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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): November 23, 1997
MAPCO INC.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 1-5254 73-0705739
- --------------- ------------ -------------------
(State or other (Commission (I.R.S. Employer
jurisdiction of File Number) Identification No.)
incorporation)
1800 South Baltimore Avenue, Tulsa, Oklahoma 74119
- -------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (918) 581-1800
Not Applicable
- -------------------------------------------------------------------------------
(Former name or former address, if changed since last report)
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Item 5. Other Events.
MAPCO Inc. (the "Company") has entered into an Agreement and Plan of
Merger, dated November 23, 1997, (the "Agreement") among The Williams Companies,
Inc. ("Williams"), TML Acquisition Corp., a wholly-owned subsidiary of Williams,
and MAPCO Inc. providing for Williams to acquire MAPCO in a non-taxable
stock-for stock transaction. The Company and Williams have agreed to exchange a
fixed ratio of .8325 of a current share of Williams common stock for each share
of the Company's common stock. The companies intend to file a joint proxy
statement with the Securities and Exchange Commission in the near future and
shareholders for both companies will vote on the transaction at shareholder
meetings expected to be held during the first quarter of 1998. The transaction,
intending to be a "pooling of interests" for accounting purposes, is subject to
review under federal antitrust laws, to the consent of the Company's joint
venture partner in the Discovery Project and to certain other conditions.
In connection with the execution of the Agreement, the Company amended its
Rights Agreement with Harris Trust of New York, a New York trust company, dated
May 29, 1996, to provide that neither Williams nor any subsidiary thereof, shall
be deemed an Acquiring Person as a result of the execution, delivery and
performance under or consummation of the transactions contemplated by the
Agreement.
Item 7. Financial Statements and Exhibits.
The Company files the following exhibits as part of this Report:
Exhibit 2. Agreement and Plan of Merger among The Williams
Companies, Inc., TML Acquisition Corp., and MAPCO
Inc., dated November 23, 1997.
Exhibit 4. Amendment No. 1 to Rights Agreement.
Exhibit 99. Copy of the Company's press release dated November
24, 1997, publicly announcing the actions reported
herein.
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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 thereunto duly authorized.
MAPCO INC.
By: /s/ James N. Cundiff
-----------------------------------
Name: James N. Cundiff
Title: General Counsel - New Ventures
and Corporate Services and
Assistant Corporate Secretary
Date: November 26, 1997
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INDEX TO EXHIBITS
EXHIBIT
NUMBER DESCRIPTION
------ -----------
Exhibit 2. Agreement and Plan of Merger among The Williams
Companies, Inc., TML Acquisition Corp., and MAPCO
Inc., dated November 23, 1997.
Exhibit 4. Amendment No. 1 to Rights Agreement.
Exhibit 99. Copy of the Company's press release dated November
24, 1997, publicly announcing the actions reported
herein.
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EXHIBIT 2
[Conformed Copy]
AGREEMENT AND PLAN OF MERGER
AMONG
THE WILLIAMS COMPANIES, INC.,
TML ACQUISITION CORP.
AND
MAPCO INC
DATED AS OF NOVEMBER 23, 1997
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ARTICLE I
THE MERGER
SECTION 1.1 The Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
SECTION 1.2 Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
SECTION 1.3 Effective Time . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
SECTION 1.4 Effects of the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
SECTION 1.5 Certificate of Incorporation and By-laws
of the Surviving Corporation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
SECTION 1.6 Directors and Officers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
ARTICLE II
EFFECT OF THE MERGER ON THE CAPITAL STOCK
OF THE CONSTITUENT CORPORATIONS;
EXCHANGE OF CERTIFICATES
SECTION 2.1 Effect on Capital Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
(a) Cancellation of Treasury Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
(b) Conversion of Company Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
(c) Conversion of Common Stock of Sub . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
SECTION 2.2 Exchange of Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
(a) Exchange Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
(b) Exchange Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
(c) Distributions with Respect to Unexchanged Shares . . . . . . . . . . . . . . . . . . . . . . 5
(d) No Further Ownership Rights in Company Common Stock . . . . . . . . . . . . . . . . . . . . . 5
(e) No Fractional Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
(f) Termination of Exchange Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
(g) No Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
(h) Investment of Exchange Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
(i) Lost Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
SECTION 2.3 Certain Adjustments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
ARTICLE III
REPRESENTATIONS AND WARRANTIES
SECTION 3.1 Disclosure Schedules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
SECTION 3.2 Representations and Warranties of the Company . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
(a) Organization, Standing and Corporate Power . . . . . . . . . . . . . . . . . . . . . . . . . 9
(b) Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
(c) Capital Structure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
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(d) Authority; Noncontravention . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
(e) SEC Documents; Undisclosed Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . 12
(f) Information Supplied . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
(g) Absence of Certain Changes or Events . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
(h) Compliance with Applicable Laws; Litigation . . . . . . . . . . . . . . . . . . . . . . . . 14
(i) Absence of Changes in Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
(j) ERISA Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
(k) Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
(l) Voting Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
(m) State Takeover Statutes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
(n) Accounting Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
(o) Brokers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
(p) Ownership of Parent Capital Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
(q) Certain Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
(r) Company Rights Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
(s) Environmental Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
(t) Derivative Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
(u) Condition of Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
(v) Fairness Opinion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
SECTION 3.3 Representations and Warranties of Parent . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
(a) Organization, Standing and Corporate Power . . . . . . . . . . . . . . . . . . . . . . . . 22
(b) Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
(c) Capital Structure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
(d) Authority; Noncontravention . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
(e) SEC Documents; Undisclosed Liabilities. . . . . . . . . . . . . . . . . . . . . . . . . . . 26
(f) Information Supplied . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
(g) Absence of Certain Changes or Events . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
(h) Compliance with Applicable Laws; Litigation . . . . . . . . . . . . . . . . . . . . . . . . 27
(i) Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
(j) Accounting Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
(k) Brokers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
(l) Ownership of Company Capital Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
(m) Voting Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
(n) Parent Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
(o) ERISA Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
ARTICLE IV
COVENANTS RELATING TO CONDUCT OF BUSINESS
SECTION 4.1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
(a) Conduct of Business by the Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
(b) Conduct of Business by Parent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
(c) Certain Payments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
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(d) Other Actions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
(e) Advice of Changes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
SECTION 4.2 No Solicitation by the Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
ARTICLE V
ADDITIONAL AGREEMENTS
SECTION 5.1 Preparation of the Form S-4 and the
Proxy Statement; Stockholders Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . 37
SECTION 5.2 Letters of the Company's Accountants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
SECTION 5.3 Letters of Parent's Accountants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
SECTION 5.4 Access to Information; Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
SECTION 5.5 Reasonable Best Efforts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
SECTION 5.6 Company Stock Options, Incentive and Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . 41
SECTION 5.7 Indemnification, Exculpation and Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
SECTION 5.8 Fees and Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
SECTION 5.9 Public Announcements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
SECTION 5.10 Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
SECTION 5.11 Stock Exchange Listings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
SECTION 5.12 Stockholder Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
SECTION 5.13 Tax Treatment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
SECTION 5.14 Pooling of Interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
SECTION 5.15 Conveyance Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
SECTION 5.16 Certain Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
SECTION 5.17 Directors of Parent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
SECTION 5.18 Parent Stock Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
ARTICLE VI
CONDITIONS PRECEDENT
SECTION 6.1 Conditions to Each Party's Obligation to Effect the Merger . . . . . . . . . . . . . . . . . . . 47
(a) Stockholder Approval . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
(b) HSR Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
(c) Governmental and Regulatory Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
(d) No Injunctions or Restraints . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
(e) Form S-4 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
(f) NYSE and PSE Listings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
(g) Pooling Letters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
SECTION 6.2 Conditions to Obligations of Parent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
(a) Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
(b) Performance of Obligations of the Company . . . . . . . . . . . . . . . . . . . . . . . . . 48
(c) Discovery Project . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
(d) No Material Adverse Change . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
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(e) Tax Opinion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
SECTION 6.3 Conditions to Obligations of the Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
(a) Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
(b) Performance of Obligations of Parent . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
(c) No Material Adverse Change . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
(d) Tax Opinion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
ARTICLE VII
TERMINATION, AMENDMENT AND WAIVER
SECTION 7.1 Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
SECTION 7.2 Effect of Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
SECTION 7.3 Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
SECTION 7.4 Extension; Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
ARTICLE VII
GENERAL PROVISIONS
SECTION 8.1 Nonsurvival of Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . 52
SECTION 8.2 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
SECTION 8.3 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
SECTION 8.4 Interpretation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
SECTION 8.5 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
SECTION 8.6 Entire Agreement; No Third-Party Beneficiaries . . . . . . . . . . . . . . . . . . . . . . . . . 55
SECTION 8.7 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
SECTION 8.8 Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
SECTION 8.9 Consent to Jurisdiction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
SECTION 8.10 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
SECTION 8.11 Enforcement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
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AGREEMENT AND PLAN OF MERGER, dated as of November 23, 1997, by
and among THE WILLIAMS COMPANIES, INC., a Delaware corporation ("Parent"), TML
ACQUISITION CORP., a Delaware corporation ("Sub"), and MAPCO Inc., a Delaware
corporation (the "Company").
WHEREAS, the respective Boards of Directors of Parent, Sub and the
Company have each approved the merger of Sub with and into the Company (the
"Merger"), upon the terms and subject to the conditions set forth in this
Agreement, whereby each issued and outstanding share of common stock, par value
$1.00 per share, of the Company (the "Company Common Stock") and each
associated preferred stock purchase right (a "Company Right") issued pursuant
to the Rights Agreement, dated May 29, 1996, between the Company and Harris
Trust Company of New York, as Rights Agent (the "Company Rights Agreement")
(references to the Company Common Stock shall be deemed to include the
associated Company Rights), other than shares owned by the Company, will be
converted into the right to receive the Merger Consideration (as defined in
Section 2.1(b));
WHEREAS, the Board of Directors of Parent has also approved an
amendment to its Restated Certificate of Incorporation providing for an
increase in its authorized number of shares of Parent Common Stock (as defined
in Section 2.1(b)) (the "Charter Amendment Proposal") in order to provide
sufficient authorized shares of Parent Common Stock (as defined in Section
2.1(b))for issuance in connection with the Merger and the other transactions
contemplated by this Agreement, after giving effect to the declared stock
dividend of one share for each share of Parent Common Stock outstanding to be
paid on December 29, 1997 (the "Stock Dividend");
WHEREAS, the respective Boards of Directors of Parent, Sub and the
Company have each determined that the Merger and the other transactions
contemplated hereby are consistent with, and in furtherance of, their
respective business strategies and goals and are in the best interests of their
respective stockholders;
WHEREAS, the parties desire to make certain representations,
warranties, covenants and agreements in connection with the Merger and also to
prescribe various conditions to the Merger;
WHEREAS, for federal income tax purposes, it is intended that the
Merger will qualify as a reorganization under the provisions of Section 368(a)
of the Internal Revenue Code of 1986, as amended (the "Code"); and
WHEREAS, for financial accounting purposes, it is intended that
the Merger will be accounted for as a pooling of interests transaction under
United States generally accepted accounting principles ("GAAP").
1
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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 Delaware
General Corporation Law (the "DGCL"), Sub shall be merged with and into the
Company at the Effective Time (as defined in Section 1.3). Following the
Effective Time, the Company shall be the surviving corporation (the "Surviving
Corporation") and become a wholly owned subsidiary of Parent and shall succeed
to and assume all the rights and obligations of Sub in accordance with the
DGCL.
SECTION 1.2 Closing. Subject to the satisfaction or waiver of all
the conditions to closing contained in Article VI hereof, the closing of the
Merger (the "Closing") will take place at 10:00 a.m. on a date to be specified
by the parties (the "Closing Date"), which shall be no later than the second
day after satisfaction or waiver of the conditions set forth in Article VI,
unless another time or date is agreed to by the parties hereto. The Closing
will be held at such location in Tulsa, Oklahoma as is agreed to by the parties
hereto.
SECTION 1.3 Effective Time. Subject to the provisions of this
Agreement, as soon as practicable on the Closing Date, the parties shall cause
the Merger to be consummated by filing a certificate of merger or other
appropriate documents (in any such case, the "Certificate of Merger") executed
in accordance with the relevant provisions of the DGCL and shall make all other
filings or recordings required under the DGCL. The Merger shall become
effective at such time as the Certificate of Merger is duly filed with the
Secretary of State of Delaware, or at such subsequent date or time as Sub and
the Company shall agree and specify in the Certificate of Merger (the time the
Merger becomes effective being hereinafter referred to as the "Effective
Time").
SECTION 1.4 Effects of the Merger. The Merger shall have the
effects set forth in Section 259 of the DGCL.
SECTION 1.5 Certificate of Incorporation and By-laws of the
Surviving Corporation. The certificate of incorporation of the Company shall
be amended as of the Effective Time to read in its entirety like the
certificate of incorporation of Sub except that Article First of such
certificate of incorporation shall read in its entirety as follows: "The name
of the Corporation is MAPCO Inc." and, as amended, such certificate of
incorporation shall be the certificate of incorporation of the Surviving
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Corporation until thereafter changed or amended as provided therein or by
applicable law. The by-laws of Sub, as in effect immediately prior to the
Effective Time, shall become the by-laws of the Surviving Corporation until
thereafter changed or amended as provided therein or by applicable law.
SECTION 1.6 Directors and Officers. The directors and officers of
Sub shall, from and after the Effective Time, become the directors and
officers, respectively, of the Surviving Corporation until their successors
shall have been duly elected or appointed or qualified or until their earlier
death, resignation or removal in accordance with the certificate of
incorporation and the by-laws of the Surviving Corporation.
ARTICLE II
EFFECT OF THE MERGER ON THE CAPITAL STOCK
OF THE CONSTITUENT CORPORATIONS;
EXCHANGE OF CERTIFICATES
SECTION 2.1 Effect on Capital Stock. As of the Effective Time, by
virtue of the Merger and without any action on the part of the holder of any
shares of Company Common Stock:
(a) Cancellation of Treasury Stock. Each share of Company Common
Stock that is owned directly or indirectly by the Company shall automatically
be canceled and retired and shall cease to exist, and no consideration shall be
delivered in exchange therefor.
(b) Conversion of Company Common Stock. Subject to Section 2.2(e),
each issued and outstanding share of Company Common Stock (other than shares to
be canceled in accordance with Section 2.1(a)) shall be converted into the
right to receive (i) .8325 (the "Exchange Ratio") validly issued, fully paid
and nonassessable shares of common stock, par value $1.00 per share (the
"Parent Common Stock"), of Parent, and (ii) one associated preferred stock
purchase right (a "Parent Right") issued in accordance with the Rights
Agreement dated as of February 6, 1996, between Parent and First Chicago Trust
Company of New York, as Rights Agent (the "Parent Rights Agreement"), for each
share of Parent Common Stock so received; provided, that, if the Stock Dividend
shall have been paid prior to the Closing, the Exchange Ratio shall be 1.665.
References to the Parent Common Stock issuable in the Merger shall be deemed to
include the associated Parent Rights. The consideration to be issued to
holders of Company Common Stock is referred to herein as the "Merger
Consideration." Subject to Section 2.1(a), as of the Effective Time, all such
shares of Company Common Stock shall no longer be outstanding and shall
automatically be canceled and retired and shall cease to exist, and each holder
of a certificate
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representing any such shares of Company Common Stock shall cease to have any
rights with respect thereto, except the right to receive the Merger
Consideration and any cash in lieu of fractional shares of Parent Common Stock
to be issued or paid in consideration therefor upon surrender of such
certificate in accordance with Section 2.2 and any dividends or distributions
to which such holder is entitled pursuant to Section 2.2(c), in each case
without interest.
(c) Conversion of Common Stock of Sub. Each issued and outstanding
share of common stock, par value $.01 per share, of Sub shall be converted into
one validly issued, fully paid and nonassessable share of common stock, par
value $.01 per share, of the Surviving Corporation.
SECTION 2.2 Exchange of Certificates.(a) Exchange Agent. As of the
Effective Time, Parent shall enter into an agreement with such bank or trust
company as may be designated by Parent and reasonably satisfactory to the
Company (the "Exchange Agent"), which shall provide that Parent shall deposit
with the Exchange Agent as of the Effective Time, for the benefit of the
holders of shares of Company Common Stock, for exchange in accordance with this
Article II, through the Exchange Agent, certificates representing the shares of
Parent Common Stock (such shares of Parent Common Stock, together with any
dividends or distributions with respect thereto with a record date after the
Effective Time, any Excess Shares (as defined in Section 2.2(e)) and any cash
(including cash proceeds from the sale of the Excess Shares) payable in lieu of
any fractional shares of Parent Common Stock being hereinafter referred to as
the "Exchange Fund") issuable pursuant to Section 2.1(b) in exchange for
outstanding shares of Company Common Stock.
