<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-------------------
FORM 8-K
CURRENT REPORT PURSUANT
TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
-------------
Date of Report (Date of Earliest Event Reported): MAY 14, 1996
---------------
Carlisle Plastics, Inc.
---------------------------------------------------------------------------
(Exact Name of Registrant as Specified in its Charter)
Delaware
---------------------------------------------------------------------------
(State or Other Jurisdiction of Incorporation)
1-10756 04-2891825
------------------------------ ------------------------------
(Commission File Number) (I.R.S. Employer
Identification No.)
1314 N. Third Street, Suite 300, Phoenix,
Arizona 85004-1751
--------------------------------------------- --------------------
(Address of Principal Executive Offices) (Zip Code)
(602) 407-2100
---------------------------------------------------------------------------
(Registrant's Telephone Number, Including Area Code)
not applicable
---------------------------------------------------------------------------
(Former Name or Former Address, if Changed Since Last Report)
<PAGE>
<PAGE>
ITEM 5. OTHER EVENTS
------ ------------
Agreement and Plan of Merger.
The following summary does not purport to be complete and is
qualified in its entirety by reference to the exhibits filed with this
Current Report, which are incorporated herein by reference.
On May 14, 1996, Carlisle Plastics, Inc., a Delaware
corporation ("Carlisle"), entered into an Agreement and Plan of Merger
(the "Merger Agreement") with Tyco International Ltd., a Massachusetts
corporation ("Tyco"), and T2 Acquisition Corp., a Delaware corporation
and a direct, wholly-owned subsidiary of Tyco ("Merger Sub"), under
which Merger Sub will be merged with and into Carlisle, and Carlisle
will become a direct wholly-owned subsidiary of Tyco (the "Merger").
Under the terms of the Merger Agreement, each share of Carlisle common
stock outstanding immediately prior to the effective time of the
Merger (the "Effective Time") (other than shares of common stock held
in Carlisle's treasury or owned by Tyco, Merger Sub or any direct or
indirect wholly-owned subsidiary of Carlisle or Tyco, which shares
will be cancelled in the Merger without payment of any consideration
therefor), will be converted into 0.172185 shares of Tyco common
stock.
Each option to purchase shares of Carlisle's Class A Common
Stock (a "Stock Option"), whether vested or unvested, shall be assumed
by Tyco and deemed to constitute a fully vested and exercisable option
to acquire the number of shares of Tyco common stock as the holder of
such Stock Option would have been entitled to receive pursuant to the
Merger had such holder exercised such option in full immediately prior
to the Effective Time, at a price per share equal to (x) the aggregate
exercise price for the Carlisle common stock otherwise purchasable
pursuant to such Stock Option divided by (y) the number of shares of
Tyco Common Stock deemed purchasable pursuant to such Stock Option.
The parties intend for the Merger to constitute a
reorganization within the meaning of Section 368 of the Internal
Revenue Code and, at the option of Tyco, subject to applicable
accounting standards, qualify for accounting treatment as a pooling of
interests. However, it is not a condition to the obligations of any
party to the Merger Agreement to effect the Merger that the Merger so
qualify.
The Merger is subject to customary conditions, including the
approval of the Merger by Carlisle's stockholders, expiration of
applicable waiting periods under the Hart-Scott-
<PAGE>
<PAGE>
Rodino Antitrust Improvements Act and the effectiveness of a
registration statement filed with the Securities and Exchange
Commission for the Tyco common stock to be issued in the Merger.
In connection with the Merger Agreement, (i) William H.
Binnie ("Binnie"), (ii) the Grigoriou Family Limited Partnership and
Christos I. Grigoriou (collectively, "Grigoriou") and
(iii) Grant M. Wilson ("Wilson") entered into separate Stockholder
Agreements with Tyco dated May 14, 1996 in which they agreed, so long
as the Merger Agreement has not been terminated, to vote all of the
shares of Carlisle common stock held by them in favor of the Merger
and against any competing merger proposals, and to take and refrain
from taking other specified actions. Each of Binnie and Wilson will
exercise his fiduciary responsibility as a director of Carlisle to review
any competing merger proposals. Such Stock Holder Agreements will
terminate and be of no further effect if the merger agreement is
terminated in accordance with its terms. Binnie beneficially owns 28,282
shares of the Company's Class A Common Stock and 5,940,313 shares of
the Company's Class B Common Stock, representing 60.6% of the vote of
all classes of the Company's voting stock. Grigoriou beneficially
owns 338,700 shares of the Company's Class A Common Stock and
1,707,448 shares of the Company's Class B Common Stock, representing
17.6% of the vote of all classes of the Company's voting stock.
Wilson beneficially owns 291,354 shares of the Company's Class A
Common Stock and 1,374,119 shares of the Company's Class B Common
Stock, representing 14.2% of the vote of all classes of the Company's
voting stock.
A press release with respect to the Merger was issued by
Carlisle on May 15, 1996.
<PAGE>
<PAGE>
Item 7. Financial Statements, Pro Forma Financial
---------------------------------------------------
Information and Exhibits.
------------------------
(c) Exhibits.
Exhibit
Number Description
2 Agreement and Plan of Merger dated as of May 14, 1996, by
and among Carlisle, Tyco and Merger Sub.
99 Press Release of Carlisle dated May 15, 1996.
<PAGE>
<PAGE>
SIGNATURES
----------
Pursuant to the requirements of the Securities Exchange Act
of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned hereunto duly authorized.
CARLISLE PLASTICS, INC.
By /s/ William H. Binnie
-------------------------------------------
Name: William H. Binnie
Title: Chairman of the Board
May 20, 1996
<PAGE>
<PAGE>
EXHIBITS
--------
Exhibit
Number Description
2 Agreement and Plan of Merger dated as of May 14, 1996, by
and among Carlisle, Tyco and Merger Sub.
99 Press Release of Carlisle dated May 15, 1996.
NYFS07...:\56\33856\0010\1187\FRM0115Y.390
<PAGE>
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
TYCO INTERNATIONAL LTD.,
T2 ACQUISITION CORP.
and
CARLISLE PLASTICS, INC.
Dated as of May 14, 1996
<PAGE>
<PAGE>
TABLE OF CONTENTS
ARTICLE I
THE MERGER
SECTION 1.01. The Merger . . . . . . . . . . . . . . . 2
SECTION 1.02. Effective Time. . . . . . . . . . . . . 2
SECTION 1.03. Effect of the Merger . . . . . . . . . . 2
SECTION 1.04. Certificate of Incorporation; By-Laws . . 2
SECTION 1.05. Directors and Officers . . . . . . . . . 3
SECTION 1.06. Effect on Capital Stock . . . . . . . . . 3
SECTION 1.07. Exchange of Certificates . . . . . . . . 5
SECTION 1.08. Stock Transfer Books . . . . . . . . . . 6
SECTION 1.09. No Further Ownership Rights in Company
Common Stock . . . . . . . . . . . . . . 6
SECTION 1.10. Lost, Stolen or Destroyed Certificates . 7
SECTION 1.11. Tax and Accounting Consequences . . . . . 7
SECTION 1.12. Taking of Necessary Action; Further Action 7
SECTION 1.13. Material Adverse Effect . . . . . . . . . 7
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
SECTION 2.01. Organization and Qualification; Subsidiaries8
SECTION 2.02. Certificate of Incorporation and By-Laws. . 8
SECTION 2.03. Capitalization . . . . . . . . . . . . . 9
SECTION 2.04. Authority Relative to this Agreement . . 9
SECTION 2.05. No Conflict; Required Filings and Consents 10
SECTION 2.06. Compliance; Permits . . . . . . . . . . . 11
SECTION 2.07. SEC Filings; Financial Statements . . . . 11
SECTION 2.08. Absence of Certain Changes or Events . . 12
SECTION 2.09. No Undisclosed Liabilities . . . . . . . 13
SECTION 2.10. Absence of Litigation . . . . . . . . . . 13
SECTION 2.11. Employee Benefit Plans; Employment
Agreements . . . . . . . . . . . . . . . 13
SECTION 2.12. Labor Matters . . . . . . . . . . . . . . 15
SECTION 2.13. Registration Statement; Proxy
Statement/Prospectus. . . . . . . . . . . 16
SECTION 2.14. Restrictions on Business Activities . . . 16
SECTION 2.15. Title to Property . . . . . . . . . . . . 17
SECTION 2.16. Taxes . . . . . . . . . . . . . . . . . . 17
SECTION 2.17. Environmental Matters . . . . . . . . . . 18
SECTION 2.18. Brokers . . . . . . . . . . . . . . . . . 19
SECTION 2.19. Full Disclosure . . . . . . . . . . . . . 19
SECTION 2.20. Intellectual Property . . . . . . . . . . 19
SECTION 2.21. Interested Party Transactions . . . . . . 20
SECTION 2.22. Insurance . . . . . . . . . . . . . . . . 20
SECTION 2.23. Product Liability and Recalls . . . . . . 20
<PAGE>
<PAGE>
SECTION 2.24 Inventory . . . . . . . . . . . . . . . . 20
SECTION 2.25. Opinion of Financial Advisor . . . . . . 21
SECTION 2.26. Pooling Matters . . . . . . . . . . . . . 21
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB 21
SECTION 3.01. Organization and Qualification;
Subsidiaries. . . . . . . . . . . . . . . .21
SECTION 3.02. Articles of Organization and By-Laws . . 22
SECTION 3.03. Capitalization . . . . . . . . . . . . . 22
SECTION 3.04. Authority Relative to this Agreement . . 23
SECTION 3.05. No Conflict; Required Filings and Consents 23
SECTION 3.06. Compliance; Permits . . . . . . . . . . . 24
SECTION 3.07. SEC Filings; Financial Statements . . . . 24
SECTION 3.08. Absence of Certain Changes or Events . . 25
SECTION 3.09. No Undisclosed Liabilities . . . . . . . 25
SECTION 3.10. Absence of Litigation . . . . . . . . . . 26
SECTION 3.11. Employee Benefit Plans; Employment
Agreements. . . . . . . . . . . . . . . . 26
SECTION 3.12. Labor Matters . . . . . . . . . . . . . . 28
SECTION 3.13. Registration Statement; Proxy
Statement/Prospectus . . . . . . . . . . 28
SECTION 3.14. Restrictions on Business Activities . . . 29
SECTION 3.15. Title to Property . . . . . . . . . . . . 29
SECTION 3.16. Taxes . . . . . . . . . . . . . . . . . . 29
SECTION 3.17. Environmental Matters . . . . . . . . . . 30
SECTION 3.18. Brokers . . . . . . . . . . . . . . . . . 31
SECTION 3.19. Full Disclosure . . . . . . . . . . . . . 31
SECTION 3.20. Intellectual Property . . . . . . . . . . 31
SECTION 3.22. Insurance . . . . . . . . . . . . . . . . 32
SECTION 3.25. Ownership of Merger Sub; No Prior
Activities . . . . . . . . . . . . . . . . 32
ARTICLE IV
CONDUCT OF BUSINESS PENDING THE MERGER
SECTION 4.01. Conduct of Business by the Company Pending
the Merger . . . . . . . . . . . . . . . 33
SECTION 4.02. No Solicitation . . . . . . . . . . . . . 35
SECTION 4.03. Conduct of Business by Parent Pending the
Merger . . . . . . . . . . . . . . . . . 36
ARTICLE V
ADDITIONAL AGREEMENTS
SECTION 5.01. Proxy Statement/Prospectus; Registration
Statement . . . . . . . . . . . . . . . . 37
SECTION 5.02. Company Stockholders Meeting . . . . . . 37
SECTION 5.03. Access to Information; Confidentiality . 38
SECTION 5.04. Consents; Approvals . . . . . . . . . . . 38
<PAGE>
<PAGE>
SECTION 5.05. Agreements with Respect to Affiliates . . 38
SECTION 5.06. Indemnification and Insurance . . . . . . 38
SECTION 5.07. Notification of Certain Matters . . . . . 40
SECTION 5.08. Further Action/Tax Treatment . . . . . . 40
SECTION 5.09. Public Announcements . . . . . . . . . . 40
SECTION 5.10. Listing of Parent Shares . . . . . . . . 41
SECTION 5.11. Conveyance Taxes . . . . . . . . . . . . 41
SECTION 5.12. Accountant's Letters . . . . . . . . . . 41
SECTION 5.13. Pooling Accounting Treatment . . . . . . 41
ARTICLE VI
CONDITIONS TO THE MERGER
SECTION 6.01. Conditions to Obligation of Each Party to
Effect the Merger . . . . . . . . . . . . 42
SECTION 6.02. Additional Conditions to Obligations of
Parent and Merger Sub . . . . . . . . . . 43
SECTION 6.03. Additional Conditions to Obligation of the
Company . . . . . . . . . . . . . . . . . 43
ARTICLE VII
TERMINATION
SECTION 7.01. Termination . . . . . . . . . . . . . . . 44
SECTION 7.02. Effect of Termination . . . . . . . . . . 46
SECTION 7.03. Fees and Expenses . . . . . . . . . . . . 46
ARTICLE VIII
GENERAL PROVISIONS
SECTION 8.01. Effectiveness of Representations, Warranties
and Agreements; Knowledge, Etc. . . . . . 47
SECTION 8.02. Notices . . . . . . . . . . . . . . . . . 48
SECTION 8.03. Certain Definitions . . . . . . . . . . . 49
SECTION 8.04. Amendment . . . . . . . . . . . . . . . . 50
SECTION 8.05. Waiver . . . . . . . . . . . . . . . . . 50
SECTION 8.06. Headings . . . . . . . . . . . . . . . . 50
SECTION 8.07. Severability . . . . . . . . . . . . . . 50
SECTION 8.08. Entire Agreement . . . . . . . . . . . . 51
SECTION 8.09. Assignment; Merger Sub. . . . . . . . . . 51
SECTION 8.10. Parties in Interest . . . . . . . . . . . 51
SECTION 8.11. Failure or Indulgence Not Waiver; Remedies
Cumulative . . . . . . . . . . . . . . . .51
SECTION 8.12. Governing Law; Jurisdiction . . . . . . . 51
SECTION 8.13. Counterparts . . . . . . . . . . . . . . 51
SECTION 8.14. WAIVER OF JURY TRIAL . . . . . . . . . . 51
<PAGE>
<PAGE>
AGREEMENT AND PLAN OF MERGER
----------------------------
AGREEMENT AND PLAN OF MERGER, dated as of May 14, 1996
(this "Agreement"), among TYCO INTERNATIONAL LTD., a
Massachusetts corporation ("Parent"), T2 ACQUISITION CORP., a
Delaware corporation and a direct, wholly-owned subsidiary of
Parent ("Merger Sub"), and CARLISLE PLASTICS, INC., a Delaware
corporation (the "Company").
W I T N E S S E T H:
-------------------
WHEREAS, the Boards of Directors of Parent, Merger Sub
and the Company have each determined that it is advisable and in
the best interests of their respective stockholders for Parent to
cause Merger Sub to merge with and into the Company upon the
terms and subject to the conditions set forth herein;
WHEREAS, in furtherance of such combination, the Boards
of Directors of Parent, Merger Sub and the Company have each
approved the merger (the "Merger") of Merger Sub with and into
the Company in accordance with the applicable provisions of the
Delaware General Corporation Law (the "DGCL"), and upon the terms
and subject to the conditions set forth herein;
WHEREAS, Parent, Merger Sub and the Company intend, by
approving resolutions authorizing this Agreement, to adopt this
Agreement as a plan of reorganization within the meaning of
Section 368(a) of the Internal Revenue Code of 1986, as amended
(the "Code"), and the regulations promulgated thereunder; and
WHEREAS, pursuant to the Merger, each outstanding share
(a "Share") of the Company's Class A Common Stock, par value $.01
per share (the "Class A Common Stock"), and the Company's Class B
Common Stock, $.01 par value per share (the "Class B Common
Stock" and, together with the Class A Common Stock, the "Company
Common Stock"), shall be converted into the right to receive the
Merger Consideration (as defined in Section 1.07(b)), upon the
terms and subject to the conditions set forth herein;
NOW, THEREFORE, in consideration of the foregoing and
the mutual covenants and agreements herein contained, and
intending to be legally bound hereby, Parent, Merger Sub and the
Company hereby agree as follows:
<PAGE>
<PAGE>
ARTICLE I
THE MERGER
----------
SECTION 1.01. The Merger. (a) Effective Time. At
---------- --------------
the Effective Time (as defined in Section 1.02 hereof), and
subject to and upon the terms and conditions of this Agreement
and the DGCL, Merger Sub shall be merged with and into the
Company, the separate corporate existence of Merger Sub shall
cease, and the Company shall continue as the surviving
corporation. The Company as the surviving corporation after the
Merger is hereinafter sometimes referred to as the "Surviving
Corporation."
(b) Closing. Unless this Agreement shall have been
-------
terminated and the transactions herein contemplated shall have
been abandoned pursuant to Section 7.01 and subject to the
satisfaction or waiver of the conditions set forth in Article VI,
the consummation of the Merger will take place as promptly as
practicable (and in any event within two business days) after
satisfaction or waiver of the conditions set forth in Article VI,
at the offices of Kramer, Levin, Naftalis & Frankel, 919 Third
Avenue, New York, New York, unless another date, time or place is
agreed to in writing by the parties hereto.
SECTION 1.02. Effective Time. As promptly as
--------------
practicable after the satisfaction or waiver of the conditions
set forth in Article VI, the parties hereto shall cause the
Merger to be consummated by filing a certificate of merger as
contemplated by the DGCL (the "Certificate of Merger"), together
with any required related certificates, with the Secretary of
State of the State of Delaware, in such form as required by, and
executed in accordance with the relevant provisions of, the DGCL
(the time of such filing being the "Effective Time").
