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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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SCHEDULE 14D-9
SOLICITATION/RECOMMENDATION STATEMENT
PURSUANT TO SECTION 14(d)(4) OF THE
SECURITIES EXCHANGE ACT OF 1934
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EXIDE ELECTRONICS GROUP, INC.
(NAME OF SUBJECT COMPANY)
EXIDE ELECTRONICS GROUP, INC.
(NAME OF PERSON FILING STATEMENT)
COMMON STOCK, PAR VALUE $.01 PER SHARE
(AND ASSOCIATED PREFERRED STOCK PURCHASE RIGHTS)
(TITLE OF CLASS OF SECURITIES)
302052 6 10 5
(CUSIP NUMBER OF CLASS OF SECURITIES)
WARRANTS TO PURCHASE SHARES OF COMMON STOCK
(TITLE OF CLASS OF SECURITIES)
302052 6 11 3
(CUSIP NUMBER OF CLASS OF SECURITIES)
NICHOLAS J. COSTANZA, ESQ.
VICE PRESIDENT, CHIEF ADMINISTRATIVE
OFFICER, GENERAL COUNSEL AND SECRETARY
EXIDE ELECTRONICS GROUP, INC.
8609 SIX FORKS ROAD
RALEIGH, NORTH CAROLINA 27615
(919) 872-3020
(NAME, ADDRESS AND TELEPHONE NUMBER OF PERSON
AUTHORIZED TO RECEIVE NOTICE AND COMMUNICATIONS
ON BEHALF OF THE PERSON FILING STATEMENT)
Copy To:
DAVID M. SILK, ESQ.
WACHTELL, LIPTON, ROSEN & KATZ
51 WEST 52ND STREET
NEW YORK, NEW YORK 10019
(212) 403-1000
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ITEM 1. SECURITY AND SUBJECT COMPANY.
The name of the subject company is Exide Electronics Group, Inc. (the
"Company" or "Exide"). The address of the principal executive offices of the
Company is 8609 Six Forks Road, Raleigh, North Carolina 27615. The titles of the
classes of equity securities to which this statement relates are (i) the
Company's common stock, par value $.01 per share (the "Common Stock"), and the
associated preferred stock purchase rights (the "Rights") and (ii) the Company's
warrants to purchase shares of Common Stock at $13.475 per share of Common Stock
(the "Warrants" and, together with the shares of Common Stock, the "Shares").
All references herein to "Shareholders" shall mean holders of Shares.
ITEM 2. TENDER OFFER OF THE BIDDER.
This Statement relates to the tender offer by BTR Acquisition Corporation
(the "Purchaser"), an indirect, wholly-owned subsidiary of BTR plc, an English
public limited company ("Parent"), to purchase (i) all outstanding Common Stock,
and associated Rights, at $29.00 per share, net to the seller in cash and (ii)
all outstanding Warrants at $15.525 per Warrant to purchase one share of Common
Stock, net to the seller in cash, in each case on the terms and subject to the
conditions set forth in the Offer to Purchase, dated October 20, 1997, and in
the related Letter of Transmittal (which together constitute the "BTR Offer").
The BTR Offer is disclosed in a Tender Offer Statement on Schedule 14D-1, dated
October 20, 1997 (the "Schedule 14D-1"), as filed with the Securities and
Exchange Commission (the "Commission"). The BTR Offer is being made pursuant to
an Agreement and Plan of Merger, dated as of October 16, 1997 (the "Merger
Agreement"), by and among Parent, the Purchaser and the Company. The Merger
Agreement provides, among other things, that as soon as practicable after the
satisfaction or waiver of the conditions set forth in the Merger Agreement, the
Purchaser will be merged with and into the Company (the "Merger"), and the
Company will continue as the surviving corporation (the "Surviving
Corporation").
As set forth in the Schedule 14D-1, the principal executive offices of
Parent and the Purchaser are located at BTR House, Carlisle Place, London, SW 1P
1BX.
ITEM 3. IDENTITY AND BACKGROUND.
(a) The name and business address of the Company, which is the person
filing this Statement, are set forth in Item 1 above.
(b) Except as described herein or on pages 2-5 and 8-18 of the Company's
proxy statement dated January 27, 1997, relating to the Company's 1997 Annual
Meeting of Shareholders, which are filed as Exhibit 1 to this Statement and are
incorporated herein by reference, to the knowledge of the Company, as of the
date hereof, there are no material contracts, agreements, arrangements or
understandings, or any actual or potential conflicts of interest, between the
Company or its affiliates and (i) the Company, its executive officers, directors
or affiliates or (ii) Parent, the Purchaser or their respective executive
officers, directors or affiliates.
The Merger Agreement. The summary of the Merger Agreement is contained in
the Offer to Purchase, which has been filed with the Commission as an exhibit to
the Schedule 14D-1. A copy of such summary is filed as Exhibit 2 hereto and is
incorporated by reference. Such summary should be read in its entirety for a
more complete description of the terms and provisions of the Merger Agreement. A
copy of the Merger Agreement has been filed as Exhibit 3 hereto and is
incorporated herein by reference. Capitalized terms used but not defined herein
shall have the meanings ascribed to them in the Merger Agreement.
The Stockholder Agreement. Concurrently with the execution of the Merger
Agreement, Parent and the Purchaser entered into an agreement (the "Stockholder
Agreement") with certain Shareholders of the Company (the "Four Shareholders")
with respect to, in the aggregate, 2,273,033 shares of Common Stock (including
shares issuable upon conversion of Series G Convertible Preferred Stock, par
value $.01 per share, of the Company (the "Preferred Stock")) owned by such Four
Shareholders representing approximately 19.9% of the shares of Common Stock
outstanding on October 16, 1997. The Four Shareholders are James A. Risher,
President and Chief Executive Officer of the Company; Conrad A. Plimpton Trust,
a trust for the
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benefit of Conrad A. Plimpton (Chairman of the Company's Board of Directors (the
"Board")); Lance L. Knox 1990 Trust, a trust for the benefit of Lance L. Knox (a
member of the Board); and Fiskars Oy Ab ("Fiskars"), which is the holder of all
of the Preferred Stock and beneficial owner of approximately 16% of the Common
Stock. Pursuant to the Stockholder Agreement, each of the Four Shareholders has
agreed to tender, in accordance with the terms of the Offer, as soon as
practicable after commencement of the Offer, all shares subject to the
Stockholder Agreement, except that Fiskars need not tender any shares of Common
Stock issuable upon conversion of Preferred Stock until Fiskars receives two
business days' notice that Parent and the Purchaser will consummate the BTR
Offer within five business days of such notice. Each of the Four Shareholders
has agreed not to withdraw his shares subject to the Stockholder Agreement
unless the Stockholder Agreement is terminated in accordance with its terms.
Each of the Four Shareholders has granted Parent and the Purchaser an
irrevocable option to purchase certain of such Shareholder's shares of Common
Stock at the applicable Merger Price. The option will become exercisable
following termination of the Merger Agreement pursuant to certain provisions of
the Merger Agreement.
Pursuant to the Stockholder Agreement, the Four Shareholders have agreed,
at any meeting of the Shareholders, to vote all shares subject to the foregoing
option in furtherance of the consummation of all actions contemplated by the
Merger Agreement and against any proposal that would frustrate the terms of the
Merger Agreement. The Four Shareholders have granted Parent and the Purchaser an
irrevocable proxy to vote the shares subject to the foregoing option in favor of
the Merger Agreement and the transactions contemplated thereby and against any
proposed Acquisition Transaction. Pursuant to the Stockholder Agreement, each of
the Four Shareholders has agreed, solely in its capacity as a stockholder of the
Company, that neither it nor any controlled affiliates, representatives or
agents of it will encourage, solicit, participate in or initiate discussions or
negotiations with, or provide any information to, any corporation, partnership,
person or other entity or group (other than Parent or any of its affiliates or
representatives) concerning any Acquisition Transaction (as hereinafter
defined). Each such Shareholder has also agreed to immediately cease any
existing activities, discussions or negotiations with any parties conducted
heretofore with respect to any Acquisition Transaction.
Each of the Four Shareholders has agreed, except as contemplated by the
Stockholder Agreement, that it shall not (i) transfer, or consent to the
transfer of, any or all of the Shares or any interest therein, (ii) enter into
any contract, option or other agreement or understanding with respect to the
transfer of any or all of the Shares or any interest therein, (iii) grant any
proxy, power-of-attorney or other authorization in or with respect to the
Shares, (iv) deposit the Shares into a voting trust or enter into a voting
agreement or arrangement with respect to the Shares or (v) take any other action
that would in any way restrict, limit or interfere with the performance of its
obligations under the Stockholder Agreement or the Merger Agreement.
The covenants, agreements and proxy contained in the Stockholder Agreement
will terminate upon the earlier of (i) the Effective Time, (b) one year
following the execution of the Stockholder Agreement or (c) the termination of
the Merger Agreement pursuant to certain terms. A copy of the Stockholder
Agreement has been filed as Exhibit 4 hereto and is incorporated herein by
reference.
Interests of Certain Persons. Certain members of the Company's management
and the Board may be deemed to have interests in the transactions contemplated
by the Merger Agreement that are in addition to their interests as Shareholders.
The Board was aware of these interests and considered them, among other matters,
in approving the Merger Agreement and the transactions contemplated thereby. In
considering the recommendation of the Board in respect of the Merger Agreement
and the transactions contemplated thereby, Shareholders should be aware of these
interests which may present actual or potential conflicts of interest.
The Merger Agreement provides that Parent will cause the Surviving
Corporation to honor all Employee Benefit Arrangements to which the Company or
any of its subsidiaries is presently a party. The Merger Agreement sets forth
Parent's intention that the Surviving Corporation provide, for a period of at
least two years from the Effective Time, employees of the Company and its
subsidiaries (excluding employees covered by collective bargaining agreements)
cash compensation, employee benefit and incentive compensation and
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similar plans and programs as would provide compensation and benefits which, in
the aggregate, are substantially similar to those provided to such employees as
of the date of the Merger Agreement.
The Merger Agreement further provides that, for not less than six years
after the Effective Time, all rights to indemnification now existing in favor of
any employee, agent, officer or director of the Company and its subsidiaries, as
provided in their respective charter and by-laws, in an agreement between the
Company or one of its subsidiaries and such employee, or otherwise in effect on
the date of the Merger, shall continue in full force and effect. Parent has also
agreed to indemnify all directors and officers of the Company ("Indemnified
Parties") to the fullest extent allowed under applicable law with respect to all
acts and omissions arising out of such individuals' services as officers or
directors of the Company or any of its subsidiaries or as trustees or
fiduciaries of any plan for the benefit of employees occurring prior to the
Effective Time. If such Indemnified Party becomes involved in any action,
proceeding, or investigation, Parent agrees to pay the Indemnified Party's
reasonable legal and other expenses of counsel; provided, however, Parent shall
not, in connection with any one such action or proceeding or separate but
substantially similar actions or proceedings arising out of the same
allegations, be liable for fees and expenses of more than one separate firm of
attorneys. Parent shall be entitled to participate in the defense of any such
action or proceeding. Parent has agreed to cause the Surviving Corporation to
leave the Company's current policies for officer and director liability
insurance in effect in place for not less than six years from the Effective
Time.
The Merger Agreement also provides that Parent and the Company shall take
all actions necessary so that, immediately prior to the earlier of (1) the
acceptance for payment and purchase of Securities by the Purchaser pursuant to
the BTR Offer and (2) the Effective Time, each outstanding option to purchase
shares of Common Stock (an "Option") granted under the Company's 1995 Employee
Stock Option and Restricted Stock Plan, 1995 Directors Plan, 1989 Stock Option
Plan and Non-Employee Directors Stock Option Plan (collectively, the "Option
Plans"), whether or not then exercisable or vested, shall become fully
exercisable and vested; each Option which is then outstanding shall be cancelled
and in consideration of such cancellation, and except to the extent that Parent
or the Purchaser and the holder of any such Option otherwise agree, immediately
following consummation of the BTR Offer, the Company shall pay to such holders
of Options an amount in respect thereof equal to the product of (x) the excess
of the Merger Price over the exercise price thereof and (y) the number of shares
of Common Stock subject thereto (such payment to be net of taxes required by law
to be withheld with respect thereto); provided that the foregoing is subject to
the obtaining of any necessary consents of holders of Options.
In addition, Parent and the Company agreed to take all actions necessary so
that, immediately prior to the Effective Time, each outstanding right to
purchase shares of Common Stock (an "ESPP Option") granted under the Company's
Employee Stock Purchase Plan, as amended ("ESPP"), shall be cancelled and in
consideration of such cancellation, and except to the extent that Parent or the
Purchaser and the holder of any such ESPP Option otherwise agree, immediately
prior to the Effective Time, the Company shall pay to such holders of ESPP
Options an amount in respect thereof equal to the product of (x) the excess of
the Merger Price over the Offering Price (as defined in the ESPP) thereof and
(y) the number of shares of Common Stock subject thereto (such payment to be net
of taxes required by law to be withheld with respect thereto); provided that the
foregoing is subject to the obtaining of any necessary consents of holders of
ESPP Options.
Agreements. On July 21, 1997, the Board authorized the Company to enter
into severance agreements (the "Severance Agreements") with each of the four
participants in Exide's Severance Plan After a Change of Control (the "Severance
Plan"): James A. Risher, President and Chief Executive Officer and a member of
the Board; Marty R. Kittrell, Vice President and Chief Financial Officer;
Nicholas J. Costanza, Vice President, Chief Administrative Officer, General
Counsel and Secretary; and William J. Raddi, Senior Vice President -- Strategic
Business Development and Chief Technology Officer; and with Mark A. Ascolese,
Vice President -- Worldwide Services Group; Hermann G.P. Metzler, Vice
President -- Far East Sales; Alden R. Schnaidt, Vice President -- Enterprise
Systems Group; and Warren J. Johnson, Vice President -- Communications Group.
Mr. Johnson subsequently left the Company's employ and has foregone all rights
under the Severance Agreement. The Severance Agreements contain the same
substantive provisions as the Severance Plan, with the exceptions described in
the following two paragraphs.
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The Severance Agreements provide that a change of control of the Company (a
"Change of Control") is, in general, deemed to occur if (i) any individual,
entity or group becomes the beneficial owner of 30% or more of the outstanding
Common Stock or of the outstanding voting securities of the Company (but not
including (a) any acquisition directly from the Company, (b) any acquisition by
the Company, (c) any acquisition by an employee benefit plan of the Company or
(d) any acquisition that complies with the provisions described in clauses (x),
(y) and (z) of subsection (iii) of this paragraph; (ii) a change in the majority
of the Board occurs; (iii) a reorganization, merger, share exchange,
consolidation or sale or other disposition of all or substantially all of the
assets of the Company, or the acquisition of assets of another entity (any of
the foregoing, a "Business Combination") is consummated unless, following such
Business Combination, (x) owners of the Common Stock and other voting securities
prior to such Business Combination own more than 60% of the Common Stock and
other voting securities of the surviving corporation, in substantially the same
proportions as before the Business Combination, (y) no person owns 30% or more
of the voting power of the surviving corporation (except to the extent that such
ownership existed before the Business Combination) and (z) a change in the
majority of the membership of the Board has not occurred; and (iv) the
shareholders approve a complete liquidation or dissolution of the Company.
Consummation of the BTR Offer or the Merger will constitute a Change of Control.
The Severance Agreements also (i) provide that severance payments are based
on a 2.5 multiple (3 multiple in the case of Mr. Risher) of Compensation (as
defined below), rather than a multiple based on length of the participant's
service, (ii) provide that health benefits for participants generally continue
for 30 months (36 months in the case of Mr. Risher) following wrongful
termination of such person's employment, (iii) provide for the payment by the
Company of an additional amount to make the executive whole for any excise tax
imposed under Section 280G of the Internal Revenue Code of 1986, as amended,
(iv) subject Messrs. Kittrell, Costanza, Ascolese, Metzler and Schnaidt to
noncompetition provisions for a period of two years following termination of
employment and (v) clarify that Compensation means the sum of (1) the higher of
(A) base salary immediately prior to the Change of Control and (B) the highest
base salary following the Change of Control and (2) an amount equal to the
average of the bonuses paid with respect to the most recent three years prior to
the year in which the participant becomes eligible for severance or, if higher,
with respect to the most recent three years prior to the year of the Change of
Control.
The Severance Agreements are intended to be in lieu of benefits under the
Severance Plan, and the Board has terminated the Severance Plan.
Employment Agreements of Messrs. Risher and Raddi. Conforming changes were
made to the Employment Agreements of Messrs. Risher and Raddi, in each case to
incorporate by reference the applicable Severance Agreement.
Management Incentive Plan. On July 21, 1997, certain amendments (the "MIP
Amendments") to the Company's Fiscal Year 1997 Management Incentive Plan (the
"1997 MIP") were adopted. The MIP Amendments provide that, in the event of a
Change of Control that occurs pursuant to an agreement authorized by the Board
prior to September 30, 1998, (i) all participants in the 1997 MIP (other than
the employees for whom the Board authorized Severance Agreements) will become
entitled to receive the maximum applicable MIP Payment (as defined in the 1997
MIP) available to such person pursuant to the 1997 MIP and certain other key
employees for whom Severance Agreements were not authorized will become entitled
to receive specified bonuses, (ii) each of Messrs. Risher, Kittrell and Costanza
will become entitled to receive (a) the target level MIP Payment applicable to
such employee ($270,000, $90,000 and $72,000 for Mr. Risher, Mr. Kittrell and
Mr. Costanza, respectively) and (b) an additional payment (the "Incremental
Payment") equal to a portion (50%, 25% and 25% for Mr. Risher, Mr. Kittrell and
Mr. Costanza, respectively) of the Incremental Amount (as defined below) and
(iii) each of Messrs. Raddi, Ascolese, Metzler and Schnaidt will become entitled
to receive (a) the target level MIP Payment applicable to such employee and (b)
an additional payment (the "MIP Spread Payment") equal to a portion (which
portion is based on their relative target level MIP Payments) of the Additional
Incremental Amount (as defined below), provided that with respect to the
individuals described in this clause (iii) in no event shall the sum of any of
such person's target MIP Payment and such person's MIP Spread Payment exceed
such person's maximum applicable MIP Payment ($160,000, $153,600, $113,600 and
$152,000 for each of Mr. Raddi, Mr. Ascolese,
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Mr. Metzler and Mr. Schnaidt). The payments to be made upon a Change of Control
pursuant to the MIP Amendments will be the amounts described in the preceding
sentence, less any MIP bonuses previously paid under the 1997 MIP without regard
to the Change of Control. Such payments are to be made in two installments, the
first on the date of the Change of Control and the second on the date which is
six months following such date or, if earlier, on the date such person resigns
for "Good Reason" or is terminated without "Cause"; provided that such person
has not voluntarily resigned from the Company (other than for death, retirement
or "Good Reason") or been terminated for "Cause," as those terms are defined in
the MIP Amendments.
For purposes of the MIP Amendments, the "Incremental Amount" is defined as
1% of the amount by which the Aggregate Change of Control Equity Value (as
defined below) exceeds $221,230,000, and the "Additional Incremental Amount" is
defined as 1% of the amount by which the Aggregate Change of Control Equity
Value exceeds $221,230,000. The "Aggregate Change of Control Equity Value" is
(a) the higher of the highest trading price of the Common Stock during the
60-day period ending on the date of the Change of Control or, if the Change of
Control is the result of a tender offer or a merger or similar corporate
transaction, the highest price per share paid in such tender offer or merger
times (b) the number of outstanding shares of voting stock as of the date of the
MIP Amendments (as the same may be adjusted to account for stock splits or
combinations, stock dividends and similar adjustments to capitalization). To the
extent that the consideration paid in any such transaction described above
consists all or in part of securities or other noncash consideration, the value
of such securities or other noncash consideration will be valued based upon
public trading prices or, if such consideration is not publicly traded, by the
Board.
Employee Stock Option Plans. On July 21, 1997, certain amendments (the
"Option Amendments") to the Company's 1989 Stock Option Plan and 1995 Employee
Stock Option and Restricted Stock Plan (collectively, the "Employee Option
Plans") were adopted. The Option Amendments (i) provide for automatic full
vesting of all unvested options granted pursuant to the Employee Option Plans
and the automatic lapse of all restrictions to which restricted stock awards are
subject, in each case upon a Change of Control and (ii) provide that in the
event of a change in corporate capitalization, such as a stock split or a
corporate transaction, including, without limitation, a merger, consolidation,
spin-off, reorganization or liquidation, the Board or a committee thereof
administering such Employee Option Plan may make such substitution or
adjustments in the number and kind of shares reserved for issuance under the
Employee Option Plan, in the number, kind and purchase price of shares subject
to outstanding options, restricted stock and stock appreciation rights granted
under the Employee Option Plan and/or such other equitable substitutions and/or
adjustments as it may determine to be appropriate in its discretion, in each
case except to the extent that such change would make ineligible for
pooling-of-interests accounting any transaction that the Company intends to be
eligible for such accounting treatment.
Management Notes. Certain executives of the Company have purchased shares
of Common Stock pursuant to stock purchase agreements with the Company in
exchange for promissory notes (the "Management Notes"). On July 21, 1997, each
Management Note was amended to provide that if, at the time the Management Note
would otherwise become payable, the obligor is unable, by reason of applicable
law, regulation or agreement with the Company, to dispose of his shares of
Common Stock purchased with the Management Note in an orderly fashion or if the
disposition of any such shares would, in the view of the Company's independent
accountants, jeopardize the intended accounting treatment of any transaction to
which the Company is a party, then the Management Note will not become payable
until such time as there has occurred at least 75 consecutive business days
during which the obligor has not been so unable to sell the shares and such
disposition would not, in the view of the Company's independent accountants,
jeopardize such accounting treatment.
Employee Stock Purchase Plan. On July 21, 1997, certain amendments (the
"Stock Purchase Amendments") to the ESPP were adopted. The Stock Purchase
Amendments provide that if a Change of Control occurs, the then-current period
during which purchases may be made under the ESPP would be bifurcated into two
periods, one of which ends as of the last payroll period to end a sufficient
number of days prior to the Change of Control to enable shares of Common Stock
to be purchased and delivered to participants in time to participate as
Shareholders in the Change of Control transaction (as determined by the Human
Resources Committee of the Board, which administers the ESPP) and the other to
begin the next
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day, with the number of ESPP Options granted to each participant for the latter
period being the excess of (i) the number of ESPP Options originally granted for
the bifurcated period over (ii) the number of ESPP Options exercised at the end
of the former period.
The foregoing descriptions are qualified in their respective entireties by
reference to the texts of the applicable agreements, plans, policies, notes and
other documents, copies of which are filed as Exhibits 5 through 25 to this
Schedule and are incorporated herein by reference.
Confidentiality Agreement. On August 29, 1997, the Company and Parent
signed a confidentiality and standstill agreement (the "Confidentiality
Agreement") providing that, subject to the terms of the agreement, Parent keep
confidential certain nonpublic information furnished by the Company. In
addition, under the terms of the Confidentiality Agreement, Parent agreed, for a
period of two years, not to, among other things, (i) acquire any of the assets
or businesses of the Company or more than 4.99% of any class of voting
securities of the Company, (ii) solicit proxies with regard to the Company or
(iii) otherwise seek to control the management or policies of the Company.
ITEM 4. THE SOLICITATION OR RECOMMENDATION.
(a) THE BOARD HAS UNANIMOUSLY APPROVED THE MERGER AGREEMENT AND THE
TRANSACTIONS CONTEMPLATED THEREBY, INCLUDING THE BTR OFFER AND THE MERGER AND
DETERMINED THAT THE BTR OFFER AND THE MERGER ARE FAIR TO, AND IN THE BEST
INTERESTS OF, THE COMPANY AND ITS SHAREHOLDERS. ACCORDINGLY, THE BOARD
UNANIMOUSLY RECOMMENDS THAT ALL SHAREHOLDERS ACCEPT THE BTR OFFER AND TENDER
THEIR SHARES PURSUANT THERETO.
Copies of the letter to the Shareholders communicating the Board's
recommendations and the press release announcing the Merger Agreement and
related transactions are filed as Exhibits 26 and 27, respectively, to this
Statement and are incorporated herein by reference.
(b) Background. On June 11, 1997, the Company received an unsolicited
letter from Danaher Corporation ("Danaher") proposing to acquire all of the
outstanding securities of the Company at a price of $20 per share of Common
Stock (the "Original Danaher Proposal"). The Board met on June 14, 19 and 23,
1997 to consider the Original Danaher Proposal and related matters. On July 9,
1997, Danaher publicly announced its intention to commence a tender offer for
the outstanding securities of the Company at a price of $20 per share of Common
Stock, and on the following day, PQR Acquisition Corporation, a wholly-owned
subsidiary of Danaher ("PQR"), commenced such an offer (the "Danaher Offer").
The Board met on July 16 and 21, 1997 to consider the Danaher Offer and related
matters. At those meetings, the Board considered the Company's business,
financial condition, results of operations, current business strategy and future
prospects, recent and historical market prices of the Common Stock, the terms of
the Original Danaher Proposal (at meetings in June), the terms and conditions of
the Danaher Offer (at the July meetings), potential alternatives to the Original
Danaher Proposal and the Danaher Offer, and other matters, including information
presented by the Company's management, legal advisors and investment banker. At
the Board's meeting on July 21, 1997, the Board unanimously determined that the
Danaher Offer is inadequate and not in the best interests of the Company or its
Shareholders, and announced its conclusion that the interests of the Company and
its Shareholders would be best served by the Company exploring strategic
alternatives available to it to maximize Shareholder value, including a possible
sale of or other extraordinary transaction involving the Company.
As part of its exploration of alternatives, the Company and Lazard Freres &
Co. LLC ("Lazard Freres"), the Company's investment banker, identified and
contacted over 70 third parties that were believed to have had a potential
interest in engaging in a possible extraordinary transaction with the Company.
The Company entered into confidentiality and standstill agreements with certain
of these third parties, held due diligence sessions with certain of these third
parties and engaged in discussions with certain of such third parties regarding
a possible extraordinary transaction. Following their review of confidential
information and due diligence investigations, certain of these third parties
communicated their potential interest in engaging in an extraordinary
transaction with the Company.
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As part of this process, Lazard Freres contacted Parent in August 1997 to
determine Parent's interest in investigating a potential extraordinary
transaction with the Company. The Company entered into a confidentiality and
standstill agreement (the "Confidentiality Agreement") with Parent, dated as of
August 29, 1997.
On September 15, 1997, representatives of the Company met with
representatives of Parent to discuss the Company's products and business, and
the potential benefits of a combination of the Company with Parent's Control
Systems business.
Parent was advised by Lazard Freres that there were other parties that had
expressed an interest in engaging in a transaction with the Company and that
Parent should submit an indication of what it might be willing to pay. On
September 19, 1997, Parent communicated to Lazard Freres a non-binding
indication of interest that it was willing to pay a price of at least $25 per
share of Common Stock.