(b) Exchange Procedures. As soon as reasonably practicable after
the Effective Time, the Exchange Agent shall mail to each holder of record of a
certificate or certificates which immediately prior to the Effective Time
represented outstanding shares of Company Common Stock (the "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 shall specify
that delivery shall be effected, and risk of loss and title to the Certificates
shall pass, only upon delivery of the Certificates to the Exchange Agent and
shall be in such form and have such other provisions as the Company and Parent
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 Exchange Agent, together with such letter
of transmittal, duly executed, and such other documents as may reasonably be
required by the Exchange Agent, the holder of such Certificate shall be
entitled to receive in exchange therefor a certificate representing that number
of whole shares of Parent Common Stock which such holder has the right to
receive pursuant to the provisions of this Article II, dividends or other
distributions on such shares of Parent Common Stock which such holder has the
right to receive pursuant to Section 2.2(c), and cash in lieu of any fractional
share of Parent Common Stock pursuant to Section
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2.2(e), and the Certificate so surrendered shall forthwith be canceled. In the
event of a surrender of a Certificate representing shares of Company Common
Stock which are not registered in the transfer records of the Company under the
name of the person surrendering such Certificate, a certificate representing
the proper number of shares of Parent Common Stock may be issued to a person
other than the person in whose name the Certificate so surrendered is
registered if such Certificate shall be properly endorsed or otherwise be in
proper form for transfer and the person requesting such issuance shall pay any
transfer or other taxes required by reason of the issuance of shares of Parent
Common Stock to a person other than the registered holder of such Certificate
or establish to the satisfaction of Parent that such tax has been paid or is
not applicable. Until surrendered as contemplated by this Section 2.2, each
Certificate shall be deemed at any time after the Effective Time to represent
only the right to receive upon such surrender the Merger Consideration which
the holder thereof has the right to receive in respect of such Certificate
pursuant to the provisions of this Article II, dividends or other distributions
in respect of such Merger Consideration which such holder has the right to
receive pursuant to Section 2.2(c), and cash in lieu of any fractional share of
Parent Common Stock pursuant to Section 2.2(e). No interest shall be paid or
will accrue on any cash payable to holders of Certificates pursuant to the
provisions of this Article II.
(c) Distributions with Respect to Unexchanged Shares. No dividends
or other distributions with respect to Parent Common Stock with a record date
after the Effective Time shall be paid to the holder of any unsurrendered
Certificate with respect to the shares of Parent Common Stock issuable
hereunder in respect thereof, and no cash payment in lieu of fractional shares
shall be paid to any such holder pursuant to Section 2.2(e), and all such
dividends, other distributions and cash in lieu of fractional shares of Parent
Common Stock shall be paid by Parent to the Exchange Agent and shall be
included in the Exchange Fund, in each case until the surrender of such
Certificate in accordance with this Article II, subject to Section 2.2(f).
Subject to the effect of applicable escheat or similar laws, following
surrender of any such Certificate there shall be paid to the holder of the
certificate representing whole shares of Parent Common Stock issued in exchange
therefor, without interest, (i) at the time of such surrender, the amount of
dividends or other distributions with a record date after the Effective Time
theretofore paid with respect to such whole shares of Parent Common Stock and
the amount of any cash payable in lieu of a fractional share of Parent Common
Stock to which such holder is entitled pursuant to Section 2.2(e) and (ii) at
the appropriate payment date, the amount of dividends or other distributions
with a record date after the Effective Time and with a payment date subsequent
to such surrender payable with respect to such whole shares of Parent Common
Stock.
(d) No Further Ownership Rights in Company Common Stock. All shares
of Parent Common Stock issued upon the surrender for exchange of Certificates
in accordance with the terms of this Article II (including any cash paid
pursuant to this Article II) shall be deemed to have been issued (and paid) in
full satisfaction of all
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rights pertaining to the shares of Company Common Stock theretofore represented
by such Certificates, subject, however, to the Surviving Corporation's
obligation to pay any dividends or make any other distributions with a record
date prior to the Effective Time which may have been declared or made by the
Company on such shares of Company Common Stock which remain unpaid at the
Effective Time, and there shall be no further registration of transfers on the
stock transfer books of the Surviving Corporation of the shares of Company
Common Stock which were outstanding immediately prior to the Effective Time.
If, after the Effective Time, Certificates are presented to the Surviving
Corporation or the Exchange Agent for any reason other than exchange as
provided in this Article II, they shall be canceled and exchanged as provided
in this Article II, except as otherwise provided by law.
(e) No Fractional Shares. (i) No certificates or scrip
representing fractional shares of Parent Common Stock shall be issued
upon the surrender for exchange of Certificates, no dividend or
distribution of Parent shall relate to such fractional share interests
and such fractional share interests will not entitle the owner thereof
to vote or to any rights of a stockholder of Parent.
(ii) As promptly as practicable following the Effective Time,
the Exchange Agent shall determine the excess of (A) the number of
whole shares of Parent Common Stock delivered to the Exchange Agent by
Parent pursuant to Section 2.2(a) over (B) the aggregate number of
whole shares of Parent Common Stock to be distributed to former
holders of Company Common Stock pursuant to Section 2.2(b) (such
excess being herein called the "Excess Shares"). Following the
Effective Time, the Exchange Agent shall, on behalf of the former
stockholders of the Company, sell the Excess Shares at then-prevailing
prices on the New York Stock Exchange, Inc. (the "NYSE"), all in the
manner provided in Section 2.2(e)(iii).
(iii) The sale of the Excess Shares by the Exchange Agent shall
be executed on the NYSE through one or more member firms of the NYSE
and shall be executed in round lots to the extent practicable. The
Exchange Agent shall use reasonable efforts to complete the sale of
the Excess Shares as promptly following the Effective Time as, in the
Exchange Agent's sole judgment, is practicable consistent with
obtaining the best execution of such sales in light of prevailing
market conditions. Until the proceeds of such sale or sales have been
distributed to the holders of Certificates formerly representing
Company Common Stock, the Exchange Agent shall hold such proceeds in
trust for such holders (the "Common Shares Trust"). The Surviving
Corporation shall pay all commissions, transfer taxes and other
out-of-pocket transaction costs, including the expenses and
compensation of the Exchange Agent, incurred in connection with such
sale of the Excess Shares. The Exchange Agent shall determine the
portion of the Common Shares Trust to which each former holder of
Company Common Stock is entitled, if any, by
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multiplying the amount of the aggregate net proceeds comprising the
Common Shares Trust by a fraction, the numerator of which is the
amount of the fractional share interest to which such former holder of
Company Common Stock is entitled (after taking into account all shares
of Company Common Stock held of record at the Effective Time by such
holder) and the denominator of which is the aggregate amount of
fractional share interests to which all former holders of Company
Common Stock are entitled.
(iv) Notwithstanding the provisions of Sections 2.2(e)(ii) and
(iii), the Surviving Corporation may elect at its option, exercised
prior to the Effective Time, in lieu of the issuance and sale of
Excess Shares and the making of the payments hereinabove contemplated,
to pay each former holder of Company Common Stock an amount in cash
equal to the product obtained by multiplying (A) the fractional share
interest to which such former holder (after taking into account all
shares of Company Common Stock held of record at the Effective Time by
such holder) would otherwise be entitled by (B) the closing price of
the Parent Common Stock as reported on the NYSE Composite Transaction
Tape (as reported in The Wall Street Journal, or, if not reported
therein, any other authoritative source) on the Closing Date, and, in
such case, all references herein to the cash proceeds of the sale of
the Excess Shares and similar references shall be deemed to mean and
refer to the payments calculated as set forth in this Section
2.2(e)(iv).
(v) As soon as practicable after the determination of the
amount of cash, if any, to be paid to holders of Certificates formerly
representing Company Common Stock with respect to any fractional share
interests, the Exchange Agent shall make available such amounts to
such holders of Certificates formerly representing Company Common
Stock subject to and in accordance with the terms of Section 2.2(b).
(f) Termination of Exchange Fund. Any portion of the Exchange Fund
which remains undistributed to the holders of the Certificates for six months
after the Effective Time shall be delivered to Parent, upon demand, and any
holders of the Certificates who have not theretofore complied with this Article
II shall thereafter look only to Parent for payment of their claim for Merger
Consideration, any dividends or distributions with respect to Parent Common
Stock and any cash in lieu of fractional shares of Parent Common Stock.
(g) No Liability. None of Parent, Sub, the Company, the Surviving
Corporation or the Exchange Agent shall be liable to any person in respect of
any shares of Parent Common Stock, any dividends or distributions with respect
thereto, any cash in lieu of fractional shares of Parent Common Stock or any
cash from the Exchange Fund, in each case delivered to a public official
pursuant to any applicable abandoned property, escheat or similar law.
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(h) Investment of Exchange Fund. The Exchange Agent shall invest
any cash included in the Exchange Fund, as directed by Parent (provided that
such cash shall be invested only in high quality short-term instruments with
low risk of loss of principal), on a daily basis. Any interest and other income
resulting from such investments shall be paid to Parent. If, as a result of any
loss resulting from such investments, the amount of cash remaining in the
Exchange Fund is insufficient to pay the full amount to which holders of
certificates formerly representing Company Common Stock are entitled, Parent
shall, promptly upon demand by the Exchange Agent, deposit additional cash into
the Exchange Fund in an amount sufficient to satisfy its obligations to such
holders.
(i) Lost Certificates. If any Certificate shall have been lost,
stolen or destroyed, upon the making of an affidavit of that fact by the person
claiming such Certificate to be lost, stolen or destroyed and the posting by
such person of a bond in such reasonable amount as Parent may direct as
indemnity against any claim that may be made against it with respect to such
Certificate, the Exchange Agent shall issue in exchange for such lost, stolen
or destroyed Certificate the Merger Consideration, any unpaid dividends and
distributions on shares of Parent Common Stock deliverable in respect thereof
and any cash in lieu of fractional shares of Parent Common Stock, in each case
pursuant to this Agreement.
SECTION 2.3 Certain Adjustments. If after the date hereof and on or
prior to the Closing Date the outstanding shares of Parent Common Stock shall
be changed into a different number of shares by reason of any reclassification,
recapitalization, split-up, combination or exchange of shares, or any dividend
payable in stock or other securities shall be declared thereon with a record
date within such period, or any similar event shall occur (any such action, an
"Adjustment Event"), the Exchange Ratio shall be adjusted accordingly to
provide to the holders of Company Common Stock the same economic effect as
contemplated by this Agreement prior to such reclassification,
recapitalization, split-up, combination, exchange or dividend or similar event,
it being agreed that no adjustment shall be made pursuant to this Section 2.3
for the Stock Dividend.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
SECTION 3.1 Disclosure Schedules. Prior to the execution of this
Agreement, the Company has delivered to Parent a schedule (the "Company
Disclosure Schedule") and Parent has delivered to the Company a schedule (the
"Parent Disclosure Schedule" and, together, the "Disclosure Schedules") each
setting forth, among other things, certain items or exceptions relating to any
or all of their respective representations and warranties; provided, however,
that notwithstanding
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anything in this Agreement to the contrary, the mere inclusion of an item in a
Disclosure Schedule shall not be deemed an admission by the disclosing party
that such item represents a material exception or fact, event or circumstance
or that such item constitutes or is reasonably likely to result in a material
adverse effect or material adverse change (each as defined in Section 8.3).
SECTION 3.2 Representations and Warranties of the Company. Subject
to Section 3.1 and except as disclosed in Company SEC Documents (as defined in
Section 3.2(e)) filed prior to the date hereof (the "Company Filed SEC
Documents") or as set forth on the Company Disclosure Schedule (it being
acknowledged that any items disclosed in any subsection in the Company
Disclosure Schedule shall be deemed disclosed in, and only in, any other
subsections thereof in which the disclosure of such items would reasonably be
considered responsive) (regardless of whether the relevant subsections of this
Agreement refer to the Company Disclosure Schedule or the Company Filed SEC
Documents), the Company represents and warrants to Parent as follows:
(a) Organization, Standing and Corporate Power. (i) Each
of the Company and its subsidiaries (as defined in Section 8.3) is a
corporation or other legal entity duly organized, validly existing and
in good standing (with respect to jurisdictions which 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,
as to subsidiaries, for those jurisdictions where the failure to be
duly organized, validly existing and in good standing individually or
in the aggregate would not have a material adverse effect on the
Company. Each of the Company and its subsidiaries is duly qualified
or licensed to do business and is in good standing (with respect to
jurisdictions which 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 have a material adverse effect on the Company.
(ii) The Company has made available to Parent prior to the
execution of this Agreement complete and correct copies of its
certificate of incorporation and by-laws, as amended to date.
(b) Subsidiaries. (i) Exhibit 21 to the Company's Annual
Report on Form 10-K for the fiscal year ended December 31, 1996
includes all the subsidiaries of the Company which as of the date of
this Agreement are Significant Subsidiaries (as defined in Rule 1-02
of Regulation S-X of the Securities and Exchange Commission (the
"SEC")). All the outstanding shares of capital stock of, or other
equity interests in, each such Significant
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Subsidiary have been validly issued and are fully paid and
nonassessable; are owned directly or indirectly by the Company, free
and clear of all pledges, claims, liens, charges, encumbrances and
security interests securing indebtedness or similar obligations
(collectively, "Liens"); and are free of any other restriction on the
right to vote, sell or otherwise dispose of such capital stock or
other ownership interests that would prevent the operation by the
Surviving Corporation of such Significant Subsidiary's business as
currently conducted.
(ii) The Company has made available to Parent prior to the
execution of this Agreement complete and correct copies of the
certificates of incorporation and by-laws or similar organizational
documents of each of its Significant Subsidiaries, as amended to
date.
(c) Capital Structure. The authorized capital stock of the
Company consists of 115,000,000 shares of Company Common Stock and 1,000,000
shares of preferred stock, without par value, of the Company (the "Company
Authorized Preferred Stock"), of which 175,000 shares have been designated as
Series A Junior Participating Preferred Stock, par value $1.00 per share (the
"Company Junior Preferred Stock"). At the close of business on November 20,
1997: (i) 54,883,087 shares of Company Common Stock were issued and
outstanding; (ii) 8,405,267 shares of Company Common Stock were issued and held
by the Company in its treasury; (iii) 175,000 shares of Company Junior
Preferred Stock were reserved for issuance pursuant to the Rights Agreement;
(iv) 13,065,951 shares of Company Common Stock were reserved for issuance
pursuant the stock-based plans identified in Section 3.2(c) of the Company
Disclosure Schedule (such plans, collectively, the "Company Stock Plans"), of
which (A) 8,678,216 shares are subject to issuance pursuant to outstanding
employee or director stock options granted under the Company Stock Plans, (B)
up to 55,000 shares are subject to purchase under the Company's 1997 Employee
Stock Purchase Plan (the "ESPP") based on employee elections made through the
date hereof, (C) no other shares are issuable pursuant to existing grants, and
(v) other than as set forth above, no other shares of Company Authorized
Preferred Stock have been designated or issued. All outstanding shares of
capital stock of the Company are, and all shares thereof which may be issued
will be, when issued, duly authorized, validly issued, fully paid and
nonassessable and not subject to preemptive rights. Except as set forth in this
Section 3.2(c) and except for changes since November 20, 1997 resulting from
the issuance of shares of Company Common Stock pursuant to the Company Stock
Options or as permitted by Section 4.1(a), (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 of the Company or any Company
subsidiary convertible into or exchangeable or exercisable for shares of
capital stock or voting securities of the Company, (C) any warrants, calls,
options or other rights to acquire from the Company or any Company subsidiary,
and any obligation of the Company or any Company subsidiary to issue, any
capital stock,
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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 Company subsidiary 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 other than the
not more than 500,000 equity put rights of the Company identified on Section
3.2(c) of the Company Disclosure Schedule (the "Equity Put Rights"). There are
no outstanding (A) securities of the Company or any Company subsidiary
convertible into or exchangeable or exercisable for shares of capital stock or
other voting securities in any Company subsidiary, (B) warrants, calls, options
or other rights to acquire from the Company or any Company subsidiary, and any
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.
Neither the Company nor any Company subsidiary is a party to any agreement
restricting the transfer of, relating to the voting of, requiring registration
of, or granting any preemptive or, except as provided by the terms of Company
Stock Options and the Company Rights, antidilutive rights with respect to, any
securities of the type referred to in the two preceding sentences. The Company
has delivered to Parent prior to the execution of this Agreement a complete and
correct copy of the Company Rights Agreement.
(d) Authority; Noncontravention. The Company has all requisite
corporate power and authority to enter into this Agreement and, subject, in the
case of the Merger, to the Company Stockholder Approval (as defined in Section
3.2(1)), 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 by this Agreement have been duly
authorized by all necessary corporate action on the part of the Company,
subject, in the case of the Merger, to the Company Stockholder Approval. This
Agreement has been duly executed and delivered by the Company and, assuming the
due authorization, execution and delivery by Parent and Sub, constitutes the
legal, valid and binding obligation of the Company, enforceable against the
Company in accordance with its terms, except as such enforceability may be
limited by applicable bankruptcy, reorganization, insolvency and similar laws
affecting creditors' rights generally and by general principles of equity
(whether considered at law or in equity). 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,
conflict with, or result in any violation of, or default (with or without
notice or lapse of time, or both) under, or give rise to a right of
termination, cancellation or acceleration of any obligation or loss of a
benefit under, or result in
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the creation of any Lien upon any of the properties or assets of the Company or
any of its subsidiaries under, (i) the certificate of incorporation or by-laws
of the Company or the comparable organizational documents of any of its
Significant Subsidiaries, (ii) any loan or credit agreement, note, bond,
mortgage, indenture, lease or other agreement, instrument, permit, concession,
franchise, license or similar authorization applicable to the Company or any of
its subsidiaries or their respective properties or assets or (iii) subject to
the governmental filings and other matters referred to in the following
sentence, any judgment, injunction, order, decree, statute, law, ordinance,
rule or regulation applicable to the Company or any of its subsidiaries or
their respective properties or assets, other than, in the case of clauses (ii)
and (iii), any such conflicts, violations, defaults, rights, losses or Liens
that individually or in the aggregate would not (x) have a material adverse
effect on the Company or (y) materially impair the ability of the Company to
perform its obligations under this Agreement or prevent the consummation of the
transactions contemplated hereby. No consent, approval, order or authorization
of, action by or in respect of, or registration, declaration or filing with,
any federal, state, local or foreign government, any court, administrative,
regulatory or other governmental agency, commission or authority or any
nongovernmental self-regulatory agency, commission or authority (a
"Governmental Entity") is required by or with respect to the Company or any of
its subsidiaries in connection with the execution and delivery of this
Agreement by the Company or the consummation by the Company of the transactions
contemplated by this Agreement, except for (1) the filing of a pre-merger
notification and report form by the Company under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended (the "HSR Act"); (2) the filing
with the SEC of (A) a joint proxy statement/prospectus relating to the Company
Stockholders Meeting (as defined in Section 5.1(b)) and the Parent Stockholders
Meeting (as defined in Section 5.1(c)) (such proxy statement, as amended or
supplemented from time to time, the "Proxy Statement"), and (B) such reports
under Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), as may be required in connection with this Agreement and
the transactions contemplated by this Agreement; (3) the filing of the
Certificate of Merger with the Secretary of State of Delaware; (4) such filings
with Governmental Entities to satisfy (A) the applicable requirements of the
laws of states in which the Company and its subsidiaries are qualified or
licensed to do business or state securities or "blue sky" laws or (B) any
filing required by foreign Governmental Entities; and (5) such consents,
approvals, orders or authorizations the failure of which to be made or obtained
individually or in the aggregate would not (x) have a material adverse effect
on the Company or (y) materially impair the ability of the Company to perform
its obligations under this Agreement or prevent the consummation of the
transactions contemplated hereby.