SECTION 1.03. Effect of the Merger. At the Effective
--------------------
Time, the effect of the Merger shall be as provided in this
Agreement, the Certificate of Merger and 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 Merger Sub shall vest in the Surviving Corporation,
and all debts, liabilities and duties of the Company and Merger
Sub shall become the debts, liabilities and duties of the
Surviving Corporation.
SECTION 1.04. Certificate of Incorporation; By-Laws.
-------------------------------------
(a) Certificate of Incorporation. Unless otherwise determined
----------------------------
by Parent prior to the Effective Time, at the Effective Time the
Certificate of Incorporation of the Company, as in effect
immediately prior to the Effective Time, shall be the Certificate
of Incorporation of the Surviving Corporation until thereafter
amended as provided by the DGCL and such Certificate of
Incorporation; provided, however, that ARTICLE FOURTH shall be
-------- -------
amended and restated in its entirety to provide that the capital
stock of the Surviving Corporation shall consist of 100 shares of
Common Stock, par value $.01 per share.
(b) By-Laws. The By-Laws of the Company, as in effect
-------
immediately prior to the Effective Time, shall be the By-Laws of
the Surviving Corporation until<PAGE>
<PAGE>
thereafter amended as provided by the DGCL, the Certificate of
Incorporation of the Surviving Corporation and such By-Laws.
SECTION 1.05. Directors and Officers. The directors
----------------------
of Merger Sub immediately prior to the Effective Time shall be
the initial directors of the Surviving Corporation, each to hold
office in accordance with the Certificate of Incorporation and
By-Laws 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 respective successors are duly elected or appointed and
qualified.
SECTION 1.06. Effect on Capital Stock. At the
-----------------------
Effective Time, by virtue of the Merger and without any action on
the part of the Parent, Merger Sub, the Company or the holders of
any of the following securities:
(a) Conversion of Securities. The Shares issued and
------------------------
outstanding immediately prior to the Effective Time (excluding
any Shares to be canceled pursuant to Section 1.06(b)) shall be
converted, subject to Section 1.06(f), into the right to receive
shares of validly issued, fully paid and nonassessable shares
("Parent Shares") of Parent Common Stock, $.50 par value ("Parent
Common Stock") in the ratio (the "Exchange Ratio") of 0.172185 of
a share of Parent Common Stock for each such issued and
outstanding Share.
(b) Cancellation. Each Share held in the treasury of
------------
the Company and each Share owned by Parent, Merger Sub or any
direct or indirect wholly owned subsidiary of the Company or
Parent immediately prior to the Effective Time shall, by virtue
of the Merger and without any action on the part of the holder
thereof, cease to be outstanding, be canceled and retired without
payment of any consideration therefor and cease to exist.
(c) Assumption of Outstanding Stock Options. Each
---------------------------------------
option outstanding at the Effective Time to purchase shares of
Class A Common Stock (a "Stock Option") granted under (i) the
Carlisle Plastics, Inc. 1991 Employee Incentive Plan (the
"Company Stock Option Plan"), or (ii) any other stock plan or
agreement of the Company, whether vested or unvested, shall be
deemed assumed by Parent and deemed to constitute a fully vested
and exercisable option to acquire, on the same terms and
conditions (other than as to vesting) as were applicable under
such Stock Option prior to the Effective Time, the number of
Parent Shares as the holder of such Stock Option would have been
entitled to receive pursuant to the Merger had such holder
exercised such option in full immediately prior to the Effective
Time (not taking into account whether or not such option was in
fact exercisable), at a price per share equal to (x) the
aggregate exercise price for Company Common Stock otherwise
purchasable pursuant to such Stock Option divided by (y) the
number of Parent Shares deemed purchasable pursuant to such Stock
Option; provided, however, that the number of Parent Shares
-------- -------
Common Stock that may be purchased upon exercise of any such
Stock Option shall not include any fractional share and, upon
exercise of the Stock Option, a cash payment shall be made for
any fractional share based upon the Closing Price (as hereinafter
defined) of a share of Parent Common Stock on the trading day
immediately preceding the date of exercise. "Closing Price"
shall mean, on any day, the last reported sale price of one share
of parent Common Stock on the New York Stock Exchange ("NYSE").
<PAGE>
<PAGE>
As soon as practicable after the Effective Time, Parent
shall deliver to each holder of an outstanding Stock Option an
appropriate notice setting forth such holder's rights pursuant
thereto, and such Stock Option shall continue in effect on the
same terms and conditions, except as otherwise provided herein.
Parent shall take all corporate action necessary to
reserve for issuance a sufficient number of shares Parent Common
Stock for delivery upon exercise of Stock Options in accordance
with this Section 1.06(c). As soon as practicable after the
Effective Time, Parent shall cause the Parent Common Stock
subject to the Stock Options to be registered under the
Securities Act of 1933, as amended and the SEC's rules thereunder
(the "Securities Act") pursuant to a registration statement on
Form S-3 or Form S-8, as the case may be (or any successor or
other appropriate forms), or another appropriate form and shall
use its best efforts to maintain the effectiveness of such
registration statement or registration statements (and maintain
the current status of the prospectus or prospectuses contained
therein) for so long as the Stock Options remain outstanding;
except that with respect to the Stock Options of the individual
------ ----
referred to in clause (vi) of the second sentence of Section
2.03, Parent shall use its best efforts to maintain the
effectiveness of such registration statement (and maintain the
current status of the prospectus contained therein) for a period
of two (2) years from the Effective Time.
(d) Capital Stock of Merger Sub. Each share of common
---------------------------
stock, $.01 par value, of Merger Sub issued and outstanding
immediately prior to the Effective Time shall be converted into
and exchanged for one validly issued, fully paid and
nonassessable share of common stock, $0.01 par value, of the
Surviving Corporation.
(e) Adjustments to Exchange Ratio. The Exchange Ratio
-----------------------------
shall be adjusted to reflect fully the effect of any stock split,
reverse split, stock dividend (including any dividend or
distribution of securities convertible into Parent Common Stock),
reorganization, recapitalization or other like change with
respect to Parent Common Stock occurring after the date hereof
and prior to the Effective Time.
(f) Fractional Shares. No certificates or scrip
-----------------
representing less than one Parent Share shall be issued upon the
surrender for exchange of a certificate or certificates which
immediately prior to the Effective Time represented outstanding
Shares (the "Certificates"). In lieu of any such fractional
share, each holder of Shares who would otherwise have been
entitled to a fraction of a Parent Share upon surrender of
Certificates for exchange shall be paid upon such surrender cash
(without interest) in an amount equal to such holder's
proportionate interest in the net proceeds from the sale or sales
in the open market by the Exchange Agent (as defined in Section
1.07), on behalf of all such holders, of the aggregate fractional
Parent Shares issued pursuant to this Section 1.06(f). As soon
as practicable following the Effective Time, the Exchange Agent
shall determine the excess of (i) the number of full Parent
Shares delivered to the Exchange Agent by Parent over (ii) the
aggregate number of full Parent Shares to be distributed to
holders of Company Common Stock (such excess being herein called
the "Excess Shares"), and the Exchange Agent, as agent for the
former holders of Company Common Stock, shall sell the Excess
Shares at the prevailing prices on the NYSE. The sale of the
Excess Shares by the Exchange Agent shall be executed on the NYSE
through one or more member firms of the NYSE and shall be
<PAGE>
<PAGE>
executed in round lots to the extent practicable. Parent shall
pay all commissions, transfer taxes and other out-of-pocket
transaction costs, including the expenses and compensation of the
Exchange Agent, incurred in connection with such sale of Excess
Shares. Until the net proceeds of such sale have been
distributed to the former stockholders of the Company, the
Exchange Agent will hold such proceeds in trust for such former
stockholders. As soon as practicable after the determination of
the amount of cash to be paid to former stockholders of the
Company in lieu of any fractional interests, the Exchange Agent
shall make available in accordance with this Agreement such
amounts to such former stockholders.
SECTION 1.07. Exchange of Certificates. (a) Exchange
------------------------ --------
Agent. Parent shall supply, or shall cause to be supplied, to or
-----
for the account of the Bank of Boston or such other bank or trust
company as shall be mutually designated by the Company and Parent
(the "Exchange Agent"), in trust for the benefit of the holders
of Company Common Stock, for exchange in accordance with this
Section 1.07, through the Exchange Agent, certificates evidencing
the Parent Shares issuable pursuant to Section 1.06 in exchange
for outstanding Shares.
(b) Exchange Procedures. As soon as reasonably
-------------------
practicable after the Effective Time, Parent will instruct the
Exchange Agent to mail to each holder of record of 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 proper delivery of the Certificates to the
Exchange Agent and shall be in such form and have such other
provisions as Parent may reasonably specify), and (ii)
instructions to effect the surrender of the Certificates in
exchange for the certificates evidencing Parent Shares. Upon
surrender of a Certificate for cancellation to the Exchange Agent
together with such letter of transmittal, duly executed, and such
other customary documents as may be required pursuant to such
instructions, the holder of such Certificate shall be entitled to
receive in exchange therefor (A) certificates evidencing that
number of whole Parent Shares which such holder has the right to
receive in accordance with the Exchange Ratio in respect of the
Shares formerly evidenced by such Certificate, (B) any dividends
or other distributions to which such holder is entitled pursuant
to Section 1.07(c), and (C) cash in respect of fractional shares
as provided in Section 1.06(f) (the Parent Shares and cash being,
collectively, the "Merger Consideration"), and the Certificate so
surrendered shall forthwith be canceled. In the event of a
transfer of ownership of Shares which is not registered in the
transfer records of the Company as of the Effective Time, Parent
Shares, dividends, distributions, and cash in respect of
fractional shares, may be issued and paid in accordance with this
Article I to a transferee if the Certificate evidencing such
Shares is presented to the Exchange Agent, accompanied by all
documents required to evidence and effect such transfer pursuant
to this Section 1.07(b) and by evidence that any applicable stock
transfer taxes have been paid. Until so surrendered, each
outstanding Certificate that, prior to the Effective Time,
represented Shares of the Company Common Stock will be deemed
from and after the Effective Time, for all corporate purposes,
other than the payment of dividends and subject to Section
1.06(f), to evidence the ownership of the number of full Parent
Shares, and cash in respect of fractional shares, into which such
shares of the Company Common Stock shall have been so converted.
<PAGE>
<PAGE>
(c) Distributions With Respect to Unexchanged Parent
------------------------------------------------
Shares. No dividends or other distributions declared or made
------
after the Effective Time with respect to Parent Shares with a
record date after the Effective Time shall be paid to the holder
of any unsurrendered Certificate with respect to the Parent
Shares they are entitled to receive until the holder of such
Certificate shall surrender such Certificate. Subject to
applicable law, following surrender of any such Certificate,
there shall be paid to the record holder of the certificates
representing whole Parent Shares issued in exchange therefor,
without interest, at the time of such surrender, the amount of
dividends or other distributions with a record date after the
Effective Time theretofore paid with respect to such whole Parent
Shares.
(d) Transfers of Ownership. If any certificate for
----------------------
Parent Shares is to be issued in a name other than that in which
the Certificate surrendered in exchange therefor is registered,
it will be a condition of the issuance thereof that the
Certificate so surrendered will be properly endorsed and
otherwise in proper form for transfer and that the person
requesting such exchange will have paid to Parent or any agent
designated by it any transfer or other taxes required by reason
of the issuance of a certificate for Parent Shares in any name
other than that of the registered holder of the certificate
surrendered, or established to the satisfaction of Parent or any
agent designated by it that such tax has been paid or is not
payable.
(e) No Liability. Neither Parent, Merger Sub nor the
------------
Company shall be liable to any holder of Company Common Stock for
any Merger Consideration delivered to a public official pursuant
to any applicable abandoned property, escheat or similar law.
(f) Withholding Rights. Parent or the Exchange Agent
------------------
shall be entitled to deduct and withhold from the Merger
Consideration otherwise payable pursuant to this Agreement to any
holder of Company Common Stock such amounts as Parent or the
Exchange Agent is required to deduct and withhold with respect to
the making of such payment under the Code, or any provision of
state, local or foreign tax law. To the extent that amounts are
so withheld by Parent or the Exchange 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 Parent or the Exchange
Agent.
SECTION 1.08. Stock Transfer Books. At the Effective
--------------------
Time, the stock transfer books of the Company shall be closed,
and there shall be no further registration of transfers of the
Company Common Stock thereafter on the records of the Company.
SECTION 1.09. No Further Ownership Rights in Company
--------------------------------------
Common Stock. The Merger Consideration delivered upon the
------------
surrender for exchange of Shares in accordance with the terms
hereof shall be deemed to have been issued in full satisfaction
of all rights pertaining to such Shares, and there shall be no
further registration of transfers on the records of the Surviving
Corporation of Shares which were outstanding immediately prior to
the Effective Time. If, after the Effective Time, Certificates
are presented to the Surviving Corporation for any reason, they
shall be canceled and exchanged as provided in this Article I.
<PAGE>
<PAGE>
SECTION 1.10. Lost, Stolen or Destroyed Certificates.
--------------------------------------
In the event any Certificates shall have been lost, stolen or
destroyed, the Exchange Agent shall issue in exchange for such
lost, stolen or destroyed Certificates, upon the making of an
affidavit of that fact by the holder thereof, such Parent Shares
as may be required pursuant to Section 1.06; provided, however,
-------- -------
that Parent may, in its discretion and as a condition precedent
to the issuance thereof, require the owner of such lost, stolen
or destroyed Certificates to deliver a bond in such sum as it may
reasonably direct as indemnity against any claim that may be made
against Parent or the Exchange Agent with respect to the
Certificates alleged to have been lost, stolen or destroyed.
SECTION 1.11. Tax and Accounting Consequences. It is
-------------------------------
intended by the parties hereto that the Merger shall (i)
constitute a reorganization within the meaning of Section 368 of
the Code and (ii) at the option of Parent, subject to applicable
accounting standards, qualify for accounting treatment as a
pooling of interests; provided, however, that, without limiting
-------- -------
any other provision of this Agreement, it shall not be a
condition to the obligations of any party hereto to effect the
Merger that the Merger so qualify. The parties hereto hereby
adopt this Agreement as a "plan of reorganization" within the
meaning of Sections 1.368-2(g) and 1.368-3(a) of the United
States Treasury Regulations.
SECTION 1.12. Taking of Necessary Action; Further
-----------------------------------
Action. Each of Parent, Merger Sub and the Company will take all
------
such reasonable and lawful action as may be necessary or
appropriate in order to effectuate the Merger in accordance with
this Agreement as promptly as possible. If, at any time after
the Effective Time, any such further action is necessary or
desirable to carry out the purposes of this Agreement and to vest
the Surviving Corporation with full right, title and possession
to all assets, property, rights, privileges, powers and
franchises of the Company and Merger Sub, the officers and
directors of the Company and Merger Sub immediately prior to the
Effective Time are fully authorized in the name of their
respective corporations or otherwise to take, and will take, all
such lawful and necessary action.
SECTION 1.13. Material Adverse Effect. When used in
-----------------------
connection with the Company or any of its subsidiaries, or Parent
or any of its subsidiaries, as the case may be, the term
"Material Adverse Effect" means any change, effect or
circumstance that, individually or when taken together with all
other such changes, effects or circumstances that have occurred
prior to the date of determination of the occurrence of the
Material Adverse Effect, is or is reasonably likely to be
materially adverse to the business, assets (including intangible
assets), financial condition or results of operations of the
Company and its subsidiaries or Parent and its subsidiaries, as
the case may be, in each case taken as a whole. Parent
acknowledges that changes in the Company's financial condition or
results of operations resulting or reasonably likely to result
from any increase in the price of resin disclosed by the Company
to Parent on or before the date of this Agreement shall not be
deemed to constitute a Material Adverse Effect with respect to
the Company.
<PAGE>
<PAGE>
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
---------------------------------------------
The Company hereby represents and warrants to Parent
and Merger Sub that, except as set forth in the written
disclosure schedule previously delivered (or, to the extent set
forth below, to be delivered) by the Company to Parent (the
"Company Disclosure Schedule"):
SECTION 2.01. Organization and Qualification;
-------------------------------
Subsidiaries. Each of the Company and each of its subsidiaries
------------
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 and is in
possession of all franchises, grants, authorizations, licenses,
permits, easements, consents, certificates, approvals and orders
("Approvals") necessary to own, lease and operate the properties
it purports to own, operate or lease and to carry on its business
as it is now being conducted, except where the failure to be so
organized, existing and in good standing or to have such power,
authority and Approvals could not reasonably be expected to have
a Material Adverse Effect. Each of the Company and its
subsidiaries is duly qualified or licensed as a foreign
corporation to do business, and is in good standing, in each
jurisdiction where the character of its properties owned, leased
or operated by it or the nature of its activities makes such
qualification or licensing necessary, except for such failures to
be so duly qualified or licensed and in good standing that could
not reasonably be expected to have a Material Adverse Effect. A
true and complete list of all of the Company's subsidiaries,
together with the jurisdiction of incorporation of each
subsidiary and the percentage of each subsidiary's outstanding
capital stock owned by the Company or another subsidiary, is set
forth in Section 2.01 of the Company Disclosure Schedule. Except
as set forth in Section 2.01 of the Company Disclosure Schedule
or the Company SEC Reports (as defined below), the Company does
not directly or indirectly own any equity or similar interest in,
or any interest convertible into or exchangeable or exercisable
for, any equity or similar interest in, any corporation,
partnership, joint venture or other business association or
entity, with respect to which interest the Company has invested
or is required to invest $100,000 or more, excluding securities
in any publicly traded company held for investment by the Company
and comprising less than five percent of the outstanding stock of
such company.