Commencing the week of September 22, 1997, Parent continued its due
diligence investigation of the Company which involved meetings with Company
personnel, data review, presentations, plant tours and question and answer
sessions. The due diligence investigation included personnel from Parent and
from its Control Systems business, as well as its accountants, investment
banking, legal, technology and other advisors. The due diligence investigation
was substantially completed by October 1, 1997, although information continued
to be provided thereafter.
On September 24, Lazard Freres distributed the Company's preferred form of
merger agreement to certain third parties which had expressed a significant
interest in engaging in a transaction following the due diligence process.
Beginning on October 7, 1997, Lazard Freres received a number of proposals from
potentially interested parties, including, in certain cases, such parties'
suggested changes to the Company's preferred form of merger agreement. These
proposals involved a variety of potential transactions, including sale of the
Company, recapitalization of the Company and sale of a privately placed
convertible preferred stock of the Company. Parent communicated to the Company
that, subject to obtaining approval of Parent's Board of Directors, it was
prepared to pay a price meaningfully in excess of $25 per share of Common Stock,
but would require certain Shareholders to enter into a tender, voting and stock
option agreement and require the Company to grant Parent an option with respect
to an unspecified amount of stock of the Company.
On October 10, 1997, Lazard Freres advised the parties which had submitted
proposals, including Parent, to submit their final proposals to the Company by
the close of business on October 14, 1997. Between October 10 and October 14,
members of management, Lazard Freres and the Company's outside counsel met with
certain interested parties, including Parent, and their respective advisors to
discuss the various issues raised by such parties in their suggested changes to
the Company's preferred form of merger agreement. During this period, Parent
notified the Company that it would not insist that the Company grant a stock
option to Parent.
During the course of these discussions, certain of these third parties
revised their proposals. On October 13, 1997, Parent indicated that it would be
willing to pay $26.50 per share of Common Stock to acquire the Company, but that
its proposal was subject to certain conditions including the grant of options by
certain Shareholders to Parent and that Parent would require, in the event of
termination of the Merger Agreement under certain specified circumstances, a
termination fee of $25 million and reimbursement of expenses of up to $2.5
million. On October 15, 1997, each of Parent and one third party revised their
offers further, by increasing the proposed price to be paid in the transaction
(in the case of Parent to $28 per share of Common Stock) and by agreeing not to
require certain changes that they had proposed to the Company's preferred form
of merger agreement. In addition, Parent reduced the proposed termination fee
and maximum amount of reimbursable expenses to $15 million and $1 million,
respectively.
On October 15, 1997, the Board met to consider the proposals received by
the Company. During a recess in the Board meeting and following communications
from Lazard Freres regarding certain documentation issues and price, the Parent
increased its proposal to $29 per share of Common Stock. Following a further
presentation by Lazard Freres and Lazard Freres' rendering of an opinion that
the consideration to be received by holders of Common Stock is fair to such
holders from a financial point of view, the Board unanimously approved the
Merger Agreement and authorized the Company to make the acknowledgment required
of the
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Company contained in the Stockholder Agreement. The Board also (i) resolved that
the Merger Agreement and the transactions contemplated thereby were in the best
interest of the Shareholders, (ii) rendered inapplicable to the Merger Agreement
and the Stockholder Agreement and the transactions contemplated thereby Section
203 of the General Corporation Law of the State of Delaware (the "Delaware
Takeover Statute"), (iii) approved Amendment No. 3 to the Rights Agreement (as
hereinafter defined) to exempt Parent from the definition of "Acquiring Person"
to the extent Parent acquires Shares pursuant to the Merger Agreement and/or the
Stockholder Agreement and (iv) directed the Company to file a Solicitation/
Recommendation Statement on Schedule 14D-9 recommending that Shareholders tender
their Shares pursuant to the BTR Offer.
Before the market opened on October 16, 1997, the Stockholder Agreement was
executed by the parties thereto, the Merger Agreement was executed by Parent,
the Purchaser and the Company and a press release announcing the execution of
the definitive agreements was issued by both Parent and the Company.
Reasons for the Recommendation. In reaching the conclusions and
recommendations described above, the Board considered a number of factors,
including, without limitation, the following:
(i) The Board's familiarity with the business, financial condition,
results of operations, current business strategy and future prospects of
the Company, the nature of the markets in which the Company operates, the
Company's position in such markets, the strength of the Company's
management team, the Company's strong relationships with key worldwide
customers and the Company's unique positioning as the "one-stop" global
source for all types of uninterruptible power supply products;
(ii) The terms and conditions of the BTR Offer and the Merger
Agreement, including the price to be paid in the BTR Offer and the Merger,
the fact that such consideration is all cash, an absence of a financing
condition and the fact that Parent and the Purchaser would require the Four
Stockholders to enter into the Stockholder Agreement;
(iii) Information provided by the Company's management relating to the
Company's financial performance and future prospects;
(iv) The presentation of Lazard Freres, at the October 15, 1997 Board
meeting and the written opinion of Lazard Freres, dated October 16, 1997,
that, based upon and subject to the matters set forth therein and as of the
date thereof, the consideration to be received by holders of Common Stock
in the BTR Offer and the Merger is fair from a financial point of view to
such holders. A copy of the written opinion of Lazard Freres, which sets
forth the factors considered, assumptions made and limitations on the
review conducted by Lazard Freres, is attached hereto as Annex I and
Exhibit 28 and incorporated herein by reference. Shareholders are urged to
read the opinion of Lazard Freres carefully and in its entirety;
(v) The Board's review, based in part on presentations by its
investment banker, of alternatives to the BTR Offer, including the fact
that since the Danaher Offer was commenced on July 10, 1997, no alternative
proposal had been made to the Company that was superior to the BTR Offer,
although alternative proposals were made by parties that had been provided
confidential information regarding the Company and over 70 parties were
contacted;
(vi) The Board's assessment with the assistance of counsel concerning
the likelihood that BTR would obtain all required regulatory approvals for
the BTR Offer and the Merger;
(vii) The facts that (a) the Merger Agreement permits the Company,
under certain circumstances, to furnish information to and negotiate with
third parties and terminate the Merger Agreement upon the payment to Parent
of a $15 million fee and the reimbursement of expenses up to $1 million,
and (b) the Board believed that such payments and the existence of the
Stockholder Agreement would not preclude a more attractive offer for the
Company and were required by Parent in order to secure a transaction that
the Board believed to be in the best interests of Shareholders and superior
to any alternative proposals which had been received by the Company; and
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(viii) Historical and current market prices and trading information
for the Shares, including the facts that the Common Share Offer Price
represented a premium of 30.3% to the trading price of the Common Stock on
the close of business on the day before the announcement of the Merger
Agreement and a premium of 45.0% to the price per share of Common Stock
offered by Danaher.
The foregoing discussion addresses the material information and factors
considered by the Board in its consideration of the BTR Offer. In view of the
variety of factors and the amount of information considered, the Board did not
find it practicable to provide specific assessments of, quantify or otherwise
assign relative weights to the specific factors considered in reaching its
determination. The determination to recommend that Shareholders accept the BTR
Offer was made after consideration of all of the factors taken as a whole. In
addition, individual members of the Board may have given different weights to
different factors.
Opinion of Lazard Freres. Lazard Freres delivered its oral opinion to the
Board on October 15, 1997, later confirmed in writing, that, based upon and
subject to the matters set forth therein and as of the date thereof, the
consideration to be received by the holders of Common Stock in the BTR Offer and
the Merger is fair from a financial point of view to such holders.
A copy of the written opinion of Lazard Freres, which sets forth the
factors considered, assumptions made and limitations on the review conducted by
Lazard Freres, is attached hereto as Annex I and Exhibit 28 and incorporated by
reference. Shareholders are urged to read the opinion of Lazard Freres carefully
and in its entirety.
ITEM 5. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED.
The Company has retained Lazard Freres as its investment banker with
respect to the Danaher Offer and related matters. Pursuant to the agreement
between the Company and Lazard Freres, dated July 12, 1997, the Company agreed
to pay Lazard Freres (i) an investment banker retainer fee of $400,000, and (ii)
an additional fee of $3,600,000 payable upon the earlier of (a) completion of a
Transaction (as defined below) and (b) October 1, 1997 with respect to 50% of
such amount, and April 1, 1998 with respect to the remainder of such amount. A
"Transaction" is defined as the sale of the Company, an interest in the Company
or a subsidiary or division of the Company to another corporation or other
business entity, which transaction takes the form of a merger or a sale of
assets or equity securities or other interests, or a recapitalization of the
Company. Lazard Freres' engagement may be terminated by either the Company or
Lazard Freres at any time; provided, however, that in the case of termination by
the Company and any expiration of the agreement with Lazard Freres, Lazard
Freres will be entitled to full payment of the fees described in this paragraph.
The Company also has agreed to reimburse Lazard Freres for its reasonable
out-of-pocket expenses, including fees and expenses of its legal counsel, and to
indemnify it against certain expenses and liabilities if incurred in connection
with its engagement, including liabilities arising under the federal securities
laws.
The Company has retained Georgeson and Company, Inc. ("Georgeson") to
assist the Company in connection with its communication with its Shareholders
with respect to, and to provide other services to the Company in connection
with, the Danaher Offer and related matters. Georgeson may contact Shareholders
by mail, telephone, telex, telegraph and personal interview and may request
brokers, dealers and other nominee Shareholders to forward material relating to
the BTR Offer to Shareholders. Georgeson will receive reasonable and customary
compensation for its services and reimbursement of out-of-pocket expenses in
connection therewith.
The Company has retained Edelman Public Relations Worldwide ("Edelman") to
assist the Company in connection with its communication with its Shareholders
with respect to the Danaher Offer, the BTR Offer and related matters. Edelman
will receive reasonable and customary compensation for its services and
reimbursement of out-of-pocket expenses in connection therewith.
Except as described above, neither the Company, nor any person acting on
its behalf, currently intends to employ, retain or compensate any other person
to make solicitations or recommendations to Shareholders on its behalf
concerning the BTR Offer.
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ITEM 6. RECENT TRANSACTIONS AND INTENT WITH RESPECT TO SECURITIES.
(a) To the knowledge of the Company, no transactions in Shares have been
effected within the past 60 days by the Company or any executive officer,
director, affiliate or subsidiary of the Company.
(b) To the knowledge of the Company, its executive officers, directors,
affiliates and subsidiaries presently intend to tender, pursuant to the BTR
Offer, any Shares which are held of record or are beneficially owned by such
persons.
ITEM 7. CERTAIN NEGOTIATIONS AND TRANSACTIONS BY THE SUBJECT COMPANY.
(a) Except as set forth in this Schedule 14D-9, the Company is not
presently engaged in any negotiation in response to the BTR Offer that relates
to or would result in (i) an extraordinary transaction such as a merger or
reorganization, involving the Company or any subsidiary of the Company; (ii) a
purchase, sale or transfer of a material amount of assets by the Company or any
subsidiary of the Company; (iii) a tender offer for or other acquisition of
securities by or of the Company; or (iv) any material change in the present
capitalization or dividend policy of the Company.
In the Merger Agreement, a copy of which has been filed as Exhibit 3 hereto
and a summary of which has been filed as Exhibit 2 hereto, the Company
represented and warranted to, and covenanted and agreed with, Parent and the
Purchaser that neither the Company nor any of its Subsidiaries has any
agreement, arrangement or understanding with any potential acquiror that,
directly or indirectly, would be violated, or require any payments, by reason of
the execution, delivery and/or consummation of the Merger Agreement. The Company
agreed that it shall, and shall cause its Subsidiaries and use its best efforts
to cause its and their officers, directors, employees, investment bankers,
attorneys and other agents and representatives to, immediately cease any
existing discussions or negotiations with any person (including a "person" as
defined in Section 13(d)(3) of the Securities Exchange Act of 1934, as amended)
other than Parent or the Purchaser (a "Third Party") heretofore conducted with
respect to any Acquisition Transaction. The Company agreed that it shall not,
and shall cause its Subsidiaries and use its best efforts to cause its and their
officers, directors, employees, investment bankers, attorneys and other agents
and representatives not to, directly or indirectly, (x) solicit, initiate,
continue, facilitate or encourage (including by way of furnishing or disclosing
non-public information) any inquiries, proposals or offers from any Third Party
with respect to, or that could reasonably be expected to lead to, any
acquisition or purchase of a material portion of the assets (other than in the
ordinary course of business) or business of, or any significant equity interest
in (including by way of a tender offer), or any amalgamation, merger,
consolidation or business combination with, or any recapitalization or
restructuring, or any similar transaction involving, the Company or any of its
Subsidiaries (the foregoing being referred to collectively as an "Acquisition
Transaction"), or (y) negotiate, explore or otherwise communicate in any way
with any Third Party with respect to any Acquisition Transaction or enter into,
approve or recommend any agreement, arrangement or understanding requiring the
Company to abandon, terminate or fail to consummate the BTR Offer and/or the
Merger or any other transaction contemplated by the Merger Agreement.
Notwithstanding anything to the contrary in the foregoing, the Company may,
prior to the purchase of Shares pursuant to the BTR Offer, in response to an
unsolicited written proposal with respect to an Acquisition Transaction
involving the acquisition of all of the Shares (or all or substantially all of
the assets of the Company and its Subsidiaries) from a Third Party (i) furnish
or disclose non-public information to such Third Party and (ii) negotiate,
explore or otherwise communicate with such Third Party, in each case only if (a)
after being advised by (x) its outside counsel with respect to its fiduciary
obligations and (y) Lazard Freres with respect to the financial terms of any
such proposed Acquisition Transaction, the Board determines reasonably and in
good faith by a majority vote that taking such action is necessary in the
exercise of its fiduciary obligations under applicable law (the proposal with
respect to an Acquisition Transaction meeting the requirements of this clause
(a), a "Superior Proposal"), (b) prior to furnishing or disclosing any
non-public information to, or entering into discussions or negotiations with,
such Third Party, the Company receives from such Third Party an executed
confidentiality agreement with terms no less favorable in the aggregate to the
Company than those contained in the Confidentiality Agreement (except that no
"standstill provisions" shall be required from any person that at the date of
the Merger Agreement had commenced a tender offer for Securities of the
Company), but which confidentiality agreement may not provide for any
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exclusive right to negotiate with the Company or any payments by the Company and
(c) the Company advises Parent of all such non-public information delivered to
such Third Party concurrently with such delivery; provided, however, that the
Company agreed that it shall not, and shall cause its affiliates not to, enter
into a definitive agreement with respect to a Superior Proposal unless (x) the
Company concurrently terminates the Merger Agreement in accordance with the
terms thereof and pays a $15 million termination fee and agrees to pay certain
expenses of Parent and the Purchaser (up to $1 million), and (y) such agreement
permits the Company to terminate it if it receives a Superior Proposal, such
termination and related provisions to be on terms no less favorable to the
Company, including as to fees and reimbursement of expenses, as those contained
in the Merger Agreement.
In addition, the Company agreed that it shall promptly (but in any event
within one day of the Company becoming aware of same) advise Parent of the
receipt by the Company, any of its subsidiaries or any of the Company's bankers,
attorneys or other agents or representatives of any inquiries or proposals
relating to an Acquisition Transaction and any actions taken pursuant to the
provisions discussed above. The Company agreed that it shall promptly (but in
any event within one day of the Company becoming aware of same) provide Parent
with a copy of any such inquiry or proposal in writing and a written statement
with respect to any such inquiries or proposals not in writing, which statement
shall include the identity of the parties making such inquiries or proposal and
the material terms thereof. The Company shall, from time to time, promptly (but
in any event within one day of the Company becoming aware of same) inform Parent
of the status and content of and material developments (including the calling of
meetings of the Board to take action with respect to such Acquisition
Transaction) with respect to any discussions regarding any Acquisition
Transaction with a Third Party. The Company agreed that it will not enter into
any agreement with respect to a Superior Proposal unless and until Parent has
been given notice of the identity of the parties making such Superior Proposal,
the material terms thereof and material developments referred to in the
preceding sentence at least two business days prior to the entering into such
agreement.
(b) To the knowledge of the Company, there are currently no transactions,
board resolutions, agreements in principle or signed contracts in response to
the BTR Offer, other than as described in Item 3(b) of this Statement, which
relate to or would result in one or more of the matters referred to in Item
7(a).
ITEM 8. ADDITIONAL INFORMATION TO BE FURNISHED.
Litigation. On July 9, 1997, Danaher and PQR filed a suit encaptioned
Danaher Corporation and PQR Acquisition Corp. v. Exide Electronics Group, Inc.,
et al. (C.A. No. 15796) in the Court of Chancery of the State of Delaware, New
Castle County, against the Company and the members of the Board. The complaint
alleges, among other things, that the defendants have refused and will refuse to
deal in good faith with Danaher in negotiating an acquisition of Exide by PQR
and have taken certain actions in response to Danaher's expressions of interest
in such an acquisition, which conduct is alleged to be in breach of the
fiduciary duties of the Board to Shareholders. In particular, the complaint
alleges that the Board acted in violation of its fiduciary duties in amending
Exide's By-Laws to provide for certain time periods with respect to any
stockholder call for a special meeting. The complaint seeks as relief, among
other things, (i) to compel redemption of the Rights, (ii) to compel the Board
to render the Delaware Takeover Statute inapplicable to the proposed acquisition
in connection with the Danaher Offer, (iii) to compel the Board to call a
special meeting of its stockholders at an unspecified future date, (iv) to
enjoin the Board from taking any action that would impede or interfere with the
Danaher Offer or the exercise by Exide's stockholders of their franchise and (v)
to enjoin the Board from taking any actions inconsistent with their fiduciary
obligations to Exide's stockholders. On September 11, 1997, the Company filed an
answer denying the material allegations of the complaint.
On July 9, 1997, a purported class action encaptioned Rima Spielman v.
Exide Electronics Group, Inc., et al. (C.A. No. 15800) was commenced in Delaware
Chancery Court against the Company and the members of the Board (the
"Shareholder Action"). The Shareholder Action was purportedly brought on behalf
of the public stockholders of the Company. The complaint alleges, among other
things, that (i) the defendants have refused to take the steps necessary to
maximize stockholder value, including properly considering the Danaher Offer,
(ii) by purportedly failing and refusing to take such steps, including
adequately considering the
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Danaher Offer, the defendants have breached their fiduciary duty to the
plaintiff and the public stockholders and are using their fiduciary positions of
control to thwart others in their legitimate attempts to acquire the Company and
(iii) the members of the Board have purportedly attempted to entrench themselves
in their positions with the Company by instituting certain of the By-Law
Amendments (as hereinafter defined). The Shareholder Action seeks as relief,
among other things, (i) to require the directors to cooperate with any person or
entity, including Danaher, having a bona fide interest in proposing any
transaction that would maximize stockholder value, including a merger or
acquisition of the Company, (ii) to enhance the value and attractiveness of the
Company as a merger/acquisition candidate, (iii) to take all appropriate steps
to create an active auction of the Company and (iv) to have such By-Law
Amendments declared void. On September 11, 1997, the Company filed its answer to
the complaint in the Shareholder Action denying the material allegations
contained in the complaint.
The foregoing summaries of litigation are qualified in their respective
entireties by reference to the texts of the respective complaints, a copy of
each of which is filed as Exhibit 29 and Exhibit 30, respectively, to this
Statement and are incorporated herein by reference.
By-Laws. At its meetings on June 23, 1997 and July 21, 1997, the Board
adopted certain amendments to the Company's By-Laws (the "By-Law Amendments"). A
copy of the By-Laws, as amended and restated to date, is filed as Exhibit 31 to
this Statement and is incorporated herein by reference. The By-Law Amendments
provide that a special meeting of shareholders of the Company may be called by
the Chairman or a majority of the Board and shall be called upon the written
request of holders of shares representing at least a majority in the amount of
the issued and outstanding capital stock of the Company entitled to vote on any
matter proposed to be considered at such special meeting, and set forth
procedures related thereto. Article II, Section 5(b) of the By-Laws requires
that shareholders who wish to call a special meeting make a written request (the
"Record Date Request") to the Company and that the Board fix a record date to
determine the shareholders entitled to request the special meeting (the "Request
Record Date"). The Board must adopt a resolution fixing a Request Record Date
within five business days after delivery of the Record Date Request, and the
Request Record Date must be not more than ten days after the date of such
resolution. If the Board fails to set a Request Record Date, the Request Record
Date will be the date of delivery of the Record Date Request. To be valid, the
Record Date Request must, among other things, set forth the purpose of the
special meeting and must include all information regarding the shareholders, any
matters to be brought before the meeting, and any nominees for directorships
that are required of shareholders giving notice of nominations of directors or
other business to be brought before an annual meeting.
A special meeting of shareholders is to be called upon the delivery of a
written request (a "Meeting Request") of shareholders of record as of the
Request Record Date representing at least a majority in the amount of the
capital stock of the Company issued and outstanding and entitled to vote on any
matter proposed to be considered at such special meeting (the "Requisite
Holders"). No purported request will be deemed to have been delivered to the
Company until regionally or nationally recognized independent inspectors of
elections certify to the Company that a majority of requests have been received
from Requisite Holders. The shareholders' Meeting Request must state, among
other things, the purpose for which such special meeting is to be held. A
special meeting called at the request of shareholders must be held at a date not
less than 10 and not more than 60 days after the record date for the special
meeting, as designated by the Board. If the Board fails to designate a date for
the special meeting within five business days after receiving a valid Meeting
Request from the Requisite Holders, then such meeting shall be held on the 90th
day after the date of delivery of the Meeting Request from the Requisite Holders
and the record date for the meeting shall be the 60th day before the meeting.
The Board may set a record date for the special meeting which is not later than
20 business days after the date of delivery of the valid Meeting Request from
the Requisite Holders and set a meeting not less than 10 days and not more than
60 days after such record date.
To nominate an individual for election to the Board or bring any other
business before an annual meeting of shareholders of the Company, a shareholder
must provide notice to the Company not later than 60 nor earlier than 90 days
prior to the first anniversary of the prior annual meeting, unless the date of
the annual meeting is advanced by more than 30 days or delayed more than 60 days
from such anniversary. The
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shareholder's notice must include information regarding the shareholder, any
matters to be brought before the meeting and any directors to be nominated at
the meeting.
To nominate an individual for election to the Board, the shareholder must
deliver a written notice to the Company not earlier than the earlier of (1) the
delivery of the request described in Section 5(b) of Article II of the By-Laws
and (2) 90 days prior to such special meeting and not later than the close of
business on the later of (a) the 60th day prior to such special meeting and (b)
the 10th day following the day on which the Company first makes a public
announcement of the date of such special meeting at which directors may be
nominated. Such written notice must set forth all of the information that would
be required to be set forth in a notice of a shareholder seeking to nominate an
individual for a directorship or bring other business before an annual meeting
of shareholders.
On June 11, 1997, in connection with the Danaher Offer, the Company
received a letter (the "Danaher Meeting Request") on behalf of PQR and its
affiliates requesting a special meeting of shareholders, at which, among other
things, PQR would seek a vote on the proposals of Danaher described below, be
called when PQR had obtained consents from holders of a majority of the
outstanding Common Stock. As the By-Laws were amended on June 23, 1997, counsel
for the Company sent a copy of the By-Laws, as amended and restated to such
date, to counsel for Danaher on June 24, and notified Danaher that the Company
would treat the Danaher Meeting Request as a Record Date Request at such time as
the Danaher Meeting Request is supplemented by the information required by the
By-Law Amendments. To date, such supplemental information has not been provided.
The By-Laws provide that indemnification of directors, officers or other
persons under the applicable provisions of the By-Laws shall be paid by the
Company unless a determination is made (i) by a majority vote of directors
constituting a quorum and who were not a party to the action, suit or proceeding
at issue, (ii) if such a quorum is not obtainable, or even if obtainable if a
quorum of disinterested directors so directs, by independent legal counsel in a
written opinion or (iii) by the stockholders, that indemnification of an
individual otherwise entitled to indemnification under such By-Law provisions is
not proper because such person has not met the applicable standard of conduct.
The By-Law Amendments provide that, in addition to the circumstances set forth
in clause (ii) above, if the director or officer seeking indemnification so
requests, the determination of whether such director or officer has met the
applicable standard of conduct will be made by independent legal counsel in a
written opinion. The By-Law Amendments define "independent legal counsel" to
mean a law firm, a member of a law firm, or an independent practitioner, that is
experienced in matters of corporation law and to exclude any person who would
have a conflict of interest. Furthermore, the By-Law Amendments preclude the
Company from asserting in any suit commenced by a claimant seeking
indemnification that the procedures and presumptions regarding indemnification
contained in the By-Laws are not valid, binding and enforceable and require the
Company to stipulate in such a suit that the Company is bound by all of the
provisions regarding indemnification contained in the By-Laws.
Consent Solicitation. On July 14, 1997, PQR and Danaher filed preliminary
proxy materials (the "Danaher Solicitation Materials") to solicit agent
designations from Shareholders in order to call a special meeting to consider
and vote upon the following proposals: (i) the amendment of the By-Laws to
increase the size of the Board from nine to 19, (ii) the election of 10 nominees
of Danaher as directors of the Company (who would then constitute a majority of
the Board), (iii) the repeal of any By-Laws or amendments thereto adopted by the
Company after December 21, 1989 and prior to the effectiveness of the foregoing
proposals, (iv) any proposals made in respect of actions taken that could
impede, delay or make more costly to Danaher or DH Holdings Corp., a Delaware
corporation and a wholly owned subsidiary of Danaher, the acquisition of the
Company or any of its securities or assets or gaining control of the Company,
including through the election of a majority of the Board and (v) the
transaction of such other business as may properly come before such special
meeting or any adjournment or postponement thereof.
On July 23, 1997, the Company filed preliminary proxy materials to solicit
revocations of agent designations submitted to Danaher pursuant to the Danaher
Solicitation Materials.
The Rights Agreement. On November 10, 1992, the Board of Directors of the
Company declared a dividend of one Right for each outstanding share of the
Common Stock to holders of Common Stock of record
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at the close of business on December 7, 1992. Each Right entitles the registered
holder thereof to purchase from the Company a unit consisting of one
one-hundredth of a share (a "Fractional Share") of Series F Junior Participating
Preferred Stock (the "Series F Preferred Stock"), at a purchase price of $80.00
per Fractional Share, subject to adjustment (the "Purchase Price"). The
description and terms of the Rights are set forth in a Rights Agreement, dated
as of November 25, 1992, between the Company and First Union National Bank of
North Carolina, as Rights Agent, as amended by Amendment No. 1, effective as of
February 9, 1996, by Amendment No. 2, dated as of July 22, 1997, and by
Amendment No. 3, dated as of October 16, 1997, and as it may from time to time
be further supplemented or amended (the "Rights Agreement").