(e) SEC Documents; Undisclosed Liabilities. Since January 1,
1995, the Company has filed with the SEC all required reports, schedules,
forms, statements and other documents (including exhibits and all other
information incorporated therein) required to be filed with the SEC (such
documents being referred to herein as
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the "Company SEC Documents"). As of their respective dates, the Company SEC
Documents complied in all material respects with the requirements of the
Securities Act of 1933, as amended (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 Company SEC Documents, and no Company SEC
Document when filed (as amended and restated and as supplemented by
subsequently filed Company SEC Documents) 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 Company SEC Documents complied as to
form, as of their respective dates 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 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 the
consolidated financial position of the Company and its consolidated
subsidiaries as of the dates thereof and the consolidated results of their
operations and cash flows for the periods then ended (subject, in the case of
unaudited statements, to normal recurring year-end audit adjustments). Except
(i) as reflected in such financial statements or in the notes thereto or (ii)
for liabilities incurred in connection with this Agreement or the transactions
contemplated hereby, neither the Company nor any of its subsidiaries has any
liabilities or obligations of any nature which, individually or in the
aggregate, would have a material adverse effect on the Company.
(f) Information Supplied. None of the information supplied or to
be supplied by the Company specifically for inclusion or incorporation by
reference in (i) the registration statement on Form S-4 to be filed with the
SEC by Parent in connection with the issuance of Parent Common Stock in the
Merger or in respect of Company Stock Options pursuant to Section 5.6 (the
"Form S-4") will, at the time the Form S-4 becomes effective under the
Securities Act, contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary to make the
statements therein not misleading or (ii) the Proxy Statement will, at the date
it is first mailed to the Company's or Parent's stockholders or at the time of
the Company Stockholders Meeting or the Parent Stockholders 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. The Proxy Statement will comply as to form in all material
respects with the requirements of the Exchange Act and the rules and
regulations thereunder, except that no representation or warranty is made by
the Company with respect to statements made or incorporated by reference
therein based on information supplied by Parent specifically for inclusion or
incorporation by reference in the Proxy Statement.
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(g) Absence of Certain Changes or Events. Except for liabilities
incurred in connection with this Agreement or the transactions contemplated
hereby and except as permitted by Section 4.1(a), since January 1, 1997, the
Company and its subsidiaries have conducted their business only in the ordinary
course, and there has not been (i) any material adverse change in the Company,
including, but not limited to, any material adverse change arising from or
relating to fraudulent or unauthorized activity, (ii) any declaration, setting
aside or payment of any dividend or other distribution (whether in cash, stock
or property) with respect to any of the Company's capital stock, other than
regular quarterly cash dividends on the Company Common Stock in amounts not in
excess of the quarterly dividend most recently paid on the Company Common Stock
prior to the date of this Agreement, (iii) any split, combination or
reclassification of any of the Company's capital stock or any issuance or the
authorization of any issuance of any other securities in respect of, in lieu of
or in substitution for shares of the Company's capital stock, except for
issuances of Company Common Stock upon the exercise of Company Stock Options
awarded prior to the date hereof in accordance with their present terms, (iv)
(A) any granting by the Company or any of its subsidiaries to any current or
former director, officer or other employee of the Company or its subsidiaries
of any Company Stock Options or any increase in compensation, bonus or other
benefits, (B) any granting by the Company or any of its subsidiaries to any
such current or former director, executive officer or employee of any increase
in severance or termination pay, or (C) any entry by the Company or any of its
subsidiaries into, or any amendment of, any employment, deferred compensation,
consulting, severance, termination or indemnification agreement with any such
current or former director, executive officer or employee, (v) except insofar
as may have been required by a change in GAAP or law or regulation, any
material change in accounting methods, principles or practices by the Company
affecting its assets, liabilities or business, (vi) any material tax election
by the Company or any of its Significant Subsidiaries or any settlement or
compromise of any material income tax liability by the Company or any of its
Significant Subsidiaries, or (vii) any new capital commitment or increase in
existing capital commitments, in excess of $15,000,000, individually or in the
aggregate.
(h) Compliance with Applicable Laws; Litigation. (i) The
Company and its subsidiaries hold all material permits, licenses,
variances, exemptions, orders, registrations and approvals of all
Governmental Entities which are necessary for the lawful operation of
the businesses of the Company and its subsidiaries (the "Company
Permits"), and are not in material default under the Company Permits
or under applicable statutes, laws, ordinances, rules and regulations,
except where the failure to hold such Company Permits or to comply
with such statutes, laws, ordinances, rules or regulations or Company
Permits would not, individually or in the aggregate, have a material
adverse effect on the Company.
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<PAGE> 20
(ii) As of the date of this Agreement, 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 of its subsidiaries or any of their respective
properties, is pending or, to the knowledge (as defined in Section
8.3) of the Company, threatened, other than, in each case, those the
outcome of which individually or in the aggregate would not have a
material adverse effect on the Company or materially impair the
ability of the Company to perform its obligations under this Agreement
or prevent the consummation of the transactions contemplated by this
Agreement.
(iii) Neither the Company nor any of its subsidiaries is
subject to any outstanding order, injunction or decree or is a party
to any written agreement, consent agreement or memorandum of
understanding with, or is a party to any commitment letter or similar
undertaking to, or is subject to any order or directive by, or is a
recipient of any supervisory letter from or has adopted any
resolutions at the request of any Governmental Entity that restricts
the conduct of its business or that in any manner relates to its
management or its business and which would have a material adverse
effect on the Company (each, a "Regulatory Agreement"), and neither
the Company nor any of its subsidiaries has been advised since January
1, 1996 by any Governmental Entity that it is considering issuing or
requesting any such Regulatory Agreement or (B) has knowledge of any
pending or threatened regulatory investigation.
(i) Absence of Changes in Benefit Plans. (i) The Company
has provided to Parent a true and complete list of (i) all severance
and employment agreements of the Company or its subsidiaries with any
current or former employee, officer, agent, independent contractor, or
director, (ii) all severance programs, policies and practices of each
of the Company and each of its subsidiaries, and (iii) all plans or
arrangements of the Company and each of its subsidiaries relating to
its current or former employees, officers, agents, independent
contractors, or directors which contain change in control provisions,
including in all cases any and all amendments entered on or prior to
the date hereof, and (iv) all Company Benefit Plans. For purposes of
this Agreement, "Company Benefit Plan" shall mean collective
bargaining agreement, employment agreement, consulting agreement,
severance agreement or any bonus, pension, post-retirement benefit,
profit sharing, deferred compensation, incentive compensation, stock
ownership, stock purchase, stock option, phantom stock, retirement,
vacation, severance, disability, death benefit, hospitalization,
medical, dental or other plan, arrangement or understanding providing
benefits to any current or former employee, officer, agent,
independent contractor, or director of the Company or any of its
subsidiaries. Since January 1, 1997, there has not been any adoption
or amendment in any respect by the Company or any of its
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<PAGE> 21
subsidiaries of any Company Benefit Plan, nor has there been any
change in any actuarial or other assumptions used to calculate funding
obligations with respect to any Company Benefit Plan, or any change in
the manner in which contributions to any Company Benefit Plan are made
or the basis on which such contributions are determined which,
individually or in the aggregate, would result in a material increase
in the Company's or its subsidiaries' liabilities thereunder.
(ii) All of the Company Stock Options have been granted in
compliance with all of the terms and provisions of the Company Stock
Benefit Plans, any awards made thereunder and all applicable law. The
Company has taken all action necessary to preclude (i) any increase in
the rate of payroll deduction contributions that may be made after the
close of business on November 21, 1997 under the ESPP, (ii) any lump
sum contribution under the ESPP, and (iii) any contribution under the
ESPP after December 31, 1997.
(j) ERISA Compliance. (i) With respect to Company Benefit
Plans, no event has occurred and there exists no condition or set of
circumstances, in connection with which the Company or any of its
subsidiaries could be subject to any liability under the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), the Code
or any other applicable law that individually or in the aggregate
would have a material adverse effect on the Company or any of its
subsidiaries.
(ii) Each Company Benefit Plan has been administered
substantially in accordance with its terms and all the Company Benefit
Plans have been operated, and are in material compliance with the
applicable provisions of ERISA, the Code and all other applicable laws
and the terms of all applicable collective bargaining agreements. The
Internal Revenue Service ("IRS") has issued a favorable determination
letter with respect to the qualification of each qualified Company
Benefit Plan and related trust, and the IRS has not taken any action
to revoke any such letter.
(iii) Neither the Company nor any trade or business, whether
or not incorporated (an "ERISA Affiliate"), which together with the
Company would be deemed a "single employer" within the meaning of
Section 4001(b) of ERISA, has incurred any unsatisfied liability under
Title IV of ERISA in connection with any Company Benefit Plan and no
condition exists that presents a risk to the Company or any ERISA
Affiliate of incurring any such liability (other than liability for
premiums to the Pension Benefit Guaranty Corporation arising in the
ordinary course). No Company Benefit Plan has incurred an
"accumulated funding deficiency" (within the meaning of Section 302 of
ERISA or Section 412 of the Code) whether or not waived.
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<PAGE> 22
(iv) Except as set forth in Section 3.3(j) of the Company
Disclosure Schedule, no Company Benefit Plan (a) is subject to Title
IV of ERISA; (b) is a "multiemployer plan" within the meaning of
Section 3(37) of ERISA; (c) is a "multiple employer plan" within the
meaning of Section 413(c) of the Code; or (d) is or at any time was
funded through a "welfare benefit fund" within the meaning of Section
419(e) of the Code and no benefits under a Company Benefit Plan are or
at any time have been provided through a voluntary employees'
beneficiary association within the meaning of Section 501(c)(9) of the
Code or a supplemental unemployment benefit plan within the meaning of
Section 501(c)(17) of the Code.
(v) Except as set forth in Section 3.2(j) of the Company
Disclosure Schedule and except for the Company's Post-Retirement
Medical Benefit Plan, no Company Benefit Plan provides medical
benefits (whether or not insured), with respect to current or former
employees after retirement or other termination of service (other than
(x) coverage mandated by applicable law or (y) benefits the full cost
of which is borne by the current or former employee).
(vi) Except for the Company's Post-Retirement Medical Benefit
Plan, each Company Benefit Plan which is a welfare benefit plan as
defined in Section 3(1) of ERISA (including any such plan covering
former employees of the Company or any subsidiary of the Company) and
each Company Benefit Plan which is a pension benefit plan as defined
in Section 3(2) of ERISA (including any such plan covering former
employees of the Company or any subsidiary of the Company)may be
amended or terminated by the Company or such subsidiary at any time.
(vii) Except as set forth in Section 3.2(j) of the Company
Disclosure Schedule, neither the Company nor any of its subsidiaries
is a party to any collective bargaining or other labor union contract
applicable to persons employed by the Company or any of its
subsidiaries and no collective bargaining agreement is being
negotiated by the Company or any of its subsidiaries. There is no
labor dispute, strike or work stoppage against the Company or any of
its subsidiaries pending or, to the knowledge of the Company,
threatened which may interfere with the respective business activities
of the Company or any of its subsidiaries.
(viii) All amounts payable under Company Benefit Plans are
deductible for federal income tax purposes. The consummation of the
transactions contemplated by this Agreement will not, either alone or
in combination with another event undertaken by the Company or any of
its subsidiaries prior to the date hereof, (A) entitle any current or
former employee, agent, independent contractor or officer of the
Company or any ERISA Affiliate to
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<PAGE> 23
severance pay, unemployment compensation or any other payment, except
as expressly provided in this Agreement, (B) accelerate the time of
payment or vesting, or increase the amount of compensation due any
such employee, officer, agent or independent contractor (C) constitute
a "change in control" under any Company Benefit Plan, and the Company
and its board of directors have taken all required actions to effect
the foregoing.
(ix) There is no pending or threatened assessment, complaint,
proceeding, or investigation of any kind in any court or government
agency with respect to any Company Benefit Plan (other than routine
claims for benefits).
(k) Taxes. (i) Each of the Company and its subsidiaries
has timely filed (or has had filed on its behalf) all material tax
returns and reports required to be filed by it and all such returns
and reports are believed to be complete and correct in all material
respects, or requests for extensions to file such returns or reports
have been timely filed, granted and have not expired. The Company and
each of its subsidiaries has timely paid (or the Company has paid on
its behalf) all taxes (as defined herein) shown as due on such
returns, and the most recent financial statements contained in Company
Filed SEC Documents reflect an adequate reserve in accordance with
GAAP for all taxes payable by the Company and its subsidiaries for all
taxable periods and portions thereof accrued through the date of such
financial statements.
(ii) No deficiencies for any taxes with respect to which the
Company or any of its subsidiaries has received a notice in writing
have been proposed, asserted or assessed against the Company or any of
its subsidiaries that are not adequately reserved for. The federal
income tax returns of the Company and each of its subsidiaries
consolidated in such returns for tax years through 1989 have closed by
virtue of the applicable statute of limitations.
(iii) Neither the Company nor any of its subsidiaries has
taken any action or knows of any fact, agreement, plan or other
circumstance that is likely to prevent the Merger from qualifying as a
reorganization within the meaning of Section 368(a) of the Code.
(iv) As used in this Agreement, "taxes" shall include all (x)
federal, state, local or foreign income, property, sales, excise and
other taxes or similar governmental charges, including any interest,
penalties or additions with respect thereto, (y) liabilities for the
payment of any amounts of the type described in (x) as a result of
being a member of an affiliated, consolidated, combined or unitary
group, and (z) liabilities for the payment of any amounts as a result
of being party to any tax sharing agreement or as a result of any
18
<PAGE> 24
express or implied obligation to indemnify any other person with
respect to the payment of any amounts of the type described in clause
(x) or (y).
(l) Voting Requirements. Assuming the accuracy of Parent's
representation and warranty contained in Section 3.3(l) (without giving effect
to the knowledge qualification thereof), the affirmative vote at the Company
Stockholders Meeting (the "Company Stockholder Approval") of the holders of the
majority of the outstanding shares of Company Common Stock to adopt this
Agreement is the only vote of the holders of any class or series of the
Company's capital stock necessary to approve and adopt this Agreement and the
transactions contemplated hereby, including the Merger.
(m) State Takeover Statutes. The Board of Directors of the
Company has approved this Agreement and the transactions contemplated hereby
and, assuming the accuracy of Parent's representation and warranty contained in
Section 3.3(l) (without giving effect to the knowledge qualification thereof),
such approval constitutes approval of the Merger and the other transactions
contemplated hereby by the Company Board of Directors under the provisions of
Section 203 of the DGCL such that Section 203 of the DGCL does not apply to
this Agreement and the transactions contemplated hereby. To the knowledge of
the Company, no other state takeover statute is applicable to the Merger or the
other transactions contemplated hereby.
(n) Accounting Matters. The Company has disclosed to its
independent public accountants all actions taken by it or its subsidiaries that
it believes would impact the accounting of the business combination to be
effected by the Merger as a pooling of interests. The Company, based on advice
from its independent public accountants, believes that the Merger will qualify
for "pooling of interests" accounting.
(o) Brokers. Other than Morgan Stanley & Co. Incorporated, a
complete and accurate copy of the engagement letter of which has been provided
to Parent, no broker, investment banker, financial advisor or other person is
entitled to any broker's, financial advisor's or other finder's fee or
commission in connection with the transactions contemplated by this Agreement
based upon arrangements made by or on behalf of the Company.
(p) Ownership of Parent Capital Stock. Except for shares owned by
Company Benefit Plans, as of the date hereof, neither the Company nor, to its
knowledge, any of its affiliates, (i) beneficially owns (as defined in Rule
13d-3 under the Exchange Act), 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 capital stock of Parent or
securities exercisable for or convertible into shares of capital stock of
Parent.
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<PAGE> 25
(q) Certain Contracts. Except for agreements entered into after
the date hereof as permitted pursuant to Section 4.1(a), neither the Company
nor any of its subsidiaries is a party to or bound by (i) any agreement
relating to the incurring of indebtedness (including sale and leaseback and
capitalized lease transactions and other similar financing transactions)
providing for payment or repayment in excess of $20,000,000, (ii) in the
aggregate, any agreements relating to capital commitments in excess of
$15,000,000, (iii) any agreement involving annual payments in excess of
$5,000,000 with "change of control" or "event risk" provisions relating to the
Company, (iv) any "material contract" (as such term is defined in Item
601(b)(10) of Regulation S-K of the SEC), or (v) any non-competition agreement
or any other agreement or obligation which purports to limit in any material
respect the manner in which, or the localities in which, all or any substantial
portion of the business of the Company and its subsidiaries, taken as a whole,
is or is presently expected to be conducted (the agreements, contracts and
obligations specified above, collectively the "Company Material Contracts").
