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EXHIBIT 2.1
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AGREEMENT AND PLAN OF MERGER
among
UNITED TECHNOLOGIES CORPORATION,
SOLAR ACQUISITION CORP.
and
SPECIALTY EQUIPMENT COMPANIES, INC.
dated as of
October 13, 2000
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TABLE OF CONTENTS
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ARTICLE I THE OFFER............................................................................................2
Section 1.01. The Offer..................................................................................2
Section 1.02. Company Action.............................................................................3
Section 1.03. Directors..................................................................................4
ARTICLE II THE MERGER..........................................................................................5
Section 2.01. The Merger.................................................................................5
Section 2.02. Closing; Effective Time....................................................................5
Section 2.03. Effect of the Merger.......................................................................6
Section 2.04. Certificate of Incorporation; By-Laws; Directors and Officers..............................6
Section 2.05. Conversion of Shares.......................................................................6
Section 2.06. Dissenting Shares..........................................................................7
Section 2.07. Surrender of Shares; Stock Transfer Books..................................................7
Section 2.08. Stock Plans................................................................................9
ARTICLE III REPRESENTATIONS AND WARRANTIES OF PARENT
AND PURCHASER.................................................................................9
Section 3.01. Corporate Organization.....................................................................9
Section 3.02. Authority Relative to this Agreement.......................................................9
Section 3.03. No Conflict; Required Filings and Consents................................................10
Section 3.04. Financing Arrangements....................................................................10
Section 3.05. Brokers...................................................................................10
Section 3.06. Offer Documents; Proxy Statement..........................................................10
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE COMPANY......................................................11
Section 4.01. Organization and Qualification; Subsidiaries..............................................11
Section 4.02. Capitalization............................................................................12
Section 4.03. Authority Relative to this Agreement......................................................13
Section 4.04. No Conflict; Required Filings and Consents................................................13
Section 4.05. SEC Filings; Financial Statements.........................................................14
Section 4.06. Absence of Certain Changes or Events......................................................14
Section 4.07. Litigation................................................................................15
Section 4.08. Employee Benefit Plans....................................................................15
Section 4.09. Labor and Employment......................................................................17
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Section 4.10. Environmental Matters.....................................................................18
Section 4.11. Licenses and Permits; Compliance with Laws................................................18
Section 4.12. Taxes.....................................................................................18
Section 4.13. Offer Documents; Proxy Statement..........................................................19
Section 4.14. Brokers...................................................................................20
Section 4.15. Takeover Statutes.........................................................................20
Section 4.16. Opinion of Financial Advisor..............................................................20
Section 4.17. Material Contracts........................................................................20
Section 4.18. Real Property.............................................................................21
Section 4.19. Intellectual Property.....................................................................21
Section 4.20. Related Party Transactions................................................................22
Section 4.21. Required Vote of Company Stockholders.....................................................23
ARTICLE V COVENANTS...........................................................................................23
Section 5.01. Conduct of Business by the Company Pending the Closing....................................23
Section 5.02. No Solicitation...........................................................................26
Section 5.03. Access to Information.....................................................................27
Section 5.04. Stockholders Approval of the Merger.......................................................28
Section 5.05. Proxy Statement...........................................................................28
Section 5.06. Public Announcements......................................................................28
Section 5.07. Reasonable Best Efforts; Cooperation......................................................29
Section 5.08. Indemnification...........................................................................29
Section 5.09. Takeover Statutes.........................................................................30
Section 5.10. Employee Benefits.........................................................................30
Section 5.11. Notification of Certain Matters...........................................................31
Section 5.12. Subsequent Filings........................................................................31
ARTICLE VI CONDITIONS TO THE MERGER...........................................................................31
Section 6.01. Conditions................................................................................31
ARTICLE VII TERMINATION, AMENDMENT AND WAIVER.................................................................32
Section 7.01. Termination...............................................................................32
Section 7.02. Effect of Termination.....................................................................33
Section 7.03. Amendment.................................................................................34
Section 7.04. Extension; Waiver.........................................................................34
ARTICLE VIII GENERAL PROVISIONS...............................................................................34
Section 8.01. Non-Survival of Representations and Warranties............................................34
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Section 8.02. Expenses..................................................................................34
Section 8.03. Entire Agreement..........................................................................34
Section 8.04. Assignment................................................................................34
Section 8.05. Parties in Interest.......................................................................34
Section 8.06. Validity..................................................................................35
Section 8.07. Notices...................................................................................35
Section 8.08. Governing Law.............................................................................36
Section 8.09. Waiver of Jury Trial......................................................................36
Section 8.10. Specific Performance......................................................................36
Section 8.11. Headings..................................................................................36
Section 8.12. Counterparts..............................................................................36
Section 8.13. Construction..............................................................................36
Section 8.14. Interpretation of Certain Terms...........................................................36
Section 8.15. Definitions...............................................................................36
Annex I - Conditions to the Offer
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of October 13, 2000
("Agreement"), among Specialty Equipment Companies, Inc., a Delaware corporation
(the "Company"), United Technologies Corporation, a Delaware corporation
("Parent"), and Solar Acquisition Corp., a Delaware corporation and a wholly
owned subsidiary of Parent ("Purchaser").
W I T N E S S E T H:
WHEREAS, the respective Boards of Directors of Parent, Purchaser and
the Company have approved the acquisition of the Company by Purchaser upon the
terms and subject to the conditions set forth in this Agreement;
WHEREAS, in furtherance of such acquisition, it is proposed that
Purchaser shall make a cash tender offer (as it may be amended from time to time
as permitted under this Agreement, the "Offer") to acquire all of the issued and
outstanding shares (the "Shares") of the common stock, $.01 par value, of the
Company (the "Common Stock") at a purchase price of $30.50 per share (such price
or such other price per share as may be payable in the Offer, the "Offer
Price"), net to the seller in cash, upon the terms and subject to the conditions
set forth in this Agreement;
WHEREAS, the respective Boards of Directors of Purchaser and Parent as
the sole stockholder of Purchaser have each approved this Agreement and the
merger of Purchaser with and into the Company (the "Merger"), upon the terms and
subject to the conditions set forth in this Agreement;
WHEREAS, as a condition to and inducement to Parent's and Purchaser's
willingness to enter into this Agreement, simultaneously with the execution of
this Agreement, certain holders and beneficial owners of Shares are entering
into a Stockholder Agreement (the "Stockholder Agreement") with Purchaser;
WHEREAS, the Board of Directors of the Company (the "Board of
Directors") has unanimously, (i) approved the Offer, the Merger, this Agreement
and the Stockholder Agreement (and the transactions contemplated hereby and
thereby) and (ii) resolved, subject to the provisions of Article VII hereof, to
recommend that the holders of such Shares accept the Offer and approve this
Agreement and the transactions contemplated hereby;
WHEREAS, Parent, Purchaser and the Company desire to make certain
representations, warranties, covenants and agreements in connection with the
Offer and the Merger and also to prescribe various conditions to the Offer and
the Merger; and
WHEREAS, capitalized terms not defined in the context in the Section
in which they first appear shall have the meanings set forth in Section 8.15.
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements of the other parties
herein contained, and intending to be legally bound hereby, each of Parent,
Purchaser and the Company hereby agree as follows:
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ARTICLE I
THE OFFER
Section 1.01. The Offer.
(a) Provided that this Agreement shall not have been terminated in
accordance with Article VII and none of the events specified in clause (iii) of
Annex I shall have occurred and then be continuing, as promptly as practical
after the date hereof, but in no event later than the sixth business day after
the date hereof, Parent shall cause Purchaser to commence (within the meaning of
Rule 14d-2 under the Exchange Act) the Offer at the Offer Price. The obligation
of Purchaser to consummate the Offer, to accept for payment and to pay for any
Shares tendered pursuant to the Offer shall be subject to the satisfaction of
the conditions set forth in Annex I. The initial expiration date of the Offer
shall be the twentieth business day following commencement (within the meaning
of Rule 14d-2 under the Exchange Act) of the Offer. Parent shall cause Purchaser
to, and Purchaser shall, subject to the conditions provided in Annex I, accept
for payment and pay for all Shares validly tendered and not withdrawn pursuant
to the Offer as soon as practicable after such expiration date and in any event
in compliance with the obligations respecting prompt payment pursuant to Rule
14e-1(c) under the Exchange Act. On or prior to the dates that the Purchaser
becomes obligated to accept for payment and pay for Shares pursuant to the
Offer, Parent shall provide or cause to be provided to the Purchaser the funds
necessary to pay for all Shares that Purchaser becomes so obligated to accept
for payment and pay for pursuant to the Offer. The Offer Price shall be net to
the seller in cash, without interest, subject to any applicable withholding
taxes.
(b) Purchaser reserves the right to (i) waive any of the conditions
set forth in Annex I (other than the Minimum Condition and the condition
relating to the expiration of the waiting period under the HSR Act), (ii)
increase the price per Share payable in the Offer, and (iii) make any other
changes in the terms of the Offer; provided, however, unless previously approved
by the Company in writing no change may be made which (a) reduces the maximum
number of Shares to be purchased pursuant to the Offer, (b) decreases the price
per Share payable pursuant to the Offer, (c) changes the form of consideration
to be paid for the Shares pursuant to the Offer, (d) imposes conditions to the
Offer in addition to the conditions set forth in Annex I, (e) waives the Minimum
Condition or waives the condition relating to the expiration of the waiting
period under the HSR Act or (f) makes other changes in the terms and conditions
of the Offer that are in any manner adverse to the holders of Shares. Without
the prior written consent of the Company, Purchaser shall not extend the
expiration date of the Offer beyond the initial expiration date of the Offer,
except (x) as required by applicable law including applicable rules and
regulations of the SEC or any interpretation or position of the SEC staff, (y)
that if, immediately prior to the expiration date of the Offer (as it may be
extended), the Shares tendered and not withdrawn pursuant to the Offer
constitute less than 90% of the outstanding Shares, Purchaser may, in its sole
discretion, extend the Offer for one or more periods not to exceed an aggregate
of ten business days, notwithstanding that all conditions to the Offer are
satisfied as of such expiration date of the Offer; provided that after the
initial expiration date, the Offer shall not be subject to any conditions that
are at the time of such extension satisfied other than the Minimum Condition and
the conditions set forth in paragraph (a) of Annex I, or (z) that if any
condition to the Offer has not been satisfied or waived, Purchaser shall extend
the expiration date of the Offer for one or more periods, but in no event later
than the Outside Date. In addition, the Offer Price may be increased and the
Offer may be extended to the extent required by law in connection with such
increase without the consent of the Company.
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(c) The Offer shall be made by means of an offer to purchase (the
"Offer to Purchase") subject only to the conditions set forth in Annex I. As
soon as reasonably practicable on the date the Offer is commenced, Parent and
Purchaser shall file with the SEC a Tender Offer Statement on Schedule TO
(together with all amendments and supplements thereto, the "Schedule TO") with
respect to the Offer that (i) will comply in all material respects with the
provisions of all applicable federal securities laws and (ii) will contain
(including as an exhibit) or incorporate by reference the Offer to Purchase, a
form of the related letter of transmittal and a summary advertisement (which
documents, together with any supplements or amendments thereto, are referred to
collectively herein as the "Offer Documents"). Each of the Company, on the one
hand, and Parent and Purchaser, on the other hand, agrees promptly to correct
any information provided by it in writing for use in the Schedule TO or the
Offer Documents if and to the extent that the Schedule TO or the Offer Documents
shall be, or have become, false or misleading in any material respect, and
Parent and Purchaser further agree to take all steps necessary to cause the
Schedule TO, as so corrected, to be filed with the SEC and the Offer Documents,
as so corrected, to be disseminated to holders of Shares and any other holder of
securities issued by the Company (if any), in each case to the extent required
by applicable federal securities laws. Parent and Purchaser shall provide the
Company and its counsel with a reasonable opportunity to review and comment on
the Schedule TO and any Offer Documents before they are filed with the SEC.
Parent and Purchaser shall promptly provide the Company and its counsel in
writing with, and consult with the Company and its counsel regarding, any
comments Parent, Purchaser or their counsel may receive from time to time from
the SEC or its staff with respect to the Schedule TO or the Offer Documents.
Section 1.02. Company Action.
(a) The Company hereby consents to the Offer and represents and
warrants that the Board of Directors, at a meeting duly called and held on
October 13, 2000, acting by a unanimous vote of the directors: (i) approved and
adopted this Agreement and the transactions contemplated hereby, including the
Offer and the Merger and the transactions contemplated by the Stockholder
Agreement (including, without limitation, for purposes of Section 9 of the
Confidentiality Agreement dated August 14, 2000 between Parent and the Company
(the "Confidentiality Agreement")); (ii) resolved to recommend that the
stockholders of the Company accept the Offer, tender their Shares pursuant to
the Offer and approve this Agreement and the transactions contemplated hereby,
including the Merger; (iii) determined that this Agreement and the transactions
contemplated hereby, including the Offer and the Merger, are advisable and in
the best interests of the stockholders of the Company and that the consideration
to be paid for each Share in the Offer and the Merger is fair to the holders of
Shares; and (iv) irrevocably has taken all action necessary to render Section
203 of the DGCL and other state takeover statutes inapplicable to the Offer, the
Merger, this Agreement and the Stockholder Agreement and the transactions
contemplated hereby and thereby. The Board has received the opinion of Credit
Suisse First Boston Corporation (the "Company's Financial Advisor") to the
effect that, based upon and subject to the matters set forth therein and as of
the date thereof, the Offer Price to be received by holders of Shares (other
than Parent and its Affiliates) pursuant to the Offer and the Merger is fair to
such holders of Shares from a financial point of view. The Company hereby
consents to the inclusion in the Offer Documents of the recommendations of the
Board described in this Section 1.02, provided that this Agreement has not been
terminated.
(b) The Company shall file with the SEC, as promptly as practicable
after the filing by Purchaser of the Schedule TO with respect to the Offer but
in any event on the date such Schedule TO is filed with the SEC, a Tender Offer
Solicitation/Recommendation Statement on Schedule 14D-9 (together with any
amendments or supplements thereto, the "Schedule 14D-9") that
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(i) will comply in all material respects with the provisions of all applicable
federal securities laws and (ii) will include the recommendations of
the Board of Directors referred to in clause (ii) of Section 1.02(a) and the
opinion of the Company's Financial Advisor referred to in Section 4.16, provided
that this Agreement has not been terminated. Each of the Company, on the one
hand, and Parent and Purchaser, on the other hand, agrees promptly to correct
any information provided by it for use in the Schedule 14D-9 if and to the
extent that the Schedule 14D-9 shall be, or have become, false or misleading in
any material respect, and the Company shall take all steps necessary to cause
the Schedule 14D-9, as so corrected, to be filed with the SEC and disseminated
to the Company's stockholders, in each case to the extent required by applicable
law. The Company shall provide Parent, Purchaser and their counsel with a
reasonable opportunity to review and comment on the Schedule 14D-9 before it is
filed with the SEC. The Company shall promptly provide the Parent and Purchaser
and their counsel in writing with, and consult with Parent and Purchaser and its
counsel regarding, any comments the Company or its counsel may receive from the
time to time from the SEC or its staff with respect to the Schedule 14D-9.
(c) In connection with the Offer, the Company shall promptly upon
execution of this Agreement furnish Parent and Purchaser with mailing labels,
security position listings, any available non-objecting beneficial owner lists
and any available listing or computer list containing the names and addresses of
the record holders of the Shares and holders of other securities issued by the
Company (if any) as of the most recent practicable date and shall furnish the
Purchaser with such additional available information (including, but not limited
to, updated lists of holders of Common Stock and their addresses, mailing labels
and lists of security positions and non-objecting beneficial owner lists) and
such other information and assistance as Parent, Purchaser or their agents may
reasonably request for the purpose of communicating the Offer to the record and
beneficial holders of Shares. Subject to the requirements of law, and except for
such steps as are necessary to such dissemination of, and communication with
respect to, the Offer Documents and any other documents necessary to consummate
the Offer and the Merger, Purchaser shall hold in confidence the information
contained in any such labels and lists and the additional information referred
to in the penultimate sentence of this Section 1.02(c), will use such
information only in connection with the Offer and the Merger, and, if this
Agreement is terminated, will, upon request, deliver to the Company all such
written information then in its possession.