The Rights are presently attached to all certificates representing
outstanding shares of Common Stock, and no separate certificates for the Rights
("Rights Certificates") will be distributed. The Rights will separate from the
Common Stock and a "Distribution Date" will occur upon the earlier of (i) 10
days following a public announcement that a person or group of affiliated or
associated persons (an "Acquiring Person") has acquired, or obtained the right
to acquire beneficial ownership of 15% or more of the outstanding shares of
Common Stock (the date of the announcement being the "Stock Acquisition Date"),
or (ii) 10 business days (or such later date as may be determined by the
Continuing Directors) following the commencement of a tender offer or exchange
offer that would result in a person's becoming an Acquiring Person.
Notwithstanding the foregoing, (a) Massachusetts Mutual Life Insurance Company
(together with its Affiliates, "Mass Mutual"), will not be deemed an Acquiring
Person unless it becomes the beneficial owner of more than 22% of the Common
Stock of the Company then outstanding, (b) Fiskars Oy Ab and its affiliates will
not be considered an Acquiring Person with respect to its 1996 acquisition of
1,000,000 shares of Preferred Stock and 825,000 shares of Common Stock and (c)
pursuant to Amendment No. 3 to the Rights Agreement approved by the Board at its
meeting on October 15, 1997, Parent and the Purchaser will not be deemed an
"Acquiring Person" as a result of and to the extent of the acquisition by Parent
or the Purchaser of shares of Common Stock, Preferred Stock or Warrants pursuant
to the terms of the Merger Agreement or the Stockholder Agreement. Until the
Distribution Date, (1) the Rights will be evidenced by the Common Stock
certificates and will be transferred with and only with such Common Stock
certificate, (2) new Common Stock certificates issued after December 7, 1992
will contain a notation incorporating the Rights Agreement by reference, and (3)
the surrender for transfer of any certificate for Common Stock (with or without
a copy of the Summary of Rights) will also constitute the transfer of the Rights
associated with the Common Stock represented by such certificate.
The Rights are not exercisable until the Distribution Date and will expire
at the close of business on December 7, 2002, unless earlier redeemed or
exchanged by the Company as described below. As soon as practicable after the
Distribution Date, Rights Certificates will be mailed to holders of record of
Common Stock as of the close of business on the Distribution Date and,
thereafter, the separate Rights Certificates alone will evidence the Rights. All
shares of Common Stock issued prior to the Distribution Date will be issued with
Rights. Except as otherwise determined by the Board, only shares of Common Stock
issued prior to the Distribution Date will be issued with Rights.
In the event (a "Flip-In Event") that a person or group of affiliated or
associated persons becomes an Acquiring Person (except pursuant to an offer for
all outstanding shares of Common Stock at a price and on terms which a majority
of the Outside Directors (as hereinafter defined) prior to a person or group of
affiliated or associated persons becoming an Acquiring Person after receiving
advice from one or more investment banking firms determines to be fair to and
otherwise in the best interests of the Company and its stockholders (a
"Permitted Offer")), each holder of a Right will thereafter have the right to
receive, upon exercise of such Right, shares of Common Stock having a value
equal to two times the exercise price of the Right. Notwithstanding the
foregoing, following the occurrence of any Flip-In Event, all Rights that are,
or (under certain circumstances specified in the Rights Agreement) were,
beneficially owned by any Acquiring Person will be null and void in the
circumstances set forth in the Rights Agreement. However, Rights are not
exercisable following the occurrence of any Flip-In Event until such time as the
Rights are no longer redeemable by the Company as set forth below.
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<PAGE> 16
In the event (a "Flip-Over Event") that, at any time from and after the
time an Acquiring Person becomes such, (i) the Company is acquired in a merger
or other business combination transaction (other than certain mergers that
follow a Permitted Offer), or (ii) 50% or more of the Company's assets or
earning power is sold or transferred, each holder of a Right (except Rights that
previously have been voided as set forth above) shall thereafter have the right
to receive, upon exercise, common stock of the acquiring company having a value
equal to two times the exercise price of the Right. Flip-In Events and Flip-Over
Events are collectively referred to as "Triggering Events."
At any time, until 10 days following the first date of public announcement
of the occurrence of a Flip-In Event, the Company may redeem the Rights in
whole, but not in part, at a price of $.01 per Right, payable, at the option of
the Company, in cash, shares of Common Stock or such other consideration as the
Board may determine. Under certain circumstances set forth in the Rights
Agreement, the decision to redeem shall require the concurrence of a majority of
the Continuing Directors (as defined below). Immediately upon the effectiveness
of the action of the Board ordering redemption of the Rights, with, where
required, the concurrence of the Continuing Directors, the Rights will terminate
and the only right of the holders of Rights will be to receive the $.01
redemption price.
At any time after a person or group of affiliated or associated persons
becomes an Acquiring Person and prior to the acquisition by such person or group
of 50% or more of the outstanding Common Stock, the Board may exchange the
Rights (other than Rights owned by such person or group which have become void),
in whole or in part, at an exchange ratio of one share of Common Stock per Right
(subject to adjustment).
The Purchase Price payable, and the number of one one-hundredths of a share
of Series F Preferred Stock or other securities or property issuable, upon
exercise of the Rights are subject to adjustment from time to time to prevent
dilution (i) in the event of a stock dividend on, or a subdivision, combination
or reclassification of the Series F Preferred Stock, (ii) upon the grant to
holders of the Series F Preferred Stock of certain rights or warrants to
subscribe for Series F Preferred Stock or convertible securities at less than
the current market price of the Series F Preferred Stock or (iii) upon the
distribution to holders of the Series F Preferred Stock of evidences of
indebtedness or assets (excluding regular quarterly cash dividends) or of
subscription rights or warrants (other than those referred to above).
With certain exceptions, no adjustment in the Purchase Price will be
required until cumulative adjustments require an adjustment of at least 1% in
such Purchase Price. No fractional shares will be issued and in lieu thereof, an
adjustment in cash will be made based on the market price of the Series F
Preferred Stock on the last trading date prior to the date of exercise.
In general, the Company may redeem the Rights in whole, but not in part, at
any time prior to the acquisition by a person or group of affiliated or
associated persons of 15% or more of the outstanding Common Stock, at a price of
$.01 per Right. Under certain circumstances set forth in the Rights Agreement,
the decision to redeem the Rights will require the concurrence of a majority of
the Continuing Directors. Immediately upon the action of the Board ordering
redemption of the Rights, with, where required, the concurrence of the
Continuing Directors, the Rights will terminate and the only right of the
holders of Rights will be to receive the $.01 redemption price.
Until a Right is exercised, the holder thereof, as such, will have no right
as a stockholder of the Company, including, without limitation, the right to
vote or to receive dividends. While the distribution of the Rights should not be
taxable to stockholders or to the Company, stockholders may, depending upon the
circumstances, recognize taxable income in the event that the Rights become
exercisable for Common Stock (or other consideration) of the Company or for the
common stock of the acquiring company as set forth above.
The term "Continuing Director" means any member of the Board, who was a
member of the Board prior to the date of the Rights Agreement, and any person
who is subsequently elected to the Board if such person is recommended or
approved by a majority of the Continuing Directors, but shall not include an
Acquiring Person or an affiliate or associate of an Acquiring Person, or any
representation of the foregoing entities. The term "Outside Directors" means
Continuing Directors who are not officers of the Company.
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<PAGE> 17
Other than those provisions relating to the principal economic terms of the
Rights, any of the provisions of the Rights Agreement may be amended by the
Board prior to the Distribution Date; provided, that after such time as a person
or group of affiliated or associated persons becomes an Acquiring Person, no
amendment that adversely affects the interests of holders of Rights is
permitted. After the Distribution Date, the provisions of the Rights Agreement
may be amended by the Board in order to cure any ambiguity, defect or
inconsistency, to make changes that do not adversely affect the interests of
holders of Rights (excluding the interests of any Acquiring Person), or to
shorten or lengthen any time period under the Rights Agreement; provided,
however, that no amendment to lengthen the time period governing redemption
shall be made at such time as the Rights are not redeemable.
The foregoing summary of the Rights is qualified in its entirety by
reference to the Rights Agreement and the amendments thereto, copies of which
are filed as Exhibits 32, 33, 34 and 35, respectively, to this Statement and are
incorporated herein by reference.
Delaware Takeover Statute. In general, the Delaware Takeover Statute
prevents an "Interested Stockholder" (defined generally as a person that is the
"owner" (as defined in the Delaware Takeover Statute) of 15% or more of a
corporation's outstanding voting stock from engaging in a "DGCL Business
Combination" (defined as a variety of transactions, including mergers, as set
forth in the second following paragraph) with a Delaware corporation for three
years following the time such person became an Interested Stockholder unless:
(i) before such person became an Interested Stockholder, the board of directors
of the corporation approved the transaction in which the Interested Stockholder
became an Interested Stockholder or approved the DGCL Business Combination; (ii)
upon consummation of the transaction which resulted in the Interested
Stockholder becoming an Interested Stockholder, the Interested Stockholder owned
at least 85% of the voting stock of the corporation outstanding at the time the
transaction commenced (excluding stock held by directors who are also officers
and employee stock ownership plans in which employee participants do not have
the right to determine confidentially whether shares held subject to the plan
will be tendered in a tender or exchange offer), or (iii) following the
transaction in which such person became an Interested Stockholder, the DGCL
Business Combination is (x) approved by the board of directors of the
corporation and (y) authorized at a meeting of stockholders by an affirmative
vote of the holders of two-thirds of the outstanding voting stock of the
corporation not owned by the Interested Stockholder.
Under the Delaware Takeover Statute, the restrictions described above do
not apply if, among other things, (i) the corporation's original certificate of
incorporation contains a provision expressly electing not to be governed by the
Delaware Takeover Statute, (ii) the corporation, by action of its board of
directors, adopts an amendment to its by-laws within 90 days of February 2,
1988, the effective date of the Delaware Takeover Statute, expressly electing
not to be governed by the Delaware Takeover Statute, which amendment may not be
further amended by the board of directors, (iii) the corporation, by action of
its stockholders, adopts an amendment to its certificate of incorporation or
by-laws expressly electing not to be governed by the Delaware Takeover Statute,
provided that, in addition to any other vote required by law, such amendment to
the certificate of incorporation or by-laws must be approved by the affirmative
vote of a majority of the shares entitled to vote (such an amendment would not
be effective until 12 months after the adoption of such amendment and shall not
apply to any DGCL Business Combination between the corporation and any person
who became an Interested Stockholder of the corporation on or prior to such
adoption), (iv) the corporation does not have a class of voting stock that is
(x) listed on a national securities exchange, (y) authorized for quotation on
The NASDAQ Stock Market, or (z) held of record by more than 2,000 stockholders,
unless any of the foregoing results from action taken, directly or indirectly,
by an Interested Stockholder or from a transaction in which a person becomes an
Interested Stockholder, or (v) a stockholder becomes an Interested Stockholder
"inadvertently" and thereafter divests itself of ownership of a sufficient
number of shares so that such stockholder ceases to be an Interested
Stockholder. The Delaware Takeover Statute would also not apply to certain DGCL
Business Combinations proposed by an Interested Stockholder following the
announcement or notification of one of certain extraordinary transactions
involving the corporation and a person who had not been an Interested
Stockholder during the three years preceding the date of the Business
Combination or who became an Interested Stockholder with the approval of a
majority of the corporation's board of directors.
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<PAGE> 18
The Delaware Takeover Statute provides that during the three-year period
following the date a person becomes an Interested Stockholder, the corporation
may not merge or consolidate with an Interested Stockholder or any affiliate or
associate thereof, and also may not engage in certain other transactions with an
Interested Stockholder or any affiliate or associate thereof, including, without
limitation, (i) any sale, lease, exchange, mortgage, pledge, transfer or other
disposition of assets (except proportionately as a stockholder of the
corporation) having an aggregate market value equal to 10% or more of the
aggregate market value of either the aggregate value of all of the assets of the
corporation or the aggregate market value of all of the outstanding stock of the
corporation, (ii) any transaction which results in the issuance or transfer by
the corporation or by certain subsidiaries thereof of any stock of the
corporation to the Interested Stockholder, subject to certain exceptions, (iii)
any transaction involving the corporation or any majority-owned subsidiary
thereof which has the effect of increasing the proportionate share of the stock
of any class or series, or securities convertible into the stock of any class or
series, of the corporation or any such subsidiary which is owned by the
Interested Stockholder (except as a result of immaterial changes due to
fractional share adjustments or as a result of any purchase or redemption of any
shares of stock not caused, directly or indirectly, by the Interested
Stockholder), or (iv) any receipt by the Interested Stockholder of the benefit
(except proportionately as a stockholder of such corporation) of any loans,
advances, guarantees, pledges or other financial benefits provided by or through
the corporation.
In connection with the approval of the Merger Agreement, on October 15,
1997, the Board unanimously determined to make the Delaware Takeover Statute
inapplicable to the Merger Agreement, the Stockholder Agreement and the
transactions contemplated thereby to the extent shares of Common Stock are
acquired pursuant to the Merger Agreement and the Stockholder Agreement.
ITEM 9. MATERIAL TO BE FILED AS EXHIBITS.
The following Exhibits are filed herewith:
Exhibit 1 -- Pages 2-5 and 8-18 of the Exide Electronics Group, Inc. Proxy
Statement, dated January 22, 1997, issued in connection with the
Annual Meeting of Shareholders held on February 25, 1997.(1)
Exhibit 2 -- Summary of Merger Agreement from the Offer to Purchase attached
as Exhibit (a)(1) to the Schedule 14D-1, filed with the
Commission by BTR plc and BTR Acquisition Corp. on October 20,
1997.(2)
Exhibit 3 -- Agreement and Plan of Merger, dated as of October 16, 1997, by
and among BTR plc, BTR Acquisition Corp. and Exide Electronics
Group, Inc.
Exhibit 4 -- Stockholder Agreement, dated October 16, 1997, by and among
Parent, the Purchaser and the Shareholders party thereto.
Exhibit 5 -- Employment Agreement, dated September 30, 1989, with James A.
Risher.(3)
Exhibit 6 -- Form of Amendment to Employment Agreement with James A.
Risher.(4)
Exhibit 7 -- Employment Agreement, dated March 15, 1990, with William J.
Raddi.(5)
Exhibit 8 -- Form of Amendment to Employment Agreement with William J.
Raddi.(6)
Exhibit 9 -- Stock Purchase Agreement among Exide Electronics Group, Inc.,
Fiskars Oy Ab, Fiskars Holdings, Inc. and Deltec Power Systems,
Inc., dated November 16, 1995, related to the purchase of Deltec
Power Systems, Inc.(7)
Exhibit 10 -- Letter Agreement to Amend Stock Purchase Agreement among Exide
Electronics Group, Inc., Fiskars Oy Ab, Fiskars Holdings, Inc.
and Deltec Power Systems, Inc., dated February 9, 1996.(8)
Exhibit 11 -- Stockholder Agreement, dated March 13, 1996, between the Company
and Fiskars Oy Ab.(9)
Exhibit 12 -- Severance Compensation Plan After Change of Control.(10)
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<PAGE> 19
Exhibit 13 -- Form of Severance Contract.(11)
Exhibit 14 -- Exide Electronics Group, Inc. Employee Stock Purchase Plan.(12)
Exhibit 15 -- Form of First Amendment to Exide Electronics Group, Inc. Employee
Stock Purchase Plan.(13)
Exhibit 16 -- 1989 Stock Option Plan, as amended on August 11, 1992.(14)
Exhibit 17 -- Form of First Amendment to 1989 Stock Option Plan.(15)
Exhibit 18 -- Non-employee Directors' Stock Option Plan, as amended on August
11, 1992.(16)
Exhibit 19 -- Exide Electronics Group, Inc. 1995 Directors Stock Option
Plan.(17)
Exhibit 20 -- Exide Electronics Group, Inc. 1995 Employee Stock Option and
Restricted Stock Plan.(18)
Exhibit 21 -- Form of First Amendment to Exide Electronics Group, Inc. 1995
Employee Stock Option and Restricted Stock Plan.(19)
Exhibit 22 -- Exide Electronics Corporation 401(k) Retirement Benefit Plan
Summary Plan Description.(20)
Exhibit 23 -- Fiscal Year 1997 Management Incentive Plan for Exide Electronics
Group, Inc.(21)
Exhibit 24 -- Form of First Amendment to Fiscal Year 1997 Management Incentive
Plan for Exide Electronics Group, Inc.(22)
Exhibit 25 -- Form of Amendment to Promissory Note.(23)
Exhibit 26 -- Letter to Exide Electronics Group, Inc. Stockholders, dated
October 20, 1997.(24)
Exhibit 27 -- Press Release issued by Exide Electronics Group, Inc. and BTR plc
on October 16, 1997.(25)
Exhibit 28 -- Written Opinion of Lazard Freres & Co., LLC, dated October 16,
1997.(24)
Exhibit 29 -- Complaint for Declaratory and Injunctive Relief filed July 9,
1997 by Danaher Corporation and PQR Acquisition Corp. v. Exide
Electronics Group, Inc., et al. (C.A. No. 15796) in the Court of
Chancery of the State of Delaware in and for New Castle
County.(26)
Exhibit 30 -- Class Action Complaint filed July 9, 1997 by Rima Spielman v.
Exide Electronics Group, Inc., et al. (C.A. No. 15800) in the
Court of Chancery of the State of Delaware in and for New Castle
County.(27)
Exhibit 31 -- Amended and Restated By-Laws of Exide Electronics Group, Inc.(28)
Exhibit 32 -- Rights Agreement, dated as of November 25, 1992.(29)
Exhibit 33 -- Amendment No. 1 to Rights Agreement, effective as of February 9,
1996.(30)
Exhibit 34 -- Form of Amendment No. 2 to Rights Agreement.(31)
Exhibit 35 -- Form of Amendment No. 3 to Rights Agreement.(32)
- ---------------
(1) Incorporated by reference to Exhibit 1 to the Schedule 14D-9 of the Company
with respect to the Danaher Offer, filed with the Commission on July 22,
1997, as amended (the "Danaher 14D-9").
(2) Incorporated by reference to the Schedule 14D-1, of BTR plc with respect to
the BTR Offer, filed with the Commission on October 20, 1997.
(3) Incorporated by reference to Exhibit 10o to the Company's Annual Report on
Form 10-K, File No. 0-18106 for the fiscal year ended September 30, 1990.
(4) Incorporated by reference to Exhibit 3 to the Danaher 14D-9.
(5) Incorporated by reference to Exhibit 10p to the Company's Annual Report on
Form 10-K, File No. 0-18106, for the fiscal year ended September 30, 1990.
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<PAGE> 20
(6) Incorporated by reference to Exhibit 5 to the Danaher 14D-9.
(7) Incorporated by reference to Exhibit 10 to the Company's Current Report on
Form 8-K, File No. 0-18106, filed on November 17, 1995.
(8) Incorporated by reference to Exhibit 10.2 to the Company's Current Report
on Form 8-K, File No. 0-18106, filed on February 21, 1996.
(9) Incorporated by reference to Exhibit 4.6 to the Company's Registration
Statement on Form S-4, File No. 333-2471.
(10) Incorporated by reference to Exhibit 10o to Amendment No. 1 of Registration
Statement No. 33-31872 on Form S-1.
(11) Incorporated by reference to Exhibit 10 to the Danaher 14D-9.
(12) Incorporated by reference to Exhibit 11 to the Danaher 14D-9.
(13) Incorporated by reference to Exhibit 12 to the Danaher 14D-9.
(14) Incorporated by reference to Exhibit 10t to the Company's Annual Report on
Form 10-K, File No. 0-18106 for the fiscal year ended September 30, 1992.
(15) Incorporated by reference to Exhibit 14 to the Danaher 14D-9.
(16) Incorporated by reference to Exhibit 10u to the Company's Annual Report on
Form 10-K, File No. 0-18106, for the fiscal year ended September 30, 1992.
(17) Incorporated by reference to Appendix B to the Company's Proxy Statement
dated January 30, 1995, issued in connection with the Company's Annual
Meeting of Stockholders held on February 28, 1995.
(18) Incorporated by reference to Appendix A to the Company's Proxy Statement
dated January 30, 1995, issued in connection with the Company's Annual
Meeting of Stockholders held on February 28, 1995.
(19) Incorporated by reference to Exhibit 18 to the Danaher 14D-9.
(20) Incorporated by reference to Exhibit 4c to Registration Statement No.
33-64121 on Form S-8.
(21) Incorporated by reference to Exhibit 20 to the Danaher 14D-9.
(22) Incorporated by reference to Exhibit 21 to the Danaher 14D-9.
(23) Incorporated by reference to Exhibit 22 to the Danaher 14D-9.
(24) Included in copy mailed to stockholders.
(25) Incorporated by reference to Exhibit 32 to the Danaher 14D-9.
(26) Incorporated by reference to Exhibit 25 to the Danaher 14D-9.
(27) Incorporated by reference to Exhibit 26 to the Danaher 14D-9.
(28) Incorporated by reference to Exhibit 27 to the Danaher 14D-9.
(29) Incorporated by reference to Exhibit 1 to the Company's Current Report on
Form 8-K, File No. 0-18106, for the event on November 25, 1992.
(30) Incorporated by reference to Exhibit 29 to the Danaher 14D-9.
(31) Incorporated by reference to Exhibit 30 to the Danaher 14D-9.
(32) Incorporated by reference to Exhibit 33 to the Danaher 14D-9.
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<PAGE> 21
SIGNATURE
After reasonable inquiry and to the best of its knowledge and belief, the
undersigned certifies that the information set forth in this statement is true,
complete and correct.
EXIDE ELECTRONICS GROUP, INC.
By: /s/ MARTY R. KITTRELL
------------------------------------
Name: Marty R. Kittrell
Title: Vice President and
Chief Financial Officer
Dated: October 20, 1997
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<PAGE> 22
ANNEX I
[LAZARD FRERES & CO. LLC LETTERHEAD]
October 16, 1997
The Board of Directors
Exide Electronics Group, Inc.
8609 Six Forks Road
Raleigh, North Carolina 27615
Dear Members of the Board:
We understand that BTR plc, an English public limited company ("Parent"),
BTR Acquisition Corp., a subsidiary of Parent (the "Purchaser") and Exide
Electronics Group, Inc. (the "Company") have entered into an Agreement and Plan
of Merger (the "Merger Agreement") providing for the acquisition (the
"Acquisition") of the Company by the Parent pursuant to a cash tender offer by
the Purchaser for all of the outstanding shares of common stock, par value $.01
per share (the "Common Stock"), of the Company and all of the outstanding
warrants (the "Warrants") to purchase Common Stock of the Company (the "Tender
Offer") followed by a merger (the "Merger") of the Purchaser into the Company,
or, if the Minimum Condition (as defined in the Merger Agreement) under the
Tender Offer is not satisfied, pursuant only to the Merger. Under the terms of
the Merger Agreement, the consideration (the "Merger Consideration") to be paid
in the Acquisition for all outstanding shares of Common Stock will be $29 per
share of Common Stock. You have informed us that the holders of the outstanding
shares of the Company's Series G Convertible Preferred Stock, par value $.01 per
share, intend to convert their shares of preferred stock into Common Stock prior
to or simultaneously with the consummation of the Acquisition. You have also
informed us that pursuant to the terms of the Warrant Agreement, dated as of
March 13, 1996 between the Company and American National Bank Association, as
Warrant Agent, upon consummation of the Merger the Warrant Agreement will
terminate and each Warrantholder will only have the right to receive in respect
of each share of Common Stock issuable upon exercise of a Warrant an amount in
cash equal to the Merger Consideration less $13.475 (the exercise price per
share of Common Stock issuable under the Warrants).
The terms and conditions of the Tender Offer and the Merger are set forth
more fully in the Merger Agreement.
You have requested our opinion as to the fairness, from a financial point
of view, to the holders of Common Stock of the Merger Consideration to be paid
in the Acquisition to such holders. In connection with this opinion, we have:
<TABLE>
<S> <C>
(i) Reviewed the financial terms and conditions of the Merger Agreement;
(ii) Analyzed certain historical business and financial information relating to the
Company;
(iii) Reviewed various financial forecasts and other data provided to us by the
Company relating to its business;
(iv) Held discussions with members of the senior management of the Company with
respect to the businesses and prospects of the Company;
(v) Reviewed public information with respect to certain other companies in lines
of businesses we believe to be generally comparable to the businesses of the
Company;
(vi) Reviewed the financial terms of certain business combinations involving
companies in lines of business we believe to be generally comparable to those
of the businesses of the Company;
(vii) Reviewed the historical stock prices and trading volumes of the Company's
common stock; and
(viii) Conducted such other financial studies, analyses and investigations as we
deemed appropriate.
</TABLE>
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<PAGE> 23
We have relied upon the accuracy and completeness of the financial or other
information supplied or otherwise made available relating to the Company, and
have not assumed any responsibility for any independent verification of such
information or any independent valuation or appraisal of any of the assets or
liabilities of the Company. With respect to financial forecasts, we have assumed
that they have been reasonably prepared on bases reflecting the best currently
available estimates and judgments of management of the Company as to the future
financial performance of the Company. For purposes of our analyses and with your
consent, we have taken into account the view of the Company's management of the
risks and uncertainties associated with the Company achieving management's
forecasts in the amounts and at the times indicated therein. We assume no
responsibility for, and express no view as to, such forecasts or the assumptions
on which they are based.
Further, our opinion is necessarily based on economic, monetary, market and
other conditions as in effect on, and the information made available to us as
of, the date hereof.
In rendering our opinion, we have assumed that the Acquisition will be
consummated on the terms described in the Merger Agreement, without any waiver
of any material terms or conditions by the Company and that obtaining the
necessary regulatory approvals for the Acquisition will not have an adverse
effect on the Company.
Lazard Freres & Co. LLC is acting as investment banker to the Company in
connection with this transaction, and, as you know, will receive a fee for our
services, whether or not the Acquisition is consummated. Lazard Freres & Co. LLC
has in the past provided investment banking services to the Company and has
received customary compensation for such services.
Our engagement and the opinion expressed herein are for the benefit of the
Company's Board of Directors in connection with, and for the purposes of, its
evaluation of the Acquisition, and our opinion is rendered to the Company's
Board of Directors in connection with its consideration of the Acquisition. This
opinion is not intended to be, and does not constitute, a recommendation to any
stockholder of the Company as to whether to accept the Tender Offer or how to
vote on the Merger if and when such transaction is presented to a vote of
stockholders of the Company. It is understood that this letter may not be
disclosed or otherwise referred to without our prior written consent, except as
may otherwise be required by law or by a court of competent jurisdiction;
provided, however, that this opinion may be reproduced in full in the
Solicitation/Recommendation Statement on Schedule 14D-9 to be filed by the
Company with the Securities and Exchange Commission in connection with the
Tender Offer and in the Proxy Statement of the Company relating to a vote of
stockholders of the Company with respect to the Merger, if such Proxy Statement
is required.
Based on, and subject to, the foregoing, we are of the opinion that the
Merger Consideration to be paid in the Acquisition to the holders of the Common
Stock is fair to such holders from a financial point of view.