(r) Company Rights Agreement. The Company has taken all action
(including, if required, amending or terminating the Company Rights Agreement)
so that the entering into of this Agreement and the consummation of the
transactions contemplated hereby do not and will not enable or require the
Company Rights to be exercised or distributed.
(s) Environmental Liability. There are no legal, administrative,
arbitral or other proceedings, claims, actions, causes of action, private
environmental investigations or remediation activities or governmental
investigations of any nature seeking to impose on the Company or any of its
subsidiaries, or that could be expected to result in the imposition on the
Company or any of its subsidiaries of, any liability or obligation arising
under applicable common law standards relating to pollution or protection of
the environment, human health or safety, or under any local, state or federal
environmental statute, regulation, ordinance, decree, judgment or order
relating to pollution or protection of the environment including, without
limitation, the Comprehensive Environmental Response, Compensation, and
Liability Act of 1980, as amended (collectively, the "Environmental Laws"),
pending or, to the knowledge of the Company, threatened, against the Company or
any of its subsidiaries, with such exceptions as would not, individually or in
the aggregate, reasonably be expected to have a material adverse effect on the
Company. Each of the Company and each of its subsidiaries is, and each former
subsidiary of the Company was, for so long as such subsidiary was a subsidiary
of the Company, in compliance with all Environmental Laws and has or at such
time had all permits required under Environmental Laws, with such exceptions as
would not, individually or in the aggregate, reasonably be expected to have a
material adverse effect on the Company and there is no reasonable basis for any
proceeding, claim, action or governmental investigation under any Environmental
Law that would impose any liability or obligation on the Company or its
subsidiaries based on any failure to have,
20
<PAGE> 26
obtain or comply with such permits, with such exceptions as would not
individually or in the aggregate reasonably be expected to have a material
adverse effect on the Company. Neither the Company nor any of its subsidiaries
is subject to any agreement (including any indemnification agreement), order,
judgment, decree, letter or memorandum by or with any court, governmental
authority, regulatory agency or third party imposing any material liability or
obligation pursuant to or under any Environmental Law that would, individually
or in the aggregate, reasonably be expected to have a material adverse effect
on the Company.
(t) Derivative Transactions. (i) All Derivative
Transactions (as defined below) entered into by the Company or any of
its subsidiaries that are currently open were entered into in material
compliance with applicable rules, regulations and policies of any
regulatory authority.
(ii) For purposes of this Section 3.2(t), "Derivative
Transactions" means derivative transactions within the coverage of
FASB 80, including any swap transaction, option, warrant, forward
purchase or sale transaction, futures transaction, cap transaction,
floor transaction or collar transaction relating to one or more
currencies, commodities, bonds, equity securities, loans, interest
rates, credit-related events or conditions or any indexes, or any
other similar transaction (including any option with respect to any of
these transactions) or combination of any of these transactions,
including collateralized mortgage obligations or other similar
instruments or any debt or equity instruments evidencing or embedding
any such types of transactions, and any related credit support,
collateral, transportation or other similar arrangements or agreements
related to such transactions.
(iii) The Company believes that it and its subsidiaries and
their respective businesses employ investment, commodities, risk
management and other policies, practices and procedures which are
prudent and reasonable in the context of such businesses; provided,
however, that the Company makes no representations or warranties
regarding the policies, practices or procedures described in Section
3.2(t) of the Parent Disclosure Schedule, and provided, further, that
the representation made in this sentence shall not be applicable to
its employment of such policies, practices and procedures. The
Company believes that it has adequate systems for maintaining and
monitoring compliance with the covenants described in Section
4.1(a)(viii).
(u) Condition of Assets. All of the material property, plant and
equipment of the Company and its subsidiaries (the "Company PP&E"), has in all
material respects been maintained in reasonable operating condition and repair,
ordinary wear and tear excepted, and is in all material respects, sufficient to
permit the Company and its subsidiaries to conduct their operations in the
ordinary course of business in a manner consistent with their past practices in
all material respects.
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<PAGE> 27
(v) Fairness Opinion. The Board of Directors of the Company has
received the opinion of Morgan Stanley & Co. Incorporated, the company's
financial advisor, to the effect that the Exchange Ratio is fair to the holders
of the Company Common Stock (other than Parent and its affiliates) from a
financial point of view.
SECTION 3.3 Representations and Warranties of Parent and Sub. Subject
to Section 3.1 and except as disclosed in the Parent SEC Documents (as defined
in Section 3.3(e)) filed prior to the date hereof (the "Parent Filed SEC
Documents") or as set forth on the Parent Disclosure Schedule (it being
acknowledged that any items disclosed in any subsection in the Parent
Disclosure Schedule shall be also deemed disclosed in, and only in, any other
subsections thereof in which the disclosure of such item would reasonably be
considered responsive) (regardless of whether the relevant subsection of this
Agreement refers to the Parent Disclosure Schedule or the Parent SEC Filed
Documents), Parent and Sub represent and warrant to the Company as follows:
(a) Organization, Standing and Corporate Power. (i) Each of
Parent and its subsidiaries (including Sub) is a corporation or other
legal entity duly organized, validly existing and in good standing
(with respect to jurisdictions which 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, as to
subsidiaries, for those jurisdictions where the failure to be duly
organized, validly existing and in good standing individually or in
the aggregate would not have a material adverse effect on Parent.
Each of Parent and its subsidiaries is duly qualified or licensed to
do business and is in good standing (with respect to jurisdictions
which 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
have a material adverse effect on Parent.
(ii) Parent has made available to the Company prior to the
execution of this Agreement complete and correct copies of its
Restated Certificate of Incorporation and By-laws, as amended to date.
(iii) Sub was formed solely for the purpose of engaging in
the transactions contemplated by this Agreement and is engaged in no
business other than incidental to its creation and the transactions
contemplated by this Agreement.
(b) Subsidiaries. (i) Exhibit 21 to Parent's Annual
Report on Form 10-K for the fiscal year ended December 31, 1996
includes all the
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<PAGE> 28
subsidiaries of Parent which as of the date of this Agreement are
Significant Subsidiaries. All the outstanding shares of capital stock
of, or other equity interests in, each such Significant Subsidiary
have been validly issued and are fully paid and nonassessable; are
owned directly or indirectly by Parent, free and clear of all Liens;
and are free of any other restriction on the right to vote, sell or
otherwise dispose of such capital stock or other ownership interests
that would prevent the operation by Parent of such Significant
Subsidiary's business as currently conducted.
(ii) Parent has made available to the Company prior to the
execution of this Agreement complete and correct copies of the
certificates of incorporation and by-laws or similar organizational
documents of each of its Significant Subsidiaries, as amended to
date.
(c) Capital Structure. The authorized capital stock of Parent
consists of 480,000,000 shares of Parent Common Stock and 30,000,000 shares of
preferred stock, par value $1.00 per share, of Parent (the "Parent Authorized
Preferred Stock"), of which 2,500,000 shares have been designated as $3.50
Cumulative Convertible Preferred Stock (the "Parent Convertible Preferred
Stock") and 1,200,000 shares have been designated as Series A Junior
Participating Preferred Stock (the "Parent Junior Preferred Stock"). At the
close of business on November 20, 1997, and without giving effect to
adjustments that will be required in connection with the Stock Split: (i)
159,915,778 shares of Parent Common Stock were issued and outstanding; (ii)
3,707,685 shares of Parent Common Stock were issued and held by Parent in its
treasury or by subsidiaries of Parent; (iii) 2,499,372 shares of Parent
Convertible Preferred Stock were issued and outstanding; (iv) no shares of
Parent Junior Preferred Stock were issued and outstanding; (v) 5,859,052 shares
of Parent Common Stock were reserved for issuance upon conversion of the Parent
Convertible Preferred Stock; (vi) 13,995,990 shares of Parent Common Stock were
reserved for issuance upon conversion of Parent's 6% Convertible Subordinated
Debentures, Due 2005 (the "Parent Convertible Debentures" and, together with
the Parent Convertible Preferred Stock, the "Parent Convertible Securities");
(vii) 11,305,720 shares of Parent Common Stock reserved for issuance upon
exercise of warrants (the "Parent Warrants"); (viii) 23,570,792 shares were
reserved for issuance pursuant to the stock-based plans identified in Section
3.3(c) of the Parent Disclosure Schedule (such plans, collectively, the "Parent
Stock Plans"), of which 12,912,597 shares are subject to outstanding employee
or director stock options, deferred stock awards or other rights to purchase or
receive Parent Common Stock granted under the Parent Stock Plans (collectively,
"Parent Stock Options"); and (viii) other than as set forth above, no other
shares of Parent Authorized Preferred Stock have been designated or issued.
All outstanding shares of capital stock of Parent are, and all shares thereof
which may be issued pursuant to this Agreement or otherwise will be, when
issued, duly authorized, validly issued, fully paid and nonassessable and not
subject to preemptive rights. Except as set forth in this Section 3.3(c),
except for the declaration by
23
<PAGE> 29
Parent's Board of the Stock Dividend and except for changes since November 20,
1997 resulting from the issuance of shares of Parent Common Stock pursuant to
the Parent Stock Plans, upon exercise of Parent Employee Stock Options or
Parent Warrants or upon conversion of Parent Convertible Securities and other
rights referred to in this Section 3.3(c), (x) there are not issued, reserved
for issuance or outstanding (A) any shares of capital stock or other voting
securities of Parent, (B) any securities of Parent or any Parent subsidiary
convertible into or exchangeable or exercisable for shares of capital stock or
voting securities of Parent, (C) any warrants, calls, options or other rights
to acquire from Parent or any Parent subsidiary, and any obligation of Parent
or any Parent subsidiary to issue, any capital stock, voting securities or
securities convertible into or exchangeable or exercisable for capital stock or
voting securities of Parent, and (y) there are no outstanding obligations of
Parent or any Parent subsidiary 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. As of the date hereof, there are no outstanding
(A) securities of Parent or any Parent subsidiary convertible into or
exchangeable or exercisable for shares of capital stock or other voting
securities in any Parent subsidiary, (B) warrants, calls, options or other
rights to acquire from Parent or any Parent subsidiary, and any obligation of
Parent or any Parent 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 Parent subsidiary or (C) obligations of Parent or
any Parent subsidiary to repurchase, redeem or otherwise acquire any such
outstanding securities of Parent subsidiaries or to issue, deliver or sell, or
cause to be issued, delivered or sold, any such securities. Neither Parent nor
any Parent subsidiary is a party to any agreement restricting the transfer of,
relating to the voting of, requiring registration of, or granting any
preemptive or, except as provided by the terms of the Parent Rights, Parent
Stock Plans, the Parent Stock Options, the Parent Warrants and the Parent
Convertible Securities, antidilutive rights with respect to, any securities of
the type referred to in the two preceding sentences.
(d) Authority; Noncontravention. Parent and Sub each has all
requisite corporate power and authority to enter into this Agreement and ,
subject to the Parent Stockholder Approval, to consummate the transactions
contemplated by this Agreement. The execution and delivery of this Agreement
by each of Parent and Sub and the consummation by each of Parent and Sub of the
transactions contemplated by this Agreement have been duly authorized by all
necessary corporate action on the part of Parent and Sub, subject to the Parent
Stockholder Approval. This Agreement has been duly executed and delivered by
each of Parent and Sub and, assuming the due authorization, execution and
delivery by the Company, constitutes the legal, valid and binding obligation of
each of Parent and Sub, enforceable against each of Parent and Sub in
accordance with its terms, except as such enforceability may be limited by
applicable bankruptcy, reorganization, insolvency and similar laws affecting
creditors' rights generally and by general principles of equity (whether
considered at law or in
24
<PAGE> 30
equity). The execution and delivery of this Agreement does not, and the
consummation of the transactions contemplated by this Agreement and compliance
with the provisions of this Agreement will not, conflict with, or result in any
violation of, or default (with or without notice or lapse of time, or both)
under, or give rise to a right of termination, cancellation 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 any of its subsidiaries
(including Sub) under, (i) the Restated Certificate of Incorporation, as
amended, or By-laws of Parent or the comparable organizational documents of any
of its Significant Subsidiaries (including Sub), (ii) 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 any of its subsidiaries (including Sub) or their
respective properties or assets or (iii) subject to the governmental filings
and other matters referred to in the following sentence, any judgment, order,
decree, statute, law, ordinance, rule or regulation applicable to Parent or any
of its subsidiaries (including Sub) or their respective properties or assets,
other than, in the case of clauses (ii) and (iii), any such conflicts,
violations, defaults, rights, losses or Liens that individually or in the
aggregate would not (x) have a material adverse effect on Parent or (y)
materially impair the ability of Parent to perform its obligations under this
Agreement or prevent consummation of any of the transactions contemplated
hereby. 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 or with respect to Parent or any of its subsidiaries
(including Sub) in connection with the execution and delivery of this Agreement
by each of Parent or Sub or the consummation by Parent and Sub of the
transactions contemplated by this Agreement, except for (1) the filing of a
pre-merger notification and report form by Parent under the HSR Act; (2) the
filing with the SEC of (A) the Form S-4 and the Proxy Statement or (B) such
reports under Section 13(a) or 15(d) of the Exchange Act as may be required in
connection with this Agreement and the transactions contemplated by this
Agreement; (3) the filing of the Certificate of Merger with the Secretary of
State of Delaware; (4) such filings with Governmental Entities to satisfy (A)
the applicable requirements of the laws of states in which Parent and its
subsidiaries are qualified or licensed to do business or state securities or
"blue sky" laws or (B) any filings required by foreign governmental entities;
(5) such filings with and approvals of the NYSE and the Pacific Stock Exchange
(the "PSE") to permit the shares of Parent Common Stock to be issued in the
Merger or in respect of the Company Stock Plans pursuant to Section 5.6 to be
listed on the NYSE and the PSE; and (6) such consents, approvals, orders or
authorizations the failure of which to be made or obtained individually or in
the aggregate would not (x) have a material adverse effect on Parent or (y)
materially impair the ability of Parent to perform its obligations under this
Agreement or prevent the consummation of any of the transactions contemplated
hereby.
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(e) SEC Documents; Undisclosed Liabilities. Since January 1,
1995, Parent has filed with the SEC all reports, schedules, forms, statements
and other documents (including exhibits and all other information incorporated
therein) required to be filed with the SEC (the "Parent SEC Documents"). As of
their respective dates, the Parent 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 Parent SEC Documents, and none of the Parent SEC
Documents when filed (as amended and restated and as supplemented by
subsequently filed Parent SEC Documents) 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 Parent included in the Parent SEC Documents complied as to form,
as of their respective dates 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 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 the consolidated
financial position of Parent and its consolidated subsidiaries as of the dates
thereof and the consolidated results of their operations and cash flows for the
periods then ended (subject, in the case of unaudited statements, to normal
recurring year-end audit adjustments). Except (i) as reflected in such
financial statements or in the notes thereto or (ii) for liabilities incurred
in connection with this Agreement or the transactions contemplated hereby,
neither Parent nor any of its subsidiaries has any liabilities or obligations
of any nature which, individually or in the aggregate, would have a material
adverse effect on Parent.
(f) Information Supplied. None of the information supplied or to
be supplied by Parent specifically for inclusion or incorporation by reference
in (i) the Form S-4 will, at the time the Form S-4 becomes effective under the
Securities Act, contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary to make the
statements therein not misleading or (ii) the Proxy Statement will, at the date
it is first mailed to the Company's or Parent's stockholders or at the time of
the Company Stockholders Meeting or the Parent Stockholders 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. The Form S-4 and the Proxy Statement will comply as to form in all
material respects with the requirements of the Securities Act and the Exchange
Act and the rules and regulations thereunder, except that no representation or
warranty is made by Parent with respect to statements made or incorporated by
reference therein based on information supplied by the Company specifically for
inclusion or incorporation by reference in the Form S-4 or the Proxy Statement.
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(g) Absence of Certain Changes or Events. Except for liabilities
incurred in connection with this Agreement or the transactions contemplated
hereby and except as permitted by Section 4.1(b), since January 1, 1997, Parent
and its subsidiaries have conducted their business only in the ordinary course,
and there has not been (i) any material adverse change in Parent, including,
but not limited to, any material adverse change arising from or relating to
fraudulent or unauthorized activity, (ii) any declaration, setting aside or
payment of any dividend or other distribution (whether in cash, stock or
property) with respect to any of Parent's capital stock, other than regular
quarterly cash dividends on the Parent Common Stock and dividends payable on
Parent's preferred stock in accordance with their terms, (iii)) except insofar
as may have been required by a change in GAAP or law or regulation, any
material change in accounting methods, principles or practices by Parent
affecting its assets, liabilities or business or (iv) any material tax election
by Parent or any of its Significant Subsidiaries or any settlement or
compromise of any material income tax liability by Parent or any of its
Significant Subsidiaries.
(h) Compliance with Applicable Laws; Litigation. (i)
Parent and its subsidiaries hold all material permits, licenses,
variances, exemptions, orders, registrations and approvals of all
Governmental Entities which are necessary for the lawful operation of
the businesses of Parent and its subsidiaries (the "Parent Permits"),
and are not in material default under the Parent Permits or under
applicable statutes, laws, ordinances, rules and regulations, except
where the failure to hold such Parent Permits or to comply with such
statutes, laws, ordinances, rules or regulations or Parent Permits
would not, individually or in the aggregate, have a material adverse
effect on Parent.
(ii) As of the date of this Agreement, 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
Parent or any of its subsidiaries or any of their respective
properties, is pending or, to the knowledge of Parent, threatened,
other than, in each case, those the outcome of which individually or
in the aggregate would not have a material adverse effect on Parent or
materially impair the ability of Parent to perform its obligations
under this Agreement or prevent the consummation of the transactions
contemplated by this Agreement.