Section 1.03. Directors. Promptly upon the payment of the Offer Price
by Purchaser for the Shares tendered pursuant to the Offer, Purchaser shall be
entitled to designate up to such number of directors (the "Purchaser
Designees"), rounded up to the nearest whole number, to the Board of Directors
as will give Purchaser, subject to compliance with the Exchange Act,
representation on the Board of Directors equal to the product of the total
number of directors on the Board of Directors (giving effect to the directors
appointed or elected pursuant to this sentence) multiplied by the percentage
that the aggregate number of Shares as are accepted for payment pursuant to the
Offer bears to the number of Shares then outstanding. In furtherance thereof,
upon Purchaser's request, the Company shall use its best efforts, to the fullest
extent permitted by law, after consummation of the Offer, to secure the
resignations of such number of directors as is necessary to enable Purchaser's
designees to be elected to the Board of Directors in accordance with the terms
of this Section 1.03. At such time, the Company shall also cause, if requested
by Purchaser, (i) each committee of the Board of Directors, (ii) the board of
directors of each of the Subsidiaries and (iii) each committee of such board to
include persons designated by Purchaser constituting up to the same percentage
(rounded up to the nearest whole number) of each such committee or board as
Purchaser Designees constitute on the Board of Directors. The foregoing
notwithstanding, until the Effective Time, the Company, Purchaser and Parent
shall use all reasonable best efforts to retain as members of the
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Company's Board of Directors at least two directors who are directors of the
Company on the date hereof and who are not representatives of Parent (the
"Independent Directors"). As used in this Agreement, the term "Independent
Directors" shall initially mean each of Messrs. Richard A. Kent and Barry L.
MacLean; provided that in the event that any such Independent Director resigns
or otherwise ceases to be a director for any reason, then the Company, Purchaser
and Parent shall use their best efforts to cause a Person nominated by the
remaining Independent Directors to be elected as a replacement for such director
as expeditiously as legally practicable. If for any reason at any time prior to
the Effective Time no Independent Directors then remain, then (i) the other
directors shall use best efforts to designate two persons to be the Independent
Directors, none of whom shall be directors, officers, employees or Affiliates of
Parent or Purchaser, and (ii) the Company, Purchaser and Parent shall use their
best efforts to cause such persons to be elected as a replacement for such
director as expeditiously as legally practicable. The Company shall promptly
take all action necessary to effect such contemplated election, including (i)
establishing as a record date for the written consent by the Company's
Stockholders to such election a date that is within six business days prior to
the commencement of the Offer and (ii) filing with the SEC a Schedule 14A
(together with any supplements or amendments thereto the "Schedule 14A")
regarding the solicitation of written consents to the election of the Purchaser
Designees which shall contain the information as may be required by Schedule 14A
under the Exchange Act as is necessary to enable the Purchaser Designees to be
elected to the Board of Directors, including distributing the information
required by the Exchange Act and such Schedule with the Schedule 14D-9.
Purchaser will supply to the Company in writing and be solely responsible for
any information with respect to itself and its nominees, officers, directors and
affiliates required by Schedule 14A. Parent and Purchaser will disseminate the
Schedule 14A to the holders of the Shares together with the Offer Documents.
Notwithstanding anything in this Agreement to the contrary, following the time
directors designated by Purchaser constitute a majority of the Board of
Directors and prior to the Effective Time, the affirmative vote of a majority of
the Independent Directors shall be required to (i) amend or terminate this
Agreement on behalf of the Company, (ii) exercise or waive any of the Company's
rights or remedies hereunder, (iii) extend the time for performance of Parent's
obligations hereunder, or (iv) approve any other action by the Company that
could adversely affect the interests of the stockholders of the Company (other
than Parent, Purchaser and their Affiliates) with respect to the transactions
contemplated hereby and such affirmative majority vote shall be sufficient to
take any such action.
ARTICLE II
THE MERGER
Section 2.01. The Merger. Upon the terms and subject to the
conditions of this Agreement, at the Effective Time in accordance with the DGCL,
Purchaser shall be merged with and into the Company. Following the Merger, the
separate corporate existence of Purchaser shall cease and the Company shall
continue as the surviving corporation (the "Surviving Corporation").
Section 2.02. Closing; Effective Time.
(a) The closing of the Merger (the "Closing") will take place at 10:00
a.m. Chicago time on a date to be specified by the parties, which shall be no
later than the second business day after satisfaction or waiver of the
conditions set forth in Article VI, at the offices of Sonnenschein Nath &
Rosenthal, 8000 Sears Tower, Chicago, Illinois 60606, unless another date, time
or place is agreed to in writing between Parent and the Company. The date on
which the Closing occurs is referred to in this Agreement as the "Closing Date."
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(b) The Merger shall be consummated by Parent duly filing, or causing
the Company and/or Purchaser to duly file, the appropriate Certificate of Merger
in such form as is required by, and prepared, executed and acknowledged in
accordance with, the relevant provisions of the DGCL. The Merger shall become
effective at such time as the Certificate of Merger is duly filed with the
Secretary of State of the State of Delaware in accordance with the DGCL or at
such later time as is specified in the Certificate of Merger (the "Effective
Time").
Section 2.03. Effect of the Merger. At the Effective Time, the effect
of the Merger shall be as provided in the applicable provisions of the DGCL.
Without limiting the generality of the foregoing, and subject thereto, at the
Effective Time all the property, rights, privileges, powers and franchises of
the Company and Purchaser shall vest in the Surviving Corporation, and all
debts, liabilities and duties of the Company and Purchaser shall become the
debts, liabilities and duties of the Surviving Corporation.
Section 2.04. Certificate of Incorporation; By-Laws; Directors and
Officers.
(a) At the Effective Time, the Certificate of Incorporation of
Company, as in effect immediately before the Effective Time, shall be the
Certificate of Incorporation of the Surviving Corporation, until thereafter
amended as provided by law and such Certificate of Incorporation.
(b) At the Effective Time, the By-Laws of Company, as in effect
immediately prior to the Effective Time, shall be the By-Laws of the Surviving
Corporation until thereafter amended as provided by law, the Certificate of
Incorporation of the Surviving Corporation and such By-Laws.
(c) The directors of Purchaser immediately prior to the Effective Time
shall be the initial directors of the Surviving Corporation, and the officers of
the Company immediately prior to the Effective Time shall be the initial
officers of the Surviving Corporation, in each case until their successors are
duly elected or appointed and qualified or until their earlier death, permanent
disability, resignation or removal.
Section 2.05. Conversion of Shares. At the Effective Time, by virtue
of the Merger and without any action on the part of Purchaser, the Company or
the holder of any of the following securities:
(a) Each Share issued and outstanding immediately prior to the
Effective Time (other than any Shares to be canceled pursuant to Section 2.05(b)
and any Dissenting Shares shall be canceled and be converted into the right to
receive the Offer Price in cash payable to the holder thereof, without interest
(the "Merger Consideration"), upon surrender of the certificate representing
such Share, less any applicable withholding taxes.
(b) Each Share held in the treasury of the Company or owned by any
Subsidiary and each Share owned by Parent, Purchaser or any direct or indirect
wholly owned subsidiary of Parent or Purchaser immediately prior to the
Effective Time shall be canceled and no payment or other consideration shall be
made with respect thereto.
(c) Each share of common stock, $0.0001 par value, of Purchaser issued
and outstanding immediately prior to the Effective Time shall be converted into
and thereafter represent one validly issued, fully paid and nonassessable share
of common stock, $.0l par value, of the Surviving Corporation.
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Section 2.06. Dissenting Shares.
(a) Notwithstanding any provision of this Agreement to the contrary,
but only to the extent required by the DGCL, Shares issued and outstanding
immediately prior to the Effective Time and owned of record by any stockholder
who has not voted such Shares in favor of or consented to the Merger and who
properly demands appraisal of such Shares pursuant to the DGCL and complies with
all the provisions of the DGCL concerning the right of holders of Shares to
demand appraisal of their Shares in connection with the Merger (collectively,
the "Dissenting Shares") shall not be converted into the right to receive the
Merger Consideration, but shall become the right to receive such cash
consideration as may be determined to be due to such stockholder as provided in
the DGCL. If, however, such stockholder withdraws such holder's demand for
appraisal or fails to perfect or otherwise loses such holder's right of
appraisal, in any case pursuant to the DGCL, each such Share of such holder
shall be deemed to be converted as of the Effective Time into the right to
receive the Merger Consideration pursuant to Section 2.05(a), without any
interest thereon, upon surrender of the certificate or certificates representing
such Shares.
(b) The Company shall give Parent (i) prompt notice of any demands for
appraisal of Shares received by the Company and (ii) the opportunity to
participate in and direct all negotiations and proceedings with respect to any
such demands. Except as required by law, the Company shall not, without the
prior written consent of Parent, make any payment with respect to, settle, or
offer to settle any such demands.
(c) Each Dissenting Share, if any, shall be canceled after payment in
respect thereof has been made to the holder thereof pursuant to the DGCL.
(d) At the Effective Time, any holder of Dissenting Shares shall cease
to have any rights with respect thereto except the rights provided by Section
262 of the DGCL or otherwise provided in this Section 2.06.
Section 2.07. Surrender of Shares; Stock Transfer Books.
(a) Prior to the Effective Time, Parent shall designate a bank or trust
company which shall be reasonably satisfactory to the Company to act as paying
agent in the Merger (the "Paying Agent") to receive the funds necessary to make
the payments contemplated by Section 2.05(a). From time to time after the
Effective Time, Parent shall cause Purchaser to and Purchaser shall deposit with
such Paying Agent an amount of cash sufficient to permit the Paying Agent to
make the payments necessary for payment of the Merger Consideration under
Section 2.07(b) to which holders of Shares shall be entitled at the Effective
Time pursuant to Section 2.05(a). Such funds shall be invested by the Paying
Agent as directed by Parent. Any net profits resulting from, or interest or
income produced by, such investments shall be payable as directed by Parent.
(b) As soon as reasonably practicable after the Effective Time, the
Surviving Corporation shall cause the Paying Agent to mail to each holder of
record of a certificate or certificates that immediately prior to the Effective
Time represented Shares (the "Certificates") (i) a letter of transmittal (which
shall specify that delivery shall be effected, and risk of loss and title to the
Certificates shall pass, only upon delivery of the Certificates to the Paying
Agent and shall be in a form and have such other provisions as Parent may
reasonably specify) and (ii) instructions for use in effecting the surrender of
the Certificates in exchange for the Merger Consideration as provided in Section
2.05(a). Upon surrender of a Certificate for cancellation to the Paying Agent or
to such other
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agent or agents as may be appointed by Parent, together with such letter of
transmittal, duly executed, and such other documents as may reasonably be
required by the Paying Agent, as consented to by Company, the holder of such
Certificate shall be entitled to receive in exchange therefor the amount of
cash, without interest, into which the Shares theretofore represented by such
Certificate shall have been converted pursuant to Section 2.05(a), and the
Certificate so surrendered shall forthwith be canceled.
(c) If payment of cash in respect of canceled Shares is to be made to
a Person other than the Person in whose name a surrendered Certificate is
registered, it shall be a condition to such payment that the Certificate so
surrendered shall be properly endorsed or shall be otherwise in proper form for
transfer and that the Person requesting such payment shall have paid any
transfer and other taxes required by reason of such payment in a name other than
that of the registered holder of the Certificate surrendered or shall have
established to the satisfaction of Parent or the Paying Agent that such tax
either has been paid or is not payable. If a mutilated Certificate is
surrendered to the Paying Agent or if the holder of a Certificate submits an
affidavit to the Paying Agent stating that the Certificate has been lost,
destroyed or wrongfully taken, such holder shall, if required by Parent, furnish
an indemnity bond sufficient in the reasonable judgment of Parent to protect
Parent, the Surviving Corporation and the Paying Agent from any loss that any of
them may suffer.
(d) Promptly following the date six months after the Effective Time,
the Paying Agent shall deliver to Parent all cash, certificates and other
documents in its possession relating to the transactions contemplated hereby,
and the Paying Agent's duties shall terminate. Thereafter, each holder of a
Certificate (other than Certificates representing Dissenting Shares and
Certificates representing Shares to be canceled pursuant to Section 2.05(b))
shall look only to the Surviving Corporation (subject to abandoned property,
escheat or other similar laws) and only as general creditors thereof, with
respect to any Merger Consideration that may be payable upon due surrender of
the Certificates held by such holder. Notwithstanding the foregoing, none of
Parent, Purchaser, the Surviving Corporation or the Paying Agent shall be liable
to any Person in respect of any cash delivered to a public official pursuant to
any applicable abandoned property, escheat or similar law. If any Certificate
shall not have been surrendered prior to the date which is immediately prior to
the date that such unclaimed funds would otherwise become subject to any
abandoned property, escheat or similar law, then such unclaimed funds payable
with respect to such certificates shall, to the extent permitted by applicable
law, become the property of the Surviving Corporation, free and clear of all
claims or interest of any Person previously entitled thereto.
(e) Parent (or any affiliate thereof) or the Paying Agent shall be
entitled to deduct and withhold from the consideration otherwise payable
pursuant to this Agreement to any holder of Shares such amounts as Parent or the
Paying Agent is required to deduct and withhold with respect to the making of
such payment under the Code, or under any provision of state, local or foreign
tax law. To the extent that amounts are so withheld by Parent or the Paying
Agent, such withheld amounts shall be treated for all purposes of this Agreement
as having been paid to the holder of the Shares in respect of which such
deduction and withholding was made by the Parent or the Paying Agent.
(f) All cash paid upon the surrender of Certificates in accordance
with the terms of this Article II shall be deemed to have been paid in full
satisfaction of all rights pertaining to the Shares theretofore represented by
such Certificates. At the Effective Time, the stock transfer books of the
Company shall be closed and thereafter there shall not be any further
registration of transfers of Shares that were outstanding immediately prior to
the Effective Time on the records of the Surviving Corporation. If, after the
Effective Time, Certificates are presented to the Surviving Corporation for
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transfer, they shall be canceled and exchanged for the Merger Consideration as
provided in Section 2.05(a) and this Section 2.07.
Section 2.08. Stock Plans.
(a) As of the Effective Time, each outstanding option to purchase
Shares (each, a "Company Stock Option") issued pursuant to the Company's
Executive Long-Term Incentive Plan and Non-Employee Directors Long-Term
Incentive Plan (the "Stock Option Plans") shall be cancelled and each holder of
Company Stock Options, whether such Company Stock Option is vested or not, will
receive, in consideration of such holder's Company Stock Options a cash payment
from Parent immediately upon the Effective Time equal to the product of (A) the
amount by which the Merger Consideration amount exceeds the exercise price of
such Company Stock Option and (B) the number of Shares issuable upon exercise of
such Company Stock Option.
(b) The provisions of this Section are intended to be for the benefit
of, and shall be enforceable by, each holder of Company Stock Options (it being
expressly agreed that such persons shall be the third party beneficiaries of
this Section).
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PARENT AND PURCHASER
Parent and Purchaser, jointly and severally, represent and warrant to
the Company as follows:
Section 3.01. Corporate Organization. Each of Parent and Purchaser is
a corporation duly organized, validly existing and in good standing under the
laws of the jurisdiction of its incorporation and has the requisite corporate
power and authority to carry on its business as it is now being conducted. Each
of Parent and Purchaser is duly qualified or licensed to do business and is in
good standing in each jurisdiction in which the property owned, leased or
operated by it or the nature of the business conducted by it makes such
qualification necessary except for any such failure that would not have a
material adverse effect on or prevent or materially delay the consummation of
the Offer or the Merger.