SECTION 2.02. Certificate of Incorporation and By-
-----------------------------------
Laws. The Company has heretofore furnished to Parent a complete
----
and correct copy of its Certificate of Incorporation and By-Laws
as most recently restated and subsequently amended to date, and
has furnished or made available to Parent the Certificate of
Incorporation and By-Laws (or equivalent organizational
documents) of each of its subsidiaries (the "Subsidiary
Documents"). Such Certificate of Incorporation, By-Laws and
Subsidiary Documents are in full force and effect. Neither the
Company nor any of its subsidiaries is in violation of any of the
provisions of its Certificate of Incorporation or By-Laws or
Subsidiary Documents, except for immaterial violations of the
Subsidiary Documents which may exist.
<PAGE>
<PAGE>
SECTION 2.03. Capitalization. The authorized capital
--------------
stock of the Company consists of 70,000,000 shares of Company
Common Stock and 10,000,000 shares of Preferred Stock, par value
$.01 (the "Company Preferred Stock"). As of April 30, 1996,
(i) 8,468,788 shares of Class A Common Stock were issued and
outstanding, all of which are validly issued, fully paid and
nonassessable, and no such shares were held in treasury, (ii)
9,385,497 shares of Class B Common Stock were issued and
outstanding, all of which were validly issued, fully paid and
nonassessable, and no such shares were held in treasury, (iii) no
shares of Company Preferred Stock were outstanding or held in
treasury, (iv) no shares of Company Common Stock or Company
Preferred Stock were held by subsidiaries of the Company, (v)
1,266,700 shares of Company Common Stock were reserved for future
issuance pursuant to outstanding stock options granted under
Company Stock Option Plan and 613,300 shares were reserved for
future grants under such plan, and (vi) 400,000 shares were
reserved for issuance upon exercise of options granted to the
individual named in Section 2.03 of the Company Disclosure
Schedule. No material change in such capitalization has occurred
between April 30, 1996 and the date hereof. Except as set forth
in Section 2.01, this Section 2.03 or Section 2.11 or in Section
2.03 or Section 2.11 of the Company Disclosure Schedule or the
Company SEC Reports, there are no options, warrants or other
rights, agreements, arrangements or commitments of any character
relating to the issued or unissued capital stock of the Company
or any of its subsidiaries or obligating the Company or any of
its subsidiaries to issue or sell any shares of capital stock of,
or other equity interests in, the Company or any of its
subsidiaries. All shares of Company Common Stock subject to
issuance as aforesaid, upon issuance on the terms and conditions
specified in the instruments pursuant to which they are issuable,
shall be duly authorized, validly issued, fully paid and
nonassessable. Except as disclosed in Section 2.03 of the
Company Disclosure Schedule or the Company SEC Reports, there are
no obligations, contingent or otherwise, of the Company or any of
its subsidiaries to repurchase, redeem or otherwise acquire any
shares of Company Common Stock or the capital stock of any
subsidiary or to provide funds to or make any investment (in the
form of a loan, capital contribution or otherwise) in any such
subsidiary or any other entity other than guarantees of bank
obligations of subsidiaries entered into in the ordinary course
of business. Except as set forth in Sections 2.01 and 2.03 of
the Company Disclosure Schedule, all of the outstanding shares of
capital stock (other than directors' qualifying shares) of each
of the Company's subsidiaries is duly authorized, validly issued,
fully paid and nonassessable, and all such shares (other than
directors' qualifying shares and a de minimis number of shares
owned by employees of such subsidiaries) are owned by the Company
or another subsidiary free and clear of all security interests,
liens, claims, pledges, agreements, limitations in the Company's
voting rights, charges or other encumbrances of any nature
whatsoever.
SECTION 2.04. Authority Relative to this Agreement.
------------------------------------
The Company has all necessary corporate power and authority to
execute and deliver this Agreement and to perform its obligations
hereunder and to consummate the transactions contemplated hereby.
The execution and delivery of this Agreement by the Company and
the consummation by the Company of the transactions contemplated
hereby have been duly and validly authorized by all necessary
corporate action, and no other corporate proceedings on the part
of the Company are necessary to authorize this Agreement or to
consummate the transactions so contemplated (other than the
adoption of this Agreement by the holders of at least a majority
of the outstanding shares of Company Common Stock entitled to
vote in accordance with the<PAGE>
<PAGE>
DGCL and the Company's Certificate ofIncorporation and By-Laws).
The Board of Directors of the Company has determined that it is advisable
and in the best interest of the Company's stockholders for the Company
to enter into this Agreement and to consummate upon the terms and subject
to the conditions of this Agreement. This Agreement has been
duly and validly executed and delivered by the Company and,
assuming the due authorization, execution and delivery by Parent
and Merger Sub, as applicable, constitutes a legal, valid and
binding obligation of the Company.
SECTION 2.05. No Conflict; Required Filings and
---------------------------------
Consents. (a) Section 2.05(a) of the Company Disclosure
--------
Schedule includes a list of (i) all loan agreements, indentures,
mortgages, pledges, conditional sale or title retention
agreements, security agreements, equipment obligations,
guaranties, standby letters of credit, equipment leases or lease
purchase agreements, each in an amount equal to or exceeding
$500,000, to which the Company or any of its subsidiaries is a
party or by which any of them is bound; (ii) all contracts,
agreements, commitments or other understandings or arrangements
to which the Company or any of its subsidiaries is a party or by
which any of them or any of their respective properties or assets
are bound or affected, but excluding contracts, agreements,
commitments or other understandings or arrangements (other than
resin purchase contracts) entered into in the ordinary course of
business and involving, in each case, payments or receipts by the
Company or any of its subsidiaries of less than $250,000 in any
single instance but not more than $1,000,000 in the aggregate;
(iii) all agreements which, as of the date hereof, are required
to be filed as "material contracts" with the Securities and
Exchange Commission ("SEC") pursuant to the requirements of the
Securities Exchange Act of 1934, as amended, and the SEC's rules
thereunder (the "Exchange Act"); and (iv) all agreements or
arrangements to which the Company or any of its subsidiaries is a
party or by which any of them is bound for the manufacture of
plastic hangers by other persons for, on behalf of, or using
molds supplied by, the Company.
(b) Except as set forth in Section 2.05(b) of the
Company Disclosure Schedule, the execution and delivery of this
Agreement by the Company does not, and the performance of this
Agreement by the Company will not, (i) conflict with or violate
the Certificate of Incorporation or By-Laws of the Company, (ii)
conflict with or violate any law, rule, regulation, order,
judgment or decree applicable to the Company or any of its
subsidiaries or by which its or any of their respective
properties is bound or affected, or (iii) result in any breach of
or constitute a default (or an event that with notice or lapse of
time or both would become a default), or impair the Company's or
any of its subsidiaries' rights or alter the rights or
obligations of any third party under, or give to others any
rights of termination, amendment, acceleration or cancellation
of, or result in the creation of a lien or encumbrance on any of
the properties or assets of the Company or any of its
subsidiaries pursuant to, any note, bond, mortgage, indenture,
contract, agreement, lease, license, permit, franchise or other
instrument or obligation to which the Company or any of its
subsidiaries is a party or by which the Company or any of its
subsidiaries or its or any of their respective properties is
bound or affected, except in any such case for any such
conflicts, violations, breaches, defaults or other occurrences
that could not reasonably be expected to have a Material Adverse
Effect.
<PAGE>
<PAGE>
(c) The execution and delivery of this Agreement by
the Company does not, and the performance of this Agreement by
the Company will not, require any consent, approval,
authorization or permit of, or filing with or notification to,
any governmental or regulatory authority, domestic or foreign,
except (i) for applicable requirements, if any, of the Securities
Act, the Exchange Act, state securities laws ("Blue Sky Laws"),
the pre-merger notification requirements of the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended, and the rules and
regulations thereunder (the "HSR Act"), filings and consents as
may be required under any environmental, health or safety law or
regulation pertaining to any notification, disclosure or required
approval triggered by the Merger or the transactions contemplated
by this Agreement, and the filing and recordation of appropriate
merger or other documents as required by the DGCL, and (ii) where
the failure to obtain such consents, approvals, authorizations or
permits, or to make such filings or notifications, would not
prevent or delay consummation of the Merger, or otherwise prevent
or delay the Company from performing its obligations under this
Agreement, or would not otherwise reasonably be expected to have
a Material Adverse Effect.
SECTION 2.06. Compliance; Permits. (a) Except as
-------------------
disclosed in Section 2.06 of the Company Disclosure Schedule,
neither the Company nor any of its subsidiaries is in conflict
with, or in default or violation of, (i) any law, rule,
regulation, order, judgment or decree applicable to the Company
or any of its subsidiaries or by which its or any of their
respective properties is bound or affected or (ii) any note,
bond, mortgage, indenture, contract, agreement, lease, license,
permit, franchise or other instrument or obligation to which the
Company or any of its subsidiaries is a party or by which the
Company or any of its subsidiaries or its or any of their
respective properties is bound or affected, except for any such
conflicts, defaults or violations which could not reasonably be
expected to have a Material Adverse Effect.
(b) Except as disclosed in Section 2.06 of the Company
Disclosure Schedule, the Company and its subsidiaries hold all
permits, licenses, easements, variances, exemptions, consents,
certificates, orders and approvals from governmental authorities
which are material to the operation of the business of the
Company and its subsidiaries taken as a whole as it is now being
conducted (collectively, the "Company Permits"). The Company and
its subsidiaries are in compliance with the terms of the Company
Permits, except where the failure to so comply could not
reasonably be expected to have a Material Adverse Effect.
SECTION 2.07. SEC Filings; Financial Statements. (a)
---------------------------------
The Company has filed all forms, reports and documents required
to be filed with the SEC since December 31, 1993 and has made
available to Parent (i) its Annual Reports on Form 10-K for the
fiscal years ended December 31, 1993, December 31, 1994 and
December 31, 1995, (ii) its Quarterly Report on Form 10-Q for the
quarterly period ended March 31, 1996, (iii) all proxy statements
relating to the Company's meetings of stockholders (whether
annual or special) held since December 31, 1993, (iv) all other
reports or registration statements (other than Reports on Form
10-Q not referred to in clause (ii) above) filed by the Company
with the SEC since December 31, 1993, and (v) all amendments and
supplements to all such reports and registration statements filed
by the Company with the SEC (collectively, the "Company SEC
Reports"). Except as disclosed in Section 2.07 of the Company
Disclosure Schedule, the Company SEC Reports (i) were prepared in
all material respects in accordance<PAGE>
<PAGE>
with the requirements of the Securities Act or the Exchange Act, as the
case may be, and (ii) did not at the time they were filed (or if amended
or superseded by a filing prior to the date of this Agreement, then on the
date of such filing) 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.
None of the Company's subsidiaries is required to file any forms,
reports or other documents with the SEC.
(b) Each of the consolidated financial statements
(including, in each case, any related notes thereto) contained in
the Company SEC Reports and the Company's 1995 Annual Report to
Stockholders was prepared in accordance with generally accepted
accounting principles ("GAAP") applied on a consistent basis
throughout the periods involved (except as may be indicated in
the notes thereto), and each fairly in all material respects
presents the consolidated financial position of the Company and
its subsidiaries as at the respective dates thereof and the
consolidated results of its operations and cash flows for the
periods indicated, except that the unaudited interim financial
statements were or are subject to normal and recurring year-end
adjustments which were not or are not expected to be material in
amount. The monthly consolidated income statement for April 1996
furnished by the Company to Parent was prepared in a manner
consistent with the consolidated financial statements contained
in the Company SEC Reports, and fairly in all material respects
presents the consolidated results of its operations for the
period indicated, except that such statement is subject to normal
and recurring quarterly and year-end adjustments, which were not
or are not expected to be material in amount.
SECTION 2.08. Absence of Certain Changes or Events.
------------------------------------
Except as set forth in Section 2.08 of the Company Disclosure
Schedule or the Company SEC Reports, since December 31, 1995, the
Company has conducted its business in the ordinary course and
there has not occurred: (i) any Material Adverse Effect; (ii)
any amendments or changes in the Certificate of Incorporation or
By-laws of the Company; (iii) any damage to, destruction or loss
of any asset of the Company (whether or not covered by insurance)
that could reasonably be expected to have a Material Adverse
Effect; (iv) any material change by the Company in its accounting
methods, principles or practices; (v) any material revaluation by
the Company of any of its assets, including, without limitation,
writing down the value of inventory or writing off notes or
accounts receivable other than in the ordinary course of
business; (vi) any other action or event that would have required
the consent of Parent pursuant to Section 4.01 had such action or
event occurred after the date of this Agreement; or (vii) any
sale of a material amount of property of the Company, except in
the ordinary course of business.
SECTION 2.09. No Undisclosed Liabilities. Except as
--------------------------
set forth in Section 2.09 of the Company Disclosure Schedule or
the Company SEC Reports, neither the Company nor any of its
subsidiaries has any liabilities (absolute, accrued, contingent
or otherwise), except liabilities (a) in the aggregate adequately
provided for in the Company's audited balance sheet (including
any related notes thereto) for the fiscal year ended December 31,
1995 included in the Company's 1995 Annual Report to Stockholders
(the "1995 Balance Sheet"), (b) incurred in the ordinary course
of business and not required under GAAP to be reflected on the
1995 Balance Sheet, (c) incurred since December 31, 1995 in the ordinary
<PAGE>
<PAGE>
course of business consistent with past practice, (d)
incurred in connection with this Agreement, or (e) which could
not reasonably be expected to have a Material Adverse Effect.
SECTION 2.10. Absence of Litigation. Except as set
---------------------
forth in Section 2.10 of the Company Disclosure Schedule or the
Company SEC Reports, there are no claims, actions, suits,
proceedings or investigations pending or, to the knowledge of the
Company, overtly threatened against the Company or any of its
subsidiaries, or any properties or rights of the Company or any
of its subsidiaries, before any court, arbitrator or
administrative, governmental or regulatory authority or body,
domestic or foreign, that could reasonably be expected to have a
Material Adverse Effect.
SECTION 2.11. Employee Benefit Plans; Employment
----------------------------------
Agreements. (a) Section 2.11(a) of the Company Disclosure
----------
Schedule lists all employee pension plans (as defined in Section
3(2) of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA")), all employee welfare plans (as defined in
Section 3(1) of ERISA, and all other bonus, stock option, stock
purchase, incentive, deferred compensation, supplemental
retirement, severance and other similar fringe or employee
benefit plans, programs or arrangements, and any employment,
executive compensation or severance agreements, written or
otherwise, as amended, modified or supplemented, for the benefit
of, or relating to, any former or current employee, officer or
consultant (or any of their beneficiaries) of the Company or any
other entity (whether or not incorporated) which is a member of a
controlled group including the Company or which is under common
control with the Company (an "ERISA Affiliate") within the
meaning of Section 414 of the Code or Section 4001 of ERISA, or
any subsidiary of the Company, as well as each plan with respect
to which the Company or an ERISA Affiliate could incur liability
under Section 4069 (if such plan has been or were terminated) or
Section 4212(c) of ERISA or Section 412 of the Code (together,
the "Employee Plans"). There have been made available to Parent
copies of (i) each such written Employee Plan and all related
trust agreements, insurance and other contracts (including
policies), summary plan descriptions, summaries of material
modifications and communications distributed to plan
participants, (ii) the three most recent annual reports on Form
5500 series, with accompanying schedules and attachments, filed
with respect to each Employee Plan required to make such a
filing, (iii) the most recent actuarial valuation for each
Employee Plan subject to Title IV of ERISA, (iv) the latest
reports which have been filed with the Department of Labor with
respect to each Employee Plan required to make such filing and
(v) favorable determination letters issued for each Employee Plan
and related trust that are intended to satisfy the qualification
requirements of Section 401(a) and Section 501(a) of the Code
(or, if pending, a copy of the application for such
determination). For purposes of this Section 2.11, the term
"material," when used with respect to (i) any Employee Plan,
shall mean that the Company or an ERISA Affiliate has incurred or
may incur obligations in an amount exceeding $100,000 with
respect to such Employee Plan, and (ii) any liability,
obligation, breach or non-compliance, shall mean that the Company
or an ERISA Affiliate has incurred or may incur obligations in an
amount exceeding $50,000, with respect to any one such or series
of related liabilities, obligations, breaches, defaults,
violations or instances of non-compliance.
<PAGE>
<PAGE>
(b) Except as set forth in Section 2.11(b) of the
Company Disclosure Schedule, (i) none of the Employee Plans
promises or provides retiree medical or other retiree welfare
benefits to any person, and none of the Employee Plans is a
"multiemployer plan" as such term is defined in Section 3(37) of
ERISA; (ii) no party in interest or disqualified person (as
defined in Section 3(14) of ERISA and Section 4975 of the Code)
has at any time engaged in a transaction with respect to any
Employee Plan which could subject the Company or any ERISA
Affiliate, directly or indirectly, to a tax, penalty or other
material liability for prohibited transactions under ERISA or
Section 4975 of the Code; (iii) no fiduciary of any Employee Plan
has breached any of the responsibilities or obligations imposed
upon fiduciaries under Title I of ERISA, which breach could
result in any material liability to the Company or any ERISA
Affiliate; (iv) all Employee Plans have been established and
maintained substantially in accordance with their terms and have
operated in compliance in all material respects with the
requirements prescribed by any and all statutes (including ERISA
and the Code), orders, or governmental rules and regulations
currently in effect with respect thereto (including all
applicable requirements for notification to participants or the
Department of Labor, Internal Revenue Service (the "IRS") or
Secretary of the Treasury), and may by their terms be amended
and/or terminated at any time subject to applicable law, and the
Company and each of its subsidiaries have performed all material
obligations required to be performed by them under, are not in
any material respect in default under or violation of, and have
no knowledge of any default or violation by any other party to,
any of the Employee Plans; (v) each Employee Plan intended to
qualify under Section 401(a) of the Code and each trust intended
to qualify under Section 501(a) of the Code is the subject of a
favorable determination letter from the IRS, and nothing has
occurred which may reasonably be expected to impair such
determination; (vi) all contributions required to be made with
respect to any Employee Plan pursuant to Section 412 of the Code,
or the terms of the Employee Plan or any collective bargaining
agreement, have been made on or before their due dates; (vii)
with respect to each Employee Plan, no "reportable event" within
the meaning of Section 4043 of ERISA (excluding any such event
for which the 30 day notice requirement has been waived under the
regulations to Section 4043 of ERISA) has occurred for which
there is any material outstanding liability to the Company nor
any ERISA Affiliate; and (viii) neither the Company nor any ERISA
Affiliate has incurred or reasonably expects to incur any
liability under Title IV of ERISA (other than liability for
premium payments to the Pension Benefit Guaranty Corporation (the
PBGC") arising in the ordinary course).
