SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K/A
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): September 9, 1999
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PREMARK INTERNATIONAL, INC.
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(Exact Name of Registrant as Specified in Charter)
Delaware 1-9256 36-3461320
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(State Or Other (Commission (IRS Employer
Jurisdiction Of File Number) Identification No.)
Incorporation)
1717 Deerfield Road, Deerfield, IL 60015
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code (847) 405-6000
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ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
Exhibit 2.1 Agreement and Plan of Merger, dated as of September 9, 1999,
by and among Illinois Tool Works Inc., CS Merger Sub
Inc. and Premark International, Inc.*
Exhibit 99.1 Stock Option Agreement dated as of September 9, 1999 by and
between Illinois Tool Works Inc. and Premark International,
Inc.**
Exhibit 99.2 Amendment to Rights Agreement dated as of September 9, 1999 by
and between Premark International, Inc. and Norwest
Bank Minnesota, N.A. (as Rights Agent)**
Exhibit 99.3 Joint Press Release dated September 9, 1999**
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* Corrected version replacing Exhibit 2.1 previously filed.
** Filed previously.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
PREMARK INTERNATIONAL, INC.
Date: September 13, 1999 By: /s/ John M. Costigan
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Name: John M. Costigan
Title: Senior Vice President, General Counsel
and Secretary
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EXHIBIT INDEX
Exhibit 2.1 Agreement and Plan of Merger, dated as of September 9, 1999,
by and among Illinois Tool Works Inc., CS Merger Sub Inc. and
Premark International, Inc.*
Exhibit 99.1 Stock Option Agreement dated as of September 9, 1999 by and
between Illinois Tool Works Inc. and Premark International,
Inc.**
Exhibit 99.2 Amendment to Rights Agreement dated as of September 9, 1999
by and between Premark International, Inc. and Norwest
Bank Minnesota, N.A. (as Rights Agent)**
Exhibit 99.3 Joint Press Release dated September 9, 1999**
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* Corrected version replacing Exhibit 2.1 previously filed.
** Filed previously.
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Exhibit 2.1
AGREEMENT AND PLAN OF MERGER
Among
PREMARK INTERNATIONAL, INC.,
ILLINOIS TOOL WORKS INC.
and
CS MERGER SUB INC.
Dated as of September 9, 1999
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|| Table of Contents
ARTICLE I. The Merger; Closing; Effective Time
1.1. The Merger..........................................................2
1.2. Closing.............................................................2
1.3. Effective Time......................................................2
ARTICLE II. Certificate of Incorporation and Bylaws of the Surviving
Corporation
2.1. The Certificate of Incorporation....................................2
2.2. The Bylaws..........................................................2
ARTICLE III. Officers, Directors and Management
3.1. Directors of Surviving Corporation..................................2
3.2. Officers of Surviving Corporation...................................3
ARTICLE IV. Effect of the Merger on Capital Stock; Exchange of Certificates
4.1. Effect on Capital Stock.............................................3
4.2. Exchange of Certificates for Shares.................................5
4.3. Dissenters' Rights..................................................7
4.4. Adjustments to Prevent Dilution.....................................7
ARTICLE V. Representations and Warranties
5.1. Representations and Warranties of the Company.......................7
5.2. Representations and Warranties of Parent and Merger Sub............19
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ARTICLE VI. Covenants
6.1. Interim Operations.................................................24
6.2. Acquisition Proposals..............................................28
6.3. Information Supplied...............................................29
6.4. Stockholders Meetings..............................................30
6.5. Filings; Other Actions; Notification...............................30
6.6. Access; Consultation...............................................33
6.7. Affiliates.........................................................34
6.8. Stock Exchange Listing ............................................34
6.9. Publicity..........................................................34
6.10. Benefits...........................................................35
6.11. Expenses...........................................................37
6.12. Indemnification; Directors' and Officers' Insurance................37
6.13. Takeover Statute...................................................40
6.14. Confidentiality....................................................40
6.15 Tax-Free Reorganization............................................40
ARTICLE VII. Conditions
7.1. Conditions to Each Party's Obligation to Effect the Merger.........41
7.2. Conditions to Obligations of Parent and Merger Sub.................42
7.3. Conditions to Obligation of the Company............................43
ARTICLE VIII. Termination
8.1. Termination by Mutual Consent......................................44
8.2. Termination by Either Parent or the Company........................44
8.3. Termination by the Company.........................................44
8.4. Termination by Parent..............................................45
8.5. Effect of Termination and Abandonment..............................45
ARTICLE IX. Miscellaneous and General
9.1. Certain Definitions................................................46
9.2. Survival...........................................................48
9.3. Modification or Amendment..........................................49
9.4. Waiver of Conditions...............................................49
9.5. Counterparts.......................................................49
9.6. Governing Law and Benue; Waiver of Jury Trial......................49
9.7. Notices............................................................50
9.8. Entire Agreement...................................................51
9.9. No Third Party Beneficiaries.......................................51
9.10. Obligations of Parent and of the Company...........................51
9.11. Severability.......................................................51
9.12. Interpretation.....................................................52
9.13. Assignment.........................................................52
Exhibits
Exhibit A ...........................................Stock Option Agreement
Exhibit B ............................................Stockholder Agreement
Exhibit C.............................................Stockholder Agreement
Exhibit C-1...........................................Stockholder Agreement
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Index of Defined Terms
Term Section
Acquisition Proposal.................................................6.2(a)
Affiliates............................................................ 9.1
Agreement..........................................................preamble
Audit Date...........................................................5.1(f)
Bankruptcy and Equity Exception......................................5.1(c)
Bylaws..................................................................2.2
Certificate...........................................................4.1(a)
Certificate of Merger...................................................1.3
Charter.................................................................2.1
Closing.................................................................1.2
Closing Date............................................................1.2
Code...............................................................recitals
Company............................................................preamble
Company Affiliate's Letter...........................................6.7(a)
Company Disclosure Letter...............................................5.1
Company Employee....................................................6.10(e)
Company IP Rights.................................................5.1(q)(i)
Company Option...................................................6.10(a)(i)
Company Preferred Shares.............................................5.1(b)
Company Representatives..............................................6.1(a)
Company Requisite Vote...............................................5.1(c)
Company Share........................................................4.1(a)
Company Shares.......................................................4.1(a)
Company Stock Plans..................................................5.1(b)
Company Stockholders Meeting.........................................6.4(a)
Company's Reports....................................................5.1(e)
Compensation and Benefit Plans....................................5.1(h)(i)
Competition Laws........................................................9.1
Computer Systems.....................................................5.1(r)
Confidentiality Agreement..............................................6.14
Contracts........................................................5.1(d)(ii)
Costs...............................................................6.12(a)
Current Premium.....................................................6.12(c)
D&O Insurance.......................................................6.12(c)
Delaware Courts......................................................9.6(a)
DGCL....................................................................9.1
Effective Time..........................................................1.3
Environmental Law.......................................................9.1
ERISA...................................................................9.1
ERISA Affiliate.........................................................9.1
Exchange Act............................................................9.1
Exchange Agent.......................................................4.2(a)
Exchange Ratio.......................................................4.1(a)
Excluded Company Shares..............................................4.1(a)
GAAP....................................................................9.1
Governmental Entity...............................................5.1(d)(i)
Hazardous Substance.....................................................9.1
HSR Act.................................................................9.1
Indemnified Parties.................................................6.12(a)
IRS.....................................................................9.1
Laws....................................................................9.1
Material Adverse Effect.................................................9.1
Merger.............................................................recitals
Merger Consideration.................................................4.1(a)
Merger Sub.........................................................preamble
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Multi-employer Plan.............................................5.1(h)(vii)
NYSE.................................................................4.1(a)
Order................................................................7.1(d)
Parent.............................................................preamble
Parent Affiliate's Letter............................................6.7(a)
Parent Average Price.................................................4.1(a)
Parent Common Stock..................................................4.1(a)
Parent Companies.....................................................4.1(a)
Parent Disclosure Letter................................................5.2
Parent Preferred Shares...........................................5.2(b)(i)
Parent Requisite Vote............................................5.2(d)(ii)
Parent Stock Plans................................................5.2(b)(i)
Parent Stockholders Meeting..........................................6.4(b)
Parent's Reports.....................................................5.2(e)
PBGC....................................................................9.1
Pension Plan.....................................................5.1(h)(ii)
Permits.................................................................9.1
Person..................................................................9.1
Pooling Affiliates...................................................6.7(a)
Pooling Requirements...............................................recitals
Products........................................................5.1(q)(iii)
Prospectus/Proxy Statement..............................................6.3
Rights Agreement.....................................................5.1(b)
Rule 145 Affiliates..................................................6.7(a)
S-4 Registration Statement..............................................6.3
SEC.....................................................................9.1
Section 16..........................................................6.10(c)
Securities Act..........................................................9.1
Significant Agreements..................................................9.1
Significant Investees...................................................9.1
Significant Subsidiaries................................................9.1
Stock Option Agreement.............................................recitals
Subsequent Transaction...............................................6.5(e)
Subsidiary..............................................................9.1
Substitute Option................................................6.10(a)(i)
Superior Proposal....................................................6.2(a)
Surviving Corporation...................................................1.1
Takeover Statute.....................................................5.1(j)
Tax.....................................................................9.1
Tax Return..............................................................9.1
Taxable.................................................................9.1
Taxes...................................................................9.1
Termination Date........................................................8.2
Termination Fee......................................................8.5(b)
Year 2000 Compliant..................................................5.1(r)
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AGREEMENT AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER (this "Agreement"), dated as of
September 9, 1999, is among PREMARK INTERNATIONAL, INC., a Delaware corporation
(the "Company"), ILLINOIS TOOL WORKS INC., a Delaware corporation ("Parent"),
and CS MERGER SUB INC., a Delaware corporation that is a wholly owned subsidiary
of Parent ("Merger Sub").
RECITALS
WHEREAS, the respective Boards of Directors of each of Parent, Merger Sub
and the Company have approved and declared advisable this Agreement and the
merger of Merger Sub with and into the Company (the "Merger") upon the terms and
subject to the conditions set forth in this Agreement;
WHEREAS, the parties intend, by executing and delivering this Agreement,
to adopt a plan of reorganization within the meaning of Section 368(a) of the
Internal Revenue Code of 1986, as amended, (the "Code"), and to cause the Merger
to qualify as a "reorganization" as therein defined;
WHEREAS, for financial accounting purposes, it is intended that the Merger
shall be accounted for as a "pooling-of-interests" in accordance with the
requirements of Opinion No. 16 "Business Combinations" of the Accounting
Principles Board of the American Institute of Certified Public Accountants, as
amended and/or interpreted by the rules and regulations of the SEC and
applicable pronouncements by the Financial Accounting Standards Board, the
Emerging Issues Task Force and the American Institute of Certified Public
Accountants (collectively with the rules and regulations of the SEC, the
"Pooling Requirements");
WHEREAS, contemporaneously with the execution and delivery of this
Agreement, as a condition and inducement to Parent's and Merger Sub's
willingness to enter into this Agreement, the Company is entering into a stock
option agreement with Parent, substantially in the form of Exhibit A (the "Stock
Option Agreement"), pursuant to which the Company has granted to Parent an
option to purchase shares of common stock of the Company under the terms and
conditions set forth in the Stock Option Agreement; and
WHEREAS, the Company, Parent and Merger Sub desire to make certain
representations, warranties, covenants and agreements in connection with this
Agreement.
NOW, THEREFORE, in consideration of the premises, and of the
representations, warranties, covenants and agreements contained in this
Agreement, the parties agree as follows:
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ARTICLE I.
The Merger; Closing; Effective Time
1.1. The Merger. Upon the terms and subject to the conditions set forth in
this Agreement, at the Effective Time (as defined in Section 1.3) Merger Sub
shall be merged with and into the Company and the separate corporate existence
of Merger Sub shall thereupon cease. The Company shall be the surviving
corporation in the Merger (sometimes referred to as the "Surviving Corporation")
and shall continue to be governed by the laws of the State of Delaware, and the
separate corporate existence of the Company, with all its rights, privileges,
immunities, powers and franchises, shall continue unaffected by the Merger
except as set forth in Article III. The Merger shall have the effects specified
in the DGCL.
1.2. Closing. The closing of the Merger (the "Closing") shall take place
(i) at the offices of Mayer, Brown & Platt, 190 South LaSalle Street, Chicago,
Illinois, at 9:00 A.M., local time, on the second business day after the date on
which the last to be fulfilled or waived of the conditions set forth in Article
VII (other than those conditions that by their nature are to be satisfied at the
Closing (which may include the condition set forth in Section 7.1(a)), but
subject to the fulfillment or waiver of those conditions) shall be satisfied or
waived in accordance with this Agreement or (ii) at such other place and time
and/or on such other date as the Company and Parent may agree in writing (the
"Closing Date").
1.3. Effective Time. As soon as practicable following the Closing, the
Company and Parent will cause a Certificate of Merger (the "Certificate of
Merger") to be executed, acknowledged and filed with the Secretary of State of
the State of Delaware as provided in Section 251 of the DGCL. The Merger shall
become effective at the time when the Certificate of Merger has been duly filed
with the Secretary of State of the State of Delaware or such other time as shall
be agreed upon by the parties and set forth in the Certificate of Merger in
accordance with the DGCL (the "Effective Time").
ARTICLE II.
Certificate of Incorporation and Bylaws of the Surviving Corporation
2.1. The Certificate of Incorporation. The certificate of incorporation of
Merger Sub as in effect immediately prior to the Effective Time shall be the
certificate of incorporation of the Surviving Corporation (the "Charter"), until
duly amended as provided therein or by applicable law.
2.2. The Bylaws. The bylaws of Merger Sub in effect at the Effective Time
shall be the Bylaws of the Surviving Corporation (the "Bylaws"), until
thereafter amended as provided therein or by applicable law.
ARTICLE III.
Officers, Directors and Management
3.1. Directors of Surviving Corporation. The directors of Merger Sub at
the Effective Time shall, from and after the Effective Time, be the directors of
the Surviving Corporation until their successors have been duly elected or
appointed and qualified or until their earlier death, resignation or removal in
accordance with the Charter and the Bylaws.
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3.2. Officers of Surviving Corporation. The officers of the Company at the
Effective Time shall, from and after the Effective Time, be the officers of the
Surviving Corporation until their successors have been duly elected or appointed
and qualified or until their earlier death, resignation or removal in accordance
with the Charter and the Bylaws.
ARTICLE IV.
Effect of the Merger on Capital Stock; Exchange of Certificates
4.1. Effect on Capital Stock. At the Effective Time, the Merger shall have
the following effects on the capital stock of the Company and Merger Sub,
without any action on the part of the holder of any capital stock of the Company
or Merger Sub:
(a) Merger Consideration. Each share of common stock, $1.00 par value per
share, of the Company (each a "Company Share" and collectively the
"Company Shares") issued and outstanding immediately prior to the
Effective Time (but not including Company Shares that are owned by Parent,
Merger Sub or any other direct or indirect subsidiary of Parent
(collectively, the "Parent Companies") or Company Shares that are owned by
the Company or any direct or indirect subsidiary of the Company, and in
each case not held on behalf of third parties (collectively, "Excluded
Company Shares")), shall be converted into and become exchangeable for the
fraction of a share (the "Exchange Ratio" or the "Merger Consideration")
of Common Stock, $0.01 par value per share, of Parent ("Parent Common
Stock"), equal to:
(i) if the Parent Average Price is equal to or greater than $66.33 but
less than or equal to $89.73, the result, calculated to four decimal
places, of $55.00 divided by the Parent Average Price;
(ii) if the Parent Average Price is greater than $89.73 but less than
$101.44, the result, calculated to four decimal places, of
[$55.00 + {.3065 (Parent Average Price - $89.73)}] [divided by]
Parent Average Price;
(iii) if the Parent Average Price is less than $66.33 but greater than
$54.62, the result, calculated to four decimal places, of
[$55.00 - {.4146 ($66.33 - Parent Average Price)}] [divided by]
Parent Average Price;
(iv) if the Parent Average Price is greater than or equal to $101.44,
.5776;
(v) if the Parent Average Price is less than or equal to $54.62, .9181.
The "Parent Average Price" means the average of the closing price per share of
Parent Common Stock on the New York Stock Exchange (the "NYSE"), as reported in
The Wall Street Journal, New York City edition, on the twenty NYSE trading days
ending on the second business day prior to the Closing Date. The Parent Average
Price shall be rounded to the nearest cent.
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At the Effective Time, all Company Shares shall no longer be outstanding,
shall be canceled and retired and shall cease to exist, and each certificate (a
"Certificate") formerly representing any of such Company Shares (other than
Excluded Company Shares) shall thereafter represent only the right to the Merger
Consideration in respect of each Company Share formerly represented by such
Certificate multiplied by the number of Company Shares formerly represented by
such Certificate and the right, if any, to receive pursuant to Section 4.2(d)
cash in lieu of the fractional shares into which such Company Shares have been
converted pursuant to this Section 4.1(a) and any distribution or dividend
pursuant to Section 4.2(b), in each case without interest.
(b) Cancellation of Excluded Company Shares. Each Excluded Company Share
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, no longer be outstanding, shall be canceled and retired without
payment of any consideration therefor and shall cease to exist.
(c) Merger Sub. At the Effective Time, each share of Common Stock, par
value $0.01 per share, of Merger Sub issued and outstanding immediately
prior to the Effective Time shall be converted into one share of common
stock of the Surviving Corporation, and the Surviving Corporation shall
thereby become a wholly owned subsidiary of Parent.
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4.2. Exchange of Certificates for Shares.
(a) Exchange Procedures. At or prior to the Effective Time Parent shall
deposit with the Exchange Agent (as defined below), in trust for the
benefit of the holders of Company Shares, certificates representing shares
of Parent Common Stock issuable pursuant to Section 4.1(a), and an amount
of cash sufficient to pay cash in lieu of fractional shares in accordance
with Section 4.2(d). Parent shall make sufficient funds available to the
Exchange Agent from time to time as needed to pay cash in respect of
dividends or other distributions in accordance with Section 4.2(b).
