.
On February 1, 1999, Aeroquip-Vickers, Inc. (the
"Corporation") announced that it entered into an Agreement and Plan of Merger,
dated as of January 31, 1999 (the "Merger Agreement"), with Eaton Corporation,
an Ohio corporation ("Parent"), and Eaton Industries Inc., an Ohio corporation
and a wholly-owned subsidiary of Parent ("Purchaser"). The Merger Agreement
provides for the merger of Purchaser with and into the Corporation (the
"Merger"), whereby each publicly outstanding share of common stock, par value
$5.00 per share, of the Corporation (the "Common Stock"), other than shares as
to which dissenters' rights have been duly asserted and perfected under the Ohio
General Corporation Law, will be converted into the right to receive $58 per
share in cash, without interest (the "Merger Consideration").
The Merger Agreement also contains a number of
representations, warranties and covenants by the parties, is subject to a number
of conditions, and may be terminated under certain circumstances, all as set
forth in the Merger Agreement.
On January 30, 1999, the Directors of the Corporation approved
Amendment No. 2 (the "1989 Plan Amendment") to the Rights Agreement, dated as of
January 26, 1989, as amended (the "1989 Rights Plan"), between the Corporation
and First Chicago Trust Company of New York (successor to National Bank of
Detroit) (the "Rights Agent"). The 1989 Plan Amendment made the provisions of
the 1989 Rights Plan inapplicable to the transactions contemplated by the Merger
Agreement. The 1989 plan will expire by its terms on February 6, 1999.
Additionally, on January 30, 1999, the Directors of the Corporation approved
Amendment No. 1 (the "1999 Plan Amendment" and, together with the 1989 Plan
Amendment, the "Amendments") to the Rights Agreement, dated as of February 7,
1999 (the "1999 Rights Plan"), between the Corporation and the Rights Agent. The
1999 Plan Amendment made the provisions of the 1999 Rights Plan inapplicable to
the transactions contemplated by the Merger Agreement. The 1999 Rights Plan
will, by its terms, become effective on February 7, 1999. No other amendments
were made to the 1989 Rights Plan or to the 1999 Rights Plan by virtue of the
Amendments.
The Merger Agreement and the press release issued by the
Corporation in connection therewith are filed herewith as Exhibits 2.1 and 99.1,
respectively, and are incorporated herein by reference. The 1989 Plan Amendment
and the 1999 Plan Amendment are filed herewith as Exhibits 4.1 and 4.2,
respectively, and are incorporated herein by reference. The descriptions of the
Merger Agreement and the Amendments set forth above do not purport to be
complete and are qualified in their entirety by reference to the provisions of
such agreements.
ITEM. 7 FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial Statements of Business Acquired: None.
(b) Pro Forma Financial Information: None.
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(c) Exhibits:
2.1 Agreement and Plan of Merger, dated as of
January 31, 1999, by and among the
Corporation, Eaton Corporation and Eaton
Industries Inc.
4.1 Amendment No. 2, dated as of January 31,
1999, to the Rights Agreement, dated as of
January 26, 1989, as amended, between the
Corporation and First Chicago Trust Company
of New York (successor to National Bank of
Detroit).
4.2 Amendment No. 1, dated as of February 7,
1999, to the Rights Agreement, dated as of
February 7, 1999, between the Corporation
and First Chicago Trust Company of New York.
99.1 Press Release, dated February 1, 1999.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
AEROQUIP-VICKERS, INC.
Dated: February 1, 1999 By: /s/ James E. Kline
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James E. Kline
Vice President and General Counsel
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INDEX TO EXHIBITS
Exhibit Description of Exhibit
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2.1 Agreement and Plan of Merger, dated January 31, 1999, by and
among the Corporation, Eaton Corporation and Eaton Industries
Inc.
4.1 Amendment No. 2, dated as of January 31, 1999, to the Rights
Agreement, dated as of January 26, 1989, as amended, between
the Corporation and First Chicago Trust Company of New York
(successor to National Bank of Detroit).
4.2 Amendment No. 1, dated as of February 7, 1999, to the Rights
Agreement, dated as of February 7, 1999, between the
Corporation and First Chicago Trust Company of New York.
99.1 Press Release, dated February 1, 1999.
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Exhibit 2.1
AGREEMENT AND PLAN OF MERGER
by and among
EATON CORPORATION
EATON INDUSTRIES INC.,
and
AEROQUIP-VICKERS, INC.
Dated as of January 31, 1999
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TABLE OF CONTENTS
PAGE
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ARTICLE I
THE MERGER
Section 1.1 The Merger................................................ 1
Section 1.2 Closing................................................... 1
Section 1.3 Effective Time............................................ 2
Section 1.4 Effects of the Merger..................................... 2
Section 1.5 Articles of Incorporation and Code of Regulations......... 2
Section 1.6 Directors and Officers of the Surviving Corporation....... 2
ARTICLE 2
EFFECT OF THE MERGER ON THE CAPITAL STOCK
OF THE CONSTITUENT CORPORATIONS;
SURRENDER OF CERTIFICATES AND PAYMENT
Section 2.1 Effect on Capital Stock....................................... 2
(a) Cancellation of Treasury Stock and Buyer Owned Stock... 2
(b) Conversion of Common Stock............................. 3
(c) Capital Stock of Buyer................................. 3
Section 2.2 Payment and Surrender of Certificates......................... 3
(a) Paying Agent........................................... 3
(b) Payment Procedures..................................... 3
(c) Stock Transfer Books................................... 4
(d) Termination of Payment Fund............................ 4
(e) No Liability........................................... 4
(f) Lost Certificates...................................... 4
Section 2.3 Company Equity Plans.......................................... 4
(a) Conversion of Options.................................. 4
(b) Treatment of Restricted Stock.......................... 5
(c) Treatment of Stock Units and Stock Award............... 5
(d) Termination of Plans................................... 5
Section 2.4 Dissenters' Rights............................................ 5
Section 2.5 Further Assurances............................................ 6
ARTICLE 3
REPRESENTATIONS AND WARRANTIES
Section 3.1 Representations and Warranties of Company..................... 6
(a) Organization, Standing and Corporate Power............. 6
(b) Subsidiaries........................................... 7
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PAGE
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(c) Capital Structure...................................... 7
(d) Authority; Noncontravention............................ 8
(e) SEC Reports and Financial Statements................... 9
(f) Absence of Certain Changes or Events................... 10
(g) Compliance with Applicable Laws; Litigation............ 10
(h) ERISA Compliance....................................... 11
(i) Taxes.................................................. 14
(j) Voting Requirement..................................... 14
(k) State Takeover Statutes................................ 14
(l) Brokers................................................ 15
(m) Environmental Matters.................................. 15
(n) The Company Rights Agreement........................... 17
(o) Proxy Statement........................................ 17
(p) Intellectual Property.................................. 17
(q) Opinion of Financial Advisor........................... 17
(r) Labor Agreements....................................... 18
(s) Contracts; Debt Instruments............................ 18
(t) Year 2000 Issues....................................... 18
(u) Product Recalls........................................ 18
Section 3.2 Representations and Warranties of Parent and Buyer............ 19
(a) Organization, Standing and Corporate Power............. 19
(b) Authority; Noncontravention............................ 19
(c) Ownership of Common Stock.............................. 20
(d) Brokers................................................ 20
(e) Financing.............................................. 20
(f) Information in Proxy Statement......................... 20
ARTICLE 4
COVENANTS RELATING TO CONDUCT OF BUSINESS
Section 4.1 Conduct of Business........................................... 20
(a) Conduct of Business by the Company..................... 20
(b) Other Actions.......................................... 23
(c) Advice of Changes...................................... 23
Section 4.2 No Solicitation............................................... 23
ARTICLE 5
ADDITIONAL AGREEMENTS
Section 5.1 Preparation of Proxy Statement; Shareholders Meeting.......... 25
Section 5.2 Access to Information; Confidentiality........................ 25
Section 5.3 Efforts; Cooperation.......................................... 25
Section 5.4 Indemnification............................................... 26
Section 5.5 Employee Benefits............................................. 27
Section 5.6 Public Announcements.......................................... 28
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Section 5.7 Fees and Expenses............................................. 28
Section 5.8 Credit Agreement.............................................. 28
ARTICLE 6
CONDITIONS PRECEDENT
Section 6.1 Conditions to Each Party's Obligation to Effect the Merger.... 28
(a) Shareholder Approval................................... 28
(b) Governmental and Regulatory Approvals.................. 28
(c) No Injunctions or Restraints........................... 28
(d) HSR Act................................................ 29
Section 6.2 Conditions to Obligations of Parent and Buyer................. 29
(a) Representations and Warranties......................... 29
(b) Performance of Obligations of the Company.............. 29
(c) Consents............................................... 29
(d) Governmental Litigation................................ 29
(e) Dissenting Shares...................................... 29
(f) Officer's Certificate.................................. 29
Section 6.3 Conditions to Obligations of the Company...................... 30
(a) Representations and Warranties......................... 30
(b) Performance of Obligations of Parent and Buyer......... 30
(c) Officer's Certificate.................................. 30
Section 6.4 Frustration of Closing Conditions............................. 30
ARTICLE 7
TERMINATION, AMENDMENT AND WAIVER
Section 7.1 Termination................................................... 30
Section 7.2 Effect of Termination......................................... 31
ARTICLE 8
GENERAL PROVISIONS
Section 8.1 Amendment..................................................... 32
Section 8.2 Extension; Waiver............................................. 32
Section 8.3 Nonsurvival of Representations and Warranties................. 32
Section 8.4 Notices....................................................... 32
Section 8.5 Interpretation................................................ 33
Section 8.6 Counterparts.................................................. 34
Section 8.7 Entire Agreement; No Third-Party Beneficiaries................ 34
Section 8.8 Governing Law................................................. 34
Section 8.9 Assignment.................................................... 34
Section 8.10 Consent to Jurisdiction....................................... 34
Section 8.11 Specific Enforcement.......................................... 34
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Section 8.12 Severability.................................................. 34
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TABLE OF DEFINED TERMS
1987 Plan.........................................5
1994 Plan.........................................5
1998 Plan.........................................5
affiliate........................................34
Agreement.........................................1
Business Day......................................2
Buyer.............................................1
Certificate of Merger.............................2
Certificate.......................................3
Closing...........................................1
Closing Date......................................2
Code.............................................12
Common Stock......................................1
Company...........................................1
Company Benefit Plans............................11
Company Disclosure Letter.........................7
Company Entities..................................7
Company Intellectual Property....................18
Company Material Adverse Effect...................7
Company Rights Agreement.........................17
Company Subsidiaries..............................7
Company Subsidiary................................7
Competing Transaction............................24
Confidentiality Agreement........................26
control..........................................34
Director Equity Plan..............................5
Director Plan.....................................5
Dissenting Shares.................................3
Dissenting Shareholders...........................3
Effective Time....................................2
Environmental Claim..............................16
Environmental Laws...............................17
Equity Plans......................................5
ERISA............................................12
ERISA Affiliate..................................12
Exchange Act......................................7
Foreign Plan.....................................11
GAAP.............................................10
Governmental Entity...............................9
Hazardous Substance..............................17
HSR Act...........................................9
Indemnified Parties..............................28
knowledge........................................34
Liens.............................................7
Merger............................................1
Merger Consideration..............................3
Multiemployer Plan...............................13
Multiple Employer Plan...........................13
OGCL..............................................1
Old Right.........................................7
Old Rights Agreement..............................8
Option Consideration..............................5
Option............................................5
Parent............................................1
Parent Material Adverse Effect...................20
Paying Agent......................................3
Payment Fund......................................3
Permits..........................................11
person...........................................34
Preferred Stock...................................7
Proxy Statement...................................9
Recent SEC Reports...............................15
Release..........................................17
Restraints.......................................29
Right.............................................8
SEC...............................................9
SEC Documents.....................................9
Securities Act....................................9
Shareholder Approval.............................15
Shareholders Meeting.............................26
Superior Proposal................................25
Surviving Corporation.............................1
Takeover Statute.................................15
Termination Fee..................................32
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER (this "Agreement"), dated as of
January 31, 1999, by and among EATON CORPORATION, an Ohio corporation
("Parent"), EATON INDUSTRIES INC., an Ohio corporation and a wholly owned
subsidiary of Parent ("Buyer"), and AEROQUIP-VICKERS, INC., an Ohio corporation
(the "Company").
W I T N E S S E T H:
1. The respective Boards of Directors of the Company,
Parent and Buyer have each approved the merger of Buyer with and into the
Company (the "Merger"), upon the terms and subject to the conditions set forth
in this Agreement and in accordance with the General Corporation Law of the
State of Ohio (the "OGCL"), whereby each issued and outstanding share of common
stock, par value $5.00 per share, of the Company ("Common Stock"), other than
Dissenting Shares and any shares of Common Stock owned by Parent, Buyer or held
in the treasury of the Company, will be converted into the right to receive the
Merger Consideration. Any reference in this Agreement to Common Stock shall be
deemed to include the Old Rights issued under the Old Rights Agreement or the
Rights to be issued under the Company Rights Agreement, as appropriate.
2. The Board of Directors of the Company has determined
that the Merger is fair to and in the best interest of the Company and its
shareholders.
NOW, THEREFORE, in consideration of the representations,
warranties, covenants and agreements contained in this Agreement, the parties
agree as follows:
ARTICLE I
THE MERGER
Section 1.1 THE MERGER. Upon the terms and subject to the
conditions set forth in this Agreement, and in accordance with the OGCL, Buyer
will be merged with and into the Company at the Effective Time and the separate
corporate existence of Buyer will thereupon cease. Following the Effective Time,
the Company will be the surviving corporation (the "Surviving Corporation").
Section 1.2 CLOSING. The closing of the Merger (the "Closing")
will take place at a time and on a date to be specified by the parties, which is
to be no later than the second Business Day (or, at the option of Parent, the
11th day) after satisfaction or waiver (subject to applicable law) of the
conditions (excluding conditions that, by their terms, cannot be satisfied until
the Closing Date) set forth in Article 6, unless another time or date is agreed
to by the parties to this Agreement. The Closing will be held at the offices of
Wachtell, Lipton, Rosen & Katz, 51 West 52nd Street, New York, New York 10019,
or such other location as the parties to this Agreement agree to in writing. The
date on which the Closing occurs is hereinafter referred to as the "Closing
Date." "Business Day" means any day other than Saturday, Sunday, or any federal
holiday.
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Section 1.3 EFFECTIVE TIME. Subject to the provisions of this
Agreement, as soon as practicable on or after the Closing Date, the parties
shall (i) file a certificate of merger (the "Certificate of Merger") in such
form as is required by and executed in accordance with the relevant provisions
of the OGCL and (ii) make all other filings or recordings required under the
OGCL. The Merger will become effective at such time as the Certificate of Merger
is duly filed with the Secretary of State of the State of Ohio, or at such
subsequent date or time as the Company and Buyer agree and specify in the
Certificate of Merger (the date and time the Merger becomes effective is
hereinafter referred to as the "Effective Time").