(c) Section 2.11(c) of the Company Disclosure Schedule
sets forth a true and complete list of each current or former
employee, officer or director of the Company or any of its
subsidiaries who holds (i) any option to purchase Company Common
Stock as of the date hereof, together with the number of shares
of Company Common Stock subject to such option, the option price
of such option (to the extent determined as of the date hereof),
whether such option is intended to qualify as an incentive stock
option within the meaning of Section 422(b) of the Code (an
"ISO"), and the expiration date of such option; and (ii) any
other right, directly or indirectly, to acquire Company Common
Stock, together with the number of shares of Company Common Stock
subject to such right. Section 2.11(c) of the Company Disclosure
Schedule also sets forth the total number of such ISOs and such
nonqualified options.
<PAGE>
<PAGE>
(d) Section 2.11(d) of the Company Disclosure Schedule
sets forth a true and complete list of (i) all employment
agreements with officers of the Company or any of its
subsidiaries; (ii) all agreements with consultants who are
individuals obligating the Company or any of its subsidiaries to
make annual cash payments in an amount exceeding $50,000; (iii)
all officers of the Company or any of its subsidiaries who have
executed a non-competition agreement with the Company or any of
its subsidiaries; (iv) all severance agreements, programs and
policies of the Company or any of its subsidiaries with or
relating to its employees, in each case with outstanding
commitments exceeding $100,000, excluding programs and policies
required to be maintained by law; and (v) all Employee Plans
which contain change in control provisions.
(e) Except as set forth in Section 2.11(e) of the
Company Disclosure Schedule, no employee of the Company or any of
its subsidiaries has participated in any employee pension benefit
plans (as defined in Section 3(2) of ERISA) maintained by or on
behalf of the Company. The PBGC has not instituted proceedings
to terminate any defined benefit plan listed in Section 2.11(e)
of the Company Disclosure Schedule (each, a "Defined Benefit
Plan"). The Defined Benefit Plans have been terminated prior to
January 1, 1996, in accordance with ERISA Section 4041. Each
Defined Benefit Plan has an IRS determination letter stating that
its termination does not adversely affect its qualification.
Final distribution of the assets of each Defined Benefit Plan has
been made to participants through the purchase of annuities from
the Transamerica Insurance Company or by lump distributions and
there are no outstanding liabilities with respect to such plans
which would be material to the Company or its ERISA Affiliates.
All applicable premiums required to be paid to the PBGC with
respect to the Defined Benefit Plans have been paid. No facts
exist with respect to the Defined Benefit Plans which would give
rise to a lien on the assets of the Company under Section 4068 of
ERISA. All the assets of the Defined Benefit Plans are readily
marketable securities or insurance contracts.
(f) The Company has fiduciary liability insurance of
at least $1,000,000 in effect covering the fiduciaries of the
Employee Plans (including the Company) with respect to whom the
Company may have liability.
SECTION 2.12. Labor Matters. Except as set forth in
-------------
Section 2.12 of the Company Disclosure Schedule or the Company
SEC Reports, (i) there are no controversies pending or, to the
knowledge of the Company or any of its subsidiaries, threatened,
between the Company or any of its subsidiaries and any of their
respective employees, which controversies have had, or could
reasonably be expected to have, a Material Adverse Effect;
(ii) neither the Company nor any of its subsidiaries is a party
to any material collective bargaining agreement or other labor
union contract applicable to persons employed by the Company or
its subsidiaries, nor does the Company or any of its subsidiaries
know of any activities or proceedings of any labor union to
organize any such employees; and (iii) neither the Company nor
any of its subsidiaries has any knowledge of any strikes,
slowdowns, work stoppages, lockouts, or threats thereof, by or
with respect to any employees of the Company or any of its
subsidiaries which could reasonably be expected to have a
Material Adverse Effect.
<PAGE>
<PAGE>
SECTION 2.13. Registration Statement; Proxy
-----------------------------
Statement/Prospectus. Subject to the accuracy of the
--------------------
representations of Parent in Section 3.13, the information
supplied by the Company for inclusion in the Registration
Statement (as defined in Section 3.13) shall not at the time the
Registration Statement is declared effective by the SEC 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 the light of the circumstances
under which they were made, not misleading. The information
supplied by the Company for inclusion in the proxy
statement/prospectus to be sent to the stockholders of the
Company in connection with the meeting of the stockholders of the
Company to consider the Merger (the "Company Stockholders
Meeting") (such proxy statement/prospectus as amended or
supplemented is referred to herein as the "Proxy
Statement/Prospectus") will not, on the date the Proxy
Statement/Prospectus (or any amendment thereof or supplement
thereto) is first mailed to stockholders, at the time of the
Company Stockholders Meeting, or at the Effective Time, contain
any statement which, at such time and in light of the
circumstances under which it shall be made, is false or
misleading with respect to any material fact, or shall omit to
state any material fact necessary in order to make the statements
made therein not false or misleading; or omit to state any
material fact necessary to correct any statement in any earlier
communication with respect to the solicitation of proxies for the
Company Stockholders Meeting which has become false or
misleading. If at any time prior to the Effective Time any event
relating to the Company or any of its respective affiliates,
officers or directors should be discovered by the Company which
should be set forth in an amendment to the Registration Statement
or a supplement to the Proxy Statement/Prospectus, the Company
shall promptly inform Parent and Merger Sub. The Proxy
Statement/Prospectus shall comply in all material respects with
the requirements of the Securities Act, the Exchange Act and the
rules and regulations thereunder. Notwithstanding the foregoing,
the Company makes no representation or warranty with respect to
any information supplied by Parent or Merger Sub which is
contained or incorporated by reference in, or furnished in
connection with the preparation of, the Registration Statement or
the Proxy Statement/Prospectus.
SECTION 2.14. Restrictions on Business Activities.
-----------------------------------
Except for this Agreement or as set forth in Section 2.14 of the
Company Disclosure Schedule or the Company SEC Reports, to the
best of the Company's knowledge, there is no agreement,
judgement, injunction, order or decree binding upon the Company
or any of its subsidiaries which has or could reasonably be
expected to have the effect of prohibiting or impairing any
business practice of the Company or any of its subsidiaries,
acquisition of property by the Company or any of its subsidiaries
or the conduct of business by the Company or any of its
subsidiaries as currently conducted or as proposed to be
conducted by the Company, except for any prohibition or
impairment as could not reasonably be expected to have a Material
Adverse Effect.
SECTION 2.15. Title to Property. Except as set forth
-----------------
in Section 2.15 of the Company Disclosure Schedule, the Company
and each of its subsidiaries have good and defensible title to
all of their properties and assets, free and clear of all liens,
charges and encumbrances, except liens for taxes not yet due and
payable and such liens or other imperfections of title, if any,
as do not materially detract from the value of or interfere with
the present use of the property affected thereby or which could
not reasonably be expected to<PAGE>
<PAGE>
have a Material Adverse Effect; and, to the knowledge of the Company, all
leases pursuant to which the Company or any of its subsidiaries lease from
others material amounts of real or personal property, are in good
standing, valid and effective in accordance with their respective
terms, and there is not, to the knowledge of the Company, under
any of such leases, any existing material default or event of
default (or event which with notice or lapse of time, or both,
would constitute a material default), except where the lack of
such good standing, validity and effectiveness or the existence
of such default or event of default could not reasonably be
expected to have a Material Adverse Effect.
SECTION 2.16. Taxes. (a) For purposes of this
-----
Agreement, "Tax" or "Taxes" shall mean taxes, fees, levies,
duties, tariffs, imposts, and governmental impositions or charges
of any kind in the nature of (or similar to) taxes, payable to
any federal, state, local or foreign taxing authority, including
(without limitation) (i) income, franchise, profits, gross
receipts, ad valorem, net worth, value added, sales, use,
----------
service, real or personal property, special assessments, capital
stock, license, payroll, withholding, employment, social
security, workers' compensation, unemployment compensation,
utility, severance, production, excise, stamp, occupation,
premiums, windfall profits, transfer and gains taxes, and (ii)
interest, penalties, additional taxes and additions to tax
imposed with respect thereto; and "Tax Returns" shall mean
returns, reports, and information statements with respect to
Taxes required to be filed with the IRS or any other taxing
authority, domestic or foreign, including, without limitation,
consolidated, combined and unitary tax returns (including returns
required in connection with any Employee Plan).
(b) Other than as disclosed in Section 2.16(b) of the
Company Disclosure Schedule or the Company SEC Reports: The
Company and its subsidiaries have filed all United States federal
income Tax Returns and all other material Tax Returns required to
be filed by them, and the Company and its subsidiaries have paid
and discharged all Taxes due in connection with or with respect
to the periods or transactions covered by such Tax Returns and
have paid all other Taxes as are due, except such as are being
contested in good faith by appropriate proceedings (to the extent
that any such proceedings are required), and there are no other
taxes that would be due if asserted by a taxing authority, except
with respect to which the Company is maintaining reserves to the
extent currently required unless the failure to do so could not
reasonably be expected to have a Material Adverse Effect. Except
as does not involve or would not result in liability to the
Company or any of its subsidiaries that could reasonably be
expected to have a Material Adverse Effect, (i) there are no tax
liens on any assets of the Company or any subsidiary thereof; and
(ii) neither the Company nor any of its subsidiaries has granted
any waiver of any statute of limitations with respect to, or any
extension of a period for the assessment of, any Tax. The
accruals and reserves for Taxes (including deferred taxes)
reflected in the 1995 Balance Sheet are in all material respects
adequate to cover all Taxes accruable through the date thereof
(including interest and penalties, if any, thereon and Taxes
being contested) in accordance with GAAP.
(c) The Company on behalf of itself and all its
subsidiaries hereby represents that, other than as disclosed in
Section 2.16(c) of the Company Disclosure Schedule or the Company
SEC Reports, and other than with respect to items the inaccuracy
of which could not reasonably be expected to have a Material
Adverse Effect: Neither the Company nor any of its subsidiaries
is obligated under any agreement with respect to<PAGE>
<PAGE>
industrial development bonds or other obligations with respect to which
the excludability from gross income of the holder for federal or
state income tax purposes could be affected by the transactions
contemplated hereunder. Neither the Company nor any of its
subsidiaries is, or has been, a United States real property
holding corporation (as defined in Section 897(c)(2) of the Code)
during the applicable period specified in Section
897(c)(1)(A)(ii) of the Code. To the best knowledge of the
Company, neither the Company nor any of its subsidiaries owns any
property of a character, the indirect transfer of which, pursuant
to this Agreement, would give rise to any material documentary,
stamp or other transfer tax.
SECTION 2.17. Environmental Matters. Except as set
---------------------
forth in Section 2.17 of the Company Disclosure Schedule or the
Company SEC Reports, and except in all cases as, in the
aggregate, have not had and could not reasonably be expected to
have a Material Adverse Effect, to the best of the Company's
knowledge, the Company and each of its subsidiaries (i) have
obtained all applicable permits, licenses and other authorization
which are required to be obtained under all applicable federal,
state or local laws or any regulation, code, plan, order, decree,
judgment, notice or demand letter issued, entered, promulgated or
approved thereunder ("Environmental Laws") relating to pollution
or protection of the environment, including laws relating to
emissions, discharges, releases or threatened releases of
pollutants, contaminants, or hazardous or toxic materials or
wastes into ambient air, surface water, ground water, or land or
otherwise relating to the manufacture, processing, distribution,
use, treatment, storage, disposal, transport, or handling of
pollutants, contaminants or hazardous or toxic materials or
wastes by the Company or its subsidiaries (or their respective
agents); (ii) are in compliance with all terms and conditions of
such required permits, licenses and authorization, and also are
in compliance with all other limitations, restrictions,
conditions, standards, prohibitions, requirements, obligations,
schedules and timetables contained in applicable Environmental
Laws; (iii) as of the date hereof, are not aware of nor have
received notice of any past or present violations of
Environmental Laws or any event, condition, circumstance,
activity, practice, incident, action or plan which is reasonably
likely to interfere with or prevent continued compliance with or
which would give rise to any common law or statutory liability,
or otherwise form the basis of any claim, action, suit or
proceeding, against the Company or any of its subsidiaries based
on or resulting from the manufacture, processing, distribution,
use, treatment, storage, disposal, transport or handling, or the
emission, discharge or release into the environment, of any
pollutant, contaminant or hazardous or toxic material or waste;
and (iv) have taken all actions necessary under applicable
Environmental Laws to register any products or materials required
to be registered by the Company or its subsidiaries (or any of
their respective agents) thereunder.
SECTION 2.18. Brokers. No broker, finder or
-------
investment banker (other than Goldman, Sachs & Co., the fees and
expenses of whom will be paid by the Company) 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 or on behalf of the Company. The Company
has heretofore furnished to Parent a complete and correct copy of
all agreements between the Company and Goldman, Sachs & Co.
pursuant to which such firms would be entitled to any payment
relating to the transactions contemplated hereunder.
<PAGE>
<PAGE>
SECTION 2.19. Full Disclosure. No statement contained
---------------
in any certificate or schedule furnished or to be furnished by
the Company or its subsidiaries to Parent or Merger Sub in, or
pursuant to the provisions of, this Agreement contains or shall
contain any untrue statement of a material fact or omits or will
omit to state any material fact necessary, in the light of the
circumstances under which it was made, in order to make
statements herein or therein not misleading.
SECTION 2.20. Intellectual Property. (a) The Company
---------------------
and/or each of its subsidiaries owns, or is licensed or otherwise
possesses legally enforceable rights to use all patents,
trademarks, trade names, service marks, copyrights, and any
applications therefor, technology, know-how, computer software
programs or applications, and tangible or intangible proprietary
information or material that are used in the business of the
Company and its subsidiaries as currently conducted, except as
could not reasonably be expected to have a Material Adverse
Effect.
(b) Except as disclosed in Section 2.20(b) of the
Company Disclosure Schedule or the Company SEC Reports or as
could not reasonably be expected to have a Material Adverse
Effect: The Company is not, nor will it be as a result of the
execution and delivery of this Agreement or the performance of
its obligations hereunder, in violation of any licenses,
sublicenses and other agreements as to which the Company is a
party and pursuant to which the Company is authorized to use any
third-party patents, trademarks, service marks and copyrights
("Third-Party Intellectual Property Rights"). No claims with
respect to the patents, registered and material unregistered
trademarks and service marks, registered copyrights, trade names
and any applications therefor owned by the Company or any of its
subsidiaries (the "Company Intellectual Property Rights"), any
trade secret material to the Company, or Third Party Intellectual
Property Rights to the extent arising out of any use,
reproduction or distribution of such Third Party Intellectual
Property Rights by or through the Company or any of its
subsidiaries, are currently pending or, to the knowledge of the
Company, are overtly threatened by any person. The Company does
not know of any valid grounds for any bona fide claims (i) to the
effect that the manufacture, sale, licensing or use of any
product as now used, sold or licensed or proposed for use, sale
or license by Company or any of its subsidiaries, infringes on
any copyright, patent, trademark, service mark or trade secret;
(ii) against the use by the Company or any of its subsidiaries,
of any trademarks, trade names, trade secrets, copyrights,
patents, technology, know-how or computer software programs and
applications used in the business of the Company or any of its
subsidiaries as currently conducted or as proposed to be
conducted; (iii) challenging the ownership, validity or
effectiveness of any of the Company Intellectual Property Rights
or other trade secret material to the Company; or (iv)
challenging the license or legally enforceable right to use of
the Third Party Intellectual Rights by the Company or any of its
subsidiaries.
(c) To the Company's knowledge, all material patents,
registered trademarks, service marks and copyrights held by the
Company are valid and subsisting. Except as set forth in Section
2.20(c) of the Company Disclosure Schedule or the Company SEC
Reports, to the Company's knowledge, there is no material
unauthorized use, infringement or misappropriation of any of the
Company Intellectual Property by any third party, including any
employee or former employee of the Company or any of its
subsidiaries.
<PAGE>
<PAGE>
SECTION 2.21. Interested Party Transactions. Except
-----------------------------
as set forth in Section 2.21 of the Company Disclosure Schedule
or the Company SEC Reports or for events as to which the amounts
involved do not, in the aggregate, exceed $100,000, since the
date of the Company's proxy statement dated March 15, 1996 (the
"1996 Company Proxy Statement"), no event has occurred that would
be required to be reported as a Certain Relationship or Related
Transaction, pursuant to Item 404 of Regulation S-K promulgated
by the SEC.
SECTION 2.22. Insurance. All material fire and
---------
casualty, general liability, business interruption, product
liability and sprinkler and water damage insurance policies
maintained by the Company or any of its subsidiaries are with
reputable insurance carriers, provide full and adequate coverage
for all normal risks incident to the business of the Company and
its subsidiaries and their respective properties and assets and
are in character and amount at least equivalent to that carried
by persons engaged in similar businesses and subject to the same
or similar perils or hazards, except as could not reasonably be
expected to have a Material Adverse Effect.