(i) Taxes. (i) Each of Parent and its subsidiaries has
filed (or has had filed on its behalf) all material tax returns and
reports required to be filed by it and all such returns and reports
are believed to be complete and correct in all material respects, or
requests for extensions to file such returns or reports have been
timely filed, granted and have not expired. Parent and each of its
subsidiaries has paid (or Parent has paid on its behalf) all taxes
shown as due on such returns, and the most recent financial statements
contained in the
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Parent Filed SEC Documents reflect an adequate reserve in accordance
with GAAP for all taxes payable by Parent and its subsidiaries for all
taxable periods and portions thereof accrued through the date of such
financial statements.
(ii) No deficiencies for any taxes with respect to which
Parent or any of its subsidiaries has received a notice in writing
have been proposed, asserted or assessed against Parent or any of its
subsidiaries that are not adequately reserved for. The federal income
tax returns of Parent and each of its subsidiaries consolidated in
such returns for tax years through 1991 have closed by virtue of the
applicable statute of limitations, except as set forth on Schedule
3.3(i).
(iii) Neither Parent nor any of its subsidiaries has taken
any action or knows of any fact, agreement, plan or other circumstance
that is likely to prevent the Merger from qualifying as a
reorganization within the meaning of Section 368(a) of the Code.
(j) Accounting Matters. Parent has disclosed to its independent
public accountants all actions taken by it or its subsidiaries that it believes
would impact the accounting of the business combination to be effected by the
Merger as a pooling of interests. Parent, based on advice from its independent
public accountants, believes that the Merger will qualify for "pooling of
interest" accounting.
(k) Brokers. Other than Smith Barney Inc., no broker, investment
banker, financial advisor or other person is entitled to any broker's,
finder's, financial advisor's or other finder's fee or commission in connection
with the transactions contemplated by this Agreement based upon arrangements
made by or on behalf of Parent.
(l) Ownership of Company Capital Stock. Except for shares owned
by Parent's employee benefit plans or as otherwise disclosed in the Parent SEC
Documents, as of the date hereof, neither Parent nor, to its knowledge without
independent investigation, any of its affiliates, (i) beneficially owns (as
defined in Rule 13d-3 under the Exchange Act), 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 capital
stock of the Company or securities exercisable or exchangeable for or
convertible into shares of capital stock of the Company.
(m) Voting Requirements. The affirmative vote at the Parent
Stockholders Meeting (the "Parent Stockholder Approval") (i) of the holders of
the majority of the outstanding shares of Parent Common Stock to approve the
Charter Amendment Proposal and (ii) of the holders of a majority of the shares
of Parent Common Stock
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present at the Parent Stockholders Meeting and entitled to vote to approve the
issuance of shares of Parent Common Stock issuable pursuant to the Merger or in
respect of Company Stock Options as provided for in Section 5.6 are the only
votes of the holders of any class or series of Parent's capital stock necessary
to approve the transactions contemplated by this Agreement.
(n) Parent Benefit Plans. (i) Parent has provided to the
Company a true and complete list of each Parent Benefit Plan relating
to Parent's current employees or officers. For purposes of this
Agreement, "Parent Benefit Plan" shall mean any plan described in
Section 3(3) of ERISA providing benefits to any current employee or
officer of Parent or any of its wholly owned subsidiaries.
(ii) No Parent Stock Options will become exercisable as a
result of the execution and delivery of this Agreement or the
consummation of the transactions contemplated hereby, except for
options outstanding under Parent's 1996 Stock Plan on not more than
190,000 shares of Parent Common Stock.
(iii) The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby will not, either
alone or in combination with another event undertaken by Parent or any
of its subsidiaries prior to the date hereof, (A) entitle any current
or former employee, agent, independent contractor or officer of Parent
or any ERISA Parent Affiliate to severance pay, unemployment
compensation or any other payment, except as expressly provided in
this Agreement, (B) accelerate the time of payment or vesting, or
increase the amount of compensation due any such employee, officer,
agent or independent contractor, or (C) constitute a "change in
control" under any Parent Benefit Plan, and Parent and its board of
directors have taken all required actions to effect the foregoing.
(o) ERISA Compliance. (i) With respect to Parent Benefit
Plans, no event has occurred and, to the knowledge of Parent, there
exists no condition or set of circumstances in connection with which
Parent could be subject to any liability under ERISA, the Code or any
other applicable law that individually or in the aggregate would have
a material adverse effect on Parent.
(ii) To the knowledge of Parent, all the Parent Benefit Plans
have been operated in accordance with, and are in material compliance
with, the applicable provisions of ERISA, the Code and all other
applicable laws.
(iii) Neither Parent nor any trade or business, whether or
not incorporated (an "ERISA Parent Affiliate"), which together with
Parent would
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be deemed a "single employer" within the meaning of Section 4001(b) of
ERISA, has incurred any unsatisfied liability under Title IV of ERISA
in connection with any Parent Benefit Plan and currently no condition
exists that presents a risk to Parent or any ERISA Parent Affiliate of
incurring any such liability (other than liability for premiums to the
Pension Benefit Guaranty Corporation arising in the ordinary course).
No Parent Benefit Plan has incurred an "accumulated funding
deficiency" (within the meaning of Section 302 of ERISA or Section 412
of the Code) whether or not waived.
(iv) The Parent Benefit Plans which are administered by
Parent or by a ERISA Parent Affiliate have been operated in
substantial compliance with plan documents.
(v) There is no labor dispute, strike or work stoppage
against Parent or any of its subsidiaries pending or, to the knowledge
of Parent, threatened which may interfere with the respective business
activities of Parent or any of its subsidiaries.
ARTICLE IV
COVENANTS RELATING TO CONDUCT OF BUSINESS
SECTION 4.1 (a) Conduct of Business by the Company. Except
as set forth in Section 4.1(a) of the Company Disclosure Schedule or the
Company Filed SEC Documents, as otherwise expressly contemplated by this
Agreement or as consented to by Parent in writing, such consent not to be
unreasonably withheld or delayed, during the period from the date of this
Agreement to the Effective Time, the Company shall, and shall cause its
subsidiaries to, carry on their respective businesses in the ordinary course
consistent with past practice and in compliance in all material respects with
all applicable laws and regulations and, to the extent consistent therewith,
use reasonable efforts to preserve intact their current business organizations,
use reasonable efforts to keep available the services of their current officers
and other employees and use reasonable efforts to preserve their relationships
with those persons having business dealings with them . Without limiting the
generality of the foregoing (but subject to the above exceptions), during the
period from the date of this Agreement to the Effective Time, the Company shall
not, and shall not permit any of its subsidiaries to:
(i) other than dividends and distributions by a direct or
indirect wholly owned subsidiary of the Company to its parent, or
regularly scheduled dividends by a subsidiary that is partially owned
by the Company or any of its subsidiaries, provided that the Company
or any such subsidiary receives or is to receive its proportionate
share thereof, (x) declare, set aside or pay any
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dividends on, make any other distributions in respect of, or enter
into any agreement with respect to the voting of, any of its capital
stock (except for regular quarterly cash dividends on Company Common
Stock at a rate not in excess of the amount per share paid in the
Company's last dividend paid before the date hereof), (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
Company Common Stock upon the exercise of Company Stock Options that
are, in each case, outstanding as of the date hereof in accordance
with their present terms, or (z) purchase, redeem or otherwise acquire
any shares of capital stock of the Company or any of its subsidiaries
or any other securities thereof or any rights, warrants or options to
acquire any such shares or other securities other than pursuant to
Equity Put Rights disclosed in Section 3.2(c) and for withholding
under Company Benefit Plans;
(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 Company Common
Stock upon the exercise of Company Stock Options that are, in each
case, outstanding as of the date hereof in accordance with their
present terms);
(iii) in the case of the Company or any of its Significant
Subsidiaries, amend its certificate of incorporation, by-laws or other
comparable organizational documents or amend the Company Rights
Agreement;
(iv) acquire any business (whether by merger, consolidation,
purchase of assets or otherwise) or acquire any equity interest in any
person not an affiliate (whether through a purchase of stock,
establishment of a joint venture or otherwise) which, together with
all such acquisitions, involves the payment of consideration having a
value in excess of $100,000,000;
(v) sell, lease, joint venture, license, mortgage or
otherwise encumber or subject to any Lien or otherwise dispose of any
of its properties or assets that is material in relation to the
Company and its subsidiaries, taken as a whole (including
securitizations), other than the sale of inventory in the ordinary
course of business and except in connection with borrowings under
existing credit facilities or lines of credit in accordance with the
terms of such facilities or lines as of the date hereof;
(vi) except for borrowings under existing credit facilities
or lines of credit, incur any indebtedness for borrowed money or issue
any debt securities or assume, guarantee or endorse, or otherwise
become responsible for the
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obligations of any person, or make any loans, advances or capital
contributions to, any person other than its wholly owned subsidiaries,
except in the ordinary course of business consistent with past
practice or except as attributable to the execution of this Agreement
and the transactions contemplated hereby;
(vii) change its methods of accounting (or underlying
assumptions) in effect at December 31, 1996, except as required by
changes in GAAP or law or regulation or as discussed in the Company
Filed SEC Documents, or change any of its methods of reporting income
and deductions for federal income tax purposes from those employed in
the preparation of the federal income tax returns of the Company for
the taxable years ending December 31, 1996, except as required by
changes in law or regulation;
(viii) fail to observe the provisions set forth in Section
3.2(t) of the Parent Disclosure Schedule;
(ix) create, renew, amend, terminate or cancel, or take any
other action that could reasonably be expected to result in the
creation, renewal, amendment, termination or cancellation of any
Company Material Contract in a manner which would be reasonably be
expected to be materially adverse to the Company;
(x) enter into any new capital commitments or increase any
existing capital commitments in an aggregate amount in excess of
$15,000,000; provided, however, that in no event will the Company
enter into capital expenditure commitments with respect to the three
matters identified by an asterisk on the attachment described in Item
15 of Section 3.2(g) of the Company Disclosure Schedule without having
first consulted with Parent as to such capital expenditures;
(xi) (A) grant Company Stock Options, (B) grant to any
current or former director, executive officer or other key employee of
the Company or its subsidiaries any increase in compensation, bonus or
other benefits (other than increases in base salary in the ordinary
course of business consistent with past practice or arising due to a
promotion or other change in status and consistent with generally
applicable compensation practices), (C) grant to any such current or
former director, executive officer or other employee any increase in
severance or termination pay, (D) amend or adopt any employment,
deferred compensation, consulting, severance, termination or
indemnification agreement with any such current or former director,
executive officer or employee, or (E) amend, adopt or terminate any
Company Benefit Plan, except as may be required to retain
qualification of any such plan under Section 401(a) of the Code;
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(xii) except (A) pursuant to agreements or arrangements in
effect on the date hereof which have been disclosed in Section 4.1(a)
of the Company Disclosure Schedule, or (B) for dividends paid in
accordance with Section 4.1(a)(i), pay, loan or advance any amount to,
or sell, transfer or lease any properties or assets (real, personal or
mixed, tangible or intangible) to, or purchase any properties or
assets, or enter into any agreement or arrangement with, any of its
officers or directors or any affiliate or the immediate family members
or associates of any of its officers or directors, other than payment
of compensation at current salary, incentive compensation and bonuses
and other than properly authorized business expenses in the ordinary
course of business, in each case consistent with past practice; or
(xiii) authorize, or commit or agree to take, any of the
foregoing actions;
provided, that the limitations set forth in this Section 4.1(a) (other than
Section 4.1(a)(iii)) shall not apply to any transaction between the Company and
any wholly owned subsidiary or between any wholly owned subsidiaries of the
Company.
(b) Conduct of Business by Parent. Except as set forth in
the Parent Disclosure Schedule or the Parent SEC Filed Documents, as otherwise
expressly contemplated by this Agreement or as consented to by the Company in
writing, such consent not to be unreasonably withheld or delayed, during the
period from the date of this Agreement to the Effective Time, Parent shall not,
and shall not permit any of its subsidiaries to:
(i) other than dividends and distributions by a direct or
indirect wholly owned subsidiary of the Company to its parent, or
regularly scheduled dividends by a subsidiary that is partially owned
by Parent or any of its subsidiaries, provided that Parent or any such
subsidiary receives or is to receive its proportionate share thereof,
(x) declare, set aside or pay any dividends on, make any other
distributions in respect of, or enter into any agreement with respect
to the voting of, any of its capital stock (except for regular
quarterly cash dividends on Parent Common Stock at a rate per share
not in excess of $.30, in the case of any dividend to be paid with a
record date on or prior to the date of completion of the Stock
Dividend, or $.15, in the case of any dividend with a record date
thereafter, and regular dividend payments on the Parent Authorized
Preferred Stock, including any preferred stock issued in accordance
with Section 4.1(b)(ii), in each case in accordance with its terms),
(y) split, combine or reclassify any of its capital stock or 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) or issue or authorize the issuance of any
other securities in respect of any thereof, in lieu of any thereof or
in substitution for any thereof (other
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than (A) issuances of Parent Common Stock upon the exercise of Parent
Stock Options that are, in each case, (1) outstanding as of the date
hereof in accordance with their present terms, or (2) issued in
accordance with the terms of any Parent Benefit Plan in a manner
generally consistent with past practices, (B) issuances of Parent
Common Stock upon conversion of Parent Convertible Securities, (C)
issuances of Parent Common Stock upon exercise of Parent Warrants or
(D) issuances of Parent Common Stock pursuant to the Stock Dividend)
or (z) purchase, redeem or otherwise acquire for greater than fair
value any shares of capital stock of Parent or any of its subsidiaries
or any other securities thereof or any rights, warrants or options to
acquire any such shares or other securities, except in accordance with
the terms of existing obligations of Parent or any of its
subsidiaries;
(ii) issue, deliver or sell 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 (A) issuances of
Parent Common Stock permitted pursuant to Section 4.2(b)(i), (B)
issuances of securities for fair value, (C) issuances of securities in
connection with the acquisition of businesses in the energy or
communications industries, or (D) issuances of Parent Common Stock in
an amount aggregating not more than 5% of the number of presently
outstanding shares of Parent Common Stock in connection with
acquisitions of businesses in industries other than the energy or
communications industries);
(iii) in the case of Parent or any of its Significant
Subsidiaries, amend its certificate of incorporation, by-laws or other
comparable organizational documents or the Parent Rights Agreement, in
each case in a manner adverse to the Company; or
(iv) authorize, or commit or agree to take, any of the
foregoing actions;
provided, that the limitations set forth in this Section 4.1(b) (other than
Section 4.2(b)(iii)) shall not apply to any transaction between Parent and any
wholly owned subsidiary or between any wholly owned subsidiaries of Parent.
(c) Certain Payments. Before December 31, 1997, the Company shall
pay to each executive identified on Section 4.1(c) of the Company Disclosure
Schedule the payments provided for in the agreements and plans identified in
such Section in the amounts and on or before the dates indicated, and shall
obtain receipts from each such executive for such payments.
(d) Other Actions. Except as required by law or as permitted by
this Agreement, the Company and Parent shall not, and shall not permit any of
their respective subsidiaries to, voluntarily take any action that would, or
that could
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reasonably be expected to, result in (i) any of the representations and
warranties of such party set forth in this Agreement that are qualified as to
materiality becoming untrue at the Effective Time, (ii) any of such
representations and warranties that are not so qualified becoming untrue in any
material respect at the Effective Time, or (iii) any of the conditions to the
Merger set forth in Article VI not being satisfied.
(e) Advice of Changes. The Company and Parent shall promptly
advise the other party orally and in writing to the extent it has knowledge of
(i) any representation or warranty made by it contained in this Agreement that
is qualified as to materiality becoming untrue or inaccurate in any respect or
any such representation or warranty that is not so qualified becoming untrue or
inaccurate in any material respect, (ii) the failure by it to comply in any
material respect with or satisfy in any material respect any covenant,
condition or agreement to be complied with or satisfied by it under this
Agreement, (iii) any actual or, to the knowledge of the Company, threatened
disputes involving an amount in excess of $15,000,000 with any customer,
supplier, joint carrier or service provider, and (iv) any change or event
having, or which, insofar as can reasonably be foreseen, could 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 VI to be satisfied; provided, however, that no
such notification shall 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; and provided, further,
that no such notice shall be deemed an admission by the disclosing party that
such item represents a material exception or fact, event or circumstance or
that such item constitutes or is reasonably likely to result in a material
adverse effect or material adverse change.
SECTION 4.2 No Solicitation by the Company. (a) The Company
shall not, nor shall it permit any of its subsidiaries to, nor shall it
authorize or permit any of its directors, officers or employees or any
investment banker, financial advisor, attorney, accountant or other
representative retained by it or any of its subsidiaries to, directly or
indirectly through another person, (i) solicit, initiate or encourage
(including by way of furnishing nonpublic information), or take any other
action designed to facilitate, any inquiries or the making of any proposal
which constitutes a Company Takeover Proposal (as defined below) or (ii)
participate in any substantive discussions or negotiations regarding any
Company Takeover Proposal; provided, however, that if and to the extent that,
at any time prior to the time of the adoption of this Agreement by the
Company's stockholders at the Company Stockholder Meeting, the Board of
Directors of the Company determines in good faith, after consultation with
outside counsel, that its failure to do so could reasonably be expected to
result in a breach of its fiduciary duties to the Company's stockholders under
applicable law, the Company may, in response to any Company Takeover Proposal
which was not solicited by it and which did not otherwise result from a breach
of this Section 4.2(a), (x) furnish information with respect to the Company and
its subsidiaries to any person
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making a Company Takeover Proposal pursuant to a customary confidentiality
agreement (as determined by the Company based on the advice of its outside
counsel) and (y) participate in discussions or negotiations regarding such
Company Takeover Proposal. For purposes of this Agreement, "Company Takeover
Proposal" means any inquiry, proposal or offer from any person relating to any
direct or indirect acquisition or purchase of a business that constitutes 30%
or more of the net revenues, net income or assets of the Company and its
subsidiaries, taken as a whole, or 30% or more of any class of equity
securities of the Company, any tender offer or exchange offer that if
consummated would result in any person beneficially owning 30% or more of any
class of any equity securities of the Company, or any merger, consolidation,
business combination, recapitalization, liquidation, dissolution or similar
transaction involving the Company (or any Company subsidiary whose business
constitutes 30% or more of the net revenues, net income or assets of the
Company and its subsidiaries, taken as a whole), other than the transactions
contemplated by this Agreement.