Section 1.4 EFFECTS OF THE MERGER. The Merger will have the
effects set forth in the OGCL. 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 Buyer will be vested in the
Surviving Corporation, and all debts, liabilities and duties of the Company and
Buyer will become the debts, liabilities and duties of the Surviving
Corporation.
Section 1.5 ARTICLES OF INCORPORATION AND CODE OF REGULATIONS.
The Articles of Incorporation and Code of Regulations of Buyer, as in effect
immediately before the Effective Time, will be the Articles of Incorporation and
Code of Regulations, respectively, of the Surviving Corporation (with such
changes thereto as the parties may agree), until thereafter changed or amended
as provided therein or by applicable law.
Section 1.6 DIRECTORS AND OFFICERS OF THE SURVIVING
CORPORATION. The directors of Buyer immediately prior to the Effective Time will
be the directors of the Surviving Corporation, until the earlier of their death,
resignation or removal or until their respective successors are duly elected and
qualified, as the case may be. The officers of the Company immediately prior to
the Effective Time will be the officers of the Surviving Corporation, until the
earlier of their death, resignation or removal or until their respective
successors are duly elected and qualified, as the case may be.
ARTICLE 2
EFFECT OF THE MERGER ON THE CAPITAL STOCK
OF THE CONSTITUENT CORPORATIONS;
SURRENDER OF CERTIFICATES AND PAYMENT
Section 2.1 EFFECT ON CAPITAL STOCK. At the Effective Time, by
virtue of the Merger and without any action on the part of the holder of any
shares of capital stock of the Company or Buyer:
(a) CANCELLATION OF TREASURY STOCK AND BUYER OWNED STOCK. Each
share of Common Stock that is owned by Parent or Buyer and any Common Stock held
in the treasury of the Company will automatically be canceled and retired and
will cease to exist, and no consideration will be delivered in exchange
therefor. Each share of Common Stock, if any, that is owned by a subsidiary of
Parent (other than Buyer) or a Company Subsidiary shall remain outstanding.
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(b) CONVERSION OF COMMON STOCK. Each issued and outstanding
share of Common Stock (other than shares to be canceled or to remain outstanding
in accordance with Section 2.1(a) and shares of Common Stock ("Dissenting
Shares") that are owned by shareholders ("Dissenting Shareholders") that have
properly exercised appraisal rights pursuant to Section 1701.85 of the OGCL))
will be converted into the right to receive $58.00, without interest, in cash
(the "Merger Consideration") upon surrender of the certificate representing
immediately prior to the Effective Time such share of Common Stock (the
"Certificate") in the manner provided in Section 2.2. At the Effective Time, all
such shares of Common Stock will no longer be outstanding and will automatically
be canceled and retired and will cease to exist, and each holder of a
Certificate will cease to have any rights with respect thereto, except the right
to receive the Merger Consideration upon surrender of such Certificate in
accordance with Section 2.2.
(c) CAPITAL STOCK OF BUYER. At the Effective Time, each share
of common stock of Buyer issued and outstanding immediately prior to the
Effective Time will be converted into and become one fully paid and
nonassessable share of common stock of the Surviving Corporation.
Section 2.2 PAYMENT AND SURRENDER OF CERTIFICATES.
(a) PAYING AGENT. Prior to the Effective Time, Buyer shall
appoint the Company's registrar and transfer agent or such other United States
bank or trust company as may be approved in writing by the Company (such
approval not to be unreasonably withheld) to act as paying agent (the "Paying
Agent") for the payment of the Merger Consideration. Buyer shall deposit or
shall cause to be deposited with the Paying Agent, in a separate fund
established for the benefit of the holders of shares of Common Stock for payment
in accordance with this Article 2 through the Paying Agent (the "Payment Fund"),
immediately available funds in amounts necessary to make the payments pursuant
to Section 2.1(b) and this Section 2.2 to holders of shares of Common Stock
entitled thereto.
(b) PAYMENT PROCEDURES. As soon as reasonably practicable
after the Effective Time and in any event not later than three Business Days
following the Effective Time, Parent shall cause the Paying Agent to mail to
each holder of record of a Certificate or Certificates whose shares were
converted into the right to receive the Merger Consideration pursuant to Section
2.1(b), (i) a letter of transmittal (which must specify that delivery will be
effected, and risk of loss and title to the Certificates will pass, only upon
delivery of the Certificates to the Paying Agent and will be in such form and
have such other provisions as the Company and Buyer may reasonably specify) and
(ii) instructions for use in surrendering the Certificates in exchange for the
Merger Consideration. Upon surrender of a Certificate for cancellation to the
Paying Agent, together with such letter of transmittal, duly executed, and such
other documents as may reasonably be required by the Paying Agent, the holder of
such Certificate will be entitled to receive in exchange therefor cash in an
amount equal to the product of (i) the number of shares of Common Stock
represented by such Certificate multiplied by (ii) the Merger Consideration, and
the Certificate so surrendered will forthwith be canceled. Absolutely no
interest will be paid or accrued on the Merger Consideration payable upon the
surrender of any Certificate. If payment is to be made to a person other than
the person in whose name the surrendered Certificate is registered, it will be a
condition of payment that the Certificate so surrendered will
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be properly endorsed or otherwise in proper form for transfer and that the
person requesting such payment, shall pay any transfer or other taxes required
by reason of the payment of the Merger Consideration to a person other than the
registered holder of the surrendered Certificate or establish to the
satisfaction of the Surviving Corporation that such tax has been paid or is not
applicable.
(c) STOCK TRANSFER BOOKS. After the Effective Time, there
shall be no further registration of transfers on the stock transfer books of the
Surviving Corporation of shares of Common Stock. If, after the Effective Time,
Certificates are presented to the Surviving Corporation or the Paying Agent for
any reason, they will be canceled and exchanged as provided in this Article 2,
except as otherwise provided by law. Until surrendered as contemplated by this
Section 2.2, each Certificate (other than Certificates representing Dissenting
Shares and shares, if any, remaining outstanding under Section 2.1(a)) will be
deemed at any time after the Effective Time to represent only the right to
receive upon surrender the Merger Consideration that the holder thereof has the
right to receive in respect of such Certificate pursuant to the provisions of
this Article 2.
(d) TERMINATION OF PAYMENT FUND. Any portion of the Payment
Fund that remains undistributed to holders of the Certificates for six months
after the Effective Time is to be delivered to the Surviving Corporation, upon
demand, and any holders of the Certificates who have not theretofore complied
with this Article 2 shall thereafter look only to the Surviving Corporation for
payment of their claim for the Merger Consideration.
(e) NO LIABILITY. None of Buyer, the Company, the Surviving
Corporation or the Paying Agent shall be liable to any person in respect of any
amount properly delivered to a public official pursuant to any applicable
abandoned property, escheat or similar law. Immediately prior to the date on
which any payment pursuant to this Article 2 would otherwise escheat to or
become the property of any Governmental Entity, such payment shall, to the
extent permitted by applicable law, become the property of the Surviving
Corporation, free and clear of all claims or interests of any person previously
entitled thereto.
(f) LOST CERTIFICATES. If any Certificate has been lost,
stolen or destroyed, upon the making of an affidavit of that fact by the person
claiming such Certificate to be lost, stolen or destroyed and, if required by
the Surviving Corporation, the posting by such person of a bond in such
reasonable amount as the Surviving Corporation may direct as indemnity against
any claim that may be made against it with respect to such Certificate, the
Paying Agent shall issue in exchange for such lost, stolen or destroyed
Certificate the Merger Consideration due to such person pursuant to this
Agreement.
Section 2.3 COMPANY EQUITY PLANS.
(a) CONVERSION OF OPTIONS. At the Effective Time, each holder
of a then-outstanding option to purchase shares of Common Stock under the
Company's 1987 Stock Option Plan, as amended (the "1987 Plan"), the Company's
1998 Stock Incentive Plan (the "1998 Plan"), the Company's 1994 Stock Incentive
Plan, as amended (the "1994 Plan"), and the Company's Non-Employee
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Directors' Stock Award Plan, as amended (the "Director Plan" and together with
the 1987 Plan, the 1998 Plan, the 1994 Plan, the Company's 1989 Non-Employee
Director Equity Plan (the "Director Equity Plan"), the Company's Directors'
Retirement Plan and the Company's Plan for Optional Deferment of Directors'
Fees, the "Equity Plans"), whether or not then exercisable (an "Option"), will
be entitled to receive, in settlement thereof, for each share subject to such
Option an amount (subject to any applicable withholding tax) in cash equal to
the difference between the Merger Consideration and the per share exercise price
of such Option to the extent such difference is a positive number (such amount
is hereinafter referred to as the "Option Consideration"). The payment of the
Option Consideration shall be made by the Surviving Corporation or Parent within
one Business Day following the Effective Time (provided the Company has
delivered by the Effective Time a list of outstanding Options as of the
Effective Time). Upon the Effective Time, the Options will be canceled.
(b) TREATMENT OF RESTRICTED STOCK. At the Effective Time, each
then-outstanding share of Common Stock awarded under the Director Equity Plan
that is still subject to forfeiture under the terms of the Director Equity Plan
will be vested and no longer subject to restrictions and will be canceled and
converted into the right to receive the Merger Consideration as set forth in
Section 2.1(b).
(c) TREATMENT OF STOCK UNITS AND STOCK AWARDS. At the
Effective Time, (i) each holder of any then-outstanding stock award granted
under the Director Plan, whether or not deferred or vested, will be entitled to
receive for each share of Common Stock represented by the stock award, in
settlement thereof, an amount in cash equal to the Merger Consideration and (ii)
each holder of any stock units credited pursuant to the Company's Directors'
Retirement Plan or the Company's Plan for Optional Deferment of Directors' Fees
will be entitled to receive, for each stock unit, in settlement thereof, an
amount in cash equal to the Merger Consideration. The payment of the amounts
under this Section 2.3(c) shall be made by the Surviving Corporation or the
Parent within one Business Day following the Effective Time provided that the
Company has delivered by the Effective Time a list of such amounts as of the
Effective Time.
(d) TERMINATION OF PLANS. Prior to the Effective Time, the
Company shall use its reasonable efforts to obtain all necessary consents or
releases from holders of Options, restricted shares, stock units or stock awards
under the Equity Plans and take all such other lawful action as may be necessary
(which include, but are not limited to, satisfying the requirements of Rule
16b-3(e) promulgated under Section 16 of the Exchange Act, without incurring any
liability in connection therewith) to provide for and give effect to the
transactions contemplated by this Section 2.3. Except as otherwise agreed to in
writing by the parties, (i) the Equity Plans will terminate as of the Effective
Time and the provisions in any other plan, program or arrangement providing for
the issuance or grant of any other interest in respect of the capital stock of
the Company or any subsidiary thereof will be canceled as of the Effective Time,
and (ii) the Company shall use its reasonable efforts to assure that following
the Effective Time no participant in the Equity Plans, or other plans, programs
or arrangements, will have any right thereunder to acquire equity securities of
the Company, the Surviving Corporation or any subsidiary thereof.
Section 2.4 DISSENTERS' RIGHTS. No Dissenting Shareholder will
be entitled to any portion of the Merger Consideration pursuant to this Article
2 unless and until the holder thereof has failed to perfect or has effectively
withdrawn or lost such holder's right to dissent from the Merger under the OGCL,
and any Dissenting Shareholder will be entitled to receive
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only the payment provided by Section 1701.85 of the OGCL with respect to shares
of Common Stock owned by such Dissenting Shareholder. If any person who
otherwise would be deemed a Dissenting Shareholder has failed to properly
perfect or has effectively withdrawn or lost the right to dissent with respect
to any shares of Common Stock, such shares of Common Stock will thereupon be
treated as though such shares of Common Stock had been converted into the right
to receive the Merger Consideration with respect to such shares of Common Stock
as provided in this Article 2. The Company shall give Buyer prompt notice of any
written demands for appraisal, attempted withdrawals of such demands and any
other instruments received by the Company relating to shareholders' rights of
appraisal. Buyer and, after the Effective Time, Parent shall conduct all
negotiations and proceedings with respect to demand for appraisal under the OGCL
and the Company shall be entitled to participate therein only as and to the
extent requested by Parent. The Company shall not, except with the prior written
consent of Buyer, make any payment with respect to any demands for appraisals of
Dissenting Shares, offer to settle or settle any such demands or approve any
withdrawal of any such demands.
Section 2.5 FURTHER ASSURANCES. At and after the Effective
Time, the officers and directors of the Surviving Corporation will be authorized
to execute and deliver, in the name and on behalf of the Company or Buyer, any
deeds, bills of sale, assignments or assurances and to take and do, in the name
and on behalf of the Company or Buyer, any other actions and things to vest,
perfect or confirm of record or otherwise in the Surviving Corporation any and
all right, title and interest in, to and under any of the rights, properties or
assets acquired or to be acquired by the Surviving Corporation as a result of,
or in connection with, the Merger.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES
Section 3.1 REPRESENTATIONS AND WARRANTIES OF COMPANY. The
Company hereby represents and warrants to Parent and Buyer as follows:
(a) ORGANIZATION, STANDING AND CORPORATE POWER. The Company
and each of the Company Subsidiaries is a corporation or other legal entity duly
organized, validly existing and in good standing (with respect to jurisdictions
that recognize such concept) under the laws of the jurisdiction in which it is
organized and has the requisite corporate or other power, as the case may be,
and authority to carry on its business as now being conducted, except for those
jurisdictions where the failure to be so organized, existing or in good standing
individually or in the aggregate would not reasonably be expected to have a
material adverse effect on the condition (financial or otherwise), business,
assets, liabilities or results of operations of the Company and its subsidiaries
taken as whole (a "Company Material Adverse Effect"). The Company and each of
the Company Subsidiaries is duly qualified or licensed to do business and is in
good standing (with respect to jurisdictions that recognize such concept) in
each jurisdiction in which the nature of its business or the ownership, leasing
or operation of its properties makes such qualification or licensing necessary,
except for those jurisdictions where the failure to be so qualified or licensed
or to be in good standing individually or in the aggregate would not reasonably
be expected to have a Company Material Adverse Effect.
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(b) SUBSIDIARIES. Section 3.1(b) of the disclosure letter
delivered by the Company to Buyer prior to the execution of this Agreement (the
"Company Disclosure Letter"), sets forth all the subsidiaries of the Company
(specifying those that as of the date of this Agreement are Significant
Subsidiaries (as defined in Rule 1-02 of Regulation S-X under the Securities
Exchange Act of 1934, as amended (the "Exchange Act")), and treating as a
Significant Subsidiary of the Company the joint ventures listed on Schedule
3.1(b) of the Company Disclosure Letter (each a "Company Subsidiary,"
collectively, the "Company Subsidiaries," and together with the Company, the
"Company Entities"). Except as set forth on Schedule 3.1(b) of the Company
Disclosure Letter, all outstanding shares of capital stock of, or other equity
interests in, each Company Subsidiary (i) have been validly issued and are fully
paid and nonassessable, (ii) are free and clear of all pledges, claims, liens,
options, charges, encumbrances and security interests of any kind or nature
whatsoever (collectively, "Liens") and (iii) are free of any other restriction
(including any restriction on the right to vote, sell or otherwise dispose of
such capital stock or other ownership interests), except in the case of clauses
(ii) and (iii) for any Liens or restrictions that, individually or in the
aggregate, would not reasonably be expected to have a Company Material Adverse
Effect. Except as set forth on Schedule 3.1(b) of the Company Disclosure Letter
and except for directors' qualifying shares, all outstanding shares of capital
stock (or equivalent equity interests of entities other than corporations) of
each of the Company Subsidiaries are beneficially owned, directly or indirectly,
by the Company. The Company does not, directly or indirectly, own more than 20%
but less than 100% of the capital stock or other equity interest in any person
except as listed on Schedule 3.1(b) of the Company Disclosure Letter.