Promptly after the Effective Time, but in no event later than three
business days following the Closing Date, the Surviving Corporation shall
cause an exchange agent (the "Exchange Agent"), selected by Parent with
the Company's prior approval, which shall not be unreasonably withheld, to
mail to each holder of record as of the Effective Time of a Certificate in
respect of Company Shares (other than holders of a Certificate in respect
of Excluded Company Shares) (i) a letter of transmittal specifying that
delivery of the Certificates shall be effected, and that risk of loss and
title to the Certificates shall pass, only upon delivery of the
Certificates (or affidavits of loss and indemnity undertakings or
indemnity bonds, as the case may be, in lieu thereof) to the Exchange
Agent, such letter of transmittal to be in such form and have such other
provisions as Parent and the Company may reasonably agree, and (ii)
instructions for exchanging the Certificates for (A) certificates
representing shares of Parent Common Stock and (B) any cash in lieu of
fractional shares determined in accordance with Section 4.2(d) plus any
cash dividends and any other dividends or other distributions that such
holder has the right to receive pursuant to the provisions of this Article
IV. Subject to Section 4.2(g), upon surrender of a Certificate for
cancellation to the Exchange Agent together with such letter of
transmittal, duly executed, the holder of such Certificate shall be
entitled to receive in exchange therefor (x) a certificate representing
that number of whole shares of Parent Common Stock that such holder is
entitled to receive pursuant to this Section 4.2, and (y) a check in the
amount (after giving effect to any required tax withholdings) of (A) any
cash in lieu of fractional shares determined in accordance with Section
4.2(d) plus (B) any cash dividends and any other dividends or other
distributions that such holder has the right to receive pursuant to the
provisions of this Section 4.2. The Certificate so surrendered shall
forthwith be canceled. No interest will be paid or accrued on any amount
payable upon due surrender of any Certificate. In the event of a transfer
of ownership of Company Shares that occurred prior to the Effective Time,
but is not registered in the transfer records of the Company, a
certificate representing the proper number of shares of Parent Common
Stock, together with a check for any cash in lieu of fractional shares to
be paid upon due surrender of the Certificate and any other dividends or
distributions in respect thereof, may be issued and/or paid to such a
transferee if the Certificate formerly representing such Company Shares is
presented to the Exchange Agent, accompanied by all documents required to
evidence and effect such transfer and to evidence that any applicable
stock transfer taxes have been paid. If any certificate for shares of
Parent Common Stock is to be issued in a name other than that in which the
Certificate surrendered in exchange therefor is registered, it shall be a
condition of such exchange that the Person requesting such exchange shall
pay any transfer or other taxes required by reason of the issuance of
certificates for shares of Parent Common Stock in a name other than that
of the registered holder of the Certificate surrendered, or shall
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establish to the satisfaction of Parent or the Exchange Agent that such
tax has been paid or is not applicable.
(b) Distributions with Respect to Unexchanged Shares; Voting.
(i) Whenever a dividend or other distribution is declared by Parent
in respect of Parent Common Stock, the record date for which is at
or after the Effective Time, that declaration shall include
dividends or other distributions in respect of all shares of Parent
Common Stock issuable pursuant to this Agreement. No dividends or
other distributions so declared in respect of such Parent Common
Stock shall be paid to any holder of any unsurrendered Certificate
until such Certificate is surrendered for exchange in accordance
with this Section 4.2. Subject to the effect of applicable laws,
following surrender of any such Certificate, there shall be issued
or paid to the holder of the certificates representing whole shares
of Parent Common Stock issued in exchange for such Certificate,
without interest, (A) at the time of such surrender, the dividends
or other distributions with a record date that is at or after the
Effective Time and a payment date on or prior to the date of
issuance of such whole shares of Parent Common Stock and not
previously paid and (B) at the appropriate payment date, the
dividends or other distributions payable with respect to such whole
shares of Parent Common Stock with a record date at or after the
Effective Time but with a payment date subsequent to surrender. For
purposes of dividends or other distributions in respect of shares of
Parent Common Stock, all shares of Parent Common Stock to be issued
pursuant to the Merger shall be deemed issued and outstanding as of
the Effective Time.
(ii) Registered holders of unsurrendered Certificates shall be
entitled to vote after the Effective Time at any meeting of Parent
stockholders with a record date at or after the Effective Time the
number of whole shares of Parent Common Stock represented by such
Certificates, regardless of whether such holders have exchanged
their Certificates.
(c) Transfers. After the Effective Time, there shall be no transfers on
the stock transfer books of the Company of the Company Shares that were
outstanding immediately prior to the Effective Time.
(d) Fractional Shares. Notwithstanding any other provision of this
Agreement, no fractional shares of Parent Common Stock will be issued and
any holder of Company Shares entitled to receive a fractional share of
Parent Common Stock but for this Section 4.2(d) shall be entitled to
receive in lieu thereof an amount in cash (without interest) determined by
multiplying such fraction (rounded to the nearest one-hundredth of a
share) by the average closing price of a share of Parent Common Stock, as
reported in The Wall Street Journal, New York City edition, on the five
(5) trading days immediately prior to the Effective Time.
(e) Termination of Exchange Period; Unclaimed Stock. Any shares of Parent
Common Stock and any portion of the cash, dividends or other distributions
with respect to the Parent Common Stock deposited by Parent with the
Exchange Agent (including the proceeds of any investments thereof) that
remain unclaimed by the stockholders of the Company 180 days after the
Effective Time shall be paid to Parent.
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Any stockholders of the Company who have not theretofore complied with this
Article IV shall thereafter be entitled to look only to Parent for payment
of their shares of Parent Common Stock and any cash, dividends and other
distributions in respect thereof issuable and/or payable pursuant to
Section 4.1, Section 4.2(b) and Section 4.2(d) upon due surrender of their
Certificates (or, in lieu of such Certificates, affidavits of loss together
with either a reasonable undertaking to indemnify Parent or the Company, if
Parent believes that the person providing the indemnity is sufficiently
creditworthy, or, if Parent does not so believe, indemnity bonds), in each
case, without any interest thereon. Notwithstanding the foregoing, none of
Parent, the Surviving Corporation, the Exchange Agent or any other Person
shall be liable to any former holder of Company Shares for any amount
properly delivered to a public official pursuant to applicable abandoned
property, escheat or similar laws.
(f) Lost, Stolen or Destroyed Certificates. In the event any Certificate
shall have been lost, stolen or destroyed, upon the making of an affidavit
of that fact by the Person claiming such Certificate to be lost, stolen or
destroyed and if Parent believes that the person providing the indemnity
is sufficiently creditworthy, the making of a reasonable undertaking to
indemnify Parent or the Company, or, if Parent does not so believe, the
posting by such Person of a bond in the form customarily required by
Parent to indemnify against any claim that may be made against it with
respect to such Certificate, Parent will issue the shares of Parent Common
Stock and the Exchange Agent will distribute such stock, any cash,
dividends and other distributions in respect thereof issuable or payable
in exchange for such lost, stolen or destroyed Certificate pursuant to
Section 4.1, Section 4.2(b) and Section 4.2(d), in each case, without
interest.
(g) Affiliates. Notwithstanding anything in this Agreement to the
contrary, Certificates surrendered for exchange by any Pooling Affiliate
or Rule 145 Affiliate (as determined pursuant to Section 6.7) of the
Company shall not be exchanged until Parent has received a written
agreement from such Person as provided in Section 6.7.
4.3. Dissenters' Rights. The parties hereto agree that, in accordance with
Section 262 of the DGCL, no appraisal rights will be available to holders of
Company Shares in connection with the Merger.
4.4. Adjustments to Prevent Dilution. In the event that prior to the
Effective Time, there shall have been declared or effected a reclassification,
stock split (including a reverse split), or stock dividend or stock distribution
made with respect to the Company Shares or the Parent Common Stock, or a stock
dividend or stock distribution or any similar transaction relating to the
Company Shares or the Parent Common Stock, the Exchange Ratio shall be equitably
adjusted to reflect such event.
ARTICLE V.
Representations and Warranties
5.1. Representations and Warranties of the Company. Except as set forth in
the disclosure letter, dated the date of this Agreement, delivered by the
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Company to Parent (the "Company Disclosure Letter") or in the Company's Reports
(as defined below) filed after December 31, 1996 but prior to the date of this
Agreement, the Company represents and warrants to Parent and Merger Sub that:
(a) Organization, Good Standing and Qualification. Each of the Company and
its Subsidiaries is a corporation duly organized, validly existing and in
good standing under the laws of its respective jurisdiction of
organization and has all requisite corporate or similar power and
authority to own and operate its properties and assets and to carry on its
business as presently conducted and is qualified to do business and is in
good standing as a foreign corporation in each jurisdiction where the
ownership or operation of its properties or conduct of its business
requires such qualification, except where the failure to have such power
and authority or to be so qualified or in good standing is not, when taken
together with all other such failures, reasonably likely to have a
Material Adverse Effect (as defined below) on it. The Company has made
available to Parent a complete and correct copy of its certificate of
incorporation and bylaws, each as amended to date. Such certificate of
incorporation and bylaws are in full force and effect.
(b) Capital Structure. The authorized capital stock of the Company
consists of 200,000,000 Company Shares, of which 61,325,093 Company Shares
were issued and outstanding and 7,678,747 Company Shares were held in
treasury as of the close of business on September 7, 1999, and 50,000,000
shares of Preferred Stock, $1.00 par value per share (the "Company
Preferred Shares"), none of which was outstanding as of the date hereof.
All of the outstanding Company Shares have been duly authorized and are
validly issued, fully paid and nonassessable. Other than the 1,000,000
Company Preferred Shares designated as Series A Junior Participating
Preferred Stock that are reserved for issuance pursuant to the Rights
Agreement, dated as of November 6, 1996, by and between the Company and
Norwest Bank Minnesota, N.A., as Rights Agent (the "Rights Agreement"),
and Company Shares subject to issuance as set forth below or that are
permitted to become subject to issuance pursuant to Section 6.1(a)(iv) or
(vii) of this Agreement, the Company has no Company Shares, Company
Preferred Shares or other shares of capital stock reserved for or
otherwise subject to issuance. As of the date of this Agreement, the
Company has outstanding $150,000,000 aggregate principal amount of 6.875%
notes due 2008, $100,000,000 aggregate principal of 10.5% notes due 2000
and $2,600,000 aggregate principal amount of 5.95% industrial revenue
bonds due 2002. As of September 7, 1999, there were 7,069,414 Company
Shares that the Company was obligated to issue pursuant to the Company's
stock plans at a weighted average exercise price of $18.20 per Company
Share, each of which plans is listed in Section 5.1(b) of the Company
Disclosure Letter (collectively the "Company Stock Plans"). Each of the
outstanding shares of capital stock or other securities of each of the
Company's Significant Subsidiaries is duly authorized, validly issued,
fully paid and nonassessable and owned by the Company or a direct or
indirect wholly owned Subsidiary of the Company, free and clear of any
lien, pledge, security interest, claim or other encumbrance, except for
such failures or exceptions to the foregoing as are not reasonably likely
to have a Material Adverse Effect on the Company. Except as set forth
above and except pursuant to the Stock Option Agreement, there are no
preemptive or other outstanding rights, options, warrants, conversion
8
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rights, stock appreciation rights, redemption rights, repurchase rights,
agreements, arrangements or commitments granted by or enforceable against
the Company or any of its Significant Subsidiaries to issue or sell any
shares of capital stock, other securities of the Company or any of its
Subsidiaries or a material amount of assets of the Company or any of its
Significant Subsidiaries other than (in the case of assets) in the
ordinary course of business or any securities or obligations convertible
or exchangeable into or exercisable for, or giving any Person a right to
subscribe for or acquire, any shares of capital stock, other securities or
material amount of assets of the Company or any of its Significant
Subsidiaries, and no securities or obligations evidencing such rights are
issued or outstanding. Neither the Company nor any of its Subsidiaries has
outstanding any bonds, debentures, notes or other debt obligations the
holders of which have the right to vote with the stockholders of the
Company on any matter or convertible into or exercisable for securities
having the right to vote with the stockholders of the Company on any
matter. The Company Shares issuable pursuant to the Stock Option Agreement
have been duly reserved for issuance by the Company, and upon any issuance
of such Company Shares in accordance with the terms of the Stock Option
Agreement, such Company Shares will be duly and validly issued and fully
paid and nonassessable. No Company Shares are held by a Subsidiary of the
Company.
(c) Corporate Authority; Approval and Fairness. The Company has all
requisite corporate power and authority and has taken all corporate action
necessary in order to execute, deliver and perform its obligations under
this Agreement and the Stock Option Agreement and, subject only to
adoption of this Agreement by the holders of at least a majority of the
outstanding Company Shares (the "Company Requisite Vote") to consummate
the Merger. This Agreement has been duly executed and delivered by the
Company and is a valid and binding agreement of the Company enforceable
against the Company in accordance with its terms, subject to bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium and similar
laws of general applicability relating to or affecting creditors' rights
and to general equity principles (the "Bankruptcy and Equity Exception").
The Stock Option Agreement has been duly executed and delivered by the
Company and is a valid and binding agreement of the Company enforceable
against the Company in accordance with its terms, subject to the
Bankruptcy and Equity Exception. The Board of Directors of the Company (A)
has approved and declared advisable this Agreement, the Stock Option
Agreement and the Merger and (B) has received the opinion of its financial
advisors, Goldman, Sachs & Co., to the effect that the Merger
Consideration to be received by the holders of the Company Shares in the
Merger is fair to such holders from a financial point of view.
(d) Governmental Filings; No Violations.
(i) Other than the filings and/or notices (A) pursuant to Section
1.3, (B) under the HSR Act, the Exchange Act and the Securities Act,
(C) pursuant to the European Community Merger Control Regulation,
(D) to comply with state securities or "blue-sky" laws and (E) to
comply with any other relevant Competition Laws (as defined below),
no notices, reports or other filings are required to be made by the
Company with, nor are any consents, registrations, approvals,
9
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permits or authorizations required to be obtained by the Company
from, any governmental or regulatory authority, court, agency,
commission, body or other governmental entity ("Governmental
Entity"), in connection with the execution and delivery of this
Agreement and the Stock Option Agreement by the Company and the
consummation by the Company of the Merger and the other transactions
contemplated by this Agreement and the Stock Option Agreement,
except those the failure to make or obtain, individually or in the
aggregate, are not reasonably likely to have a Material Adverse
Effect on the Company and those that to the knowledge of the
Company's executive officers, as of the date hereof, would not be
reasonably likely to prevent, materially delay or materially impair
the Company's ability to consummate the transactions contemplated by
this Agreement or the Stock Option Agreement.
(ii) The execution, delivery and performance of this Agreement and
the Stock Option Agreement by the Company do not, and the
consummation by the Company of the Merger and the other transactions
contemplated by this Agreement and the Stock Option Agreement will
not, constitute or result in (A) a breach or violation of, or a
default under, the Company's certificate of incorporation or bylaws
or the comparable governing instruments of any of the Company's
Significant Investees or (B) a breach or violation of, a default
under, or give rise to a right of termination under, the
acceleration of any obligations or the creation of a lien, pledge,
security interest or other encumbrance on its assets or the assets
of any of the Company's Significant Investees (with or without
notice, lapse of time or both) pursuant to, any agreement, license,
lease, contract, note, mortgage, indenture, arrangement or other
obligation ("Contracts") binding upon the Company or any of its
Significant Investees or any Law (as defined in Section 5.1(i)) or
governmental or non-governmental permit or license to which the
Company or any of its Significant Investees are subject or (C) any
change in the rights or obligations of any party under any Contracts
to which the Company or its Significant Investees are a party,
except, in the case of clauses (B) or (C) above, for any breach,
violation, default, right of termination, acceleration, creation or
change that, individually or in the aggregate, is not reasonably
likely to have a Material Adverse Effect on the Company and that to
the knowledge of the Company's executive officers, as of the date
hereof, would not be reasonably likely to prevent, materially delay
or materially impair the Company's ability to consummate the
transactions contemplated by this Agreement or the Stock Option
Agreement.
(e) Reports; Financial Statements. The Company has filed with the SEC all
required forms, reports, registration statements and documents required to
be filed by it with the SEC since December 31, 1996. The Company has made
or will make available to Parent each registration statement, report,
proxy statement or information statement prepared by the Company since
December 31, 1996, including the Company's Annual Report on Form 10-K for
the years ended December 28, 1996, December 27, 1997 and December 26, 1998
and the Company's Quarterly Report on Form 10-Q for the quarters ended
March 27, 1999 and June 26, 1999 in the form (including exhibits, annexes
and any amendments thereto) filed with the SEC (collectively, including
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any such reports filed subsequent to the date of this Agreement, the
"Company's Reports"). As of their respective dates, the Company's Reports
complied as to form in all material respects with all applicable
requirements under the Securities Act, the Exchange Act and the rules and
regulations thereunder and did not contain any untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements made therein, in light of the
circumstances in which they were made, not misleading. Each of the
consolidated balance sheets included in or incorporated by reference into
the Company's Reports (including the related notes and schedules) fairly
presents the consolidated financial position of the Company and its
consolidated Subsidiaries as of its date and each of the consolidated
statements of income, stockholders' equity and of cash flows included in
or incorporated by reference into the Company's Reports (including any
related notes and schedules) fairly presents the consolidated results of
operations, retained earnings and cash flows, as the case may be, of the
Company and its consolidated Subsidiaries for the periods set forth
therein (subject, in the case of unaudited statements, to the absence of
notes (to the extent permitted by the rules applicable to Form 10-Q) and
to normal year-end audit adjustments that will not be material in amount
or effect), in each case in accordance with GAAP consistently applied
during the periods involved, except as may be noted therein. Except as set
forth in Section 5.1(e) of the Company Disclosure Letter or except as may
be reflected in any public filing made prior to the date of this Agreement
with the SEC under Section 13 of the Exchange Act and the regulations
promulgated thereunder, to the Company's knowledge, as of the date of this
Agreement, no Person or "group" "beneficially owns" 5% or more of the
Company's outstanding voting securities, with the terms "beneficially
owns" and "group" having the meanings ascribed to them under Rule 13d-3
and Rule 13d-5 under the Exchange Act.