Section 3.02. Authority Relative to this Agreement. Each of Parent and
Purchaser has the necessary corporate power and authority to execute, deliver
and enter into this Agreement, to carry out their obligations hereunder and to
consummate the transactions contemplated hereby. The execution and delivery of
and entering into this Agreement by Parent and Purchaser, the performances of
the Parent's and Purchaser's obligations hereunder and the consummation by
Parent and Purchaser of the transactions contemplated hereby have been duly
authorized by all necessary corporate action on the part of Parent and Purchaser
and no other corporate proceeding or stockholder action is necessary for the
execution and delivery of and entering into this Agreement by Parent or
Purchaser, the performance by Parent or Purchaser of their respective
obligations hereunder and the consummation by Parent or Purchaser of the
transactions contemplated hereby. This Agreement has been duly executed,
delivered and entered into by Parent and Purchaser and, assuming due
authorization, execution and delivery by the Company, constitutes a legal, valid
and binding obligation of each such corporation, enforceable against each of
them in accordance with its terms except to the extent that its enforceability
may be limited by applicable bankruptcy, insolvency, reorganization or other
laws affecting the enforcement of creditors' rights generally or by general
equitable principles.
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Section 3.03. No Conflict; Required Filings and Consents.
(a) The execution and delivery of this Agreement by Parent and
Purchaser do not, and the performance of their respective obligations under this
Agreement by Parent and Purchaser and the consummation of the transactions
contemplated by this Agreement will not, (i) assuming all notices, reports,
other filings, or required approvals described in clauses (i) through (iii) of
Section 3.03(b) have been given, made, or received, conflict with or violate any
law, regulation, court order, judgment or decree applicable to Parent or
Purchaser or by which any of their property is bound or affected, (ii) violate
or conflict with either the Certificate or Articles of Incorporation or By-Laws
of either Parent or Purchaser or (iii) result in any violation or breach of or
constitute a default (or an event which with notice or lapse of time or both
would become a default) under, or give to others any rights of termination,
amendment or cancellation of, or result in the creation of a lien or encumbrance
on any of the property or assets of Parent or Purchaser pursuant to, any note,
bond, mortgage, indenture, agreement, contract, instrument, permit, license,
franchise or other obligation to which Parent or Purchaser is a party or by
which Parent or Purchaser or any of them or their property is bound or affected,
except for, in the case of clauses (i) and (iii), conflicts, violations,
breaches or defaults which would not prevent or materially delay the
consummation of the Offer and the Merger.
(b) Except for (i) applicable requirements, if any, of the Exchange
Act, (ii) the pre-merger notification requirements of the HSR Act, and (iii)
filings by Parent or Purchaser required by, and approvals under, applicable
foreign antitrust and competition laws or regulations ("Foreign Antitrust
Laws"), neither Parent nor Purchaser is required to submit any notice, report or
other filing with any federal, state or local government or any court,
administrative or regulatory agency or commission or other governmental
authority or agency, domestic or foreign (a "Governmental Entity"), in
connection with the execution, delivery or performance of their respective
obligations of this Agreement or the consummation of the transactions
contemplated hereby. No waiver, consent, approval or authorization of any
Governmental Entity is required to be obtained or made by either Parent or
Purchaser in connection with its execution, delivery or performance of their
respective obligations of this Agreement or the consummation of the transactions
contemplated hereby, except as set forth above and except where the failure to
obtain such waivers, consents, approvals or authorizations would not prevent or
materially delay the performance by Parent or Purchaser of their respective
obligations under this Agreement.
Section 3.04. Financing Arrangements. Parent has or will obtain, and
will cause Purchaser to have or obtain, the funds sufficient to consummate the
Offer and the Merger in accordance with the terms of this Agreement, and to pay
all related fees and expenses in connection therewith, and shall make such funds
available to Purchaser for such purposes.
Section 3.05. Brokers. No broker, finder or investment banker is
entitled to any brokerage, finder's or other fee or commission in connection
with the transactions contemplated by this Agreement based upon arrangements
made by and on behalf of Parent or Purchaser.
Section 3.06. Offer Documents; Proxy Statement. None of the
information supplied in writing by Parent or Purchaser (the "Parent
Information") specifically for inclusion in the Schedule 14D-9, the Schedule 14A
or the Proxy Statement (if any) will, on the date filed with the SEC or mailed
to the Company stockholders, and, in the case of the Proxy Statement, at the
time of the Company Stockholders' Meeting (if any), 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
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<PAGE> 15
therein, in light of the circumstances under which they were made, not
misleading or necessary to correct any statement in any earlier filing by Parent
or Purchaser with the SEC or communication with the holders of Shares with
respect to the Offer, the Merger or the Company Stockholders' Meeting (if any)
that has become false or misleading. Neither the Schedule TO nor the Offer
Documents will, at the respective times the Offer Documents are filed with the
SEC or first published, sent or given to the Company's stockholders, 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 or
necessary to correct any statement in any earlier filing by Parent or Purchaser
with the SEC or communication to holders of the Shares with respect to the
Offer, this Agreement, the Merger or the Company's Stockholders' Meeting (if
any) that has become false or misleading. Notwithstanding the foregoing, Parent
and Purchaser do not make any representation or warranty with respect to
statements made or incorporated by reference in any of the foregoing documents
based upon information that has been supplied in writing by the Company or its
accountants, counsel or other authorized representatives for use in any of the
foregoing documents. Each of the Schedule TO and the Offer Documents will comply
as to form in all material respects with the applicable provisions of the
Exchange Act.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Purchaser that as of the date
hereof, except as disclosed or reflected (including, in the case of financial
statements, provided for) in the Company's disclosure letter delivered herewith
to Parent and Purchaser (the "Company's Disclosure Letter"), or in the Company's
Form 10-K for the fiscal year ended January 31, 2000 ("Form 10-K") as filed with
the SEC, any subsequently filed Forms 10-Q and Forms 8-K filed prior to the date
hereof, the annual report to stockholders for the fiscal year ended January 31,
2000 delivered to Parent and Purchaser (the "Annual Report"), and the proxy
statement for the Company's 2000 Annual Stockholders Meeting (such Forms, the
Annual Report and such proxy statement, including any financial statements and
related notes or schedules included in such documents and all exhibits and
schedules included or incorporated by reference therein, are herein collectively
referred to as the "Recent SEC Reports"):
Section 4.01. Organization and Qualification; Subsidiaries. Each of
the Company and its Subsidiaries is a corporation duly organized, validly
existing and in good standing (with respect to jurisdictions that recognize the
concept of good standing) under the laws of the jurisdiction of its
incorporation and has the requisite corporate power and authority and any
necessary governmental authority and approvals to own, operate or lease the
properties that it purports to own, operate or lease and to carry on its
business as it is now being conducted, and is duly qualified or licensed as a
foreign corporation to do business, and is in good standing (with respect to
jurisdictions that recognize the concept of good standing), in each jurisdiction
where the character of its properties owned, operated or leased or the nature of
its activities makes such qualification or licensing necessary, except for any
such failures that, individually and in the aggregate, have not had and are not
reasonably likely to have, a Material Adverse Effect or prevent or materially
delay the consummation of the Offer or the Merger. For purposes of this
Agreement, "Material Adverse Effect" means a materially adverse effect to the
business, financial condition or operations of the Company and its Subsidiaries
taken as a whole, other than adverse effects from (i) conditions, circumstances
or changes in the general economy or capital markets or (ii) any disclosure of
this Agreement. The Company has heretofore furnished to Parent a complete and
correct copy of the
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<PAGE> 16
Certificate of Incorporation and the By-Laws of the Company as currently in
effect. Neither the Company nor any of its Subsidiaries, directly or indirectly,
owns any interest in any Person other than the Company's Subsidiaries.
Section 4.02. Capitalization.
(a) The authorized capital stock of the Company consists of 25,000,000
shares of Common Stock. As of October 12, 2000, (i) 19,515,887 shares of Common
Stock were issued and outstanding, all of which shares of Common Stock were
validly issued and are fully paid, nonassessable and free of preemptive rights,
(ii) 33,646 shares of Common Stock were held in the treasury of the Company and
(iii) 924,100 shares of Common Stock were reserved for issuance upon exercise of
Company Stock Options issued and outstanding on such date. Since October 12,
2000, (i) no shares of Common Stock have been issued, except in connection with
the exercise of Company Stock Options issued and outstanding on the date hereof
and (ii) no options, warrants, securities convertible into, or commitments with
respect to the issuance of, shares of capital stock of the Company have been
issued, granted or made. Section 4.02 of the Company's Disclosure Letter
contains a true, accurate and complete list, as of the date hereof, of the name
of each holder of Company Stock Options, the number of Company Stock Options
held by such holder, the grant date of each such Company Stock Option, the
number of Shares such holder is entitled to receive upon the exercise of each
such Option and the corresponding exercise price. There are no shares of capital
stock or other voting securities of the Company, options, calls, warrants or
rights, agreements, arrangements or commitments of any character obligating the
Company or any of its Subsidiaries to issue, deliver or sell or cause to be
issued, delivered or sold any shares of capital stock or other voting securities
or securities convertible into or exchangeable for capital stock or voting
securities of or other equity interests in the Company or any of the
Subsidiaries or equity equivalents, interests in the ownership or earnings of
the Company (including, but not limited to, stock appreciation rights, phantom
stock or stock-based performance units) or other similar rights issued and
outstanding (collectively, "Company Securities") or obligations by the Company
or any of its Subsidiaries to make any payments based on the price or value of
the Shares. There are no voting trusts or other agreements or understandings to
which the Company or any of its Subsidiaries is a party with respect to the
voting of capital stock of the Company or any of its Subsidiaries. There are no
bonds, debentures, notes or other indebtedness of the Company having the right
to vote (or convertible into, or exchangeable for, securities having the right
to vote) on any matters on which stockholders of the Company may vote ("Company
Voting Debt") issued and outstanding. There are no stockholders agreements,
voting trusts or other agreements or understandings to which the Company or any
of its Subsidiaries is a party or by which it is bound relating to the issued or
unissued capital stock of the Company (including any such agreements or
understandings that may limit in any way the solicitation of proxies by or on
behalf of the Company from, or the casting of votes by, the stockholders of the
Company with respect to the Merger) or granting to any person or group of
persons the right to elect, or to designate or nominate for election, a director
to the Board of Directors. There are no programs in place or outstanding
obligations of the Company or any of its Subsidiaries (i) to repurchase, redeem
or otherwise acquire any Company Securities or (ii) to vote or to dispose of any
shares of the capital stock of any of the Subsidiaries.
(b) All the shares of outstanding capital stock of each of the
Company's Subsidiaries are duly authorized, validly issued, fully paid and
nonassessable and not subject to preemptive (or similar) rights and are owned by
the Company or a wholly owned Subsidiary free and clear of any liens, security
interests, pledges, agreements, claims, charges or encumbrances of any nature
whatsoever. There are no existing options, calls, warrants or other rights,
agreements, arrangements
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<PAGE> 17
or commitments of any character relating to the issued or unissued capital
stock or other equity interests or securities of any Subsidiary. There
are no outstanding obligations of the Company or any of its Subsidiaries to make
any payments based on the price or value of any shares of any Subsidiary.
Neither the Company nor any of its Subsidiaries is under any current or
prospective obligation to provide funds to, make a capital contribution or
investment in or loan to, or to assume any liability or obligation of, any
corporation, partnership, joint venture or business association or entity.
Section 4.03. Authority Relative to this Agreement. The Company has
the necessary corporate power and authority to execute, deliver and enter into
this Agreement and, subject to obtaining any necessary stockholder approval of
the Merger, to carry out its obligations hereunder and to consummate the
transactions contemplated hereby. The execution and delivery of and entering
into this Agreement by the Company, the performance of the Company's obligations
hereunder and the consummation by the Company of the transactions contemplated
hereby have been duly authorized by all necessary corporate action on the part
of the Company, subject to the approval of the Merger by the Company's
stockholders to the extent required by the DGCL. This Agreement has been duly
executed and delivered by the Company and constitutes a legal, valid and binding
obligation of the Company, enforceable against it in accordance with its terms
except to the extent that its enforceability may be limited by applicable
bankruptcy, insolvency, reorganization or other laws affecting the enforcement
of creditors' rights generally or by general equitable principles.
Section 4.04. No Conflict; Required Filings and Consents.
(a) Neither the execution and delivery of this Agreement by the
Company, subject to obtaining the approval of the Company's stockholders of the
Merger if required by Section 251 of the DGCL, the consummation by the Company
of the transactions contemplated hereby, nor compliance by the Company with any
of the provisions hereof, will (i) violate, conflict with, or result in a breach
of any provision of, or constitute a default (or an event which, with notice or
lapse of time or both, would constitute a default) under, or result in the
termination of, or accelerate the performance required by, or result in a right
of termination or acceleration under, or result in the creation of any lien,
security interest, charge or encumbrance upon any of the properties or assets of
the Company or any of its Subsidiaries under, any of the terms, conditions or
provisions of (x) the charter or by-laws of the Company or any of its
Subsidiaries, or (y) any note, bond, mortgage, indenture, deed of trust,
license, lease, agreement or other instrument or obligation to which the Company
or any of its subsidiaries is a party or to which any of them or any of their
respective properties or assets may be subject, or (ii) subject to compliance
with the statutes and regulations referred to in the next subsection, violate
any judgment, ruling, order, writ, injunction, decree, statute, rule or
regulation applicable to the Company and its Subsidiaries or any of their
respective properties or assets; except, in the case of each of clauses (i)(y)
and (ii) above, for such violations, conflicts, breaches, defaults,
terminations, accelerations or creations of liens, security interests, charges
or encumbrances which, individually or in the aggregate, are not reasonably
likely to have a Material Adverse Effect or prevent or materially delay the
consummation of the Offer or the Merger.
(b) Except for (i) applicable requirements, if any, of the Exchange
Act, (ii) the pre-merger notification requirements of the HSR Act, (iii) filings
by the Company required by, and approvals under, Foreign Antitrust Laws, (iv)
the filing and recordation of appropriate merger or other documents as required
by the DGCL, and (v) any required notifications or filings with the New York
Stock Exchange, Inc., the Company and each of its Subsidiaries are not required
to submit any notice, report or other filing with or obtain any authorization,
consent or approval from any Governmental Entity, in connection with the
execution, delivery or performance of this Agreement or
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<PAGE> 18
the consummation of the transactions contemplated hereby, except where the
failure to give such notices, make such filings or obtain such authorizations,
consents or approvals would not, individually or in the aggregate,
be reasonably expected to have a Material Adverse Effect or prevent or
materially delay consummation of the Offer or the Merger.
Section 4.05. SEC Filings; Financial Statements.
(a) The Company has timely filed all forms, reports, schedules, proxy
statements, registration statements and other documents (including all exhibits
thereto) required to be filed with the SEC since January 31, 1998 (the "SEC
Reports"). The SEC Reports (including but not limited to any financial
statements or schedules included or incorporated by reference therein) (i) at
the time they became effective, in the case of registration statements, or when
filed, in the case of any other SEC Report, complied in all material respects
with the requirements of the Securities Act or the Exchange Act, as the case may
be, and (ii) do not (except to the extent revised or superseded by a subsequent
filing with the SEC), and did not at the time they were filed, contain any
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading.
(b) The consolidated financial statements contained in the SEC Reports
were prepared in accordance with United States generally accepted accounting
principles applied on a consistent basis throughout the periods involved and
present fairly the financial position of the Company and results of operations
and cash flows of the Company for the periods indicated, except that the
unaudited interim financial statements were or are subject to normal and
recurring year-end adjustments (which in the aggregate are not material in
amount) and do not contain all the footnote disclosures required by United
States generally accepted accounting principles for audited financial
statements.
(c) Neither the Company nor any of its Subsidiaries has any
liabilities of any nature, whether accrued, absolute, fixed, contingent or
otherwise, whether due or to become due and whether or not required to be
recorded or reflected on a balance sheet under United States generally accepted
accounting principles, except liabilities reflected or reserved against or
disclosed in the financial statements of the Company included in the Company's
Form 10-Q for the quarter ended July 31, 2000, and except liabilities incurred
since July 31, 2000 that (i) have been incurred in the ordinary course of
business, consistent with past practice, and (ii) have not had and are not
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect.
(d) The Company has heretofore furnished to Parent a complete and
correct copy of (i) any material agreements, documents or other instruments that
will be required to be filed by the Company with the SEC pursuant to the
Securities Act or the Exchange Act, which have not yet been filed with the SEC,
and (ii) any material amendments or modifications which have not yet been filed
with the SEC to agreements, documents or other instruments which previously had
been filed by the Company with the SEC pursuant to the Securities Act or the
Exchange Act.