(c) CAPITAL STRUCTURE. The authorized capital stock of the
Company consists of (i) 100,000,000 shares of Common Stock and (ii) 4,000,000
shares of Serial Preferred Stock, no par value per share, of the Company
("Preferred Stock"). At the close of business on January 28, 1999: (i)
27,600,520 shares of Common Stock were issued and outstanding (including 1,810
shares of restricted stock and excluding 6,680,326 shares of Common Stock held
in the treasury of the Company); (ii) no shares of Preferred Stock were issued
or outstanding; and (iii) 2,787,331 shares of Common Stock were reserved for
issuance under the Equity Plans. Section 3.1(c) of the Company Disclosure Letter
sets forth the holders of all outstanding Options, stock units and stock awards
and the number, exercise prices, vesting schedules and expiration dates of each
grant to such holders. Each share of Common Stock carries with it an associated
share purchase right (an "Old Right"), issued pursuant to the Rights Agreement
between the Company and First Chicago Trust Company of New York, dated as of
January 26, 1989 (the "Old Rights Agreement") which entitles the holder thereof
to purchase, upon the occurrence of certain events, Preferred Stock. As of
February 6, 1999, the Old Rights will lapse and thereafter be of no effect. Each
share of Common Stock will carry, from February 6, 1999, an associated share
purchase right pursuant to the Company Rights Agreement (a "Right"), which will
entitle the holder thereof to purchase, on the occurrence of certain events,
Preferred Stock. All outstanding shares of capital stock of the Company are, and
all shares that may be issued will be, when issued, duly authorized, validly
issued, fully paid and nonassessable and not subject to or issued in violation
of preemptive rights. Except (i) as set forth above, (ii) for shares of Common
Stock issued pursuant to Options outstanding on January 29, 1999 that are
described on Schedule 3.1(c) of the Company Disclosure Letter, and (iii) as set
forth on Schedule 3.1(c) of the Company Disclosure Letter, (x) there are not
issued, reserved for issuance or outstanding (A) any shares of capital stock or
other voting securities of the Company, (B) any securities convertible into or
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exchangeable or exercisable for shares of capital stock or voting securities of
the Company, or (C) any warrants, calls, options or other rights to acquire from
the Company or any Company Subsidiary, and no obligation of the Company or any
Company Subsidiary to issue, any capital stock, voting securities or securities
convertible into or exchangeable or exercisable for capital stock or voting
securities of the Company and (y) there are no outstanding obligations of the
Company or any of its subsidiaries to repurchase, redeem or otherwise acquire
any such securities or to issue, deliver or sell, or cause to be issued,
delivered or sold, any such securities. Neither the Company nor any Company
Subsidiary is a party to any voting agreement with respect to the voting of any
such securities. Except as set forth on Schedule 3.1(c) of the Company
Disclosure Letter, there are no outstanding (A) securities convertible into or
exchangeable or exercisable for shares of capital stock or other voting
securities or ownership interests in any Company Subsidiary, (B) warrants,
calls, options or other rights to acquire from the Company or any Company
Subsidiary, and no obligation of the Company or any Company Subsidiary to issue,
any capital stock, voting securities or other ownership interests in, or any
securities convertible into or exchangeable or exercisable for any capital
stock, voting securities or ownership interests in, any Company Subsidiary, or
(C) obligations of the Company or any Company Subsidiary to repurchase, redeem
or otherwise acquire any such outstanding securities of Company Subsidiaries or
to issue, deliver or sell, or cause to be issued, delivered or sold, any such
securities. Except as set forth on Schedule 3.1(c) of the Company Disclosure
Letter, there are no agreements, arrangements or commitments of any character
(contingent or otherwise) entered into in connection with acquisitions pursuant
to which any person is or may be entitled to receive any payment based on the
revenues, earnings or financial performance of the Company or any of its
subsidiaries or assets or calculated in accordance therewith.
(d) AUTHORITY; NONCONTRAVENTION. The Company has all requisite
corporate power and authority to enter into this Agreement, and, subject to the
Shareholder Approval, to consummate the transactions contemplated by this
Agreement. The execution and delivery of this Agreement by the Company and the
consummation by the Company of the transactions contemplated hereby and thereby
have been duly authorized by all necessary corporate action on the part of the
Company, subject, in the case of the Merger, to the Shareholder Approval. This
Agreement has been duly executed and delivered by the Company, and, assuming the
due authorization, execution and delivery by Buyer and Parent, constitutes a
legal, valid and binding obligation of the Company, enforceable against the
Company in accordance with its terms. Except as set forth on Schedule 3.1(d) of
the Company Disclosure Letter, the execution and delivery of this Agreement do
not, and the consummation of the transactions contemplated by this Agreement and
compliance with the provisions of this Agreement will not, (i) conflict with the
articles of incorporation or code of regulations or comparable organizational
documents of any of the Company Entities, (ii) result in any breach, violation
or default (with or without notice or lapse of time, or both) under, or give
rise to a right of termination, cancellation or creation or acceleration of any
obligation or right of a third party or loss of a benefit under, or result in
the creation of any Lien upon any of the properties or assets of the Company
Entities under, any loan or credit agreement, note, bond, mortgage, indenture,
lease or other agreement, instrument, permit, concession, franchise, license or
other authorization applicable to the Company Entities or their respective
properties or assets or (iii) subject to the governmental filings and other
matters referred to in the following sentence, conflict with or violate any
judgment, order, decree, statute, law, ordinance, rule or regulation applicable
to the Company Entities or their respective properties or assets, other than, in
the case of clauses (ii) and (iii) any such conflicts, violations,
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defaults, rights, losses or Liens that, individually or in the aggregate, would
not reasonably be expected to have a Company Material Adverse Effect or that
would not prevent or materially delay consummation of the transactions
contemplated by this Agreement. No consent, approval, order or authorization of,
action by or in respect of, or registration, declaration or filing with, any
federal, state, or local, foreign or supra-national government, any court,
administrative, regulatory or other governmental agency, commission or authority
or any non-governmental United States or foreign self-regulatory agency,
commission or authority or any arbitral tribunal (each, a "Governmental Entity")
is required by the Company in connection with the execution and delivery of this
Agreement by the Company or the consummation by the Company of the transactions
contemplated hereby or thereby, except for: (i) the filing with the Securities
and Exchange Commission (the "SEC") of a proxy statement relating to the
Shareholders Meeting (such proxy statement, as amended or supplemented from time
to time, the "Proxy Statement"); (ii) the filing of the Certificate of Merger
with the Secretary of State of the State of Ohio; (iii) the filing of a
premerger notification and report form by the Company under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended ("HSR Act");
(iv) the consents, approvals, orders or authorizations set forth on Schedule
3.1(d) of the Company Disclosure Letter; (v) the antitrust and competition laws
of foreign countries; (vi) the "takeover" or "blue sky" laws of various states;
and (vii) such consents, approvals, orders or authorizations the failure of
which to be made or obtained, individually or in the aggregate, would not
reasonably be expected to have a Company Material Adverse Effect or would not
prevent or materially delay consummation of the transactions contemplated by
this Agreement.
(e) SEC REPORTS AND FINANCIAL STATEMENTS. The Company has
timely filed all required reports, schedules, forms, statements and other
documents (including exhibits and all other information incorporated therein)
under the Securities Act of 1933, as amended (the "Securities Act"), and the
Exchange Act, with the SEC since January 1, 1996 (as such reports, schedules,
forms, statements and documents have been amended since the time of their
filing, collectively, the "SEC Documents"). As of their respective dates, or if
amended prior to the date hereof, as of the date of the last such amendment, the
SEC Documents complied in all material respects with the requirements of the
Securities Act or the Exchange Act, as the case may be, and the rules and
regulations of the SEC promulgated thereunder applicable to such SEC Documents,
and none of the SEC Documents when filed, or as so amended, contained any untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading. The financial
statements of the Company included in the SEC Documents comply as to form, as of
their respective date of filing with the SEC, in all material respects with
applicable accounting requirements and the published rules and regulations of
the SEC with respect thereto, have been prepared in accordance with United
States generally accepted accounting principles ("GAAP") (except, in the case of
unaudited statements, as permitted by Form 10-Q of the SEC) applied on a
consistent basis during the periods involved (except as may be indicated in the
notes thereto), and fairly present in all material respects the consolidated
financial position of the Company and its consolidated subsidiaries as of the
dates thereof and the consolidated statement of earnings, cash flows and
shareholders' equity for the periods then ended (subject, in the case of
unaudited statements, to normal recurring year-end audit adjustments). Except as
set forth in the SEC Documents filed prior to the date of this Agreement and
except for liabilities and obligations that are not material to the Company as a
whole, neither the Company nor any Company Subsidiary has any liabilities or
obligations of any nature
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<PAGE> 16
(whether accrued, absolute, contingent or otherwise) which have been incurred or
shall have arisen prior to September 30, 1998.
(f) ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as disclosed
on Schedule 3.1(f) of the Company Disclosure Letter, since September 30, 1998,
(i) the Company Entities have conducted their respective operations only in the
ordinary course consistent with past practice, (ii) there has not been a Company
Material Adverse Effect, (iii) the Company Entities have not taken action that
if taken after the date of this Agreement would constitute a violation of
Section 4.1, (iv) neither the Company nor any Company Subsidiary has incurred
nor shall there have arisen any liabilities (direct, contingent or otherwise)
material to the Company as a whole and (v) neither the Company nor any Company
Subsidiary has engaged in any material transaction or entered into any material
agreement or commitments outside the ordinary course of business (except for the
transactions contemplated by this Agreement). The unaudited financial statements
included in the earnings release published by the Company on January 28, 1999
fairly present in all material respects the consolidated financial position of
the Company and its consolidated subsidiaries as of December 31, 1998 and the
results of operations of the Company and its consolidated subsidiaries for the
year then ended.
(g) COMPLIANCE WITH APPLICABLE LAWS; LITIGATION.
(i) Except for violations of Environmental Laws (which are the
subject of Section 3.1(m)), the operations of the Company Entities have
not been and are not being conducted in violation of any law or any
Permit, except where such violations, individually or in the aggregate,
would not reasonably be expected to have or result in a Company
Material Adverse Effect. Except as set forth on Schedule 3.1(g) of the
Company Disclosure Letter, none of the Company Entities has received
any notice, or has knowledge of any claim, alleging any such violation.
(ii) The Company Entities hold all licenses, permits,
variances, consents, authorizations, waivers, grants, franchises,
concessions, exemptions, orders, registrations and approvals of
Governmental Entities or other persons necessary for the conduct of
their respective businesses as currently conducted ("Permits"), except
where the failure to hold such Permits, individually or in the
aggregate, would not reasonably be expected to have or result in a
Company Material Adverse Effect. None of the Company Entities has
received notice that any Permit will be terminated or modified or
cannot be renewed in the ordinary course of business, and the Company
has no knowledge of any reasonable basis for any such termination,
modification or nonrenewal, except for such terminations, modifications
or nonrenewals as, individually or in the aggregate, would not
reasonably be expected to have or result in a Company Material Adverse
Effect. The execution, delivery and performance of this Agreement and
the consummation of the transactions contemplated hereby and thereby do
not and will not violate any Permit, or result in any termination,
modification or nonrenewals thereof, except for such violations,
terminations, modifications or nonrenewals thereof as, individually or
in the aggregate, would not reasonably be expected to have or result in
a Company Material Adverse Effect.
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(iii) Except as disclosed in Schedule 3.1(g) of the Company
Disclosure Letter, no action, demand, requirement or investigation by
any Governmental Entity and no suit, action or proceeding by any
person, in each case, with respect to the Company or any Company
Subsidiary or any of their respective properties is pending or, to the
knowledge of the Company, threatened as of the date of this Agreement,
other than, in each case, those the outcome of that, individually or in
the aggregate, would not reasonably be expected to have a Company
Material Adverse Effect or that would not reasonably be expected to
prevent or materially delay consummation of the transactions
contemplated by this Agreement.
(h) ERISA COMPLIANCE.
(i) Schedule 3.1(h)(i) of the Company Disclosure Letter sets
forth a true and complete list of each United States collective
bargaining agreement and any United States bonus, pension, profit
sharing, deferred compensation, incentive compensation, stock
ownership, stock purchase, stock option, phantom stock, retirement,
vacation, employment, disability, death benefit, hospitalization,
medical, life, severance or other plan, agreement, arrangement or
understanding, or change of control agreement providing benefits to any
current or former employee, officer or director of the Company or any
Company Subsidiary or to which the Company or any Company Subsidiary
contributes or is obligated to contribute (collectively, the "Company
Benefit Plans"). For purposes of this Agreement, the term "Foreign
Plan" shall refer to each plan, agreement, arrangement or understanding
that is subject to or governed by the laws of any jurisdiction other
than the United States, and which would have been treated as a Company
Benefit Plan had it been a United States plan, agreement, arrangement
or understanding. With respect to each Company Benefit Plan and Foreign
Plan, no event has occurred and there exists no condition or set of
circumstances in connection with which the Company could be subject to
any liability that, individually or in the aggregate, would reasonably
be expected to have a Company Material Adverse Effect.
(ii) Except as set forth on Schedule 3.1(h) of the Company
Disclosure Letter, each Company Benefit Plan has been administered in
accordance with its terms, all applicable laws, including the Employee
Retirement Income Security Act of 1974, as amended ("ERISA") and the
Internal Revenue Code of 1986, as amended (the "Code"), and the terms
of all applicable collective bargaining agreements, except for any
failures so to administer any Company Benefit Plan that, individually
or in the aggregate, would not reasonably be expected to have a Company
Material Adverse Effect. The Company and all Company Benefit Plans are
in compliance with the applicable provisions of ERISA, the Code and all
other applicable laws and the terms of all applicable collective
bargaining agreements, except for any failures to be in such compliance
that, individually or in the aggregate, would not reasonably be
expected to have a Company Material Adverse Effect. Each Company
Benefit Plan that is intended to be qualified under Section 401(a) or
401(k) of the Code is so qualified and each trust established in
connection with any Company Benefit Plan that is intended to be exempt
from federal income taxation under Section 501(a) of the Code is so
exempt. No fact or event has occurred which is reasonably likely to
affect adversely the qualified status of any such Company Benefit Plan
or the exempt status of any such trust, except for any occurrence
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<PAGE> 18
that, individually or in the aggregate, would not reasonably be
expected to have a Company Material Adverse Effect, and all
contributions to, and payments from, such Company Benefit Plans that
are required to be made in accordance with such Company Benefit Plans,
ERISA or the Code have been timely made other than any failures that,
individually or in the aggregate, would not reasonably be expected to
have a Company Material Adverse Effect. Each Company Benefit Plan
intended to meet the requirements of Section 501(c)(9) of the Code
meets such requirements in all material respects and provides no
disqualified benefits (as defined in Section 4976(b) of the Code).