(f) Absence of Certain Changes. Except as disclosed in the Company's
Reports filed prior to the date of this Agreement or as expressly
contemplated by this Agreement, since December 26, 1998 (the "Audit
Date"), the Company and its Subsidiaries have conducted their respective
businesses only in the ordinary and usual course of such businesses and
there has not been: (i) any change in the financial condition, liabilities
and assets (taken together) or business of the Company and its
Subsidiaries which, individually or in the aggregate, is reasonably likely
to have a Material Adverse Effect on the Company; (ii) any damage,
destruction or other casualty loss with respect to any asset or property
owned, leased or otherwise used by the Company or any of its Subsidiaries,
whether or not covered by insurance, which damage, destruction or loss is
reasonably likely, individually or in the aggregate, to have a Material
Adverse Effect on the Company; (iii) any declaration, setting aside or
payment of any dividend or other distribution in respect of the Company's
capital stock other than regular quarterly cash dividends not in excess of
$.11 per Common Share; or (iv) any material change by the Company in
financial accounting principles, practices or methods, except as required
by GAAP. Since the Audit Date, except as provided for in this Agreement,
in the Company Disclosure Letter or as disclosed in the Company's Reports
filed prior to the date of this Agreement and except for increases and
amendments that are not material in the aggregate, there has not been any
increase in the salary, wage, bonus, grants, awards, benefits or other
compensation payable or that could become payable by the Company or any of
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its Subsidiaries to directors, officers or key employees or any amendment
of any of the Company's Compensation and Benefit Plans (as defined in
Section 5.1(h)(i)) other than increases or amendments in the normal and
usual course of the Company's business (which may include normal periodic
performance reviews and related compensation and benefit increases and the
provision of new individual compensation and benefits for promoted or
newly hired officers and employees on terms consistent with past
practice).
(g) Litigation and Liabilities. Except as disclosed in the Company's
Reports filed prior to the date of this Agreement, there are no (i) civil,
criminal or administrative actions, suits, claims, hearings,
investigations or proceedings pending or, to the actual knowledge of the
Company's executive officers, threatened against the Company or any of its
Affiliates or (ii) obligations or liabilities of the Company or any of its
Subsidiaries, whether or not accrued, contingent or otherwise and whether
or not required to be disclosed, including those relating to matters
involving any Environmental Law, in either such case, except for those
that, individually or in the aggregate, are not reasonably likely to have
a Material Adverse Effect on the Company and that to the knowledge of the
Company's executive officers, as of the date hereof, would not be
reasonably likely to prevent, materially delay or materially impair the
Company's ability to consummate the transactions contemplated by this
Agreement or the Stock Option Agreement.
(h) Employee Benefits.
(i) The term "Compensation and Benefit Plans" means any employee
benefit plan (within the meaning of Section 3(3) of ERISA), or any
bonus, deferred compensation, pension, retirement, profit-sharing,
thrift, savings, incentive compensation, employee stock ownership,
stock bonus, stock purchase, restricted stock, stock option,
employment, consulting, termination, severance, compensation,
medical, health or fringe benefit plan, program, agreement, policy
or arrangement for any agents, consultants, employees, directors,
former employees or former directors of the Company and or any ERISA
Affiliate which the Company or any ERISA Affiliate maintains, is a
party to, participates in or with respect to which any of them has
any liability or contingent liability. The Company has delivered to
Parent copies of certain plan documents and summary plan
descriptions for certain Compensation and Benefit Plans, and such
copies are, to the knowledge of the Company's executive officers,
true and complete in all material respects.
(ii) (A) All Compensation and Benefit Plans have been administered
in form and operation in substantial compliance with all
requirements of applicable law, and no event has occurred which will
or could cause any such Compensation and Benefit Plan to fail to
comply with such requirements and no notice has been issued by any
governmental authority questioning or challenging such compliance;
(B) there have been no acts or omissions by the Company or any ERISA
Affiliate which have given rise to or may give rise to material
fines, penalties, taxes or related charges under Section 502 of
ERISA or Chapters 43, 47, 68 or 100 of the Code for which the
Company or ERISA Affiliate may be liable; (C) each of the
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Compensation and Benefit Plans that is an "employee pension benefit
plan" within the meaning of Section 3(2) of ERISA, other than a
multiemployer plan (as defined in Section 3(37) of ERISA), (each a
"Pension Plan,") and that is intended to be qualified under Section
401(a) of the Code has received a favorable determination letter
from the IRS or an application therefor filed within the applicable
remedial amendment period is pending which covers all changes in law
for which the remedial amendment period (within the meaning of
Section 401(b) of the Code and applicable regulations) has expired
and none of the Company nor any of its ERISA Affiliates is aware of
any circumstances likely to result in revocation of any such
favorable determination letter; (D) there is no pending or, to the
knowledge of the Company's executive officers, threatened material
litigation relating to its Compensation and Benefit Plans; and (E)
neither the Company nor any of the ERISA Affiliates has engaged in a
transaction with respect to any of the Compensation and Benefit
Plans that would subject the Company or any of the ERISA Affiliates
to a material tax or penalty imposed by either Section 4975 of the
Code or Section 502 of ERISA.
(iii) All contributions required to be made under the terms of any
of the Compensation and Benefit Plans as of the date of this
Agreement have been timely made or have been reflected on the most
recent consolidated balance sheet filed or incorporated by reference
in the Company's Reports prior to the date of this Agreement.
(iv) None of the Company nor any ERISA Affiliate has any obligation
for post-employment health and life benefits under any of the
Compensation and Benefit Plans, except as set forth in its Reports
filed prior to the date of this Agreement or as required by
applicable law or as may be provided under individual employment or
severance agreements which in the aggregate do not require the
Company to provide benefits, the cost of which is material to the
Company.
(v) The consummation of the Merger (or the approval of the Merger by
stockholders of the Company) and the other transactions contemplated
by this Agreement does not (x) entitle any employees or directors of
the Company or any employees of any of the Company's ERISA
Affiliates to severance pay, directly or indirectly, upon
termination of employment or otherwise, (y) accelerate the time of
payment or vesting or trigger any payment of compensation or
benefits under, increase the amount payable or trigger any other
material obligation pursuant to, any of the Compensation and Benefit
Plans or (z) result in any breach or violation of, or a default
under, any of the Compensation and Benefit Plans.
(vi) In each summary plan description and plan document relating to
a Compensation and Benefits Plan that is not an individual
agreement, the Company has reserved the right unilaterally to amend
or terminate such plan, and to the knowledge of the Company's
executive officers as of the date hereof, the Company has not
distributed any other documents to participants generally or issued
any general communication that purports to promise that
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any such plan will be continued indefinitely or otherwise obligates
the Company to provide a specific level of benefits in the future,
except under the terms of a collective bargaining agreement, a
change-in-control provision that has been disclosed to Parent prior
to the date of this Agreement or an individual agreement that has
been disclosed to Parent prior to the date of this Agreement, or
except as may be required by a statutory provision requiring the
continuation of certain benefits or requiring that certain steps be
taken, such as notification to affected participants, before a plan
amendment or termination can be effective.
(vii) None of the Compensation and Benefit Plans is a "multiemployer
plan", within the meaning of Section 4001(a)(3) of ERISA that is
subject to Title IV of ERISA (a "Multiemployer Plan") none of the
Compensation and Benefit Plans is otherwise subject to Title IV of
ERISA and none of the Company or any of the ERISA Affiliates have
contributed or been obligated to contribute to a Multiemployer Plan
or any other plan which is subject to Title IV of ERISA.
(i) Compliance with Laws. Except as set forth in the Company's Reports
filed prior to the date of this Agreement, the businesses of each of the
Company and its Subsidiaries have not been, and are not being, conducted
in violation of any Laws except for violations or possible violations
that, individually or in the aggregate, are reasonably likely to have a
Material Adverse Effect on the Company or that to the knowledge of the
Company's executive officers, as of the date hereof, would be reasonably
likely to prevent, materially delay or materially impair the Company's
ability to consummate the transactions contemplated by this Agreement and
the Stock Option Agreement. Except as set forth in the Company's Reports
filed prior to the date of this Agreement, to the actual knowledge of the
Company's executive officers, no investigation or review by any
Governmental Entity with respect to the Company or any of its Subsidiaries
is pending or threatened, nor has any Governmental Entity indicated an
intention to conduct the same, which, individually or in the aggregate,
are reasonably likely to have a Material Adverse Effect on the Company or
to the knowledge of the Company's executive officers, as of the date
hereof, would be reasonably likely to prevent, materially delay or
materially impair the Company's ability to consummate the transactions
contemplated by this Agreement and the Stock Option Agreement. To the
actual knowledge of the Company's executive officers, no material change
is required in the Company's or any of its Subsidiaries' processes,
properties or procedures in order to comply with any such Laws, and the
Company has not received any written notice or written communication of
any material noncompliance with any such Laws that has not been cured as
of the date of this Agreement, except for changes and noncompliance that
individually or in the aggregate, are not reasonably likely to have a
Material Adverse Effect on the Company and that to the knowledge of the
Company's executive officers, as of the date hereof, would not be
reasonably likely to prevent, materially delay or materially impair the
Company's ability to consummate the transactions contemplated by this
Agreement and the Stock Option Agreement. Each of the Company and its
Subsidiaries has all Permits necessary to conduct their business as
presently conducted, except for those the absence of which, individually
or in the aggregate, are not reasonably likely to have a Material Adverse
Effect on the Company and that to the knowledge of the Company's executive
14
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officers, as of the date hereof, would not be reasonably likely to
prevent, materially delay or materially impair the Company's ability to
consummate the transactions contemplated by this Agreement and the Stock
Option Agreement.
(j) Takeover Statutes; Charter and Bylaw Provisions. The Board of
Directors of the Company has taken all appropriate and necessary actions
to render inapplicable to the Merger and the transactions contemplated by
this Agreement the provisions of Section 203 of the DGCL. No other "fair
price," "moratorium," "control share acquisition" or other similar
anti-takeover statute or regulation of any state in the United States
(each a "Takeover Statute") as in effect on the date of this Agreement is
applicable to the Company, the Company Shares, the Merger or the other
transactions contemplated by this Agreement or the Stock Option Agreement.
Assuming that Parent and its Affiliates were not, at or prior to the date
of this Agreement (without giving effect to the Stock Option Agreement),
"Interested Stockholders" within the meaning of Article EIGHTH, Section
B(2)(vii)(2) of the Company's certificate of incorporation, the Company's
Board of Directors has taken such action as is necessary to render Article
EIGHTH, Section A of the Company's certificate of incorporation
inapplicable to the Merger or the other transactions contemplated by this
Agreement or the Stock Option Agreement. Article NINTH of the Company's
certificate of incorporation has expired in accordance with its terms.
(k) Environmental Matters. Except as disclosed or reflected in the
Company's Reports filed prior to the date of this Agreement and except for
such matters that, alone or in the aggregate, are not reasonably likely to
have a Material Adverse Effect on the Company: (i) each of the Company and
its Subsidiaries has complied with all applicable Environmental Laws; (ii)
neither the Company nor any of its Subsidiaries has received any notice,
demand, letter, claim or request for information alleging that the Company
or any of its Subsidiaries may be in violation of or liable under any
Environmental Law; (iii) neither the Company nor any of its Subsidiaries
is subject to any orders, decrees, injunctions or other arrangements with
any Governmental Entity or is subject to any indemnity or other agreement
with any third party relating to liability under any Environmental Law or
relating to Hazardous Substances; and (iv) there are no circumstances or
conditions involving the Company or any of its Subsidiaries that could
reasonably be expected to result in any claims, liability, investigations,
costs or restrictions on the ownership, use, or transfer of any of the
Company's properties pursuant to any Environmental Law.
(l) Accounting and Tax Matters. Neither the Company nor any of its
Subsidiaries or Pooling Affiliates (as defined in Section 6.7) has taken
or agreed to take any action, nor do the Company's executive officers have
any actual knowledge of any fact or circumstance, that would prevent
Parent from accounting for the business combination to be effected by the
Merger as a "pooling-of-interests" in accordance with the Pooling
Requirements or prevent the Merger from qualifying as a "reorganization"
within the meaning of Section 368(a) of the Code.
(m) Taxes. Except to the extent of any inaccuracy or incompleteness of any
of the following which is not, individually or in the aggregate,
reasonably likely to have a Material Adverse Effect on the Company, (i)
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the Company and each of its Subsidiaries have prepared or will prepare in
good faith and duly and timely filed (taking into account any extension of
time within which to file), or will so file, all material Tax Returns
required to be filed by any of them at or before the Effective Time and
all such filed Tax Returns are or will be complete and accurate, (ii) the
Company and each of its Subsidiaries as of the Effective Time (x) will
have paid all Taxes that they are required to pay prior to the Effective
Time, and (y) will have withheld all federal, state and local income
taxes, FICA, FUTA and other Taxes, including, without limitation, similar
foreign Taxes, required to be withheld from amounts owing to any employee,
creditor or third party, (iii) as of the date of this Agreement, there are
not pending or threatened in writing, any audits, examinations,
investigations or other proceedings in respect of Taxes or Tax matters,
(iv) there are not, to the actual knowledge of the Company's executive
officers, any unresolved questions, claims or outstanding proposed or
assessed deficiencies concerning the Company or any of its Subsidiaries'
Tax liability, (v) neither the Company nor any of its Subsidiaries has any
liability with respect to income, franchise or similar Taxes in excess of
the amounts accrued in respect of such Taxes that are reflected in the
financial statements included in the Company's Reports and (vi) neither
the Company nor any of its Subsidiaries has executed any waiver of any
statute of limitations on, or extended the period for the assessment or
collection of, any Tax. No payments to be made to any of the officers and
employees of the Company or its Subsidiaries will, as a result of
consummation of the Merger, be subject to the deduction limitations under
Sections 280G or 162(m) of the Code.
(n) Labor Matters. Neither the Company nor any of its Subsidiaries is the
subject of any material proceeding asserting that the Company or any of
its Subsidiaries has committed an unfair labor practice or is seeking to
compel the Company to bargain with any labor union or labor organization
nor is there pending or, to the knowledge of the Company's executive
officers, threatened, any labor strike, dispute, walkout, work stoppage,
slow down or lockout involving the Company or any of its Subsidiaries,
except in each case as is not, individually or in the aggregate,
reasonably likely to have a Material Adverse Effect on the Company.
(o) Brokers and Finders; Professional Expenses. Neither the Company nor
any of its officers, directors or employees has employed any broker or
finder or incurred any liability for any brokerage fees, commissions or
finders' fees in connection with the Merger or the other transactions
contemplated by this Agreement except that the Company has employed
Goldman, Sachs & Co. as the Company's financial advisor. The calculation
of the amount payable to Goldman, Sachs & Co. in connection with this
Agreement, including the Merger and the other transactions contemplated by
this Agreement, is disclosed in Section 5.1(o) of the Company Disclosure
Letter and true and complete copies of all engagement letters and other
Contracts relating to currently active assignments under which Goldman,
Sachs & Co. may be entitled to any engagement, assignment, fees, expense
reimbursement, indemnification or other payment from the Company or any of
its Subsidiaries are attached to the Company Disclosure Letter.
(p) Significant Agreements. Each of the Significant Agreements is in full
force and effect and enforceable in accordance with its terms, except as
would not reasonably be expected to have a Material Adverse Effect on the
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Company. Neither the Company nor any of its Subsidiaries has received any
notice (written or oral) of cancellation or termination of, or any
expression or indication of an intention or desire to cancel or terminate,
any of the Significant Agreements, except as would not reasonably be
expected to have a Material Adverse Effect on the Company. No Significant
Agreement is the subject of, or has been threatened to be made the subject
of, any arbitration, suit or other legal proceeding, except as would not
reasonably be expected to have a Material Adverse Effect on the Company.
With respect to any Significant Agreement which by its terms will
terminate as of a certain date unless renewed or unless an option to
extend such Significant Agreement is exercised, neither the Company nor
any of its Subsidiaries has received any notice (written or oral), or
otherwise has any knowledge, that any such Significant Agreement will not
be, or is not likely to be, so renewed or that any such extension option
will not be exercised, except as would not reasonably be expected to have
a Material Adverse Effect on the Company. There exists no event of default
or occurrence, condition or act on the part of the Company or any of its
Subsidiaries or, to the knowledge of the Company, on the part of the other
parties to the Significant Agreements which constitutes or would
constitute (with notice or lapse of time or both) a breach of or default
under any of the Significant Agreements, except as would not reasonably be
expected to have a Material Adverse Effect on the Company. Neither the
Company nor any of its Subsidiaries is a party to or otherwise bound by
any Contract purporting to limit the Company or any of its Affiliates from
engaging in any business or from competing with any Person in any
business, except as would not reasonably be expected to have a Material
Adverse Effect on the Company. Neither the Company nor any of its
Subsidiaries is a party to or otherwise bound by any Contract purporting
to limit any direct or indirect shareholder or parent company of the
Company (or any Subsidiary of any direct or indirect shareholder or parent
company of the Company, other than the Company or any Subsidiary of the
Company) from engaging in any business or from competing with any Person
in any business except as would not have a Material Adverse Effect on
Parent.
(q) Intellectual Property Rights. Except as would not have a Material
Adverse Effect on the Company:
(i) The Company and its Subsidiaries own or have the right to use
all intellectual property material to the conduct of their
respective businesses (such intellectual property and such rights
are collectively referred to herein as the "Company IP Rights").