Very truly yours,
LAZARD FRERES & CO. LLC
By: /s/ JONATHAN F. FOSTER
------------------------------------
Jonathan F. Foster
Managing Director
I-2
<PAGE> 1
Exhibit 3
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER dated as of October 16, 1997, by and
among BTR plc, an English public limited company ("Parent"), BTR Acquisition
Corporation, a Delaware corporation and a subsidiary of Parent (the
"Purchaser"), and Exide Electronics Group, Inc., a Delaware corporation (the
"Company").
WHEREAS, as a condition and inducement to Parent's willingness to
enter into this Agreement, Parent has requested that the Company approve, and
the Company has approved, the Parent entering into Stockholder Agreements, dated
the date hereof, with certain holders of capital stock of the Company (the
"Stockholder Agreements");
WHEREAS, the Board of Directors of the Company has approved the
foregoing agreements and the transactions contemplated thereby;
WHEREAS, the respective Boards of Directors of Parent, the Purchaser
and the Company have approved the acquisition of the Company by Parent on the
terms and subject to the conditions set forth in this Agreement;
WHEREAS, in furtherance of such acquisition, Parent proposes to
cause the Purchaser to make a tender offer (as it may be amended from time to
time as permitted under this Agreement, the "Offer") to purchase (i) all of the
shares of Common Stock, par value $.01 per share, of the Company (the "Common
Shares" or "Shares") (including the associated Preferred Share Purchase Rights
(the "Rights") issued pursuant to the Rights Agreement dated as of November 25,
1992 between the Company and First Union National Bank of North Carolina, as
Rights Agent, as amended (the "Rights Agreement")) at a price per Common Share
of $29.00 net to the Seller in cash (such price, as it may hereafter be
increased, the "Common Share Offer Price") and (ii) all of the warrants (the
"Warrants", which Warrants together with the Shares are hereinafter defined as
the "Securities") to purchase Shares pursuant to the Warrant Agreement (the
"Warrant Agreement"), dated as of March 13, 1996, by and between the Company and
Firststar Trust
-1-
<PAGE> 2
Company, formerly named American Bank National Association, as warrant agent, at
a price per Common Share purchasable upon exercise of such Warrant of $15.525
net to the seller in cash (such price, as it may hereafter be increased, the
"Warrant Offer Price" and, together with the Common Share Offer Price, the
"Securities Offer Prices"), in each case, upon the terms and subject to the
conditions set forth in this Agreement;
WHEREAS, the Board of Directors of the Company (the "Board") has
unanimously approved this Agreement, the Offer and the Merger (as hereinafter
defined), has determined that the Offer and the Merger are fair and in the best
interests of the Company's shareholders (the "Shareholders") and is recommending
that the Shareholders accept the Offer and tender all their Shares and adopt and
approve the Merger Agreement;
WHEREAS, the respective Boards of Directors of Parent, the Purchaser
and the Company have approved the merger of the Purchaser with and into the
Company, as set forth below (the "Merger"), in accordance with the General
Corporation Law of the State of Delaware (the "GCL") and upon the terms and
subject to the conditions set forth in this Agreement, whereby each issued and
outstanding Security not owned directly or indirectly by Parent or the Company
will be converted into the right to receive the Securities Offer Price
applicable thereto in cash;
WHEREAS, Parent, the Purchaser and the Company desire to make
certain representations, warranties, covenants and agreements in connection with
the Offer and the Merger and also to prescribe various conditions to the Offer
and the Merger.
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth herein, Parent,
the Purchaser and the Company agree as follows:
ARTICLE I
THE OFFER
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<PAGE> 3
SECTION 1.01 The Offer.
(a) So long as none of the events set forth in clauses (a)
through (i) of Annex I hereto (as hereinafter provided) shall have occurred or
exist, the Purchaser shall, and Parent shall cause the Purchaser to, commence
(within the meaning of Rule 14d-2(a) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act")) as promptly as practicable after the date hereof,
but in any event not later than October 22, 1997, the Offer for all outstanding
Securities at the Securities Offer Price applicable to such Securities, net to
the seller in cash. The initial expiration date for the Offer shall be the
twentieth business day from and after the date the Offer is commenced, including
the date of commencement as the first business day in accordance with Rule 14d-2
under the Exchange Act (the "Initial Expiration Date"). As promptly as
practicable, the Purchaser shall file with the Securities and Exchange
Commission (the "SEC") the Purchaser's Tender Offer Statement on Schedule 14D-1
(together with any supplements or amendments thereto, the "Offer Documents"),
which shall contain (as an exhibit thereto) the Purchaser's Offer to Purchase
(the "Offer to Purchase") which shall be mailed to the holders of Securities
with respect to the Offer. The obligation of Parent to accept for payment or pay
for any Securities tendered pursuant to the Offer will be subject only to the
satisfaction or waiver (which waiver is restricted only to the extent set forth
in the next succeeding sentence) of the conditions set forth in Annex I hereto.
Without the prior written consent of the Company, the Purchaser shall not
decrease the price per Security or change the form of consideration payable in
the Offer, decrease the number of Shares or Warrants sought to be purchased in
the Offer, change the conditions set forth in Annex I, waive or reduce the
Minimum Condition (as defined in Annex I) to lower than fifty percent of the
fully diluted Common Shares, impose additional conditions to the Offer or amend
any other term of the Offer in any manner adverse to the holders of any
Securities, provided, however, that if all of the conditions to the Offer are
then satisfied or waived, the Parent, in order to permit the Merger to become
effective without a meeting of Shareholders in accordance with Section 253 of
the GCL, shall have the right (i) to extend the Offer for a period or periods
aggregating up to ten business days from the then effec-
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tive Expiration Date; provided, that prior to any such extensions referred to in
this clause (i), Parent and the Purchaser shall deliver to the Company a written
notice that all conditions set forth on Annex I hereto are permanently deemed to
be satisfied except for a failure of the Minimum Condition to occur or any other
such conditions the failure of which to be satisfied results from an intentional
breach hereof by the Company, and (ii) thereafter to extend the Offer with the
prior written consent of the Company; and provided further that Parent may
extend the Offer to the extent required by law or regulation. Subject to the
terms of the Offer and this Agreement and the satisfaction or waiver (which
waiver is restricted only to the extent set forth in the immediately preceding
sentence) of all the conditions of the Offer set forth in Annex I hereto as of
any expiration date, Parent will accept for payment and pay for all Securities
validly tendered and not withdrawn pursuant to the Offer as soon as practicable
after such expiration date of the Offer. Subject to Section 8.01, if the
conditions set forth in Annex I hereto are not satisfied or, waived by the
Parent, as of the Initial Expiration Date (or any subsequently scheduled
expiration date), Parent will extend the Offer from time to time for the
shortest time periods which it reasonably believes are necessary until the
consummation of the Offer. Each of Parent and the Purchaser shall use its
reasonable best efforts to avoid the occurrence of any event specified in Annex
I or to cure any such event that shall have occurred.
(b) The Offer Documents will comply in all material respects
with the provisions of applicable federal securities laws and, on the date filed
with the SEC and on the date first published, sent or given to the Shareholders,
shall not contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements made therein, in light of the circumstances under which they were
made, not misleading, except that no representation is made by Parent or the
Purchaser with respect to information supplied by the Company in writing for
inclusion in the Offer Documents. Each of Parent and the Purchaser, on the one
hand, and the Company, on the other hand, agrees promptly to correct any
information provided by it for use in the Offer Documents if and to the extent
that it shall have
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become false or misleading in any material respect and the Purchaser further
agrees to take all steps necessary to cause the Offer Documents as so corrected
to be filed with the SEC and to be disseminated to Shareholders, in each case as
and to the extent required by applicable federal securities laws.
SECTION 1.02 Company Actions.
(a) The Company shall promptly file with the SEC and mail to
the holders of Securities a Solicitation/Recommendation Statement on Schedule
14D-9 with respect to the Offer (together with any amendments or supplements
thereto, the "Schedule 14D-9"). The Schedule 14D-9 will set forth, and the
Company hereby represents, that the Board, at a meeting duly called and held,
has (i) determined that the Offer and the Merger are fair to and in the best
interests of the Company and its Shareholders, (ii) approved the Offer and the
Merger in accordance with Section 203 of the GCL, and (iii) resolved to
recommend acceptance of the Offer and approval and adoption of the Merger and
this Agreement by the Company's Shareholders (in accordance with the
requirements of the Company's certificate of incorporation and of applicable
law); provided, however, that such recommendation and approval may be withdrawn,
modified or amended to the extent that the Board determines reasonably and in
good faith that it is necessary under applicable law to do so in the exercise of
its fiduciary obligations after being advised with respect thereto by outside
counsel.
(b) The Schedule 14D-9 will comply in all material respects
with the provisions of applicable federal securities laws and, on the date filed
with the SEC and on the date first published, sent or given to the Shareholders,
shall not contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements made therein, in light of the circumstances under which they were
made, not misleading, except that no representation is made by the Company with
respect to information supplied by the Parent or Purchaser in writing for
inclusion in the Schedule 14D-9. Each of the Company, on the one hand, and
Parent and the Purchaser, on the other hand, agree promptly to correct any
information provided by either of them
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for use in the Schedule 14D-9 if and to the extent that it shall have become
false or misleading, and the Company further agrees to take all steps necessary
to cause the Schedule 14D-9 as so corrected to be filed with the SEC and to be
disseminated to the Shareholders, in each case as and to the extent required by
applicable federal securities law.
(c) In connection with the Offer, the Company will furnish the
Purchaser with such information and assistance as the Purchaser or its agents or
representatives may reasonably request in connection with communicating the
Offer to the record and beneficial holders of the Securities, including, without
limitation, its stockholders list, security position listings and non-objecting
beneficial owners list.
SECTION 1.03 Directors.
(a) Subject to compliance with applicable law, promptly upon
the payment by the Purchaser for Securities pursuant to the Offer, and from time
to time thereafter, Parent shall be entitled to designate such number of
directors, rounded up to the next whole number, on the Board as is equal to the
product of the total number of directors on the Board (determined after giving
effect to the directors elected pursuant to this sentence) multiplied by the
percentage that the aggregate number of Common Shares beneficially owned by
Parent or its affiliates bears to the total number of Shares then outstanding,
and the Company shall, upon request of Parent, promptly take all actions
necessary to cause Parent's designees to be so elected, including, if necessary,
seeking the resignations of one or more existing directors; provided, however,
that prior to the Effective Time (as defined in Section 2.02), the Board shall
always have at least three members who are neither officers, directors,
stockholders or designees of the Purchaser or any of its affiliates ("Purchaser
Insiders"). If the number of directors who are not Purchaser Insiders is reduced
below three for any reason prior to the Effective Time, the remaining directors
who are not Purchaser Insiders (or if there is only one director who is not a
Purchaser Insider, the remaining director who is not a Purchaser Insider) shall
be entitled to designate a person (or persons) to fill such vacancy (or
vacancies) who is not an officer, director, stock-
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<PAGE> 7
holder or designee of the Purchaser or any of its affiliates and who shall be a
director not deemed to be a Purchaser Insider for all purposes of this
Agreement.
(b) The Company's obligations to appoint Parent's designees to
the Board shall be subject to Section 14(f) of the Exchange Act and Rule 14f-1
thereunder. The Company shall promptly take all actions required pursuant to
such Section and Rule in order to fulfill its obligations under this Section
1.03 and shall include in the Schedule 14D-9 such information with respect to
the Company and its officers and directors as is required under such Section and
Rule in order to fulfill its obligations under this Section 1.03. Parent will
supply any information with respect to itself and its officers, directors and
affiliates required by such Section and Rule to the Company.
(c) From and after the election or appointment of Parent's
designees pursuant to this Section 1.03 and prior to the Effective Time, any
amendment or termination of this Agreement by the Company, any extension by the
Company of the time for the performance of any of the obligations or other acts
of Parent or the Purchaser or waiver of any of the Company's rights hereunder,
or any other action taken by the Board in connection with this Agreement, will
require the concurrence of a majority of the directors of the Company then in
office who are not Purchaser Insiders.
ARTICLE II
THE MERGER
SECTION 2.01 The Merger. Upon the terms and subject to the
satisfaction or waiver of the conditions hereof, and in accordance with the
applicable provisions of this Agreement and the GCL, at the Effective Time (as
defined in Section 2.02) the Purchaser shall be merged with and into the
Company. Following the Merger, the separate corporate existence of the Purchaser
shall cease and the Company shall continue as the surviving corporation (the
"Surviving Corporation"). At the option of Parent and provided that such
amendment does not delay the
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<PAGE> 8
Effective Time, the Merger may be structured so that, and this Agreement shall
thereupon be amended to provide that, the Company shall be merged with and into
the Purchaser or another direct or indirect wholly-owned subsidiary of Parent,
with the Purchaser or such other subsidiary of Parent continuing as the
Surviving Corporation; provided, however, that the Company shall be deemed not
to have breached any of its representations and warranties herein if and to the
extent such breach would have been attributable to such election.
SECTION 2.02 Effective Time; Closing. As soon as practicable after
the satisfaction or waiver of either the Second Step Conditions or the One-Step
Conditions described in Article VII hereof, the Company shall execute in the
manner required by the GCL and deliver to the Secretary of State of the State of
Delaware a duly executed and verified certificate of merger, or, if permitted, a
certificate of ownership and merger, and the parties shall take such other and
further actions as may be required by law to make the Merger effective. The time
the Merger becomes effective in accordance with applicable law is referred to as
the "Effective Time."
SECTION 2.03 Effects of the Merger. The Merger shall have the
effects set forth in Section 259 of the GCL.
SECTION 2.04 Certificate of Incorporation and By-Laws of the
Surviving Corporation.
(a) The certificate of incorporation of the Company (or such
other subsidiary of Parent if Parent exercises its option pursuant to the last
sentence of Section 2.01 hereof), as in effect immediately prior to the
Effective Time, shall be the certificate of incorporation of the Surviving
Corporation, until thereafter amended in accordance with the provisions thereof
and hereof and applicable law.
(b) Subject to the provisions of Section 6.07 of this
Agreement, the by-laws of the Purchaser in effect at the Effective Time shall be
the by-laws of the Surviving Corporation, until thereafter amended in accordance
with the provisions thereof and hereof and applicable law.
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<PAGE> 9
SECTION 2.05 Directors. Subject to applicable law, the directors of
the Purchaser immediately prior to the Effective Time shall be the initial
directors of the Surviving Corporation and shall hold office until their
respective successors are duly elected and qualified, or their earlier death,
resignation or removal.
SECTION 2.06 Officers. The officers of the Company immediately prior
to the Effective Time shall be the initial officers of the Surviving Corporation
and shall hold office until their respective successors are duly elected and
qualified, or their earlier death, resignation or removal.
SECTION 2.07 Conversion of Securities. At the Effective Time, by
virtue of the Merger and without any action on the part of the holders thereof,
(a) each Share issued and outstanding immediately prior to the Effective Time
(other than any Shares held by Parent, the Purchaser, any wholly-owned
subsidiary of Parent or the Purchaser, in the treasury of the Company or by any
wholly-owned subsidiary of the Company, which Shares, by virtue of the Merger
and without any action on the part of the holder thereof, shall be cancelled and
retired and shall cease to exist with no payment being made with respect
thereto, and other than Dissenting Shares (as defined in Section 3.01)) shall be
converted into the right to receive in cash the Securities Offer Price
applicable thereto (the "Merger Price"), and (b) in accordance with Section
14(m) of the Warrant Agreement, (i) the Warrant Agreement and each of the
Warrants, if any, which has not been purchased by Parent in the Offer shall
terminate and (ii) each holder of a Warrant, if any, which has not been
purchased by Parent in the Offer, without having to take any other action than
the surrendering of such Warrant to the Surviving Corporation, shall receive in
respect of each Common Share that may have been acquired upon exercise of such
Warrant an amount (the "Warrant Spread Amount") equal to the amount (if any) by
which the Merger Price applicable to one Common Share exceeds the exercise price
per share of such Warrant pursuant to the Warrant Agreement, in each case,
payable to the holder thereof, without interest thereon, upon surrender of the
certificate formerly representing such Security.
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<PAGE> 10
SECTION 2.08 Conversion of Purchaser Common Stock. At the Effective
Time, each share of common stock, par value $.01 per share, of the Purchaser
issued and outstanding immediately prior to the Effective Time shall, by virtue
of the Merger and without any action on the part of the holder thereof, be
converted into and become the number of validly issued, fully paid and
nonassessable shares of common stock, par value $.01 per share, of the Surviving
Corporation equal to the number of shares of Common Stock outstanding on a fully
diluted basis immediately prior to the Effective Time.
SECTION 2.09 Company Option Plans.
(a) Parent and the Company shall take all actions necessary so
that, immediately prior to the earlier of (1) the acceptance for payment and
purchase of Securities by the Purchaser pursuant to the Offer and (2) the
Effective Time, (A) each outstanding option to purchase Common Shares (an
"Option") granted under the Company's 1995 Employee Stock Option and Restricted
Stock Plan, 1995 Directors Plan, 1989 Stock Option Plan and Non-Employee
Directors Stock Option Plan (collectively, the "Option Plans"), whether or not
then exercisable or vested, shall become fully exercisable and vested, (B) each
Option which is then outstanding shall be cancelled and (C) in consideration of
such cancellation, and except to the extent that Parent or the Purchaser and the
holder of any such Option otherwise agree, immediately following consummation of
the Offer, the Company shall pay to such holders of Options an amount in respect
thereof equal to the product of (1) the excess of the Merger Price over the
exercise price thereof and (2) the number of Common Shares subject thereto (such
payment to be net of taxes required by law to be withheld with respect thereto);
provided that the foregoing shall be subject to the obtaining of any necessary
consents of holders of Options, it being agreed that the Company and Parent will
use their reasonable best efforts to obtain any such consents.
(b) Parent and the Company shall take all actions necessary so
that, immediately prior to the Effective Time, each outstanding right to
purchase Common Shares (an "ESPP Option")
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<PAGE> 11
granted under the Company's Employee Stock Purchase Plan, as amended ("ESPP"),
shall be cancelled and in consideration of such cancellation, and except to the
extent that Parent or the Purchaser and the holder of any such ESPP Option
otherwise agree, immediately prior to the Effective Time, the Company shall pay
to such holders of ESPP Options an amount in respect thereof equal to the
product of (A) the excess of the Merger Price over the Offering Price (as
defined in the ESPP) thereof and (B) the number of Common Shares subject thereto
(such payment to be net of taxes required by law to be withheld with respect
thereto); provided that the foregoing shall be subject to the obtaining of any
necessary consents of holders of ESPP Options, it being agreed that the Company
and Parent will use their reasonable best efforts to obtain any such consents
and to terminate the ESPP in connection therewith. The number of shares subject
to an ESPP Option immediately prior to the Effective Time shall be deemed to
equal that number of Common Shares that would be purchased on the last day of
the then-current Purchase Period (as defined in the ESPP) assuming that they
were purchased at the Offering Price and that the holder of such ESPP Option did
not exercise his or her right to withdraw from participation in the ESPP after
the Effective Time.
SECTION 2.10 Shareholders' Meeting.
(a) If required by the Company's certificate of incorporation
and/or applicable law in order to consummate the Merger, the Company, acting
through the Board, shall, in accordance with applicable law:
(i) duly call, give notice of, convene and hold a
special meeting of its Shareholders (the "Special Meeting") as soon as
practicable following the acceptance for payment of and payment for
Securities by the Purchaser pursuant to the Offer for the purpose of
considering and taking action upon this Agreement;
(ii) prepare and file with the SEC a preliminary proxy
statement relating to the Merger and this Agreement and use its best
efforts (x) to obtain and furnish the information required to be included
by the SEC in the
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<PAGE> 12
Proxy Statement (as hereinafter defined) and, after consultation with
Parent, to respond promptly to any comments made by the SEC with respect
to the preliminary proxy statement and cause a definitive proxy statement
(the "Proxy Statement") to be mailed to its Shareholders and (y) to obtain
the necessary approvals of the Merger and this Agreement by its
Shareholders; and
(iii) subject to the fiduciary obligations of the Board
under applicable law as advised by outside counsel, include in the Proxy
Statement the recommendation of the Board that Shareholders vote in favor
of the approval of the Merger and the adoption of this Agreement.
(b) Parent agrees that it will vote, or cause to be voted, all
of the Shares then owned by it, the Purchaser or any of its other subsidiaries
in favor of the approval of the Merger and the adoption of this Agreement.
SECTION 2.11 Merger Without Meeting of Shareholders. Notwithstanding
Section 2.10, in the event that Parent, the Purchaser or any other subsidiary of
Parent shall acquire at least 90% of the outstanding shares of each outstanding
class of capital stock of the Company pursuant to the Offer, the parties hereto
agree to take all necessary and appropriate action to cause the Merger to become
effective as soon as practicable after the acceptance for payment of and payment
for Securities by the Purchaser pursuant to the Offer without a meeting of
Shareholders, in accordance with Section 253 of the GCL.
SECTION 2.12 Earliest Consummation. Each party hereto shall use its
reasonable best efforts to consummate the Merger as soon as practicable. If the
conditions set forth in Annex I hereto are satisfied, or (subject to the fifth
sentence of Section 1.01(a)), waived, the Purchaser shall consummate the Offer
and accept for payment Securities tendered therein and thereafter effectuate the
Merger subject to the proviso in the fourth sentence of Section 1.01(a);
provided, that if the conditions set forth in Annex II hereto are satisfied
prior to the satisfaction of the conditions set forth in Annex I hereto,
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<PAGE> 13
the parties shall consummate the Merger as promptly as practicable.
ARTICLE III
DISSENTING SHARES; PAYMENT FOR SHARES AND WARRANTS
SECTION 3.01 Dissenting Shares. Notwithstanding anything in this
Agreement to the contrary, Shares outstanding immediately prior to the Effective
Time and held by a holder who has not voted in favor of the Merger or consented
thereto in writing and who has demanded appraisal for such Shares in accordance
with Section 262 of the GCL, if such Section 262 provides for appraisal rights
for such Shares in the Merger ("Dissenting Shares"), shall not be converted into
the right to receive the Merger Price as provided in Section 2.07, unless and
until such holder fails to perfect or withdraws or otherwise loses his right to
appraisal and payment under the GCL. If, after the Effective Time, any such
holder fails to perfect or withdraws or loses his right to appraisal, such
Dissenting Shares shall thereupon be treated as if they had been converted as of
the Effective Time into the right to receive the Merger Price, if any, to which
such holder is entitled, without interest or dividends thereon. The Company
shall give Parent prompt notice of any demands received by the Company for
appraisal of Shares and, prior to the Effective Time, Parent shall have the
right to participate in all negotiations and proceedings with respect to such
demands. Prior to the Effective Time, the Company shall not, except with the
prior written consent of Parent, make any payment with respect to, or settle or
offer to settle, any such demands.
SECTION 3.02 Payment for Securities.
(a) From and after the Effective Time, a bank or trust company
mutually acceptable to Parent and the Company (pursuant to an agreement
satisfactory to Parent and the Company) shall act as paying agent (the "Paying
Agent") in effecting the payment of (i) the Merger Price in respect of
certificates (the "Share Certificates") that, prior to the Effective Time,
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<PAGE> 14
represented Shares entitled to payment of the Merger Price pursuant to Section
2.07, and (ii) the applicable consideration in respect of certificates (the
"Warrant Certificates" and, together with the Share Certificates, the
"Certificates") that, prior to the Effective Time, represented Warrants entitled
to payment therefor pursuant to Section 2.07. At the Effective Time, Parent or
the Purchaser shall deposit, or cause to be deposited, in trust with the Paying
Agent the aggregate Merger Price and Warrant Spread Amount to which holders of
Securities shall be entitled at the Effective Time pursuant to Section 2.07. The
funds so deposited shall be invested by the Paying Agent as directed by Parent
in obligations of, or guaranteed by, the United States of America, in commercial
paper obligations rated A-1 or P-1 or better by Moody's Investor Services or
Standard & Poor's Corporation, respectively, or in certificates of deposit, bank
repurchase agreements or bankers, acceptances of commercial banks with capital
exceeding $100 million, in each case with maturities not exceeding seven days.
All earnings thereon shall inure to the benefit of the Surviving Corporation.
(b) Promptly after the Effective Time, the Paying Agent shall
mail to each record holder of Certificates that immediately prior to the
Effective Time represented Securities (other than Share Certificates
representing Dissenting Shares and Certificates representing Securities held by
Parent or the Purchaser, any wholly-owned subsidiary of Parent or the Purchaser,
in the treasury of the Company or by any wholly-owned subsidiary of the Company)
a form of letter of transmittal which shall specify that delivery shall be
effected, and risk of loss and title to the Certificates shall pass, only upon
proper delivery of the Certificates to the Paying Agent and instructions for use
in surrendering such Certificates and receiving the aggregate Merger Price or
aggregate Warrant Spread Amount, as applicable, in respect thereof. Upon the
surrender of each such Certificate, the Paying Agent shall pay the holder of
such Certificate (i) in respect of Shares, the Merger Price multiplied by the
number of Shares formerly represented by such Certificate, and (ii) in respect
of Warrants, the Warrant Spread Amount multiplied by the number of shares of
Common Stock that may have been acquired upon exercise of the Warrant formerly
represented by such Certificate, in each case in consideration therefor, and
such Certificate
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<PAGE> 15
shall forthwith be cancelled. Until so surrendered, each such Certificate (other
than Share Certificates representing Dissenting Shares and Certificates
representing Securities held by Parent or the Purchaser, any wholly-owned
subsidiary of Parent or the Purchaser, in the treasury of the Company or by any
wholly-owned subsidiary of the Company) shall represent solely the right to
receive the aggregate Merger Price or the aggregate Warrant Spread Amount, as
applicable, relating thereto. No interest or dividends shall be paid or accrued
on the Merger Price or the Warrant Spread Amount, as applicable. If the Merger
Price (or any portion thereof) or the Warrant Spread Amount (or any portion
thereof), as applicable, is to be delivered to any person other than the person
in whose name the Certificate formerly representing Shares or Warrants
surrendered therefor is registered, it shall be a condition to such right to
receive such Merger Price or the Warrant Spread Amount, as applicable, that the
Certificate so surrendered shall be properly endorsed or otherwise be in proper
form for transfer and that the person surrendering such Certificates shall pay
to the Paying Agent any transfer or other taxes required by reason of the
payment of the Merger Price or the Warrant Spread Amount, as applicable, to a
person other than the registered holder of the Certificate surrendered, or shall
establish to the satisfaction of the Paying Agent that such tax has been paid or
is not applicable.