(iii) Neither the Company nor any trade or business, whether
or not incorporated, which, together with the Company, would be deemed
to be a "single employer" within the meaning of Section 4001(b) of
ERISA (an "ERISA Affiliate") has incurred any liability under Title IV
of ERISA or 4971 of the Code, or has a current failure to meet the
minimum funding standards of Section 302 of ERISA or Section 412 of the
Code, and no condition exists that presents a risk to the Company or
any ERISA Affiliate of the Company of incurring any such liability or
failure (other than liability for benefits or premiums to the Pension
Benefit Guaranty Corporation arising in the ordinary course, all of
which have been timely paid in full). Except as disclosed on actuarial
reports previously provided to Parent, with respect to each Company
Benefit Plan that is subject to Title IV or Section 302 of ERISA or
Section 412 or 4971 of the Code, the fair market value of the assets of
such Company Benefit Plan equals or exceeds the actuarial present value
of all accrued benefits under such Company Benefit Plan (whether or not
vested), based upon the actuarial assumptions used to prepare the most
recent actuarial report for such Company Benefit Plan and, to the
knowledge of the Company, no event has occurred which would be
reasonably expected to change any such funded status.
(iv) Except for Company Benefit Plans set forth on Schedule
3.1(h)(iv) of the Company Disclosure Letter, no Company Benefit Plan
provides medical benefits (whether or not insured) with respect to
current or former employees or officers or directors after retirement
or other termination of service.
(v) Except for Company Benefit Plans set forth on Schedule
3.1(h)(v) of the Company Disclosure Letter, the consummation of the
transactions contemplated by this Agreement will not, either alone or
in combination with another event, (A) entitle any current or former
employee, officer or director of the Company to severance pay,
unemployment compensation or any other payment, except as expressly
provided in this Agreement, or (B) accelerate the time of payment or
vesting, or increase the amount of compensation due any such employee,
officer or director.
(vi) Except for Company Benefit Plans set forth on Schedule
3.1(h)(vi) of the Company Disclosure Letter, neither the Company nor
any Company Subsidiary is a party to any agreement, contract or
arrangement (including this Agreement) that could result, separately or
in the aggregate, in the payment of any "excess parachute payments"
within the meaning of Section 280G of the Code. No Company Benefit Plan
provides for the reimbursement of excise taxes under Section 4999 of
the Code or any income taxes under the Code.
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(vii) With respect to each Company Benefit Plan, the Company
has delivered or made available to Parent a true and complete copy of:
(A) each writing constituting a part of such Company Benefit Plan,
including, without limitation, all Company Benefit Plan documents, and
trust agreements; (B) the most recent Annual Report (Form 5500 Series)
and accompanying schedule, if any; (C) the most recent annual financial
report, if any; (D) the most recent actuarial report, if any; and (E)
the most recent determination letter from the Internal Revenue Service,
if any. Except as specifically provided in the foregoing documents
delivered or made available to Buyer, there are no amendments to any
Company Benefit Plan that have been adopted or approved nor has the
Company or any Company Subsidiary undertaken to make any such
amendments or to adopt or approve any new Company Benefit Plan.
(viii) No Company Benefit Plan is a multiemployer plan (as
defined in Section 4001(a)(3) of ERISA) (a "Multiemployer Plan") or a
plan that has two or more contributing sponsors at least two of whom
are not under common control, within the meaning of Section 4063 of
ERISA (a "Multiple Employer Plan"). None of the Company, the Company
Subsidiaries nor any of their respective ERISA Affiliates has, at any
time during the last six years, contributed to or been obligated to
contribute to any Multiemployer Plan or Multiple Employer Plan. None of
the Company, the Company Subsidiaries nor any ERISA Affiliates has
incurred any material withdrawal liability under a Multiemployer Plan
that has not been satisfied in full.
(ix) Except as set forth on Schedule 3.1(h) of the Company
Disclosure Letter, there are no pending or threatened claims (other
than claims for benefits in the ordinary course), lawsuits or
arbitrations that have been asserted or instituted, or to the Company's
knowledge, no set of circumstances exists that may reasonably give rise
to a claim or lawsuit, against the Company Benefit Plans, any
fiduciaries thereof with respect to their duties to the Company Benefit
Plans or the assets of any of the trusts under any of the Company
Benefit Plans that could reasonably be expected to result in any
liability of the Company or any Company Subsidiaries to the Pension
Benefit Guaranty Corporation, the United States Department of Treasury,
the United States Department of Labor, any Multiemployer Plan, any
Company Benefit Plan or any participant in a Company Benefit Plan,
other than any liability that, individually or in the aggregate, would
not reasonably be expected to have a Company Material Adverse Effect.
(x) Except as could not be expected, individually or in the
aggregate, to have a Material Adverse Effect, with respect to each
Company Benefit Plan that is subject to or governed by the law of any
jurisdiction other than the United States (a "Foreign Plan"): (A) all
amounts required to be reserved under each book reserved Foreign Plan
have been so reserved in accordance with reasonable accounting
practices prevailing in the country where such Foreign Plan is
established; (B) each Foreign Plan required to be registered with a
Governmental Entity has been registered, has been maintained in good
standing with the appropriate Governmental Entities, and has been
maintained and operated in accordance with its terms and applicable
law; and (C) the fair market value of the assets of each funded Foreign
Plan that is a defined pension plan (or termination indemnity plan),
and the liability of each insurer for each Foreign Plan that is a
defined benefit pension plan (or termination indemnity plan) and is
funded through insurance or the book
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<PAGE> 20
reserve established for each Foreign Plan that is a defined benefit
pension plan (or termination indemnity plan) that utilizes book
reserves, together with any accrued contributions, is sufficient to
procure or provide for the liability for accrued benefits with respect
to those current and former employees of the Company and the Company
Subsidiaries that participate in such Foreign Plan according to the
reasonable actuarial or other applicable assumptions and valuations
most recently used to determine employer contributions to or the funded
status or book reserve of such Foreign Plans.
(xi) For purposes of this Section 3.1(h), the term "employee"
shall be considered to include individuals rendering personal services
to the Company or any Company Subsidiary as independent contractors.
(i) TAXES. Except as set forth on Schedule 3.1(i) of the
Company Disclosure Letter and except as would not, individually or in the
aggregate, reasonably be expected to have a Company Material Adverse Effect:
(A) the Company and each Company Subsidiary has filed all tax returns and
reports required to be filed by it or requests for extensions to file such
returns or reports have been timely filed, granted and have not expired, and
all such filed returns and reports are complete and accurate, (B) the Company
and each Company Subsidiary has paid (or the Company has paid on its behalf)
all taxes shown as due on such returns, (C) there are no pending or threatened
in writing audits, examinations, investigations or other proceedings in respect
of taxes relating to the Company or any Company Subsidiary, (D) there are no
liens for taxes upon the assets of the Company or any of the Company
Subsidiaries, other than liens for current taxes not yet due and liens for
taxes that are being contested in good faith by appropriate proceedings, (E)
neither the Company nor any of the Company Subsidiaries has any liability for
taxes of any person (other than the Company and the Company Subsidiaries) under
Treasury Regulation Section 1.1502-6 (or any comparable provision of state or
local or foreign law), and (F) neither the Company nor any Company Subsidiary
is a party to any agreement relating to the allocation or sharing of taxes. As
used in this Agreement, "taxes" includes all federal, state or local or foreign
net and gross income, alternative or add-on minimum, environmental, gross
receipts, AD VALOREM, value added, goods and services, capital stock, profits,
license, single business, employment, severance, stamp, unemployment, customs,
property, sales, excise, use, occupation, service, transfer, payroll,
franchise, withholding and other taxes or similar governmental duties, charges,
fees, levies or other assessments, including any interest, penalties or
additions with respect thereto. The consolidated federal income tax returns of
the Company and the Company Subsidiaries have been examined, or the statute of
limitations has closed, with respect to all taxable years through and including
1985.
(j) VOTING REQUIREMENT. The affirmative vote of the holders of
a majority of the outstanding shares of Common Stock at the Shareholders
Meeting to adopt this Agreement (the "Shareholder Approval") is the only vote
of the holders of any class or series of the Company's capital stock necessary
to adopt and approve this Agreement, and the Merger and the transactions
contemplated hereby and thereby.
(k) STATE TAKEOVER STATUTES. The Board of Directors of the
Company has taken all necessary action so that no "fair price," "moratorium,"
"control share acquisition" or other antitakeover statute or regulation (each,
a "Takeover Statute") (including the control share acquisition provisions
codified in Sections 1701.83 ET SEQ. of the OGCL and the moratorium
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<PAGE> 21
provisions codified in Sections 1704.02 ET SEQ. of the OCGL) is applicable to
the Merger and the transactions contemplated by this Agreement.
(l) BROKERS. Except for Morgan Stanley & Co. Incorporated (the
engagement letter with whom has previously been provided to Parent), no broker,
investment banker, financial advisor or other person is entitled to any
broker's, finder's, financial advisor'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.
(m) ENVIRONMENTAL MATTERS.
(i) Except as disclosed in the SEC Reports filed since January
1, 1998 (the "Recent SEC Reports") or as set forth on Schedule 3.1(m)
of the Company Disclosure Letter, except where noncompliance,
individually or in the aggregate, would not reasonably be expected to
have or result in a Company Material Adverse Effect, the Company
Entities are in compliance with all applicable Environmental Laws.
(ii) Except as disclosed in the Recent SEC Reports or as
disclosed on Schedule 3.1(m) of the Company Disclosure Letter, there
are no written (or, to the knowledge of the Company, other)
Environmental Claims pending or, to the knowledge of the Company,
threatened, against the Company or any of the Company Subsidiaries
that, individually or in the aggregate, would reasonably be expected to
have or result in a Company Material Adverse Effect.
(iii) The Company has disclosed and, where requested, made
available to Buyer all material information, including such studies,
analyses and test results, in the possession, custody or control of or
otherwise known and available to the Company Entities relating to the
environmental conditions on, under or about any of the properties or
assets owned, leased, or operated by any of the Company Entities at the
present time or for which any of the Company Entities may be
responsible.
(iv) Except as disclosed in the Recent SEC Reports or as
disclosed on Schedule 3.1(m) of the Company Disclosure Letter, prior to
and during the period of ownership or operation by the Company or the
Company Subsidiaries, to the knowledge of the Company, no Hazardous
Substance was generated, treated, stored, disposed of, used, handled or
manufactured at, or transported, shipped or disposed of from, currently
or previously owned or leased properties in violation of applicable
Environmental Laws that would reasonably be expected to have or result
in a Company Material Adverse Effect and there were no Releases of
Hazardous Substance in, on, under or affecting any currently or
previously owned or leased properties in violation of applicable
Environmental Laws that would reasonably be expected to have or result
in a Company Material Adverse Effect.
(v) Except as disclosed in the Recent SEC Reports, or as set
forth on Schedule 3.1(m) of the Company Disclosure Letter, none of the
Company or the Company Subsidiaries has received from any Governmental
Entity or other third party any written (or, to the knowledge of the
Company, other) notice that any of them or any of their
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predecessors is or may be a potentially responsible party in respect of
or may otherwise bear liability for any actual or threatened Release of
Hazardous Substance at any site or facility that is, has been or could
reasonably be expected to be listed on the National Priorities List,
the Comprehensive Environmental Response, Compensation and Liability
Information System or any similar or analogous federal, state,
provincial, territorial, municipal, county, local or other domestic or
foreign list, schedule, inventory or database of Hazardous Substance
sites or facilities, except where such notice or the circumstances
referred to therein would not reasonably be expected to have or result
in a Company Material Adverse Effect.
(vi) As used in this Agreement:
(a) the term "Environmental Claim" means any written or
other claim, demand, suit, action, proceeding, investigation
or notice to any of the Company Entities by any person
alleging any potential liability (including, without
limitation, potential liability for investigatory costs,
cleanup costs, governmental response costs, natural resource
damages, or penalties) arising out of, based on, or resulting
from the presence, or Release into the environment, of any
Hazardous Substance at any location, whether or not owned,
leased, operated or used by the Company or the Company
Subsidiaries;
(b) the term "Environmental Laws" means all laws in
effect as of the date of this Agreement relating to emissions,
discharges, Releases or threatened Releases of Hazardous
Substances, or otherwise relating to the manufacture,
generation, processing, distribution, use, sale, treatment,
receipt, storage, disposal, transport or handling of Hazardous
Substances, including the Comprehensive Environmental
Response, Compensation and Liability Act and the Resource
Conversation and Recovery Act, and the Occupational Safety and
Health Act;
(c) the term "Hazardous Substance" means (i) chemicals,
pollutants, contaminants, hazardous wastes, toxic substances,
and oil and petroleum products, (ii) any substance that is or
contains friable asbestos, urea formaldehyde foam insulation,
polychlorinated biphenyls, petroleum or petroleum-derived
substances or wastes, radon gas or related materials, (iii)
any substance that requires removal or remediation under any
Environmental Law, or is defined, listed or identified as a
"hazardous waste" or "hazardous substance" thereunder, or (iv)
any substance that is toxic, explosive, corrosive, flammable,
infectious, radioactive, carcinogenic, mutagenic, or otherwise
hazardous; in each case in clauses (i)-(iv) which is regulated
under any Environmental Law; and
(d) the term "Release" means any unauthorized releasing,
disposing, discharging, injecting, spilling, leaking, pumping,
dumping, emitting, escaping, emptying, migration,
transporting, placing and the like, including into or upon,
any land, soil, surface water, ground water or air, or
otherwise entering into the environment.
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(n) THE COMPANY RIGHTS AGREEMENT. The Rights Agreement dated
February 7, 1999, between the Company and First Chicago Trust Company of New
York (the "Company Rights Agreement") and the Old Rights Agreement have been
amended to (i) render the Company Rights Agreement and the Old Rights Agreement
inapplicable to the Merger and the other transactions contemplated by this
Agreement, (ii) ensure that (x) none of Parent or its wholly owned subsidiaries
is an Acquiring Person (as defined in the Company Rights Agreement or the Old
Rights Agreement) pursuant to the Company Rights Agreement or the Old Rights
Agreement, (y) a Distribution Date, a Triggering Event or a Share Acquisition
Date (as such terms are defined in the Company Rights Agreement or the Old
Rights Agreement) does not occur solely by reason of the execution of this
Agreement, the consummation of the Merger, or the consummation of the other
transactions contemplated by this Agreement and (z) ensure that the Company
Rights Agreement will expire or otherwise terminate immediately prior to the
Effective Time. The Old Rights Agreement will expire by its terms on February 6,
1999.