(ii) The execution, delivery and performance of this Agreement by
the Company and the consummation by the Company of the transactions
contemplated hereby will not (A) constitute a breach by the Company
or any of its Subsidiaries of any instrument or agreement governing
any Company IP Rights, (B) cause the modification of any terms of
any licenses or agreements relating to any Company IP Rights
including but not limited to the modification of the effective rate
of any royalties or other payments provided for in any such license
or agreement, (C) cause the forfeiture or termination of any Company
IP Rights, (D) give rise to a right of forfeiture or termination of
any Company IP Rights or (E) impair the right of the Company, its
Subsidiaries, the Surviving Corporation or Parent to use, sell or
license any Company IP Rights or portion thereof.
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(iii) Neither the manufacture, marketing, license, sale or intended
use of any product or product under development (collectively,
"Products") by the Company and its Subsidiaries nor the current use
by the Company and its Subsidiaries of any Company IP Rights, (A)
violates any license or agreement between the Company or any of its
Subsidiaries and any third party or (B) infringes any patents or
other intellectual property rights of any other party; and there is
no pending or threatened claim or litigation contesting the
validity, ownership or right to use, sell, license or dispose of any
Company IP Rights, or asserting that any Company IP Rights or the
proposed use, sale, license or disposition thereof, or the
manufacture, use or sale of any Products, conflicts or will conflict
with the rights of any other party.
(r) Year 2000 Compliance. The Company has instituted processes and
controls to become Year 2000 Compliant, as that term is defined below, and
the foreseeable expenses or other liabilities associated with the process
of securing full Year 2000 Compliance would not be reasonably expected to
cause a Material Adverse Effect on the Company. Upon completion of such
instituted processes and controls the Company's Computer Systems will be
Year 2000 Compliant. "Year 2000 Compliant" means, except for any
noncompliance that, individually or in the aggregate would not be
reasonably likely to have a Material Adverse Effect on the Company, that
such hardware or software used, by the Company or any of its Subsidiaries
including, but not limited to, microcode, firmware, system and application
programs, files, databases, computer services, and microcontrollers,
including those embedded in computer and non-computer equipment (the
"Computer Systems") will not fail (because of a date change event
resulting from a transition to the Year 2000) to:
(i) process date data consistently from before and after January
1, 2000;
(ii) maintain functionality with respect to the introduction
processing, or output of records containing dates falling on
or after January 1, 2000; and
(iii) be interoperable with other Year 2000 Compliant software or
hardware which may deliver records to, receive records from,
or interact with such Computer Systems in the course of
conducting the business of the Company, including processing
data and manufacturing the products of the Company.
(s) Rights Agreement. The Company has adopted an amendment to the Rights
Agreement with the effect that neither Parent nor Merger Sub shall be
deemed to be an Acquiring Person (as defined in the Rights Agreement), the
Distribution Date (as defined in the Rights Agreement) shall not be deemed
to occur and the Rights (as defined in the Rights Agreement) will not
separate from the Company Shares, as a result of entering into this
Agreement or the Stock Option Agreement or consummating the Merger and/or
the other transactions contemplated by this Agreement or the Stock Option
Agreement.
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5.2. Representations and Warranties of Parent and Merger Sub. Except as
set forth in the disclosure letter, dated the date of this Agreement, delivered
by Parent to the Company (the "Parent Disclosure Letter") or in Parent's Reports
filed after December 31, 1996 but prior to the date of this Agreement, Parent,
on behalf of itself and Merger Sub, represents and warrants to the Company that:
(a) Organization, Good Standing and Qualification. Each of Parent and its
Subsidiaries is a corporation duly organized, validly existing and in good
standing under the laws of its respective jurisdiction of organization and
has all requisite corporate or similar power and authority to own and
operate its properties and assets and to carry on its business as
presently conducted and is qualified to do business and is in good
standing as a foreign corporation in each jurisdiction where the ownership
or operation of its properties or conduct of its business requires such
qualification, except where the failure to have such power and authority
or to be so qualified or in good standing is not, when taken together with
all other such failures, reasonably likely to have a Material Adverse
Effect on it. Parent has made available to Company a complete and correct
copy of its certificate of incorporation and bylaws, each as amended to
date. Such certificates of incorporation and bylaws are in full force and
effect.
(b) Capital Structure.
(i) The authorized capital stock of Parent consists of 350,000,000
shares of Parent Common Stock, of which 250,637,386 shares were
issued and outstanding and 260,536 shares were held in treasury as
of the close of business on September 7, 1999, and 300,000 shares of
Preferred Stock, no par value (the "Parent Preferred Shares"), of
which no shares were outstanding as of the date hereof. All of the
outstanding shares of Parent Common Stock have been duly authorized
and are validly issued, fully paid and nonassessable. As of the date
of this Agreement, other than Parent Common Stock subject to
issuance as set forth below, Parent has no shares of Parent Common
Stock or Parent Preferred Shares reserved for or subject to
issuance. As of September 7, 1999, there were not more than
5,344,999 shares of Parent Common Stock that Parent was obligated to
issue pursuant to the Parent's stock plans, each of which plans is
listed in Section 5.2(b) of the Parent Disclosure Letter
(collectively, the "Parent Stock Plans"). Except as set forth above,
as of the date of this Agreement, there are no preemptive or other
outstanding rights, options, warrants, conversion rights, stock
appreciation rights, redemption rights, repurchase rights,
agreements, arrangements or commitments to issue or to sell any
shares of capital stock or other securities of Parent or any
securities or obligations convertible or exchangeable into or
exercisable for, or giving any Person a right to subscribe for or
acquire, any securities of Parent, and no securities or obligation
evidencing such rights are authorized, issued or outstanding. As of
the date of this Agreement, Parent does not have outstanding any
bonds, debentures, notes or other debt obligations the holders of
which have the right to vote (or convertible into or exercisable for
securities having the right to vote) with the stockholders of Parent
on any matter.
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(ii) The authorized capital stock of Merger Sub consists of 1,000
shares of Common Stock, par value $0.01 per share, all of which are
validly issued and outstanding. All of the issued and outstanding
capital stock of Merger Sub is, and at the Effective Time will be,
owned by Parent, and there are (A) no other shares of capital stock
or other voting securities of Merger Sub, (B) no securities of
Merger Sub convertible into or exchangeable for shares of capital
stock or other voting securities of Merger Sub and (C) no options or
other rights to acquire from Merger Sub, and no obligations of
Merger Sub to issue, any capital stock, other voting securities or
securities convertible into or exchangeable for capital stock or
other voting securities of Merger Sub. Merger Sub has not conducted
any business prior to the date of this Agreement and has no, and
prior to the Effective Time will have no, assets, liabilities or
obligations of any nature other than those incident to its formation
and pursuant to this Agreement and the Merger and the other
transactions contemplated by this Agreement.
(c) Corporate Authority; Approval. Parent and Merger Sub each has all
requisite corporate power and authority and each has taken all corporate
action necessary in order to execute, deliver and perform its obligations
under this Agreement and to consummate the Merger. This Agreement has been
duly executed and delivered by Parent and Merger Sub and is a valid and
binding agreement of Parent and Merger Sub, enforceable against each of
Parent and Merger Sub in accordance with its terms, subject to the
Bankruptcy and Equity Exception. The shares of Parent Common Stock, when
issued pursuant to this Agreement, will be validly issued, fully paid and
nonassessable, and no stockholder of Parent will have any preemptive right
of subscription or purchase in respect thereof.
(d) Governmental Filings; No Violations.
(i) Other than the filings and/or notices (A) pursuant to Section
1.3, (B) under the HSR Act, the Exchange Act and the Securities Act,
(C) pursuant to the European Community Merger Control Regulation,
(D) to comply with state securities or "blue-sky" laws and (E) to
comply with any other relevant Competition Laws, no notices, reports
or other filings are required to be made by Parent with, nor are any
consents, registrations, approvals, permits or authorizations
required to be obtained by Parent from, any Governmental Entity, in
connection with the execution and delivery of this Agreement and the
Stock Option Agreement by Parent and the consummation by Parent of
the Merger and the other transactions contemplated by this Agreement
and the Stock Option Agreement, except those that the failure to
make or obtain, individually or in the aggregate, are not reasonably
likely to have a Material Adverse Effect on Parent and that to the
knowledge of Parent's executive officers, as of the date hereof,
would not be reasonably likely to prevent, materially delay or
materially impair Parent's ability to consummate the transactions
contemplated by this Agreement or the Stock Option Agreement.
(ii) The execution, delivery and performance of this Agreement and
the Stock Option Agreement by Parent do not, and the consummation by
Parent of the Merger and the other transactions contemplated by this
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Agreement and the Stock Option Agreement will not, constitute or
result in (A) a breach or violation of, or a default under, Parent's
certificate of incorporation or bylaws or the comparable governing
instruments of any of Parent or its Significant Subsidiaries or any
Significant Investees or (B) subject to the approval of the issuance
of the aggregate Merger Consideration by a majority of the
stockholders of Parent voting thereon at the Parent Stockholders
Meeting (as defined in Section 6.4(b) (the "Parent Requisite Vote"),
if applicable, a breach or violation of, a default under or give
rise to a right of termination under, the acceleration of any
obligations or the creation of a lien, pledge, security interest or
other encumbrance on its assets or the assets of any of Parent or
its Significant Investees (with or without notice, lapse of time or
both) pursuant to, any Contracts binding upon Parent or any of its
Significant Investees or any Law or governmental or non-governmental
permit or license to which Parent or any of its Significant
Investees is subject or (C) any change in the rights or obligations
of any party under any Contracts to which Parent or its Significant
Investees are a party, except, in the case of clauses (B) or (C)
above, for any breach, violation, default, acceleration, creation or
change that, individually or in the aggregate, is not reasonably
likely to have a Material Adverse Effect on Parent and that to the
knowledge of Parent's executive officers, as of the date hereof,
would not be reasonably likely to prevent, materially delay or
materially impair Parent's ability to consummate the transactions
contemplated by this Agreement or the Stock Option Agreement.
(e) Reports; Financial Statements. Parent has made or will make available
to the Company each registration statement, report, proxy statement or
information statement prepared by Parent since December 31, 1996,
including Parent's Annual Report on Form 10-K for the years ended December
31, 1996, December 31, 1997 and December 31, 1998 and Parent's Quarterly
Report on Form 10-Q for the quarters ended March 31, 1999 and June 30,
1999 in the form (including exhibits, annexes and any amendments thereto)
filed with the SEC (collectively, including any such reports filed
subsequent to the date of this Agreement, "Parent's Reports"). As of their
respective dates, Parent's Reports complied as to form in all material
respects with all applicable requirements under the Securities Act, the
Exchange Act and the rules and regulations thereunder and did not contain
any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements made
therein, in light of the circumstances in which they were made, not
misleading. Each of the consolidated balance sheets included in or
incorporated by reference into Parent's Reports (including the related
notes and schedules) fairly presents the consolidated financial position
of Parent and its consolidated Subsidiaries as of its date and each of the
consolidated statements of income, stockholders' equity and cash flows
included in or incorporated by reference into Parent's Reports (including
any related notes and schedules) fairly presents the consolidated results
of operations, statement of shareholders' investment and cash flows, as
the case may be, of Parent and its consolidated Subsidiaries for the
periods set forth therein (subject, in the case of unaudited statements,
to the absence of notes (to the extent permitted by the rules applicable
to Form 10-Q) and to normal year-end audit adjustments that will not be
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material in amount or effect), in each case in accordance with GAAP
consistently applied during the periods involved, except as may be noted
therein.
(f) Absence of Certain Changes. Except as disclosed in the Parent's
Reports filed prior to the date of this Agreement or as expressly
contemplated by this Agreement, since December 31, 1998, there has not
been: (i) any change in the financial condition, liabilities and assets
(taken together) or business of Parent and its Subsidiaries which,
individually or in the aggregate, is reasonably likely to have a Material
Adverse Effect on Parent; or (ii) any declaration, setting aside or
payment of any dividend or other distribution in respect of Parent's
capital stock other than regular quarterly cash dividends consistent with
past practice and other than any dividend that would be received by the
holders of Company Common Stock on an equivalent basis per share of Parent
Common Stock after the Effective Time.
(g) Accounting and Tax Matters. Neither Parent nor any of its Subsidiaries
or Pooling Affiliates (as defined in Section 6.7) has taken or agreed to
take any action, nor do Parent's executive officers have any actual
knowledge of any fact or circumstance, that would prevent Parent from
accounting for the business combination to be effected by the Merger as a
"pooling-of-interests" in accordance with the Pooling Requirements or
prevent the Merger from qualifying as a "reorganization" within the
meaning of Section 368(a) of the Code. Neither Parent nor any of its
Subsidiaries owns any shares of capital stock of the Company or any other
securities convertible into or otherwise exercisable to acquire capital
stock of the Company other than any securities that may be held pursuant
to any pension or benefit plan of Parent or any of its Subsidiaries.
(h) Compliance with Laws. Except as set forth in Parent's Reports filed
prior to the date of this Agreement, the businesses of each of Parent and
its Subsidiaries have not been, and are not being, conducted in violation
of any Laws except for violations or possible violations that,
individually or in the aggregate, are not reasonably likely to have a
Material Adverse Effect on Parent and that to the knowledge of Parent's
executive officers, as of the date hereof, would not prevent, materially
delay or materially impair Parent's ability to consummate the transactions
contemplated by this Agreement and the Stock Option Agreement. Except as
set forth in Parent's Reports filed prior to the date of this Agreement,
to the actual knowledge of Parent's executive officers, no investigation
or review by any Governmental Entity with respect to Parent or any of its
Subsidiaries is pending or threatened, nor has any Governmental Entity
indicated an intention to conduct the same, which, individually or in the
aggregate, are reasonably likely to have a Material Adverse Effect on
Parent or that to the knowledge of Parent's executive officers, as of the
date hereof, would be reasonably likely to prevent, materially delay or
materially impair Parent's ability to consummate the transactions
contemplated by this Agreement and the Stock Option Agreement. To the
actual knowledge of Parent's executive officers, no material change is
required in Parent's or any of its Subsidiaries' processes, properties or
procedures in order to comply with any such Laws, and Parent has not
received any written notice or written communication of any material
noncompliance with any such Laws that has not been cured as of the date of
this Agreement, except for changes and noncompliance that, individually or
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in the aggregate, are not reasonably likely to have a Material Adverse
Effect on Parent and that to the knowledge of Parent's executive officers,
as of the date hereof, would not prevent, materially delay or materially
impair Parent's ability to consummate the transactions contemplated by
this Agreement and the Stock Option Agreement. Each of Parent and its
Subsidiaries has all Permits necessary to conduct their business as
presently conducted, except for those the absence of which, individually
or in the aggregate, are not reasonably likely to have a Material Adverse
Effect on Parent and that to the knowledge of Parent's executive officers,
as of the date hereof, would not prevent, materially delay or materially
impair Parent's ability to consummate the transactions contemplated by
this Agreement and the Stock Option Agreement.
(i) Litigation and Liabilities. Except as disclosed in Parent's Reports
filed prior to the date of this Agreement, there are no (i) civil,
criminal or administrative actions, suits, claims, hearings,
investigations or proceedings pending or, to the actual knowledge of
Parent's executive officers, threatened against Parent or any of its
Affiliates or (ii) obligations or liabilities of Parent or any of its
Subsidiaries, whether or not accrued, contingent or otherwise and whether
or not required to be disclosed, including those relating to matters
involving any Environmental Law, in either such case, except for those
that, individually or in the aggregate, are not reasonably likely to have
a Material Adverse Effect on Parent and that to the knowledge of Parent's
executive officers, as of the date hereof, would not prevent, materially
delay or materially impair Parent's ability to consummate the transactions
contemplated by this Agreement or the Stock Option Agreement.
(j) Environmental Matters. Except as disclosed or reflected in Parent's
Reports filed prior to the date of this Agreement and except for such
matters that, alone or in the aggregate, are not reasonably likely to have
a Material Adverse Effect on Parent: (i) each of Parent and its
Subsidiaries has complied with all applicable Environmental Laws; (ii)
neither Parent nor any of its Subsidiaries has received any notice,
demand, letter, claim or request for information alleging that Parent or
any of its Subsidiaries may be in violation of or liable under any
Environmental Law; (iii) neither Parent nor any of its Subsidiaries is
subject to any orders, decrees, injunctions or other arrangements with any
Governmental Entity or is subject to any indemnity or other agreement with
any third party relating to liability under any Environmental Law or
relating to Hazardous Substances; and (iv) there are no circumstances or
conditions involving Parent or any of its Subsidiaries that could
reasonably be expected to result in any claims, liability, investigations,
costs or restrictions on the ownership, use, or transfer of any of
Parent's properties pursuant to any Environmental Law.
(k) Taxes. Except to the extent of any inaccuracy or incompleteness of any
of the following which is not, individually or in the aggregate,
reasonably likely to have a Material Adverse Effect on Parent, (i) Parent
and each of its Subsidiaries have prepared or will prepare in good faith
and duly and timely filed (taking into account any extension of time
within which to file), or will so file, all material Tax Returns required
to be filed by any of them at or before the Effective Time and all such
filed Tax Returns are or will be complete and accurate, (ii) Parent and
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each of its Subsidiaries as of the Effective Time (x) will have paid all
Taxes that they are required to pay prior to the Effective Time, and (y)
will have withheld all federal, state and local income taxes, FICA, FUTA
and other Taxes, including, without limitation, similar foreign Taxes,
required to be withheld from amounts owing to any employee, creditor or
third party, (iii) as of the date of this Agreement, there are not pending
or threatened in writing, any audits, examinations, investigations or
other proceedings in respect of Taxes or Tax matters, (iv) there are not,
to the actual knowledge of Parent's executive officers, any unresolved
questions, claims or outstanding proposed or assessed deficiencies
concerning Parent or any of its Subsidiaries' Tax liability, (v) neither
Parent nor any of its Subsidiaries has any liability with respect to
income, franchise or similar Taxes in excess of the amounts accrued in
respect of such Taxes that are reflected in the financial statements
included in Parent's Reports and (vi) neither Parent nor any of its
Subsidiaries has executed any waiver of any statute of limitations on, or
extended the period for the assessment or collection of, any Tax.