(c) Promptly following the date which is 90 days after the
Effective Time, the Paying Agent shall deliver to the Surviving Corporation all
cash, Certificates and other documents in its possession relating to the
transactions described in this Agreement, and the Paying Agent's duties shall
terminate. Thereafter, each holder of a Certificate formerly representing a
Security may surrender such Certificate to the Surviving Corporation and
(subject to applicable abandoned property, escheat and similar laws) receive in
consideration therefor the aggregate Merger Price or Warrant Spread Amount, as
applicable, relating thereto, without any interest or dividends thereon.
(d) After the Effective Time, there shall be no transfers on
the stock transfer books of the Surviving Corporation of any Securities which
were outstanding immediately prior to the Effective Time. If, after the
Effective Time,
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Certificates formerly representing Securities are presented to the Surviving
Corporation or the Paying Agent, they shall be surrendered and cancelled in
return for the payment of the aggregate Merger Price or Warrant Spread Amount,
as applicable, relating thereto, as provided in this Article III, subject to
applicable law in the case of Dissenting Shares.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Parent and the Purchaser that
except (I) as specifically set forth in the SEC Reports (as defined below) and
(II) as set forth in the section of the Company Disclosure Statement
corresponding to the section of this Article IV (or any other section of such
Company Disclosure Statement so long as it is reasonably evident from the
matters disclosed on such schedule that they are or should be applicable to
another section hereof or of the Company Disclosure Statement) delivered to
Parent or the Purchaser prior to the execution hereof (the "Company Disclosure
Statement"), provided that the exception set forth in clause (I) shall not be
deemed in any way to apply to the representations and warranties covered by
Sections 4.01, 4.03, 4.04, 4.06, 4.07, 4.17 or 4.18, to the first sentence of
Section 4.13 or to the definition of Material Adverse Effect on the Company:
SECTION 4.01 Organization and Qualification; Subsidiaries. The
Company is a corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware. Each of the Company's subsidiaries (the
"Subsidiaries") is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation. The Company
and each of its Subsidiaries has the requisite corporate power and authority to
own, operate or lease its properties and to carry on its business as it is now
being conducted, and is duly qualified or licensed to do business, and is in
good standing, in each jurisdiction in which the nature of its business or the
properties owned, operated or leased by it makes such qualification, licensing
or good standing necessary,
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except where the failures to have such power or authority, or the failures to be
so qualified, licensed or in good standing, individually, and in the aggregate,
would not have a Material Adverse Effect on the Company. The term "Material
Adverse Effect on the Company", as used in this Agreement, means any change in
or effect on the business, results of operations, assets or condition (financial
or otherwise) of the Company or any of its Subsidiaries that is materially
adverse to the Company and its Subsidiaries taken as a whole except for any
change or effect resulting from general economic or financial market conditions.
SECTION 4.02 Certificate of Incorporation and By-Laws. The Company
has heretofore made available to Parent and the Purchaser a complete and correct
copy of the certificate of incorporation and the by-laws, each as amended to the
date hereof, of the Company.
SECTION 4.03 Capitalization. The authorized capital stock of the
Company consists of 30,000,000 Common Shares and 2,000,000 shares of Preferred
Stock, par value $.01 per share (the "Preferred Stock"). As of the close of
business on October 15, 1997, there were 1,000,000 shares of Series G
Convertible Preferred Stock, par value $.01 per share, of the Company (the
"Series G Shares") issued and outstanding (on which dividends in arrears
aggregated $1,272,049 as of such date), and the Company had no other shares of
Preferred Stock issued or outstanding. As of the close of business on October
15, 1997, there were 10,745,802 Common Shares issued, of which 322,462 were
owned by the Company or a wholly owned Subsidiary of the Company. The Company
has no shares of capital stock reserved for issuance, except that, as of October
15, 1997, there were (i) 894,502 Common Shares reserved for issuance pursuant to
Options outstanding on the date hereof pursuant to the Option Plans, (ii)
200,000 shares of Series F Preferred Stock reserved for issuance upon exercise
of the Rights, (iii) 309,283 Common Shares reserved for issuance upon exercise
of Warrants pursuant to the Warrant Agreement, (iv) 243,594 Common Shares
reserved for issuance upon exercise of ESPP rights (of which approximately
89,000 would be issued if there were an issuance as of September 30, 1997) and
(v) 1,000,000 Common Shares reserved for issuance upon conversion of the Series
G Shares. Since October 15, 1997, the Company has
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not issued any shares of capital stock except pursuant to the exercise of
Options, ESPP Options or Warrants or conversion of Series G Shares, in each
case, outstanding as of such date and in accordance with their terms. All the
outstanding Series G Shares and Common Shares are, and all Common Shares which
may be issued pursuant to the exercise of outstanding Options and Warrants and
the conversion of Series G Shares will be, when issued in accordance with the
respective terms thereof, duly authorized, validly issued, fully paid and
nonassessable. There are no bonds, debentures, notes or other indebtedness
having general voting rights (or convertible into securities having such rights)
("Voting Debt") of the Company or any of its subsidiaries issued and
outstanding. Except as set forth in this Section 4.03, except pursuant to the
Company's Employee Stock Purchase Plan and except for the Merger, there are no
existing options, warrants, calls, subscriptions or other rights, agreements,
arrangements or commitments of any character, relating to the issued or unissued
capital stock of the Company or any of its subsidiaries, obligating the Company
or any of its subsidiaries to issue, transfer or sell or cause to be issued,
transferred or sold any shares of capital stock or Voting Debt of, or other
equity interest in, the Company or any of its subsidiaries or securities
convertible into or exchangeable for such shares or equity interests or
obligations of the Company or any of its subsidiaries to grant, extend or enter
into any such option, warrant, call, subscription or other right, agreement,
arrangement or commitment. Except (i) as contemplated by the Merger contemplated
by this Agreement or the Rights Agreement, (ii) the Warrants and the Series G
Shares, and (iii) the Company's obligations under the Option Plans, there are no
outstanding contractual obligations of the Company or any of its subsidiaries to
repurchase, redeem or otherwise acquire any Common Shares or the capital stock
of the Company or any of its subsidiaries. Each of the outstanding shares of
capital stock of each of the Company's Significant Subsidiaries (within the
meaning of Regulation S-X under the Exchange Act) is duly authorized, validly
issued, fully paid and nonassessable, and such shares of the Company's
Significant Subsidiaries as are owned by the Company or by a subsidiary of the
Company are owned in each case free and clear of any lien, claim, option,
charge, security interest, limitation, encumbrance and restriction of any kind
(any of the foregoing being a "Lien"), except for those which are
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immaterial. Section 4.03 of the Company Disclosure Statement contains a complete
list as of the date hereof of each Significant Subsidiary of the Company and
sets forth with respect to each of the Company's Significant Subsidiaries its
name and jurisdiction of organization and, with respect to each Significant
Subsidiary of the Company that is not wholly owned by the Company or another
Subsidiary, the percentage of shares of capital stock or share capital owned by
the Company or a Subsidiary.
SECTION 4.04 Authority Relative to this Agreement. The Company has
all necessary corporate power and authority to execute and deliver this
Agreement and to consummate the transactions contemplated hereby. The execution
and delivery of this Agreement by the Company and the consummation by the
Company of the transactions contemplated hereby have been duly and validly
authorized and approved by the Board and no other corporate proceedings on the
part of the Company are necessary to authorize or approve this Agreement or to
consummate the transactions contemplated hereby (other than, with respect to the
Merger, the approval and adoption of the Merger and this Agreement by holders of
the Shares to the extent required by the Company's certificate of incorporation
and by applicable law). This Agreement has been duly and validly executed and
delivered by the Company and, assuming the due and valid authorization,
execution and delivery of this Agreement by Parent and the Purchaser,
constitutes a valid and binding obligation of the Company enforceable against
the Company in accordance with its terms, except that such enforceability (i)
may be limited by bankruptcy, insolvency, moratorium or other similar laws
affecting or relating to the enforcement of creditors' rights generally and (ii)
is subject to general principles of equity. The Board of Directors of the
Company has, by a unanimous vote at a meeting of such Board duly held on October
15, 1997, approved and adopted this Agreement, the Offer, the Merger, the
Stockholder Agreements and the other transactions contemplated hereby and
thereby, determined that the Securities Offer Price to be received by the
holders of Securities pursuant to the Offer and the Merger is fair to the
holders of the Securities and recommended that the holders of Securities approve
and adopt this Agreement, the Merger and the other transactions contemplated
hereby and tender
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their Securities pursuant to the Offer.
SECTION 4.05 No Conflict; Required Filings and Consents.
(a) None of the execution and delivery of this Agreement by
the Company, the consummation by the Company of the transactions contemplated
hereby or compliance by the Company with any of the provisions hereof will (i)
conflict with or violate the certificate of incorporation or by-laws of the
Company or the comparable organizational documents of any of its Subsidiaries,
(ii) conflict with or violate any statute, ordinance, rule, regulation, order,
judgment or decree applicable to the Company or its subsidiaries, or by which
any of them or any of their respective properties or assets may be bound or
affected, or (iii) result in a violation or breach of or constitute a default
(or an event which with notice or lapse of time or both would become a default)
under, or give to others any rights of termination, amendment, acceleration or
cancellation of, or result in any loss of any material benefit, or the creation
of any Lien on any of the property or assets of the Company or any of its
subsidiaries (any of the foregoing referred to in clause (ii) or this clause
(iii) being a "Violation") pursuant to, any note, bond, mortgage, indenture,
contract, agreement, lease, license, permit, franchise or other instrument or
obligation to which the Company or any of its subsidiaries is a party or by
which the Company or any of its subsidiaries or any of their respective
properties may be bound or affected, except in the case of the foregoing clauses
(ii) or (iii) for any such Violations which, individually and in the aggregate,
would not have a Material Adverse Effect on the Company.
(b) None of the execution and delivery of this Agreement by
the Company, the consummation by the Company of the transactions contemplated
hereby or compliance by the Company with any of the provisions hereof will
require any consent, waiver, approval, authorization or permit of, or
registration or filing with or notification to (any of the foregoing being a
"Consent"), any government or subdivision thereof, or any administrative,
governmental or regulatory authority, agency, commission, tribunal or body,
domestic, foreign or supranational
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(a "Governmental Entity"), except for (i) compliance with any applicable
requirements of the Exchange Act, (ii) the filing of a certificate of merger,
or, if permitted, a certificate of ownership and merger, pursuant to the GCL,
(iii) applicable state takeover and environmental statutes, (iv) compliance with
the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR
Act") and any requirements of any foreign or supranational Antitrust Laws (as
hereinafter defined) and (v) Consents the failure of which to obtain or make,
individually and in the aggregate, would not have a Material Adverse Effect on
the Company or materially adversely affect the ability of the Company to
consummate the transactions contemplated hereby.
SECTION 4.06 SEC Reports and Financial Statements.
(a) The Company has filed with the SEC all forms, reports,
schedules, registration statements and definitive proxy statements required to
be filed by the Company with the SEC since September 30, 1996 until the date
hereof (the "SEC Reports"). As of their respective dates, the SEC Reports
complied in all material respects with the requirements of the Exchange Act or
the Securities Act of 1933, as amended, and the rules and regulations of the SEC
promulgated thereunder applicable, as the case may be, to such SEC Reports, and
none of the SEC Reports contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary to
make the statements made therein, in light of the circumstances under which they
were made, not misleading.
(b) The consolidated balance sheets as of September 30, 1996
and 1995 and the related consolidated statements of income, common shareholders'
equity and cash flows for each of the three years in the period ended September
30, 1996 (including the related notes and schedules thereto) of the Company
contained in the Company's Form 10-K for the year ended September 30, 1996
included in the SEC Reports present fairly, in all material respects, the
consolidated financial position and the consolidated results of operations and
cash flows of the Company and its consolidated subsidiaries as of the dates or
for the periods presented therein in conformity with United States generally
accepted accounting principles ("GAAP") applied on a
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consistent basis during the periods involved except as otherwise noted therein,
including the related notes.
(c) The consolidated balance sheets and the related statements
of income and cash flows (including in each case the related notes thereto) of
the Company contained in the Forms 10-Q for the periods ended June 30, 1997 and
March 31, 1997 and December 31, 1996 included in the SEC Reports (collectively,
the Quarterly Financial Statements) have been prepared in accordance with the
requirements for interim financial statements contained in Regulation S-X. The
Quarterly Financial Statements reflect all adjustments, which include only
normal recurring adjustments, necessary to present fairly and do present fairly,
in all material respects, the consolidated financial position, results of
operations and cash flows of the Company for all periods presented therein in
conformity with GAAP applied on a consistent basis during the periods involved
except as otherwise noted therein, including the related notes.
(d) The Company and its Subsidiaries have no liabilities or
obligations of any nature (whether absolute, accrued, contingent, unmatured,
unaccrued, unliquidated, unasserted, conditional or otherwise) except for
liabilities or obligations (i) reflected or reserved against on the balance
sheet as at June 30, 1997 (including the notes thereto) included in the
Quarterly Financial Statements, (ii) incurred in the ordinary course of business
consistent with past practice since such date, or (iii) which, individually and
in the aggregate, would not have a Material Adverse Effect on the Company.
SECTION 4.07 Information. None of the information supplied by the
Company in writing specifically for inclusion or incorporation by reference in
(i) the Offer Documents, (ii) the Schedule 14D-9, (iii) the Proxy Statement or
(iv) any other document to be filed with the SEC or any other Governmental
Entity in connection with the transactions contemplated by this Agreement (the
"Other Filings") will, at the respective times filed with the SEC or other
Governmental Entity and, in addition, in the case of the Proxy Statement, at the
date it or any amendment or supplement is mailed to Shareholders, at the time of
the Special Meeting and at the Effective Time, contain any untrue
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statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements made therein, in
light of the circumstances under which they were made, not misleading. The Proxy
Statement will comply as to form in all material respects with the provisions of
the Exchange Act and the rules and regulations thereunder, except that no
representation is made by the Company with respect to statements made therein
based on information supplied by Parent or the Purchaser in writing specifically
for inclusion in the Proxy Statement.
SECTION 4.08 Litigation. As of the date hereof, there is no suit,
action or proceeding pending or, to the knowledge of the Company, threatened
against or affecting the Company or any of its subsidiaries that, individually
or in the aggregate, would have a Material Adverse Effect on the Company, nor is
there any judgment, decree, injunction or order of any Governmental Entity or
arbitrator outstanding against the Company or any of its subsidiaries that would
have, individually or in the aggregate, a Material Adverse Effect on the
Company.
SECTION 4.09 Compliance with Applicable Laws. To the best knowledge
of the Company, the Company and its subsidiaries are in compliance with all
laws, regulations and orders (except with respect to environmental matters) of
any Governmental Entity applicable to it or such subsidiaries, except for such
failures so to comply which, individually and in the aggregate, would not have a
Material Adverse Effect on the Company. To the best knowledge of the Company,
the business operations of the Company and its subsidiaries are not being
conducted in violation of any law, ordinance or regulation of any Governmental
Entity, except for possible violations which, individually or in the aggregate,
would not have a Material Adverse Effect on the Company.
SECTION 4.10 Employee Benefit Plans.
(a) Section 4.10 of the Company Disclosure Statement includes
a complete list of all material bonus, profit sharing, thrift, compensation,
stock option, restricted stock, pension, retirement, savings, welfare, deferred
compensation, employment, termination, severance, incentive, or other employee
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benefit plans, programs and agreements providing benefits to any employee or
former employee of the Company and its subsidiaries sponsored or maintained by
the Company or any of its subsidiaries or to which the Company or any of its
subsidiaries contributes or is obligated to contribute (collectively, the
"Plans"). Without limiting the generality of the foregoing, the term "Plans"
includes all employee welfare benefit plans within the meaning of Section 3(1)
of the Employee Retirement Income Security Act of 1974, as amended, and the
regulations thereunder ("ERISA") and all employee pension benefit plans within
the meaning of Section 3(2) of ERISA.
(b) With respect to each Plan, the Company has made available
to Parent a true, correct and complete copy of: (i) all plan documents, benefit
schedules, trust agreements, and insurance contracts and other funding vehicles;
(ii) the most recent Annual Report (Form 5500 Series) and accompanying schedule,
if any; (iii) the current summary plan description, if any; (iv) the most recent
annual financial report, if any; (v) the most recent actuarial report, if any;
and (vi) the most recent determination letter from the Internal Revenue Service
(the "IRS"), if any.
(c) The Company and each of its subsidiaries has complied, and
is now in compliance, in all material respects with all provisions of ERISA, the
Code and all laws and regulations applicable to the Plans. With respect to each
Plan that is intended to be a "qualified plan" within the meaning of Section
401(a) of the Code ("Qualified Plans"), the IRS has issued a favorable
determination letter, and to the knowledge of the Company nothing has occurred
at the date hereof that would reasonably be expected to cause the loss of such
qualification.
(d) All contributions required to be made to any Plan by
applicable law or regulation or by any plan document or other contractual
undertaking, and all premiums due or payable with respect to insurance policies
funding any Plan, for any period through the date hereof have been timely made
or paid in full or, to the extent not required to be made or paid on or before
the date hereof, have been fully reflected in the financial statements of the
Company included in the SEC Reports
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to the extent required under generally accepted accounting principles.
(e) No Plan is subject to Title IV or Section 302 of ERISA or
Section 412 or 4971 of the Code. There does not now exist, nor do any
circumstances exist that could result in, any liability under (i) Title IV of
ERISA, (ii) section 302 of ERISA, (iii) sections 412 and 4971 of the Code, or
(iv) the continuation coverage requirements of section 601 et seq. of ERISA and
section 4980B of the Code, that would be a liability of the Company or any of
its subsidiaries following the Closing.
(f) Except as provided in Section 2.09 hereof, or as set forth
in Section 4.10 of the Company Disclosure Statement, the execution of, and
performance of the transactions contemplated in, this Agreement will not, either
alone or upon the occurrence of subsequent events, result in any payment
(whether of severance pay or otherwise), acceleration, forgiveness of
indebtedness, vesting, distribution, increase in benefits or obligation to fund
benefits with respect to any employee or former employee of the Company or any
of its subsidiaries.
(g) There are no pending actions, claims or lawsuits which
have been asserted, instituted or, to the knowledge of the Company, threatened
in connection with any of the Plans (other than routine claims for benefits).
(h) The Company has terminated its Severance Compensation Plan
After Change of Control adopted in 1989 and no employee of the Company or any of
its Subsidiaries has any rights thereunder.
SECTION 4.11 Intellectual Property.
(a) Except as would not, individually and in the aggregate,
have a Material Adverse Effect on the Company, (i) the Company and each of its
Subsidiaries owns, has the right to acquire or is licensed or otherwise has the
right to use (in each case, clear of any liens or encumbrances of any kind), all
Intellectual Property (as defined below) used in or necessary for
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the conduct of its business as currently conducted, including the items listed
in Section 4.11 of the Company Disclosure Statement, (ii) no claims are pending
or, to the knowledge of the Company, threatened that the Company or any of its
subsidiaries is infringing on or otherwise violating the rights of any person
with regard to any Intellectual Property and (iii) to the knowledge of the
Company, no person is infringing on or otherwise violating any right of the
Company or any of its Subsidiaries with respect to any Intellectual Property
owned by and/or licensed to the Company or its subsidiaries.
(b) For purposes of this Agreement, "Intellectual Property"
shall mean patents, copyrights, trademarks (registered or unregistered), service
marks, brand names, trade dress, trade names, the goodwill associated with the
foregoing and registrations in any jurisdiction of, and applications in any
jurisdiction to register, the foregoing; and trade secrets and rights in any
jurisdiction to limit the use or disclosure thereof by any person.
SECTION 4.12 Environmental Matters. Except for the matters described
in the reports set forth on Section 4.12 of the Company Disclosure Statement or
except as would not reasonably be expected to have a Material Adverse Effect on
the Company, (i) to the knowledge of the Company, no real property currently or
formerly owned or operated by the Company or any current subsidiary thereof has
been contaminated with any Hazardous Substances to an extent or in a manner or
condition now requiring investigation, removal, corrective action, or
remediation, or that could be reasonably likely to result in liability of, or
costs to, the Company or any of its Subsidiaries, under any Environmental Law,
(ii) no judicial or administrative proceeding is pending or to the knowledge of
the Company threatened relating to liability for any off-site disposal or
contamination, (iii) there is currently no civil, criminal, or administrative
action, suit, demand, hearing, notice of violation, investigation, notice or
demand letter, or request for information pending, or to the knowledge of the
Company, threatened, under any Environmental Law against the Company or any of
its Subsidiaries, the Company and its subsidiaries have not received in writing
any claims or notices alleging liability under any Environmental Law, and the
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Company has no knowledge of any circumstances that would reasonably be expected
to result in such claims (iv) the Company and each of its Subsidiaries are
currently in compliance, and within the period of applicable statutes of
limitation, have complied, with all applicable Environmental Laws, and (v) no
property or facility currently or, to the Company's knowledge as of the date
hereof, formerly owned or operated by the Company or any of its subsidiaries is
listed or proposed for listing on the National Priorities List or the
Comprehensive Environmental Response, Compensation and Liability Information
System, both promulgated under the Comprehensive Environmental Response,
Compensation & Liability Act, as amended, or on any comparable state or foreign
list established under any Environmental Law. "Environmental Law" means any
applicable (in the United States, Finland or Mexico) federal, national, state or
local law, regulation, order, decree or judicial opinion, agency requirement
having the force and effect of law and relating to noise, odor, Hazardous
Substances, pollution, human health and safety or the protection of the
environment. "Hazardous Substance" means any pollutant, contaminant or toxic or
hazardous substance or constituent that is defined or regulated by or under
authority of any Environmental Law, including without limitation any petroleum
products, asbestos or polychlorinated biphenyls, and any other substance that
can give rise to liability under any Environmental Law. The Company has
previously made available to Purchaser and Parent or its representatives copies
of all of its material environmental reports.
SECTION 4.13 Material Adverse Change.
(a) Since June 30, 1997, there has not been any change, or any
development that is reasonably likely to result in a change, in the business,
results of operations, assets or condition (financial or otherwise) of the
Company or any of its subsidiaries that is materially adverse, or is reasonably
expected to be materially adverse, to the Company and its Subsidiaries taken as
a whole, except for any change resulting from general economic or financial
market conditions. Since June 30, 1997, the Company and its Subsidiaries have
conducted their businesses only in the ordinary course of business consistent
with past practices and there has not been, directly or
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indirectly:
(i) any payment or granting by the Company or any of its
Subsidiaries of any increase in compensation to any director or executive
officer of the Company or, except in the ordinary course of business and
consistent with past practice or as required under employment agreements
in effect as of or prior to the date of this Agreement, any employee of
the Company or its Subsidiaries;
(ii) any granting by the Company or any of its Subsidiaries to any
such director, executive officer or employee of any increase in severance
or termination pay, except as required under employment, severance or
termination agreements or plans in effect as of the date of this
Agreement;
(iii) any entry by the Company or any of its Subsidiaries into any
employment, severance or termination agreement with any such director or
executive officer, or, except in the ordinary course of business
consistent with past practice, employee;
(iv) any adoption or increase in payments to or benefits under any
profit sharing, bonus, deferred compensation, savings, insurance, pension,
retirement or other employee benefit plan for or with any employees of the
Company or any of its Subsidiaries;
(v) any change in accounting methods, principles or practices by the
Company or any of its Subsidiaries materially affecting their assets,
liabilities or business, except insofar as may have been required by
change in GAAP; or
(vi) agreed to do any of the things described in the preceding
clauses (i) through (v).
SECTION 4.14 Certain Approvals. The Board has taken appropriate
action such that, assuming the accuracy of Parent's representation in Section
5.06 of this Agreement, the provisions
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of Section 203 of the GCL will not apply to any of the transactions contemplated
by this Agreement and the Stockholder Agreements.
SECTION 4.15 Opinion of Financial Advisor. The Company has received
the written opinion of Lazard Freres & Co., LLC ("Lazard Freres") to the effect
that the Common Share Offer Price is fair to the holders of the Common Shares
from a financial point of view.
SECTION 4.16 Rights Agreement. Assuming the accuracy of Parent's
representation in Section 5.06 of this Agreement, neither the execution nor the
delivery of this Agreement nor commencement of the Offer will result in a
"Distribution Date" (as defined in the Rights Agreement). The Company has
irrevocably taken all actions necessary to make the Rights inapplicable to (a)
the Offer and the Merger effective immediately prior to the acceptance for
payment of any Securities by the Purchaser pursuant to the Offer and in
accordance with the terms of this Agreement and (b) the Stockholder Agreements
and the transactions contemplated thereby, including the Parent's exercise of
options to acquire Common Shares and the grant of the irrevocable proxies to the
Parent.
SECTION 4.17 Brokers. Except for the engagement of Lazard Freres (a
copy of whose engagement letter previously has been delivered by the Company to
the Parent), none of the Company, any of its subsidiaries, or any of their
respective officers, directors or employees has employed any broker or finder or
incurred any liability for any brokerage fees, commissions or finder's fees in
connection with the transactions contemplated by this Agreement.
SECTION 4.18 Taxes. Except to the extent that failures, individually
or in the aggregate, would not have a Material Adverse Effect on the Company,
(i) the Company has filed all Tax Returns that it was required to file and all
such Tax Returns were correct and complete in all respects, (ii) all Taxes owed
by the Company (whether or not shown on any Tax Return) have been paid, except
for Taxes as set forth on the balance sheet dated as of June 30, 1997 or which
have arisen after June 30,
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1997 in the ordinary course of the Company's trade or business and (iii) there
are no liens on any of the assets of the Company that arose in connection with
any failure (or alleged failure) to pay any Tax.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
OF PARENT AND THE PURCHASER
Parent and the Purchaser represent and warrant to the Company as
follows:
SECTION 5.01 Organization and Qualification. Parent is a corporation
duly organized, validly existing and in good standing under English law and each
material subsidiary of Parent is a corporation duly organized, validly existing
and in good standing under the laws of the jurisdiction of its organization. The
Purchaser is a corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware. Parent and each of its material
subsidiaries (including the Purchaser) has the requisite corporate power and
authority to own, operate or lease its properties and to carry on its business
as it is now being conducted, and is duly qualified or licensed to do business,
and is in good standing, in each jurisdiction in which the nature of its
business or the properties owned, operated or leased by it makes such
qualification, licensing or good standing necessary, except where the failure to
have such power or authority, or the failure to be so qualified, licensed or in
good standing, would not have a Material Adverse Effect on Parent. The term
"Material Adverse Effect on Parent", as used in this Agreement, means any change
in or effect on the business, operations or financial condition of Parent or any
of its subsidiaries that would be materially adverse to Parent and its
subsidiaries taken as a whole.