SECTION 2.23. Product Liability and Recalls. (a)
-----------------------------
Except as disclosed in Section 2.23(a) of the Company Disclosure
Schedule or the Company SEC Reports, the Company is not aware of
any claim, or the basis of any claim, against the Company or any
of its subsidiaries for injury to person or property of employees
or any third parties suffered as a result of the sale of any
product or performance of any service by the Company or any of
its subsidiaries, including claims arising out of the defective
or unsafe nature of its products or services, which could
reasonably be expected to have a Material Adverse Effect.
(b) Except as disclosed in Section 2.23(b) of the
Company Disclosure Schedule or the Company SEC Reports, there is
no pending or, to the knowledge of the Company, threatened recall
or investigation of any product sold by the Company, which recall
or investigation could reasonably be expected to have a Material
Adverse Effect.
SECTION 2.24. Inventory. The inventories of the
---------
Company and its subsidiaries as reflected in the most recent
financial statements contained in the Company SEC Reports, or
acquired by the Company or any of its subsidiaries after the date
thereof, (i) are carried at an amount not in excess of the lower
of cost or net realizable value, and (ii) do not include any
inventory which is obsolete, surplus or not usable or saleable in
the lawful and ordinary course of business of the Company and its
subsidiaries as heretofore conducted, in each case net of
reserves provided therefor.
SECTION 2.25. Opinion of Financial Advisor. The
----------------------------
Company has been advised by its financial advisor, Goldman, Sachs
& Co., to the effect that in its opinion, as of the date hereof,
the Exchange Ratio is fair to the holders of Shares. It is
agreed and understood that such opinion is for the benefit of the
Board of Directors of the Company and may not be relied upon by
Parent, Merger Sub or their affiliates.
SECTION 2.26. Pooling Matters. To the Company's
---------------
knowledge and based upon consultation with its independent
accountants, the Company has provided to Parent and<PAGE>
<PAGE>
its independent accountants all information concerning actions taken
or agreed to be taken by the Company or any of its affiliates on
or before the date of this Agreement that could reasonably be
expected to adversely affect the ability of Parent to account for
the business combination to be effected by the Merger as a
pooling of interests. For purposes of this Section 2.26, "to the
Company's knowledge" means to the actual knowledge of the
Company's Chairman, Chief Executive Officer or Chief Financial
Officer.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
--------------------------------------------------------
Parent and Merger Sub hereby, jointly and severally, represent
and warrant to the Company that, except as set forth in the
written disclosure schedule previously delivered or, to the
extent set forth below, to be delivered, by Parent to the Company
(the "Parent Disclosure Schedule"):
SECTION 3.01. Organization and Qualification; Subsidiaries.
--------------------------------------------
Each of Parent and its subsidiaries 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 and is in possession of all
Approvals necessary to own, lease and operate the properties it
purports to own, operate or lease and to carry on its business as
it is now being conducted, except where the failure to be so
organized, existing and in good standing or to have such power,
authority and Approvals could not reasonably be expected to have
a Material Adverse Effect. Each of Parent and its subsidiaries
is duly qualified or licensed as a foreign corporation to do
business, and is in good standing, in each jurisdiction where the
character of its properties owned, leased or operated by it or
the nature of its activities makes such qualification or
licensing necessary, except for such failures to be so duly
qualified or licensed and in good standing that could not
reasonably be expected to have a Material Adverse Effect. A true
and complete list of all of Parent's subsidiaries, together with
the jurisdiction of incorporation of each subsidiary and the
percentage of each subsidiary's outstanding capital stock owned
by Parent or another subsidiary, is set forth in Section 3.01.
Except as set forth in Section 3.01 of the Parent Disclosure
Schedule or the Parent SEC Reports (as defined below), Parent
does not directly or indirectly own any equity or similar
interest in, or any interest convertible into or exchangeable or
exercisable for, any equity or similar interest in, any
corporation, partnership, joint venture or other business
association or entity, with respect to which Parent has invested
or is required to invest $1,000,000 or more, excluding securities
in any publicly traded company held for investment by Parent and
comprising less than five percent of the outstanding capital
stock of such company.
SECTION 3.02. Articles of Organization and By-Laws.
------------------------------------
Parent has heretofore furnished to the Company a complete and
correct copy of its Articles of Organization and the By-Laws, as
amended to date. Such Articles of Organization and By-Laws are
in full force and effect. Neither Parent nor Merger Sub is in
violation of any of the provisions of its Articles of
Organization (or Certificate of Incorporation) or By-Laws.
<PAGE>
<PAGE>
SECTION 3.03. Capitalization. (a) The authorized
--------------
capital stock of Parent consists of 180,000,000 shares of Parent
Common Stock and 2,000,000 shares of Preferred Stock, $1 par
value ("Parent Preferred Stock"). As of April 30, 1996, (i)
152,551,626 shares of Parent Common Stock were issued and
outstanding, all of which are validly issued, fully paid and non-
assessable, and 16,048,763 shares were held in treasury, (ii) no
shares of Parent Preferred Stock were outstanding or held in
treasury, (iii) no shares of Parent Common Stock or Parent
Preferred Stock were held by subsidiaries of the Parent, (iv)
1,395,434 shares of Parent Common Stock were reserved for future
issuance under Parent's 1994 Restricted Stock Ownership Plan, (v)
242,729 shares of Parent Common Stock were reserved for issuance
upon exercise of Warrants issued by Kendall International, Inc.
and assumed by Parent, (vi) 8,248,897 shares of Parent Common
Stock were reserved for issuance upon exercise of stock options
issued under the Tyco International Ltd. 1995 Stock Option Plan,
and (viii) 26,674 shares of Parent Common Stock were reserved for
issuance upon exercise of stock options issued under the stock
incentive plans maintained by Kendall International, Inc. No
material change in such capitalization has occurred between April
30, 1996 and the date hereof. Except as set forth in Section
3.03 of the Parent Disclosure Schedule or the Parent SEC Reports,
there are no options, warrants or other rights, agreements,
arrangements or commitments of any character relating to the
issued or unissued capital stock of Parent or any of its
subsidiaries or obligating Parent or any of its subsidiaries to
issue or sell any shares of capital stock of, or other equity
interests in, Parent or any of its subsidiaries. Except as set
forth in Section 3.03 of the Parent Disclosure Schedule or the
Parent SEC Reports, there are no obligations, contingent or
otherwise, of Parent or any of its subsidiaries to repurchase,
redeem or otherwise acquire any shares of Parent Common Stock or
the capital stock of any subsidiary or to provide funds to or
make any investment (in the form of a loan, capital contribution
or otherwise) in any such subsidiary other than guarantees of
bank obligations of subsidiaries entered into in the ordinary
course of business. Except as set forth in Section 3.01 or
3.03(a) of the Parent Disclosure Schedule, all of the outstanding
shares of capital stock (other than directors' qualifying shares)
of each of Parent's subsidiaries is duly authorized, validly
issued, fully paid and nonassessable and all such shares (other
than directors' qualifying shares) are owned by Parent or another
subsidiary free and clear of all security interests, liens,
claims, pledges, agreements, limitations in Parent's voting
rights, charges or other encumbrances of any nature whatsoever.
(b) The shares of Parent Common Stock to be issued
pursuant to the Merger will be duly authorized, validly issued,
fully paid and nonassessable and shall be listed, upon official
notice of issuance, for trading on the NYSE.
SECTION 3.04. Authority Relative to this Agreement.
------------------------------------
Each of Parent and Merger Sub has all necessary corporate power
and authority to execute and deliver this Agreement and to
perform its obligations hereunder and to consummate the
transactions contemplated hereby. The execution and delivery of
this Agreement by Parent and Merger Sub and the consummation by
Parent and Merger Sub of the transactions contemplated hereby
have been duly and validly authorized by all necessary corporate
action on the part of Parent and Merger Sub, and no other
corporate proceedings on the part of Parent or Merger Sub are
necessary to authorize this Agreement or to consummate the
transactions contemplated thereby. The Board of Directors of
Parent has determined that it is advisable<PAGE>
<PAGE>
and in the best interest of Parent's stockholders for Parent to enter
into this Agreement and to consummate the Merger upon the terms and
subject to the conditions of this Agreement. This Agreement has been
duly and validly executed and delivered by Parent and Merger Sub
and, assuming the due authorization, execution and delivery by
the Company, constitutes a legal, valid and binding obligation of
Parent and Merger Sub.
SECTION 3.05. No Conflict; Required Filings and
---------------------------------
Consents. (a) Section 3.05(a) of the Parent Disclosure Schedule
--------
includes a list of (i) all loan agreements, indentures,
mortgages, pledges, conditional sale or title retention
agreements, security agreements, equipment obligations,
guaranties, standby letters of credit, equipment leases or lease
purchase agreements to which Parent or any of its subsidiaries is
a party or by which any of them is bound, each in an amount equal
to or exceeding $25,000,000, but excluding any such agreement
between Parent and its wholly-owned subsidiaries or between two
or more wholly-owned subsidiaries of Parent; (ii) all contracts,
agreements, commitments or other understandings or arrangements
to which Parent or any of its subsidiaries is a party or by which
any of them or any of their respective property or assets are
bound or affected, but excluding contracts, agreements,
commitments or other understandings or arrangements entered into
in the ordinary course of business and involving, in each case,
payments or receipts by Parent or any of its subsidiaries of less
than $5,000,000 in any single instance; and (iii) all agreements
which, as of the date hereof, are required to be filed with the
SEC pursuant to the requirements of the Exchange Act as "material
contracts."
(b) Except as set forth in Section 3.05(b) of the
Parent Disclosure Schedule, the execution and delivery of this
Agreement by Parent and Merger Sub do not, and the performance of
this Agreement by Parent and Merger Sub will not, (i) conflict
with or violate the Articles of Organization (or Certificate of
Incorporation) or By-Laws of Parent or Merger Sub, (ii) conflict
with or violate any law, rule, regulation, order, judgment or
decree applicable to Parent or any of its subsidiaries or by
which its or their respective properties are bound or affected,
or (iii) result in any breach of or constitute a default (or an
event which with notice or lapse of time or both would become a
default) under, or impair Parent's or any of its subsidiaries'
rights or alter the rights or obligations of any third party
under, or give to others any rights of termination, amendment,
acceleration or cancellation of, or result in the creation of a
lien or encumbrance on any of the properties or assets of Parent
or any of its subsidiaries pursuant to, any note, bond, mortgage,
indenture, contract, agreement, lease, license, permit, franchise
or other instrument or obligation to which Parent or any of its
subsidiaries is a party or by which Parent or any of its
subsidiaries or its or any of their respective properties are
bound or affected, except in any such case for any such
conflicts, violations, breaches, defaults or other occurrences
that could not reasonably be expected to have a Material Adverse
Effect.
(c) The execution and delivery of this Agreement by
Parent and Merger Sub does not, and the performance of this
Agreement by Parent and Merger Sub will not, require any consent,
approval, authorization or permit of, or filing with or
notification to, any governmental or regulatory authority,
domestic or foreign, except (i) for applicable requirements, if
any, of the Securities Act, the Exchange Act, the Blue Sky Laws,
the pre-merger notification requirements of the HSR Act, and the
filing and recordation of appropriate merger or other documents
as required by the DGCL, and (ii) where the failure<PAGE>
<PAGE>
to obtain such consents, approvals, authorizations or permits, or to
make such filings or notifications, would not prevent or delay
consummation of the Merger, or otherwise prevent Parent or Merger
Sub from performing their respective obligations under this
Agreement, and would not otherwise be reasonably expected to have
a Material Adverse Effect.
SECTION 3.06. Compliance; Permits. (a) Except as
-------------------
disclosed in Section 3.06 of the Parent Disclosure Schedule,
neither Parent nor any of its subsidiaries is in conflict with,
or in default or violation of, (i) any law, rule, regulation,
order, judgment or decree applicable to Parent or any of its
subsidiaries or by which its or any of their respective
properties is bound or affected or (ii) any note, bond, mortgage,
indenture, contract, agreement, lease, license, permit, franchise
or other instrument or obligation to which Parent or any of its
subsidiaries is a party or by which Parent or any of its
subsidiaries or its or any of their respective properties is
bound or affected, except for any such conflicts, defaults or
violations which could not reasonably be expected to have a
Material Adverse Effect.
(b) Except as disclosed in Section 3.06 of the Parent
Disclosure Schedule, Parent and its subsidiaries hold all
permits, licenses, easements, variances, exemptions, consents,
certificates, orders and approvals from governmental authorities
which are material to the operation of the business of the Parent
and its subsidiaries taken as a whole as it is now being
conducted (collectively, the "Parent Permits"). Parent and its
subsidiaries are in compliance with the terms of Parent Permits,
except where the failure to so comply could not reasonably be
expected to have a Material Adverse Effect.
SECTION 3.07. SEC Filings; Financial Statements. (a)
---------------------------------
Parent has filed all forms, reports and documents required to be
filed with the SEC since June 30, 1993, and has heretofore
delivered to the Company, in the form filed (or, in the case of
the Quarterly Report on Form 10-Q for the quarterly period ended
March 31, 1996, to be filed) with the SEC, (i) its Annual Reports
on Form 10-K for the fiscal years ended June 30, 1993, 1994 and
1995, (ii) its Quarterly Reports on Form 10-Q for the quarterly
periods ending September 30, 1995, December 31, 1995 and March
31, 1996, (iii) all proxy statements relating to Parent's
meetings of stockholders (whether annual or special) held since
June 30, 1993, (iv) all other reports or registration statements
(other than Reports on Form 10-Q not referred to in clause (ii)
above) filed by Parent with the SEC since June 30, 1992, and (v)
all amendments and supplements to all such reports and
registration statements filed by Parent with the SEC
(collectively, the "Parent SEC Reports"). The Parent SEC Reports
(i) were prepared in all material respects in accordance with the
requirements of the Securities Act or the Exchange Act, as the
case may be, and (ii) did not at the time they were filed (or if
amended or superseded by a filing prior to the date of this
Agreement, then on the date of such filing) 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. None of Parent's subsidiaries is
required to file any forms, reports or other documents with the
SEC.
(b) Each of the consolidated financial statements
(including, in each case, any related notes thereto) contained in
the Parent SEC Reports has been prepared in accordance with GAAP
applied on a consistent basis throughout the periods involved(except<PAGE>
<PAGE>
as may be indicated in the notes thereto) and each fairly
presents the consolidated financial position of Parent and its
subsidiaries as at the respective dates thereof and the
consolidated results of its operations and cash flows for the
periods indicated, except that the unaudited interim financial
statements were or are subject to normal and recurring year-end
adjustments which were not or are not expected to be material in
amount.
SECTION 3.08. Absence of Certain Changes or Events.
------------------------------------
Except as set forth in Section 3.08 of the Parent Disclosure
Schedule or the Parent SEC Reports, since June 30, 1995, Parent
has conducted its business in the ordinary course and there has
not occurred: (i) any Material Adverse Effect; (ii) any
amendments or changes in the Articles of Organization or By-Laws
of Parent; (iii) any damage to, destruction or loss of any assets
of the Parent (whether or not covered by insurance) that could
reasonably be expected to have a Material Adverse Effect; (iv)
any material change by Parent in its accounting methods; (v) any
material revaluation by Parent of any of its assets, including
without limitation, writing down the value of inventory or
writing off notes or accounts receivable other than in the
ordinary course of business; (vi) any other action or event that
would have required the consent of the Company pursuant to
Section 4.03 had such action or event occurred after the date of
this Agreement; or (vii) any sale of a material amount of assets
of Parent, except in the ordinary course of business.
SECTION 3.09. No Undisclosed Liabilities. Except as
--------------------------
is disclosed in Section 3.09 of the Parent Disclosure Schedule
and the Parent SEC Reports, neither the Parent nor any of its
subsidiaries has any liabilities (absolute, accrued, contingent
or otherwise), except liabilities (a) adequately provided for in
the Parent's balance sheet (including any related notes thereto)
as of June 30, 1995 included in Parent's Annual Report on Form
10-K for the fiscal year ended June 30, 1995 (the "June 1995
Balance Sheet"), (b) incurred in the ordinary course of business
and not required under GAAP to be reflected on the June 1995
Balance Sheet, (c) incurred since June 30, 1995 in the ordinary
course of business and consistent with past practice,
(d) incurred in connection with this Agreement, or (e) which
could not reasonably be expected to have a Material Adverse
Effect .
SECTION 3.10. Absence of Litigation. Except as set
---------------------
forth in Section 3.10 of the Parent Disclosure Schedule, there
are no claims, actions, suits, proceedings or investigations
pending or, to the knowledge of the Parent, threatened against
the Parent or any of its subsidiaries, or any properties or
rights of the Parent or any of its subsidiaries, before any
court, arbitrator or administrative, governmental or regulatory
authority or body, domestic or foreign, that could reasonably be
expected to have a Material Adverse Effect.
SECTION 3.11. Employee Benefit Plans; Employment
----------------------------------
Agreements. (a) Section 3.11(a) of the Parent Disclosure
----------
Schedule lists all employee pension plans (as defined in Section
3(2) of ERISA), all employee welfare plans (as defined in Section
3(1) of ERISA) and all other bonus, stock option, stock purchase,
incentive, deferred compensation, supplemental retirement,
severance and other similar fringe or employee benefit plans,
programs or arrangements, and any employment, executive
compensation or severance agreements, written or otherwise, as
amended, modified or supplemented, for the benefit of, or
relating to, former or current employee, officer or consultant
(or any of their beneficiaries) of Parent or any other entity
(whether or not incorporated) which is a member <PAGE>
<PAGE>
of a controlled group including Parent or which is under common control
with Parent (an "ERISA Affiliate") within the meaning of Section 414
of the Code or Section 4001 of ERISA, or any subsidiary of
Parent, as well as each plan with respect to which Parent or an
ERISA Affiliate could incur liability under Section 4069 (if such
plan has been or were terminated) or Section 4212(c) of ERISA or
Section 412 of the Code (together, the "Employee Plans"). There
have been made available to the Company copies of (i) each such
written Employee Plan and all related trust agreements,
insurance and other contracts (including policies), summary plan
descriptions, summaries of material modifications and
communications distributed to plan participants, (ii) the most
recent three annual reports on form 5500 series, with
accompanying schedules and attachments, filed with respect to
each Employee Plan required to make such a filing, and (iii) the
most recent actuarial valuation for each Employee Plan subject to
Title IV of ERISA. For purposes of this Section 3.11(a) the term
material, when used with respect to (i) any Employee Plan, shall
mean that Parent or an ERISA Affiliate has incurred or may incur
obligations in an amount exceeding $5,000,000 with respect to
such Employee Plan, and (ii) any liability, obligation, breach or
non-compliance, shall mean that the Company or an ERISA Affiliate
has incurred or may incur obligations in an amount exceeding
$1,000,000 with respect to any one such or series of related
liabilities, obligations, breaches, defaults, violations or
instances of non-compliance.