Section 4.06. Absence of Certain Changes or Events. Since July 31,
2000, (a) the business of the Company and its Subsidiaries has been conducted in
the ordinary course consistent with past practice; (b) neither the Company nor
any of its Subsidiaries have taken any of the actions set forth in Section 5.01;
and (c) neither the Company nor any of its Subsidiaries has engaged in any
material transaction or entered into any material agreement or commitment
outside the ordinary course of business. Since January 31, 2000, neither the
Company nor its Subsidiaries have suffered any
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<PAGE> 19
Material Adverse Effect and there has not occurred, and there is not currently
existing, any circumstance or event that is reasonably likely to have
individually or in the aggregate, a Material Adverse Effect.
Section 4.07. Litigation. There are no claims, actions, suits,
proceedings or investigations pending or, to the knowledge of the Company,
threatened against or affecting the Company or any of its Subsidiaries, or any
properties or rights of the Company or any of its Subsidiaries, that (i) seek
damages of more than $250,000, (ii) have had or are, individually or in the
aggregate, reasonably likely to have, a Material Adverse Effect or (iii) are
reasonably likely to prevent, enjoin, alter or materially delay the consummation
of the transactions contemplated hereby. Neither the Company nor any of its
Subsidiaries nor any of their property is subject to any order, judgment,
injunction or decree, which has had or is, individually or in the aggregate,
reasonably likely to have a Material Adverse Effect or prevent or materially
delay the consummation of the Offer or the Merger.
Section 4.08. Employee Benefit Plans.
(a) The Company's Disclosure Letter sets forth a list of all material
"employee benefit plans", as defined in Section 3(3) of ERISA whether or not
such plan is subject to ERISA, and all other material employee employment
agreements, consulting agreements, severance or change of control agreements,
benefit or executive compensation arrangements, perquisite programs or payroll
practices, including, without limitation, any such material arrangements or
payroll practices providing severance pay, sick leave, vacation pay, salary
continuation for disability, retirement benefits, deferred compensation, bonus
pay, incentive pay, stock options (including those held by directors, employees,
and consultants), hospitalization insurance, medical insurance, life insurance,
scholarships or tuition reimbursements, that are maintained by the Company, any
Subsidiary or any entity within the same "controlled group" as the Company or
Subsidiary, within the meaning of Section 4001(a)(14) of ERISA (an "ERISA
Affiliate") or to which the Company, any Subsidiary or ERISA Affiliate is
obligated to contribute thereunder for current or former employees or directors
of the Company, any Subsidiary or ERISA Affiliate (the "Employee Benefit
Plans"). Neither the Company nor any of its Subsidiaries has made any plan or
commitment, whether legally binding or not, to create any additional Employee
Benefit Plan or modify or change any existing Employee Benefit Plan that would
materially increase the benefits provided to any employee or former employee,
consultant or director of the Company or any Subsidiary thereof. Since January
31, 2000 there has been no material change, amendment, modification to, or
adoption of, any Employee Benefit Plan.
(b) The Company has delivered or made available to Parent true,
correct and complete copies of the following documents, with respect to each of
the Employee Benefit Plans: (i) all Employee Benefit Plan documents and related
trust documents, if any, and amendments thereto; (ii) the most recent Forms
5500, if any; (iii) current summary plan descriptions, if any; (iv) the most
recent determination letter from the IRS, if any and (v) the most recent
actuarial valuation reports.
(c) None of the Employee Benefit Plans is a "multiemployer plan", as
defined in Section 4001(a)(3) of ERISA or a plan that has two or more
contributing sponsors at least two of whom are not under common control, within
the meaning of Section 4063 of ERISA.
(d) None of the Employee Benefit Plans is a "single employer plan," as
defined in Section 4001(a)(15) of ERISA, that is subject to Title IV of ERISA.
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<PAGE> 20
(e) Each Employee Benefit Plan that is intended to qualify under
Section 401 of the Code and each trust maintained pursuant thereto has been
determined to be exempt from federal income taxation under Section 501 of the
Code by the IRS, and nothing material has occurred with respect to the operation
of any such Employee Benefit Plan that is reasonably likely to cause the loss of
such qualification or exemption or to require a filing under Rev. Proc. 2000-16
or any predecessor thereto to maintain such qualification.
(f) All material contributions required to be made to any Employee
Benefit Plan by the Company or any Subsidiary by applicable law or regulation or
by any plan document, and all premiums due from or payable by the Company or any
Subsidiary with respect to insurance policies funding any Employee Benefit Plan,
for any period through the date hereof have been timely made or paid in full or,
to the extent not required to be made or paid on or before the date hereof, have
been appropriately reflected in the financial statements of the Company included
in the SEC Reports to the extent required under United States generally accepted
accounting principles.
(g) Under each Employee Benefit Plan that is a single-employer plan as
of the last day of the most recent plan year ended prior to the date hereof, the
actuarially determined present value of all "benefit liabilities", within the
meaning of Section 4001(a)(16) of ERISA or, with respect to any Employee Benefit
Plan established pursuant to the laws of a country other than the United States
("Foreign Plan") as determined under any equivalent law or practice (in each
case as determined on the basis of the actuarial assumptions contained in the
Employee Benefit Plan's most recent actuarial valuation), did not exceed the
then current value of the assets of such Employee Benefit Plan (or, with respect
to a Foreign Plan that in accordance with local law, custom or practice is not
funded, adequate reserves are appropriately reflected in the financial
statements of the Company included in the SEC Reports to the extent required
under United States generally accepted accounting principles), and there has
been no material adverse change in the financial condition of such Employee
Benefit Plan (with respect to either assets or benefits) since the last day of
the most recent plan year.
(h) The Company has materially complied with the continuation coverage
requirements of Sections 601 through 608 of ERISA, and the requirements of any
similar state law regarding continued insurance coverage, and there is no
material suit or action pending or threatened against the Company or its
Subsidiaries with respect to such requirements.
(i) No amount of compensation paid or payable by the Company to any
employee will result in any nondeductible compensation under Section 162(m) of
the Code.
(j) To the Company's knowledge, none of the Company, the Subsidiaries,
the officers or directors of the Company or any of its Subsidiaries, any trusts
created thereunder or any trustee or administrator of any Employee Benefits
Plans subject to ERISA, has engaged in a "prohibited transaction" (as such term
is defined in Section 406 of ERISA or Section 4975 of the Code) that subjects
the Company, any of its Subsidiaries to a tax or penalty on prohibited
transactions imposed by such Section 4975 or liability under Section 502(i) or
(l) of ERISA which would, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect.
(k) There are no material pending actions, claims or lawsuits which
have been asserted, instituted or, to the Company's knowledge, threatened,
against the Company or any of its Subsidiaries or any Employee Benefit Plan with
respect to the operation of the Employee Benefit Plan (other than routine
benefit claims).
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(l) All Employee Benefit Plans have been maintained and administered,
in all material respects, in accordance with their terms, with all provisions of
ERISA, the Code (including rules and regulations under ERISA or the Code), and
other applicable federal and state laws and regulations, all to the extent
applicable to each such Employee Benefit Plan.
(m) With respect to each Employee Benefit Plan that is a "welfare
plan" (as defined in Section 3(1) of ERISA, neither the Company nor any
Subsidiary has any obligations to provide health, life insurance, or death
benefits with respect to current or former employees, consultants or directors
of the Company or any of its Subsidiaries beyond their termination of employment
or service, other than as required under Section 4980B of the Code, and each
such Employee Benefit Plan may be amended or terminated at any time without
incurring liability thereunder. Except as set forth in Section 4.08 of the
Company's Disclosure Letter, there has been no communication to any employee,
consultant or director of the Company or any Subsidiary that would reasonably be
expected to create an enforceable promise or guarantee of such retiree health or
life insurance or other retiree death benefits on a permanent basis.
(n) No Employee Benefit Plan, or the Company or any Subsidiary with
respect to such Employee Benefit Plan, is under audit or is the subject of an
audit or investigation by the IRS, the U.S. Department of Labor, the Pension
Benefit Guaranty Corporation or any other federal or state governmental agency,
nor is any such audit or investigation pending or threatened.
(o) All Foreign Plans have been established, operated, administered
and maintained, in all material respects, in compliance with all laws,
regulations and orders applicable thereto. All premiums, contributions and any
other amounts required by applicable Foreign Plan documents or applicable laws
to be paid or accrued by the Company and any of its Subsidiaries have been paid
or accrued as required and have been appropriately reflected in the financial
statements of the Company included in the SEC Reports to the extent required
under United States generally accepted accounting principles.
(p) Neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated hereby, either alone or in
conjunction with any other event (whether contingent or otherwise), will except
as contemplated by Section 2.08 of this Agreement (i) result in any
nondeductible compensation under Section 162(m) of the Code or any payment
(including, without limitation, severance, unemployment compensation, "excess
parachute payment" (within the meaning of Section 280G of the Code), forgiveness
of indebtedness or otherwise) becoming due to any director or any employee of
the Company or any of its Subsidiaries under any Employee Benefit Plan or
otherwise; (ii) materially increase any benefits otherwise payable under any
Employee Benefit Plan; (iii) result in any acceleration of the time of payment
or vesting of any such benefits; (iv) materially limit or prohibit the ability
to amend or terminate any Employee Benefit Plan; (v) require the funding of any
trust or other funding vehicle; or (vi) renew or extend the term of any
agreement in respect of compensation for an employee of the Company or any
Subsidiary that would create any liability to the Company, any Subsidiary,
Parent or Purchaser or their respective affiliates after consummation of the
Offer.
(q) Each employment retention agreement between the Company and the
executives identified on Section 4.08(q) of the Company's Disclosure Letter have
been amended in the applicable form set forth in Section 4.08(q) of the
Company's Disclosure Letter.
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Section 4.09. Labor and Employment. There is no (i) unfair labor
practice charge pending or, to the Company's knowledge, threatened against the
Company or any of its Subsidiaries; (ii) there is no labor strike, slowdown,
stoppage or other similar labor activity actually pending or, to the Company's
knowledge, threatened against or involving the Company or its Subsidiaries; and
(iii) no material labor grievance is pending or, to the Company's knowledge,
threatened which, individually or in the aggregate, has had or is reasonably
likely to have a Material Adverse Effect. Neither the Company nor any Subsidiary
(i) is presently a party to or otherwise bound by any collective bargaining
agreement or union contract and (ii) has any material labor negotiations in
progress with any labor union or other labor organization. To the Company's
knowledge, there are no efforts in progress by labor unions to organize any
employees who are not now represented by recognized collective bargaining
agents.
Section 4.10. Environmental Matters. Except as set forth in the
financial statements contained in the Company's Form 10-K and except for
Environmental Liability (as defined below) which has not had and is not,
individually or in the aggregate, reasonably likely to have a Material Adverse
Effect: (a) each of the Company and its Subsidiaries is and has been in
compliance with all applicable Environmental Laws; (b) no current or former
operations of the Company or of any present or former Subsidiary have given rise
to any Release that may require cleanup or other study, investigation or
remediation or give rise to any material liability under any Environmental Law
(collectively, "Environmental Liability"); (c) the Company and each Subsidiary
have all permits, licenses and other authorizations required under any
Environmental Law ("Environmental Permits"); (d) the Company and each Subsidiary
is in compliance with its Environmental Permits; and (e) there are no pending
or, to the Company's knowledge, threatened claims against the Company or any
Subsidiary relating to any Environmental Law, Release or Hazardous Substance.
Section 4.11. Licenses and Permits; Compliance with Laws. The Company
and its Subsidiaries hold, and at all applicable times hereunder held, all
permits, licenses, variances, exemptions, franchises, authorizations and
approvals from all Governmental Entities that are required for the operation of
the businesses of the Company and its Subsidiaries and the ownership, operation,
lease and holding by the Company and its Subsidiaries of their respective
properties and assets (the "Company Permits") to the extent the failure to do
so, individually or in the aggregate, has had or is reasonably likely to have a
Material Adverse Effect or would prevent or materially delay the Offer or the
Merger. The Company and its Subsidiaries are in compliance in all material
respects with the terms of the Company Permits to the extent the failure to do
so, individually or in the aggregate, has had or is reasonably likely to have a
Material Adverse Effect or would prevent or materially delay consummation of the
Offer or the Merger. The Company and its Subsidiaries are in compliance with all
applicable federal, state, local and foreign statutes, ordinances, laws, rules,
regulations, orders, judgments and decrees of any Governmental Entity to the
extent the failure to so comply, individually or in the aggregate, has had or is
reasonably likely to have a Material Adverse Effect or would prevent or
materially delay consummation of the Offer or the Merger.
Section 4.12. Taxes.
(a) The Company and each of its Subsidiaries has duly filed with the
appropriate Governmental Entity all Tax Returns required to be filed by the
Company or such Subsidiary. All such Tax Returns were correct and complete in
all material respects. Except to the extent that failure to do so would not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect: (i) all Taxes due thereon have been paid, and the most recent
financial statements contained in the SEC Reports provide an adequate accrual
for the payment of Taxes for the periods
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covered by such reports; and (ii) the Company and each Subsidiary has duly
withheld and paid all Taxes which it is required to withhold and pay relating
to amounts heretofore due or owing to any employee, independent contractor,
creditor, shareholder or any other third party. Since July 31, 2000, neither
the Company nor any Subsidiary has incurred any Tax other than Taxes incurred
in the ordinary course of business consistent in type and amount with past
practices of the Company and each Subsidiary, respectively.
(b) Neither the Company nor any Subsidiary has requested any extension
of time within which to file any Tax Return in respect of any taxable year,
which Tax Return has not since been filed.
(c) Set forth in the Company's Disclosure Letter is a complete list of
all Tax Returns filed by the Company or any of its Subsidiaries that have been
examined or audited by the IRS or any other Governmental Entity during the
preceding three years, and except as set forth in the Company's Disclosure
Letter, no such audit or examination is in progress. No (i) deficiency or
adjustment for any Taxes has been proposed or assessed against the Company or
any Subsidiary, except for deficiencies or adjustments which have been fully
satisfied, settled or reserved for in the financial statements; (ii) waivers or
comparable consents have been given by the Company or any Subsidiary that remain
outstanding with respect to any Tax Return of the Company or any Subsidiary
regarding the application of any statute of limitations with respect to any
Taxes or Tax Returns of the Company or any such Subsidiary; and (iii) issue has
been raised in any examination or audit of any Tax Return of the Company or any
Subsidiary that, by application of similar principles, is reasonably likely to
result in the assertion of a deficiency for any other year not so examined or
audited. Neither the Company nor any Subsidiary has (x) been a member of an
affiliated group filing a consolidated federal income Tax Return (other than a
group the common parent of which is the Company) or (y) any liability for the
Taxes of any person (other than the Company and its Subsidiaries) under Section
1.1502-6 of the Treasury Regulations (or any similar provision of state, local
or foreign law), as a transferee or successor, by contract or otherwise.
(d) The Company has made available to the Parent for inspection copies
of all material Tax Returns filed (or intended to be filed) by the Company or
any of its Subsidiaries within the previous three years and all workpapers
prepared in connection with the preparation of such Tax Returns.