(o) PROXY STATEMENT. The Proxy Statement at the date mailed to
Company shareholders and at the time of the Shareholders Meeting will not
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they are made, not misleading
and (ii) will comply in all material respects with the provisions of the
Exchange Act and the rules and regulations thereunder; except that no
representation is made by the Company with respect to statements made in the
Proxy Statement based on information supplied in writing by Parent or Buyer
specifically for inclusion in the Proxy Statement.
(p) INTELLECTUAL PROPERTY. Except as disclosed on Schedule
3.1(p) of the Company Disclosure Letter, the Company and the Company
Subsidiaries own or have a binding, enforceable right to use all intellectual
property, including letters patent, patent applications, trade names, brand
names, trademarks, service marks, trademark and service mark registrations and
applications, copyright registrations and applications, both domestic and
foreign, trade secrets, inventions, proprietary processes, licenses,
confidential information and know-how (collectively, the "Company Intellectual
Property") used in their businesses as currently conducted, except for such
Company Intellectual Property, the failure of which to own or have a binding,
enforceable right to use, individually or in the aggregate, would not reasonably
be expected to have a Company Material Adverse Effect. Neither the Company nor
any of the Company Subsidiaries has received any written (or, to the knowledge
of the Company, other) notice of infringement of and, to the knowledge of the
Company, the business of the Company and the Company Subsidiaries as presently
conducted does not infringe upon the rights of others with respect to the use of
any intellectual property that, individually or in the aggregate, in either such
case, would reasonably be expected to have a Company Material Adverse Effect.
Neither the Company nor any of the Company Subsidiaries has received any written
(or, to the knowledge of the Company, other) notice that the conduct of another
person's business or the nature of any products sold or services provided by
another person infringes upon the Company Intellectual Property other than those
infringements or conflicts that individually or in the aggregate would not
reasonably be expected to have a Company Material Adverse Effect.
(q) OPINION OF FINANCIAL ADVISOR. The Company has received the
opinion of Morgan Stanley & Co. Incorporated, dated the date of this Agreement,
to the effect that, as of such date, the Merger Consideration is fair from a
financial point of view to holders of shares
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<PAGE> 24
of Common Stock, a signed copy of which opinion will be made available to Parent
promptly after the date hereof.
(r) LABOR AGREEMENTS. Schedule 3.1(r) of the Company
Disclosure Letter sets forth a true and complete list of each collective
bargaining agreement or other labor agreement with any union or labor
organization to which the Company or any of the Company Subsidiaries is a party
in the United States and the Company does not know of any activity or proceeding
of any labor organization (or representative thereof) to organize any of its or
their employees that would be reasonably expected to result in a Company
Material Adverse Effect. The Company and the Company Subsidiaries are not, and
have not since January 1, 1997 been, subject to any pending, or to the knowledge
of the Company, threatened (i) unfair labor practice, employment discrimination
or other complaint, (ii) strike, lockout or dispute, slowdown or work stoppage
or (iii) claim, suit, action or governmental investigation, in respect of which
any director, officer, employee or agent of the Company or any of the Company
Subsidiaries is or may be entitled to claim indemnification from the Company or
any Company Subsidiary, except for the foregoing which, in the case of (i), (ii)
and (iii), would not, individually or in the aggregate, reasonably be expected
to result in a Company Material Adverse Effect.
(s) CONTRACTS; DEBT INSTRUMENTS. Each material contract of the
Company and the Company Subsidiaries is valid and binding and in full force and
effect, and neither the Company nor any Company Subsidiary is in violation of or
in default under (nor does there exist any condition which upon the passage of
time or the giving of notice, or both, would cause such a violation of or
default under) any loan or credit agreement, note, bond, mortgage, indenture or
lease, or any other material contract to which it is a party or by which it or
any of its properties or assets is bound, except for such failures to be valid
and binding and for violations or defaults that could not, individually or in
the aggregate, reasonably be expected to result in a Company Material Adverse
Effect. Except for those agreements listed on Schedule 3.1(s) of the Company
Disclosure Letter, the Company and Company Subsidiaries are not, and after the
Effective Time neither the Surviving Corporation nor Parent will be (by reason
of any agreement to which the Company is a party), subject to any material
noncompetition or similar restriction on their respective businesses.
(t) YEAR 2000 ISSUES. The Company has adopted and implemented
a commercially reasonable plan to investigate and correct any "year 2000
problems" associated with (i) the operation of the Company's business, and (ii)
the products manufactured and distributed by the Company. The Company has
provided to Parent a complete and correct copy of such plan, an accurate written
explanation of the costs that the Company and Company Subsidiaries have incurred
in each of the past two fiscal years to investigate and correct the "year 2000
problem," as well as a written report of its estimates of the costs to be
incurred in the future to investigate and correct the "year 2000 problem."
(u) PRODUCT RECALLS. Except as set forth on Schedule 3.1(u) of
the Company Disclosure Letter, the Company is not aware of any pattern or series
of claims against the Company or any of Company Subsidiaries that reasonably
could be expected to result in a generalized product recall relating to products
sold by the Company or any of Company Subsidiaries, regardless of whether such
product recall is formal, informal, voluntary or
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<PAGE> 25
involuntary that, individually or in the aggregate, would reasonably be expected
to result in a Company Material Adverse Effect.
Section 3.2 REPRESENTATIONS AND WARRANTIES OF PARENT AND
BUYER. Parent and Buyer hereby jointly and severally represent and warrant to
the Company as follows:
(a) ORGANIZATION, STANDING AND CORPORATE POWER. Each of Parent
and Buyer is a corporation duly organized, validly existing and in good standing
under the laws of the State of Ohio and has the requisite corporate authority to
carry on its business as now being conducted. Each of Parent and Buyer is duly
qualified or licensed to do business and is in good standing (with respect to
jurisdictions that recognize such concept) in each jurisdiction in which the
nature of its business or the ownership, leasing or operation of its properties
makes such qualification or licensing necessary, except for those jurisdictions
where the failure to be so qualified or licensed or to be in good standing,
individually or in the aggregate, would not reasonably be expected to prevent or
materially delay the consummation by Parent or Buyer of the transactions
contemplated by this Agreement (a "Parent Material Adverse Effect").
(b) AUTHORITY; NONCONTRAVENTION. Parent and Buyer have all
requisite corporate power and authority to enter into this Agreement and to
consummate the transactions contemplated by this Agreement. The execution and
delivery of this Agreement by Parent and Buyer, and the consummation by Parent
and Buyer of the transactions contemplated hereby and thereby have been duly
authorized by all necessary corporate action on the part of Parent and Buyer.
This Agreement has been duly executed and delivered by Parent and Buyer, and,
assuming the due authorization, execution and delivery by the Company, each
constitutes a legal, valid and binding obligation of each of Parent and Buyer,
as applicable, enforceable against Parent and Buyer in accordance with its
terms. The execution and delivery of this Agreement do not, and the consummation
of the transactions contemplated by this Agreement and compliance with the
provisions of this Agreement will not, (i) conflict with the respective Articles
of Incorporation or Code of Regulations or comparable organizational documents
of Parent and Buyer, (ii) result in any breach, violation or default (with or
without notice or lapse of time, or both) under, or give rise to a right of
termination, cancellation or creation or acceleration of any obligation or loss
of a benefit under, or result in the creation of any Lien upon any of the
properties or assets of Parent or Buyer under any loan or credit agreement,
note, bond, mortgage, indenture, lease or other agreement, instrument, permit,
concession, franchise, license or similar authorization applicable to Parent or
Buyer or their respective properties or assets, or (iii) subject to the
governmental filings and other matters referred to in the following sentence,
conflict with or violate any judgment, order, decree, statute, law, ordinance,
rule or regulation applicable to Parent or Buyer or their respective properties
or assets, other than in the case of this clause (ii) and (iii), any such
conflicts, violations, defaults, rights, losses or Liens that, individually or
in the aggregate, would not reasonably be expected to have a Parent Material
Adverse Effect. No consent, approval, order or authorization of, action by or in
respect of, or registration, declaration or filing with, any Governmental Entity
is required by Parent and Buyer in connection with the execution and delivery of
this Agreement by Parent and Buyer or the consummation by Parent and Buyer of
the transactions contemplated hereby and thereby, except for (i) the filing of a
premerger notification and report form under the HSR Act; (ii) the filing of the
Certificate of Merger with the Secretary of the State of Ohio; (iii) the
consents, approvals, orders or authorizations set forth on Section 3.1(d) of the
Company Disclosure Letter; (iv) the antitrust and
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<PAGE> 26
competition laws of foreign countries; (v) the "takeover" or "blue sky" laws of
various states; and (vi) such consents, approvals, orders or authorizations the
failure of which to be made or obtained, individually or in the aggregate, would
not reasonably be expected to have a Parent Material Adverse Effect.
(c) OWNERSHIP OF COMMON STOCK. Except for any shares of
Company Common Stock acquired by employee benefit trust funds in the ordinary
course of business, none of Parent, Buyer or any of its affiliates (i)
beneficially owns, directly or indirectly, or (ii) is party to any agreement,
arrangement or understanding for the purpose of acquiring, holding, voting or
disposing of, in each case, shares of Common Stock.
(d) BROKERS. No broker, investment banker, financial advisor
or other person is entitled to any broker's, finder's, financial advisor'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 Buyer or
Parent.
(e) FINANCING. Parent and Buyer, collectively, will at the
Effective Time have cash on hand or borrowing availability under financing
arrangements from financially responsible third parties, or a combination
thereof, in an aggregate amount sufficient to enable Parent and Buyer to (i) pay
in full the Merger Consideration, the Option Consideration and all fees and
expenses payable by Parent and Buyer in connection with this Agreement and the
transactions contemplated thereby, and (ii) refinance such of the Company's
existing indebtedness as, pursuant to its terms, will become due and payable
prior to its stated maturity as a result of the consummation of the transactions
contemplated hereby (as set forth by the Company on Section 3.1(d) of the
Company Disclosure Letter).
(f) INFORMATION IN PROXY STATEMENT. None of the information
supplied in writing by Parent or Buyer specifically for inclusion in the Proxy
Statement will, at the date mailed to shareholders and at the time of the
Shareholders Meeting, contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they are
made, not misleading.
ARTICLE 4
COVENANTS RELATING TO CONDUCT OF BUSINESS
Section 4.1 CONDUCT OF BUSINESS.
(a) CONDUCT OF BUSINESS BY THE COMPANY. Except as set forth on
Schedule 4.1(a) of the Company Disclosure Letter, or consented to in writing by
Buyer, during the period from the date of this Agreement to the Effective Time,
the Company shall carry on its businesses in the ordinary course consistent with
past practice and in compliance with all applicable laws and regulations and, to
the extent consistent therewith, use all reasonable efforts to keep available
the services of its current officers and other key employees and preserve its
relationships with customers, suppliers, distributors and other persons having
business dealings with them. Without limiting the generality of the foregoing
(but subject to the above exceptions), during the
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period from the date of this Agreement to the Effective Time, the Company shall
not, and shall not permit any Company Subsidiary, to:
(i) (x) other than (a) the regular quarterly cash dividend of
$.22 per share payable to holders of the Common Stock on March 15, 1999
and (b) dividends and distributions by a direct or indirect wholly
owned Company Subsidiary to its parent, declare, set aside or pay any
dividends on, or make any other distributions in respect of, any of its
capital stock, (y) split, combine or reclassify any of its capital
stock or issue or authorize the issuance of any other securities in
respect of, in lieu of or in substitution for shares of its capital
stock, except for issuances of the Common Stock upon the exercise of
the Options or other rights under the Equity Plans, in each case which
are disclosed on Schedule 3.1(c) of the Company Disclosure Letter as
outstanding on the date hereof;
(ii) issue, deliver, sell, pledge or otherwise encumber or
subject to any Lien any shares of its capital stock, any other voting
securities or any securities convertible into, or any rights, warrants
or options to acquire, any such shares, voting securities or
convertible securities, other than the issuance of shares of Common
Stock upon the exercise of the Options or other rights under the Equity
Plans or in connection with other awards under the Equity Plans, in
each case, which are disclosed on Schedule 3.1(c) of the Company
Disclosure Letter as outstanding on the date hereof and in accordance
with their present terms, or redeem, purchase or otherwise acquire,
directly or indirectly, any of its capital stock or other securities;
(iii) amend its articles of incorporation, code of regulations
or other comparable organizational documents, amend or take any other
action with respect to the Company Rights Agreement or the Old Rights
Agreement or the Rights or Old Rights respectively, or merge or
consolidate with any person;
(iv) sell, lease, license, mortgage or otherwise encumber or
subject to any Lien or otherwise dispose of any of its properties or
assets other than immaterial assets in the ordinary course of business
consistent with past practice;
(v) enter into commitments for capital expenditures involving
more than $10,000,000 in the aggregate except as may be necessary for
the maintenance of existing facilities, machinery and equipment in good
operating condition and repair in the ordinary course of business, as
reflected in the capital plan of the Company previously provided to
Parent;
(vi) incur any long-term indebtedness (whether evidenced by a
note or other instrument, pursuant to a financing lease, sale-leaseback
transaction, or otherwise) or incur short-term indebtedness other than
up to $50,000,000 of short-term indebtedness under lines of credit
existing on the date hereof;
(vii) (A) except for normal increases in salary and wages in
the ordinary course of business consistent with past practice that are
not material or as set forth on Schedule 5.5, grant any increase in the
compensation or benefits payable or to become payable by the Company or
any Company Subsidiary to any current or former director, officer,
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employee or consultant; (B) adopt, enter into, amend or otherwise
increase, reprice or accelerate the payment or vesting of the amounts,
benefits or rights payable or accrued or to become payable or accrued
under any bonus, incentive compensation, deferred compensation,
severance, termination, change in control, retention, hospitalization
or other medical, life, disability, insurance or other welfare, profit
sharing, stock option, stock appreciation right, restricted stock or
other equity based, pension, retirement or other employee compensation
or benefit plan, program, agreement or arrangement; (C) enter into or
amend any employment or collective bargaining agreement or, except as
required in accordance with the existing written policies of the
Company or contracts or agreements entered into or approved (and
previously disclosed to Parent) on or prior to the date of this
Agreement, grant any severance or termination pay to any officer,
director, consultant or employee of the Company or any Company
Subsidiaries (except in the ordinary course of business consistent with
past practice and not in excess of one week of severance for every year
of employment and, in the aggregate for all such payments, $1,000,000);
or (D) pay or award any pension, retirement, allowance or other
non-equity incentive awards, or other employee benefit not required by
any outstanding employee benefit plan or arrangement;
(viii) change the accounting principles used by it unless
required by GAAP (or, if applicable with respect to foreign
subsidiaries, foreign generally accepted accounting principles);
(ix) acquire by merging or consolidating with, by purchasing
any equity interest in or a portion of the assets of, or by any other
manner, any business or any corporation, partnership, association or
other business organization or division thereof, or otherwise acquire
any material amount of assets of any other person (other than the
purchase of assets from suppliers or vendors in the ordinary course of
business consistent with past practice);
(x) except in the ordinary course of business consistent with
past practice, make or rescind any express or deemed election or
settle or compromise any claim or action relating to U.S. federal,
state or local taxes, or change any of its methods of accounting or
of reporting income or deductions for U.S. federal income tax purposes;
(xi) satisfy any claims or liabilities, other than the
satisfaction, in the ordinary course of business consistent with past
practice, in accordance with their terms or in an amount not to exceed
$5,000,000 in the aggregate, of liabilities reflected or reserved
against in, or contemplated by, the consolidated financial statements
(or the notes thereto) of the Company included in the Recent SEC
Documents or incurred in the ordinary course of business consistent
with past practice;
(xii) make any loans, advances or capital contributions to, or
investments in, any other person, except for loans, advances, capital
contributions or investments between any wholly owned Company
Subsidiary and the Company or another wholly owned Company Subsidiary
and except for employee advances for expenses in the ordinary course of
business consistent with past practice;
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(xiii) other than in the ordinary course of business
consistent with past practice, (A) modify, amend or terminate any
contract, (B) waive, release, relinquish or assign any contract (or any
of the Company's rights thereunder), right or claim, or (C) cancel or
forgive any indebtedness owed to the Company or any Company
Subsidiaries; PROVIDED, HOWEVER, that the Company may not under any
circumstance waive or release any of its rights under any
confidentiality agreement to which it is a party; or
(xiv) authorize, or commit or agree to take, any of the
foregoing actions; PROVIDED, HOWEVER, that the limitations set forth in
this Section 4.1(a) (other than clause (iii)) do not apply to any
transaction to which the only parties are wholly owned subsidiaries of
the Company.