(b) (i) Except as set forth in Section 3.11(b) of the
Parent Disclosure Schedule, none of the Employee Plans promises
or provides retiree medical or other retiree welfare benefits to
any person, and none of the Employee Plans is a "multiemployer
plan" as such term is defined in Section 3(37) of ERISA; (ii) no
party in interest or disqualified person (as defined in Section
3(14) of ERISA and Section 4975 of the Code) has at any time
engaged in a transaction with respect to any Employee Plan which
could subject Parent or any ERISA Affiliate, directly or
indirectly, to a tax, penalty or other material liability for
prohibited transactions under ERISA or Section 4975 of the Code;
(iii) no fiduciary of any Employee Plan has breached any of the
responsibilities or obligations imposed upon fiduciaries under
Title I of ERISA, which breach could result in any material
liability to Parent or any ERISA Affiliate; (iv) all Employee
Plans have been established and maintained substantially in
accordance with their terms and have operated in compliance in
all material respects with the requirements prescribed by any and
all statutes (including ERISA and the Code), orders, or
governmental rules and regulations currently in effect with
respect thereto (including all applicable requirements for
notification to participants or the Department of Labor, IRS or
Secretary of the Treasury), and Parent and each of its
subsidiaries have performed all material obligations required to
be performed by them under, are not in any material respect in
default under or violation of, and have no knowledge of any
default or violation by any other party to, any of the Employee
Plans; (iv) each Employee Plan intended to qualify under Section
401(a) of the Code and each trust intended to qualify under
Section 501(a) of the Code is the subject of a favorable
determination letter from the IRS, and nothing has occurred which
may reasonably be expected to impair such determination; (v) all
contributions required to be made with respect to any Employee
Plan pursuant to Section 412 of the Code, or the terms of the
Employee Plan or any collective bargaining agreement, have been
made on or before their due dates; (vi) with respect to each
Employee Plan, no "reportable event" within the meaning of
Section 4043 of ERISA (excluding any such event for which the 30
day notice requirement has been waived under the regulations to
<PAGE>
<PAGE>
Section 4043 of ERISA) nor any event described in Section 4062,
4063 or 4041 of ERISA has occurred; and (vii) neither Parent nor
any ERISA Affiliate has incurred, nor reasonably expects to
incur, any liability under Title IV of ERISA (other than
liability for premium payments to the Pension Benefit Guaranty
Corporation arising in the ordinary course).
(c) Section 3.11(c) of the Parent Disclosure Schedule
sets forth a true and complete list of each current or former
employee, officer or director of Parent or any of its
subsidiaries who holds (i) any option to purchase Parent Common
Stock as of the date hereof, together with the number of shares
of Parent Common Stock subject to such option, the option price
of such option (to the extent determined as of the date hereof),
whether such option is intended to qualify as an incentive stock
option within the meaning of Section 422(b) of the Code (an
"ISO"), and the expiration date of such option; and (ii) any
other right, directly or indirectly, to acquire Parent Common
Stock, together with the number of shares of Parent Common Stock
subject to such right. Section 3.11(c) of the Parent Disclosure
Schedule also sets forth the total number of such ISOs, such
nonqualified options and such other rights.
(d) Section 3.11(d) of the Parent Disclosure Schedule
sets forth a true and complete list of (i) all employment
agreements with officers of Parent or any of its subsidiaries;
(ii) all agreements with consultants who are individuals
obligating Parent or any of its subsidiaries to make annual cash
payments in an amount exceeding $1,000,000; (iii) all officers of
Parent or any of its subsidiaries who have executed a non-
competition agreement with Parent; (iv) all severance agreements,
programs and policies of Parent or any of its subsidiaries with
or relating to its employees in each case with outstanding
commitments exceeding $1,000,000, except programs and policies
required to be maintained by law; and (v) all plans, programs,
agreements and other arrangements of Parent or any of its
subsidiaries with or relating to its employees which contain
change in control provisions.
(e) Except as set forth in Section 3.11(a) of the
Parent Disclosure Schedule, no employee of Parent or any of its
subsidiaries has participated in any employee pension benefit
plans (as defined in Section 3(2) of ERISA) maintained by or on
behalf of Parent. The PBGC has not instituted proceedings to
terminate any defined benefit plan listed in Section 3.11(a) of
the Parent Disclosure Schedule (each, a "Defined Benefit Plan").
The Defined Benefit Plans have no accumulated or waived funding
deficiencies within the meaning of Section 412 of the Code nor
have any extensions of any amortization period within the meaning
of Section 412 of the Code or 302 of ERISA been applied for with
respect thereto. The present value of the benefit liabilities
(within the meaning of Section 4041 of ERISA) of the Defined
Benefit Plans, determined on a termination basis using actuarial
assumptions that would be used by the PBGC does not exceed by
more than $1,000,000 the value of the Plans' assets. All
applicable premiums required to be paid to the PBGC with respect
to the Defined Benefit Plans have been paid. No facts or
circumstances exist with respect to the Defined Benefit Plans
which would give rise to a lien on the assets of Parent under
Section 4068 of ERISA. All the assets of the Defined Benefit
Plans are readily marketable securities or insurance contracts.
<PAGE>
<PAGE>
(f) Parent has fiduciary liability insurance of at
least $15,000,000 in effect covering the fiduciaries of the
Employee Plans (including Parent) with respect to whom Parent may
have liability.
SECTION 3.12. Labor Matters. Except as set forth in
-------------
Section 3.12 of the Parent Disclosure Schedule or the Parent SEC
Reports, (i) there are no controversies pending or, to the
knowledge of Parent or any of its subsidiaries, threatened,
between Parent or any of its subsidiaries and any of their
respective employees, which controversies have or could
reasonably be expected to have a Material Adverse Effect; (ii)
neither Parent nor any of its subsidiaries is a party to any
material collective bargaining agreement or other labor union
contract applicable to persons employed by Parent or its
subsidiaries, nor does Parent or any of its subsidiaries know of
any activities or proceedings of any labor union to organize any
such employees; and (iii) neither Parent nor any of its
subsidiaries has any knowledge of any strikes, slowdowns, work
stoppages, lockouts, or threats thereof, by or with respect to
any employees of Parent or any of its subsidiaries which could
reasonably be expected to have a Material Adverse Effect.
SECTION 3.13. Registration Statement; Proxy
------------------------------
Statement/Prospectus. Subject to the accuracy of the
--------------------
representations of the Company in Section 2.13, the registration
statement (the "Registration Statement") pursuant to which the
Parent Common Stock to be issued in the Merger will be registered
with the SEC shall not, at the time the Registration Statement
(including any amendments or supplements thereto) is declared
effective by the SEC, contain any untrue statement of a material
fact or omit to state any material fact necessary in order to
make the statements included therein, in light of the
circumstances under which they were made, not misleading. The
information supplied by Parent for inclusion in the Proxy
Statement/Prospectus will not, on the date the Proxy
Statement/Prospectus is first mailed to stockholders, at the time
of the Company Stockholders Meeting and at the Effective Time,
contain any statement which, at such time and in light of the
circumstances under which it shall be made, is false or
misleading with respect to any material fact, or will omit to
state any material fact necessary in order to make the statements
therein not false or misleading; or omit to state any material
fact necessary to correct any statement in any earlier
communication with respect to the solicitation of proxies for the
Company Stockholders Meeting which has become false or
misleading. If at any time prior to the Effective Time any event
relating to Parent, Merger Sub or any of their respective
affiliates, officers or directors should be discovered by Parent
or Merger Sub which should be set forth in an amendment to the
Registration Statement or a supplement to the Proxy
Statement/Prospectus, Parent or Merger Sub will promptly inform
the Company. The Registration Statement and Proxy
Statement/Prospectus shall comply in all material respects with
the requirements of the Securities Act, the Exchange Act and the
rules and regulations thereunder. Notwithstanding the foregoing,
Parent and Merger Sub make no representation or warranty with
respect to any information supplied by the Company which is
contained or incorporated by reference in, or furnished in
connection with the preparation of, the Registration Statement or
the Proxy Statement/Prospectus.
SECTION 3.14. Restrictions on Business Activities.
-----------------------------------
Except for this Agreement, to the best of Parent's knowledge,
there is no agreement, judgment, injunction, order or decree
binding upon Parent or any of its subsidiaries which has or could
reasonably<PAGE>
<PAGE>
be expected to have the effect of prohibiting or
materially impairing any business practice of Parent or any of
its subsidiaries, any acquisition of property by Parent or any of
its subsidiaries or the conduct of business by Parent or any of
its subsidiaries as currently conducted or as proposed to be
conducted by Parent, except for any prohibition or impairment as
could not reasonably be expected to have a Material Adverse
Effect.
SECTION 3.15. Title to Property. Parent and each of
-----------------
its subsidiaries have good and defensible title to all of their
properties and assets, free and clear of all liens, charges and
encumbrances, except liens for taxes not yet due and payable and
such liens or other imperfections of title, if any, as do not
materially detract from the value of or interfere with the
present use of the property affected thereby or which could not
reasonably be expected to have a Material Adverse Effect; and, to
Parent's knowledge, all leases pursuant to which Parent or any of
its subsidiaries lease from other material amounts of real or
personal property are in good standing, valid and effective in
accordance with their respective terms, and there is not, to the
knowledge of Parent, under any of such leases, any existing
material default or event of default (or event which with notice
or lapse of time, or both, would constitute a material default)
except where the lack of such good standing, validity and
effectiveness, or the existence of such default or event of
default could not reasonably be expected to have a Material
Adverse Effect.
SECTION 3.16. Taxes. (a) Parent on behalf of itself
-----
and all its subsidiaries hereby represents that, other than as
disclosed in Section 3.16(a) of the Parent Disclosure Schedule or
the Parent SEC Reports: Parent and its subsidiaries have filed
all United States federal income Tax Returns and all other
material Tax Returns required to be filed by them, and Parent and
its subsidiaries have paid and discharged all Taxes due in
connection with or with respect to the periods or transactions
covered by such Tax Returns and have paid all other Taxes as are
due, except such as are being contested in good faith by
appropriate proceedings (to the extent that any such proceedings
are required) and there are no other taxes that would be due if
asserted by a taxing authority, except with respect to which
Parent is maintaining reserves to the extent currently required
unless the failure to do so could not reasonably be expected to
have a Material Adverse Effect. Except as does not involve or
would not result in liability to Parent that could reasonably be
expected to have a Material Adverse Effect, (i) there are no tax
liens on any assets of Parent or any subsidiary thereof; and (ii)
neither Parent nor any of its subsidiaries has granted any waiver
of any statute of limitations with respect to, or any extension
of a period for the assessment of, any Tax. The accruals and
reserves for taxes (including deferred taxes) reflected in the
June 1995 Balance Sheet are in all material respects adequate to
cover all Taxes accruable through the date thereof (including
interest and penalties, if any, thereon and Taxes being
contested) in accordance with GAAP.
(b) Parent on behalf of itself and all its
subsidiaries hereby represents that, other than as disclosed on
Section 3.16(b) of the Parent Disclosure Schedule or the Parent
SEC Reports, and other than with respect to items the inaccuracy
of which could not reasonably be expected to have a Material
Adverse Effect: Neither Parent nor any of its subsidiaries is
obligated under any agreement with respect to industrial
development bonds or other obligations with respect to which the
excludability from gross income of the holder for<PAGE>
<PAGE>
federal or state income tax purposes could be affected by the transactions
contemplated hereunder.
SECTION 3.17. Environmental Matters. Except as set
---------------------
forth in Section 3.17 of the Parent Disclosure Schedule, and
except in all cases as, in the aggregate, have not had and could
not reasonably be expected to have a Material Adverse Effect,
Parent and each of its subsidiaries to the best of Parent's
knowledge (i) have obtained all applicable permits, licenses and
other authorization which are required to be obtained under all
applicable Environmental Laws by Parent or its subsidiaries (or
their respective agents); (ii) are in compliance with all terms
and conditions of such required permits, licenses and
authorization, and also are in compliance with all other
limitations, restrictions, conditions, standards, prohibitions,
requirements, obligations, schedules and timetables contained in
applicable Environmental Laws; (iii) as of the date hereof, are
not aware of nor have received notice of any past or present
violations of Environmental Laws, or any event, condition,
circumstance, activity, practice, incident, action or plan which
is reasonably likely to interfere with or prevent continued
compliance with or which would give rise to any common law or
statutory liability, or otherwise form the basis of any claim,
action, suit or proceeding, against Parent or any of its
subsidiaries based on or resulting from the manufacture,
processing, distribution, use, treatment, storage, disposal,
transport, or handling, or the emission, discharge or release
into the environment, of any pollutant, contaminant or hazardous
or toxic material or waste; and (iv) have taken all actions
necessary under applicable Environmental Laws to register any
products or materials required to be registered by Parent or its
subsidiaries (or any of their respective agents) thereunder.
SECTION 3.18. Brokers. No broker, finder or
-------
investment banker (other than Merrill Lynch, Pierce, Fenner &
Smith Incorporated, the fees and expenses of which will be paid
by Parent) 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 or on behalf of
Parent or Merger Sub.
SECTION 3.19. Full Disclosure. No statement contained
---------------
in any certificate or schedule furnished or to be furnished by
Parent or Merger Sub to the Company in, or pursuant to the
provisions of, this Agreement contains or will contain any untrue
statement of a material fact or omits or shall omit to state any
material fact necessary, in the light of the circumstances under
which it was made, in order to make the statements herein or
therein not misleading.
SECTION 3.20. Intellectual Property. (a) Parent
---------------------
and/or each of its subsidiaries owns, or is licensed or otherwise
possesses legally enforceable rights to use all patents,
trademarks, trade names, service marks, copyrights, and any
applications therefor, technology, know-how, computer software
programs or applications, and tangible or intangible proprietary
information or material that are used in the business of Parent
and its subsidiaries as currently conducted, except as could not
reasonably be expected to have a Material Adverse Effect.
(b) Except as disclosed in Section 3.20(b) of the
Parent Disclosure Schedule or the Parent SEC Reports or as could
not reasonably be expected to have a<PAGE>
<PAGE>
Material Adverse Effect: Parent is not, nor will it be as a result
of the execution and delivery of this Agreement or the performance
of its obligations hereunder, in violation of any licenses, sublicenses
and other agreements as to which Parent is a party and pursuant to which
Parent is authorized to use any third-party patents, trademarks,
service marks and copyrights ("Third-Party Intellectual Property
Rights"). No claims with respect to the patents, registered and
material unregistered trademarks and service marks, registered
copyrights, trade names and any applications therefor owned by
Parent or any of its subsidiaries (the "Parent Intellectual
Property Rights"), any trade secret material to the Parent, or
Third Party Intellectual Property Rights to the extent arising
out of any use, reproduction or distribution of such Third Party
Intellectual Property Rights by or through Parent or any of its
subsidiaries, are currently pending or, to the knowledge of
Parent, are overtly threatened by any person. Parent does not
know of any valid grounds for any bona fide claims (i) to the
effect that the manufacture, sale, licensing or use of any
product as now used, sold or licensed or proposed for use, sale
or license by Parent or any of its subsidiaries infringes on any
copyright, patent, trademark, service mark or trade secret;
(ii) against the use by Parent or any of its subsidiaries of any
trademarks, trade names, trade secrets, copyrights, patents,
technology, know-how or computer software programs and
applications used in the business of Parent or any of its
subsidiaries as currently conducted or as proposed to be
conducted; (iii) challenging the ownership, validity or
effectiveness of any part of the Parent Intellectual Property
Rights or other trade secret material to Parent; or
(iv) challenging the license or legally enforceable right to use
of the Third Party Intellectual Rights by Parent or any of its
subsidiaries.
(c) To Parent's knowledge, all patents, registered
trademarks and copyrights held by Parent are valid and
subsisting. Except as set forth in Section 3.20(c) of the Parent
Disclosure Schedule on the Parent SEC Reports, to the Parent's
knowledge, there is no material unauthorized use, infringement or
misappropriation of any of the Parent Intellectual Property by
any third party, including any employee or former employee of
Parent or any of its subsidiaries.
SECTION 3.21. Interested Party Transactions. Except
-----------------------------
as set forth in Section 3.21 of the Parent Disclosure Schedule or
the Parent SEC Reports, since the date of Parent's proxy
statement dated September 29, 1995, no event has occurred that
would be required to be reported as a Certain Relationship or
Related Transaction, pursuant to Item 404 of Regulation S-K
promulgated by the SEC.
SECTION 3.22. Insurance. All material fire and
---------
casualty, general liability, business interruption, product
liability and sprinkler and water damage insurance policies
maintained by Parent or any of its subsidiaries are with
reputable insurance carriers, provide full and adequate coverage
for all normal risks incident to the business of Parent and its
subsidiaries and their respective properties and assets and are
in character and amount at least equivalent to that carried by
entities engaged in similar businesses and subject to the same or
similar perils or hazards, except as could not reasonably be
expected to have a Material Adverse Effect.