(b) Except as expressly permitted by this Section 4.2, neither the
Board of Directors of the Company nor any committee thereof shall (i) withdraw
or modify, or propose publicly to withdraw or modify, in a manner adverse to
Parent, the approval or recommendation by such Board of Directors or such
committee of the Merger or this Agreement, (ii) approve or recommend, or
propose publicly to approve or recommend, any Company Takeover Proposal, or
(iii) cause the Company to enter into any letter of intent, agreement in
principle, acquisition agreement or other similar agreement (each, a "Company
Acquisition Agreement") related to any Company Takeover Proposal.
Notwithstanding the foregoing, in the event that prior to the adoption of this
Agreement by the Company's stockholders at the Company Stockholder Meeting, the
Board of Directors of the Company, to the extent that it determines in good
faith, after consultation with outside counsel, that in light of a Company
Superior Proposal its failure to do so could reasonably be expected to result
in a breach of fiduciary duties to the Company's stockholders under applicable
law, may terminate this Agreement solely in order to concurrently enter into a
Company Acquisition Agreement with respect to any Company Superior Proposal,
but only at a time that is after the third business day following Parent's
receipt of written notice advising Parent that the Board of Directors of the
Company is prepared to accept a Company Superior Proposal, specifying the
material terms and conditions of such Company Superior Proposal and identifying
the person making such Company Superior Proposal, all of which information will
be kept confidential by Parent in accordance with the terms of the
Confidentiality Agreement. For purposes of this Agreement, a "Company Superior
Proposal" means any proposal with respect to a transaction which the Board of
Directors of the Company determines in its good faith judgment, based on the
advice of a investment banking firm of national reputation and after
consultation with outside counsel, to be more favorable to the Company's
stockholders than the Merger.
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(c) In addition to the obligations of the Company set forth in
paragraphs (a) and (b) of this Section 4.2, the Company shall promptly advise
Parent orally and in writing of any request for information or of any Company
Takeover Proposal, the material terms and conditions of such request or Company
Takeover Proposal and the identity of the person making such request or Company
Takeover Proposal. The Company will keep Parent reasonably informed of the
status and details (including amendments or proposed amendments) of any such
request or Company Takeover Proposal.
(d) Nothing contained in this Section 4.2 shall prohibit the Company
from taking and disclosing to its stockholders a position contemplated by Rule
14e-2(a) promulgated under the Exchange Act or from making any disclosure to
the Company's stockholders (including any withdrawal or modification of the
Board's position with respect to this Agreement or the Merger) if, in the good
faith judgment of the Board of Directors of the Company, after consultation
with outside counsel, failure to so disclose could reasonably be expected to
result in a breach of its fiduciary duties to the Company's stockholders under
applicable law; provided, however, that, neither the Company nor its Board of
Directors nor any committee thereof shall, except in connection with a
termination permitted by Section 4.2(b), withdraw or modify, or propose
publicly to withdraw or modify, its position with respect to this Agreement or
the Merger or approve or recommend, or propose publicly to approve or
recommend, a Company Takeover Proposal.
ARTICLE V
ADDITIONAL AGREEMENTS
SECTION 5.1 Preparation of the Form S-4 and the Proxy Statement;
Stockholders Meetings. (a) As soon as practicable following the date of this
Agreement, the Company and Parent shall prepare and file with the SEC the Proxy
Statement and Parent shall prepare and file with the SEC the Form S-4, in which
the Proxy Statement will be included as a prospectus. Each of the Company and
Parent shall use reasonable best efforts to have the Form S-4 declared
effective under the Securities Act as promptly as practicable after such
filing. The Company and Parent will use all their respective reasonable
efforts to cause the Proxy Statement to be mailed to the holders of Company
Common Stock and the Parent Common Stock as promptly as practicable after the
Form S-4 is declared effective under the Securities Act. Parent shall also
take any action (other than qualifying to do business in any jurisdiction in
which it is not now so qualified or to file a general consent to service of
process) required to be taken under any applicable state securities laws in
connection with the issuance of the Parent Common Stock in the Merger and in
respect of Company Options pursuant Section 5.6 and the Company shall furnish
all information concerning the Company and the holders of Company Common Stock
as
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may be reasonably requested in connection with any such action. No filing of,
or amendment or supplement to, the Form S-4 or the Proxy Statement will be made
by Parent or the Company without providing the other with the opportunity to
review and comment thereon. Parent will advise the Company, promptly after it
receives notice thereof, of the time when the Form S-4 has become effective or
any supplement or amendment has been filed, the issuance of any stop order, the
suspension of the qualification of the Parent Common Stock issuable in
connection with the Merger for offering or sale in any jurisdiction, or any
request by the SEC for amendment of the Proxy Statement or the Form S-4 or
comments thereon and responses thereto or requests by the SEC for additional
information. If at any time prior to the Effective Time any information
relating to the Company or Parent, or any of their respective affiliates,
officers or directors, should be discovered by the Company or Parent which
should be set forth in an amendment or supplement to any of the Form S-4 or the
Proxy Statement, so that any of such documents would not include any
misstatement of a material fact or omit to state any material fact necessary to
make the statements therein, in light of the circumstances under which they
were made, not misleading, the party which discovers such information shall
promptly notify the other parties hereto and an appropriate amendment or
supplement describing such information shall be promptly filed with the SEC
and, to the extent required by law, disseminated to the stockholders of the
Company and Parent.
(b) The Company shall, as promptly as reasonably practicable after
the date hereof duly call, give notice of, convene and hold a meeting of its
stockholders (the "Company Stockholders Meeting") in accordance with the DGCL
for the purpose of obtaining the Company Stockholder Approval and, subject to
its rights under Section 4.2(b), shall, through its Board of Directors,
recommend to its stockholders the approval and adoption of this Agreement, the
Merger and the other transactions contemplated hereby.
(c) Parent shall, as promptly as reasonably practicable after the
date hereof give notice of, convene and hold a meeting of its stockholders (the
"Parent Stockholders Meeting") in accordance with the DGCL and the requirements
of the NYSE for the purpose of obtaining the Parent Stockholder Approval and
shall, through its Board of Directors, recommend to its stockholders the
approval and adoption of the Charter Amendment Proposal and the issuance of
shares of Parent Common Stock pursuant to the Merger or in respect of Company
Stock Options pursuant to Section 5.6.
SECTION 5.2 Letters of the Company's Accountants. (a) The Company
shall use reasonable best efforts to cause to be delivered to Parent two
letters from the Company's independent accountants, one dated as of the date on
which the Form S-4 shall become effective and one dated as of the Closing Date,
each addressed to Parent, in form and substance reasonably satisfactory to
Parent and customary in
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scope and substance for comfort letters delivered by independent public
accountants in connection with registration statements similar to the Form S-4.
(b) The Company shall use reasonable best efforts to cause to be
delivered to Parent and Parent's independent accountants two letters from the
Company's independent accountants addressed to Parent and the Company, one
dated as of the date the Form S-4 is declared effective and one dated as of the
Closing Date, in each case stating that no conditions exist that would
preclude the Company from being a party to a business combination to be
accounted for as a pooling of interests.
SECTION 5.3 Letters of Parent's Accountants. (a) Parent
shall use reasonable best efforts to cause to be delivered to the Company two
letters from Parent's independent accountants, one dated as of the date on
which the Form S-4 shall become effective and one dated as of the Closing Date,
each addressed to the Company, in form and substance reasonably satisfactory to
the Company and customary in scope and substance for comfort letters delivered
by independent public accountants in connection with registration statements
similar to the Form S-4.
(b) Parent shall use reasonable best efforts to cause to be delivered
to the Company and the Company's independent accountants two letters from
Parent's independent accountants addressed to the Company and Parent, one dated
as of the date the Form S-4 is declared effective and one dated as of the
Closing Date, in each case stating that no conditions exist that would preclude
the Parent from being a party to a business combination to be accounted for as
a pooling of interests.
SECTION 5.4 Access to Information; Confidentiality. Subject to the
Confidentiality Agreement, dated October 27, 1997, between Parent and the
Company (the "Confidentiality Agreement"), and subject to the restrictions
contained in confidentiality agreements to which such party is subject and
applicable law, each of the Company and Parent shall, and shall cause each of
its respective subsidiaries to, afford to the other party and to the officers,
employees, accountants, counsel, financial advisors and other representatives
of such other party, reasonable access during normal business hours during the
period prior to the Effective Time to all their respective properties, books,
contracts, commitments, personnel, reports and records and, during such period,
each of the Company and Parent shall, and shall cause each of its respective
subsidiaries to, furnish promptly to the other party (a) a copy of each report,
schedule, registration statement and other document filed by it during such
period pursuant to the requirements of federal or state securities laws and (b)
all other information concerning its business, properties and personnel as such
other party may reasonably request. No review pursuant to this Section 5.4
shall affect any representation or warranty given by the other party hereto.
Each of the Company and Parent will hold, and will 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.
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SECTION 5.5 Reasonable Best Efforts. (a) Upon the terms and
subject to the conditions set forth in this Agreement, each of the parties
agrees to use its reasonable best efforts to take, or cause to be taken, all
actions, and to do, or cause to be done, and to assist and cooperate with the
other parties in doing, all things necessary, proper or advisable to consummate
and make effective, in the most expeditious manner practicable, the Merger and
the other transactions contemplated by this Agreement, including (i) the
obtaining of all necessary actions or nonactions, waivers, consents and
approvals from Governmental Entities and the making of all necessary
registrations and filings and the taking of all steps as may be necessary to
obtain an approval or waiver from, or to avoid an action or proceeding by, any
Governmental Entity, (ii) the obtaining of all necessary consents, approvals or
waivers from third parties, (iii) the defending of any lawsuits or other legal
proceedings, whether judicial or administrative, challenging this Agreement or
the consummation of the transactions contemplated by this Agreement, including
seeking to have any stay or temporary restraining order entered by any court or
other Governmental Entity or any Restraint (as defined in Section 6.1(d))
vacated or reversed, and (iv) the execution and delivery of any additional
instruments necessary to consummate the transactions contemplated by, and to
fully carry out the purposes of, this Agreement. Nothing set forth in this
Section 5.5(a) will limit or affect actions permitted to be taken pursuant to
Section 4.2.
(b) In connection with and without limiting the foregoing, the
Company and Parent shall use reasonable best efforts (i) to take all action
necessary to ensure that no state takeover statute or similar statute or
regulation is or becomes applicable to this Agreement or the Merger or any of
the other transactions contemplated hereby or thereby and (ii) if any state
takeover statute or similar statute or regulation becomes applicable to this
Agreement or the Merger or any other transaction contemplated hereby or
thereby, to take all action necessary to ensure that the Merger and the other
transactions contemplated by this Agreement may be consummated as promptly as
practicable on the terms contemplated by this Agreement and otherwise to
minimize the effect of such statute or regulation on the Merger and the other
transactions contemplated by this Agreement.
(c) Each of the Company and Parent shall cooperate with each other in
obtaining opinions of Debevoise & Plimpton and Jones, Day, Reavis & Pogue, each
dated as of the Effective Time, to the effect that the Merger will constitute a
reorganization within the meaning of Section 368(a) of the Code. In connection
therewith, each of Parent, Sub and the Company shall deliver to such counsel
customary representation letters in form and substance reasonably satisfactory
to such counsel and the Company shall use all reasonable efforts to obtain any
representation letters from appropriate stockholders and shall deliver any such
letters obtained to Debevoise & Plimpton and Jones, Day, Reavis & Pogue (the
representation letters referred to in this sentence are collectively referred
to as the "Tax Certificates").
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Section 5.6 Company Stock Options, Incentive and Benefit Plans.
(a) After the Company Stockholder Approval, but prior to the Effective Time,
each outstanding Company Stock Option will be deemed exercisable and converted
into a right to receive that number of shares of Parent Common Stock determined
below. For each holder, the value of each Company Stock Option, which shall
equal the excess of (i) the Exchange Ratio multiplied by the closing price of a
share of Company Common Stock on the date on which the Company Stockholder
Approval is obtained (the "Closing Value") over (ii) the per share exercise
price of each such Company Stock Option shall be determined, and multiplied by
102% (the "Adjusted Cash Value"). The number of shares of Parent Common Stock
issuable to each such holder (the "Settlement Shares") shall be equal to the
quotient of the (A) Adjusted Cash Value divided by (B) the Closing Value, and
shall represent the fair settlement value of all rights thereunder.
(b) Parent shall establish a mechanism whereby each holder of Company
Stock Options permitted to sell Settlement Shares without registration under
the Securities Act can convert a portion of the Settlement Shares to cash
through open market sales of such Settlement Shares to be effected by a broker
selected by Parent, to the extent necessary to satisfy the minimum withholding
tax obligation with respect to such holder; provided, however,. that, if
Parent's and the Company's accountants conclude that it will not prevent the
transactions contemplated by this Agreement from being eligible to qualify as a
pooling of interests, such mechanism shall also be made available to such
holders for any Settlement Shares in excess of the number of shares necessary
to satisfy such tax withholding. Parent shall, at least 10 days prior to the
Effective Time, identify the person to whom such holders may direct sales
orders and Parent shall deliver (or cause the Exchange Agent to deliver) the
aggregate number of shares of Parent Common Stock subject to all such sales
orders received prior to the Effective Time to the broker as soon as
practicable thereafter, but no later than five business days after the
Effective Time. Each holder shall be responsible for the payment of commissions
related to such sales, which shall be deducted from the proceeds of such sales.
(c) Except as set forth in the third sentence of this Section 5.6(c),
from and for a period of at least one year after the Effective Time, Parent
shall or shall cause the Surviving Corporation to provide each employee of the
Company and its subsidiaries (the "Company Employees") and any former employee
of the Company or its subsidiaries entitled to receive benefits under a Company
Benefit Plan at the Effective Time (the "Former Company Employees") the same
benefits Parent provides to its similarly situated employees or former
employees. For purposes of eligibility to participate and vesting in its
benefit plans, Parent shall recognize service with the Company and its
subsidiaries prior to the Effective Time. From and for a period at least one
year after the Effective Time, Parent shall or shall cause the Surviving
Corporation to maintain the Company's Retirement Plan (the Company Retirement
Plan") with benefit accruals no less favorable than those on the date hereof.
Each
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Company Employee shall be eligible to participate in the Company Retirement
Plan in accordance with its terms. Notwithstanding the foregoing, provisions
of this Section 5.6(c), nothing contained herein shall prohibit Parent or the
Surviving Corporation from merging or consolidating the Company Retirement Plan
with any other defined benefit plan maintained by Parent or the Surviving
Corporation. On and after the Effective Time, Parent or the Surviving
Corporation may cause the Company Benefit Plans to provide that Company
Employees and Former Company Employees shall no longer participate in any of
the Company Benefit Plans; provided, however, that Parent shall or shall cause
the Surviving Corporation to honor or assume the obligation of the Company
under each Company Benefit Plan (including, without limitation, plans for the
benefit of directors of the Company) with respect to vested benefits at the
Effective Time. On and for a period of one year after the Effective Time,
Company Employees shall be eligible for severance benefits as provided in
Section 5.6(c) of the Company Disclosure Schedule. For purposes of determining
the amount of benefits to be paid to a Company Employee from the severance
plan, years of service with the Company, the Company's subsidiaries, Parent and
the Surviving Corporation shall be counted. Except as set forth in this
Section 5.6(c), nothing in this Section 5.6(c) shall prohibit Parent or the
Surviving Corporation from amending, modifying or terminating any employee
benefit plan of Parent or the Surviving Corporation.
SECTION 5.7 Indemnification, Exculpation and Insurance. (a) Parent
and Sub agree that all rights to indemnification and exculpation from
liabilities for acts or omissions occurring at or prior to the Effective Time
now existing in favor of the current or former directors, officers, employees
or agents of the Company and its subsidiaries as provided in their respective
certificates of incorporation or by-laws (or comparable organizational
documents) and any indemnification agreements or arrangements of the Company
the existence of which does not cause a breach of this Agreement shall be
assumed by Parent, shall survive the Merger and shall continue in full force
and effect, without amendment, for six years after the Effective Time;
provided, however, that all rights to indemnification in respect of any claim
asserted or made within such period shall continue until the final disposition
of such claim. Parent shall pay any expenses of any indemnified person under
this Section 5.7 in advance of the final disposition of any action, proceeding
or claim relating to any such act or omission to the fullest extent permitted
under the DGCL upon receipt from the applicable indemnified person to whom
advances are to be advanced of any undertaking to repay such advances required
under the DGCL. Parent shall cooperate in the defense of any such matter. In
addition, from and after the Effective Time, directors or officers of the
Company who become directors or officers of Parent will be entitled to the same
indemnity rights and protections as are afforded to other directors and
officers of Parent.
(b) In the event that either of the Surviving Corporation or Parent
or any of its successors or assigns (i) consolidates with or merges into any
other person and is
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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 provision will be
made so that the successors and assigns of Parent or the Surviving Corporation,
as applicable, will assume the obligations thereof set forth in this Section
5.7.