(b) OTHER ACTIONS. Except as required by law, the Company,
Parent and Buyer shall not, and, in the case of the Company, shall not permit
any Company Subsidiary to, voluntarily take any action that would reasonably be
expected to result in any of the conditions to the Merger set forth in Article 6
not being satisfied.
(c) ADVICE OF CHANGES. The Company and Buyer shall promptly
advise the other party orally and in writing to the extent it has knowledge of
any change or event having, or which, insofar as can reasonably be foreseen,
would reasonably be expected to have a Material Adverse Effect on such party or
on the truth of their respective representations and warranties or the ability
of the conditions set forth in Article 6 to be satisfied; PROVIDED, HOWEVER,
that no such notification will affect the representations, warranties, covenants
or agreements of the parties (or remedies with respect thereto) or the
conditions to the obligations of the parties under this Agreement.
Section 4.2 NO SOLICITATION. The Company agrees that, during
the term of this Agreement, it shall not, and shall not authorize or permit any
of the Company Subsidiaries or any of its or their directors, officers,
employees, agents or representatives, directly or indirectly, to solicit,
initiate, encourage or knowingly facilitate, or furnish or disclose non-public
information in furtherance of, any inquiries or the making of any proposal with
respect to any recapitalization, merger, consolidation or other business
combination involving the Company, or acquisition of any capital stock (other
than upon exercise of the Options that are outstanding as of the date hereof) or
all or any material portion of the assets of the Company and the Company
Subsidiaries, taken as a whole, in a single transaction or a series of related
transactions, or any combination of the foregoing (a "Competing Transaction"),
or negotiate, explore or otherwise engage in discussions with any person (other
than Parent, Buyer or their respective directors, officers, employees, agents
and representatives) with respect to any Competing Transaction or enter into any
agreement, arrangement or understanding requiring it to abandon, terminate or
fail to consummate the Merger or any other transactions contemplated by this
Agreement; PROVIDED that, at any time prior to the approval of the Merger by the
shareholders of the Company, the Board of Directors of the Company may, in the
exercise of its fiduciary obligations under the OGCL as determined by the Board
of Directors of the Company in good faith, after consultation with and receipt
of advice from its outside counsel (who may be its regularly engaged outside
counsel), pursuant to a customary confidentiality agreement with terms not
substantially more favorable to such third party than the Confidentiality
Agreement, furnish information to, and negotiate or otherwise engage in
discussions with, any third party who delivers a written
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proposal for a Superior Proposal which was not solicited, initiated, knowingly
facilitated or encouraged after the date of this Agreement. The Company will
immediately cease all existing activities, discussions and negotiations with any
parties conducted heretofore with respect to any proposal for a Competing
Transaction and request the return of all confidential information regarding the
Company provided to any such parties prior to the date hereof pursuant to the
terms of any confidentiality agreements or otherwise. In the event that prior to
the approval of the Merger by the shareholders of the Company, the Board of
Directors of the Company receives a Superior Proposal that was not solicited,
initiated, knowingly facilitated or encouraged after the date of this Agreement
(except as otherwise permitted pursuant to the proviso contained in the first
sentence of this Section 4.2), the Board of Directors of the Company may
(subject to this and the following sentences) in the exercise of its fiduciary
obligations under the OGCL as determined by the Board of Directors of the
Company in good faith, after consultation with and receipt of advice from its
outside counsel (who may be its regularly engaged outside counsel) withdraw,
modify or change, in a manner adverse to Parent, the recommendation of the Board
of Directors of the Company of this Agreement and/or recommend a Superior
Proposal to the shareholders of the Company and/or comply with Rule 14e-2
promulgated under the Exchange Act with respect to a Competing Transaction,
PROVIDED that it gives Parent five Business Days prior written notice of its
intention to do so (PROVIDED that the foregoing shall in no way limit or
otherwise affect Parent's right to terminate this Agreement pursuant to Section
7.1(e) at such time as the requirements of such subsection have been met). Any
such withdrawal, modification or change of the recommendation of the Board of
Directors of the Company of this Agreement shall not change the approval of the
Board of Directors of the Company for purposes of causing any state takeover
statute or other state law to be inapplicable to the transactions contemplated
hereby, including the Merger. From and after the execution of this Agreement,
the Company shall promptly (but in any event within two calendar days) advise
Parent in writing of the receipt, directly or indirectly, of any inquiries,
discussions, negotiations or proposals relating to a Competing Transaction
(including the specific terms thereof and the identity of the other party or
parties involved) and promptly furnish to Parent a copy of any such written
proposal in addition to any information provided to or by any third-party
relating thereto. In addition, the Company shall promptly (but in any event
within two calendar days) advise Parent, in writing, if the Board of Directors
of the Company shall make any determination as to any Competing Transaction as
contemplated by the proviso to the first sentence of this Section 4.2. As used
herein, the term "Superior Proposal" means a Competing Transaction that the
Board of Directors of the Company determines is, after consulting with and
receipt of advice from Morgan Stanley & Co. Incorporated (or any other
nationally recognized investment banking firm), more favorable to the
shareholders of the Company from a financial point of view than the transactions
contemplated by this Agreement (including any adjustment to the terms and
conditions proposed by Parent or Buyer in response to such Competing
Transaction), and that it reasonably expects a transaction pursuant to such
proposal could be consummated. Nothing in this Section 4.2 shall (x) permit the
Company to terminate this Agreement, (y) permit the Company to enter into any
agreement with respect to any Competing Transaction or (z) affect any other
obligation of the Company under this Agreement.
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ARTICLE 5
ADDITIONAL AGREEMENTS
Section 5.1 PREPARATION OF PROXY STATEMENT; SHAREHOLDERS
MEETING.
(a) As soon as practicable, but in no event later than 21 days
following the date of this Agreement, the Company shall prepare and file with
the SEC, and Parent and Buyer shall cooperate with the Company in such
preparation and filing of, the Proxy Statement. The Company shall cause the
Proxy Statement to be mailed to the Company's shareholders as promptly as
practicable after the Proxy Statement is cleared by the staff of the SEC for
mailing to the Company's shareholders.
(b) The Company shall, as soon as practicable following the
date of this Agreement, duly call, give notice of, convene and hold a meeting of
its shareholders (the "Shareholders Meeting") in accordance with law, the
Company's Articles of Incorporation and the Company's Code of Regulations for
the purpose of obtaining Shareholder Approval and shall, through the Board of
Directors of the Company, subject to Section 4.2, recommend to its shareholders
the approval and adoption of this Agreement, the Merger and the other
transactions contemplated hereby. The Shareholders Meeting may not be adjourned
or postponed beyond July 15, 1999.
(c) Parent agrees that (i) it will provide the Company with
all information concerning Parent or the Buyer necessary or reasonably
appropriate to be included in the Proxy Statement and (ii) at the Shareholders
Meeting, if held, or any postponement or adjournment thereof (or at any other
meeting at which the Merger or this Agreement are considered by shareholders),
it will vote, or cause to be voted, all of the shares of Common Stock then owned
by it, the Buyer or any of its other subsidiaries, if any, in favor of the
approval and adoption of this Agreement and the transactions contemplated
hereby.
Section 5.2 ACCESS TO INFORMATION; CONFIDENTIALITY. To the
extent permitted by applicable law and subject to the Agreement dated November
6, 1998, between the Company and Parent (the "Confidentiality Agreement"), the
Company shall afford to Parent and to the officers, employees, accountants,
counsel, financial advisors and other representatives of Parent, full access
during normal business hours during the period prior to the Effective Time to
all of the Company's properties, books, contracts, commitments, personnel and
records and all other information concerning its business, properties and
personnel as Parent may reasonably request. Each of the Company and Buyer shall
hold, and shall cause its respective officers, employees, accountants, counsel,
financial advisors and other representatives and affiliates to hold, any
nonpublic information in accordance with the terms of the Confidentiality
Agreement.
Section 5.3 EFFORTS; COOPERATION.
(a) Subject to the terms and conditions provided herein, each
of the Company, Parent and Buyer shall, and the Company shall cause each
Company Subsidiary to, cooperate
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and use reasonable efforts to make, or cause to be made, all filings necessary
or proper under applicable laws and regulations to consummate and make effective
the transactions contemplated by this Agreement, including, but not limited to,
cooperation in the preparation and filing of the Proxy Statement, any required
filings under the HSR Act or other foreign filings and any amendments to any
thereof.
In addition, if, at any time prior to the Effective Time, any
event or circumstance relating to either the Company or Parent or Buyer or any
of their respective subsidiaries should be discovered by the Company or Parent,
as the case may be, which should be set forth in an amendment to the Proxy
Statement, the discovering party will promptly inform the other party of such
event or circumstance. If, at any time after the Effective Time, any further
action is necessary or desirable to carry out the purposes of this Agreement,
including the execution of additional instruments, the proper officers and
directors of each party to this Agreement shall take all such necessary action.
(b) Each of the parties will use its reasonable efforts to
obtain as promptly as practicable all required consents and approvals of any
Governmental Entity or any other person required in connection with, and waivers
of any violations that may be caused by, the consummation of the transactions
contemplated by this Agreement.
(c) The Company and Parent shall coordinate in advance of
sending any communications to or scheduling any meetings with any Governmental
Entity relating to this Agreement or the Merger and shall promptly share all
correspondence or other communication received from any Governmental Entity
relating to this Agreement or the Merger.
(d) The Company shall, upon the request of Buyer, take all
reasonable steps to assist in any challenge by Buyer to the validity or
applicability to the transactions contemplated by this Agreement, including the
Merger, of any state takeover law.
Section 5.4 INDEMNIFICATION.
(a) The Articles of Incorporation and the Code of Regulations
of the Surviving Corporation shall contain the provisions with respect to
indemnification and exculpation from liability set forth in the Articles of
Incorporation and Regulations of the Company on the date of this Agreement,
which provisions shall not be amended, repealed or otherwise modified for a
period of six years from the Effective Time in any manner that would adversely
affect the rights thereunder of individuals who on or prior to the Effective
Time were directors, officers, employees or agents of the Company, unless such
modification is required by law. Parent shall guarantee the obligations of the
Surviving Corporation with respect to the indemnification provisions contained
in the Articles of Incorporation and Code of Regulations of the Surviving
Corporation.
(b) In the event that the Surviving Corporation or any of its
successors or assigns (i) consolidates with or merges into any other person and
is not the continuing or surviving corporation or entity of such consolidation
or merger or (ii) transfers or conveys all or substantially all of its
properties and assets to any person, then, and in each such case, proper
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provision will be made so that the successors and assigns of the Surviving
Corporation assume the obligations set forth in this Section 5.4.
(c) For six years after the Effective Time, the Surviving
Corporation or Parent shall maintain in effect directors' and officers'
liability insurance covering acts or omissions occurring prior to the Effective
Time with respect to those persons who are currently covered by the Company's
directors' and officers' liability insurance policy (a copy of which has been
heretofore delivered to Parent) (the "Indemnified Parties") on terms with
respect to such coverage and amount no less favorable than those of such current
insurance coverage; PROVIDED, HOWEVER, that in no event shall Parent be required
to expend in any one year an amount in excess of 200% of the annual premiums
currently paid by the Company for such insurance; and PROVIDED, FURTHER, that,
if the annual premiums of such insurance coverage exceed such amount, Parent
shall be obligated to obtain a policy with the greatest coverage available for a
cost not exceeding such amount. Notwithstanding the foregoing, at any time on or
after the second anniversary of the Effective Time, Parent may, at its election,
undertake to provide funds to the Surviving Corporation to the extent necessary
so that the Surviving Corporation may self-insure with respect to the level and
scope of insurance coverage required under this Section 5.4(c) in lieu of
causing to remain in effect any directors' and officers' liability insurance
policy.
(d) The provisions of this Section 5.4 are (i) intended to be
for the benefit of, and will be enforceable by, each Indemnified Party, his or
her heirs and his or her representatives and (ii) in addition to, and not in
substitution for, any other rights to indemnification or contribution that any
such person may have by contract or otherwise.
Section 5.5 EMPLOYEE BENEFITS.
(a) Except for employees subject to collective bargaining
agreements, through December 31, 2000, Parent shall maintain, or cause the
Surviving Corporation to maintain employee benefits under tax-qualified employee
benefit plans, annual bonus plans, deferred compensation plans, and supplemental
non-qualified pension plans substantially equivalent in the aggregate to (i)
those provided by the Company immediately prior to the Effective Time or (ii) at
the election of Parent, those provided by Parent to similarly-situated employees
of Parent.
(b) Following the Effective Time, Parent shall cause the
Surviving Corporation to honor in accordance with their terms all written
employment, severance and other compensation agreements of the Company and
Company Subsidiaries that are set forth on Schedule 3.1(h) of the Company
Disclosure Letter; and, to the extent necessary under these agreements and
plans, the preceding clause will be deemed an assumption of the Company's
obligations under these agreements and plans by the Surviving Corporation.
(c) The Company shall use its reasonable efforts to provide or
make available to Buyer within thirty days following the date of this Agreement,
the following items:
(iii) true and complete copies, with respect to Company
Benefit Plans, of all insurance contracts and
funding vehicles, benefit schedules, summary plan
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<PAGE> 34
descriptions (and material modifications) and
material written employee communications; and
(iv) a list of Foreign Plans and true and complete copies
of the items described in Section 3.1(h)(vii) and
Section 5.5(c)(i), as they would be applicable to
Foreign Plans.