SECTION 3.23. Product Liability and Recalls. (a)
-----------------------------
Except as disclosed in Section 3.23 of the Parent Disclosure
Schedule or the Parent SEC Reports, Parent is not<PAGE>
<PAGE>
aware of any claim, or the basis of any claim, against Parent
or any of its subsidiaries for injury to person or property of
employees or any third parties suffered as a result of the sale of
any product or performance of any service by Parent or any of its
subsidiaries, including claims arising out of the defective or unsafe
nature of its products or services, which could reasonably be expected
to have a Material Adverse Effect.
(b) Except as disclosed in Section 3.23(b) of the
Parent Disclosure Schedule or the Parent SEC Reports, there is no
pending or, to the knowledge of Parent, threatened, recall or
investigation of any product sold by Parent, which recall or
investigation could reasonably be expected to have a Material
Adverse Effect.
SECTION 3.24. Inventory. The inventories of Parent
---------
and its subsidiaries as reflected in the most recent financial
statements contained in the Parent SEC Reports, or acquired by
Parent or any of its subsidiaries after the date thereof, (i) are
carried at an amount not in excess of the lower of cost or net
realizable value, and (ii) do not include any inventory which is
obsolete, surplus or not usable or saleable in the lawful and
ordinary course of business of Parent and its subsidiaries as
heretofore conducted, in each case net of reserves provided
therefor.
SECTION 3.25. Ownership of Merger Sub; No Prior
---------------------------------
Activities. (a) Merger Sub is a direct, wholly-owned subsidiary
----------
of Parent and was formed solely for the purpose of engaging in
the transactions contemplated by this Agreement.
(b) As of the date hereof and the Effective Time,
except for obligations or liabilities incurred in connection with
its incorporation or organization and the transactions
contemplated by this Agreement and except for this Agreement and
any other agreements or arrangements contemplated by this
Agreement, Merger Sub has not and will not have incurred,
directly or indirectly, through any subsidiary or affiliate, any
obligations or liabilities or engaged in any business activities
of any type or kind whatsoever or entered into any agreements or
arrangements with any person.
SECTION 3.26. Pooling Matters. To the Parent's
---------------
knowledge and based upon consultation with its independent
accountants, the Parent has provided to the Company and its
independent accountants all information concerning actions taken
or agreed to be taken by Parent or any of its affiliates on or
before the date of this Agreement that could reasonably be
expected to adversely affect the ability of Parent to account for
the business combination to be effected by the Merger as a
pooling of interests. For purposes of this Section 3.26, "to the
Parent's knowledge" means to the actual knowledge of Parent's
Chief Executive Officer or Chief Financial Officer.
<PAGE>
<PAGE>
ARTICLE IV
CONDUCT OF BUSINESS PENDING THE MERGER
---------------------------------------
SECTION 4.01. Conduct of Business by the Company Pending the
----------------------------------------------
Merger. During the period from the date of this Agreement and
------
continuing until the earlier of the termination of this Agreement
or the Effective Time, the Company covenants and agrees that,
unless Parent shall otherwise agree in writing, and except as set
forth in Section 4.01 of the Company Disclosure Schedule, the
Company shall conduct its business and shall cause the businesses
of its subsidiaries to be conducted only in, and the Company and
its subsidiaries shall not take any action except in, the
ordinary course of business and in a manner consistent with past
practice; and the Company shall use reasonable commercial efforts
to preserve substantially intact the business organization of the
Company and its subsidiaries, to keep available the services of
the present officers, employees and consultants of the Company
and its subsidiaries and to preserve the present relationships of
the Company and its subsidiaries with customers, suppliers and
other persons with which the Company or any of its subsidiaries
has significant business relations. By way of amplification and
not limitation, except as contemplated by this Agreement, neither
the Company nor any of its subsidiaries shall, during the period
from the date of this Agreement and continuing until the earlier
of the termination of this Agreement or the Effective Time, and
except as set forth in Section 4.01 of the Company Disclosure
Schedule, directly or indirectly do, or propose to do, any of the
following without the prior written consent of Parent:
(a) amend or otherwise change the Company's
Certificate of Incorporation or By-Laws;
(b) issue, sell, pledge, dispose of or encumber, or
authorize the issuance, sale, pledge, disposition or
encumbrance of, any shares of capital stock of any class, or
any options, warrants, convertible securities or other
rights of any kind to acquire any shares of capital stock,
or any other ownership interest (including, without
limitation, any phantom interest) in the Company, any of its
subsidiaries or affiliates (except for the issuance of
shares of Company Common Stock issuable pursuant to Stock
Options under either the Company Stock Option Plan or under
the terms of the stock option agreement between the Company
and the individual named in Section 2.03 of the Company
Disclosure Schedule, which options are outstanding on the
date hereof);
(c) sell, pledge, dispose of or encumber any assets of
the Company or any of its subsidiaries (except for (i) sales
of assets in the ordinary course of business and in a manner
consistent with past practice, (ii) dispositions of obsolete
or worthless assets, and (iii) sales of immaterial assets
not in excess of $500,000);
(d) (i) declare, set aside, make or pay any dividend
or other distribution (whether in cash, stock or property or
any combination thereof) in respect of any of its capital
stock, except that a wholly owned subsidiary of the Company
may declare and pay a dividend to its parent, (ii) split,
combine or reclassify any of its capital<PAGE>
<PAGE>
stock or issue or authorize or propose the issuance of any other
securities in respect of, in lieu of or in substitution for shares
of its capital stock, or (iii) amend the terms or change the period
of exercisability of, purchase, repurchase, redeem or
otherwise acquire, or permit any subsidiary to purchase,
repurchase, redeem or otherwise acquire, any of its
securities or any securities of its subsidiaries, including,
without limitation, shares of Company Common Stock or any
option, warrant or right, directly or indirectly, to acquire
shares of Company Common Stock, or propose to do any of the
foregoing;
(e) (i) acquire (by merger, consolidation, or
acquisition of stock or assets) any corporation, partnership
or other business organization or division thereof other
than those listed on Section 4.01(e) of the Company
Disclosure Schedule; (ii) incur any indebtedness for
borrowed money or issue any debt securities or assume,
guarantee (other than guarantees of bank debt of the
Company's subsidiaries entered into in the ordinary course
of business) or endorse or otherwise as an accommodation
become responsible for, the obligations of any person, or
make any loans or advances, except in the ordinary course of
business consistent with past practice; (iii) enter into or
amend any resin purchase contract that would be in effect
after the Effective Time if the non-cancelable incremental
commitment is in excess of 20% of its 1996 resin
requirements or enter into or amend any other material
contract or agreement other than in the ordinary course of
business; (iv) authorize any capital expenditures or
purchase of fixed assets which are, in the aggregate, in
excess of the amount set forth in Section 4.01 of the
Company Disclosure Schedule for the Company and its
subsidiaries taken as a whole; or (v) enter into or amend
any contract, agreement, commitment or arrangement to effect
any of the matters prohibited by this Section 4.01(e);
(f) increase the compensation payable or to become
payable to its officers or employees, except for increases
in salary or wages of employees of the Company or its
subsidiaries in accordance with past practices, or grant any
severance or termination pay to, or enter into any
employment or severance agreement with any director, officer
or other employee of the Company or any of its subsidiaries,
or establish, adopt, enter into or amend any collective
bargaining, bonus, profit sharing, thrift, compensation,
stock option, restricted stock, pension, retirement,
deferred compensation, employment, termination, severance or
other plan, agreement, trust, fund, policy or arrangement
for the benefit of any current or former directors, officers
or employees, except, in each case, as may be required by
law;
(g) take any action to change accounting policies or
procedures (including, without limitation, procedures with
respect to revenue recognition, payments of accounts payable
and collection of accounts receivable);
(h) make any material tax election inconsistent with
past practice or settle or compromise any material federal,
state, local or foreign tax liability or agree to an
extension of a statute of limitations, except to the extent
the amount of any such settlement has been reserved for in
the financial statements contained in the Company SEC
Reports filed prior to the date of this Agreement;
<PAGE>
<PAGE>
(i) pay, discharge or satisfy any claims, liabilities
or obligations (absolute, accrued, asserted or unasserted,
contingent or otherwise), other than the payment, discharge
or satisfaction in the ordinary course of business and
consistent with past practice of liabilities reflected or
reserved against in the financial statements contained in
the Company SEC Reports filed prior to the date of this
Agreement or incurred in the ordinary course of business and
consistent with past practice; or
(j) take, or agree in writing or otherwise to take,
any of the actions described in Sections 4.01(a) through (i)
above, or any action which would make any of the
representations or warranties of the Company contained in
this Agreement untrue or incorrect or prevent the Company
from performing or cause the Company not to perform its
covenants hereunder.
SECTION 4.02. No Solicitation. (a) The Company shall
---------------
not, directly or indirectly, through any officer, director,
employee, representative or agent of the Company or any of its
subsidiaries, solicit or encourage the initiation of any
inquiries or proposals regarding any merger, sale of substantial
assets, sale of shares of capital stock (including without
limitation by way of a tender offer) or similar transactions
involving the Company or any subsidiaries of the Company (any of
the foregoing inquiries or proposals being referred to herein as
an "Acquisition Proposal"). Nothing contained in this Section
4.02(a) shall prevent the Board of Directors of the Company from
(i) considering, negotiating, approving and recommending to the
stockholders of the Company a bona fide Acquisition Proposal not
solicited in violation of this Agreement, (ii) taking and
disclosing to its stockholders a position contemplated by
Exchange Act Rule 14e-2 or (iii) making any disclosure to its
stockholders; provided that, as to each of clauses (i), (ii) and
(iii), the Board of Directors of the Company determines in good
faith (upon advice of independent counsel) that it is required to
do so in order to discharge properly its fiduciary duties.
(b) The Company shall immediately notify Parent after
receipt of any Acquisition Proposal, or any modification of or
amendment to any Acquisition Proposal, or any request for
nonpublic information relating to the Company or any of its
subsidiaries in connection with an Acquisition Proposal or for
access to the properties, books or records of the Company or any
subsidiary by any person or entity that informs the Board of
Directors of the Company or such subsidiary that it is
considering making, or has made, an Acquisition Proposal. Such
notice to Parent shall be made orally and in writing, and shall
indicate whether the Company is providing or intends to provide
the person making the Acquisition Proposal with access to
information concerning the Company as provided in Section
4.02(c).
(c) If the Board of Directors of the Company receives
a request for material nonpublic information by a person who
makes a bona fide Acquisition Proposal, and the Board of
Directors determines in good faith and upon the advice of
independent counsel that it is required to cause the Company to
act as provided in this Section 4.02(c) in order to discharge
properly the directors' fiduciary duties, then, provided the
person making the Acquisition Proposal has executed a
confidentiality agreement substantially similar to the one then
in effect between the Company and Parent, the Company may provide
such person with access to information regarding the Company and
may request such person to make a<PAGE>
<PAGE>
proposal concerning a transaction between or involving such person
and the Company or its securityholders.
(d) The Company shall immediately cease and cause to
be terminated any existing discussions or negotiations with any
persons (other than Parent and Merger Sub) conducted heretofore
with respect to any of the foregoing. The Company agrees not to
release any third party from the confidentiality provisions of
any confidentiality agreement to which the Company is a party.
(e) The Company shall ensure that the officers,
directors and employees of the Company and its subsidiaries and
any investment banker or other advisor or representative retained
by the Company are aware of the restrictions described in this
Section 4.02.
SECTION 4.03. Conduct of Business by Parent Pending
-------------------------------------
the Merger. During the period from the date of this Agreement
----------
and continuing until the earlier of the termination of this
Agreement or the Effective Time, Parent covenants and agrees
that, except as set forth in Section 4.03 of Parent's Disclosure
Schedule or unless the Company shall otherwise agree in writing,
Parent shall conduct its business, and cause the businesses of
its subsidiaries to be conducted, in the ordinary course of
business and consistent with past practice, other than actions
taken by Parent or its subsidiaries in contemplation of the
Merger, and shall not directly or indirectly do, or propose to
do, any of the following without the prior written consent of the
Company:
(a) amend or otherwise change Parent's Articles of
Organization or By-Laws;
(b) acquire or agree to acquire, by merging or
consolidating with, by purchasing an equity interest in or a
portion of the assets of, or by any other manner, any
business or any corporation, partnership, association or
other business organization or division thereof, or
otherwise acquire or agree to acquire any assets of any
other person, which, in any such case, would materially
delay or prevent the consummation of the transactions
contemplated by this Agreement;
(c) declare, set aside, make or pay any dividend or
other distribution (whether in cash, stock or property or
any combination thereof) in respect of any of its capital
stock, except that a wholly owned subsidiary of Parent may
declare and pay a dividend to its parent, and except that
Parent may declare and pay cash dividends of $0.10 per
quarter consistent with past practice; or
(d) take or agree in writing or otherwise to take any
action which would make any of the representations or
warranties of Parent contained in this Agreement untrue or
incorrect or prevent Parent from performing or cause Parent
not to perform its covenants hereunder.
<PAGE>
<PAGE>
ARTICLE V
ADDITIONAL AGREEMENTS
---------------------
SECTION 5.01. Proxy Statement/Prospectus;
----------------------------
Registration Statement. As promptly as practicable after the
----------------------
execution of this Agreement, the Company and Parent shall prepare
and file with the SEC preliminary proxy materials which shall
constitute the Proxy Statement/Prospectus and the Registration
Statement of the Parent with respect to the Parent Common Stock
to be issued in connection with the Merger. As promptly as
practicable after comments are received from the SEC thereon and
after the furnishing by the Company and Parent of all information
required to be contained therein, the Company and Parent shall
file with the SEC a combined proxy and Registration Statement on
Form S-4 (or on such other form as shall be appropriate) relating
to the adoption of this Agreement and approval of the
transactions contemplated hereby by the stockholders of the
Company pursuant to this Agreement, and shall use all reasonable
efforts to cause the Registration Statement to become effective
as soon thereafter as practicable. The Proxy
Statement/Prospectus shall include the recommendation of the
Board of Directors of the Company in favor of the Merger, subject
to the last sentence of Section 5.02.
SECTION 5.02. Company Stockholders Meeting. The
----------------------------
Company shall call the Company Stockholders Meeting as promptly
as practicable for the purpose of voting upon the approval of the
Merger, and the Company shall use its reasonable best efforts to
hold the Company Stockholders Meeting as soon as practicable
after the date on which the Registration Statement becomes
effective. Unless otherwise required under the applicable
fiduciary duties of the directors of the Company, as determined
by such directors in good faith after consultation with and based
upon the advice of independent legal counsel, the Company shall
solicit from its stockholders proxies in favor of adoption of
this Agreement and approval of the transactions contemplated
thereby, and shall take all other action necessary or advisable
to secure the vote or consent of stockholders to obtain such
approvals.
SECTION 5.03. Access to Information; Confidentiality.
--------------------------------------
Upon reasonable notice and subject to restrictions contained in
confidentiality agreements to which such party is subject (from
which such party shall use reasonable efforts to be released),
the Company and Parent shall each (and shall cause each of their
subsidiaries to) afford to the officers, employees, accountants,
counsel and other representatives of the other, reasonable
access, during the period prior to the Effective Time, to all its
properties, books, contracts, commitments and records and, during
such period, the Company and Parent each shall (and shall cause
each of their subsidiaries to) furnish promptly to the other all
information concerning its business, properties and personnel as
such other party may reasonably request, and each shall make
available to the other the appropriate individuals (including
attorneys, accountants and other professionals) for discussion of
the other's business, properties and personnel as either Parent
or the Company may reasonably request. Each party shall keep
such information confidential in accordance with the terms of the
confidentiality letter, dated July 13, 1995 (the "Confidentiality
Letter"), between Parent and the Company.
<PAGE>
<PAGE>
SECTION 5.04. Consents; Approvals. The Company and
-------------------
Parent shall each use their best efforts to obtain all consents,
waivers, approvals, authorizations or orders (including, without
limitation, all United States and foreign governmental and
regulatory rulings and approvals), and the Company and Parent
shall make all filings (including, without limitation, all
filings with United States and foreign governmental or regulatory
agencies) required in connection with the authorization,
execution and delivery of this Agreement by the Company and
Parent and the consummation by them of the transactions
contemplated hereby. The Company and Parent shall furnish all
information required to be included in the Proxy
Statement/Prospectus and the Registration Statement, or for any
application or other filing to be made pursuant to the rules and
regulations of any United States or foreign governmental body in
connection with the transactions contemplated by this Agreement.
SECTION 5.05. Agreements with Respect to Affiliates.
-------------------------------------
The Company shall deliver to Parent, prior to the date the
Registration Statement becomes effective under the Securities
Act, a letter (the "Affiliate Letter") identifying all persons
who are, at the time of the Company Stockholders Meeting,
"affiliates" of the Company for purposes of Rule 145 under the
Securities Act ("Rule 145"). The Company shall use its best
efforts to cause each person who is identified as an "affiliate"
in the Affiliate Letter to deliver to Parent, prior to the
Effective Time, a written agreement (an "Affiliate Agreement") in
connection with restrictions on affiliates under Rule 145 and,
unless Parent has notified the Company in writing that it has
elected not to treat the Merger as a pooling of interests for
accounting purposes, pooling of interests accounting treatment,
in form mutually agreeable to the Company and Parent.
SECTION 5.06. Indemnification and Insurance. (a) The
-----------------------------
By-Laws of the Surviving Corporation shall contain the provisions
with respect to indemnification set forth in the By-Laws of the
Company, 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 at the Effective Time were
directors, officers, employees or agents of the Company, unless
such modification is required by law.