(c) The provisions of this Section 5.7 (i) are 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) are 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.
(d) For six years after the Effective Time, Parent or the Surviving
Corporation shall maintain in effect the Company's current 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 on terms with
respect to such coverage and amount no less favorable in the aggregate to the
Company's directors and officers currently covered by such insurance than those
of such policy in effect on the date hereof; provided that Parent may
substitute therefor policies of Parent or its subsidiaries containing terms
with respect to coverage and amount no less favorable to such directors or
officers; provided, further, that in no event shall Parent or the Surviving
Corporation be required to pay aggregate premiums for insurance for the benefit
of persons currently covered by the Company's officers' and directors'
insurance policy under this Section 5.7(d) in excess of 200% of the aggregate
premiums paid by the Company in 1997 on an annualized basis for such purpose.
(e) Parent shall cause the Surviving Corporation or any successor
thereto to comply with its obligations under this Section 5.7.
SECTION 5.8 Fees and Expenses. (a) Except as provided in this
Section 5.8, all fees and expenses incurred in connection with the Merger, this
Agreement, and the transactions contemplated by this Agreement shall be paid by
the party incurring such fees or expenses, whether or not the Merger is
consummated.
(b)(i) In the event that this Agreement is terminated by the
Company pursuant to Section 7.1(e) or, after the date hereof but prior
to any termination of this Agreement, the Company or its Board of
Directors shall have taken any action to make the Company Rights
Agreement inapplicable (through termination or otherwise) to any
person other than Parent, Sub or another wholly owned subsidiary of
Parent, then, concurrently with any such termination, the Company
shall pay Parent a fee equal to $75 million by wire transfer of same
day funds.
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(ii) In the event that (A) a Pre-Termination Takeover
Proposal Event (as defined below) shall occur and thereafter this
Agreement is terminated by either Parent or the Company pursuant to
Section 7.1(b)(ii), by Parent pursuant to Section 7.1(f) or 7.1(g) or
by the Company pursuant to Section 7.1(b)(i) and (B) prior to the date
that is 12 months after the date of such termination the Company
enters into a Company Acquisition Agreement, then the Company shall
(1) promptly, but in no event later than two business days after the
date such Company Acquisition Agreement is entered into, pay Parent a
fee equal to $25 million by wire transfer of same day funds, and (2)
promptly, but in no event later than two business days after the date
the transactions set forth in such Company Acquisition Agreement (or
any other Company Acquisition Agreement entered into within 12 months
after the date of this Agreement) are consummated, pay Parent an
additional fee equal to $50 million by wire transfer of same day
funds.
(iii) In the event that this Agreement is terminated under
the circumstances contemplated by Section 5.8(b)(ii), the Company
shall promptly pay upon Parent's request all reasonable out-of-pocket
expenses incurred by Parent in connection with this Agreement and the
transactions contemplated hereby (such expenses not to exceed
$7,500,000 in the aggregate), which shall be credited against any
termination fee payable pursuant to Section 5.8(b)(ii).
(iv) In the event that this Agreement is terminated pursuant
to Section 7.1(b)(iii), (A) if the affirmative vote described in
Section 3.3(m)(ii) shall have been obtained but the affirmative vote
described in Section 3.3(m)(i) shall not have been obtained, Parent
shall promptly, but in no event later than five business days after
the date of such termination, pay the Company a fee equal to $75
million, by wire transfer of same day funds or (B) if the affirmative
vote described in Section 3.3(l)(ii) shall not have been obtained,
Parent shall promptly pay upon the Company's request all reasonable
out-of-pocket expenses incurred by the Company in connection with this
Agreement and the transactions contemplated hereby (such expenses not
to exceed $7,500,000 in the aggregate).
(v) For purposes of this Section 5.8(b), a "Pre-Termination
Takeover Proposal Event" shall be deemed to occur if a Company
Takeover Proposal shall have been made public or any person shall have
publicly announced an intention (whether or not conditional) to make a
Company Takeover Proposal and shall have not withdrawn such Company
Takeover Proposal at the time of the action giving rise to the
termination of this Agreement.
(vi) The parties acknowledge that the agreements contained in
this Section 5.8(b) are an integral part of the transactions
contemplated by this Agreement, and that, without these agreements,
the other parties would not
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enter into this Agreement. Accordingly, if the Company or Parent, as
the case may be, fails promptly to pay the amount due to be paid by it
pursuant to this Section 5.8(b), and, in order to obtain such payment,
the other party commences a suit which results in a judgment against
the defaulting party for any of the fees set forth in this Section
5.8(b), the defaulting party shall pay to the non-defaulting party its
costs and expenses (including attorneys' fees and expenses) in
connection with such suit.
SECTION 5.9 Public Announcements. Parent and the Company will
consult with each other before issuing, and provide each other the opportunity
to review, comment upon and concur with and use reasonable efforts to agree on,
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 prior to such
consultation, except as either party may determine is required by applicable
law or court process or by obligations pursuant to any listing agreement with
any national securities exchange. The parties agree that the initial press
release to be issued with respect to the transactions contemplated by this
Agreement shall be in the form heretofore agreed to by the parties.
SECTION 5.10 Affiliates. (a) Concurrently with the execution of
this Agreement (or with respect to relevant persons who are not available on
the date hereof, as soon as practicable after the date hereof), the Company
shall deliver to Parent a written agreement substantially in the form attached
as Exhibit A hereto of all of the persons who are "affiliates" of the Company
for purposes of Rule 145 under the Securities Act or for purposes of qualifying
the Merger for pooling of interests accounting treatment under Opinion 16 of
the Accounting Principles Board and applicable SEC rules and regulations, all
of whom are, as of the date of this Agreement, identified in Section 5.10 of
the Company Disclosure Schedule. Section 5.10 of the Company Disclosure
Schedule shall be updated by the Company as necessary to reflect changes from
the date hereof and the Company shall use all reasonable efforts to cause each
person added to such schedule after the date hereof to deliver a similar
agreement. Parent shall cause all persons who are affiliates of Parent for
purposes of qualifying the Merger for pooling of interests accounting treatment
under Opinion 16 of the Accounting Principles Board and applicable SEC rules
and regulations to comply with the fourth paragraph of Exhibit A hereto.
(b) Parent shall use its reasonable best efforts to publish on the
earliest possible date after the end of the first month after the Effective
Time in which there are at least 30 days of post-Merger combined operations
(which month may be the month in which the Effective Time occurs), combined
sales and net income figures as contemplated by and in accordance with the
terms of SEC Accounting Series Release No. 135 (the time such results are
published, the "Permitted Sales Time"). This Section 5.10(b) is intended to be
for the benefit of affiliates of the Company.
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SECTION 5.11 Stock Exchange Listings. Parent shall use reasonable
best efforts to cause the Parent Common Stock issuable under pursuant to the
Merger or in respect of Company Stock Options pursuant to Section 5.6 to be
approved for listing on the NYSE and PSE, in each case subject to official
notice of issuance, as promptly as practicable after the date hereof, and in
any event prior to the Closing Date.
SECTION 5.12 Stockholder Litigation. Each of the Company and Parent
shall give the other the reasonable opportunity to participate in the defense
of any stockholder litigation against the Company or Parent, as applicable, and
its directors relating to the transactions contemplated by this Agreement.
SECTION 5.13 Tax Treatment. Each of Parent and the Company shall
use reasonable best efforts to cause the Merger to qualify as a reorganization
under the provisions of Section 368 of the Code and to obtain the opinion of
counsel referred to in Section 6.2(f) and 6.3(d) and each of the Company and
Parent agrees that it shall take no action that would cause such tax treatment
not to be obtained.
SECTION 5.14 Pooling of Interests. Each of the Company and Parent
shall use reasonable best efforts to cause the transactions contemplated by
this Agreement, including the Merger, to be accounted for as a pooling of
interests under Opinion 16 of the Accounting Principles Board and applicable
SEC rules and regulations, and such accounting treatment to be accepted by
Parent's accountants and by the SEC, and each of the Company and Parent agrees
that it shall take no action that would cause such accounting treatment not to
be obtained.
SECTION 5.15 Conveyance Taxes. Parent and the Company shall
cooperate in the preparation, execution and filing of all returns,
questionnaires, applications or other documents regarding any real property
transfer or gains, sales, use, transfer, value added, stock transfer and stamp
taxes, any transfer, recording, registration and other fees or any similar
taxes which become payable in connection with the transactions contemplated by
this Agreement that are required or permitted to be filed on or before the
Effective Time. Parent shall pay, and the Company shall pay, without deduction
or withholding from any amount payable to the holders of Company Common Stock,
any such taxes or fees imposed by any Governmental Entity, which become payable
in connection with the transactions contemplated by this Agreement, on behalf
of their respective stockholders.
SECTION 5.16 Certain Contracts. Parent shall, and shall cause the
Surviving Corporation to, expressly assume the obligations of the Company or
any subsidiary thereof under contracts, indentures, guarantees, securities,
leases and other instruments thereof in accordance with their respective terms,
as and to the extent necessary to avoid any breach, penalty, termination,
default, payment or prepayment that would otherwise result from the execution
of this Agreement or the consummation of the transactions contemplated hereby.
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SECTION 5.17 Directors of Parent. Parent agrees that promptly after
the Effective Time, Parent shall use all reasonable efforts to cause two
persons mutually agreed upon to be appointed to the Board of Directors of
Parent.
SECTION 5.18. Parent Stock Options. After the Parent Stockholder
Approval, but prior to the Effective Time, each Parent Stock Option outstanding
under the Parent's 1990 Stock Plan (the "Parent 1990 Options") held by an
optionee who has not waived in writing his right to a cash settlement of such
Parent 1990 Options will be converted into a right to receive that number of
shares of Parent Common Stock determined below. For each holder, the value of
each Parent 1990 Option, which shall equal the excess of (a) the closing price
of a share of Parent Common Stock on the day immediately prior to the date the
Parent Stockholder Approval is obtained (the "Parent Closing Value") over (b)
the per share exercise price of each such Parent 1990 Option shall be
determined, and multiplied by 100% (the "Parent Adjusted Cash Value"). The
number of shares of Parent Common Stock issuable to each such holder shall be
equal to the quotient of the (i) Parent Adjusted Cash Value divided by (ii) the
Parent Closing Value, and represent the fair value settlement value of all
rights thereunder.
ARTICLE VI
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 by each of Parent and the Company on or prior to
the Closing Date of the following conditions:
(a) Stockholder Approval. The Company Stockholder Approval and
the Parent Stockholder Approval shall have been obtained.
(b) HSR Act. The waiting period (and any extension thereof)
applicable to the Merger under the HSR Act shall have been terminated or shall
have expired.
(c) Governmental and Regulatory Approvals. Other than the filing
provided for under Section 1.3 and filings pursuant to the HSR Act (which are
addressed in Section 6.1(b)), all consents, approvals and actions of, filings
with and notices to any Governmental Entity required of the Company, Parent or
any of their subsidiaries to consummate the Merger and the other transactions
contemplated hereby shall have been obtained or made, the failure of which to
be obtained or taken is reasonably expected to have a material adverse effect
on Parent and its prospective subsidiaries, taken as a whole.
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(d) 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 (i) preventing the consummation of the Merger,
or (ii) which otherwise is reasonably likely to have a material adverse effect
on the Company or Parent, as applicable; provided, however, the party relying
upon this condition shall have complied with Section 5.5(a)(iii).
(e) Form S-4. The Form S-4 shall have become effective under the
Securities Act prior to the mailing of the Proxy Statement by the Company and
Parent to their respective stockholders and no stop order or proceedings
seeking a stop order shall have been entered or be pending by the SEC.
(f) NYSE and PSE Listings. The shares of Parent Common Stock
issuable to the Company's stockholders pursuant to the Merger or in respect of
Company Stock Options pursuant to Section 5.6 shall have been approved for
listing on the NYSE and the PSE, subject to official notice of issuance.
(g) Pooling Letters. Parent and the Company shall have received
the letters as to treatment of the Merger as a pooling of interests
contemplated by Sections 5.2(b) and 5.3(b).
SECTION 6.2 Conditions to Obligations of Parent. The obligation of
Parent 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 set forth herein shall be true and correct 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 (without giving effect to any limitation as to
"materiality", "material adverse effect" or "material adverse change" set forth
therein) does not have, and would not reasonable be expected to have,
individually or in the aggregate, a material adverse effect on the Company.
(b) Performance of Obligations of the Company. The Company shall
have performed all obligations required to be performed by it under this
Agreement at or prior to the Closing Date in all material respects, it being
agreed that a failure to comply with the provisions of Section 4.1(c) in any
respect shall be deemed to be a material breach with the effect that Parent
shall not be obligated to complete the Merger.
(c) Discovery Project. Parent shall be satisfied in its sole
discretion that Texaco Exploration and Productions Inc. shall have irrevocably
waived its right to
48
<PAGE> 54
require the disposition of the Company's indirect membership interest in
Discovery Gas Transmission LLC by reason of the transactions contemplated by
this Agreement.
(d) No Material Adverse Change. At any time after the date of
this Agreement there shall not have been a material adverse change relating to
the Company.
(e) Tax Opinion. Parent shall have received from Jones, Day,
Reavis & Pogue an opinion to the effect that the Merger will constitute a
"reorganization" within the meaning of Section 368(a) of the Code, and Parent,
Sub and the Company will each be a party to such reorganization within the
meaning of Section 368(b) of the Code. In rendering such opinion, counsel may
require delivery of and rely upon the Tax Certificates.
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 set forth herein shall be true and correct 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 (without giving effect to any limitation as to "materiality",
"material adverse effect" or "material adverse change" set forth therein) does
not have, and would not reasonably be expected to have, individually or in the
aggregate, a material adverse effect on Parent.
(b) Performance of Obligations of Parent. Parent shall have
performed all obligations required to be performed by it under this Agreement
at or prior to the Closing Date in all material respects.
(c) No Material Adverse Change. At any time after the date of
this Agreement there shall not have been a material adverse change relating to
Parent.
(d) Tax Opinion. The Company shall have received from Debevoise &
Plimpton an opinion to the effect that the Merger will constitute a
"reorganization" within the meaning of Section 368(a) of the Code, and Parent,
Sub and the Company will each be a party to such reorganization within the
meaning of Section 368(b) of the Code. In rendering such opinion, counsel may
require delivery of any rely upon the Tax Certificates.
49
<PAGE> 55
ARTICLE VII
TERMINATION, AMENDMENT AND WAIVER
SECTION 7.1 Termination. This Agreement may be terminated at any
time prior to the Effective Time, and whether before or after the Company
Stockholder Approval:
(a) by mutual written consent of Parent and the Company;
(b) by either Parent or the Company:
(i) if the Merger shall not have been consummated by June 30,
1998; provided, however, that the right to terminate this Agreement
pursuant to this Section 7.1(b)(i) shall not be 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;
provided, however, that this Agreement may be extended not more than
60 days by either party by written notice to the other party if the
Merger shall not have been consummated as a direct result of the
condition set forth in Section 6.1(b) or 6.1(c) failing to have been
satisfied and the extending party reasonably believes that the
relevant approvals will be obtained during such extension period;
(ii) if the Company Stockholder Approval shall not have been
obtained at the Company Stockholders Meeting duly convened therefor or
at any adjournment or postponement thereof;
(iii) if the Parent Stockholder Approval shall not have been
obtained at the Parent Stockholders Meeting duly convened therefor or
at any adjournment or postponement thereof;
(iv) if any Restraint having any of the effects set forth in
Section 6.1(d) shall be in effect and shall have become final and
nonappealable;
(c) by Parent, if the Company shall have 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) would give rise to the failure of a condition set forth
in Section 6.2(a) or (b), and (B) is incapable of being cured by the Company or
is not cured within 30 days of written notice thereof (a "Company Material
Breach") (provided that Parent is not then in Parent Material Breach (as
defined in Section 7.1(d))of any representation, warranty, covenant or other
agreement contained in this Agreement;
50
<PAGE> 56
(d) by the Company, if Parent shall have 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) would give rise to the failure of a condition set forth
in Section 6.3(a) or (b), and (B) is incapable of being cured by Parent or is
not cured within 30 days of written notice thereof (a "Parent Material Breach")
(provided that the Company is not then in Company Material Breach of any
representation, warranty, covenant or other agreement contained in this
Agreement;
(e) by the Company in accordance with Section 4.2(b);
(f) by Parent if (i) the Board of Directors of the Company or any
committee thereof shall have withdrawn or modified its approval or
recommendation of the Merger or this Agreement, or approved or recommended any
Company Takeover Proposal or (ii) the Board of Directors of the Company shall
have resolved to do any of the foregoing; or
(g) by Parent if the Company or any of its officers, directors,
representatives or agents shall take any of the actions proscribed by Section
4.2 (but for the exceptions therein allowing certain actions to be taken
pursuant to the proviso to the first sentence of Section 4.2(a), the second
sentence of Section 4.2(b) or Section 4.2(d)) in a manner that would result in
a material breach thereof.
SECTION 7.2 Effect of Termination. 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 Parent or the Company, other than the provisions
of Section 3.2(o), Section 3.3(k), the last sentence of Section 5.4, Section
5.8, this Section 7.2 and Article VIII, which provisions survive such
termination, and except to the extent that such termination results from the
willful and material breach by a party of any of its representations,
warranties, covenants or agreements set forth in this Agreement.
SECTION 7.3 Amendment. This Agreement may be amended by the
parties at any time before or after the Company Stockholder Approval or the
Parent Stockholder Approval; provided, however, that after any such approval,
there shall not be made any amendment that by law requires further approval by
the stockholders of the Company or Parent without the further approval of such
stockholders. This Agreement may not be amended except by an instrument in
writing signed on behalf of all of the parties.