Section 5.6 PUBLIC ANNOUNCEMENTS. Parent, Buyer and the
Company shall consult with each other before issuing, and provide each other the
opportunity to review, comment upon and concur with, any press release or other
public statements with respect to the transactions contemplated by this
Agreement, including the Merger, and shall not issue any such press release or
make any such public statement, except as either party may determine is required
by applicable law, court process or by obligations pursuant to any rules and
regulations of any national securities exchange in which event prior
consultation with the other party shall be required.
Section 5.7 FEES AND EXPENSES. Except as provided in Section
7.2(b), all fees and expenses incurred in connection with the Merger, this
Agreement and the transactions contemplated hereby shall be paid by the party
incurring such fees or expenses, whether or not the Merger is consummated.
Section 5.8 CREDIT AGREEMENT. Prior to the Effective Time, the
Company shall terminate its bank credit facility or, at the option of the
Company, obtain a waiver of such credit facility (so long as such waiver would
prevent a cross default under any other agreements).
ARTICLE 6
CONDITIONS PRECEDENT
Section 6.1 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT
THE MERGER. The respective obligation of each party to effect the Merger is
subject to the satisfaction or waiver on or prior to the Closing Date of the
following conditions:
(a) SHAREHOLDER APPROVAL. The Shareholder Approval shall have
been obtained.
(b) GOVERNMENTAL AND REGULATORY APPROVALS. Other than the
filing of the Certificate of Merger and insignificant consents, approvals and
actions, all consents, approvals and actions of, filings with and notices to any
Governmental Entity required of Parent, Buyer, the Company or any Company
Subsidiary to consummate the Merger and the other transactions contemplated
hereby shall have been obtained in form and substance reasonably satisfactory to
each of Parent and the Company.
(c) NO INJUNCTIONS OR RESTRAINTS. No judgment, order, decree,
statute, law, ordinance, rule or regulation, entered, enacted, promulgated,
enforced or issued by any court or other Governmental Entity of competent
jurisdiction or other legal restraint or prohibition (collectively,
"Restraints") shall be in effect preventing the consummation of the Merger or
limiting the ownership or operation by Parent, the Company or any of their
respective
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<PAGE> 35
subsidiaries of any material portion of the business or assets of
Parent or the Company; PROVIDED, HOWEVER, that the party seeking to assert this
condition to terminate the Agreement shall not have breached its obligations
under this Agreement in any material respect.
(d) HSR ACT. The waiting period (including any extension
thereof) applicable to the consummation of the Merger under the HSR Act shall
have expired or been terminated.
Section 6.2 CONDITIONS TO OBLIGATIONS OF PARENT AND BUYER. The
obligation of Parent and Buyer to effect the Merger is further subject to
satisfaction or waiver of the following conditions:
(a) REPRESENTATIONS AND WARRANTIES. The representations and
warranties of the Company contained in Section 3.1(c) shall be true and correct
in all respects both when made and as of the Closing Date as though made on and
as of the Closing Date, and all other representations and warranties of the
Company set forth herein shall be true and correct in all respects (without
giving effect to any materiality or material adverse effect qualifications
contained therein) both when made and at and as of the Closing Date, as if made
at and as of such time (except to the extent expressly made as of an earlier
date, in which case as of such date), except where the failure of such other
representations and warranties to be so true and correct would not reasonably be
expected to have, individually or in the aggregate, a Company Material Adverse
Effect.
(b) PERFORMANCE OF OBLIGATIONS OF THE COMPANY. The Company
shall have performed in all material respects all of its obligations required to
be performed by it under this Agreement at or prior to the Closing Date.
(c) CONSENTS. With the exception of any consents required
under the Company's credit facility and outstanding medium term notes, the
Company shall have obtained the consent of each person whose consent shall be
required in connection with the Merger under all agreements or instruments to
which it or any of its subsidiaries is a party, except those for which failure
to obtain such consents and approvals could not reasonably be expected to have a
Company Material Adverse Effect prior to or after the Effective Time.
(d) GOVERNMENTAL LITIGATION. There shall not be pending any
action, claim, proceeding or investigation instituted by any Governmental Entity
challenging or seeking to restrain or prohibit the consummation of the Merger or
any of the other transactions contemplated by this Agreement.
(e) DISSENTING SHARES. As of immediately prior to the
Effective Time, no more than 10% of the outstanding shares of Company Common
Stock shall have taken actions to assert dissenter's rights under Section
1701.85 of the OGCL.
(f) OFFICER'S CERTIFICATE. The Company shall have furnished
Parent and Buyer with a certificate dated the Closing Date signed on its behalf
by an executive officer to the effect that the conditions set forth in Sections
6.2(a) and (b) have been satisfied.
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Section 6.3 CONDITIONS TO OBLIGATIONS OF THE COMPANY. The
obligation of the Company to effect the Merger is further subject to
satisfaction or waiver of the following conditions:
(a) REPRESENTATIONS AND WARRANTIES. The representations and
warranties of Parent and Buyer set forth herein shall be true and correct in all
respects (without giving effect to any materiality or material adverse effect
qualifications contained therein) both when made and at and as of the Closing
Date, as if made at and as of such time (except to the extent expressly made as
of an earlier date, in which case as of such date), except where the failure of
such representations and warranties to be so true and correct would not have,
individually or in the aggregate, a Parent Material Adverse Effect.
(b) PERFORMANCE OF OBLIGATIONS OF PARENT AND BUYER. Parent and
Buyer shall have performed in all material respects all obligations required to
be performed by them under this Agreement at or prior to the Closing Date.
(c) OFFICER'S CERTIFICATE. Each of Parent and Buyer shall have
furnished the Company with a certificate dated the Closing Date signed on its
behalf by an executive officer to the effect that the conditions set forth in
Section 6.3(a) and (b) have been satisfied.
Section 6.4 FRUSTRATION OF CLOSING CONDITIONS. None of Parent,
Buyer nor the Company may rely on the failure of any condition set forth in
Sections 6.1, 6.2 or 6.3, as the case may be, to be satisfied if such failure
was caused by such party's failure to comply with its obligations to consummate
the Merger and the other transactions contemplated by this Agreement, as
required by and subject to Section 5.3.
ARTICLE 7
TERMINATION, AMENDMENT AND WAIVER
Section 7.1 TERMINATION. This Agreement may be terminated at
any time prior to the Effective Time, whether before or after the Shareholder
Approval:
(a) by mutual written consent of Parent and the Company;
(b) by either Parent or the Company:
(i) if the Merger has not been consummated by July 31, 1999 or
such later date, if any, as Parent and the Company agree upon;
PROVIDED, HOWEVER, that the right to terminate this Agreement pursuant
to this Section 7.1(b)(i) is not available to any party whose failure
to perform any of its obligations under this Agreement results in the
failure of the Merger to be consummated by such time;
(ii) if the Shareholders Meeting (including any adjournment or
postponement thereof) shall have concluded and the Shareholder Approval
shall not have been obtained, or
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(iii) if any Restraint having any of the effects set forth in
Section 6.1(c) is in effect and has become final and nonappealable;
PROVIDED, HOWEVER, that the right to terminate this Agreement pursuant
to this Section 7.1(b)(iii) is not available to any party whose failure
to perform any of its obligations under this Agreement results in such
Restraint;
(c) by Parent, if the Company has breached or failed to
perform in any material respect any of its representations, warranties,
covenants or other agreements contained in this Agreement, which breach or
failure to perform (A) is not cured within 30 days after written notice thereof
or (B) is incapable of being cured by the Company;
(d) by the Company, if Parent or Buyer has breached or failed
to perform in any material respect any of its representations, warranties,
covenants or other agreements contained in this Agreement, which breach or
failure to perform (A) is not cured within 30 days after written notice thereof
or (B) is incapable of being cured by Parent or Buyer (it being understood that
Parent's failure to obtain the requisite financing by the 11th day after the
satisfaction or waiver of the conditions set forth in Article 6 shall be
incapable of cure);
(e) by Parent, if any person (other than an affiliate of
Parent) shall acquire 30% of the outstanding shares of Company Common Stock or
if the Board of Directors of the Company or any committee thereof shall (i)
withdraw or modify or change, or propose or announce any intention to withdraw
or modify or change, in a manner adverse to Parent or Buyer, the approval or
recommendation by the Board of Directors of the Company or committee thereof of
this Agreement or the transactions contemplated hereby, including the Merger,
(ii) approve or recommend, or propose to or announce any intention to approve or
recommend, any Competing Transaction proposal, or (iii) propose or announce any
intention to enter into any agreement, with respect to any Competing
Transaction proposal, or if the Company shall willfully breach the provisions
of Section 4.2 or Section 5.1(b).
Section 7.2 EFFECT OF TERMINATION. (a) In the event of
termination of this Agreement by either the Company or Parent as provided in
Section 7.1, this Agreement shall forthwith become void and have no effect,
without any liability or obligation on the part of Buyer, the Company or Parent,
other than the provisions of the last sentence of Section 5.2, Section 5.6,
Section 5.7, this Section 7.2 and Article 8, which provisions survive such
termination; PROVIDED, HOWEVER, that nothing herein will relieve any party from
any liability for any willful and material breach by such party of any of its
representations, warranties, covenants or agreements set forth in this
Agreement.
(b) In the event that this Agreement is terminated (i) by
Parent pursuant to Section 7.1(e) or (ii) by either the Company or Parent
pursuant to Section 7.1(b)(ii), if, prior to the Shareholders Meeting, a
Competing Transaction proposal shall have been made known to the Company or
been made directly to its shareholders generally or any person shall have
publicly announced an intention (whether or not conditional) to make a
Competing Transaction proposal or solicited proxies or consents in opposition
to the Merger, then, in the case of either clause (i) or (ii), the Company
shall promptly, but in no event later than two days after the date of such
termination, pay Parent a fee equal to $2 multiplied by the number of shares of
Company Common Stock outstanding on a fully diluted basis (the "Termination
Fee"), payable by wire transfer of same day funds. The
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Company acknowledges that the agreements contained in this Section 7.2(b) are an
integral part of the transactions contemplated by this Agreement, and that,
without these agreements, Parent would not enter into this Agreement.
ARTICLE 8
GENERAL PROVISIONS
Section 8.1 AMENDMENT. This Agreement may be amended by the
parties at any time before or after the Shareholder Approval; PROVIDED, HOWEVER,
that, after such Shareholder Approval, there is not to be made any amendment
that by law requires further approval by the shareholders of the Company without
further approval of such shareholders. This Agreement may not be amended except
by an instrument in writing signed on behalf of each of the parties.
Section 8.2 EXTENSION; WAIVER. At any time prior to the
Effective Time, a party may (a) extend the time for the performance of any of
the obligations or other acts of the other party, (b) waive any inaccuracies in
the representations and warranties of the other party contained in this
Agreement or in any document delivered pursuant to this Agreement or (c) subject
to the proviso of Section 8.1, waive compliance by the other party with any of
the agreements or conditions contained in this Agreement. Any agreement on the
part of a party to any such extension or waiver will be valid only if set forth
in an instrument in writing signed on behalf of such party.
The failure of any party to this Agreement to assert any of
its rights under this Agreement or otherwise will not constitute a waiver of
such rights.
Section 8.3 NONSURVIVAL OF REPRESENTATIONS AND WARRANTIES.
None of the representations, warranties, covenants and agreements in this
Agreement or in any instrument delivered pursuant to this Agreement will survive
the Effective Time, except the covenants and agreements contained in Article 2
and in Sections 5.4 and 5.5(a) and (b), each of which will survive in accordance
with its terms.
Section 8.4 NOTICES. All notices, requests, claims, demands
and other communications under this Agreement must be in writing and will be
deemed given if delivered personally, telecopied (which is confirmed) or sent by
a nationally recognized overnight courier service (providing proof of delivery)
to the parties at the following addresses (or at such other address for a party
as is specified by like notice):
(a) if to the Company, to: Aeroquip-Vickers, Inc.
3000 Strayer
P.O. Box 50
Maumee, OH 43537
Telecopy No.: (419) 867-2209
Attention: Vice President and General
Counsel
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<PAGE> 39
with a copy to: Jones, Day, Reavis & Pogue
North Point
901 Lakeside Avenue
Cleveland, Ohio 44114
Telecopy No.: (216) 579-0212
Attention: Charles W. Hardin, Jr., Esq.
(b) if to Parent or Buyer, to: Eaton Corporation
Eaton Center
Cleveland, OH 44114
Telecopy No.: (216) 479-7056
Attention: Executive Vice President and
General Counsel
with a copy to: Wachtell, Lipton, Rosen & Katz
51 West 52nd Street
New York, New York 10019
Telecopy No.: (212) 403-2000
Attention: Daniel A. Neff, Esq.
Section 8.5 INTERPRETATION. When a reference is made in this
Agreement to an Article, Section or Exhibit, such reference is to an Article or
Section of, or an Exhibit to, this Agreement unless otherwise indicated. The
table of contents, table of defined terms and headings contained in this
Agreement are for reference purposes only and do not affect in any way the
meaning or interpretation of this Agreement. Whenever the words "include,"
"includes" or "including" are used in this Agreement, they will be deemed to be
followed by the words "without limitation." The words "hereof," "herein" and
"hereunder" and words of similar import when used in this Agreement will refer
to this Agreement as a whole and not to any particular provision of this
Agreement. All terms defined in this Agreement will have the defined meanings
when used in any certificate or other document made or delivered pursuant hereto
unless otherwise defined therein. The definitions contained in this Agreement
are applicable to the singular as well as the plural forms of such terms and to
the masculine as well as to the feminine and neuter genders of such term. Any
agreement, instrument or statute defined or referred to herein or in any
agreement or instrument that is referred to herein means such agreement,
instrument or statute as from time to time amended, modified or supplemented,
including (in the case of agreements or instruments) by waiver or consent and
(in the case of statutes) by succession of comparable successor statutes and
references to all attachments thereto and instruments incorporated therein. For
purposes of this Agreement, (a) "person" means an individual, corporation,
partnership, limited liability company, joint venture, association, trust,
unincorporated organization or other entity (including its permitted successors
and assigns), (b) "knowledge" of any person that is not an individual means the
knowledge after due inquiry of such person's executive officers and officers
with direct responsibility for the subject matter to which such knowledge
relates, and (c) "affiliate" of any person means another person that directly or
indirectly, through one or more intermediaries, controls, is controlled by, or
is under common control with, such first person, where "control" means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management policies of a person, whether through the ownership
of voting securities, by contract or otherwise.
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Section 8.6 COUNTERPARTS. This Agreement may be executed in
one or more counterparts, all of which will be considered one and the same
agreement and will become effective when one or more counterparts have been
signed by each of the parties and delivered to the other parties.
Section 8.7 ENTIRE AGREEMENT; NO THIRD-PARTY BENEFICIARIES.