ARTICLE VI.
Covenants
6.1. Interim Operations. Except as set forth in the corresponding
sections or subsections of the Company Disclosure Letter and the Parent
Disclosure Letter, as appropriate:
(a) The Company covenants and agrees as to itself and its Subsidiaries
that, after the date of this Agreement and prior to the Effective Time
(unless Parent shall otherwise approve in writing and except as otherwise
required by applicable Law, in which case, the Company shall provide
Parent with prior reasonable notice of such requirement, or unless
expressly contemplated by this Agreement or the Stock Option Agreement):
(i) Its business and that of its Subsidiaries shall be conducted
only in the ordinary and usual course and, to the extent consistent
therewith, it and its Subsidiaries shall use their commercially
reasonable efforts to preserve their business organizations intact
and maintain their existing relations and goodwill with customers,
suppliers, regulators, distributors, creditors, lessors, employees
and business associates; provided, however, that no action by the
Company or its Subsidiaries with respect to matters specifically
addressed by any other provision of this Section 6.1(a) shall be
deemed a breach of this Section 6.1(a)(i) unless such action would
constitute a breach of one or more such other provisions;
(ii) It shall not: (A) amend its certificate of incorporation or
bylaws; (B) split, combine, subdivide or reclassify its outstanding
shares of capital stock; (C) declare, set aside or pay any dividend
on the Common Shares or other capital stock of the Company payable
in cash, stock or property in respect of any such capital stock
(other than regular quarterly dividends on the Common Shares not to
exceed $.11 per common share per quarter); or (D) repurchase, redeem
or otherwise acquire, except in connection with existing commitments
under the Company Stock Plans but subject to the Company's
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obligations under subparagraph (iii) below, or permit any of its
Subsidiaries to purchase or otherwise acquire, any shares of its
capital stock or any securities convertible into or exchangeable or
exercisable for any shares of its capital stock;
(iii) Neither it nor any of its Subsidiaries shall take any action
that would prevent the Merger from qualifying for
"pooling-of-interests" accounting treatment in accordance with the
Pooling Requirements or as a "reorganization" within the meaning of
Section 368(a) of the Code;
(iv) Neither it nor any of its ERISA Affiliates shall: (A)
accelerate, amend or change the period of exercisability of or
terminate, establish, adopt, enter into, make any new grants or
awards of stock-based compensation or other benefits under any
Compensation and Benefit Plans; (B) amend or otherwise modify any
Compensation and Benefit Plans; or (C) increase the salary, wage,
bonus or other compensation of any directors, officers or employees
except, in the case of (A), (B) and (C), (x) for grants or awards to
employees with annual salaries below $150,000 under existing
Compensation and Benefit Plans in such amounts and on such terms as
are consistent with past practice, (y) in the normal and usual
course of its business (which may include normal periodic
performance reviews and related compensation and benefit increases
and the provision of individual Company Compensation and Benefit
Plans consistent with past practice for promoted or newly hired
employees below the level of Company Vice President on terms
consistent with past practice), or (z) for actions necessary to
satisfy existing contractual obligations under Compensation and
Benefit Plans existing as of the date of this Agreement, including
pursuant to rights and obligations under such Compensation and
Benefit Plans that vest or mature automatically with the passage of
time or the satisfaction of other conditions; provided, that it
shall not take such action unless it shall provide Parent with prior
reasonable notice; or to comply with applicable law or regulations;
(v) Except for transactions between the Company and one or more of
its wholly-owned Subsidiaries or between wholly-owned Subsidiaries
of the Company, neither it nor any of its Subsidiaries shall incur,
repay or retire prior to maturity or refinance any indebtedness for
borrowed money or guarantee any such indebtedness or issue, sell,
repurchase or redeem prior to maturity any debt securities or
warrants or rights to acquire any debt securities or guarantee any
debt securities of others in all such cases in excess of $10,000,000
in the aggregate or except for the use of foreign bank lines of
credit in the ordinary course;
(vi) Neither it nor any of its Subsidiaries shall (A) make any
capital expenditures prior to December 31, 1999 in an aggregate
amount in excess of $8,000,000, except as set forth in the Company's
1999 capital budget which has been made available to Parent or (B)
make any capital expenditures subsequent to December 31, 1999 in an
amount in excess of an average of $10,000,000 per month;
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(vii) Neither it nor any of its Subsidiaries shall issue, deliver,
sell, pledge or encumber shares of any class of its capital stock or
any securities convertible or exchangeable into, any rights,
warrants or options to acquire, or any bonds, debentures, notes or
other debt obligations having the right to vote or convertible or
exercisable for any such shares except for transactions between the
Company and one or more of its wholly-owned Subsidiaries, or between
wholly-owned Subsidiaries of the Company and except for Company
Shares issued pursuant to options and other awards outstanding on
the date of this Agreement under the Company Stock Plans or
otherwise permitted by Section 6.1(a)(iv);
(viii) Except as permitted by Sections 6.2 and 8.3(b), neither it
nor any of its Subsidiaries shall authorize, propose or announce an
intention to authorize or propose or enter into an agreement with
respect to, any merger, consolidation or business combination (other
than the Merger), or any purchase, sale, lease, license or other
acquisition or disposition of any business or of a material amount
of assets or securities excluding sales of inventory or products in
the ordinary course of business;
(ix) It shall not make any material change in its financial
accounting policies or procedures, other than any such change that
is required by GAAP, or revalue any assets, including, without
limitation, writing down the value of material inventory or writing
off notes or accounts receivable in a material amount other than as
required by GAAP;
(x) Except in the ordinary and usual course of business or as is
required by law, it shall not release, assign, settle or compromise
any material claims or litigation or make any material tax election
or settle or compromise any material United States federal, state,
local or foreign tax liability; and
(xi) Neither it nor any of its Subsidiaries shall authorize or enter
into any agreement to do any of the foregoing.
(b) Parent covenants and agrees as to itself and its Subsidiaries that,
after the date of this Agreement and prior to the Effective Time (unless
the Company shall otherwise approve in writing and except as otherwise
required by applicable Law, in which case, Parent shall provide the
Company with prior reasonable notice of such requirement, or unless
expressly contemplated by this Agreement or the Stock Option Agreement):
(i) It shall not: (A) amend its certificate of incorporation or
bylaws in any manner that would adversely affect the Merger or the
other transactions contemplated by this Agreement or the Stock
Option Agreement; (B) split, combine, subdivide or reclassify its
outstanding shares of capital stock; (C) declare, set aside or pay
any dividend on the Parent Common Stock or other capital stock of
Parent payable in cash, stock or property in respect of any such
capital stock (other than regular quarterly dividends on the Parent
Common Stock consistent with past practice and other than any
dividend that would be received by the holders of Company Common
Stock on an equivalent basis per
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share of Parent Common Stock after the Effective Time); or (D)
repurchase, redeem or otherwise acquire, except in connection with
existing commitments under Parent's employee benefit plans but
subject to Parent's obligations under subparagraph (iii) below, or
permit any of its Subsidiaries to purchase or otherwise acquire, any
shares of its capital stock or any securities convertible into or
exchangeable or exercisable for any shares of its capital stock;
(ii) Neither it nor any of its Subsidiaries shall take any action
that would prevent the Merger from qualifying for
"pooling-of-interests" accounting treatment in accordance with the
Pooling Requirements or as a "reorganization" within the meaning of
Section 368(a) of the Code; and
(iii) Neither it nor any of its Subsidiaries shall authorize or
enter into any agreement to do any of the foregoing.
(c) Parent and the Company agree that any written approval obtained under
Section 6.1(a) must be signed by the Chief Executive Officer or Senior
Vice President, General Counsel and Secretary of Parent and any written
approval obtained under Section 6.1(b) must be signed by the Chief
Executive Officer or Senior Vice President, General Counsel and Secretary
of the Company.
(d) Parent and the Company agree that prior to the Closing, the record
date for determining shareholders of the Company or Parent entitled to
receive the regular quarterly dividends permitted hereunder that may be
declared by the board of directors of either Parent or the Company after
the date of this Agreement but prior to the Closing shall be the close of
business on the day on which Parent's then current fiscal quarter ends.
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6.2. Acquisition Proposals.
(a) The Company agrees that it shall not nor shall it knowingly permit any
of its Subsidiaries or any of the officers and directors of it or its
Subsidiaries to, and that it shall direct and use its reasonable best
efforts to cause its and its Subsidiaries' employees, agents and
representatives (including any investment banker, attorney or accountant
retained by it or any of its Subsidiaries) (the Company, its Subsidiaries
and their officers, directors, employees, agents and representatives being
referred to as the "Company Representatives") not to, directly or
indirectly, initiate, solicit, or knowingly encourage or otherwise
intentionally facilitate any inquiries or the making of any proposal or
offer with respect to a merger, reorganization, share exchange,
consolidation, business combination, recapitalization, liquidation,
dissolution or similar transaction involving the Company, or any purchase
or sale of the consolidated assets (including without limitation stock of
Subsidiaries) of the Company or any of its Subsidiaries, taken as a whole,
having an aggregate value equal to 15% or more of the Company's market
capitalization, or any purchase or sale of, or tender or exchange offer
for, 15% or more of its equity securities (any such proposal or offer
being hereinafter referred to as an "Acquisition Proposal"). The Company
further agrees that it shall not nor shall it knowingly permit any of its
Subsidiaries or any of the officers and directors of it or its
Subsidiaries to, and that it shall direct and use its reasonable best
efforts to cause the Company Representatives not to, directly or
indirectly, have any discussion in furtherance of or provide any
confidential information or data to any Person relating to an Acquisition
Proposal or engage in any negotiations concerning an Acquisition Proposal,
or otherwise intentionally facilitate any effort or attempt to make or
implement an Acquisition Proposal; provided, however, that nothing
contained in this Agreement shall prevent either the Company or its Board
of Directors from: (A) complying with Rules 14d-9 and 14e-2 promulgated
under the Exchange Act with regard to an Acquisition Proposal; (B) if the
Board of Directors of the Company determines in good faith after
consultation with outside counsel, that in order for the Board of
Directors of the Company to comply with its fiduciary duties to
stockholders under applicable law it should take such action, engaging in
any discussions or negotiations with or providing any information or data
to any Person (including its Representatives) in response to an
unsolicited written Acquisition Proposal by any such Person; provided,
that prior to providing any information or data to any Person in
connection with an Acquisition Proposal by any such Person, the Board of
Directors of the Company shall receive from such Person an executed
confidentiality agreement on terms substantially similar to those
contained in the confidentiality agreement previously entered into between
Parent and the Company in connection with their consideration of the
Merger; provided further, that such confidentiality agreement shall
contain terms that allow the Company to comply with its obligations under
this Section 6.2 or (C) recommending such an unsolicited written
Acquisition Proposal to the stockholders of the Company if, and only to
the extent that, with respect to the actions referred to in clause (C),
(i) the Board of Directors of the Company concludes in good faith (after
consultation with its outside legal counsel and its financial advisor)
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that such Acquisition Proposal is reasonably capable of being completed,
and would, if consummated, result in a transaction more favorable to the
Company's stockholders than the Merger (a "Superior Proposal"), and (ii)
the Board of Directors of the Company determines in good faith after
consultation with outside legal counsel that the failure to take such
action would be reasonably likely to be inconsistent with its fiduciary
duty to the Company's stockholders under applicable Law.
(b) Except as disclosed in Section 6.1(a) of the Company Disclosure
Letter, the Company agrees that it will immediately cease and cause to be
terminated any existing activities, discussions or negotiations with any
parties conducted heretofore with respect to any Acquisition Proposal. The
Company agrees that it will promptly inform its executive officers,
directors, attorneys and financial advisors of the obligations undertaken
in Section 6.2(a). The Company agrees that it will notify Parent as soon
as reasonably practicable, if any such proposals or offers are received by
it, any such information is requested from it or any such discussions or
negotiations are sought to be initiated with it, indicating, in connection
with such notice, the name of such Person making such inquiry, proposal,
offer or request and a description of the substance of any such inquiries,
proposals, offers or requests. The Company thereafter shall keep Parent
informed as soon as reasonably practicable, of the status and terms of any
such inquiries, proposals or offers.
6.3. Information Supplied. The Company and Parent each agrees, as to
itself and its Subsidiaries, that none of the information supplied or to be
supplied by it or its Subsidiaries for inclusion or incorporation by reference
in (i) the Registration Statement on Form S-4 to be filed with the SEC by Parent
in connection with the issuance of shares of Parent Common Stock in the Merger
(including the joint proxy statement of Parent and the Company and prospectus of
Parent (the "Prospectus/Proxy Statement") constituting a part thereof) (the "S-4
Registration Statement") will, at the time the S-4 Registration Statement
becomes effective under the Securities Act, and (ii) the Prospectus/Proxy
Statement and any amendment or supplement thereto will, at the date of mailing
to stockholders and at the time of the meetings of stockholders of the Company
and Parent to be held in connection with the Merger, in any such case, contain
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. If at any time prior to the Effective Time any information relating
to Parent or the Company, or any of their respective Affiliates, officers or
directors, is discovered by Parent or the Company which should be set forth in
an amendment or supplement to any of the S-4 Registration Statement or the
Prospectus/Proxy Statement, so that any of such documents would not include any
misstatement of a material fact or would omit to state any material fact
required to be stated therein or necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading, the
party which discovers such information shall promptly notify the other parties
to this Agreement and an appropriate amendment or supplement describing such
information shall be promptly filed with the SEC and, to the extent required by
law, disseminated to the stockholders of the Company and Parent.
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6.4. Stockholders Meetings.
(a) The Company will take, in accordance with applicable Law and its
certificate of incorporation and bylaws, all action necessary to convene a
meeting of holders of Company Shares (the "Company Stockholders Meeting")
as promptly as reasonably practicable after the S-4 Registration Statement
is declared effective to consider and vote upon the adoption of this
Agreement. The Company's Board of Directors shall (i) recommend that the
stockholders of the Company adopt this Agreement and thereby approve the
transactions contemplated by this Agreement and (ii) solicit such adoption
(including soliciting proxies); provided, however, that the Company's
Board of Directors may, at any time prior to the Effective Time, withdraw,
modify or change any such recommendation to the extent that the Company's
Board of Directors determines in good faith, after consultation with
outside legal counsel, that the failure to take such action would be
reasonably likely to be inconsistent with its fiduciary duties to the
Company's stockholders under applicable Law.
(b) Parent will take, in accordance with applicable Law and its
certificate of incorporation and bylaws, all action necessary to convene a
meeting of its stockholders (the "Parent Stockholders Meeting") as
promptly as reasonably practicable after the S-4 Registration Statement is
declared effective to consider and vote upon the issuance of the aggregate
Merger Consideration pursuant to this Agreement. The Board of Directors of
Parent shall: (i) recommend that the stockholders approve the issuance of
the Merger Consideration pursuant to this Agreement; and (ii) solicit such
approval (including soliciting proxies). Notwithstanding the foregoing, at
any time following determination of the Exchange Ratio but prior to the
Parent Stockholders Meeting, Parent may cancel and not convene the Parent
Stockholders Meeting if the rules and listing policies of the NYSE do not
require the stockholders of Parent to approve the issuance of the Merger
Consideration in the Merger.
6.5. Filings; Other Actions; Notification.
(a) Parent and the Company shall promptly prepare and file with the SEC
the Prospectus/Proxy Statement, and Parent shall prepare and file with the
SEC the S-4 Registration Statement as promptly as practicable. Parent and
the Company each shall use its reasonable best efforts to have the S-4
Registration Statement declared effective under the Securities Act as
promptly as practicable after such filing, and promptly thereafter mail
the Prospectus/Proxy Statement to the stockholders of the Company and to
the stockholders of Parent. Parent shall also use its reasonable best
efforts to obtain prior to the effective date of the S-4 Registration
Statement all necessary state securities law or "blue sky" permits and
approvals required in connection with the Merger and the other
transactions contemplated by this Agreement and will pay all expenses
incident thereto.
(b) The Company and Parent each shall use its respective reasonable best
efforts to cause to be delivered to the other party and its directors
letters of its independent auditors, dated (i) the date on which the S-4
Registration Statement shall become effective and (ii) the Closing Date,
and addressed to the other party and its directors, in form customary for
"comfort" letters delivered by independent public accountants in
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connection with registration statements similar to the S-4 Registration
Statement.