Section 4.13. Offer Documents; Proxy Statement. The Schedule 14D-9,
when filed with the SEC and first published, sent or given to stockholders of
the Company, will comply in all material respects with the Exchange Act. Neither
the Schedule 14D-9 nor any of the information provided by or on behalf of the
Company specifically for inclusion in the Schedule TO or the Offer Documents
will, at the respective times the Schedule 14D-9, the Schedule TO and the Offer
Documents or any amendments or supplements thereto are filed with the SEC or
first published, sent or given to stockholders of the Company, contain any
untrue statement of a material fact or omit to state any material fact (i)
required to be stated therein or necessary in order to make the statements made
therein, in light of the circumstances under which they were made, not
misleading or (ii) necessary to correct any statements in any earlier filing by
the Company with the SEC or communication from the Company to the holder of
Shares with respect to the Offer, the Merger or the Company's Stockholders'
Meeting (if any) that has become false or misleading. Any proxy statement to be
sent to the stockholders of the Company in connection with a meeting of the
Company's stockholders to consider the Merger (the "Company Stockholders'
Meeting") or the information statement to be sent to such stockholders in
connection with any action by consent in
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writing in lieu of a meeting, as appropriate (such proxy statement or
information statement, as amended or supplemented, is herein referred to as the
"Proxy Statement"), as amended or supplemented from time to time, will comply
in all material respects with the applicable requirements of the Exchange Act
and the DGCL. The Proxy Statement will not, at the time the Proxy Statement
(or any amendment or supplement thereto) is filed with the SEC or first sent to
stockholders, at the time of the Company Stockholders' Meeting (if any) or at
the Effective Time, contain any untrue statement of a material fact or omit to
state any material fact (i) 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, or (ii) necessary to correct any statement in any
earlier filing by the Company with the SEC or communication from the Company to
the holders of Shares with respect to the Offer, the Merger or the Company
Stockholders' Meeting (if any) that has become false or misleading. The
Schedule 14A, when filed with the SEC and first published, sent or given to
stockholders of the Company, will comply in all material respects with the
Exchange Act. The Schedule 14A will not, at the respective times the
Schedule 14A or any amendments or supplements thereto are filed with the SEC or
first published, sent or given to stockholders of the Company, contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary in order to make the statements made therein,
in light of the circumstances under which they were made, not misleading.
Notwithstanding the foregoing, the Company makes no representation or warranty
with respect to any information that has been supplied by Parent or Purchaser or
any of their accountants, counsel or other authorized representatives in writing
specifically for use in any of the foregoing documents.
Section 4.14. Brokers. No broker, finder or investment banker (other
than the Company's Financial Advisor) is entitled to any brokerage, finder's or
other fee or commission in connection with the transactions contemplated by this
Agreement based upon arrangements made by and on behalf of the Company. A true
and complete copy of the Company's engagement letter with the Company's
Financial Advisor has previously been provided to Parent.
Section 4.15. Takeover Statutes. The Board of Directors has approved
the Offer, the Merger, this Agreement and the transactions contemplated by the
Stockholder Agreement, and such approval is sufficient to render inapplicable to
the Offer, the Merger, this Agreement and the transactions contemplated by this
Agreement and the Stockholder Agreement, Section 203 of the DGCL or any other
restrictive provision of any applicable anti-takeover provision in the Company's
Certificate of Incorporation, By-Laws or under applicable law.
Section 4.16. Opinion of Financial Advisor. The Company's Financial
Advisor has delivered to the Board of Directors its written opinion, dated prior
to or as of the date of this Agreement, to the effect that, based upon and
subject to the matters set forth therein and as of the date thereof, the Offer
Price to be received by holders of Shares (other than Parent and its Affiliates)
pursuant to the Offer and the Merger is fair to such holders of Shares from a
financial point of view. The Company has been authorized by the Company's
Financial Advisor to permit inclusion of such opinion (or a reference thereto)
in the Schedule 14D-9.
Section 4.17. Material Contracts. The Company has made available to
Parent and Purchaser true, correct and complete copies of all contracts,
agreements, commitments, arrangements, leases (including with respect to
personal property) and other instruments to which the Company or any of its
Subsidiaries is a party or by which the Company, any of its Subsidiaries or any
of their respective assets is bound which (a) involves or could involve
aggregate payments or receipts of more than $250,000 (excluding any commitments
or obligations under purchase orders
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arising in the ordinary course of business), (b) is with any of the Company's
officers, directors or affiliates, (c) which would, pursuant to Item 601 of
Regulation S-K promulgated by the SEC, be required to be attached as an exhibit
to the Company's SEC filings under the Exchange Act, (d) is a confidentiality,
standstill or similar agreement restricting actions by the Company or (e)
contains covenants limiting the freedom to engage in any line of business or
compete with any Person or operate at any location (each, a "Material
Contract"). Neither the Company nor any of its Subsidiaries is, or has any
knowledge that any other party is, in default in any respect under any of the
contracts, agreements, commitments, arrangements, leases (including with respect
to personal property) and other instruments to which the Company or any of its
Subsidiaries is a party or by which the Company, any of its Subsidiaries or any
of their respective assets is bound, except for such defaults, individually or
in the aggregate, as have not had and are not reasonably likely to have a
Material Adverse Effect, and there has not occurred any event that with the
lapse of time or the giving of notice or both would constitute such a default.
Section 4.18. Real Property.
(a) Each of the Company and its Subsidiaries has good and marketable
title to each parcel of real property owned in fee by it free and clear of all
mortgages, pledges, liens, encumbrances and security interests, except (i) those
reflected or reserved against in the balance sheet of the Company dated as of
January 31, 2000 and included in the SEC Reports, (ii) Taxes and general and
special assessments not in default and payable without penalty and interest and
(iii) other liens, mortgages, pledges, encumbrances and security interests which
do not materially interfere with the Company's or such Subsidiary's use and
enjoyment of such real property or materially detract from the value thereof and
that, individually or in the aggregate, have not had and are not reasonably
likely to have a Material Adverse Effect.
(b) All leases, subleases and other agreements under which the Company
or any of its Subsidiaries uses or occupies or has the right to use or occupy,
now or in the future, any real property (the "Real Property Leases") are valid,
binding and in full force and effect and neither the Company nor any of its
Subsidiaries is currently in default of any of the provisions of any real
property lease, except for such defaults, individually or in the aggregate, as
have not had or are not reasonably likely to have a Material Adverse Effect. The
interests of the Company and its Subsidiaries in the Real Property Leases are
free and clear of all mortgages, pledges, liens, encumbrances and security
interests, except (i) those reflected or reserved against in the balance sheet
of the Company dated as of January 31, 2000, (ii) Taxes and general and special
assessments not in default and payable without penalty and interest and (iii)
other liens, mortgages, pledges, encumbrances and security interests which do
not materially interfere with the Company's use and enjoyment of such real
property or materially detract from the value thereof and that, individually or
in the aggregate, have not had and are not reasonably likely to have a Material
Adverse Effect.
Section 4.19. Intellectual Property.
(a) (i) With respect to each of the Company Intellectual Property
Rights, the Company and its Subsidiaries either (A) are the owners of the
Company Intellectual Property Rights free and clear of any royalty or other
payment obligation, lien or charge or (B) have sufficient rights to use such
Company Intellectual Property Rights under a valid and enforceable license
agreement, (ii) there are no agreements which restrict or limit the use by the
Company or its Subsidiaries of the owned Company Intellectual Property Rights,
and (iii) to the extent that the Company Intellectual Property Rights owned or
held by the Company or its Subsidiaries are registered with the applicable
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authorities, record title to such Company Intellectual Property Rights is
registered or (applied for) in the name of the Company or any of its
Subsidiaries except, in each case, where the failure of such, individually or in
the aggregate, has not had and is not reasonably likely to have a Material
Adverse Effect.
(b) (i) (A) The Company Intellectual Property Rights are valid and
enforceable, (B) the Company Intellectual Property Rights and the products and
services of the Company and its Subsidiaries do not infringe on Intellectual
Property Rights of any person or entity in any country, (C) except where
reasonable business decisions to allow rights to lapse have been made, all
maintenance taxes, annuities and renewal fees have been paid and all other
necessary actions to maintain the Company Intellectual Property rights have been
taken through the date hereof and will continue to be paid or taken by the
Company or its Subsidiaries through the Effective Time and (D) there exists no
impediment which would impair the Company's rights to conduct its business or
the business of its Subsidiaries after the Effective Time pursuant to the
Company Intellectual Property Rights except, in each case, where the failure of
such has not had and would not reasonably be likely to have a Material Adverse
Effect.
(ii) The Company and its Subsidiaries have taken all reasonable and
appropriate steps to protect the Company Intellectual Property Rights and, where
applicable, to preserve the confidentiality of the Company Intellectual Property
rights except, where the failure of such, individually or in the aggregate, has
not had and would not reasonably be likely to have a Material Adverse Effect.
(iii) During the two-year period immediately preceding the date of
this Agreement, neither the Company nor any of its Subsidiaries has received any
notice of claim that any of such Company Intellectual Property Rights has
expired, is not valid or enforceable in any country or that it infringes upon or
conflicts with Intellectual Property Rights of any third party, and no such
claim of infringement or conflict, whenever filed or threatened, currently
exists, except such as, individually or in the aggregate, has not had and would
not reasonably be likely to have a Material Adverse Effect.
(iv) During the two-year period immediately preceding the date of this
Agreement, neither the Company nor any of its Subsidiaries has given any notice
of infringement to any third party with respect to any of the Company
Intellectual Property Rights or has become aware of facts or circumstances
evidencing the infringement by any third party of any of the Company
Intellectual Property Rights, and no claim or controversy with respect to any
such alleged infringement currently exists, except such as, individually or in
the aggregate, has not had and would not reasonably be likely to have a Material
Adverse Effect.
(v) Certificates of registration and renewal, letter patents and
copyright registration certificates and all other instruments evidencing
ownership of the Company Intellectual Property Rights Property are in the
possession of the Company, its Subsidiaries, their agents or authorized
representatives except such as, individually or in the aggregate, has not had
and would not reasonably be likely to have a Material Adverse Effect.
Section 4.20. Related Party Transactions. No director of officer of
the Company or any of its Subsidiaries, nor any affiliate of such director or
officer, (a) has outstanding any indebtedness or other similar obligations to
the Company or any of its Subsidiaries, (b) owns any direct or indirect interest
of any kind (other than the ownership of less than 5% of the stock of a publicly
traded
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company) in, or is a director, officer, employee, partner, affiliate or
associate of, or consultant or lender to, or borrower from, or has the right to
participate in the management, operation or profits of, any Person or entity
which is (i) a competitor, supplier, customer, distributor, lessor, tenant,
creditor or debtor of the Company of any of its Subsidiaries or (ii)
participated in any transaction to which the company or any of its Subsidiaries
is a party or (c) is otherwise a party to any contract, arrangement or
understanding with the Company or any of its Subsidiaries.
Section 4.21. Required Vote of Company Stockholders. Unless the Merger
is consummated in accordance with Section 253 of the DGCL, the only vote of the
stockholders of the Company required to adopt the plan of merger contained in
this Agreement and approve the Merger is the affirmative vote of the holders of
not less than a majority of the outstanding Shares. No other vote of the
stockholders of the Company is required by law, the Certificate of Incorporation
or Bylaws of the Company as currently in effect or otherwise to adopt the plan
of merger contained in this Agreement and approve the Merger. Purchaser will
have full voting power with respect to any Shares purchased pursuant to the
Offer or the Stockholder Agreement.
ARTICLE V
COVENANTS
Section 5.01. Conduct of Business by the Company Pending the Closing.
From the date of this Agreement to the Effective Time, except as (i) expressly
required by this Agreement or otherwise with the prior written consent of Parent
or (ii) specifically described in the Company's Disclosure Letter, the Company
shall, and shall cause each of its Subsidiaries, to (a) carry on its respective
businesses in the ordinary course consistent with past practice, (b) use
reasonable efforts to preserve intact its current business organizations and
keep available the services of its current officers and employees, (c) use all
reasonable efforts to preserve its relationships with customers, suppliers and
other Persons with which it has business dealings and (d) comply in all material
respects with all laws and regulations applicable to it or any of its
properties, assets or business. Without limiting the generality of the
foregoing, the Company shall not, and it shall cause its Subsidiaries not to,
between the date of this Agreement and the Effective Time, except as expressly
required by this Agreement, directly or indirectly, do, or commit to do, any of
the following without the prior written consent of Parent:
(i) Propose to amend, amend or otherwise change its Certificate of
Incorporation or By-Laws or the equivalent organizational documents;
(ii) Sell, pledge or encumber any stock owned by the Company in any of
its Subsidiaries;
(iii) Issue, reissue, sell, or authorize the issuance, reissuance or
sale of any shares of capital stock of any class, any Company Voting Debt or any
options, warrants, convertible securities or other rights of any kind to
acquire, or in respect of, any shares of capital stock or any Company Voting
Debt or any other ownership interest (including, but not limited to, stock
appreciation rights, phantom stock or stock-based performance units) of the
Company or any Subsidiary (except for the issuance of shares of Common Stock
required to be issued pursuant to the terms of the Company Stock Options
outstanding as of the date hereof) or make any other changes in its capital
structure;
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(iv) Declare, set aside, make or pay any dividend or other
distribution, whether payable in cash, stock, property or otherwise, with
respect to any of its capital stock (other than dividends or distributions by
any wholly owned Subsidiary of the Company to its parent);
(v) Reclassify, combine, split, subdivide or redeem, purchase or
otherwise acquire, directly or indirectly, any shares of capital stock of the
Company or any Subsidiary or any securities convertible into or exercisable for
any such shares of its capital stock or securities;
(vi) Acquire (by merger, consolidation, or acquisition of stock or
assets) any corporation, partnership or other business organization or division
thereof, or any assets in each case involving an amount in excess of $100,000,
except for purchases of inventory, raw materials, supplies and parts made in the
ordinary course of business and consistent with past practices;
(vii) Incur any indebtedness for borrowed money (including by issuance
of debt securities) other than borrowings in the ordinary course of business
under the Company's existing credit facility or issue any debt securities or
warrants or other rights to acquire any debt securities of the Company or any
Subsidiary, or assume, guarantee or endorse (other than for collection or
deposit in the ordinary course of business), or otherwise as an accommodation
become responsible for, the obligations of any person, or make any loans or
advances or make any capital contributions to, or investments in, any other
Person;
(viii) Enter into, or modify, amend or terminate, any Material Contract
or agreement;
(ix) Authorize or make capital expenditures not in the ordinary course
of business or in excess of $2,000,000 in the aggregate;
(x) (A) Increase the compensation, pension, welfare or fringe
benefits of any of its directors, officers or employees, except as required by
contractual obligations existing as of the date hereof and except for increases
in salary or wages in connection with a promotion or change in position granted
to employees (other than executive officers) of the Company or its Subsidiary in
the ordinary course of business in accordance with past practice, (B) grant any
increase in severance or termination pay not currently required to be paid under
existing severance plans or contracts to any director, officer or other employee
of the Company or any Subsidiary, including without limitation any increase as a
result of promotion, (C) enter into or amend any new, or amend any existing
employment, consulting or severance agreement or arrangement, including any
arrangement to provide post-retirement medical or life insurance benefits, with
any present or former director, officer or other employee of the Company or any
Subsidiary or (D) except as is required by law, establish, adopt, enter into or
amend or terminate, or take any action to accelerate any rights or benefits
under, or make any material determination not in the ordinary course of business
consistent with past practice under, any collective bargaining agreement,
Employee Benefit Plan or employee benefit arrangement that would have been
Employee Benefit Plans if they were in effect as of the date hereof or (E)
forgive any loans to employees, officers or directors or any of their respective
affiliates or associates.
(xi) Except as may be required as a result of a change in law or in
United States generally accepted accounting principles, change any of the
accounting methods, practices or principles used by it;
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(xii) Except as may be required to comply with a change in law, make
any material tax election, make or change any method of accounting with respect
to Taxes, file any amended Tax Returns that may have a material adverse effect
on the tax position of the Company or any Subsidiary or settle or compromise any
material federal, state, local or foreign Tax liability or refund;
(xiii) Settle or agree to settle any material pending suit, action,
audit proceeding, investigation or claim (A) against the Company or any
Subsidiary by any Governmental Entity, (B) for an amount in excess of $50,000 in
any instance or $500,000 in the aggregate, or (C) which relates to the
transactions contemplated hereby;
(xiv) Adopt a plan of complete or partial liquidation, dissolution,
merger, consolidation, restructuring, recapitalization or other reorganization
of the Company or than the Merger);
(xv) (A) Pay, discharge or satisfy or agree to pay, discharge or
satisfy any claims, liabilities or obligations (absolute, accrued, asserted or
unasserted, contingent or otherwise), other than the payment, discharge or
satisfaction (I) in the ordinary course of business and consistent with past
practice or in accordance with their terms, of liabilities reflected or reserved
against in the most recent consolidated financial statements of the Company
included in the SEC Reports filed prior to the date of this Agreement or (II) of
liabilities incurred in the ordinary course of business and consistent with past
practice, (B) cancel any material indebtedness (individually or in the
aggregate) or waive any claims or rights of substantial value or (C) waive the
benefits of, or agree to modify in any manner, any confidentiality, standstill
or similar agreement to which the Company or any Subsidiary is a party;
(xvi) Sell, lease (as lessor), license or otherwise dispose of or
subject to any lien or encumbrance any properties or assets, except sales of
excess or obsolete assets or real property other than in the ordinary course
consistent with past practice.