This Agreement (including the documents and instruments referred to herein) and
the Confidentiality Agreement (a) constitute the entire agreement, and supersede
all prior agreements and understandings, both written and oral, among the
parties with respect to the subject matter of this Agreement and (b) except for
the provisions of Article 2 and Section 5.4, are not intended to confer upon any
person other than the parties any rights or remedies.
Section 8.8 GOVERNING LAW. This Agreement is to be governed
by, and construed in accordance with, the laws of the State of Ohio, regardless
of the laws that might otherwise govern under applicable principles of conflict
of laws thereof.
Section 8.9 ASSIGNMENT. Neither this Agreement nor any of the
rights, interests or obligations under this Agreement may be assigned, in whole
or in part, by operation of law or otherwise by any of the parties hereto
without the prior written consent of the other party. Any assignment in
violation of this Section 8.9 will be void. Subject to the preceding two
sentences, this Agreement is binding upon, inures to the benefit of, and is
enforceable by, the parties and their respective successors and assigns.
Section 8.10 CONSENT TO JURISDICTION. Each of the parties
hereto (a) consents to submit itself to the personal jurisdiction of any federal
court located in the State of Ohio or any Ohio state court in the event any
dispute arises out of this Agreement or any of the transactions contemplated by
this Agreement, (b) agrees that it will not attempt to deny or defeat such
personal jurisdiction by motion or other request for leave from any such court,
and (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 a
federal court sitting in the State of Ohio or an Ohio state court.
Section 8.11 SPECIFIC ENFORCEMENT. The parties agree that
irreparable damage would occur in the event that any of the provisions of this
Agreement were not performed in accordance with their specific terms or were
otherwise breached. It is accordingly agreed that the parties shall be entitled
to an injunction or injunctions to prevent breaches of this Agreement and to
enforce specifically the terms and provisions of this Agreement in any federal
court located in the State of Ohio or an Ohio state court, this being in
addition to any other remedy to which they are entitled at law or in equity.
Section 8.12 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 will
nevertheless remain in full force and effect. 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 to the fullest
extent permitted by applicable
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<PAGE> 41
law in an acceptable manner to the end that the transactions contemplated hereby
are fulfilled to the extent possible.
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<PAGE> 42
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement and Plan of Merger to be signed by their respective officers thereunto
duly authorized, all as of the date first written above.
AEROQUIP-VICKERS, INC.
By: /s/ Darryl F. Allen
---------------------------------------
Name: Darryl F. Allen
Title: Chairman, President and
Chief Executive Officer
EATON CORPORATION
By: /s/ Gerald L. Gherlein
---------------------------------------
Name: Gerald L. Gherlein
Title: Executive Vice President and
General Counsel
By: /s/ Mark Hennessey
---------------------------------------
Name: Mark Hennessey
Title: Attorney-In-Fact
EATON INDUSTRIES INC.
By: /s/ Mark Hennessey
---------------------------------------
Name: Mark Hennessey
Title: Assistant Secretary
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<PAGE> 1
Exhibit 4.1
Annex A
-------
AEROQUIP-VICKERS, INC.
3000 Strayer
Maumee, Ohio 43537-0050
January 30, 1999
First Chicago Trust Company of New York
P.O. Box 2535, Suite 4693
Jersey City, New Jersey 07303-2535
Attention: John G. Herr
Re: Amendment No. 2 to the Rights Agreement
---------------------------------------
Dear Mr. Herr:
Pursuant to Section 26 of the Rights Agreement (the "Rights
Agreement"), dated January 26, 1989, as amended, between Aeroquip-Vickers, Inc.
(formerly TRINOVA Corporation) (the "Company") and First Chicago Trust Company
of New York (as successor to National Bank of Detroit), as rights agent, the
Company, by resolution duly adopted by its Board of Directors, hereby amends the
Rights Agreement as follows:
1. Section 1(p) of the Rights Agreement is hereby amended by
adding the following new Section 1(pp) immediately thereafter:
(pp) "MERGER AGREEMENT" means the Agreement and Plan of
Merger, dated as of January 31, 1999, among the Company, Eaton
Corporation, an Ohio corporation ("Parent") and Eaton
Industries, Inc., an Ohio corporation and a wholly-owned
subsidiary of Parent
("Merger Sub").
2. Section 1 of the Rights Agreement is hereby amended by
adding the following new paragraph at the end of that Section:
Notwithstanding anything in this Agreement to the
contrary, none of Parent, Merger Sub, any of their respective
Affiliates or Associates or any of their respective permitted
assignees or transferees shall be deemed an Acquiring Person
and none of a Distribution Date, a Share Acquisition Date, or
a Triggering Event
<PAGE> 2
First Chicago Trust Company of New York
January 30, 1999
Page 2
shall be deemed to occur or to have occurred, in each such
case, by reason of the approval, execution or delivery of the
Merger Agreement, the consummation of the Merger (as defined
in the Merger Agreement) or the consummation of the other
transactions contemplated by the Merger Agreement.
3. The Rights Agreement shall not otherwise be supplemented or
amended by virtue of this Amendment No. 2 to the Rights Agreement, but shall
remain in full force and effect.
4. Capitalized terms used without other definition in this
Amendment No. 2 to the Rights Agreement shall be used as defined in the Rights
Agreement.
5. This Amendment No. 2 to the Rights Agreement shall be
deemed to be a contract made under the laws of the State of Ohio and for all
purposes will be governed by and construed in accordance with the laws of such
State applicable to contracts to be made and performed entirely within such
State.
6. This Amendment No. 2 to the Rights Agreement may be
executed in any number of counterparts and each of such counterparts shall for
all purposes be deemed to be an original, and all such counterparts shall
together constitute but one and the same instrument.
7. This Amendment No. 2 to the Rights Agreement shall be
effective as of, and immediately prior to, the execution and delivery of the
Merger Agreement, and all references to the Rights Agreement shall, from and
after such time, be deemed to be references to the Rights Agreement as amended
hereby.
<PAGE> 3
First Chicago Trust Company of New York
January 30, 1999
Page 3
8. Exhibits B and C to the Rights Agreement shall be deemed
amended in a manner consistent with this Amendment No. 2 to the Rights
Agreement.
Very truly yours,
AEROQUIP-VICKERS, INC.
By: /s/ James E. Kline
--------------------------
Name: James E. Kline
Title: Vice President and
General Counsel
Accepted and agreed to as of the
effective time specified above:
FIRST CHICAGO TRUST COMPANY OF NEW YORK
By:
--------------------------------
Name:
Title:
<PAGE> 1
Exhibit 4.2
Annex A
-------
AEROQUIP-VICKERS, INC.
3000 Strayer
Maumee, Ohio 43537-0050
January 30, 1999
First Chicago Trust Company of New York
P.O. Box 2535, Suite 4693
Jersey City, New Jersey 07303-2535
Attention: John G. Herr
Re: Amendment No. 1 to the Rights Agreement
---------------------------------------
Dear Mr. Herr:
Pursuant to Section 27 of the Rights Agreement (the "Rights
Agreement"), dated February 7, 1999, between Aeroquip-Vickers, Inc. (the
"Company") and First Chicago Trust Company of New York, as rights agent, the
Company, by resolution duly adopted by its Board of Directors, hereby amends the
Rights Agreement as follows:
1. Section 1(j) of the Rights Agreement is hereby amended to
read in its entirety as follows:
(j) "Expiration Date" shall mean the earliest of (i) the Close
of Business on the Final Expiration Date, (ii) the time at
which the Rights are redeemed as provided in Section 23, (iii)
the time at which all exercisable Rights are exchanged as
provided in Section 24, or (iv) immediately prior to the
Effective Time (as defined in the Merger Agreement).
2. Section 1(n) of the Rights Agreement is hereby amended by
adding the following new Section 1(nn) immediately thereafter:
(nn) "MERGER AGREEMENT" means the Agreement and Plan of
Merger, dated as of January 31, 1999, among the Company, Eaton
Corporation, an Ohio corporation ("Parent") and Eaton
Industries, Inc., an Ohio
<PAGE> 2
First Chicago Trust Company of New York
January 30, 1999
Page 2
corporation and a wholly-owned subsidiary of Parent
("Merger Sub").
3. Section 1 of the Rights Agreement is hereby amended by
adding the following new paragraph at the end of that Section:
Notwithstanding anything in this Agreement to the
contrary, none of Parent, Merger Sub, any of their respective
Affiliates or Associates or any of their respective permitted
assignees or transferees shall be deemed an Acquiring Person
and none of a Distribution Date, a Share Acquisition Date, or
a Triggering Event shall be deemed to occur or to have
occurred, in each such case, by reason of the approval,
execution or delivery of the Merger Agreement, the
consummation of the Merger (as defined in the Merger
Agreement) or the consummation of the other transactions
contemplated by the Merger Agreement.
4. The Rights Agreement shall not otherwise be supplemented or
amended by virtue of this Amendment No. 1 to the Rights Agreement, but shall
remain in full force and effect.
5. Capitalized terms used without other definition in this
Amendment No. 1 to the Rights Agreement shall be used as defined in the Rights
Agreement.
6. This Amendment No. 1 to the Rights Agreement shall be
deemed to be a contract made under the laws of the State of Ohio and for all
purposes will be governed by and construed in accordance with the laws of such
State applicable to contracts to be made and performed entirely within such
State.
7. This Amendment No. 1 to the Rights Agreement may
be executed in any number of counterparts and each of such
counterparts shall for all purposes be deemed to be an original,
and all such counterparts shall together constitute but one and
the same instrument.
8. This Amendment No. 1 to the Rights Agreement shall be
effective as of, and immediately prior to, the execution and delivery of the
Merger Agreement, and all references to the Rights Agreement shall, from and
after such time, be deemed to be references to the Rights Agreement as amended
hereby.
<PAGE> 3
First Chicago Trust Company of New York
January 30, 1999
Page 3
9. Exhibits B and C to the Rights Agreement shall be deemed
amended in a manner consistent with this Amendment No. 1 to the Rights
Agreement.
Very truly yours,
AEROQUIP-VICKERS, INC.
By: /s/ James E. Kline
----------------------------
Name: James E. Kline
Title: Vice President and
General Counsel
Accepted and agreed to as of the
effective time specified above:
FIRST CHICAGO TRUST COMPANY OF NEW YORK
By:
----------------------------------
Name:
Title:
<PAGE> 1
Exhibit 99.1
EATON TO ACQUIRE AEROQUIP-VICKERS FOR
$1.7 BILLION
CLEVELAND and MAUMEE, Ohio--February 1, 1999--Eaton Corporation (NYSE:ETN -
news) and Aeroquip-Vickers, Inc. (NYSE:ANV - news) today jointly announced that
Eaton will acquire all of the outstanding common shares of Aeroquip-Vickers for
$58 per share in cash, or approximately $1.7 billion. The Boards of Directors of
both companies have approved the transaction, which is subject to normal
closing conditions and the approval of Aeroquip-Vickers shareholders. It is
expected to be completed in April.
Stephen R. Hardis, Eaton Corporation Chairman and Chief Executive Officer, said,
"We are very pleased to welcome Aeroquip-Vickers to the family of Eaton
businesses. Leadership is a fundamental requisite for success in today's global
economy. This acquisition enables Eaton to achieve that critical objective -
building upon and extending Eaton's strong position in mobile hydraulics. With
Vickers, we acquire a global leader in industrial hydraulics and the combined
scale of $1.1 billion to serve mobile and industrial customers. This
complementary acquisition fundamentally repositions our business among the world
leaders, just as our 1993 acquisition of the Westinghouse DCBU did for our
Cutler-Hammer business.
"With Aeroquip, we expand upon these strengths in hydraulics via its $1.1
billion position in hose and couplings, serving mobile and industrial, aerospace
and automotive customers. Together, Eaton and Aeroquip-Vickers create an
aerospace hydraulics business with sales of $700 million, and a systems
capability across all hydraulics applications that is unparalleled.
"The value created for our customers and our owners from this combination will
be significant, with mature-year synergies of about $120 million. We expect the
acquisition to be neutral to Eaton earnings this year, excluding first-year
transition costs, but to add about $1 per share to annual earnings by years 3
to 5.
"Eaton now has a very strong family of industrial products and brand names:
Eaton, Cutler-Hammer, Vickers, Aeroquip, and Char-Lynn. Along with our
traditional strengths with OEMs, we now have strong positions in distributor,
aftermarket, and service channels."
Daryl F. Allen, Aeroquip-Vickers Chairman, President and Chief Executive
Officer, said, "This is a great opportunity for Aeroquip-Vickers and its
operations. Like Aeroquip and Vickers, Eaton is a leader in many of its product
lines. Eaton also recognizes the well-respected heritage of the Aeroquip and
Vickers brands and the strength of those brands in global markets.
<PAGE> 2
"Today, many industrial markets are consolidating, including the hydraulics
market. It is clear that to successfully compete, a firm must supply complete
product lines and global platforms. At $2.2 billion, Aeroquip-Vickers is too
small to realize the full advantage of its strengths. Adding Aeroquip-Vickers to
Eaton, however, creates an impressive force. I cannot think of a better company
with which to secure the future of our employees, customers and suppliers."
Concluded Hardis, "This is the largest acquisition in Eaton's history. More
important, it builds upon and expands the growth platforms that are redefining
Eaton as a premier diversified capital goods company, distinguished by
differentiated products and services. Given Eaton's strong positive cash flows,
we could finance this acquisition entirely through debt. But, we intend to
continue to build upon all of Eaton's growth platforms, and so we expect to
include about 20% equity to fund this transaction.
"This acquisition is an important step toward achieving Eaton's long-held Year
2000 goals of $10 billion in sales and $8 earnings per share. Far more
important, it reinforces our determination to build a global enterprise
characterized by superior operating performance and higher sustainable growth."
Eaton Corporation is a global manufacturer of highly engineered products that
serve industrial, vehicle, construction, commercial and semiconductor markets.
Principal products include electrical power distribution and control equipment,
truck drivetrain systems, engine components, hydraulic products, ion implanters
and a wide variety of controls. Headquartered in Cleveland, the company has
49,500 employees and 155 manufacturing sites in 25 countries around the world.
Sales for 1998 were $6.6 billion. The Internet address for Eaton is:
http://www.eaton.com/
Aeroquip-Vickers is two companies, Aeroquip Corporation and Vickers,
Incorporated, world leaders in the design, manufacture and distribution of
engineered components and systems to industrial, aerospace and automotive
markets. Headquartered in Maumee, Ohio, the company has 15,000 employees and 50
manufacturing and/or assembly sites in 15 countries around the world. Sales for
1998 were $2.15 billion. The Internet address for Aeroquip-Vickers, Inc. is:
http://www.aeroquip-vickers.com.
The forward-looking statements in this news release should be used with
caution. They are subject to various risks and uncertainties, many of which are
outside the control of the companies. Important factors which could cause
actual results to differ materially from those in the forward-looking
statements include changes in global economic and financial conditions, labor
strikes, the markets for hydraulics, hose and couplings around the world and
Eaton's ability to successfully implement the integration.
CONTACTS: Richard G. Rump for Aeroquip-Vickers
419-867-2292
Renald M. Romain for Eaton
216-523-4736
###