(c) The Company and Parent shall cooperate with each other and, subject to
Sections 6.5(d) and (e), use (and shall cause their respective
Subsidiaries to use) their respective reasonable best efforts (i) to take
or cause to be taken all actions, and do or cause to be done all things,
necessary, proper or advisable on their part under this Agreement and the
Stock Option Agreement and applicable Laws to consummate and make
effective the Merger and the other transactions contemplated by this
Agreement and the Stock Option Agreement as soon as practicable, including
(A) obtaining comfort letters and opinions of their respective accountants
and attorneys referred to in Section 6.5(b) and Article VII of this
Agreement, (B) preparing and filing as promptly as practicable all
documentation, including all additional information requested by any
Governmental Entity, to effect all necessary applications, notices,
petitions, filings and other documents (including under the HSR Act (as
defined below) and other Competition Laws (as defined below)), and (C)
instituting court actions and other proceedings necessary to obtain the
approval or clearance required to, or have lifted any injunction or order
which would not permit the parties hereto to, consummate the Merger or the
other transactions contemplated by this Agreement and the Stock Option
Agreement or defending or otherwise opposing all court actions and other
proceedings instituted by a Governmental Entity or other Person under the
Competition Laws or otherwise for purposes of preventing the consummation
of the Merger and the other transactions contemplated by this Agreement
and the Stock Option Agreement and (ii) to obtain as promptly as
practicable all consents, clearances, registrations, approvals, permits
and authorizations and to achieve the termination or expiration of all
applicable waiting periods necessary or advisable to be obtained from any
Governmental Entity in order to consummate the Merger and the other
transactions contemplated by this Agreement and the Stock Option
Agreement. Subject to applicable Laws and existing obligations relating to
the exchange of information, Parent and the Company shall have the right
to review in advance, and to the extent practicable each will consult the
other on, all the information relating to Parent or the Company, as the
case may be, and any of their respective Subsidiaries, that appear in any
filing made with, or written materials submitted to, any third party
and/or any Governmental Entity in connection with the Merger and the other
transactions contemplated by this Agreement and the Stock Option
Agreement. In exercising the foregoing right, each of the Company and
Parent shall act reasonably and as promptly as practicable, including by
(i) permitting the other party to review and discuss in advance, and
considering in good faith the views of one another in connection with, any
proposed written (or any material proposed oral) communication with any
Governmental Entity, (ii) not participating in any meeting with any
Governmental Entity unless it consults with the other party in advance and
to the extent permitted by such Governmental Entity gives the other party
the opportunity to attend and participate thereat, and (iii) furnishing
the other party with such necessary information and reasonable assistance
as such other party may reasonably request in connection with its
preparation of necessary filings or submissions of information to any
Governmental Entity; provided, however, that subject to its obligations
hereunder Parent shall have the right to direct the strategy of the
parties in a manner consistent with the terms of this Agreement in any
communications, meetings or proceedings with any Governmental Entity in
connection with the Merger and the other transactions contemplated by this
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Agreement and the Stock Option Agreement. The Company and Parent may, as
each deems advisable and necessary, reasonably designate any competitively
sensitive material provided to the other under this Section as "outside
counsel only." Such materials and the information contained therein shall
be given only to the outside legal counsel to the recipient and will not
be disclosed by such outside counsel to employees, officers, or directors
of the recipient unless express permission is obtained in advance from the
source of the materials (the Company or Parent, as the case may be) or its
legal counsel.
(d) Notwithstanding anything to the contrary in this Agreement, (i) the
Company shall not, without Parent's prior written consent, commit to any
divestitures, licenses, hold separate arrangements or similar matters,
including covenants affecting business operating practices (or allow its
Subsidiaries to commit to any divestitures, licenses, hold separate
arrangements or similar matters), and the Company shall commit to, and
shall use reasonable best efforts to effect (and shall cause its
Subsidiaries to commit to and use reasonable best efforts to effect), any
such divestitures, licenses, hold separate arrangements or similar matters
as Parent shall request, but solely if such divestitures, licenses, hold
separate arrangements or similar matters are contingent on consummation of
the Merger and (ii) neither Parent nor any of its Subsidiaries shall be
required (pursuant to Section 6.5(c) or otherwise) to agree (with respect
to (x) Parent or its Subsidiaries or (y) the Company or its Subsidiaries)
to any divestitures, licenses, hold separate arrangements or similar
matters, including covenants affecting business operating practices, if
such divestitures, licenses, arrangements or similar matters, individually
or in the aggregate, would reasonably be expected to have a Material
Adverse Effect on Parent or the Company.
(e) Except as provided below, nothing in this Section 6.5 or any other
part of this Agreement shall require Parent to refrain from entering into
any agreement with respect to, or issuing Parent Common Stock or other
consideration in connection with, a business combination with, or an
acquisition of, a third party after the date of this Agreement and prior
to the Effective Time (a "Subsequent Transaction"); provided, however,
that (i) the aggregate fair market value of the consideration paid or to
be paid by Parent in all such Subsequent Transactions shall not exceed
$1.5 billion and the fair market value of the consideration paid or to be
paid by Parent in any individual Subsequent Transaction shall not exceed
$750 million (provided that these amounts may be exceeded with the consent
of the Company's Chief Executive Officer) and (ii) Parent has a good faith
belief at the time it enters into the definitive agreement calling for any
such Subsequent Transaction that such Subsequent Transaction is not
reasonably likely to prevent or delay satisfaction of any of the
conditions set forth in Article VII. In the event of a Subsequent
Transaction which would be permissible under the preceding sentence,
Parent shall agree to any divestitures, licenses, hold separate
arrangements or similar matters (including covenants affecting business
operating practices) necessary in order to obtain approval of the
transactions contemplated by this Agreement under applicable Competition
Laws that would not otherwise have been required in order to obtain such
approval but for the Subsequent Transaction.
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(f) The Company and Parent each shall, upon request by the other and
subject to applicable laws and existing obligations relating to the
exchange of information, furnish the other with all information concerning
itself, its Subsidiaries, directors, officers and stockholders and such
other matters as may be reasonably necessary or advisable in connection
with the Prospectus/Proxy Statement, the S-4 Registration Statement or any
other statement, filing, notice or application made by or on behalf of
Parent, the Company or any of their respective Subsidiaries to any third
party and/or any Governmental Entity in connection with the Merger and the
transactions contemplated by this Agreement and the Stock Option
Agreement.
(g) The Company and Parent each shall keep the other apprised of the
status of matters relating to completion of the transactions contemplated
by this Agreement and the Stock Option Agreement, including promptly
furnishing the other with copies of notice or other communications
received by Parent or the Company, as the case may be, or any of its
Subsidiaries, from any Governmental Entity with respect to the Merger and
the other transactions contemplated by this Agreement and the Stock Option
Agreement.
6.6. Access; Consultation.
(a) Upon reasonable notice, and except as may be prohibited by applicable
Law, each of the Company and Parent shall (and shall cause its respective
Subsidiaries to) afford to the other employees, agents and representatives
(including any investment banker, attorney or accountant retained by the
other or any of its Subsidiaries) reasonable access, during normal
business hours throughout the period prior to the Effective Time, to its
properties, books, contracts and records and, during such period, it shall
(and shall cause its Subsidiaries to) furnish promptly to the other all
information concerning its business, properties and personnel as may
reasonably be requested; provided that no investigation pursuant to this
Section 6.6(a) shall affect or be deemed to modify any representation or
warranty made by the Company or Parent under this Agreement; and provided,
further, that the foregoing shall not require the Company to permit any
inspection, or to disclose any information, that in the reasonable
judgment of such party would result in the disclosure of any trade secrets
of third parties or the waiver of any privilege or violate any of such
party's obligations with respect to confidentiality if such party shall
have used all reasonable efforts to obtain the consent of such third party
to such inspection or disclosure or to preserve such privilege. All
requests for information made pursuant to this Section 6.6(a) shall be
directed to an executive officer of the Company or Parent, or such Person
as may be designated by any such executive officer, as the case may be.
(b) Subject to applicable Laws relating to the exchange of information,
from the date of this Agreement to the Effective Time, the Company agrees
to consult with Parent on a regular basis on a schedule to be agreed with
regard to the Company's operations.
(c) Prior to the Closing, the Company will provide to Parent a worldwide
list of all patents, trade names, registered trademarks and registered
service marks, and applications for any of the foregoing, owned or
possessed by the Company or any of its Subsidiaries.
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6.7. Affiliates.
(a) Each of the Company and Parent shall deliver to the other a letter
identifying all Persons whom such party believes to be, at the date of the
Company Stockholders Meeting, affiliates of such party for purposes of
applicable interpretations regarding use of the pooling-of-interests
accounting method ("Pooling Affiliates") and, in the case of the Company,
affiliates of the Company for purposes of Rule 145 under the Securities
Act ("Rule 145 Affiliates"). Each of the Company and Parent shall use all
reasonable efforts to cause each Person who is identified as a Pooling
Affiliate or Rule 145 Affiliate in the letter referred to above to deliver
to Parent on or prior to the date of the Company Stockholders Meeting a
written agreement, in the form attached as Exhibit B, in the case of a
Pooling Affiliate or Rule 145 Affiliate of the Company (the "Company
Affiliate's Letter"), and Exhibit C (or Exhibit C-1 as applicable), in the
case of a Pooling Affiliate of Parent (the "Parent Affiliate's Letter").
Prior to the Effective Time, each of the Company and Parent shall use all
reasonable efforts to cause each additional Person who is identified by
such party as its Pooling Affiliate or by the Company as a Rule 145
Affiliate after the date of the Company Stockholders Meeting to execute
the applicable written agreement as set forth in this Section 6.7, as soon
as practicable after such Person is identified.
(b) Shares of Parent Common Stock issued to Pooling Affiliates of the
Company in exchange for Company Shares shall not be transferable until
such time as financial results covering at least 30 days of combined
operations of Parent and the Company shall have been published within the
meaning of Section 201.01 of the SEC's Codification of Financial Reporting
Policies, regardless of whether each such Pooling Affiliate has provided
the written agreement referred to in this Section, except to the extent
permitted by, and in accordance with, SEC Accounting Series Release 135
and SEC Staff Accounting Bulletins 65 and 76. The Company shall not
register the transfer of any Certificate unless such transfer is made in
compliance with the foregoing.
6.8. Stock Exchange Listing. To the extent they are not already listed,
Parent shall use its reasonable best efforts to cause the shares of Parent
Common Stock to be issued in the Merger to be approved for listing on the NYSE
and on all other stock exchanges on which shares of Parent Common Stock are then
listed, subject to official notice of issuance, prior to the Closing Date.
6.9. Publicity. The initial press release with respect to the Merger shall
be a joint press release. Thereafter, unless otherwise required by applicable
law or pursuant to any listing agreement with or rules of a securities exchange,
the Company and Parent shall consult with each other prior to issuing any press
releases or otherwise making public announcements with respect to the Merger and
the other transactions contemplated by this Agreement and prior to making any
filings with any third party and/or any Governmental Entity (including any
securities exchange) with respect thereto.
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6.10. Benefits.
(a) Stock Options.
(i) At the Effective Time, each outstanding option to purchase
Company Shares (a "Company Option") under the Company Stock Plans,
whether vested or unvested, shall be converted to an option to
acquire the same number of shares of Parent Common Stock as the
holder of such Company Option would have been entitled to receive
pursuant to the Merger had such holder exercised such Company Option
in full immediately prior to the Effective Time (rounded down to the
nearest whole number) (a "Substitute Option"), at an exercise price
per share (rounded to the nearest whole cent) equal to (y) the
aggregate exercise price for the Company Shares otherwise
purchasable pursuant to such Company Option divided by (z) the
number of full shares of Parent Common Stock deemed purchasable
pursuant to such Company Option in accordance with the foregoing. To
illustrate the foregoing, a Company Option outstanding immediately
prior to the Effective Time that entitles the holder to purchase
1,000 Company Shares for an aggregate exercise price of $25,000
would be converted at the Effective Time into a Substitute Option to
purchase [1,000 * Exchange Ratio] shares of Parent Common Stock for
an exercise per share of Parent Common Stock of $[25,000 [divided
by] (1,000 * Exchange Ratio)].
(ii) As promptly as practicable after the Effective Time, the
Company shall deliver to the participants in the Company Stock Plans
appropriate notices setting forth such participants' rights pursuant
to the Substitute Options.
(b) Conversion and Registration. At or prior to the Effective Time, the
Company shall make all necessary arrangements with respect to the Company
Stock Plans to permit the conversion of the unexercised Company Options
into Substitute Options pursuant to this Section and register under the
Securities Act on Form S-8 or other appropriate form (and use its best
efforts to maintain the effectiveness thereof) shares of Parent Common
Stock issuable pursuant to all Substitute Options with respect to Parent
Common Stock not later than three business days after the Effective Time.
(c) Prior to the Effective Time, the Board of Directors of Parent, or an
appropriate committee of non-employee directors thereof, shall adopt a
resolution consistent with the interpretive guidance of the SEC so that
the acquisition by any officer or director of the Company who may become a
covered person of Parent for purposes of Section 16 of the Exchange Act
and the rules and regulations thereunder ("Section 16") of shares of
Parent Common Stock or options to acquire Parent Common Stock pursuant to
this Agreement and the Merger shall be an exempt transaction for purposes
of Section 16.
(d) From and after the Effective Time, Parent in its sole discretion shall
either itself assume or cause one of its Affiliates to assume, or shall
cause the Company to continue to maintain, the Compensation and Benefit
Plans in effect immediately before the Effective Time; provided that
nothing shall prevent Parent or its Affiliates or the Company or its
Affiliates from amending or terminating any Compensation or Benefit Plan
to the extent permitted by its terms or applicable law.
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(e) For purposes of determining the eligibility of any individual employed
by the Company or any of its Subsidiaries immediately before the Effective
Time (a "Company Employee") to participate in and have vested rights under
the employee benefit plans of Parent and its Affiliates providing benefits
to Company Employees after the Effective Time, each Company Employee shall
be credited with his or her years of service with the Company and its
Affiliates before the Effective Time, to the same extent as such Company
Employee was entitled, before the Effective Time, to credit for any such
service under similar Compensation and Benefit Plans. "Eligibility" for
purposes of this paragraph (e) shall mean (i) eligibility to participate
in any such employee benefit plan, (ii) eligibility for post-retirement
health and life benefits (to the extent such benefits are conditioned on
the satisfaction of specified age and service requirements) and (iii)
eligibility for early retirement under any employee pension benefit plan
of Parent and its Affiliates (to the extent that early retirement is
conditioned on the satisfaction of specified age and service
requirements). Years of service with the Company and its Affiliates prior
to the Effective Time shall also be recognized: (i) under any severance,
separation pay or vacation pay plan or policy of Parent and its Affiliates
extended to Company Employees after the Effective Time for purposes of
determining the amount of a Company Employee's benefit under such plan or
policy; (ii) under any savings, 401(k) or other defined contribution plan
in which any Company Employee participates after the Effective Time for
purposes of determining the amount of employer contributions to such
Company Employee's account thereunder (to the extent service is relevant
for that purpose); and (iii) under any plan providing welfare benefits in
which any Company Employee participates after the Effective Time for
purposes of determining the level of benefits and the amounts the Company
Employee is required to pay with respect thereto (including without
limitation premiums, co-payments, deductibles and the like), to the extent
service is relevant for those purposes, but only with respect to Company
Employees who are eligible for that category of welfare benefit (such as
post-retirement health care) under a Compensation and Benefit Plan on the
date of this Agreement, or who would be so eligible if they had met the
requisite age and service requirements for eligibility. For purposes of
determining a Company Employee's benefits under a pension benefit plan
which is merged with or has its assets and liabilities transferred to an
employee benefit plan of Parent or its Affiliates after the Effective
Time, such benefit shall not be less than the benefit to which any
affected Company Employee would be entitled had the Company employee
benefit plan been frozen at the time of such merger or transfer and the
Parent or Affiliate employee benefit plan began accruing benefits from and
after the date of such merger or transfer. In addition, and without
limiting the generality of the foregoing, to the extent permitted by
applicable law, if a Company Employee participates, immediately before the
Effective Time, in a pension benefit plan under which such Company
Employee accrues a benefit based upon final average pay (as opposed to
career average pay), and such Company pension benefit plan is merged into
a pension benefit plan of Parent or one of its Affiliates that continues
to provide a benefit based upon final average pay, such Company Employee's
pay increases from the Company and its Affiliates after the Effective Time
shall be applied to his or her pre-Effective Time service and benefit
formula, except to the extent such application would result in a
duplication of benefits, so that such Company Employee's combined pension
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benefit under the merged plan will reflect his or her final average pay
following the Effective Time as applied to all years of service, both
before and after the Effective Time, under whichever formula is relevant
to the different periods of service. Furthermore, and without limiting the
generality of the foregoing, for purposes of each employee benefit plan
sponsored by the Parent and its Affiliates which provides for medical,
dental, pharmaceutical and/or vision benefits to any Company Employee,
Parent shall cause all pre-existing condition exclusions and
actively-at-work requirements of such new employee benefit plan to be
waived for such Employee and his or her covered dependents and to have any
eligible expenses incurred by such Employee and his or her covered
dependents during the portion of the plan year of a prior plan ending on
the date such employee's participation in a replacement plan, begins to be
taken into account under such replacement plan for purposes of satisfying
all deductible, coinsurance and maximum out-of-pocket requirements
applicable to such employee and his or her covered dependents for the
applicable plan year as if such amounts had been paid in accordance with
such replacement plan. No provision in the foregoing shall be construed as
requiring Parent or any of its Affiliates to extend participation in any
employee benefit plan sponsored by Parent or any of its Affiliates to any
Company Employee. In addition, the foregoing provisions of this paragraph
(e) shall not apply to any benefits that are the subject of collective
bargaining, and nothing in this paragraph (e) shall limit or restrict the
right of Parent or any of its Affiliates to amend or terminate any of
their employee benefit plans at any time.
6.11. Expenses. Whether or not the Merger is consummated, all costs and
expenses incurred in connection with this Agreement and the Merger and the other
transactions contemplated by this Agreement shall be paid by the party incurring
such expense, except that expenses incurred in connection with the filing fee
for the S-4 Registration Statement, printing and mailing the Prospectus/Proxy
Statement, the S-4 Registration Statement and the filing fees under the HSR Act
and any other Competition Law filings shall be paid by Parent.