SECTION 5.02 Authority Relative to this Agreement. Each of Parent
and the Purchaser has all necessary corporate power and authority to execute
and deliver this Agreement and to consummate the transactions contemplated
hereby. The execution
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and delivery of this Agreement by Parent and the Purchaser and the
consummation by Parent and the Purchaser of the transactions contemplated hereby
have been duly and validly authorized and approved by the Boards of Directors of
Parent and the Purchaser and by Parent as stockholder of the Purchaser and no
other corporate proceedings on the part of Parent or the Purchaser are necessary
to authorize or approve this Agreement or to consummate the transactions
contemplated hereby. This Agreement has been duly executed and delivered by each
of Parent and the Purchaser and, assuming the due and valid authorization,
execution and delivery by the Company, constitutes a valid and binding
obligation of each of Parent and the Purchaser enforceable against each of them
in accordance with its terms, except that such enforceability (i) may be limited
by bankruptcy, insolvency, moratorium or other similar laws affecting or
relating to the enforcement of creditors' rights generally and (ii) is subject
to general principles of equity.
SECTION 5.03 No Conflict; Required Filings and Consents.
(a) None of the execution and delivery of this Agreement by
Parent or the Purchaser, the consummation by Parent or the Purchaser of the
transactions contemplated hereby or compliance by Parent or the Purchaser with
any of the provisions hereof will (i) conflict with or violate the
organizational documents of Parent or the Purchaser, (ii) conflict with or
violate any statute, ordinance, rule, regulation, order, judgment or decree
applicable to Parent or the Purchaser, or any of their subsidiaries, or by which
any of them or any of their respective properties or assets may be bound or
affected, or (iii) result in a Violation pursuant to any note, bond, mortgage,
indenture, contract, agreement, lease, license, permit, franchise or other
instrument or obligation to which Parent or the Purchaser, or any of their
respective subsidiaries, is a party or by which any of their respective
properties or assets may be bound or affected, except in the case of the
foregoing clauses (ii) and (iii) for any such Violations which would not have a
Material Adverse Effect on Parent or materially adversely affect the ability of
Parent or the Purchaser to consummate the transactions contemplated hereby.
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(b) None of the execution and delivery of this Agreement by
Parent and the Purchaser, the consummation by Parent and the Purchaser of the
transactions contemplated hereby or compliance by Parent and the Purchaser with
any of the provisions hereof will require any Consent of any Governmental
Entity, except for (i) compliance with any applicable requirements of the
Exchange Act, (ii) the filing of a certificate of merger, or, if permitted, a
certificate of ownership and merger, pursuant to the GCL, (iii) applicable state
takeover and environmental statutes, (iv) compliance with the HSR Act and any
requirements of any foreign or supranational Antitrust Laws, and (v) Consents
the failure of which to obtain or make would not have a Material Adverse Effect
on Parent or materially adversely affect the ability of Parent or the Purchaser
to consummate the transactions contemplated hereby.
SECTION 5.04 Information. None of the information supplied or to be
supplied by Parent and the Purchaser in writing specifically for inclusion in
(i) the Offer Documents, (ii) the Schedule 14D-9, (iii) the Proxy Statement or
(iv) the Other Filings will, at the respective times filed with the SEC or such
other Governmental Entity and, in addition, in the case of the Proxy Statement,
at the date it or any amendment or supplement is mailed to Shareholders, at the
time of the Special Meeting and at the Effective Time, contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements made therein, in
light of the circumstances under which they were made, not misleading.
SECTION 5.05 Financing. Parent or the Purchaser has available the
funds necessary to consummate the Offer and the Merger and the transactions
contemplated hereby on a timely basis.
SECTION 5.06 Parent Not an Interested Stockholder or an Acquiring
Person. As of the date of this Agreement, (a) neither Parent nor any of its
affiliates is an "Interested Stockholder" as such term is defined in Section 203
of the GCL, or an "Acquiring Person" as such term is defined in the Rights
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Agreement, and (b) neither Parent nor Purchaser beneficially owns any Shares or
Warrants.
SECTION 5.07 Brokers. None of Parent, Purchaser, or any of their
respective subsidiaries, officers, directors or employees, has employed any
broker or finder or incurred any liability for any brokerage fees, commissions
or finder's fees in connection with the transactions contemplated by this
Agreement for or with respect to which the Company is or might be liable.
ARTICLE VI
COVENANTS
SECTION 6.01 Conduct of Business of the Company. Except as required
by this Agreement or with the prior written consent of Parent, during the period
from the date of this Agreement to the Effective Time, the Company will, and
will cause each of its Subsidiaries to, conduct its operations only in the
ordinary course of business consistent with past practice and will use its
reasonable best efforts, and will cause each of its Subsidiaries to use its
reasonable best efforts, to preserve intact the business organization of the
Company and each of its Subsidiaries, to keep available the services of its and
their present officers and key employees, and to preserve the good will of those
having business relationships with it. Without limiting the generality of the
foregoing, and except as otherwise required by this Agreement or as set forth in
Section 6.01 of the Company Disclosure Statement, the Company will not, and will
not permit any of its Subsidiaries to, prior to the Effective Time, without the
prior written consent of Parent:
(a) adopt any amendment to its charter or by-laws or
comparable organizational documents or the Rights Agreement (except that the
Company may, upon notice to the Parent, lower the threshold in determining who
is an "Acquiring Person" thereunder to not less than 10%);
(b) except for issuances of capital stock of the Company's
Subsidiaries to the Company or a wholly-owned
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Subsidiary of the Company, issue, reissue or sell, or authorize the issuance,
reissuance or sale of (i) additional shares of capital stock of any class, or
securities convertible into capital stock of any class, or any rights, warrants
or options to acquire any convertible securities or capital stock, other than
the issuance of Common Shares (and the related Rights), in accordance with the
terms of the instruments governing such issuance on the date hereof, pursuant to
the exercise of Options or ESPP Options outstanding on the date hereof, pursuant
to the exercise of the Warrants or pursuant to the conversion of shares of
Series G Stock outstanding on the date hereof, in each case, as contemplated by
Section 4.03, or (ii) any other securities in respect of, in lieu of, or in
substitution for, Common Shares outstanding on the date hereof;
(c) declare, set aside or pay any dividend or other
distribution (whether in cash, securities or property or any combination
thereof) in respect of any class or series of its capital stock other than
between any of the Company and any of its wholly owned subsidiaries, except for,
in accordance with the terms of the instrument governing the Series G Shares on
the date hereof, a semi-annual dividend on the Series G Shares not in excess of
$0.80 per Series G Share, including, without limitation, all current and accrued
and unpaid dividends on the Series G Shares;
(d) split, combine, subdivide, reclassify or redeem, purchase
or otherwise acquire, or propose to redeem or purchase or otherwise acquire, any
shares of its capital stock, or any of its other securities;
(e) except for (A) increases in salary, wages and benefits of
non-executive officers or employees of the Company or its Subsidiaries in the
ordinary course of business consistent with past practice, (B) increases in
salary, wages and benefits granted to officers and employees of the Company or
its subsidiaries in conjunction with new hires, promotions or other changes in
job status in the ordinary course of business consistent with past practice, or
(C) increases in salary, wages and benefits to employees of the Company pursuant
to collective bargaining agreements entered into in the ordinary course of
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business consistent with past practice, (i) increase the compensation or fringe
benefits payable or to become payable to its directors, officers or key
employees (whether from the Company or any of its subsidiaries), or (ii) pay any
benefit not required by any existing plan or arrangement (including, without
limitation, the granting of stock options, stock appreciation rights, shares of
restricted stock or performance units) or (iii) grant any severance or
termination pay to (except pursuant to existing agreements, plans or policies
and as required by such agreements, plans or polices), or (iv) enter into any
employment or severance agreement with, any director, officer or other key
employee of the Company or any of its subsidiaries or (iv) establish, adopt,
enter into, or amend any collective bargaining, bonus, profit sharing, thrift,
compensation, stock option, restricted stock, pension, retirement, savings,
welfare, deferred compensation, employment, termination, severance or other
employee benefit plan, agreement, trust, fund, policy or arrangement for the
benefit or welfare of any directors, officers or current or former employees
(any of the foregoing being an "Employee Benefit Arrangement"), except in each
case to the extent required by applicable law or regulation; provided, however,
that nothing herein will be deemed to prohibit the payment of benefits as they
become payable;
(f) acquire, sell, lease or dispose of any assets (other than
inventory) or securities which are material to the Company and its Subsidiaries,
taken as a whole, or enter into any commitment to do any of the foregoing or
enter into any material commitment or transaction outside the ordinary course of
business consistent with past practice other than transactions between a wholly
owned subsidiary of the Company and the Company or another wholly owned
subsidiary of the Company;
(g) (i) incur, assume or pre-pay any long-term debt or incur
or assume any short-term debt, except that the Company and its subsidiaries may
incur, assume or pre-pay debt in the ordinary course of business consistent with
past practice under existing lines of credit and except for a contemplated $3
million line of credit to be offered by Bank of America with respect to the
Company's operations in Brazil, (ii) assume, guarantee, endorse or otherwise
become liable or responsible
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(whether directly, contingently or otherwise) for the obligations of any other
person except in the ordinary course of business consistent with past practice,
or (iii) make any loans, advances or capital contributions to, or investments
in, any other person except in the ordinary course of business consistent with
past practice and except for loans, advances, capital contributions or
investments between any wholly owned subsidiary of the Company (for these
purposes including any foreign subsidiary wholly owned by the Company other than
a de minimus percentage of shares owned by officers and directors of such
subsidiary) and the Company or another wholly owned subsidiary of the Company
(for these purposes including any foreign subsidiary wholly owned by the Company
other than a de minimus percentage of shares owned by officers and directors of
such subsidiary); or
(h) agree in writing or otherwise to take any of the
foregoing actions.
SECTION 6.02 Access to Information. From the date hereof until the
Effective Time, the Company will, and will cause its Subsidiaries, and each of
its and their respective officers, directors, employees, counsel, advisors and
representatives (collectively, the "Company Representatives") to, provide Parent
and the Purchaser and their respective officers, employees, counsel, advisors
and representatives (collectively, the "Parent Representatives") reasonable
access (subject, however, to existing confidentiality and similar non-disclosure
obligations and the preservation of attorney client and work product
privileges), during normal business hours and upon reasonable notice, to the
offices and other facilities and to the books and records of the Company and its
Subsidiaries, as will permit Parent and the Purchaser to make inspections of
such as either of them may reasonably require (other than environmental testing)
and will cause the Company Representatives and the Company's subsidiaries to
furnish Parent, the Purchaser and the Parent Representatives to the extent
available with such other information with respect to the business and
operations of the Company and its subsidiaries as Parent and the Purchaser may
from time to time reasonably request. Unless otherwise required by law, Parent
and the Purchaser will, and will cause the Parent Representatives to, hold any
such information in confidence until
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such time as such information otherwise becomes publicly available through no
wrongful act of Parent, the Purchaser or the Parent Representatives. In the
event of termination of this Agreement for any reason, Parent and the Purchaser
will, and will cause the Parent Representatives to, return to the Company all
copies of written information furnished by the Company or any of the Company
Representatives to Parent or the Purchaser or the Parent Representatives and
destroy all memoranda, notes and other writings prepared by Parent, the
Purchaser or the Parent Representatives based upon or including the information
furnished by the Company or any of the Company Representatives to Parent or the
Purchaser or the Parent Representatives (and Parent will certify to the Company
that such destruction has occurred). In addition, Parent will comply with the
terms of the Confidentiality Agreement (as hereinafter defined).
SECTION 6.03 Reasonable Best Efforts. Subject to the terms and
conditions herein provided and to applicable legal requirements, each of the
parties hereto agrees to use its reasonable best efforts to take, or cause to be
taken, all action, and to do, or cause to be done, in the case of the Company,
consistent with the fiduciary duties of the Company's Board of Directors (as
described in Section 6.08 hereof), and to assist and cooperate with the other
parties hereto in doing, as promptly as practicable, all things necessary,
proper or advisable under applicable laws and regulations to ensure that the
conditions set forth in Annex I and Article VII are satisfied and to consummate
and make effective the transactions contemplated by the Offer and this
Agreement.
In addition, if at any time prior to the Effective Time any event or
circumstance relating to either the Company or Parent or the Purchaser or any of
their respective subsidiaries, should be discovered by the Company or Parent, as
the case may be, and which should be set forth in an amendment to the Offer
Documents or Schedule 14D-9, the discovering party will promptly inform the
other party of such event or circumstance. If at any time after the Effective
Time any further action is necessary or desirable to carry out the purposes of
this Agreement, including the execution of additional instruments, the proper
officers and directors of each party to this Agreement shall take all such
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necessary action.
SECTION 6.04 Consents.
(a) Each of the parties will use its reasonable best efforts
to obtain as promptly as practicable all Consents of any Governmental Entity or
any other person required in connection with, and waivers of any Violations that
may be caused by, the consummation of the transactions contemplated by the Offer
and this Agreement.
(b) In furtherance and not in limitation of the foregoing,
Parent shall use its reasonable best efforts to resolve such objections, if any,
as may be asserted with respect to the transactions contemplated by this
Agreement under any antitrust, competition or trade regulatory laws, rules or
regulations of any domestic or foreign government or governmental authority or
any multinational authority ("Antitrust Laws").
(c) Any party hereto shall promptly inform the others of any
material communication from the United States Federal Trade Commission, the
Department of Justice or any other domestic or foreign government or
governmental or multinational authority regarding any of the transactions
contemplated by this Agreement. If any party or any affiliate thereof receives a
request for additional information or documentary material from any such
government or authority with respect to the transactions contemplated by this
Agreement, then such party will endeavor in good faith to make, or cause to be
made, as soon as reasonably practicable and after consultation with the other
party, an appropriate response in compliance with such request. Parent will
advise the Company promptly in respect of any understandings, undertakings or
agreements (oral or written) which Parent proposes to make or enter into with
the Federal Trade Commission, the Department of Justice or any other domestic or
foreign government or governmental or multinational authority in connection with
the transactions contemplated by this Agreement.
SECTION 6.05 Public Announcements. So long as this Agreement is in
effect, Parent, the Purchaser and the Company
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agree to use reasonable efforts to consult with each other before issuing any
press release or otherwise making any public statement with respect to the
transactions contemplated by this Agreement.
SECTION 6.06 Employee Benefit Arrangements.
(a) Parent agrees that the Company will honor and, from and
after the Effective Time, Parent will cause the Surviving Corporation to honor,
all Employee Benefit Arrangements to which the Company or any of its
subsidiaries is presently a party; provided, however, that nothing contained in
this Section 6.06(a) shall limit or restrict the Surviving Corporation's right
on or after the Effective Time to amend, modify or terminate any Employee
Benefit Arrangement in accordance with the terms thereof and applicable law.
(b) Parent intends that the Surviving Corporation would
provide, for a period of at least two years from the Effective Time, employees
of the Company and its subsidiaries (excluding employees covered by collective
bargaining agreements) cash compensation employee benefit and incentive
compensation and similar plans and programs as would provide compensation and
benefits which in the aggregate are substantially similar to those provided to
such employees as of the date hereof; provided, however, that it is understood
that after the Effective Time it is not intended that any party hereto would
issue shares of capital stock of any entity pursuant to any such plan or
program; any substitute plan or program may be based on criteria other than
stock performance.
SECTION 6.07 Indemnification.
(a) Parent agrees that all rights to indemnification now
existing in favor of any employee, agent, director or officer of the Company and
its subsidiaries as provided in their respective charters or by-laws, in an
agreement between any such person and the Company or one of its Subsidiaries, or
otherwise in effect on the date hereof shall survive the Merger and shall
continue in full force and effect for a period of not less than six years from
the Effective Time; provided that in the
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event any claim or claims are asserted or made within such six-year period, all
rights to indemnification in respect of any such claim or claims shall continue
until final disposition of any and all such claims. Parent also agrees to
indemnify all directors and officers of the Company ("Indemnified Parties") to
the fullest extent permitted by applicable law with respect to all acts and
omissions arising out of such individuals' services as officers or directors of
the Company or any of its Subsidiaries or as trustees or fiduciaries of any plan
for the benefit of employees occurring prior to the Effective Time including,
without limitation, the transactions contemplated by this Agreement. Without
limitation of the foregoing, in the event any such Indemnified Party is or
becomes involved in any capacity in any action, proceeding or investigation in
connection with any matter, including, without limitation, the transactions
contemplated by this Agreement, occurring prior to, and including, the Effective
Time, Parent will pay as incurred such Indemnified Party's reasonable legal and
other expenses of counsel selected by the Indemnified Party and reasonably
acceptable to Parent (including the cost of any investigation and preparation)
incurred in connection therewith; provided, however, that Parent shall not, in
connection with any one such action or proceeding or separate but substantially
similar actions or proceedings arising out of the same general allegations be
liable for fees and expenses of more than one separate firm of attorneys (in
addition to any local counsel) at any time for all Indemnified Parties. Parent
shall be entitled to participate in the defense of any such action or proceeding
and counsel selected by the Indemnified Party, shall, to the extent consistent
with their professional responsibilities, cooperate with Parent and any counsel
designated by Parent. Parent shall pay all reasonable expenses, including
attorneys' fees, that may be incurred by any Indemnified Party in enforcing the
indemnity and other obligations provided for in this Section 6.07.
(b) Parent agrees that the Company and, from and after the
Effective Time, the Surviving Corporation shall cause to be maintained in effect
for not less than six years from the Effective Time the current policies of the
directors' and officers' liability insurance maintained by the Company; provided
that the Surviving Corporation may substitute therefor policies
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of at least the same coverage containing terms and conditions which are no less
advantageous and provided that such substitution shall not result in any gaps or
lapses in coverage with respect to matters occurring prior to the Effective
Time; and provided, further, that the Surviving Corporation shall not be
required to pay an annual premium in excess of 300% of the last annual premium
paid by the Company prior to the date hereof and if the Surviving Corporation is
unable to obtain the insurance required by this Section 6.07(b) it shall obtain
as much comparable insurance as possible for an annual premium equal to such
maximum amount.
SECTION 6.08 No Solicitation.
(a) The Company represents and warrants to, and covenants and
agrees with, Parent and Purchaser that neither the Company nor any of its
Subsidiaries has any agreement, arrangement or understanding with any potential
acquiror that, directly or indirectly, would be violated, or require any
payments, by reason of the execution, delivery and/or consummation of this
Agreement. The Company shall, and shall cause its Subsidiaries and use its best
efforts to cause its and their officers, directors, employees, investment
bankers, attorneys and other agents and representatives to, immediately cease
any existing discussions or negotiations with any person (including a "person"
as defined in Section 13(d)(3) of the Exchange Act) other than Parent or
Purchaser (a "Third Party") heretofore conducted with respect to any Acquisition
Transaction (as hereinafter defined). The Company shall not, and shall cause its
Subsidiaries and use its best efforts to cause its and their officers,
directors, employees, investment bankers, attorneys and other agents and
representatives not to, directly or indirectly, (x) solicit, initiate, continue,
facilitate or encourage (including by way of furnishing or disclosing non-public
information) any inquiries, proposals or offers from any Third Party with
respect to, or that could reasonably be expected to lead to, any acquisition or
purchase of a material portion of the assets (other than in the ordinary course
of business) or business of, or any significant equity interest in (including by
way of a tender offer), or any amalgamation, merger, consolidation or business
combination with, or any recapitalization or restructur-
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ing, or any similar transaction involving, the Company or any of its
Subsidiaries (the foregoing being referred to collectively as an "Acquisition
Transaction"), or (y) negotiate, explore or otherwise communicate in any way
with any Third Party with respect to any Acquisition Transaction or enter into,
approve or recommend any agreement, arrangement or understanding requiring the
Company to abandon, terminate or fail to consummate the Offer and/or the Merger
or any other transaction contemplated hereby. Notwithstanding anything to the
contrary in the foregoing, the Company may, prior to the purchase of Shares
pursuant to the Offer, in response to an unsolicited written proposal with
respect to an Acquisition Transaction involving the acquisition of all of the
Shares (or all or substantially all of the assets of the Company and its
Subsidiaries) from a Third Party (i) furnish or disclose non-public information
to such Third Party and (ii) negotiate, explore or otherwise communicate with
such Third Party, in each case only if (a) after being advised by (x) its
outside counsel with respect to its fiduciary obligations and (y) Lazard Freres
with respect to the financial terms of any such proposed Acquisition
Transaction, the Board of Directors of the Company determines reasonably and in
good faith by a majority vote that taking such action is necessary in the
exercise of its fiduciary obligations under applicable law (the proposal with
respect to an Acquisition Transaction meeting the requirements of this clause
(a), a "Superior Proposal"), (b) prior to furnishing or disclosing any
non-public information to, or entering into discussions or negotiations with,
such Third Party, the Company receives from such Third Party an executed
confidentiality agreement with terms no less favorable in the aggregate to
Company than those contained in the Confidentiality Agreement (except that no
"standstill provisions" shall be required from any person that at the date
hereof has commenced a tender offer for Securities of the Company), but which
confidentiality agreement shall not provide for any exclusive right to negotiate
with the Company or any payments by the Company and (c) the Company advises
Parent of all such non-public information delivered to such Third Party
concurrently with such delivery; provided, however, that Company shall not, and
shall cause its affiliates not to, enter into a definitive agreement with
respect to a Superior Proposal unless (x) the Company concurrently terminates
this Agreement in accordance with the terms hereof and pays any
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Termination Fee required under Section 8.03(b) and agrees to pay any other
amounts required under such Section 8.03(b), and (y) such agreement permits the
Company to terminate it if it receives a Superior Proposal, such termination and
related provisions to be on terms no less favorable to the Company, including as
to fees and reimbursement of expenses, as those contained herein.
(b) The Company shall promptly (but in any event within one
day of the Company becoming aware of same) advise Parent of the receipt by the
Company, any of its subsidiaries or any of the Company's bankers, attorneys or
other agents or representatives of any inquiries or proposals relating to an
Acquisition Transaction and any actions taken pursuant to Section 6.08(a). The
Company shall promptly (but in any event within one day of the Company becoming
aware of same) provide Parent with a copy of any such inquiry or proposal in
writing and a written statement with respect to any such inquiries or proposals
not in writing, which statement shall include the identity of the parties making
such inquiries or proposal and the material terms thereof. The Company shall,
from time to time, promptly (but in any event within one day of the Company
becoming aware of same) inform Parent of the status and content of and material
developments (including the calling of meetings of the Board to take action with
respect to such Acquisition Transaction) with respect to any discussions
regarding any Acquisition Transaction with a Third Party. For the avoidance of
doubt, the Company agrees that it will not enter into any agreement with respect
to a Superior Proposal unless and until Parent has been given notice of the
identity of the parties making such Superior Proposal, the material terms
thereof and material developments referred to in the preceding sentence at least
two business days prior to the entering into such agreement.
SECTION 6.9 Notification of Certain Matters. Parent and the Company
shall promptly notify each other of (a) the occurrence or non-occurrence of any
fact or event which would be reasonably likely (i) to cause any representation
or warranty contained in this Agreement to be untrue or inaccurate in any
material respect at any time from the date hereof to the Effective Time or (ii)
to cause any material covenant, condition or agreement hereunder not to be
complied with or satisfied in
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all material respects and (b) any failure of the Company or Parent, as the case
may be, to comply with or satisfy any covenant, condition or agreement to be
complied with or satisfied by it hereunder in any material respect; provided,
however, that no such notification shall affect the representations or
warranties of any party or the conditions to the obligations of any party
hereunder.
SECTION 6.10 State Takeover Laws. The Company shall, upon the
request of the Purchaser, take all reasonable steps to assist in any challenge
by the Purchaser to the validity or applicability to the transactions
contemplated by this Agreement, including the Offer and the Merger and by the
Stockholder Agreements of any state takeover law.
ARTICLE VII
CONDITIONS TO CONSUMMATION OF THE MERGER
SECTION 7.01 Conditions to Each Party's Obligation to Effect the
Merger If the Offer Shall Have Been Consummated. The respective obligations of
Parent, the Purchaser and the Company to consummate the Merger if the Offer
shall have been consummated are subject to the satisfaction or waiver in writing
by each party hereto, at or before the Effective Time, of each of the following
conditions (the "Second Step Conditions") (and shall not be subject to the
One-Step Conditions (as defined herein)):
(a) Shareholder Approval. The Shareholders shall have duly
approved the transactions contemplated by this Agreement, to the extent required
pursuant to the requirements of the Company's certificate of incorporation and
applicable law.
(b) Purchase of Securities. The Purchaser shall have accepted
for payment and paid for Securities pursuant to the Offer in accordance with the
terms hereof; provided, that this condition shall be deemed to have been
satisfied with respect to Parent and the Purchaser if the Purchaser fails to
accept for payment or pay for Securities pursuant to the Offer in violation of
the terms of the Offer.
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(c) Injunctions; Illegality. The consummation of the Merger
shall not be restrained, enjoined or prohibited by any order, judgment, decree,
injunction or ruling of a court of competent jurisdiction or any Governmental
Entity and there shall not have been any statute, rule or regulation enacted,
promulgated or deemed applicable to the Merger by any Governmental Entity which
prevents the consummation of the Merger.
SECTION 7.02 Conditions to Each Party's Obligation to Effect the
Merger If the Offer Shall Not Have Been Consummated. The respective obligations
of the parties to consummate the Merger if the Offer shall not have been
consummated are subject to the satisfaction, or waiver in writing by the party
specified below, at or before the Effective Time, of each of the following
conditions set forth in paragraphs (a), (b) and (c) of this Section 7.02 (the
"One-Step Conditions") (and shall not be subject to the Second Step Conditions):
(a) Conditions to Each Party's Obligations. The respective
obligations of Parent, the Purchaser and the Company to consummate the Merger if
the Offer shall not have been consummated are subject to the satisfactions, or
waiver in writing by each party hereto, at or before the Effective Time, of each
of the following conditions:
(i) Shareholder Approval. The Shareholders shall have duly
approved the transactions contemplated by this Agreement, pursuant to the
requirements of the Company's certificate of incorporation and applicable law.
(ii) Injunctions; Illegality. The consummation of the Merger shall
not be restrained, enjoined or prohibited by any order, judgment, decree,
injunction or ruling of a court of competent jurisdiction or any Governmental
Entity and there shall not have been any statute, rule or regulation enacted,
promulgated or deemed applicable to the Merger by any Governmental Entity which
prevents the consummation of the Merger.
(iii) Antitrust. The expiration or termination of all applicable
waiting periods relating to the Merger under the HSR Act and applicable
antitrust laws of Belgium, Ireland, Italy,
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Germany, Mexico and Sweden, if applicable, shall have occurred.
(b) Additional Conditions to Parent and the Purchaser's
Obligation to Effect the Merger if the Offer shall not have been Consummated.
The obligation of Parent and Purchaser to effect the Merger prior to
consummation of the Offer is also subject to the satisfaction, or waiver in
writing by Parent and the Purchaser, at or before the Effective Time of each of
the additional conditions set forth in Annex II hereto.
(c) Additional Conditions to the Company's Obligation to
Effect the Merger if the Offer shall not have been Consummated. The obligation
of the Company to effect the Merger prior to consummation of the Offer is also
subject to the satisfaction, or waiver in writing by the Company, at or before
the Effective Time of each of the additional conditions set forth in Annex III
hereto.