SECTION 7.4 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 parties, (b) waive any inaccuracies in
the representations and warranties of the other parties contained in this
Agreement or in any document
51
<PAGE> 57
delivered pursuant to this Agreement or (c) subject to the proviso of Section
7.3, 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 shall 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
shall not constitute a waiver of such rights.
ARTICLE VII
GENERAL PROVISIONS
SECTION 8.1 Nonsurvival of Representations and Warranties. None of
the representations and warranties in this Agreement or in any instrument
delivered pursuant to this Agreement shall survive the Effective Time. This
Section 8.1 shall not limit any covenant or agreement of the parties which by
its terms contemplates performance after the Effective Time.
SECTION 8.2 Notices. All notices, requests, claims, demands and
other communications under this Agreement shall be in writing and shall be
deemed given if delivered personally, telecopied (which is confirmed) or sent
by overnight courier (providing proof of delivery) to the parties at the
following addresses (or at such other address for a party as shall be specified
by like notice):
(a) if to Parent or Sub, to
The Williams Companies, Inc.
One Williams Center
Tulsa, Oklahoma 74172
Telecopy No.: 918/588-5942
Attention: William G. von Glahn, Esq.
with a copy to:
Jones, Day, Reavis & Pogue
599 Lexington Avenue, 30th Floor
New York, New York 10022
Telecopy No.: (212) 755-7306
Attention: Jere R. Thomson, Esq.
52
<PAGE> 58
(b) if to the Company, to
MAPCO Inc.
1800 S. Baltimore Avenue
P.O. Box 645
Tulsa, Oklahoma 74101-0645
Telecopy No.: 918/599-3696
Attention: David Bowman, Esq.
with a copy to:
Debevoise & Plimpton
875 Third Avenue
New York, New York 10022
Telecopy No.: 212/909-6836
Attention: Franci J. Blassberg, Esq.
SECTION 8.3 Definitions. For purposes of this Agreement:
(a) except as otherwise provided for in this Agreement, an
"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, as trustee or executor, or otherwise;
(b) "material adverse change" or "material adverse effect" means,
when used in connection with the Company or Parent, any change, effect, event,
occurrence or state of facts that is, or would reasonably be expected to be,
materially adverse to the business, financial condition or results of
operations of such party and its subsidiaries taken as a whole, other than any
change, effect, event or occurrence constituting or relating to any of the
following:
(i) the United States economy or securities markets in
general;
(ii) this Agreement or the transactions contemplated hereby
or the announcement thereof;
(iii) the natural resources industry in general, and not
specifically relating to Parent or the Company or their respective
subsidiaries;
(iv) the resignation of officers or employees of the Company
or Parent or their respective subsidiaries; and
53
<PAGE> 59
(v) changes in GAAP;
(c) "person" means an individual, corporation, partnership, limited
liability company, joint venture, association, trust, unincorporated
organization or other entity;
(d) a "subsidiary" of any person means another person, an amount of
the voting securities, other voting ownership or voting partnership interests
of which is sufficient to elect at least a majority of its Board of Directors
or other governing body (or, if there are no such voting interests, 50% or more
of the equity interests of which) is owned directly or indirectly by such first
person;
(e) "belief" of any person which is not an individual means the
actual belief of such person's executive officers; and
(f) "knowledge" of any person which is not an individual means the
actual knowledge of such person's executive officers. .
SECTION 8.4 Interpretation. When a reference is made in this
Agreement to an Article, Section or Exhibit, such reference shall be to an
Article or Section of, or an Exhibit to, this Agreement unless otherwise
indicated. The table of contents and headings contained in this Agreement are
for reference purposes only and shall 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 shall 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 shall refer to this
Agreement as a whole and not to any particular provision of this Agreement.
All terms defined in this Agreement shall 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.
References to a person are also to its permitted successors and assigns.
SECTION 8.5 Counterparts. This Agreement may be executed in one or
more counterparts, all of which shall be considered one and the same agreement
and shall become effective when one or more counterparts have been signed by
each of the parties and delivered to the other parties.
54
<PAGE> 60
SECTION 8.6 Entire Agreement; No Third-Party Beneficiaries. This
Agreement (including the documents and instruments referred to herein) and the
Confidentiality Agreements (a) constitute the entire agreement, and supersede
all prior agreements and understandings, both written and oral, between the
parties with respect to the subject matter of this Agreement and (b) except for
the provisions of Article II, Sections 5.6, 5.7 and 5.10(b), are not intended
to confer upon any person other than the parties any rights or remedies.
SECTION 8.7 Governing Law. This Agreement shall be governed by,
and construed in accordance with, the laws of the State of Delaware, regardless
of the laws that might otherwise govern under applicable principles of conflict
of laws thereof.
SECTION 8.8 Assignment. Neither this Agreement nor any of the
rights, interests or obligations under this Agreement shall 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 parties; provided, however, that
Sub may assign its rights and obligations, in whole or in part, under this
Agreement to any other wholly owned subsidiary of Parent. Any assignment in
violation of the preceding sentence shall be void. Subject to the preceding
two sentences, this Agreement will be binding upon, inure to the benefit of,
and be enforceable by, the parties and their respective successors and assigns.
SECTION 8.9 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 Delaware or any Delaware 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 Delaware or a Delaware state court.
SECTION 8.10 Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of law
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect. 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 law in an acceptable manner to the end that the
transactions contemplated hereby are fulfilled to the extent possible.
55
<PAGE> 61
SECTION 8.11 Enforcement. The parties agree that irreparable damage
would occur and that the parties would not have any adequate remedy at law 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 Delaware or in Delaware state court, this being in addition to any
other remedy to which they are entitled at law or in equity.
56
<PAGE> 62
IN WITNESS WHEREOF, Parent, Sub and the Company have caused this
Agreement to be signed by their respective officers thereunto duly authorized,
all as of the date first written above.
THE WILLIAMS COMPANIES, INC.
By /s/ Keith E. Bailey
-----------------------------------
Title: Chairman of the Board and
Chief Executive Officer
TML ACQUISITION CORP.
By /s/ Keith E. Bailey
-----------------------------------
Title: President
MAPCO INC.
By /s/ James E. Barnes
-----------------------------------
Title: Chairman and Chief
Executive Officer
<PAGE> 1
EXHIBIT 4
AMENDMENT NO. 1 TO
RIGHTS AGREEMENT
This Amendment (the "Amendment"), dated as of November 23,
1997, is entered into by and between MAPCO Inc., a Delaware corporation (the
"Company"), and Harris Trust Company of New York, a New York trust company, as
Rights Agent (the "Rights Agent").
WHEREAS, the Company and the Rights Agent have entered into an
Rights Agreement, dated as of May 29, 1996 (the "Agreement");
WHEREAS, the Company wishes to amend the Agreement;
WHEREAS, Section 26 of the Agreement provides, among other
things, that prior to the Stock Acquisition Date the Company may, by resolution
of its Board of Directors, and the Rights Agent shall, if the Company so
directs, supplement or amend certain provision of the Agreement without the
approval of any holders of Rights; and
WHEREAS, the Board of Directors of the Company has approved
this Amendment and the Company has directed the Rights Agent to amend the
Agreement as provided herein;
NOW, THEREFORE, the Company and the Rights Agent hereby amend
the Agreement as follows:
1. Capitalized terms used in this Amendment without
definition shall have the meanings given to them in the Agreement.
2. Section 1.1(a) of the Agreement is amended to add the
following sentence to the end thereof:
"Notwithstanding anything in this Agreement to the contrary,
neither The Williams Companies, Inc. ("Parent") nor any subsidiary of
Parent (any such subsidiary being referred to herein as "Merger Sub")
established to effect the Merger (as defined herein) shall be deemed
to be an Acquiring Person as a result of the execution, delivery and
performance under, or consummation of any one or more transactions
(each, a "Permitted Event" and collectively, the "Permitted Events"),
contemplated by the Agreement and Plan of Merger, dated as of November
23, 1997, as the same may be amended from time to time, by and among
the Parent, TML Acquisition Corp., a Delaware corporation and a
wholly-
<PAGE> 2
owned subsidiary of Parent, and the Company (the "Merger Agreement"),
pursuant to which Merger Sub will be merged (the "Merger") with and
into the Company."
3. Section 1.1 (ee) is amended to add the following sentence
at the end thereof:
"Notwithstanding anything in this Agreement to the contrary,
the acquisition of beneficial ownership of Common Stock of the Company
pursuant to the Merger and the consummation of any one or more of the
Permitted Events shall not constitute or result in the occurrence of a
Stock Acquisition Date."
4. Section 3(a) of the Agreement is amended to add the
following sentence at the end of the first sentence thereof immediately prior
to the period:
"; provided, however, that, notwithstanding anything in this
Agreement to the contrary, the acquisition of beneficial ownership of
Common Stock of the Company pursuant to the Merger and the
consummation of any one or more of the Permitted Events shall not
constitute or result in the occurrence of a Distribution Date."
5. Section 7(a) of the Agreement is amended by (a) deleting
the word "or" at the end of clause (iii) thereto, and (b) adding the following
clause immediately following clause (iv) thereof and prior to the
parenthetical:
"or (v) the time immediately prior to the Effective Time (as
such term is defined in the Merger Agreement), provided,
however, that if the Merger contemplated by the Merger
Agreement does not occur and the Merger Agreement is
terminated, the Rights will remain exercisable until the
earlier of (i), (ii), (iii) or (iv) above, and no Expiration
Date shall be deemed to have occurred as a result of this
clause (v)."
6. Section 11(a)(ii) of the Agreement is amended to add the
following at the end of the first sentence thereof immediately prior to the
period:
"; provided, however, that, notwithstanding anything in this
Agreement to the contrary, the acquisition of beneficial ownership of
Common Stock of the Company pursuant to the Merger and the
consummation of any one or more of the Permitted Events shall not
constitute or result in the occurrence of a Section 11(a)(ii) Event.
2
<PAGE> 3
7. Section 13(a) of the Agreement is amended to add the
following at the end thereof immediately prior to the period:
"; provided, however, that, notwithstanding anything in this
Agreement to the contrary, the acquisition of beneficial ownership of
Common Stock of the Company pursuant to the Merger and the
consummation of any one or more of the Permitted Events shall not
constitute or result in the occurrence of a Section 13 Event."
8. The term "Agreement" as used in the Agreement shall be
deemed to refer to the Agreement as amended hereby.
9. This Amendment shall be governed by and constructed in
accordance with the laws of the State of Delaware.
10. This Amendment shall be effective as of the date first
above written, and, except as set forth herein, the Agreement shall remain in
full force and effect and shall be otherwise unaffected hereby.
11. This Amendment may be executed in two or more
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be duly executed as of this 23rd day of November, 1997.
MAPCO INC.
By: /s/ James E. Barnes
------------------------------------
Name: James E. Barnes
Title: Chairman of the Board,
President and Chief
Executive Officer
HARRIS TRUST COMPANY OF
NEW YORK
By: /s/ Steven Rothblum
------------------------------------
Name: Steven Rothblum
Title: President
3
<PAGE> 1
Exhibit 99
MAPCO, WILLIAMS BOARDS TO SEEK SHAREHOLDER APPROVAL OF MERGER
IN STOCK-FOR-STOCK TRANSACTION
TULSA, Okla., Nov. 24, 1997: MAPCO Inc. and The Williams Companies, Inc.
announced today they have entered into a definitive merger agreement providing
Williams to acquire MAPCO in a non-taxable stock-for-stock transaction valued at
approximately $2.7 billion, based on Williams' price at the close of New York
Stock Exchange trading Friday.
The companies have agreed to exchange a fixed ratio of .8325 of a
current share of Williams common stock for each share of MAPCO common stock.
That would equate to $46.15 for each share of MAPCO common stock, based on
Friday's closing price of Williams common stock. MAPCO closed Friday at $38.13
per share.
James E. Barnes and Keith E. Bailey, chairman, president and chief
executive officer of MAPCO and Williams, respectively, characterized the
transaction as the opportunity to create one company with greater potential
shareholder value than either standing alone.
Barnes said, "The merging of MAPCO and Williams will provide both
immediate and long-term value for shareholders through the heightened earnings
power and growth possibilities of the combined businesses. Together, our
strategic assets--including outstanding people--will create a formidable force
to aggressively pursue growth strategies in today's increasingly competitive
global energy marketplace."
Bailey said, "This acquisition is a terrific fit with Williams because
we believe it will be additive to earnings while strengthening our balance sheet
and increasing our capacity to generate capital for future growth. MAPCO's
businesses are very complementary to ours and should provide a growth rate
comparable to our energy services segment, while doubling its current scale.
"Ultimately, we expect the future earnings contribution from energy
services to exceed that of our regulated natural gas pipelines," he said. "This
should occur over a rapid enough time frame to provide an income bridge while
the earnings capability of our communications business matures in the coming
years."
-more-
<PAGE> 2
MAPCO/Williams
2-2-2-2-2-2
The companies intend to file a joint proxy statement with the
Securities and Exchange Commission in the near future. MAPCO and Williams
shareholders will vote on the transaction at shareholder meetings expected to be
held during the first quarter of 1998. The transaction, intended to be a
"pooling of interests" for accounting purposes, is subject to review under
federal antitrust laws, to the consent of MAPCO's joint venture partner in the
Discovery Project and to certain other conditions.
Since closing of the transaction would occur after Dec. 29, the
effective date of a common stock split also announced today by Williams, the
fixed exchange ratio will be 1.665 shares of Williams stock for each share of
MAPCO stock. Value to the MAPCO shareholder would be tied to this exchange ratio
and Williams' common stock price at the time of closing, which would occur after
the shareholder meetings.
MAPCO's major businesses include:
* A division that offers a full range of natural gas liquids marketing
services through an infrastructure of gathering, processing, underground storage
and distribution systems. The company's Mid-America Pipeline is the backbone of
the transportation network, which extends more than 10,000 miles in 15 states
and links critical producing areas with major demand centers.
* Two divisions that each operate a refinery. The North Pole Refinery
is the largest in Alaska, producing a broad slate of petroleum products,
marketing 40,000 barrels per day in Alaska, Canada and the Pacific Rim.
Mid-South Marketing and Refining in Memphis is the only refinery in Tennessee,
and is near one of the world's largest cargo airports and the fourth largest
U.S. marine port.
* Thermogas, the fourth largest propane marketer in the U.S. with more
than 180 outlets in 18 states selling propane to more than 380,000 customers;
MAPCO Express, which is comprised of some 252 convenience stores and travel
centers, targeting markets in Tennessee and Alaska; FleetOne, which provides
fleet operators with motor fuel and data management; and Touchstar Technologies,
L.L.C., which specializes in energy-related information management.
Bailey said that Stephen L. Cropper, 47, president and chief executive
officer of Williams' $3.7 billion (assets) energy services segment, will assume
the additional responsibilities of leading the MAPCO organization. Additional
organizational alignments will be announced pending shareholder action.
-more-
<PAGE> 3
MAPCO/Williams
3-3-3-3-3-3
Cropper currently leads a full-service company that includes:
* A merchant services division that is a top-tier physical and
financial trading company, handling volumes of over 30 trillion British thermal
unit (TBtu) equivalents per day. Its market scope is throughout North America,
providing natural gas, power and petroleum products marketing at the wholesale
and retail level, as well as energy financing.
* A field services unit that is one of the largest independent
gatherers and processors in the United States, operating 11,000 miles of
gathering lines, 10 processing plants, eight treating plants and averaging
gathering volumes of nearly 6 TBtu per day.
* A petroleum services division that operates a 9,200-mile pipeline
system and 53 product terminals that move an average of 225 million barrels, or
nearly 9.5 billion gallons, a year with access to 35 percent of U.S. refining
capacity. This unit also can produce 100 million gallons a year of ethanol.
* An exploration and production unit that operates 448 wells and has
natural gas reserves of 532 billion cubic feet. It owns 1,220 square miles of 3D
seismic data and is actively engaged in exploring on- and off-shore in Texas and
Louisiana and in the northern and southern Rocky Mountains.
Williams employs 14,218 people across the nation. Its national
headquarters is in Tulsa, where it employs 2,523 people. MAPCO employs about
6,603 people at more than 600 locations in 26 states. Tulsa is also its national
headquarters, where 673 people are employed.
"While our merger economics are driven by current and future business
opportunities, rather than major workforce reductions, the fact is that some
people will see their jobs change," Bailey said. "It wouldn't be fair to
guarantee anything at this point, but it is certainly our goal to look first to
affected employees to fill many of our critically important jobs.
"Our growth over the past several years has fueled the need for good
people," Bailey said. "And we believe MAPCO has a highly skilled workforce with
strong cultural values that mirror our own."
Williams currently has 909 job openings across the country, including
300 in Tulsa. The jobs include professional, technical and administrative areas.
As of Sept. 30, MAPCO has $2.3 billion in assets. For the first nine
months of 1997, MAPCO reported revenue of $2.8 billion and net income of $105.5
million. (NYSE:MDA). Company information is on the Internet at
http://www.mapcoinc.com.
-more-
<PAGE> 4
MAPCO/Williams
4-4-4-4-4-4
As of Sept. 30, Williams has $13.3 billion in assets. For the first
nine months of 1997, Williams reported revenue of $3.1 billion and net income of
$205.3 million. In addition to its energy services division, other Williams
units consist of the nation's largest-volume system of interstate natural gas
pipelines and single-source providers of national business communications
systems and international satellite and fiber-optic video services. (NYSE:WMB).
Company information is on the Internet at http://www.twc.com.
# # #
For more information from Williams, contact: Jim Gipson 918/588-2111 (Media)
Mark Husband 588-2087 (Investors)
Richard George 588-3679