(xvii) Other than in the ordinary course of business and consistent with
past practice, make any loans, advances or capital contributions to, or
investments in, any other Person (other than wholly-owned Subsidiaries of the
Company);
(xviii) Except as permitted by Section 5.02, take, or agree to commit to
take, or fail to take any action that would result or is reasonably likely to
result in any of the conditions to the Offer set forth in Annex I or any of the
conditions to the Merger set forth in Article VI not being satisfied, or would
make any representation or warranty of the Company contained herein inaccurate
in any material respect at, or as of any time prior to, the Effective Time, or
that would materially impair the ability to consummate the Offer or the Merger
in accordance with the terms hereof or materially delay such consummation;
(xix) Agree in writing or otherwise to take any of the foregoing
actions; or
(xx) Except as may be required by applicable law or the Company's
Certificate of Incorporation or By-Laws, call or hold any stockholders' meeting
other than as required by Section 251 of the DGCL to approve the Merger.
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Section 5.02. No Solicitation.
(a) Until this Agreement has been terminated in accordance with Section
7.01 (and the payments, if any, required to be made in connection with such
termination pursuant to Section 7.02(b) have been made), the Company shall not
and shall cause its Subsidiaries and its and their officers, directors,
employees, consultants, representatives, affiliates and other agents, including,
but not limited to, investment bankers, attorneys and accountants (collectively,
the "Company Representatives"), not to, directly or indirectly, (i) encourage,
solicit, initiate or facilitate the making of, or take any other action to
facilitate any inquiries or the making of any proposal that constitutes or may
reasonably be expected to lead to, any Acquisition Proposal (including, without
limitation, by taking any action that would make Section 203 of the DGCL
inapplicable to an Acquisition Proposal), (ii) participate in any way in
discussions or negotiations with, or furnish or disclose any information or
afford any access to the properties, books or records of the Company or any of
its Subsidiaries to, any Person (other than Parent or Purchaser or any affiliate
or associate of Parent or Purchaser) in connection with any Acquisition
Proposal, (iii) withdraw or modify, or propose to withdraw or modify, in a
manner adverse to Parent or Purchaser the approval and recommendation of the
Offer, the Merger or this Agreement, (iv) approve or recommend, or propose
publicly to approve or recommend, any Acquisition Proposal (unless
contemporaneously with such approval or recommendation the Company terminates
this Agreement in accordance with Section 7.01(e)), (v) release any third party
from any confidentiality or standstill agreement to which the Company is a party
or fail to enforce to the fullest extent possible, or grant any waiver, request
or consent to any Acquisition Proposal under, any such agreement, or (vi) enter
into any agreement, letter of intent or similar document contemplating or
otherwise relating to any Acquisition Proposal; provided, however, that this
Section 5.02 shall not prohibit the Company or the Company Representatives from:
(A) (i) issuing a press release or otherwise publicly
disclosing the terms of this Agreement (including the provisions of
this Section 5.02), the Offer, the Merger or any Acquisition Proposal,
(ii) proceeding with the transactions contemplated by this Agreement,
(iii) communicating to the holders of the Company's securities a
position with respect to an Acquisition Proposal by a third party
contemplated by Rule 14d-9 and Rule 14e-2 promulgated under the
Exchange Act, or (iv) making any disclosure to the holders of the
Company's securities which, in the judgment of the Board of Directors
(after receiving the advice of legal counsel) is advisable to be made
under applicable law (including laws relating to the fiduciary duties
of directors); or
(B) participating in discussions or negotiations with, or
furnishing or disclosing nonpublic information to or entering into any
confidentiality or standstill or similar agreements with, any Person
in response to an unsolicited, bona fide and written Acquisition
Proposal that is submitted to the Company by such Person after the
date of this Agreement and prior to the date an amount of Shares
sufficient to satisfy the Minimum Condition have been accepted for
payment pursuant to the Offer if (I) such Acquisition Proposal does
not result from a violation of any of the provisions of this Section
5.02, (II) a majority of the members of the Board of Directors
determines in good faith, after having received the advice of its
financial advisor and outside legal counsel, that (x) such Person is
reasonably capable, financially and otherwise, of consummating such
Acquisition Proposal, (y) such Acquisition Proposal is reasonably
likely to lead to a Superior Proposal and (z) failure to do so would
result in a breach of the fiduciary duty of the Board of Directors of
the Company to the stockholders of the Company under applicable law,
and (III) prior to participating in
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discussions or negotiations with, or furnishing or disclosing any
nonpublic information to, such Person, the Company gives Parent
written notice of the identity of such Person and of the Company's
intention to participate in discussions or negotiations with, or
furnish or disclose nonpublic information to, such Person, and the
Company receives from such Person an executed confidentiality
agreement containing terms no less restrictive than the terms of the
Confidentiality Agreement.
Parent and Purchaser agree that neither the Company, the Company
Representatives, nor any Person who makes an Acquisition Proposal shall be
deemed, by reason of taking actions permitted under the provisos of paragraphs
(A) and (B) of this Section 5.02, to have tortiously or otherwise wrongfully
interfered with or caused a breach of this Agreement or any other agreements,
instruments or documents executed in connection herewith, or tortiously or
otherwise wrongfully interfered with the Offer, the Merger, the other
transactions contemplated hereby or thereby or the rights of Parent, Purchaser
or any of their Affiliates hereunder or thereunder.
(b) The Company shall, and shall cause its Subsidiaries and the
Company Representatives to, immediately cease and cause to be terminated any
discussions or negotiations, if any, with any other parties that may be ongoing
as of the date hereof with respect to any Acquisition Proposal.
(c) "Acquisition Proposal" shall mean any proposal or offer, or any
indication of interest in making an offer or proposal, made by any Person or
group (in each case, whether or not in writing and whether or not delivered to
the stockholders of the Company generally) relating to (i) any direct or
indirect acquisition or purchase which is structured to permit such Person or
group to acquire beneficial ownership of at least 10% of the assets of the
Company or any of its Subsidiaries or of over 10% of any class of equity
securities of the Company or any of its Subsidiaries, (ii) any tender offer or
exchange offer that, if consummated, would result in any Person, other than
Parent, Purchaser, their Affiliates or any group of which any of them is a
member beneficially owning 10% or more of any class of equity securities of the
Company or any of its Subsidiaries, or (iii) any merger, consolidation, business
combination, sale of substantially all the assets, recapitalization,
liquidation, dissolution or similar transaction involving the Company or any of
its Subsidiaries. "Superior Proposal" shall mean an unsolicited bona fide
written proposal made by a third party to acquire all of the issued and
outstanding Shares pursuant to a tender offer or a merger or to acquire all of
the properties and assets of the Company on terms and conditions that the Board
of Directors determines in good faith, after receiving the written advice of its
financial advisor and taking into account all the terms and conditions of such
proposal (including, without limitation, any expense reimbursement provisions,
termination fees and conditions), is more favorable to the Company's
stockholders from a financial point of view than the transactions contemplated
hereby and is reasonably likely to be consummated.
(d) Nothing contained in this Section 5.02 shall prohibit Purchaser
from purchasing the Shares pursuant to the Offer or consummating the Merger.
Without limiting any other rights of Parent or Purchaser under this Agreement in
respect of any such action, neither any withdrawal or modification by the
Company of the approval or recommendation of the Offer or the Merger nor the
termination of this Agreement shall have any effect on the approvals of, and
other actions referred to herein for the purpose of causing Section 203 of the
DGCL and the other statutes referred to in Section 4.15 hereof and paragraph 9
of the Confidentiality Agreement to be inapplicable to, this Agreement and the
Stockholder Agreement and the transactions contemplated hereby and thereby,
which approvals and actions are irrevocable.
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Section 5.03. Access to Information.
(a) Subject to applicable law, during the period commencing on the
date hereof and ending on the earlier of (i) the Closing Date and (ii) the date
on which this Agreement is terminated pursuant to Section 7.01, the Company
shall, and shall cause each of its Subsidiaries to, upon reasonable notice,
afford Parent and Purchaser, and their respective counsel, accountants,
consultants and other authorized representatives, complete access during normal
business hours to the employees, properties (including plants, offices,
warehouses and other facilities), books and records of the Company and its
Subsidiaries, and cause the Company's and its Subsidiaries' independent public
accountants and tax advisors to provide access to their work information so that
the Parent and Purchaser may have the opportunity to make such investigations as
they shall desire of the affairs of the Company and its Subsidiaries. The
Company shall furnish as promptly as practicable to Parent and Purchaser a copy
of each form, report, schedule, statement, registration statement and other
document filed by it or its Subsidiaries during such period pursuant to the
requirements of federal or state securities laws or the DGCL. The Company agrees
to cause its officers and employees, in a manner consistent with the fulfillment
of their ongoing duties and obligations, to furnish such additional financial
and operating data and other information and respond to such inquiries as Parent
and Purchaser shall from time to time reasonably request.
(b) Parent hereby confirms to the Company that the Confidentiality
Agreement is in full force and effect.
Section 5.04. Stockholders Approval of the Merger. Following the
consummation of the Offer, the Company shall promptly take all action necessary
in accordance with the DGCL and its Certificate of Incorporation and By-Laws to
convene the Company Stockholders' Meeting, or, at the option of Parent, to seek
approval of the Merger by written consent in lieu of the Company Stockholder's
Meeting. The Company shall use its reasonable efforts to solicit from
stockholders of the Company proxies to the extent a stockholder meeting is to be
held in favor of the Merger (or written consent is to be obtained in lieu
thereof) and shall take all other action necessary or, in the reasonable opinion
of Parent, advisable to secure any vote (or written consent) of stockholders
required by the DGCL to effect the Merger. Parent agrees that it will vote, or
cause to be voted, at the Company Stockholders' Meeting all Shares then owned by
it or Purchaser or any of Parent's other subsidiaries and Affiliates in favor of
the Merger and the adoption of this Agreement (or deliver written consents
conforming to the requirements of the DGCL in lieu thereof). Notwithstanding the
foregoing, if Purchaser or any other subsidiary of Parent shall acquire at least
90% of the outstanding Shares, and provided that the conditions set forth in
Article VI shall have been satisfied or waived, the Company shall use its best
efforts to take all necessary and appropriate action to cause the Merger to
become effective as soon as practicable after such acquisition, without the
approval of the stockholders of the Company, in accordance with Section 253 of
the DGCL.
Section 5.05. Proxy Statement. As promptly as practicable after the
consummation of the Offer if required by the Exchange Act, the Company shall
prepare and file the Proxy Statement with the SEC subject to the prior review
and approval of Parent and Purchaser (which approval shall not be unreasonably
withheld), and shall use all reasonable efforts to have it cleared by the SEC.
The Company shall obtain and furnish the information required to be included in
the Proxy Statement, shall provide Parent and Purchaser with, and consult with
Parent and Purchaser regarding, any comments that may be received from the SEC
or its staff with respect thereto, shall, subject to the prior review and
approval of Parent and Purchaser (which approval shall not be unreasonably
withheld), respond promptly to any such comments made by the SEC or its staff
with respect to the
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<PAGE> 33
Proxy Statement and shall cause the Proxy Statement to be mailed to the
Company's shareholders at the earliest practicable date. The Proxy Statement
shall contain the recommendation of the Board of Directors that the Company's
stockholders approve and adopt this Agreement and the Merger.
Section 5.06. Public Announcements. So long as this Agreement is in
effect, Parent and the Company shall consult with each other before issuing, and
provide each other a reasonable opportunity to review and comment upon, any
press release or other public statements with respect to the Offer or the Merger
and shall not issue, or permit their affiliates to issue, any such press release
or make any such public statement without the written consent of the other
party, except as may be required by law or in accordance with any listing
agreement with any securities exchange on which such party's securities are
listed.
Section 5.07. Reasonable Best Efforts; Cooperation.
(a) Upon the terms and subject to the conditions hereof, each of the
parties hereto shall use its reasonable best efforts to obtain in a timely
manner all necessary waivers, consents and approvals and to effect all necessary
registrations and filings, and to take, or cause to be taken, all other actions
and to do, or cause to be done, all other things necessary, proper or advisable
to consummate and make effective as promptly as practicable the transactions
contemplated by this Agreement; provided, however, that nothing in this
Agreement (except as expressly provided for in Section 1.01) shall obligate
Parent or Purchaser to extend the Offer. Without limiting the foregoing, each of
the parties hereto shall (i) cooperate in responding to inquiries from, and
making presentations to, regulatory authorities and customers, (ii) defend
against and respond to any action, suit, proceeding, or investigation, whether
judicial or administrative, challenging or relating to this Agreement or the
transactions contemplated hereby, including seeking to have any stay or
temporary restraining order entered, by any court or other Governmental Entity
vacated or reversed, (iii) cooperate in the preparation and filing of the Offer
Documents, the Schedule TO, the Schedule 14D-9 and the Proxy Statement and (iv)
promptly make all regulatory filings and applications, including without
limitation any required filings and responses to requests for additional
information under the HSR Act and Foreign Antitrust Laws, and any amendments
thereto as are necessary for the consummation of the transactions contemplated
by this Agreement.
(b) Nothing in this Agreement shall obligate Parent, Purchaser or any
of their respective Subsidiaries or affiliates to agree (i) to limit in any
manner or not to exercise any rights of ownership of any securities (including
the Shares), or to divest, dispose of or hold separate any securities or all or
any portion of their respective businesses, assets or properties or of the
businesses, assets or properties of the Company or any of its Subsidiaries or
(ii) to limit in any material manner the ability of such entities (A) to conduct
their respective businesses or own such assets or properties or to conduct the
businesses or own the properties or assets of the Company and its Subsidiaries
or (B) to control their respective businesses or operations or the businesses or
operations of the Company and its Subsidiaries.
Section 5.08. Indemnification.
(a) The Certificate of Incorporation and the By-Laws of the Surviving
Corporation shall contain the provisions in favor of the directors, officers,
employees or agents of the Company, or of any other corporation, partnership,
joint venture, trust or other enterprise with which he or she is or was serving
in such capacity at the request of the Company, with respect to indemnification
and exculpation from liability set forth in the Company's Certificate of
Incorporation and By-Laws on
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<PAGE> 34
the date of this Agreement, which provisions shall not be amended, repealed or
otherwise modified for a period of six years from the Effective Time in any
manner that would adversely affect the rights thereunder of individuals who on
or prior to the Effective Time were directors, officers or employees of the
Company, or any of its subsidiaries unless such modification is required by law.
Parent shall guarantee the obligations of the Surviving Corporation with respect
to the indemnification provisions contained in the Surviving Corporation's
Certificate of Incorporation and By-Laws and in any currently existing
agreements with respect to indemnification between the Company and any of its
current and former officers, directors or employees of the Company, to the
extent such agreements are listed in the Disclosure Letter and copies of the
forms thereof are provided by the Company.
(b) For six years after the Effective Time, the Surviving Corporation
shall maintain in effect, in respect of acts or omissions occurring prior to the
Effective Time, policies of directors' and officers' liability insurance
covering each person currently covered by such policies on terms with respect to
coverage and amount no less favorable in any material respect than those of such
policy in effect on the date hereof; provided, however, that in satisfying its
obligation under this Section 5.08(b) the Surviving Corporation shall not be
obligated to pay annual premiums in excess of 200% of the amount per annum the
Company is currently paying for such coverage; provided further that if the
annual premiums of such insurance coverage exceeds such amount, the Surviving
Corporation shall be obligated to obtain policies with as much coverage as is
available for a cost not exceeding such amount.
(c) The provisions of this Section 5.08 are intended for the benefit
of, and shall be enforceable by, the respective indemnified parties. The
obligations of Parent and Purchaser under this Section 5.08 shall not be
terminated or modified in such a manner as to adversely affect any indemnified
party to whom this Section 5.08 applies without the consent of such party.