6.12. Indemnification; Directors' and Officers' Insurance.
(a) From and after the Effective Time, (i) Parent will, and will cause the
Surviving Corporation to, indemnify and hold harmless each present and
former director or officer of the Company and (ii) Parent will cause the
Surviving Corporation to indemnify and hold harmless each present or
former director or officer of any subsidiary or division of the Company
and each person who served at the request of the Company as a director,
officer, trustee or fiduciary of another corporation, partnership, joint
venture, trust, pension, or other employee benefit plan or enterprise (the
Persons indemnified under (i) and (ii) being the "Indemnified Parties"),
in the case of (i) and (ii), against any costs or expenses (including
reasonable attorneys' fees), judgments, fines, losses, claims, damages or
liabilities and amounts paid in settlement (provided that no such
settlement is entered into without the approval of Parent or the Surviving
Corporation, which approval shall not be unreasonably withheld)
(collectively, "Costs") incurred in connection with any claim, action,
suit, proceeding or investigation, whether civil, criminal, administrative
or investigative, arising out of or pertaining to matters existing or
occurring at or prior to the Effective Time relating to the Indemnified
Party's service with or at the request of the Company, whether asserted or
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claimed prior to, at or after the Effective Time, to the fullest extent
permitted under Law (in the case of (i)) and to the fullest extent the
Company would have been permitted to so indemnify under Delaware law (in
the case of (ii)). In the case of (i), Parent shall, and shall cause the
Surviving Corporation to, advance expenses to the fullest extent permitted
under applicable Law, provided that, if required under applicable Law, the
Person to whom expenses are advanced shall provide an undertaking to repay
such advances if it is ultimately determined that such Person is not
entitled to indemnification. In the case of (ii), Parent shall cause the
Surviving Corporation to advance expenses as incurred to the fullest
extent permitted under Delaware law, provided that the Person to whom
expenses are advanced shall provide an undertaking to repay such advances
if it is ultimately determined that such Person is not entitled to
indemnification. The indemnification rights hereunder shall be in addition
to any other rights such Indemnified Party may have under the Certificate
of Incorporation and Bylaws of the Surviving Corporation or any of its
Subsidiaries, under the DGCL or otherwise. The Certificate of
Incorporation and Bylaws of the Surviving Corporation shall contain, and
Parent shall cause the Surviving Corporation to fulfill and honor,
provisions with respect to indemnification and exculpation that are at
least as favorable to the Indemnified Parties as those set forth in the
certificate of incorporation and bylaws of the Company as of the date of
this Agreement, which provisions shall not be amended, repealed or
otherwise modified for a period of six years from the Effective Time in
any manner that would adversely affect the rights thereunder of any of the
Indemnified Parties. The parties agree that the provisions relating to
exoneration of directors and officers and the rights to indemnification,
including provisions relating to advances of expenses incurred in defense
of any action or suit, in the certificate of incorporation and bylaws of
Company and its Subsidiaries with respect to matters occurring through the
Effective Time, shall survive the Merger and shall continue in full force
and effect for a period of six years from the Effective Time; provided,
however, that all rights to indemnification in respect of any action
pending or asserted or claim made within such period shall continue until
the disposition of such action or resolution of such claim.
(b) Any Indemnified Party wishing to claim indemnification under paragraph
(a) of this Section 6.12 shall promptly notify Parent and the Surviving
Corporation, upon learning of any such claim, action, suit, proceeding or
investigation, but the failure to so notify shall not relieve Parent and
the Surviving Corporation of any liability they may have to such
Indemnified Party if such failure does not materially prejudice Parent and
the Surviving Corporation. In the event of any such claim, action, suit,
proceeding or investigation (whether arising before or after the Effective
Time), (i) Parent or the Surviving Corporation shall have the right to
assume the defense thereof (unless the Indemnified Parties (or any of
them) determine in good faith (after consultation with legal counsel) that
there are issues which raise conflicts of interest between an Indemnified
Party, on the one hand, and Parent and the Surviving Corporation on the
other hand), and Parent and the Surviving Corporation shall not be liable
to such Indemnified Parties for any legal expenses of other counsel or any
other expenses subsequently incurred by such Indemnified Parties in
connection with the defense thereof (except that if Parent and the
Surviving Corporation elect not to assume such defense or if there are
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issues which raise conflicts of interest between Parent and the Surviving
Corporation, on the one hand, and one or more of the Indemnified Parties,
on the other, the Indemnified Parties may retain counsel satisfactory to
them, and Parent and the Surviving Corporation shall pay all reasonable
fees and expenses of such counsel for the Indemnified Parties promptly as
statements therefor are received); provided, however, that Parent and the
Surviving Corporation shall be obligated pursuant to this paragraph (b) to
pay for only one firm of counsel (in addition to local counsel) for all
Indemnified Parties in any jurisdiction (unless there is such a conflict
of interest), (ii) the Indemnified Parties will cooperate in the defense
of any such matter and (iii) Parent and the Surviving Corporation shall
not be liable for any settlement effected without their prior written
consent, which consent shall not be unreasonably withheld.
(c) Parent shall cause the Surviving Corporation to maintain a policy of
officers' and directors' liability insurance covering the Indemnified
Parties for acts and omissions occurring on or prior to the Effective Time
("D&O Insurance") with coverage in amount and scope at least as favorable
as the Company's existing directors' and officers' liability insurance
coverage for a period of six years after the Effective Time; provided,
however, if the existing D&O Insurance expires, is terminated or canceled,
or if the annual premium therefor is increased to an amount in excess of
200% of the last annual premium paid prior to the date of this Agreement
(the "Current Premium"), in each case during such six-year period, Parent
and the Surviving Corporation will use their best efforts to obtain D&O
Insurance in an amount and scope as great as can be obtained for the
remainder of such period for a premium not in excess (on an annualized
basis) of 200% of the Current Premium. The provisions of this Section
6.12(c) shall be deemed to have been satisfied if prepaid policies have
been obtained by the Company prior to the Closing, which policies provide
such directors and officers with coverage for an aggregate period of six
years with respect to claims arising from facts or events that occurred on
or before the Effective Time, including, without limitation, in respect of
the transactions contemplated by this Agreement and for a premium not in
excess of the aggregate of the premiums set forth in the preceding
sentence. If such prepaid policies have been obtained by the Company prior
to the Closing, Parent shall and shall cause the Surviving Corporation to
maintain such policies in full force and effect, and continue to honor the
Company's obligations thereunder.
(d) If Parent or the Surviving Corporation or any of its successors or
assigns (i) shall consolidate with or merge into any other corporation or
entity and shall not be the continuing or surviving corporation or entity
of such consolidation or merger or (ii) shall transfer all or
substantially all of its properties and assets to any individual,
corporation or other entity, then and in each such case, proper provisions
shall be made so that the successors and assigns of Parent or the
Surviving Corporation shall assume all of the obligations set forth in
this Section. Parent shall (in the case of Section 6.12(a)(i)), and Parent
shall cause the Surviving Corporation (in the case of Section
6.12(a)(ii)), to pay all expenses, including reasonable attorneys' fees,
that may be incurred by the Indemnified Parties in successfully enforcing
the indemnity and other rights in this Section 6.12.
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(e) Parent shall cause the Surviving Corporation to perform its
obligations under this Section 6.12 and shall, in addition, guarantee, as
co-obligor with the Surviving Corporation, the performance of such
obligations by the Surviving Corporation subject to the limits imposed on
the Surviving Corporation under the DGCL.
(f) The provisions of this Section are intended to be for the benefit of,
and shall be enforceable by, each of the Indemnified Parties, their heirs
and their representatives.
6.13. Takeover Statute. If any Takeover Statute is or may become
applicable to the Merger or the other transactions contemplated by this
Agreement or the Stock Option Agreement, each of Parent and the Company and its
Board of Directors shall grant such approvals and take such actions as are
necessary so that such transactions may be consummated as promptly as
practicable on the terms contemplated by this Agreement or by the Merger and
otherwise act to eliminate or minimize the effects of such statute or regulation
on such transactions.
6.14. Confidentiality. The Company and Parent each acknowledges and
confirms that it has entered into a Confidentiality Agreement, dated August 25,
1999 (the "Confidentiality Agreement"), and that the Confidentiality Agreement
shall remain in full force and effect in accordance with its terms.
6.15 Tax-Free Reorganization. Parent, Merger Sub, and the Company shall
each use all reasonable efforts to cause the Merger to be treated as a
reorganization within the meaning of Section 368(a) of the Code and to obtain an
opinion of its respective counsel as contemplated by Sections 7.2(c) and 7.3(c),
respectively.
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ARTICLE VII.
Conditions
7.1. Conditions to Each Party's Obligation to Effect the Merger. The
respective obligation of each party to effect the Merger is subject to the
satisfaction or waiver, if applicable, at or prior to the Effective Time of each
of the following conditions:
(a) Stockholder Approval. This Agreement shall have been duly adopted by
the stockholders of the Company and, if required by the rules or listing
policies of the NYSE, the issuance of the aggregate Merger Consideration
by Parent shall have been approved by the stockholders of Parent;
(b) NYSE Listing. The shares of Parent Common Stock issuable to the
Company stockholders pursuant to this Agreement shall have been approved
for listing (either before or after the execution of this Agreement) on
the NYSE subject to official notice of issuance;
(c) Consents. (i) The waiting period applicable to the consummation of the
Merger under the HSR Act shall have expired or been terminated and (ii)
any consents to the Merger required under (A) the European Community
Merger Control Regulation or (B) other applicable Competition Laws shall
have been obtained, except with respect to (B) for those consents the
failure of which to obtain would not reasonably be expected to have a
Material Adverse Effect on the Company or a Material Adverse Effect on
Parent.
(d) Laws and Orders. No Governmental Entity of competent jurisdiction
shall have enacted, issued, promulgated, enforced or entered any Law
(whether temporary, preliminary or permanent) that is in effect and
restrains, enjoins or otherwise prohibits consummation of the Merger or
prohibits consummation of the Merger under applicable Competition Laws
(collectively, an "Order") and neither the United States federal
government (or any agency, commission, department or similar entity of the
United States federal government), the European Community (or any agency,
commission, department or similar entity of the European Community) nor
the government (or any agency, commission, or department or similar entity
of such government) of any jurisdiction in which Parent and the Company
had, on a combined basis, revenues of $100 million or more in the twelve
months ending June 30, 1999 shall have instituted and be pursuing any
proceeding seeking any such Order.
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(e) S-4. The S-4 Registration Statement shall have become effective under
the Securities Act. No stop order suspending the effectiveness of the S-4
Registration Statement shall have been issued, and no proceedings for that
purpose shall have been initiated or, through a senior official, be
threatened by the SEC; and
(f) Pooling. (i) Parent shall have received a letter from its independent
public accounting firm to the effect that the Merger should qualify for
"pooling-of-interests" accounting treatment and (ii) the Company shall
have received a letter from its independent public accounting firm to the
effect that the Company is a poolable entity.
7.2. Conditions to Obligations of Parent and Merger Sub. The obligations
of Parent and Merger Sub to effect the Merger are also subject to the
satisfaction or waiver by Parent at or prior to the Effective Time of the
following conditions:
(a) Representations and Warranties. (i) The representations and warranties
of the Company set forth in Section 5.1(b), 5.1(c) (other than the third
sentence), 5.1(j), 5.1(l) or 5.1(s) of this Agreement shall be true and
correct in all material respects, and (ii) the other representations and
warranties of the Company set forth in this Agreement (x) to the extent
qualified by Material Adverse Effect shall be true and correct as so
qualified and (y) to the extent not qualified by Material Adverse Effect
shall be true and correct (except that this clause (y) shall be deemed
satisfied so long as any failures of such representations and warranties
to be true and correct, taken together, would not reasonably be expected
to have a Material Adverse Effect on the Company), in the case of each of
(i) and (ii), as of the date of this Agreement and (except to the extent
such representations and warranties speak as of an earlier date) as of the
Closing Date as though made on and as of the Closing Date, and Parent
shall have received a certificate signed on behalf of the Company by an
executive officer of the Company to such effect;
(b) Performance of Obligations of the Company. The Company shall have
performed in all material respects all obligations required to be
performed by it under this Agreement at or prior to the Closing Date, and
Parent shall have received a certificate signed on behalf of the Company
by an executive officer of the Company to such effect; and
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(c) Tax Opinion. Parent shall have received the opinion of Mayer, Brown &
Platt, counsel to Parent, dated the Closing Date, to the effect that the
Merger will be treated for Federal income tax purposes as a reorganization
within the meaning of Section 368(a) of the Code, and that each of Parent,
Merger Sub and the Company will be a party to that reorganization within
the meaning of Section 368(b) of the Code. In rendering such opinions,
such counsel may rely upon customary representations and certificates of
Parent, Merger Sub and the Company reasonably satisfactory to such
counsel.
7.3. Conditions to Obligation of the Company. The obligation of the
Company to effect the Merger is also subject to the satisfaction or waiver by
the Company at or prior to the Effective Time of the following conditions:
(a) Representations and Warranties. (i) the representations and warranties
of Parent set forth in Sections 5.2(b), 5.2(c) and 5.2(g) of this
Agreement shall be true and correct in all material respects, and (ii) the
other representations and warranties of Parent and Merger Sub set forth in
this Agreement (x) to the extent qualified by Material Adverse Effect and
(y) to the extent not qualified by Material Adverse Effect shall be true
and correct (except that this clause (y) shall be deemed satisfied so long
as any failures of such representations and warranties to be true and
correct, taken together, would not reasonably be expected to have a
Material Adverse Effect on Parent), in the case of each of (i) and (ii),
as of the date of this Agreement and (except to the extent such
representations and warranties speak as of an earlier date), as of the
Closing Date as though made on and as of the Closing Date, and the Company
shall have received a certificate signed on behalf of Parent by an
executive officer of Parent to such effect;
(b) Performance of Obligations of Parent and Merger Sub. Each of Parent
and Merger Sub shall have performed in all material respects all
obligations required to be performed by it under this Agreement at or
prior to the Closing Date, and the Company shall have received a
certificate signed on behalf of Parent and Merger Sub by an executive
officer of Parent to such effect; and
(c) Tax Opinion. The Company shall have received the opinion of Wachtell,
Lipton, Rosen & Katz, counsel to the Company, dated the Closing Date, to
the effect that the Merger will be treated for Federal income tax purposes
as a reorganization within the meaning of Section 368(a) of the Code, and
that each of Parent, Merger Sub and the Company will be a party to that
reorganization within the meaning of Section 368(b) of the Code. In
rendering such opinions, such counsel may rely upon customary
representations and certificates of Parent, Merger Sub and the Company
reasonably satisfactory to such counsel.
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ARTICLE VIII.
Termination
8.1. Termination by Mutual Consent. This Agreement may be terminated and
the Merger may be abandoned at any time prior to the Effective Time, whether
before or after the approval by stockholders of the Company referred to in
Section 7.1(a), by mutual written consent of the Company and Parent, through
action of their respective Boards of Directors.
8.2. Termination by Either Parent or the Company. This Agreement may be
terminated and the Merger may be abandoned at any time prior to the Effective
Time by action of the Board of Directors of either Parent or the Company if (i)
the Merger shall not have been consummated prior to April 9, 2000 (the
"Termination Date"); provided, however, that either party shall have the option,
in its sole discretion, to extend the Termination Date for an additional period
of time not to exceed 90 days if all other conditions to consummation of the
Merger are satisfied or capable of then being satisfied and the sole reason that
the Merger has not been consummated by such date is that either (A) the
condition set forth in Section 7.1(c) has not been satisfied due to the failure
to obtain the necessary consents and approvals under applicable Competition Laws
and Parent or the Company are still attempting to obtain such necessary consents
and approvals under applicable Competition Laws or are contesting the refusal of
the relevant Governmental Entities to give such consents or approvals in court
or through other applicable proceedings, or (B) the condition set forth in
Section 7.1(d) has not been satisfied; (ii) the Company Stockholders Meeting
shall have been held and completed and the adoption of this Agreement by the
Company's stockholders referred to in Section 7.1(a) shall not have occurred;
(iii) the issuance of the aggregate Merger Consideration is required to be
approved by Parent's stockholders pursuant to the rules or listing policies of
the NYSE, the Parent Stockholders Meeting shall have been held and completed and
the approval of the issuance of the Merger Consideration pursuant to this
Agreement referred to in Section 7.1(a) shall not have occurred; or (iv) any
Order of a court of competent jurisdiction permanently restraining, enjoining or
otherwise prohibiting consummation of the Merger shall become final and
non-appealable (whether before or after the adoption or approval by the
stockholders of the Company or Parent); provided, that the right to terminate
this Agreement pursuant to clause (i) above shall not be available to any party
that has breached in any material respect its obligations under this Agreement
in any manner that shall have been the cause of, or resulted in, the failure of
the Merger to be consummated on or before the Termination Date.
8.3. Termination by the Company. This Agreement may be terminated and the
Merger may be abandoned at any time prior to the Effective Time, whether before
or after the adoption of this Agreement by the stockholders of the Company
referred to in Section 7.1(a), by action of the Board of Directors of the
Company:
(a) if there has been a material breach by Parent or Merger Sub of any
representation, warranty, covenant or agreement contained in this
Agreement which (x) would result in a failure of a condition set forth in
Section 7.3(a) or 7.3(b) and (y) cannot be or is not cured prior to the
Termination Date; or
(b) at any time prior to the adoption of this Agreement by the Company's
stockholders, by reason of a Superior Proposal; provided, however, that
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the Company may not terminate this Agreement pursuant to this Section
8.3(b) unless: (i) the Company shall have complied with Section 6.2; (ii)
the Board of Directors of the Company shall have concluded in good faith,
prior to giving effect to all concessions which may be offered the Company
by Parent, that such proposal is a Superior Proposal; (iii) the Company
shall have (A) notified Parent in writing of its receipt of such Superior
Proposal, (B) further notified Parent in such writing that the Company
intends, not earlier than the fourth business day following such notice,
to enter into a binding agreement for such Superior Proposal and (C)
attached the most current written version of such Superior Proposal (or a
summary containing all material terms and conditions of such Superior
Proposal) to such notice; and (iv) during such four business day period,
the Company shall, and shall cause its respective financial and legal
advisors to, consider any adjustment in the terms and conditions of this
Agreement that Parent may propose; provided, further, that it shall be a
condition to termination pursuant to this Section 8.3(b) that the Company
shall have made the payment of the Termination Fee to Parent required by
Section 8.5(b).