ARTICLE VIII
TERMINATION; AMENDMENTS; WAIVER
SECTION 8.01 Termination. This Agreement may be terminated and the
Merger contemplated hereby may be abandoned at any time prior to the Effective
Time, whether or not approval thereof by the Shareholders has been obtained:
(a) by the mutual written consent of Parent and the
Company; or
(b) by the Company if the Company is not in material breach of
any of its representations, warranties, covenants or agreements contained in
this Agreement and if (i) the Purchaser fails to commence the Offer as provided
in Section 1.01 hereof, (ii) the Purchaser shall not have accepted for payment
and paid for Securities pursuant to the Offer in accordance with the terms
thereof on or before April 30, 1998 or (iii) the Purchaser fails to purchase
validly tendered Securities in violation of the terms of the Offer or this
Agreement; or
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(c) by Parent or the Company if (i) the Offer is terminated or
withdrawn pursuant to its terms without any Securities being purchased
thereunder and (ii) the One-Step Conditions shall not have been satisfied;
provided, however, that Parent may terminate this Agreement pursuant to this
Section 8.01(c) only if Parent's or the Purchaser's termination or withdrawal of
the Offer is not in violation of the terms of this Agreement or the Offer; or
(d) by Parent or the Company if any court or other
Governmental Entity shall have issued, enacted, entered, promulgated or enforced
any order, judgment, decree, injunction, or ruling or taken any other action
restraining, enjoining or otherwise prohibiting the Merger and such order,
judgment, decree, injunction, ruling or other action shall have become final and
nonappealable; or
(e) by the Company if, prior to the purchase of Securities
pursuant to the Offer in accordance with the terms of this Agreement, (i) there
shall have occurred, on the part of Parent or Purchaser, a material breach of
any representation or warranty, covenant or agreement contained in this
Agreement which is not curable or, if curable, is not cured within five business
days after written notice of such breach is given by the Company to the party
committing the breach or (ii) the Company (A) enters into a definitive agreement
with respect to a Superior Proposal and (B) pays any Termination Fee and agrees
to pay any other amounts required under Section 8.03(b); or
(f) by Parent if, prior to the purchase of Securities pursuant
to the Offer in accordance with the terms of this Agreement, (i) there shall
have occurred, on the part of the Company, a breach of any representation,
warranty, covenant or agreement contained in this Agreement which individually,
or in the aggregate if not cured would be reasonably likely to have a Material
Adverse Effect on the Company and which is not curable or, if curable, is not
cured within the later of (x) 5 business days after written notice of such
breach is given by Parent to the Company and (y) the satisfaction of all
conditions to the Offer not related to such breach or (ii) if the Board of
Directors of the Company or committee thereof shall have
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withdrawn or modified (or shall have resolved to withdraw or modify) in a manner
adverse to Parent, its approval or recommendation of this Agreement or any of
the transactions contemplated hereby (it being agreed that, for all purposes of
this agreement, including Annex I hereto, the public disclosure of the fact that
the Company has supplied a third party with information regarding the Company
shall not by itself be deemed a withdrawal or modification in a manner adverse
to Parent of the Board's approval or recommendation of this Agreement or the
transactions contemplated hereby) and the Board of Directors and such committee
shall not have fully reinstated such approval or recommendations within two
business days or shall have recommended (or resolved to recommend) an
Acquisition Transaction (other than the Offer and Merger) to the Shareholders
and at least two business days shall have passed since such recommendation (or
resolution); or
(g) by Parent if it is not in material breach of its
obligations hereunder or under the Offer and no Securities shall have been
purchased pursuant to the Offer on or before April 30, 1998.
SECTION 8.02 Effect of Termination. In the event of the termination
of this Agreement pursuant to Section 8.01, this Agreement shall forthwith
become void and have no effect, without any liability on the part of any party
or its directors, officers or stockholders, other than the provisions of this
Section 8.02, Section 8.03 and the last sentence of Section 6.02, which shall
survive any such termination. Nothing contained in this Section 8.02 shall
relieve any party from liability for any breach of this Agreement or the
Confidentiality Agreement.
SECTION 8.03 Fees and Expenses.
(a) Whether or not the Merger is consummated, all costs and
expenses incurred in connection with the Offer, this Agreement and the
transactions contemplated by this Agreement shall be paid by the party incurring
such expenses.
(b) In the event this Agreement is terminated pursuant to
Section 8.01(c), 8.01(e)(ii) or 8.01(f), then the
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Company shall promptly reimburse Parent for the documented fees and expenses of
Parent and the Purchaser related to this Agreement, the transactions
contemplated hereby and any related financing (subject to a maximum of $1.0
million) and in the event this Agreement is terminated pursuant to 8.01(e)(ii),
then the Company shall promptly pay Parent a Termination Fee of $15.0 million by
wire transfer of same day funds to an account designated by the Parent as a
condition of such termination.
(c) In the event that (i) any person shall have publicly
disclosed a proposal regarding an Acquisition Transaction and (ii) following
such disclosure, either (x) April 30, 1998 occurs without the Minimum Condition
being satisfied or the requisite stockholder approval of the Merger being
obtained (other than as a result of a material breach hereof by Parent or the
Purchaser that has not been cured within the time period set forth in Article
VIII of this Agreement) or (y) the Company breaches any of its material
obligations hereunder and does not cure such breach within the time period set
forth in Article VIII of this Agreement or (z) the Agreement is terminated
pursuant to Section 8.01(f)(ii), and (iii) not later than six months after any
such termination the Company shall have entered into an agreement for an
Acquisition Transaction, or an Acquisition Transaction shall have been
consummated, then the Company shall promptly, but in no event later than
immediately prior to, and as a condition of, entering into such definitive
agreement, or, if there is no such definitive agreement then immediately upon
consummation of the Acquisition Transaction, pay Parent a Termination Fee of
$15.0 million which amount shall be payable by wire transfer of same day funds
to an account designated by the Parent.
(d) The Company acknowledges that the agreements contained in
Section 8.03(b) and (c) are an integral part of the transactions contemplated in
this Agreement, and that, without these agreements, Parent and Purchaser would
not enter into this Agreement; accordingly, if the Company fails to promptly pay
the amount due pursuant to Section 8.03(b) and (c), and, in order to obtain such
payment, Parent or Purchaser commences a suit that results in a judgment against
the Company for the fee and expenses set forth in Section 8.03(b) and (c), the
Company shall
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<PAGE> 50
pay to Parent its costs and expenses (including reasonable attorneys' fees) in
connection with such suit. No termination of this Agreement pursuant to Article
VIII or otherwise shall prejudice the ability of a non-breaching party from
seeking damages from any other party for any breach of this Agreement,
including, without limitation, reasonable attorneys' fees and the right to
pursue any remedy at law or in equity.
SECTION 8.04 Amendment. Subject to Section 1.03(c), this Agreement
may be amended by the Company, Parent and the Purchaser at any time before or
after any approval of this Agreement by the Shareholders but, after any such
approval, no amendment shall be made which decreases the Merger Price or the
Warrant Spread Amount or which adversely affects the rights of the Shareholders
hereunder without the approval of such Shareholders. This Agreement may not be
amended except by an instrument in writing signed on behalf of all the parties.
SECTION 8.05 Extension; Waiver. Subject to Section 1.03(c), at any
time prior to the Effective Time, the parties hereto may (i) extend the time for
the performance of any of the obligations or other acts of any other party
hereto, (ii) waive any inaccuracies in the representations and warranties
contained herein by any other party or in any document, certificate or writing
delivered pursuant hereto by any other party or (iii) waive compliance with any
of the agreements of any other party or with any conditions to its own
obligations; provided, that, the Minimum Condition may not be waived by the
Purchaser, without the consent of the Company, so as to require to be validly
tendered and not withdrawn prior to the Expiration Date that number of Common
Shares which represents less than 50% of the outstanding Common Shares on a
fully diluted basis on the date of purchase (not taking into account the
Rights), it being understood that the other conditions set forth in Annexes I
and II may be waived by Purchaser without the consent of the Company. Any
agreement on the part of any party to any such extension or waiver shall be
valid only if set forth in an instrument in writing signed on behalf of such
party.
ARTICLE IX
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MISCELLANEOUS
9.
SECTION 9.01 Non-Survival of Representations and Warranties. The
representations and warranties made in this Agreement shall not survive beyond
the Effective Time. For the avoidance of doubt and notwithstanding the
foregoing, the agreements set forth in Section 3.02 and Section 6.07 shall
survive the Effective Time indefinitely (except to the extent a shorter period
of time is explicitly specified therein).
SECTION 9.02 Entire Agreement; Assignment.
(a) This Agreement (including the documents and the
instruments referred to herein) and the letter agreement, by and between Parent
and the Company, dated August 29, 1997 (the "Confidentiality Agreement"),
constitute the entire agreement and supersede all prior agreements and
understandings, both written and oral, among the parties with respect to the
subject matter hereof and thereof.
(b) Neither this Agreement nor any of the rights, interests or
obligations hereunder will be assigned by any of the parties hereto (whether by
operation of law or otherwise) without the prior written consent of the other
party. Subject to the preceding sentence, this Agreement will be binding upon,
inure to the benefit of and be enforceable by the parties and their respective
successors and assigns.
SECTION 9.03 Validity. The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement, each of which shall remain in full force
and effect.
SECTION 9.04 Notices. All notices, requests, claims, demands and
other communications hereunder shall be in writing and shall be deemed to have
been duly given when delivered in person, by overnight courier or facsimile to
the respective parties as follows:
If to Parent or the Purchaser:
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BTR plc
BTR House
Carlisle Place
London, SW 1P 1BX
Attention: David J. Stevens, Esq.
General Counsel
Fax: 011 44 171 821-3806
with copies to:
BTR Incorporated
Stamford Harbor Park
333 Ludlow Street
Stamford, Connecticut 06902
Attention: Edgar P. DeVylder, Esq.
Vice President, General
Counsel and Secretary
Fax: 203-324-0503
and
Cahill Gordon & Reindel
80 Pine Street
New York, New York 10005
Attention: W. Leslie Duffy, Esq.
Fax: 212-269-5420
If to the Company:
Exide Electronics Group, Inc.
8609 Six Forks Road
Raleigh, North Carolina 27615
Attention: Nicholas J. Costanza, Esq.
Vice President, Chief
Administrative Officer and
General Counsel
Fax: 919-870-3079
with a copy to:
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Wachtell, Lipton, Rosen & Katz
51 West 52nd Street
New York, New York 10019
Attention: David M. Silk, Esq.
Fax: 212-403-2000
or to such other address as the person to whom notice is given may have
previously furnished to the other in writing in the manner set forth above
(provided that notice of any change of address shall be effective only upon
receipt thereof).
SECTION 9.05 Governing Law; Jurisdiction. (a) 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 conflicts of laws thereof.
(b) In addition, 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 hereby in any court other than a federal or state court sitting in
the State of Delaware. Each of Parent and the Purchaser hereby irrevocably
designates The Corporation Trust Company in Delaware as its authorized agent,
respectively, to accept and acknowledge on its behalf service of any process
which may be served in any suit, action or proceeding in Delaware. Each of
Parent and the Purchaser hereby irrevocably (i) consents and agrees to process
being served in any suit, action or proceeding brought in the federal court
located in the State of Delaware or any Delaware state court by serving a copy
thereof upon the agent designated in the preceding sentence and (ii) agrees that
such service of process shall be deemed in every respect effective service of
process upon it in any such suit, action or proceeding and shall, to the fullest
extent permitted by law, be taken and be held to be valid personal service upon
and personal delivery to Parent
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and Purchaser, as the case may be.
SECTION 9.6 Waiver of Jury Trial. EACH PARTY ACKNOWLEDGES AND AGREES
THAT ANY CONTROVERSY OR DISPUTE THAT MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO
INVOLVE COMPLICATED AND DIFFICULT ISSUES AND THEREFORE EACH SUCH PARTY HEREBY
IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL
BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY. EACH PARTY
CERTIFIES AND ACKNOWLEDGES THAT (i) NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY
OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD
NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER, (ii) EACH
SUCH PARTY UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (iii)
EACH SUCH PARTY MAKES THIS WAIVER VOLUNTARILY, AND (iv) EACH SUCH PARTY HAS BEEN
INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS
AND CERTIFICATIONS IN THIS SECTION 9.06.
SECTION 9.7 Descriptive Headings. The descriptive headings herein
are inserted for convenience of reference only and are not intended to be part
of or to affect the meaning or interpretation of this Agreement.
SECTION 9.8 Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall be deemed to be an original, but all of
which shall constitute one and the same agreement.
SECTION 9.9 Parties in Interest. This Agreement shall be binding
upon and inure solely to the benefit of each party hereto, and, except with
respect to Sections 1.03(c), 2.09 and 6.07, nothing in this Agreement, express
or implied, is intended to confer upon any other person any rights or remedies
of any nature whatsoever under or by reason of this Agreement.
SECTION 9.10 Certain Definitions. As used in this Agreement:
(a) the term "affiliate", as applied to any person, shall mean
any other person directly or indirectly
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<PAGE> 55
controlling, controlled by, or under common control with, that person. For the
purposes of this definition, "control" (including, with correlative meanings,
the terms "controlling," "controlled by" and "under common control with"), as
applied to any person, means the possession, directly or indirectly, of the
power to direct or cause the direction of the management and policies of that
person, whether through the ownership of voting securities, by contract or
otherwise;
(b) the term "person" shall include individuals, corporations,
partnerships, trusts, other entities and groups (which term shall include a
"group" as such term is defined in Section 13(d)(3) of the Exchange Act); and
(c) the term "subsidiary" or "subsidiaries" means, with
respect to Parent, the Company or any other person, any corporation,
partnership, joint venture or other legal entity of which Parent, the Company or
such other person, as the case may be (either alone or through or together with
any other subsidiary), owns, directly or indirectly, stock or other equity
interests the holders of which are generally entitled to more than 50% of the
vote for the election of the board of directors or other governing body of such
corporation or other legal entity.
(d) the term "Tax" means any federal, state, local, or foreign
income, gross receipts, license, payroll, employment, excise, severance, stamp,
occupation, premium, windfall profits, environmental (including taxes under Code
Section 59A), customs duties, capital stock, franchise, profits, withholding,
social security (or similar), unemployment, disability, real property, personal
property, sales, use, transfer, registration, value added, alternative or add-on
minimum, estimated, or other tax of any kind whatsoever, including any interest,
penalty, or addition thereto.
(e) the term "Tax Return" means any return, declaration,
report, claim for refund, or information return or statement relating to Taxes,
including any schedule or attachment thereto, and including any amendment
thereof.
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SECTION 9.11 Specific Performance. The parties hereto agree that
irreparable damage would occur in the event that any of the provisions of this
Agreement were not performed in accordance with their specific terms or were
otherwise breached. It is accordingly agreed that the parties shall be entitled
to an injunction or injunctions to prevent breaches of this Agreement and to
enforce specifically the terms and provisions hereof in any court of the United
States or any state having jurisdiction, this being in addition to any other
remedy to which they are entitled at law or in equity.
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<PAGE> 57
IN WITNESS WHEREOF, each of the parties has caused this Agreement to
be executed on its behalf by its respective officer thereunto duly authorized,
all as of the day and year first above written.
BTR PLC
By: ___________________________________
Name:
Title:
BTR ACQUISITION CORPORATION
By: ___________________________________
Name:
Title:
EXIDE ELECTRONICS GROUP, INC.
By: ___________________________________
Name:
Title:
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<PAGE> 58
Annex I
Conditions to the Offer. Notwithstanding any other provisions of the
Offer, the Purchaser shall not be required to accept for payment or pay for any
tendered Securities, unless there are validly tendered and not withdrawn prior
to the expiration date for the Offer (the "Expiration Date") that number of
Common Shares which represent at least 80% of the outstanding Common Shares on a
fully diluted basis on the date of purchase (not taking into account the Rights)
(the "Minimum Condition"). Furthermore, notwithstanding any other provisions of
the Offer, the Purchaser shall not be required to accept for payment or pay for
any tendered Securities until expiration of all applicable waiting periods under
the HSR Act and applicable antitrust statutes in Belgium, Germany, Ireland,
Italy, Mexico and Sweden, if applicable, and may, subject to the terms of the
Merger Agreement, amend the Offer or postpone the acceptance for payment of
tendered Securities if at any time on or after October 16, 1997 and before the
expiration of the Offer, any of the following events (each, an "Event") shall
occur:
(a) any order, preliminary or permanent injunction, decree,
judgment or ruling in any suit, action or proceeding is entered that (i)
makes illegal or otherwise directly or indirectly restrains or prohibits
the acquisition by Parent or Purchaser of any Shares under the Offer or
the making or consummation of the Offer or the Merger, the performance by
the Company of any of its material obligations under the Merger Agreement
or the consummation of any purchase of Shares contemplated by the Merger
Agreement or related agreements, (ii) prohibits or limits the ownership or
operation by the Company, Parent or any of their respective subsidiaries
of a material portion of the business or assets of the Company and its
subsidiaries, taken as a whole, or Parent and its subsidiaries, taken as a
whole, or compels the Company or Parent to dispose of or hold separate any
material portion of the business or assets of the Company and its
subsidiaries, taken as a whole, or Parent and its subsidiaries, taken as a
whole, as a result of the Offer or the Merger, (iii) imposes material
limitations on the ability of Parent or Purchaser to acquire or hold, or
exercise full rights of ownership of, any Shares accepted for payment
pursuant to the Offer, including, without limitation, the right to vote
such Shares on all matters properly presented to the shareholders of the
Company or (iv) prohibits Parent or any of its subsidiaries from
effectively controlling in any material respect the business or operation
of the Company and its subsidiaries, taken as a whole; or
(b) any Law is enacted, entered, enforced, promulgated or
deemed applicable to the Offer or the Merger, or any other action is taken
by any governmental entity, other than the application to the Offer or the
Merger of
<PAGE> 59
applicable waiting periods under the HSR Act, that results, directly or
indirectly, in any of the consequences referred to in clauses (i) through
(iv) or paragraph (a) above; or
(c) any Material Adverse Effect on the Company (as
defined in the Merger Agreement) has occurred; or
(d) (i) the Board of Directors of the Company or any committee
thereof withdraws or modifies in a manner adverse to Parent or Purchaser
its approval or recommendation of the Offer, the Merger or the Merger
Agreement and does not fully reinstate such approval or recommendation
within two business days of such withdrawal or modification, or approves
or recommends any Acquisition Proposal or (ii) the Company enters into any
agreement to consummate any Acquisition Proposal or (iii) the One-Step
Conditions have been satisfied or waived; or
(e) any of the representations and warranties of the Company
set forth in the Merger Agreement that are qualified as to Material
Adverse Effect (as defined in the Merger Agreement) are not true and
correct, or any such representations and warranties that are not so
qualified are not true and correct in any respect (when taken together
with all other failures of such representations and warranties to be true
and correct) that would have a Material Adverse Effect on the Company, in
each case at the date of the Merger Agreement or at the scheduled
expiration of the Offer (as though made as of such date, except that those
representations and warranties that address matters only as of a
particular date shall remain true and correct as of such date) which have
been not been cured within the time period specified in Article VIII of
the Merger Agreement; or
(f) the Company and the Purchaser and Parent shall have
reached an agreement that the Offer or the Merger Agreement be terminated,
or the Merger Agreement shall have been terminated in accordance with its
terms; or
(g) the Company shall have breached or failed to perform in
any material respect any of its material
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<PAGE> 60
obligations, covenants or agreements under the Merger Agreement; or
(h) there shall have occurred, and continued to exist, (i) any
general suspension of, or limitation on prices for, trading in securities
on the Nasdaq National Market, (ii) a declaration of a banking moratorium
or any suspension of payments in respect of banks in the United States or
Great Britain, (iii) a commencement of a war, armed hostilities or other
national or international crisis directly involving the United States or
Great Britain (other than an action involving United Nations' personnel or
support of United Nations' personnel) or (iv) in the case of any of the
foregoing clauses (i) through (iii) existing at the time of the
commencement of the Offer, a material acceleration or worsening thereof;
or
(i) it shall have been publicly disclosed, or Purchaser shall
have otherwise learned after the date of the Merger Agreement that
beneficial ownership (determined for the purposes of this paragraph as set
forth in Rule 13d-3 promulgated under the Exchange Act) of 20% or more of
the then outstanding Shares has been acquired by any person, other than
Parent or any of its affiliates.
The foregoing conditions are for the benefit of Parent and the
Purchaser and may be asserted by Parent or the Purchaser regardless of the
circumstances giving rise to any such conditions and may be waived (except that
the Minimum Condition may not be waived or amended without the consent of the
Company so as to require to be validly tendered and not withdrawn prior to the
Expiration Date that number of Common Shares which represents less than 50% of
the outstanding Common Shares on a fully diluted basis on the date of purchase
(not taking into account the Rights)) by Parent or the Purchaser in whole or in
part at any time and from time to time in their reasonable discretion. The
failure by Parent or the Purchaser at any time to exercise any of the foregoing
rights shall not be deemed a waiver of any such right and each such right shall
be deemed an ongoing right which may be asserted at any time and from time to
time.
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<PAGE> 61
The capitalized terms used in this Annex I shall have the meanings
set forth in the Agreement to which it is annexed, except that the term "Merger
Agreement" shall be deemed to refer to the Agreement to which this Annex I is
appended.
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<PAGE> 62
Annex II
Parent and Purchaser's One-Step Conditions
(a) Order; Injunction. There shall not be entered and in
effect any order, preliminary or permanent injunction, decree, judgment or
ruling in any suit, action or proceeding that (i) prohibits or limits the
ownership or operation by the Company, Parent or any of their respective
subsidiaries of a material portion of the business or assets of the
Company and its subsidiaries, taken as a whole, or Parent and its
subsidiaries, taken as a whole, or compels the Company or Parent to
dispose of or hold separate any material portion of the business or assets
of the Company and its subsidiaries, taken as a whole, or Parent and its
subsidiaries, taken as a whole, as a result of the Merger, (ii) imposes
material limitations on the ability of Parent or Purchaser to acquire or
hold, or exercise full rights of ownership of, the Company's common stock,
including, without limitation, the right to vote such common stock on all
matters properly presented to the Shareholders of the Company, or (iii)
prohibits Parent or any of its subsidiaries from effectively controlling
in any material respect the business or operation of the Company and its
subsidiaries, taken as a whole.
(b) Law. There shall have been no Law enacted, entered,
enforced, promulgated or deemed applicable to the Merger, or any other
action taken by any governmental entity, other than the application to the
Merger of applicable waiting periods under the HSR Act and under
applicable antitrust statutes in Belgium, Germany, Ireland, Italy, Mexico
and Sweden, if applicable, that results, directly or indirectly, in any of
the consequences referred to in clauses (i) through (iii) of paragraph (a)
above, which remains in effect at the Effective Time.
(c) Material Adverse Effect. No Material Adverse
<PAGE> 63
Effect on the Company (as defined in the Merger Agreement) shall have
occurred and be in effect at the Effective Time.
(d) Representations and Warranties. None of the
representations and warranties of the Company set forth in the Merger
Agreement that are qualified as to Material Adverse Effect (as defined in
the Merger Agreement) shall not be true and correct, and no such
representations and warranties that are not so qualified shall not be true
and correct in any respect (when taken together with all other failures of
such representations and warranties to be true and correct) that would
have a Material Adverse Effect on the Company, in each case at the date of
the Merger Agreement or as of the Effective Time (as though made as of
such date, except that those representations and warranties that address
matters only as of a particular date shall remain true and correct as of
such date) which have been not been cured within the time period specified
in Article VIII of the Merger Agreement.
(e) Breach of Covenants. The Company shall not be in breach of
or failing to perform in any material respect any of its material
obligations, covenants or agreements under the Merger Agreement.
(f) Economic Conditions. There shall not have occurred, and
continued to exist, (i) any general suspension of, or limitation on prices
for, trading in securities on the Nasdaq National Market, (ii) a
declaration of a banking moratorium or any suspension of payments in
respect of banks in the United States or Great Britain, (iii) a
commencement of a war, armed hostilities or other national or
international crisis directly involving the United States or Great Britain
(other than an action involving United Nations' personnel or support of
United Nations' personnel) or (iv) in the case of any of the foregoing
clauses (i) through (iii) existing at the time of the commencement of the
Offer, a material acceleration or worsening thereof.
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<PAGE> 64
Annex III
Company's One-Step Conditions
(a) Representations and Warranties. None of the
representations and warranties of Parent or the Purchaser set forth in the
Merger Agreement that are qualified as to Material Adverse Effect (as
defined in the Merger Agreement) shall not be true and correct, and no
such representations and warranties that are not so qualified shall not be
true and correct in any respect (when taken together with all other
failures of such representations and warranties to be true and correct)
that would have a Material Adverse Effect on Parent, in each case at the
date of the Merger Agreement or as of the Effective Time (as though made
as of such date, except that those representations and warranties that
address matters only as of a particular date shall remain true and correct
as of such date).
(b) Breach of Covenants. Neither Parent nor the Purchaser
shall be in breach of or failing to perform in any material respect any of
its respective material obligations, covenants or agreements under the
Merger Agreement.
<PAGE> 1
Exhibit 4
STOCKHOLDER AGREEMENT
AGREEMENT, dated as of October 16, 1997, among BTR plc, an
English public limited company ("Parent"), BTR Acquisition Corporation, a
Delaware corporation and an indirect wholly owned subsidiary of Parent (the
"Purchaser"), and Fiskars OY AB, James A. Risher, Conrad A. Plimpton Trust and
Lance L. Knox 1990 Trust (each, a "Stockholder").
W I T N E S S E T H :
WHEREAS, concurrently with the execution and delivery of this
Agreement, Parent, the Purchaser and Exide Electronics Group, Inc., a Delaware
corporation (the "Company"), have entered into an Agreement and Plan of Merger
(as such agreement may hereafter be amended from time to time, the "Merger
Agreement"), pursuant to which the Purchaser will be merged with and into the
Company (the "Merger");
WHEREAS, in furtherance of the Merger, Parent and the Company
desire that as soon as practicable (and not later than five business days) after
the announcement of the execution of the Merger Agreement, the Purchaser shall
commence a cash tender offer (the "Offer") to purchase at the applicable
Securities Offer Price all outstanding shares of Common Stock and Warrants (each
as defined in Section 1 hereof), including all of the Common Stock and Warrants
beneficially owned by the Stockholder; and
WHEREAS, as an inducement and a condition to entering into the
Merger Agreement, Parent has required that the Stockholder agree, and the
Stockholder has agreed, to enter into this agreement;
NOW, THEREFORE, in consideration of the foregoing and the
mutual representations, warranties, covenants and agreements contained herein,
the parties hereto agree as follows:
1. Definitions. For purposes of this Agreement:
(a) "Beneficially Own" or "Beneficial Ownership" with respect
to any securities shall mean having "beneficial ownership" of such securities
(as determined pursuant to Rule 13d-3 under the Securities Exchange Act of 1934,
as amended (the
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<PAGE> 2
"Exchange Act")), including pursuant to any agreement, arrangement or
understanding, whether or not in writing. Without duplicative counting of the
same securities by the same holder, securities Beneficially Owned by a Person
shall include securities Beneficially Owned by all other Persons with whom such
Person would constitute a "group" within the meaning of Section 13(d)(3) of the
Exchange Act.