Section 5.09. Takeover Statutes. If any state takeover statute or
other similar statute or regulation becomes or is deemed to become applicable to
the Offer, the Merger, this Agreement or any of the transactions contemplated
hereby, the Company shall promptly take all action necessary to render such
statute or regulation inapplicable to all of the foregoing.
Section 5.10. Employee Benefits. Each employee of the Company or any
of its subsidiaries immediately prior to the Effective Time will become an
employee of the Surviving Corporation as of the Effective Time ("Company
Employees"). Purchaser will provide to Company Employees for a period of one
year after the Effective Time, compensation, employee welfare benefits,
tax-qualified retirement benefits and other employee and fringe benefits that
are, in the aggregate, of at least equal value to those currently in effect for
such Company Employees. Aggregate comparable value shall be determined
separately for each principal line of business in which the Company and its
Subsidiaries are engaged. Purchaser shall waive any pre-existing condition
clause or waiting period requirement in welfare benefit plans or programs
(except to the extent such condition or waiting period in comparable plans of
the Company would apply to a participant or beneficiary after the Closing if
such plans continued after the Closing) and give credit for deductible amounts
and co-payments paid by Company Employees during the current deductible year.
Purchaser shall grant each Company Employee credit under its tax-qualified
retirement plans, for purposes of eligibility and vesting (but not for purposes
of benefit accrual), for Company Employee's service with the Company and its
Affiliates prior to the Effective Time. Notwithstanding anything in this
Agreement to the contrary, Parent shall cause the Surviving Corporation to honor
and assume the written employment agreements (amended in accordance with Section
4.08(q)), severance agreements, indemnification agreements with existing
directors and officers of the Company, incentive
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<PAGE> 35
arrangements and other agreements listed on the Company's Disclosure Letter, all
as in effect on the date of this Agreement. The provisions of this Section 5.10
are not intended to create any enforceable rights by, current or former
employees, officers and directors of the Company and their respective heirs and
legal representatives.
Section 5.11. Notification of Certain Matters. The Company shall give
prompt notice to Parent and Purchaser, and Parent or Purchaser, as the case may
be, shall give prompt notice to the Company, of the occurrence, or
non-occurrence, of any event the occurrence, or non-occurrence, of which is
likely (a) to cause any representation or warranty of such party contained in
this Agreement to be untrue or inaccurate (in the case of any representation or
warranty not limited by materiality or Material Adverse Effect, in any material
respect) if made as of any time at or prior to the Effective Time or (b) to
result in any material failure of such party to comply with or satisfy any
covenant, condition or agreement to be complied with or satisfied hereunder.
Section 5.12. Subsequent Filings. Until the Effective Time, the
Company will timely file with the SEC each form, report and document required to
be filed by the Company under the Exchange Act and will promptly deliver to
Parent and Purchaser copies of each such report filed with the SEC. As of their
respective dates, none of such reports shall 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 therein, in light of the circumstances under
which they were made, not misleading. The audited consolidated financial
statements and unaudited interim financial statements of the Company included in
such reports shall be prepared in accordance with United States generally
accepted accounting principles applied on a consistent basis (except as may be
indicated in the notes thereto) and shall fairly present the financial position
of the Company and its consolidated Subsidiaries as at the dates thereof and the
results of their operations and changes in financial position for the periods
then ended, except that the unaudited interim financial statements were or are
subject to normal and recurring year-end adjustments which should not be
materially adverse to the Company and its Subsidiaries taken as a whole.
ARTICLE VI
CONDITIONS TO THE MERGER
Section 6.01. Conditions. The respective obligations of each party to
effect the Merger shall be subject to the satisfaction or waiver, where
permissible, on or prior to the Effective Time of the following conditions:
(a) Purchaser shall have made, or caused to be made, the Offer and
shall have accepted for payment and paid for Shares in an amount sufficient to
satisfy the Minimum Condition and otherwise pursuant to the Offer;
(b) The Merger and this Agreement shall have been approved and
adopted by the requisite vote of the stockholders of the Company, if required by
the DGCL; and
(c) No statute, rule, regulation, judgment, writ, decree, order or
injunction shall have been promulgated, enacted, entered or enforced, and no
other action shall have been taken, by any Governmental Entity that in any of
the foregoing cases has the effect of making illegal or directly or indirectly
restraining, prohibiting or restricting the consummation of the Merger (provided
that each party hereto shall use its reasonable best efforts to have vacated or
reversed, in accordance with Section 5.07, any applicable judgment, writ,
decree, order or injunction).
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ARTICLE VII
TERMINATION, AMENDMENT AND WAIVER
Section 7.01. Termination. This Agreement may be terminated and the
Merger may be abandoned at any time prior to the Effective Time, whether prior
to or after approval of matters presented in connection with the Merger by the
stockholders of the Company (with any termination by Parent also being an
effective termination by Purchaser):
(a) By the mutual written consent of Parent and the Company;
(b) By either of Parent or the Company if any statute, law, rule or
regulation shall have been promulgated that prohibits the consummation of the
Offer or the Merger or if any Governmental Entity of competent jurisdiction
shall have issued an order, decree or ruling or taken any other action (which
order, decree or ruling or other action each party hereto shall use its
reasonable best efforts to have vacated or reversed in accordance with Section
5.07(a)), in each case restraining, enjoining or otherwise prohibiting the
transactions contemplated by this Agreement and such order, decree, ruling or
other action shall have become final and non-appealable;
(c) By the Company if (i) Purchaser fails to commence the Offer in
violation of Section 1.01, (ii) as a result of the failure of one or more
conditions set forth in Annex I, Purchaser shall not have accepted for payment
and paid for Shares pursuant to the Offer in accordance with the terms thereof
on or before December 18, 2000; provided, however, that either Purchaser or
Company shall have the option, in their respective sole discretion, to extend
such date for an additional period not to exceed 60 business days if the sole
reason that the Purchaser has not accepted for payment and paid for Shares
pursuant to the Offer is the failure of the applicable waiting period under the
HSR Act or any Foreign Antitrust Laws to expire or failure to obtain any
required governmental or regulatory approval (the "Outside Date") or (iii)
Purchaser fails to purchase validly tendered Shares in violation of the terms of
this Agreement;
(d) By Parent if, due to an occurrence or circumstance which would
result in a failure to satisfy any of the conditions to the Offer, Purchaser
shall have (i) not commenced the Offer within the time required by Section 1.01,
(ii) terminated the Offer without purchasing any Shares pursuant to the Offer or
(iii) failed to accept for payment Shares pursuant to the Offer prior to the
Outside Date;
(e) By the Company, prior to the purchase of Shares pursuant to the
Offer, if (i) the Company has complied with its obligations under Section 5.02
and (ii) the Company has given Parent and Purchaser prior written notice, of not
less than the greater of seventy-two hours and two full business days, of its
intention to terminate this Agreement and accept or recommend a Superior
Proposal and of the material terms and conditions of such Superior Proposal,
provided that the termination described in this Section 7.01(e) shall not be
effective unless and until the Company shall have paid to Parent the amounts
specified in Section 7.02(b);
(f) By Parent, prior to the purchase of Shares pursuant to the Offer,
if the Company breaches any of its covenants in Section 5.02 or the Board of
Directors of the Company shall have resolved to effect any of the actions
referred to in the first paragraph of Section 5.02(a);
(g) By Parent, prior to the purchase of Shares pursuant to the Offer,
if the Company shall have breached any of its representations, warranties or
covenants contained in this Agreement, which
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<PAGE> 37
breach would give rise to a failure of a condition set forth in Annex I and
which breach has not been or is incapable of being cured by the Company prior to
the Outside Date; or
(h) By the Company, prior to the purchase of Shares pursuant to the
Offer, if the Parent or Purchaser shall have breached any of their
representations, warranties or covenants contained in this Agreement, which
breach would cause Parent or Purchaser to be unable to complete the Offer and
the Merger and which breach has not been or is incapable of being cured prior to
the Outside Date.
Section 7.02. Effect of Termination.
(a) In the event of termination of this Agreement by either the
Company or Parent or Purchaser as provided in Section 7.01, (i) this Agreement
shall forthwith become void and have no effect, without any liability or
obligation on the part of Parent, Purchaser or the Company, except that (i)
Article VIII and this Section 7.02 shall survive any termination of this
Agreement and (ii) nothing in this Section 7.02 shall relieve any party to this
Agreement for liability for breach of this Agreement.
(b) If this Agreement is terminated pursuant to (i) Section 7.01(e),
(ii) Section 7.01(f) or (iii) Section 7.01(c)(ii) or Section 7.01(d) and, in the
case of this clause (iii) only, at any time after the date of this Agreement and
prior to such termination an Acquisition Proposal shall have been publicly
announced or otherwise publicly communicated to the stockholders of the Company
generally and as of the date of such termination such Acquisition Proposal shall
not have been withdrawn or lapsed in accordance with its terms, then the Company
shall pay to Parent in immediately available funds an amount equal to $20
million. If such amount becomes payable pursuant to clause (i), (ii) or (iii)(A)
of this Section 7.02(b), such amount shall be payable simultaneously with such
termination (in the case of termination by the Company) or within two business
days thereafter (in the case of termination by Parent). If such amount becomes
payable pursuant to clause (iii)(B) of this Section 7.02(b), it shall be payable
on the earlier of the Company's entry into such a definitive agreement or within
two business days following such consummation.
(c) The Company acknowledges that the agreements contained in Section
7.02(b) are an integral part of the transactions contemplated by this Agreement,
and that, without these agreements, Parent and Purchaser would not enter into
this Agreement; accordingly, if the Company fails to pay the amount due pursuant
to Section 7.02(b), and, in order to obtain such payment, Parent or Purchaser
commences a suit which results in a judgment against the Company for the amounts
set forth in Section 7.02(b), the Company shall pay to Parent or Purchaser, as
the case may be, its costs and expenses (including attorneys' fees and expenses)
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.
Section 7.03. Amendment. Subject to Section 1.03, this Agreement may
be amended by the parties hereto by action taken by the respective Board of
Directors of the Company, Parent and Purchaser or by the respective officers
authorized by such Boards of Directors at any time prior to the Effective Time
(notwithstanding any stockholder approval); provided, however, that, after
approval of the Merger by the stockholders of the Company, no amendment may be
made which by law requires further approval by such stockholders without such
further approval. This Agreement may not be amended except by an instrument in
writing signed by the parties hereto.
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Section 7.04. Extension; Waiver. Subject to Section 1.03, at any time
prior to the Effective Time, any party hereto may (a) extend the time for the
performance of any of the obligations or other acts of the other parties hereto,
(b) waive any inaccuracies in the representations and warranties of the other
parties hereto contained herein or in any document delivered pursuant hereto,
and (c) waive compliance by the other parties hereto with any of their
agreements or conditions contained herein. Any agreement on the part of a party
hereto to any such extension or waiver shall be valid only if set forth in an
instrument in writing signed by such party. The failure of any party hereto to
assert any of its rights under this Agreement or otherwise shall not constitute
a waiver of those rights.
ARTICLE VIII
GENERAL PROVISIONS
Section 8.01. Non-Survival of Representations and Warranties. The
representations and warranties in this Agreement shall not survive beyond the
consummation of the Offer. The covenants and agreements set forth herein shall
survive the Effective Time indefinitely (except to the extent a shorter period
of time is explicitly specified therein or as otherwise provided in Section
7.02).
Section 8.02. Expenses. Whether or not the Merger is consummated,
except as expressly set forth herein, all fees, costs and expenses incurred in
connection with this Agreement and the transactions contemplated hereby shall be
paid by the party incurring such fees, costs and expenses.
Section 8.03. Entire Agreement. This Agreement (including the
documents and the instruments referred to herein) constitutes the entire
agreement and supersedes any and all other prior agreements and understandings,
both written and oral, among the parties with respect to the subject matter
hereof.
Section 8.04. Assignment. Neither this Agreement nor any of the
rights, interests or obligations hereunder shall be assigned by any of the
parties hereto (whether by operation of law or otherwise) without the prior
written consent of the other parties (except that Parent may assign its rights
and Purchaser may assign its rights, interest and obligations to any Subsidiary
of Parent without the consent of the Company; provided that no such assignment
shall relieve Parent of any liability for any breach by such assignee). Subject
to the preceding sentence, this Agreement shall be binding upon, inure to the
benefit of and be enforceable by the parties and their respective successors and
assigns.
Section 8.05. Parties in Interest. Except as otherwise provided
herein, this Agreement shall be binding upon and inure solely to the benefit of
each party hereto, and nothing in this Agreement, express or implied, is
intended to confer upon any other person any rights or remedies of any nature
whatsoever under or by reason of this Agreement.
Section 8.06. Validity. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of law,
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
adverse to any party. Upon such determination that any term or other provision
is invalid, illegal or incapable of being enforced, the parties hereto shall
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible in an acceptable manner to the end
that the transactions contemplated hereby are consummated to the maximum extent
possible.
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<PAGE> 39
Section 8.07. Notices. All notices and other communications given or
made pursuant hereto shall be in writing (and shall be deemed to have been duly
given or made when received by the addressee) by delivery in person, by
facsimile, cable, telecopy, telegram or telex or by registered or certified mail
(postage prepaid, return receipt requested), in each case to the parties at the
following addresses (or at such other address for a party as shall be specified
by like notice):
(a) If to Parent or Purchaser:
United Technologies Corporation
United Technologies Building
One Financial Plaza
Hartford, Connecticut 06101
Attention: General Counsel
Facsimile: 860-728-7862
With a copy to:
Cleary, Gottlieb, Steen & Hamilton
One Liberty Plaza
New York, NY 10006
Attention: Christopher E. Austin
Facsimile: (212) 225-3999
(b) If to the Company:
Specialty Equipment Companies, Inc.
1245 Corporate Blvd., Suite 401
Aurora, Illinois 60504
Attention: Jeffrey P. Rhodenbaugh
Facsimile: (630) 585-9450
With a copy to:
Sonnenschein Nath & Rosenthal
8000 Sears Tower
Chicago, Illinois 60606
Attention: Andrew L. Weil
Michael D. Rosenthal
Facsimile: (312) 876-7934
Section 8.08. Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Delaware applicable to
contracts executed in and to be performed entirely within that State, regardless
of the laws that might otherwise govern under applicable principles of conflicts
of laws thereof. In addition, each of the parties hereto (a) consents to submit
itself to the personal jurisdiction of any federal court located in the State of
Delaware or any Delaware state court in the event any dispute arises out of this
Agreement or any of the transactions contemplated by this Agreement, (b) agrees
that it will not attempt to deny or defeat such personal jurisdiction by motion
or other request for leave from any such court and (c) agrees
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<PAGE> 40
that it will not bring any action relating to this Agreement or any of the
transaction contemplated by this Agreement in any court other than a federal or
state court sitting in the State of Delaware.
Section 8.09. Waiver of Jury Trial. Each of the parties to this
Agreement hereby irrevocably waives all right to a trial by jury in any action,
proceeding or counterclaim arising out of or relating to this Agreement or the
transactions contemplated hereby.
Section 8.10. Specific Performance. The parties hereto agree that
irreparable damage would occur in the event that any of the provisions of this
Agreement were not performed in accordance with their specific terms or were
otherwise breached. It is accordingly agreed that the parties shall be entitled
to an injunction or injunctions to prevent breaches of this Agreement and to
enforce specifically the terms and provisions hereof in any federal or state
court sitting in Delaware, this being in addition to any other remedy to which
they are entitled at law or in equity.
Section 8.11. Headings. The headings contained in this Agreement are
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
Section 8.12. Counterparts. This Agreement may be executed in one or
more counterparts, and by the different parties hereto in separate counterparts,
each of which when executed shall be deemed to be an original but all of which
shall constitute one and the same agreement.
Section 8.13. Construction. This Agreement is a product of
negotiation between the parties, and the language of all parts of this Agreement
shall in all cases be construed as a whole, according to its fair meaning, and
not strictly for or against either party, and no presumptions or rules of
interpretation based upon the identity of the party preparing or drafting the
Agreement, or any part thereof, shall be applicable or invoked.
Section 8.14. Interpretation of Certain Terms. Any words herein used
in the singular shall denote the plural as the context so requires and when used
herein in the plural shall denote the singular as the context so requires.