8.4. Termination by Parent. This Agreement may be terminated and the
Merger may be abandoned at any time prior to the Effective Time, before or after
the approval by the stockholders of the Company referred to in Section 7.1(a),
by action of the Board of Directors of Parent if:
(a) the Board of Directors of the Company shall have withdrawn, materially
modified in a manner adverse to Parent or changed in a manner adverse to
Parent its approval or recommendation of this Agreement or the Merger; or
(b) there has been a material breach by the Company of any representation,
warranty, covenant or agreement contained in this Agreement which (i)
would result in a failure of a condition set forth in Section 7.2(a) or
7.2(b) and (ii) cannot be or is not cured prior to the Termination Date.
8.5. Effect of Termination and Abandonment.
(a) In the event of termination of this Agreement and the abandonment of
the Merger pursuant to this Article VIII, this Agreement (other than as
set forth in Section 9.2) shall become void and of no effect with no
liability (other than as set forth in Section 8.5(b) or in the proviso at
the end of this sentence) on the part of any party to this Agreement or of
any of its directors, officers, employees, agents, legal or financial
advisors or other representatives; provided, however, that no such
termination shall relieve any party to this Agreement from any liability
resulting from any breach of this Agreement.
(b) In the event that (i) an Acquisition Proposal is publicly announced
and not withdrawn prior to the Company Stockholders Meeting, the Board of
Directors of the Company shall have withdrawn or materially modified, in a
manner adverse to Parent, its approval or recommendation of this Agreement
or the Merger and this Agreement is terminated by the Company or Parent
pursuant to Section 8.2(ii), (ii) this Agreement is terminated by Parent
pursuant to Section 8.4(a) (but with respect to Section 8.4(a), only if
the Board of Directors of the Company shall have withdrawn its approval or
recommendation of this Agreement or the Merger or modified or changed that
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approval or recommendation to such an extent that it is no longer
approving or recommending this Agreement or the Merger), (iii) an
Acquisition Proposal is publicly announced and not withdrawn prior to the
Company Stockholders Meeting, this Agreement is terminated by the Company
or Parent pursuant to Section 8.2(ii) and within one year after such
termination the Company enters into a definitive agreement with respect to
an Acquisition Proposal or an Acquisition Proposal is consummated, in
either case with any Person or (iv) this Agreement is terminated by the
Company pursuant to Section 8.3(b), then the Company shall pay Parent a
fee equal to $75 million (the "Termination Fee"). In the event of a
termination by the Company described in clause (i) or (iv) of the
preceding sentence, the Termination Fee shall be payable by wire transfer
of same day funds as a condition precedent to such termination; in the
event the Termination Fee shall become payable pursuant to clause (iii) of
the preceding sentence, the Termination Fee shall be payable by wire
transfer of same day funds simultaneously with the execution of the
definitive agreement or the consummation of the Acquisition Proposal which
gives rise to the obligation to pay the Termination Fee; and in the event
of a termination by Parent described in clause (i) or (ii) of the
preceding sentence, the Termination Fee shall be payable by wire transfer
of same day funds promptly, but in no event later than two days after the
date of such termination of this Agreement. For purposes of this Section
8.5(b), the definition of "Acquisition Proposal" shall be modified by
changing all references to "15%" to "50%." The Company acknowledges that
the agreements contained in this Section 8.5(b) are an integral part of
the transactions contemplated by this Agreement, and that, without these
agreements, Parent and Merger Sub would not enter into this Agreement.
Accordingly, if the Company fails to pay promptly the amount due pursuant
to this Section 8.5(b), and, in order to obtain such payment, Parent or
Merger Sub commences a suit which results in a judgment against the
Company for the fee set forth in this paragraph (b), the Company shall pay
to Parent or Merger Sub its costs and expenses (including reasonable
attorneys' fees) in connection with such suit, together with interest on
the amount of the fee at the prime rate of Citibank N.A. in effect on the
date such payment was required to be made.
ARTICLE IX.
Miscellaneous and General
9.1. Certain Definitions. Terms defined elsewhere in this Agreement shall
have the meanings set forth therein for all purposes of this Agreement, unless
otherwise specified to the contrary. The following terms shall have the
following meanings:
"Affiliates" shall have the meaning set forth in Rule 12b-2 under the
Exchange Act.
"Competition Laws" includes the HSR Act, the European Community Merger
Control Regulation, and any other antitrust or competition Law of the United
States of America, the European Community or any other nation, province,
territory or jurisdiction which must be satisfied or complied with in order to
consummate and make effective the Merger.
"DGCL" means the Delaware General Corporation Law.
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"Environmental Law" means any Law relating to: (A) the protection,
investigation or restoration of the environment or natural resources; (B) the
handling, use, presence, disposal, release or threatened release of any
Hazardous Substance; or (C) noise, odor, wetlands, pollution, contamination or
any injury or threat of injury to persons or property or notifications to
government agencies or the public in connection with any Hazardous Substance.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"ERISA Affiliate" means any corporation or trade or business which,
together with the Company, is a member of a controlled group of Persons or a
group of trades or businesses under common control with the Company within the
meaning of Sections 414(b), (c), (m) or (o) of the Code.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"GAAP" means U.S. generally accepted accounting principles.
"Hazardous Substance" means any substance that is listed, classified or
regulated pursuant to any Environmental Law, including any petroleum product or
by-product, asbestos-containing material, lead-containing paint or plumbing,
polychlorinated biphenyls, electromagnetic fields, microwave transmission,
radioactive materials or radon.
"HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended.
"IRS" means the Internal Revenue Service.
"Laws" means any law, statute, ordinance, regulation, judgment, order,
decree, injunction, license, authorization, opinion, agency requirement or
permit of any Governmental Entity or common law.
"Material Adverse Effect" means, with respect to any Person, a material
adverse effect on the financial condition, assets and liabilities (taken
together), or business of such Person and its Subsidiaries, taken as a whole,
provided, however, that none of the following shall be deemed to constitute and
shall not be taken into account in determining the occurrence of a Material
Adverse Effect with respect to a party: (i) any effect arising from or relating
to general business or economic conditions or financial market fluctuations or
conditions which do not affect such party in any materially disproportionate
manner, (ii) any effect relating to or affecting industries in which such
party's businesses operate generally; (iii) any effect arising from or relating
to changes in accounting rules or procedures announced by the Financial
Accounting Standards Board, or (iv) any effect arising from or relating to the
announcement of the Merger or a failure of a Person to achieve Year 2000
Compliance as a result of supplier, customer or third-party non-compliance.
"PBGC" means the Pension Benefit Guaranty Corporation.
"Permits" means permits, licenses, franchises, variances, exemptions,
orders and other governmental authorizations, consents and approvals.
"Person" means any individual, corporation (including not-for-profit),
general or limited partnership, limited liability company, joint venture,
estate, trust, association, organization, Governmental Entity (as defined in
Section 5.1(d)(i)) or other entity of any kind or nature.
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"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended.
"Significant Agreements" means (i) all Contracts required to be filed as
exhibits to the Company's Reports filed prior to the date hereof; (ii) all
Contracts reasonably expected to require the payment (whether by or to the
Company or any of its Subsidiaries) of $10,000,000 or more in the aggregate or
payments in any twelve-month period aggregating $2,000,000 or more; and (iii)
all Contracts between the Company and any of its Subsidiaries, on the one hand,
and any Affiliate of the Company, on the other hand excluding in each of clauses
(i), (ii) and (iii), Compensation and Benefit Plans.
"Significant Investees" means, with respect to any Person, Significant
Subsidiaries of such Person and any entity in which such Person has an equity
interest of 20% or more.
"Significant Subsidiaries" with respect to any Person has the meaning set
forth in Rule 1-02(w) of Regulation S-X promulgated pursuant to the Exchange
Act.
"Subsidiary" means, with respect to any Person, any entity, whether
incorporated or unincorporated, of which at least 50% of the stock, securities
or other ownership interests having by their terms ordinary voting power to
elect at least 50% of the Board of Directors or other persons performing similar
functions is directly or indirectly owned by such Person and "wholly-owned
subsidiary" shall include Subsidiaries which are wholly-owned except for
directors' qualifying shares.
"Tax" (including, with correlative meaning, the terms "Taxes," and
"Taxable") means all federal, state, local and foreign income, profits,
franchise, gross receipts, environmental, customs duty, capital stock,
severance, stamp, payroll, sales, employment, unemployment, disability, use,
property, withholding, excise, production, value added, occupancy and other
taxes, duties or assessments of any nature whatsoever, together with all
interest, penalties and additions imposed with respect to such amounts and any
interest in respect of such penalties and additions.
"Tax Return" means all federal, state, local and foreign returns and
reports (including elections, declarations, disclosures, schedules, estimates
and information returns) required to be supplied to a Tax authority relating to
Taxes.
9.2. Survival. Article II, Article III, Article IV and this Article IX and
the agreements of the Company, Parent and Merger Sub contained in Sections
6.7(b) (Affiliates), 6.10 (Benefits), 6.11 (Expenses), 6.12 (Indemnification;
Directors' and Officers' Insurance) and 6.15 (Tax-Free Reorganization) shall
survive the consummation of the Merger. This Article IX (other than Section 9.3
(Modification or Amendment), Section 9.4 (Waiver of Conditions) and Section 9.13
(Assignment)) and the agreements of the Company, Parent and Merger Sub contained
in Section 6.11 (Expenses), Section 6.13 (Takeover Statute), Section 6.14
(Confidentiality) and Section 8.5 (Effect of Termination and Abandonment) shall
survive the termination of this Agreement. All other representations,
warranties, covenants and agreements in this Agreement shall not survive the
consummation of the Merger or the termination of this Agreement.
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9.3. Modification or Amendment. Subject to the provisions of the
applicable law, at any time prior to the Effective Time, the parties to this
Agreement may modify or amend this Agreement, by written agreement executed and
delivered by duly authorized officers of the respective parties.
9.4. Waiver of Conditions.
(a) Any provision of this Agreement may be waived prior to the Effective
Time if, and only if, such waiver is in writing and signed by an
authorized representative or the party against whom the waiver is to be
effective.
(b) No failure or delay by any party in exercising any right, power or
privilege under this Agreement shall operate as a waiver thereof nor shall
any single or partial exercise thereof preclude any other or further
exercise thereof or the exercise of any other right, power or privilege.
Except as otherwise provided in this Agreement, the rights and remedies
herein provided shall be cumulative and not exclusive of any rights or
remedies provided by Law. The payments required to be made to Parent
pursuant to Section 8.5(b) shall not prevent Parent from pursuing remedies
for breach of this Agreement or in tort if, prior to instituting any
proceeding in any court seeking such remedies, Parent shall reject such
payments and refund such payments to the Company in full, it being agreed
that a termination of this Agreement by the Company in accordance with
Section 8.3(b) and the taking of actions in accordance with Section 6.2
shall not constitute a breach of this Agreement.
9.5. Counterparts. This Agreement may be executed in any number of
counterparts, each such counterpart being deemed to be an original instrument,
and all such counterparts shall together constitute the same agreement.
9.6. GOVERNING LAW AND VENUE; WAIVER OF JURY TRIAL.
(a) THIS AGREEMENT SHALL BE DEEMED TO BE MADE IN AND IN ALL RESPECTS SHALL
BE INTERPRETED, CONSTRUED AND GOVERNED BY AND IN ACCORDANCE WITH THE LAW
OF THE STATE OF DELAWARE WITHOUT REGARD TO THE CONFLICT OF LAW PRINCIPLES
THEREOF. The parties hereby irrevocably and unconditionally consent to
submit to the exclusive jurisdiction of the courts of the State of
Delaware and of the United States of America located in Wilmington,
Delaware (the "Delaware Courts") for any litigation arising out of or
relating to this Agreement and the transactions contemplated by this
Agreement (and agree not to commence any litigation relating thereto
except in such Delaware Courts), waive any objection to the laying of
venue of any such litigation in the Delaware Courts and agree not to plead
or claim in any Delaware Court that such litigation brought therein has
been brought in an inconvenient forum.
(b) EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH 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 BY THIS
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AGREEMENT. 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 9.6.
9.7. Notices. Notices, requests, instructions or other documents to be
given under this Agreement shall be in writing and shall be deemed given, (i)
when received if sent by facsimile, (ii) when delivered, if delivered personally
to the intended recipient, and (iii) one business day later, if sent by
overnight delivery via a national courier service, and in each case, addressed
to a party at the following address for such party:
If to Parent or Merger Sub:
Illinois Tool Works Inc.
3600 West Lake Avenue
Glenview, IL 60025-5811
Attention: Chief Executive Officer
Fax: (847) 657-4392
and
Illinois Tool Works Inc.
3600 West Lake Avenue
Glenview, IL 60025-5811
Attention: General Counsel
Fax: (847) 657-4392
with a copy to:
Scott J. Davis and James T. Lidbury
Mayer, Brown & Platt
190 South LaSalle Street
Chicago, Illinois 60603
Fax: (312) 701-7711
and if to the Company:
Premark International, Inc.
1717 Deerfield Road
Deerfield, IL 60015
Attention: Chief Executive Officer
Fax: (847) 405-6333
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and
Premark International, Inc.
1717 Deerfield Road
Deerfield, IL 60015
Attention: General Counsel
Fax: (847) 405-6333
with a copy to:
Daniel A. Neff
Wachtell, Lipton, Rosen & Katz
51 West 52nd Street
New York, New York 10019
Fax: (212) 403-2000
or to such other persons or addresses as may be designated in writing by the
party to receive such notice as provided above.
9.8. Entire Agreement. This Agreement (including any exhibits to this
Agreement), the Stock Option Agreement, the Confidentiality Agreement, the
Company Disclosure Letter and the Parent Disclosure Letter constitute the entire
agreement, and supersede all other prior agreements, understandings,
representations and warranties both written and oral, among the parties with
respect to the subject matter of this Agreement. EACH PARTY TO THIS AGREEMENT
AGREES THAT, EXCEPT FOR THE REPRESENTATIONS AND WARRANTIES CONTAINED IN THIS
AGREEMENT, NEITHER PARENT AND MERGER SUB NOR THE COMPANY MAKES ANY
REPRESENTATIONS OR WARRANTIES, AND EACH HEREBY DISCLAIMS ANY OTHER
REPRESENTATIONS OR WARRANTIES MADE BY ITSELF OR ANY OF ITS OFFICERS, DIRECTORS,
EMPLOYEES, AGENTS, FINANCIAL AND LEGAL ADVISORS OR OTHER REPRESENTATIVES, WITH
RESPECT TO THE EXECUTION AND DELIVERY OF THIS AGREEMENT OR THE TRANSACTIONS
CONTEMPLATED BY THIS AGREEMENT, NOTWITHSTANDING THE DELIVERY OR DISCLOSURE TO
THE OTHER OR THE OTHER'S REPRESENTATIVES OF ANY DOCUMENTATION OR OTHER
INFORMATION WITH RESPECT TO ANY ONE OR MORE OF THE FOREGOING.
9.9. No Third Party Beneficiaries. Except as provided in Section 6.10(a),
Section 6.10(c) and Section 6.12, this Agreement is not intended to confer upon
any Person other than the parties to this Agreement any rights or remedies under
this Agreement.
9.10. Obligations of Parent and of the Company. Whenever this Agreement
requires a Subsidiary of Parent (including, after the Effective Time, the
Surviving Corporation) to take any action, such requirement shall be deemed to
include an undertaking on the part of Parent to cause such Subsidiary to take
such action. Whenever this Agreement requires a Subsidiary of the Company to
take any action, such requirement shall be deemed to include an undertaking on
the part of the Company to cause such Subsidiary to take such action and, after
the Effective Time, on the part of the Surviving Corporation to cause such
Subsidiary to take such action.
9.11. Severability. The provisions of this Agreement shall be deemed
severable and the invalidity or unenforceability of any provision shall not
affect the validity or enforceability of the other provisions of this Agreement.
If any provision of this Agreement, or the application thereof to any Person or
any circumstance, is invalid or unenforceable, (a) a suitable and equitable
provision shall be substituted therefor in order to carry out, so far as may be
valid and enforceable, the intent and purpose of such invalid or
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unenforceable provision and (b) the remainder of this Agreement and the
application of such provision to other Persons or circumstances shall not be
affected by such invalidity or unenforceability, nor shall such invalidity or
unenforceability affect the validity or enforceability of such provision, or the
application thereof, in any other jurisdiction.
9.12. Interpretation. The table of contents and headings in this Agreement
are for convenience of reference only, do not constitute part of this Agreement
and shall not be deemed to limit or otherwise affect any of the provisions of
this Agreement. Where a reference in this Agreement is made to a Section or
Exhibit, such reference shall be to a Section of or Exhibit to this Agreement
unless otherwise indicated. Whenever the words "include," "includes" or
"including" are used in this Agreement, they shall be deemed to be followed by
the words "without limitation." The definitions in this Agreement are applicable
to the singular as well as the plural forms of such terms.
9.13. Assignment. This Agreement shall not be assignable; provided,
however, that Parent may designate prior to the Effective Time, by written
notice to the Company, another wholly owned direct or indirect Subsidiary to be
a party to the Merger in lieu of Merger Sub, in which event all references in
this Agreement to Merger Sub shall be deemed references to such other Subsidiary
(except with respect to representations and warranties made in this Agreement,
with respect to Merger Sub as of the date of this Agreement) and all
representations and warranties made herein with respect to Merger Sub as of the
date of this Agreement shall also be made with respect to such other subsidiary
as of the date of such designation. Any assignment in contravention of the
preceding sentence shall be null and void.
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IN WITNESS WHEREOF, this Agreement has been duly executed and delivered by
the duly authorized officers of the parties to this Agreement as of the date
first written above.
PREMARK INTERNATIONAL, INC.
By: /s/ James M. Ringler
----------------------------------
Name: James M. Ringler
Title: Chairman of the Board,
Chief Executive Officer and
President
ILLINOIS TOOL WORKS INC.
By: /s/ W. James Farrell
----------------------------------
Name: W. James Farrell
Title: Chairman and Chief
Executive Officer
CS MERGER SUB INC.
By: /s/ Frank S. Ptak
----------------------------------
Name: Frank S. Ptak
Title: President
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