(b) "Common Stock" shall mean the Common Stock, par value $.01
per share, of the Company, including the associated Preferred Share Purchase
Rights issued pursuant to the Rights Agreement, dated November 25, 1992 as
amended to date, between the Company and First Union National Bank of North
Carolina, as Rights Agent.
(c) "Person" shall mean an individual, corporation,
partnership, limited liability company, joint venture, association, trust,
unincorporated organization or other entity.
(d) "Preferred Stock" shall mean the Series G Convertible
Preferred Stock, par value $.01 per share, of the Company.
(e) "Warrants" shall mean the warrants to purchase shares of
Common Stock pursuant to the Warrant Agreement, dated March 13, 1996 between the
Company and Firststar Trust Company, formerly named American Bank National
Association, as warrant agent.
(f) Capitalized terms used and not defined herein, and the
term "Acquisition Transaction" have the respective meanings ascribed to them in
the Merger Agreement.
2. Tender of Shares.
(a) In order to induce Parent and the Purchaser to enter into
the Merger Agreement, each Stockholder hereby agrees to validly tender (or cause
the record owner of such shares to validly tender), and not to withdraw,
pursuant to and in accordance with the terms of the Offer, as soon as
practicable after commencement of the Offer pursuant to Section 1.01 of the
Merger Agreement and Rule 14d-2 under the Exchange Act (but subject to Section
2(c)), the number of shares of Common Stock and the number of Warrants, each as
set forth opposite the Stockholder's name on Schedule I hereto (for each such
Stockholders, the "Specified Securities"). The Stockholder hereby acknowledges
and
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<PAGE> 3
agrees that Parent's and the Purchaser's obligation to accept for payment and
pay for the Securities in the Offer, including the Securities Beneficially Owned
by the Stockholder, is subject to the terms and conditions of the Offer.
(b) The Stockholder hereby permits Parent and the Purchaser to
publish and disclose in the Offer Documents and, if approval of the Company's
stockholders is required under applicable law, the Proxy Statement (including
all documents and schedules filed with the Securities and Exchange Commission)
its identity and ownership of the Securities and the nature of its commitments,
arrangements and understandings under this Agreement.
(c) It is understood that some of the shares of Common Stock
listed on Schedule I as Beneficially Owned by Fiskars OY AB ("Fiskars") are
shares issuable upon conversion of 1,000,000 shares of Preferred Stock
Beneficially Owned by Fiskars (representing all of its shares of Preferred
Stock) and in respect of accrued and unpaid dividends thereon. Parent and the
Purchaser agree that Fiskars need not tender any such Common Shares until
Fiskars receives two business days' notice that Parent and the Purchaser will
consummate the Offer within five business days of such notice. Fiskars will, at
or prior to that time, convert all of its Preferred Stock (and accrued and
unpaid dividends thereon) into Common Stock, and tender into the Offer Fiskars'
Specified Securities.
3. Option. In order to induce Parent and the Purchaser to
enter into the Merger Agreement, each Stockholder hereby grants to the Purchaser
an irrevocable option (a "Securities Option") to purchase the Specified
Securities listed on Schedule I (the "Option Securities") at the applicable
Securities Offer Price (the "Purchase Price") which, for purposes of each share
of the Preferred Stock, shall be equal to the Securities Offer Price for one
share of Common Stock multiplied by the number of shares (including fractional
shares) of Common Stock into which such share of Preferred Stock (including
unpaid dividends thereon) is convertible. If (i) the Merger Agreement is
terminated in accordance with Sections 8.01(c), (e)(ii), (f) or (g) thereof or
(ii) the Merger Agreement is terminated in accordance with Section 8.01(b)(ii)
thereof and (x) the Stockholder shall have breached the agreements set forth in
Section 2(a) hereof or (y) at the time of such termination, neither the Minimum
Tender Condition nor the One-Step Conditions shall have been satisfied, the
Securities Option shall, in any
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<PAGE> 4
such case, become exercisable, in whole or in part, upon the first to occur of
any such event and remain exercisable in whole or in part until the date which
is 90 days after the date of the occurrence of such event (the "90 Day Period"),
so long as: (i) all waiting periods under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended (the "HSR Act"), required for the purchase
of the Securities upon such exercise shall have expired or been waived and (ii)
there shall not be in effect any preliminary injunction or other order issued by
any Governmental Entity prohibiting the exercise of the Securities Option
pursuant to this Agreement; provided that if (i) all HSR Act waiting periods
shall not have expired or been waived or (ii) there shall be in effect any such
injunction or order, in each case on the expiration of the 90 Day Period, the 90
Day Period shall be extended until 5 business days after the later of (A) the
date of expiration or waiver of all HSR Act waiting periods, and (B) the date of
removal or lifting of such injunction or order. In the event that the Purchaser
wishes to exercise the Securities Option, the Purchaser shall deliver a written
notice (the "Notice") to the Stockholder identifying the place and date (not
less than two nor more than 10 business days from the date of the Notice) for
the closing of such purchase.
4. Additional Agreements.
(a) Voting Agreement. At the request of Parent, the
Stockholder shall, at any meeting of the stockholders of the Company, however
called, or in connection with any written consent of the stockholders of the
Company, vote (or cause to be voted) all Specified Securities (other than
Warrants) (i) in favor of the Merger, the execution and delivery by the Company
of the Merger Agreement and the approval of the terms thereof and each of the
other actions contemplated by the Merger Agreement and this Agreement and any
actions required in furtherance thereof and hereof; and (ii) against any
Acquisition Transaction and against any action or agreement that would impede,
frustrate, prevent or nullify this Agreement, or result in a breach in any
respect of any covenant, representation or warranty or any other obligation or
agreement of the Company under the Merger Agreement or which would result in any
of the conditions set forth in Annex I to the Merger Agreement or set forth in
Article VII of the Merger Agreement not being fulfilled; provided, however, any
vote pursuant to the proxy granted under clause 4(c) below shall not be a
violation of this clause 4(a).
(b) No Inconsistent Arrangements. The Stockholder
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<PAGE> 5
hereby covenants and agrees that, except as contemplated by this Agreement and
the Merger Agreement, it shall not (i) transfer (which term shall include,
without limitation, any sale, gift, pledge or other disposition), or consent to
any transfer of, any or all of the Securities or any interest therein, (ii)
enter into any contract, option or other agreement or understanding with respect
to any transfer of any or all of the Securities or any interest therein, (iii)
grant any proxy, power-of-attorney or other authorization in or with respect to
the Securities, (iv) deposit the Securities into a voting trust or enter into a
voting agreement or arrangement with respect to the Securities or (v) take any
other action that would in any way restrict, limit or interfere with the
performance of its obligations hereunder or the transactions contemplated hereby
or by the Merger Agreement.
(c) Grant of Irrevocable Proxy; Appointment of Proxy.
(i) The Stockholder hereby irrevocably grants to, and
appoints, Parent and John Saunders and David Stevens, or either of them, in
their respective capacities as officers or directors of Parent, and any
individual who shall hereafter succeed to any such office or directorship of
Parent, and each of them individually, the Stockholder's proxy and
attorney-in-fact (with full power of substitution), for and in the name, place
and stead of the Stockholder, to vote the Specified Securities (other than
Warrants), and, in the case of Fiskars to vote the Preferred Stock convertible
into such Specified Securities, or grant a consent or approval in respect of the
Specified Securities, in favor of the various transactions contemplated by the
Merger Agreement (the "Transactions") and against any Acquisition Transaction.
(ii) The Stockholder represents that any proxies heretofore
given in respect of the Stockholder's Option Securities (other than Warrants)
are not irrevocable, and that any such proxies are hereby revoked.
(iii) The Stockholder understands and acknowledges that Parent
is entering into the Merger Agreement in reliance upon the Stockholder's
execution and delivery of this Agreement. The Stockholder hereby affirms that
the irrevocable proxy set forth in this Section 4(c) is given in connection with
the execution of the Merger Agreement, and that such irrevocable proxy is given
to secure the performance of the duties of the Stockholder under this Agreement.
The Stockholder hereby further affirms that the irrevocable proxy is coupled
with an interest
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<PAGE> 6
and may under no circumstances be revoked. The Stockholder hereby ratifies and
confirms all that such irrevocable proxy may lawfully do or cause to be done by
virtue hereof. Such irrevocable proxy is executed and intended to be irrevocable
in accordance with the provisions of Section 212(e) of the Delaware General
Corporation Law.
(d) No Solicitation. The Stockholder hereby agrees, solely in
its capacity as a stockholder of the Company, that neither the Stockholder nor
any controlled affiliates, representatives or agents of it shall (and, if the
Stockholder is a corporation, partnership, trust or other entity, the
Stockholder shall cause its officers, directors, partners, and employees,
representatives and agents, including, but not limited to, investment bankers,
attorneys and accountants, not to), directly or indirectly, encourage, solicit,
participate in or initiate discussions or negotiations with, or provide any
information to, any corporation, partnership, person or other entity or group
(other than Parent, any of its affiliates or representatives) concerning any
Acquisition Transaction. The Stockholder will immediately cease any existing
activities, discussions or negotiations with any parties conducted heretofore
with respect to any Acquisition Transaction. Any action taken by the Company or
any officer or member of the Board of Directors of the Company in accordance
with Section 6.08 of the Merger Agreement shall be deemed not to violate this
Section 4(d).
(e) Best Efforts. Subject to the terms and conditions of this
Agreement, each of the parties hereto agrees to use all reasonable best efforts
to take, or cause to be taken, all actions, and to do, or cause to be done, all
things necessary, proper or advisable under applicable laws and regulations to
consummate and make effective the transactions contemplated by this Agreement
and the Merger Agreement. Each party shall promptly consult with the other and
provide any necessary information and material with respect to all filings made
by such party with any Governmental Entity in connection with this Agreement and
the Merger Agreement and the transactions contemplated hereby and thereby.
(f) Waiver of Appraisal Rights. Each Stockholder hereby waives
any rights of appraisal or rights to dissent from the Merger that it may have.
5. Representations and Warranties of the Stockholder. Each
Stockholder hereby represents and warrants to Parent and
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<PAGE> 7
the Purchaser as follows:
(a) Ownership of Securities. Such Stockholder is the record
and Beneficial Owner of the Specified Securities, as set forth on Schedule I,
except Parent and the Purchaser acknowledge that some of the shares of Common
Stock that are Fiskars' Specified Securities are issuable upon conversion of
Fiskars' shares of Preferred Stock (and accrued and unpaid dividends thereon).
Such Stockholder has sole voting power and sole power to issue instructions with
respect to the matters set forth in Sections 2, 3 and 4 hereof, sole power of
disposition, sole power to demand appraisal rights and sole power to agree to
all of the matters set forth in this Agreement, in each case with respect to all
of the Existing Securities with no limitations, qualifications or restrictions
on such rights, subject to applicable securities laws and the terms of this
Agreement and the Management Notes of which Parent is aware.
(b) Power; Binding Agreement. Such Stockholder has the power
and authority to enter into and perform all of the Stockholder's obligations
under this Agreement. The execution, delivery and performance of this Agreement
by such Stockholder will not violate any other agreement to which such
Stockholder is a party including, without limitations, any voting agreement,
proxy arrangement, pledge agreement, shareholders agreement or voting trust.
This Agreement has been duly and validly executed and delivered by such
Stockholder and constitutes a valid and binding agreement of such Stockholder,
enforceable against such Stockholder in accordance with its terms. There is no
beneficiary or holder of a voting trust certificate or other interest of any
trust of which such Stockholder is a trustee, or any party to any other
agreement or arrangement, whose consent is required for the execution and
delivery of this Agreement or the consummation by such Stockholder of the
transactions contemplated hereby.
(c) No Conflicts. Except for filings under the HSR Act and the
Exchange Act (i) no filing with, and no permit, authorization, consent or
approval of, any Governmental Entity for the execution and delivery of this
Agreement by such Stock holder, the consummation by such Stockholder of the
transactions contemplated hereby and the compliance by such Stockholder with the
provisions hereof and (ii) none of the execution and delivery of this Agreement
by such Stockholder, the consummation by such Stockholder of the transactions
contemplated hereby or compliance by such Stockholder with any of the provisions
hereof shall (A)
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<PAGE> 8
conflict with or result in any breach of any organizational documents applicable
to such Stockholder, (B) result in a violation or breach of, or constitute (with
or without notice or lapse of time or both) a default (or give rise to any third
party right of termination, cancellation, modification or acceleration) under
any of the terms, conditions or provisions of any note, loan agreement, bond,
mortgage, indenture, license, contract, commitment, arrangement, understanding,
agreement or other instrument or obligation of any kind to which such
Stockholder is a party or by which the Stockholder or any of its properties or
assets may be bound, or (C) violate any order, writ, injunction, decree,
judgment, order, statute, rule or regulation applicable to the Stockholder or
any of its properties or assets.
(d) No Liens. Except as permitted by this Agreement, the
Specified Securities and the certificates representing such Securities are now,
and at all times during the term hereof will be, held by the Stockholder, or by
a nominee or custodian or other agent for the benefit of the Stockholder, free
and clear of all Liens, proxies, voting trusts or agreements, understandings or
arrangements or any other rights whatsoever, except for any such Liens or
proxies arising hereunder.
(e) No Finder's Fees. No broker, investment banker, financial
advisor or other person is entitled to any broker's, finder's, financial
adviser's or other similar fee or commission in connection with the transactions
contemplated hereby based upon arrangements made by or on behalf of such
Stockholder.
(f) Reliance by Parent. Such Stockholder understands and
acknowledges that Parent is entering into, and causing the Purchaser to enter
into, the Merger Agreement in reliance upon the Stockholder's execution and
delivery of this Agreement.
(g) Parent and the Purchaser acknowledge that certain
Stockholders may hold their Securities in margin accounts, and that certain
Stockholders are parties to Management Notes with the Company, and agree that
neither such state of facts violates any of the representations of such
Stockholder set forth herein, except that such certain Stockholders will remove,
without cost to Parent or the Purchaser, such Securities from any margin account
and discharge the Management Notes to the extent necessary to comply, on a
timely basis, with Section 2, 3 and 4 hereof.
6. Representations and Warranties of Parent and the
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<PAGE> 9
Purchaser. Each of Parent and the Purchaser hereby represents
and warrants to the Stockholder as follows:
(a) Power; Binding Agreement. Parent and the Purchaser each
has the corporate power and authority to enter into and perform all of its
obligations under this Agreement. The execution, delivery and performance of
this Agreement by each of Parent and the Purchaser will not violate any other
agreement to which either of them is a party. This Agreement has been duly and
validly executed and delivered by each of Parent and the Purchaser and
constitutes a valid and binding agreement of each of Parent and the Purchaser,
enforceable against each of Parent and the Purchaser in accordance with its
terms.
(b) No Conflicts. Except for filings under the HSR Act and the
Exchange Act, (i) no filing with, and no permit, authorization, consent or
approval of, any Governmental Entity is necessary for the execution of this
Agreement by each of Parent and the Purchaser, the consummation by each of
Parent and the Purchaser of the transactions contemplated hereby and the
compliance by Parent and the Purchaser with the provisions hereof and (ii) none
of the execution and delivery of this Agreement by each of Parent and the
Purchaser, the consummation by each of Parent and the Purchaser of the
transactions contemplated hereby or compliance by each of Parent and the
Purchaser with any of the provisions hereof shall (A) conflict with or result in
any breach of any organizational documents applicable to either of Parent or the
Purchaser, (B) result in a violation or breach of, or constitute (with or
without notice or lapse of time or both) a default (or give rise to any third
party right of termination, cancellation, modification or acceleration) under
any of the terms, conditions or provisions of any note, loan agreement, bond,
mortgage, indenture, license, contract, commitment, arrangement, understanding,
agreement or other instrument or obligation of any kind to which either of
Parent or the Purchaser is a party or by which either of Parent or the Purchaser
or any of their properties or assets may be bound, or (C) violate any order,
writ, injunction, decree, judgment, order, statute, rule or regulation
applicable to either of Parent or the Purchaser or any of their properties or
assets.
7. Further Assurances. From time to time, at the other party's
request and without further consideration, each party hereto shall execute and
deliver such additional documents and take all such further lawful action as may
be necessary or desirable to consummate and make effective, in the most
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<PAGE> 10
expeditious manner practicable, the transactions contemplated by this Agreement.
8. Stop Transfer. The Stockholder shall not request that the
Company register the transfer (book-entry or otherwise) of any certificate or
uncertificated interest representing any of the Securities, unless such transfer
is made in compliance with this Agreement. In the event of a stock dividend or
distribution, or any change in the Common Stock or Preferred Stock by reason of
any stock dividend, split-up, recapitalization, combination, exchange of shares
or the like, the term "Securities" shall refer to and include the Securities as
well as all such stock dividends and distributions and any shares into which or
for which any and all of the Securities may be changed or exchanged.
9. Termination. The covenants, agreements and proxy contained
herein with respect to the Securities shall terminate upon the earlier of (a)
the Effective time, (b) the first anniversary of the date hereof or (c) the
termination of the Merger Agreement pursuant to Sections 8.01(a), (b)(i) or
(iii), (d) or (e)(i) thereof.
10. Miscellaneous.
(a) Entire Agreement. This Agreement and the Merger Agreement
constitute the entire agreement between the parties with respect to the subject
matter hereof and supersede all other prior agreements and understandings, both
written and oral, between the parties with respect to the subject matter hereof.
(b) Binding Agreement. This Agreement and the obligations
hereunder shall attach to the Securities and shall be binding upon any person or
entity to which legal or beneficial ownership of the Securities shall pass,
whether by operation of law or otherwise, including, without limitation, the
Stockholder's administrators or successors. Notwithstanding any transfer of
Securities, the transferor shall remain liable for the performance of all
obligations of the transferor under this Agreement
(c) Assignment. This Agreement shall not be assigned by
operation of law or otherwise without the prior written consent of the relevant
Stockholder or Parent and the Purchaser, as the case maybe, provided that Parent
or the Purchaser may assign, in its sole discretion, its rights and obligations
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<PAGE> 11
hereunder to any direct or indirect wholly owned subsidiary of Parent, but no
such assignment shall relieve Parent or the Purchaser of its obligations
hereunder if such assignee does not perform such obligations.
(d) Amendments, Waivers, Etc. This Agreement may not be
amended, changed, supplemented, waived or otherwise modified or terminated,
except upon the execution and delivery of a written agreement executed by the
parties hereto.
(e) Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given by hand delivery
or telecopy (with a confirmation copy sent for next day delivery via courier
service, such as Federal Express), or by any courier service, such as Federal
Express, providing proof of delivery. All communications hereunder shall be
delivered to the respective parties at the following addresses:
If to any
Stockholder at the address set forth on Schedule II, with
copies as set forth on such Schedule II.
If to Parent
or the Purchaser:
BTR plc
BTR House
Carlisle Place
London, England SW1P 1BX
Attention: David J. Stevens,
General Counsel
Telephone No.:
Telecopy No.: 011-44-171-821-3805
011-44-171-821-3806
Copies to: BTR Incorporated
Stamford Harbor Park
333 Ludlow Street
Stamford, Connecticut 06902
Attention: Edgar P. DeVylder
Vice President, General
Counsel & Secretary
Telephone No.: (203) 352-0000
-11-
<PAGE> 12
Telecopy No.: (203) 324-0503
Cahill Gordon & Reindel
80 Pine Street
New York, New York 10005
Attention: W. Leslie Duffy
Telephone No.: (212) 701-3000
Telecopy No.: (212) 269-5420
or to such other address as the person to whom notice is given may have
previously furnished to the others in writing in the manner set forth above.
(f) Severability. Whenever possible, each provision or portion
of any provision of this Agreement will be interpreted in such manner as to be
effective and valid under applicable law but if any provision or portion of any
provision of this Agreement is held to be invalid, illegal or unenforceable in
any respect under any applicable law or rule in any jurisdiction such
invalidity, illegality or unenforceability will not affect any other provision
or portion of any provision in such jurisdiction, and this Agreement will be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision or portion of any provision had never been
contained herein.
(g) Specific Performance. Each of the parties hereto
recognizes and acknowledges that a breach by it of any covenants or agreements
contained in this Agreement will cause the other party to sustain damages for
which it would not have an adequate remedy at law for money damages, and
therefore in the event of any such breach the aggrieved party shall be entitled
to the remedy of specific performance of such covenants and agreements and
injunctive and other equitable relief in addition to any other remedy to which
it may be entitled, at law or in equity.
(h) Remedies Cumulative. All rights, powers and remedies
provided under this Agreement or otherwise available in respect hereof at law or
in equity shall be cumulative and not alternative, and the exercise of any
thereof by any party shall not preclude the simultaneous or later exercise of
any other such right, power or remedy by such party.
(i) No Waiver. The failure of any party hereto to exercise any
right, power or remedy provided under this Agreement or otherwise available in
respect hereof at law or in equity, or
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<PAGE> 13
to insist upon compliance by any other party hereto with its obligations
hereunder, and any custom or practice of the parties at variance with the terms
hereof, shall not constitute a waiver by such party of its right to exercise any
such or other right, power or remedy or to demand such compliance.
(j) No Third Party Beneficiaries. This Agreement is not
intended to be for the benefit of, and shall not be enforceable by, any person
or entity who or which is not a party hereto.
(k) Governing Law. This Agreement shall be governed and
construed in accordance with the laws of the State of Delaware, without giving
effect to the principles of conflicts of law thereof.
(l) Waiver of Jury Trial. Each party hereto hereby waives any
right to a trial by jury in connection with any action, suit or proceeding
brought in connection with this Agreement.
(m) Descriptive Headings. The descriptive headings used herein
are inserted for convenience of reference only and are not intended to be part
of or to affect the meaning or interpretation of this Agreement.
(n) Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed to be an original, but all of which,
taken together, shall constitute one and the same agreement.
IN WITNESS WHEREOF, Parent, the Purchaser and the Stockholders
have caused this Agreement to be duly executed as of the day and year first
above written.
James A. Risher BTR plc
By: ____________________
_______________________ Name: _________________
Title: _________________
Conrad A. Plimpton Trust BTR ACQUISITION CORPORATION
By: ____________________
By: ___________________ Name: _________________
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<PAGE> 14
Title: Title:
-----------------
Lance L. Knox 1990 Trust FISKARS OY AB
By:
--------------------
By: Name:
------------------- ------------------
Title: Title:
----------------- ------------------
With respect to the Stockholder Agreement, dated March 13,
1996, between the Company and Fiskars, (the "Stockholder Agreement"), the
Company hereby exempts this Agreement and Fiskars from the terms of the
Stockholder Agreement, including, without limitation, Sections 1.2, 1.3, 3.2,
3.3, and 3.4, to the extent necessary so that the Stockholder can fully perform
its obligations to Parent and the Purchaser under this Agreement.
The Company also acknowledges that the entry into this
Agreement and performance by a Stockholder of its obligations hereunder does not
violate the terms of any Management Notes.
EXIDE ELECTRONICS GROUP, INC.
By:
-------------------------
Name:
Title:
Schedule I
<TABLE>
<CAPTION>
Common
Common Issu- Issuable Upon
able Upon Conversion of
Conversion of Unpaid
Shareholder Common Preferred Dividends Total
- ---------- ------ --------- --------- -----
<S> <C> <C> <C> <C>
James A. Risher 239,068 239,068
Conrad A. Plimpton 229,069 229,069
Trust
Lance L. Knox 1990 124,282 124,282
Trust
Fiskars OY AB 613,947 1,000,000 66,667 1,680,614
-----------
2,273,033
</TABLE>
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<PAGE> 15
Schedule II
<TABLE>
<CAPTION>
Notice Copy to:
------ --------
<S> <C>
James A. Risher Nicholas Costanza
2419 Anderson Drive Exide Electronics Group, Inc.
Raleigh, NC 27608 8609 Six Forks Road
Raleigh, NC 27615
Conrad A. Plimpton Trust Nicholas Costanza
c/o Cymric Exide Electronics Group, Inc.
8609 Six Forks Road
Costa Mesa, CA Raleigh, NC 27615
Lance L. Knox 1990 Trust Nicholas Costanza
c/o Lance L. Knox Exide Electronics Group, Inc.
3342 North Southport Avenue 8609 Six Forks Road
Chicago, IL 60657 Raleigh, NC 27615
Fiskars OY AB Ralph R. Roer
POB 235 Foley & Lardner
FIN-00101 Helsinki 777 E. Wisconsin Avenue
Finland Milwaukee, WI 53201
</TABLE>
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<PAGE> 1
[EXIDE ELECTRONICS LOGO]
[ADDRESS, PHONE NUMBER]
October 20, 1997
To Our Shareholders:
I am pleased to inform you that Exide Electronics Group, Inc. (the
"Company") has signed a merger agreement with BTR plc ("BTR") pursuant to which
a subsidiary of BTR has commenced a tender offer to purchase all of the
outstanding shares of Common Stock of the Company at a price of $29.00 per share
in cash and all of the outstanding warrants to purchase Common Stock at a price
of $15.525 per warrant to purchase one share of Common Stock in cash. The tender
offer will be followed by a merger of the Company and such subsidiary and the
Company will continue as the surviving corporation.
AFTER CAREFUL CONSIDERATION, YOUR BOARD OF DIRECTORS HAS UNANIMOUSLY
APPROVED THE MERGER AGREEMENT AND THE TRANSACTIONS CONTEMPLATED THEREBY,
INCLUDING THE TENDER OFFER AND THE MERGER, AND DETERMINED THAT THE TENDER OFFER
AND MERGER ARE FAIR TO, AND IN THE BEST INTERESTS OF, THE COMPANY AND ITS
SHAREHOLDERS. ACCORDINGLY, THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT
SHAREHOLDERS ACCEPT THE BTR OFFER AND TENDER THEIR SHARES (INCLUDING WARRANTS)
PURSUANT TO THE BTR OFFER.
In arriving at its determination and recommendation, the Board gave careful
consideration to a number of factors that are described in the enclosed Schedule
14D-9, including the written opinion, dated October 16, 1997, of our investment
banker, Lazard Freres & Co. LLC, that, based upon and subject to the matters set
forth therein as of such date, the consideration to be received by the holders
of the Common Stock in the tender offer and the merger is fair to such holders
from a financial point of view.
Additional information with respect to the Board's decision is contained in
the enclosed Schedule 14D-9, and we urge you to consider this information
carefully.
Your Directors thank you for your continued support.
Sincerely,
/s/ James A. Risher
James A. Risher
President and Chief Executive Officer