Pronouns used herein, whether masculine, feminine, or neuter, shall be
interpreted as the context so requires. The word "including" shall mean
"including, without limitation." Any reference to any federal, state, or local
law shall be deemed also to refer to all rules and regulations promulgated
thereunder, unless the context requires otherwise.
Section 8.15. Definitions. For purposes of this Agreement, the term:
"Acquisition Proposal" shall have the meaning set forth in
Section 5.02(c).
"Affiliate" shall have the meaning set forth in Rule 12b-2 promulgated
under the Exchange Act.
"Agreement" shall have the meaning set forth in the preamble.
"Annual Report" shall have the meaning set forth in the introductory
paragraph of Article IV.
"Board of Directors" shall have the meaning set forth in the recitals
of this Agreement.
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<PAGE> 41
"business day" shall have the meaning set forth in Rule 14d-1(g)(3)
under the Exchange Act.
"Certificates" shall have the meaning set forth in Section 2.07(b).
"Closing" shall have the meaning set forth in Section 2.02(a).
"Closing Date" shall have the meaning set forth in Section 2.02(a).
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Common Stock" shall have the meaning set forth in the recitals of
this Agreement.
"Company" shall have the meaning set forth in the preamble of this
Agreement.
"Company's Disclosure Letter" shall have the meaning set forth in the
introductory paragraph of Article IV.
"Company Employees" shall have the meaning set forth in Section 5.10.
"Company's Financial Advisor" shall have the meaning set forth in
Section 1.02(a).
"Company Intellectual Property Rights" shall mean all Intellectual
Property Rights owned or held by the Company or any of its Subsidiaries or
otherwise used in the business of the Company and its Subsidiaries.
"Company Permits" shall have the meaning set forth in Section 4.11.
"Company Representatives" shall have the meaning set forth in
Section 5.02(a).
"Company Securities" shall have the meaning set forth in
Section 4.02(a).
"Company Stockholders' Meeting" shall have the meaning set forth in
Section 4.13.
"Company Stock Option" shall have the meaning set forth in
Section 2.08(a).
"Company Voting Debt" shall have the meaning set forth in
Section 4.02(a).
"Confidentiality Agreement" shall have the meaning set forth in
Section 1.02(a).
"Control" (including the terms "controlled by" and "under common
control with") shall have the meaning set forth in Rule 12b-2 promulgated under
the Exchange Act.
"DGCL" shall mean the Delaware General Corporation Law.
"Dissenting Shares" shall have the meaning set forth in
Section 2.06(a).
"Effective Time" shall have the meaning set forth in Section 2.02(b).
"Employee Benefit Plans" shall have the meaning set forth in
Section 4.08(a).
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<PAGE> 42
"Environmental Disclosure Requirements" shall mean any Environmental
Laws requiring notification, registration, or filing with any governmental
agency, prior to the sale or transfer of control of an establishment, of the
actual or threatened presence or Release into the environment, or the use,
disposal, or handling of Hazardous Substance on, at, under, or near the
establishment for which control is to be transferred.
"Environmental Law" shall mean any federal, state, municipal, foreign
or other statutes, laws, ordinances, rules or regulations and common law
principles relating to regulation of pollution or the protection of human health
or the environment, including without limitation the following federal statutes
and their state counterparts, as each may be amended from time to time, and any
regulations promulgated thereunder: the Atomic Energy Act, the Clean Air Act,
the Clean Water Act, the Comprehensive Environmental Response, Compensation, and
Liability Act, the Federal Insecticide, Fungicide, and Rodenticide Act, the
Hazardous Materials Transportation Act, the Occupational Safety and Health Act,
the Resource Conservation and Recovery Act and the Safe Drinking Water Act.
"Environmental Liability" shall have the meaning set forth in
Section 4.10.
"Environmental Permits" shall have the meaning set forth in
Section 4.10.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended.
"ERISA Affiliate" shall have the meaning set forth in Section 4.08(a).
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended (including the rules and regulations promulgated thereunder).
"Foreign Antitrust Laws" shall have the meaning set forth in
Section 3.03(b).
"Foreign Plan" shall have the meanings set forth in Section 4.08(g).
"Form 10-K" shall have the meaning set forth in the introductory
paragraph of Article IV.
"Governmental Entity" shall have the meaning set forth in
Section 3.03(b).
"Hazardous Substances" shall mean any pollutant or contaminant or any
hazardous or toxic substance, waste, chemical, or material, including without
limitation as those terms are defined in any Environmental Law, and including
without limitation (a) petroleum and petroleum products including crude oil and
any fractions thereof; (b) natural gas, synthetic gas, and mixtures thereof;
(c) radon; and (d) asbestos and asbestos-containing materials.
"HSR Act" shall mean the Hart-Scott-Rodino Antitrust Improvements Act
of 1976, as amended.
"Independent Directors" shall have the meaning set forth in
Section 1.03.
"Intellectual Property Rights" shall mean all proprietary and other
rights, including rights granted under license, in and to the following:
(i) trademarks, service marks, trademark
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<PAGE> 43
registrations, service mark registrations, trade names, applications for
registration of trademarks and service marks, and the goodwill associated
therewith; (ii) copyrights, copyright registrations and applications for
registration of copyrights; (iii) patents, design patents and utility patents,
all applications for grant of any such patents pending as of the date hereof or
as of the Effective Time or filed within five years prior to the date hereof,
and all reissues, divisions, continuations-in-part and extensions thereof; (iv)
computer software, including source code, object code, algorithms, databases,
and all related documentation; (v) technical documentation, trade secrets,
designs, inventions, processes, formulae, know-how, operating manuals and
guides, plans, new product development, technical and marketing surveys,
material specifications, product specifications, invention records, research
records, labor routings, inspection processes, equipment lists, engineering
reports and drawing; architectural or engineering plans, know-how agreements and
other know-how; marketing and licensing records, sales literature, customer
lists, trade lists, sales forces and distributor networks lists, advertising and
promotional materials, service and parts records, warranty records, maintenance
records and similar records; and (vi) all rights and incidents of interest in
and to all noncompetition or confidentiality agreements; in each case including
any applications therefor or registrations, renewals, modifications and
extensions thereof.
"IRS" shall mean the Internal Revenue Service.
"knowledge" of the Company shall mean the actual knowledge, after
reasonable inquiry, of the executive officers of the Company and the
Subsidiaries, including reasonable inquiry of the Company's counsel.
"Material Adverse Effect" shall have the meaning set forth in
Section 4.01.
"Material Contract" shall have the meaning set forth in Section 4.17.
"Merger" shall have the meaning set forth in the recitals of this
Agreement.
"Merger Consideration" shall have the meaning set forth in
Section 2.05(a).
"Minimum Condition" shall have the meaning set forth in Annex I.
"Offer" shall have the meaning set forth in the recitals of this
Agreement.
"Offer Documents" shall have the meaning set forth in Section 1.01(c).
"Offer Price" shall have the meaning set forth in the recitals of this
Agreement.
"Offer to Purchase" shall have the meaning set forth in
Section 1.01(c).
"Outside Date" shall have the meaning set forth in Section 7.01(c).
"Parent" shall have the meaning set forth in the preamble of this
Agreement.
"Parent Information" shall have the meaning set forth in Section 3.06.
"Paying Agent" shall have the meaning set forth in Section 2.07(a).
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<PAGE> 44
"Person" shall mean an individual, corporation, partnership,
association, trust, any unincorporated organization or group (within the meaning
of Section 13(d)(3) of the Exchange Act).
"Proxy Statement" shall have the meaning set forth in
Section 4.13.
"Purchaser" shall have the meaning set forth in the preamble of
this Agreement.
"Real Property Leases" shall have the meaning set forth in
Section 4.18(b).
"Recent SEC Reports" shall have the meaning set forth in the
introductory paragraph of Article IV.
"Release" shall mean any spill, discharge, leak, emission,
disposal, injection, escape, dumping, leaching, dispersal, emanation, migration
or release of any kind whatsoever of any Hazardous Substance, at, in, on, into
or onto the environment.
"Schedule 14A" shall have the meaning set forth in Section 1.03.
"Schedule 14D-9" shall have the meaning set forth in
Section 1.02(b).
"Schedule TO" shall have the meaning set forth in
Section 1.01(c).
"SEC" shall mean the Securities and Exchange Commission.
"SEC Reports" shall have the meaning set forth in
Section 4.05(a).
"Securities Act" shall mean the Securities Act of 1933, as
amended (including the rules and regulations promulgated thereunder).
"Shares" shall have the meaning set forth in the recitals of this
Agreement.
"Stockholder Agreement" shall have the meaning set forth in the
recitals of this Agreement.
"Stock Option Plans" shall have the meaning set forth in
Section 2.08(a).
"Subsidiary" shall mean any corporation or other legal entity of
which the Company (either alone or through or together with any other
Subsidiary) (a) owns, directly or indirectly, more than 50% of the stock or
other equity interests the holders of which are generally entitled to vote for
the election of the board of directors or other governing body of such
corporation or other legal entity, or (b) in the case of partnerships, serves as
a general partner, or (c) in the case of a limited liability company, serves as
managing member or (d) otherwise has the ability to elect a majority of the
directors, trustees or managing members thereof.
"Superior Proposal" shall have the meaning set forth in
Section 5.02(c).
"Surviving Corporation" shall have the meaning set forth in
Section 2.01.
"Taxes" shall mean all taxes, charges, fees, levies or other
assessments, including, without limitation, all net income, gross income, gross
receipts, corporation, advance corporation,
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<PAGE> 45
sales, use, ad valorem, registration, alternative or add on minimum, value
added, premium, goods and services, capital, capital stock, transfer, franchise,
single business, profits, license, withholding, payroll, employment, employer
health, excise, severance, stamp, occupation, real and personal property,
workers compensation, unemployment, disability, PBGC premiums, social security,
FICA, estimated, recording, gift, value assessed, windfall profits,
environmental, or other taxes, customs duties, fees, assessments or charges of
any kind whatsoever, whether computed on a separate, consolidated, unitary,
combined or other basis, together with any interest, fines, penalties, additions
to tax or other additional amounts imposed by any taxing authority (domestic or
foreign), however denominated, whether disputed or not.
"Tax Returns" shall mean any return, declaration, report,
estimate, claim for refund, information or other document (including any
documents, forms, statements or schedules attached thereto) required to be filed
with or supplied to any federal, state, local or foreign tax authority with
respect to Taxes and including any amendment thereof.
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<PAGE> 46
IN WITNESS WHEREOF, Parent, Purchaser and the Company have
caused this Agreement to be executed as of the date first written above by their
respective officers thereunto duly authorized.
UNITED TECHNOLOGIES CORPORATION
By: ___________________________________
Name: ___________________________________
Title: ___________________________________
SOLAR ACQUISITION CORP.
By: ___________________________________
Name: ___________________________________
Title: ___________________________________
SPECIALTY EQUIPMENT COMPANIES, INC.
By: ___________________________________
Name: ___________________________________
Title: ___________________________________
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<PAGE> 47
ANNEX I
CONDITIONS TO THE OFFER
Notwithstanding any other provision of the Offer or Agreement,
Purchaser shall not be required to accept for payment or, subject to any
applicable rules and regulations of the SEC, including Rule 14e-1(c) promulgated
under the Exchange Act (relating to Purchaser's obligation to pay for or return
tendered Shares promptly after termination or withdrawal of the Offer), to pay
for any tendered Shares if (i) there shall not have been validly tendered and
not properly withdrawn prior to the expiration of the Offer such number of
shares of Common Stock which, when aggregated with shares of Common Stock
beneficially owned by Parent (excluding shares of Common Stock held by an
employee benefit plan), represents at least a majority of all of the issued and
outstanding shares of Common Stock on a fully diluted basis, assuming the
exercise of all Company Stock Options and the conversion or exchange of all
securities convertible or exchangeable into shares of Common Stock (the "Minimum
Condition"), (ii) any applicable waiting period under the HSR Act and any
Foreign Antitrust Law shall not have expired or been terminated or any required
approval under any Foreign Antitrust Law shall not have been obtained or (iii)
at any time after the date of this Agreement and prior to the acceptance of such
Shares for payment or payment for any such Shares, any of the following events
shall occur or conditions shall exist:
(a) there shall have been any statute, rule, regulation,
legislation, judgment, order or injunction, promulgated, enacted, entered,
enforced, issued, amended or deemed applicable by a Governmental Entity to
Parent, Purchaser, the Company, any other affiliate of Parent or the Company,
the Offer or the Merger, that would or is reasonably likely to (1) make the
acceptance for payment of, or payment for or purchase of all or a substantial
number of the Shares pursuant to the Offer illegal, or otherwise materially
restrict or prohibit the consummation of the Offer or the Merger, (2) result
in a material delay in the ability of Purchaser to accept for payment, pay for
or purchase all or a substantial number of the Shares pursuant to the Offer or
to effect the Merger, (3) render Purchaser unable to accept for payment or pay
for or purchase all or a substantial number of the Shares pursuant to the Offer,
(4) impose material limitations on the ability of Parent, Purchaser or any of
their respective Subsidiaries or affiliates to acquire or hold, transfer or
dispose of, or effectively to exercise all rights of ownership of, all or a
substantial number of the Shares including the right to vote the Shares
purchased by it pursuant to the Offer on an equal basis with all other Shares on
all matters properly presented to the stockholders of the Company, (5) require
the divestiture by Parent, Purchaser or any of their respective Subsidiaries or
affiliates of any Shares, or require Purchaser, Parent, the Company, or any of
their respective Subsidiaries or affiliates to dispose of all or any material
portion of their respective businesses, assets or properties or impose any
material limitations on the ability of any of such entities to conduct their
respective businesses or own such assets, properties or Shares or on the ability
of Parent or Purchaser to conduct the business of the Company and its
Subsidiaries and own the assets and properties of the Company and its
Subsidiaries, or (6) impose any material limitations on the ability of Parent,
Purchaser or any of their respective Subsidiaries or affiliates effectively to
control the business or operations of the Company, Parent, Purchaser or any of
their respective Subsidiaries or affiliates;
(b) this Agreement shall have been terminated in accordance with
its terms;
(c) the representations and warranties of the Company set forth
in the Agreement shall not have been true and correct when made, or shall not
continue to be true and correct except (i) those representations and warranties
that address matters only as of a particular date (which shall be
<PAGE> 48
true and correct as of such date), and (ii) where the failure of such
representations and warranties has not had, and is not reasonably likely to
have, a Material Adverse Effect;
(d) the Company shall have failed to perform in any material
respect, or to comply in any material respect with, any obligation, agreement or
covenant of the Company to be performed or complied with by it under the
Agreement;
(e) there shall have been instituted or pending any action,
proceeding or counterclaim by any Governmental Entity challenging the making of
the Offer, the acquisition by Purchaser of the Shares pursuant to the Offer or
the consummation of the Merger, or seeking to, directly or indirectly, result in
any of the consequences referred to in clauses (1) through (6) of paragraph (a)
above;
(f) there shall have occurred (1) any general suspension of, or
limitation on, trading in securities on the New York Stock Exchange (other than
any suspension or limitation on trading in any particular security as a result
of a computerized trading limit or any intraday suspension due to "circuit
breakers") or (2) the declaration of any banking moratorium or any suspension of
payments in respect of banks or any limitation (whether or not mandatory) on the
extension of credit by lending institutions in the United States; or
(g) there shall have occurred any change, condition, event or
development that, individually or in the aggregate, has had or is reasonably
likely to have a Material Adverse Effect.
The foregoing conditions are for the sole benefit of Parent and
Purchaser and may be asserted regardless of the circumstances (including any
action or inaction by Parent or Purchaser or any of their affiliates giving rise
to any such condition) or waived by Parent or Purchaser in whole or in part at
any time or from time to time, in its discretion subject to the terms and
conditions of the Agreement. The failure of Parent or Purchaser at any time to
exercise any of the foregoing rights shall not be deemed a waiver of any such
right and each such right shall be deemed an ongoing right which may be asserted
at any time and from time to time.
Capitalized terms used but not defined in this Annex I shall have
the meanings assigned to such terms in the Agreement to which it is annexed,
except that the term "Agreement" shall be deemed to refer to the Agreement to
which this Annex I is appended.
I-2