(b) The Company shall, to the fullest extent permitted
under applicable law or under the Company's Certificate of
Incorporation or By-Laws and regardless of whether the Merger
becomes effective, indemnify and hold harmless, and, after the
Effective Time, the Surviving Corporation shall, to the fullest
extent permitted under applicable law or under the Surviving
Corporation's Certificate of Incorporation or By-Laws, indemnify
and hold harmless, each present and former director, officer or
employee of the Company or any of its subsidiaries (collectively,
the "Indemnified Parties") against any costs or expenses
(including attorneys' fees), judgments, fines, losses, claims,
damages, liabilities and amounts paid in settlement in connection
with any claim, action, suit, proceeding or investigation,
whether civil, criminal, administrative or investigative, (x)
arising out of or pertaining to the transactions contemplated by
this Agreement or (y) otherwise with respect to any acts or
omissions occurring at or prior to the Effective Time, to the
same extent as provided in the Company's Certificate of
Incorporation or By-Laws or any applicable contract or agreement
as in effect on the date hereof, in each case for a period of six
years after the date hereof.<PAGE>
<PAGE>
In the event of any such claim, action, suit, proceeding or
investigation (whether arising before or after
the Effective Time), (i) any counsel retained by the
Indemnified Parties for any period after the Effective Time shall
be reasonably satisfactory to the Surviving Corporation, (ii)
after the Effective Time, the Surviving Corporation shall pay the
reasonable fees and expenses of such counsel, promptly after
statements therefor are received, and (iii) the Surviving
Corporation will cooperate in the defense of any such matter;
provided, however, that the Surviving Corporation shall not be
-------- -------
liable for any settlement effected without its written consent
(which consent shall not be unreasonably withheld); and provided,
--------
further, that, in the event that any claim or claims for
-------
indemnification are asserted or made within such six-year period,
all rights to indemnification in respect of any such claim or
claims shall continue until the disposition of any and all such
claims. The Indemnified Parties as a group may retain only one
law firm to represent them with respect to any single action
unless there is, under applicable standards of professional
conduct, a conflict on any significant issue between the
positions of any two or more Indemnified Parties, in which case
each Indemnified Person with respect to whom such a conflict
exists (or group of such Indemnified Persons who among them have
no such conflict) may retain one separate law firm.
(c) The Surviving Corporation shall honor and fulfill
in all respects the obligations of the Company pursuant to
indemnification agreements and employment agreements (the
employee parties under such agreements being referred to as the
"Officer Employees") with the Company's directors and officers
existing at or before the Effective Time.
(d) For a period of three years after the Effective
Time, Parent shall cause the Surviving Corporation to maintain in
effect, if available, directors' and officers' liability
insurance covering those persons who are currently covered by the
Company's directors' and officers' liability insurance policy (a
copy of which has been made available to Parent) on terms
comparable to those now applicable to directors and officers of
the Company; provided, however, that in no event shall Parent or
-------- -------
the Surviving Corporation be required to expend in excess of 200%
of the annual premium currently paid by the Company for such
coverage; and provided further, that if the premium for such
-------- -------
coverage exceeds such amount, Parent or the Surviving Corporation
shall purchase a policy with the greatest coverage available for
such 200% of the annual premium.
(e) From and after the Effective Time, Parent shall
guarantee the obligations of the Surviving Corporation under this
Section.
(f) This Section shall survive the consummation of the
Merger at the Effective Time, is intended to benefit the Company,
the Surviving Corporation and the Indemnified Parties, shall be
binding on all successors and assigns of the Surviving
Corporation and shall be enforceable by the Indemnified Parties.
SECTION 5.07. Notification of Certain Matters. The
-------------------------------
Company shall give prompt notice to Parent, and Parent shall give
prompt notice to the Company, of (i) the occurrence or
nonoccurrence of any event the occurrence or nonoccurrence of
which would be likely to cause any representation or warranty
contained in this Agreement to be<PAGE>
<PAGE>
materially untrue or inaccurate, or (ii) any failure of the Company,
Parent or Merger Sub, as the case may be, materially to comply with
or satisfy any covenant, condition or agreement to be complied with
or satisfied by it hereunder; provided, however, that the delivery
-------- -------
of any notice pursuant to this Section shall not limit or otherwise
affect the remedies available hereunder to the party receiving
such notice; and provided further that failure to give such
-------- -------
notice shall not be treated as a breach of covenant for the
purposes of Sections 6.02(a) or 6.03(a) unless the failure to
give such notice results in material prejudice to the other
party.
SECTION 5.08. Further Action/Tax Treatment. Upon the
----------------------------
terms and subject to the conditions hereof, each of the parties
hereto shall use all reasonable efforts to take, or cause to be
taken, all 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, to obtain in a timely manner all
necessary waivers, consents and approvals and to effect all
necessary registrations and filings, and otherwise to satisfy or
cause to be satisfied all conditions precedent to its obligations
under this Agreement. The foregoing covenant shall not include
any obligation by Parent to agree to divest, abandon, license or
take similar action with respect to any assets (tangible or
intangible) of Parent or the Company. Each of Parent, Merger Sub
and the Company shall use its best efforts to cause the Merger to
qualify, and will not (both before and after consummation of the
Merger) take any actions which to its knowledge could reasonably
be expected to prevent the Merger from qualifying as a
reorganization under the provisions of Section 368 of the Code.
SECTION 5.09. Public Announcements. Parent and the
--------------------
Company shall consult with each other before issuing any press
release with respect to the Merger or this Agreement and shall
not issue any such press release or make any such public
statement without the prior consent of the other party, which
shall not be unreasonably withheld; provided, however, that a
-------- -------
party may, without the prior consent of the other party, issue
such press release or make such public statement as may upon the
advice of counsel be required by law or the rules and regulations
of the NYSE, if it has used all reasonable efforts to consult
with the other party.
SECTION 5.10. Listing of Parent Shares. Parent shall
------------------------
use its best efforts to cause the Parent Shares to be issued in
the Merger to be listed, upon official notice of issuance, on the
NYSE prior to the Effective Time.
SECTION 5.11. Conveyance Taxes. Parent and the
----------------
Company shall cooperate in the preparation, execution and filing
of all returns, questionnaires, applications, or other documents
regarding any real property transfer or gains, sales, use,
transfer, value added, stock transfer and stamp taxes, any
transfer, recording, registration and other fees, and any similar
taxes which become payable in connection with the transactions
contemplated hereby that are required or permitted to be filed on
or before the Effective Time and the Surviving Corporation shall
be responsible for the payment of all such taxes and fees.
SECTION 5.12. Accountant's Letters. Upon reasonable
--------------------
notice from the other, the Company shall use its best efforts to
cause Deloitte & Touche LLP to deliver to Parent, and Parent
shall use its best efforts to cause Coopers & Lybrand to deliver
to the<PAGE>
<PAGE>
Company, a letter covering such matters as are requested
by Parent or the Company, as the case may be, and as are
customarily addressed in accountant's "comfort" letters.
SECTION 5.13. Pooling Accounting Treatment. The
----------------------------
Company agrees not to take any action that to its knowledge could
reasonably be expected to adversely affect the ability of Parent
to account for the business combination to be effected by the
Merger as a pooling of interests, and the Company agrees to use
its reasonable best efforts to take such action within the
Company's control as may be reasonably requested by Parent to
negate the impact of any past actions by the Company or its
affiliates which could reasonably be expected to adversely affect
the ability of Parent to treat the Merger as a pooling of
interests. For purposes of this Section 5.13, "to the Company's
knowledge" means the actual knowledge of the Company's Chairman,
Chief Executive Officer or Chief Financial Officer. In the event
that Parent elects not to treat the Merger as a "pooling of
interests" for accounting purposes, Parent shall promptly so
inform the Company in writing, and, in such case, the provisions
of this Section 5.13 shall terminate.
ARTICLE VI
CONDITIONS TO THE MERGER
------------------------
SECTION 6.01. Conditions to Obligation of Each Party
--------------------------------------
to Effect the Merger. The respective obligations of each party
--------------------
to effect the Merger shall be subject to the satisfaction at or
prior to the Effective Time of the following conditions:
(a) Effectiveness of the Registration Statement. The
-------------------------------------------
Registration Statement shall have been declared effective by
the SEC under the Securities Act. No stop order suspending
the effectiveness of the Registration Statement shall have
been issued by the SEC and no proceedings for that purpose
and no similar proceeding in respect of the Proxy
Statement/Prospectus shall have been initiated or threatened
by the SEC;
(b) Stockholder Approval. This Agreement and the
--------------------
Merger shall have been approved and adopted by the requisite
vote of the stockholders of the Company;
(c) Listing. The shares of Parent Common Stock
-------
issuable in the Merger shall have been authorized for
listing on the NYSE upon official notice of issuance;
(d) HSR Act. All waiting periods applicable to the
-------
consummation of the Merger under the HSR Act shall have
expired or been terminated;
(e) Governmental Actions. There shall not have been
--------------------
instituted, pending or threatened any action or proceeding
(or any investigation or other inquiry that might result in
such an action or proceeding) by any governmental authority or<PAGE>
<PAGE>
administrative agency before any governmental authority,
administrative agency or court of competent jurisdiction,
domestic or foreign, nor shall there be in effect any
judgment, decree or order of any governmental authority,
administrative agency or court of competent jurisdiction, or
any other legal restraint (i) preventing or seeking to
prevent consummation of the Merger, (ii) prohibiting or
seeking to prohibit or limiting or seeking to limit, Parent
from exercising all material rights and privileges
pertaining to its ownership of the Surviving Corporation or
the ownership or operation by Parent or any of its
subsidiaries of all or a material portion of the business or
assets of Parent or any of its subsidiaries, or (iii)
compelling or seeking to compel Parent or any of its
subsidiaries to dispose of or hold separate all or any
material portion of the business or assets of Parent or any
of its subsidiaries (including the Surviving Corporation and
its subsidiaries), as a result of the Merger or the
transactions contemplated by this Agreement;
(f) Illegality. No statute, rule, regulation or order
----------
shall be enacted, entered, enforced or deemed applicable to
the Merger which makes the consummation of the Merger
illegal; and
(g) Tax Opinions. The Company shall have received a
------------
written opinion of Weil, Gotshal & Manges LLP, and Parent
shall have received a written opinion of Kramer, Levin,
Naftalis & Frankel, in form and substance reasonably
satisfactory to each of them to the effect that the Merger
will constitute a reorganization within the meaning of
Section 368 of the Code. Each party agrees to make
reasonable and necessary representations and covenants in
connection with the rendering of such opinions.
SECTION 6.02. Additional Conditions to Obligations of
---------------------------------------
Parent and Merger Sub. The obligations of Parent and Merger Sub
---------------------
to effect the Merger are also subject to the following
conditions:
(a) Representations and Warranties. The
------------------------------
representations and warranties of the Company contained in
this Agreement shall be true and correct in all respects on
and as of the Effective Time, except for (i) changes
contemplated by this Agreement, (ii) those representations
and warranties which address matters only as of a particular
date (which shall have been true and correct as of such
date, subject to clause (iii)), and (iii) where the failure
to be true and correct could not reasonably be expected to
have a Material Adverse Effect, with the same force and
effect as if made on and as of the Effective Time, and
Parent and Merger Sub shall have received a certificate to
such effect signed by the President and the Chief Financial
Officer of the Company;
(b) Agreements and Covenants. The Company shall have
------------------------
performed or complied in all material respects with all
agreements and covenants required by this Agreement to be
performed or complied with by it on or prior to the
Effective Time, and Parent and Merger Sub shall have
received a certificate to such effect signed by the
Chairman, the President and the Chief Financial Officer of
the Company;
<PAGE>
<PAGE>
(c) Consents Obtained. All material consents,
-----------------
waivers, approvals, authorizations or orders required to be
obtained, and all filings required to be made, by the
Company for the authorization, execution and delivery of
this Agreement and the consummation by it of the
transactions contemplated hereby shall have been obtained
and made by the Company, except where the failure to receive
such consents, etc. could not reasonably be expected to have
a Material Adverse Effect on the Company or Parent; and
(d) Affiliate Agreements. Parent shall have received
--------------------
from each person who is identified in the Affiliate Letter
as an "affiliate" of the Company, an Affiliate Agreement,
and such Affiliate Agreement shall be in full force and
effect.
SECTION 6.03. Additional Conditions to Obligation of
--------------------------------------
the Company. The obligation of the Company to effect the Merger
-----------
is also subject to the following conditions:
(a) Representations and Warranties. The
------------------------------
representations and warranties of Parent and Merger Sub
contained in this Agreement shall be true and correct in all
respects on and as of the Effective Time, except for (i)
changes contemplated by this Agreement, (ii) those
representations and warranties which address matters only as
of a particular date (which shall have been true and
correct as of such date, subject to clause (iii)), and (iii)
where the failure to be true and correct could not
reasonably be expected to have a Material Adverse Effect,
with the same force and effect as if made on and as of the
Effective Time, and the Company shall have received a
certificate to such effect signed by the President and the
Chief Financial Officer of Parent;
(b) Agreements and Covenants. Parent and Merger Sub
------------------------
shall have performed or complied in all material respects
with all agreements and covenants required by this Agreement
to be performed or complied with by them on or prior to the
Effective Time, and the Company shall have received a
certificate to such effect signed by the President and the
Chief Financial Officer of Parent;
(c) Consents Obtained. All material consents,
-----------------
waivers, approvals, authorizations or orders required to be
obtained, and all filings required to be made, by Parent and
Merger Sub for the authorization, execution and delivery of
this Agreement and the consummation by them of the
transactions contemplated hereby shall have been obtained
and made by Parent and Merger Sub, except where the failure
to receive such consents, etc. could not reasonably be
expected to have a Material Adverse Effect on the Company or
Parent;
<PAGE>
<PAGE>
ARTICLE VII
TERMINATION
-----------
SECTION 7.01. Termination. This Agreement may be
-----------
terminated at any time prior to the Effective Time,
notwithstanding approval thereof by the stockholders of the
Company or Parent:
(a) by mutual written consent duly authorized by the
Boards of Directors of Parent and the Company; or
(b) by either Parent or the Company if the Merger
shall not have been consummated by October 31, 1996
(provided that the right to terminate this Agreement under
this Section 7.01(b) shall not be available to any party
whose failure to fulfill any obligation under this Agreement
has been the cause of or resulted in the failure of the
Merger to occur on or before such date); or
(c) by either Parent or the Company if a court of
competent jurisdiction or governmental, regulatory or
administrative agency or commission shall have issued a
nonappealable final order, decree or ruling or taken any
other action having the effect of permanently restraining,
enjoining or otherwise prohibiting the Merger (provided that
the right to terminate this Agreement under this Section
7.01(c) shall not be available to any party who has not
complied with its obligations under Section 5.08 and such
noncompliance materially contributed to the issuance of any
such order, decree or ruling or the taking of such action);
or
(d) by Parent, if the requisite vote of the
stockholders of the Company shall not have been obtained by
October 31, 1996; or
(e) by Parent, if (i) the Board of Directors of the
Company shall withdraw, modify or change its approval or
recommendation of this Agreement or the Merger in a manner
adverse to Parent or shall have resolved to do so; (ii) the
Board of Directors of the Company shall have recommended to
the stockholders of the Company an Alternative Transaction
(as hereinafter defined); or (iii) a tender offer or
exchange offer for 25% or more of the outstanding shares of
Company Common Stock is commenced (other than by Parent or
an affiliate of Parent) and the Board of Directors of the
Company recommends that the stockholders of the Company
tender their shares in such tender or exchange offer; or
(f) by the Company, if the Board of Directors of the
Company shall withdraw, modify or change its approval of
this Agreement or the Merger in a manner adverse to Parent
or Merger Sub or shall have resolved to do so; or
(g) by Parent or the Company, if any representation or
warranty of the Company or Parent, respectively, set forth
in this Agreement shall be untrue when made, such that the
conditions set forth in Sections 6.02(a) or 6.03(a), as the case
<PAGE>
<PAGE>
may be, would not be satisfied (a "Terminating
Misrepresentation"); provided, that, if such Terminating
--------
Misrepresentation is curable prior to October 31, 1996 by
the Company or Parent, as the case may be, through the
exercise of its reasonable best efforts and for so long as
the Company or Parent, as the case may be, continues to
exercise such reasonable best efforts, neither Parent nor
the Company, respectively, may terminate this Agreement
under this Section 7.01(g); or
(h) by Parent, if any representation or warranty of
the Company shall have become untrue such that the condition
set forth in Section 6.02(a) would not be satisfied, or by
the Company, if any representation or warranty of Parent
shall have become untrue such that the condition set forth
in Section 6.03(a) would not be satisfied, in either case
other than by reason of a Terminating Breach (as hereinafter
defined); provided that if any such Terminating
--------
Misrepresentation is curable prior to October 31, 1996 by
the Company or Parent, as the case may be, through the
exercise of its reasonable best efforts, and for so long as
the Company or Parent, as the case may be, continues to
exercise such reasonable best efforts, neither Parent nor
the Company, respectively, may terminate this Agreement
under this Section 7.01(h); or
(i) by Parent or the Company, upon a breach of any
covenant or agreement on the part of the Company or Parent,
respectively, set forth in this Agreement, such that the
conditions set forth in Sections 6.02(b) or 6.03(b), as the
case may be, would not be satisfied (a "Terminating
Breach"); provided, that, if such Terminating Breach is
-------- ----
curable prior to October 31, 1996 by the Company or Parent,
as the case may be, through the exercise of its reasonable
best efforts and for so long as the Company or Parent, as
the case may be, continues to exercise such reasonable best
efforts, neither Parent nor the Company, respectively, may
terminate this Agreement under this Section 7.01(i).
As used herein, "Alternative Transaction" means any of
(i) a transaction pursuant to which any person (or group of
persons) other than Parent or its affiliates (a "Third Party")
acquires or would acquire more than 25% of the outstanding shares
of any class of equity securities of the Company, or, in the case
of any person (or group of persons other than Parent and its
affiliates) identified in the 1996 Company Proxy Statement as the
beneficial owner of more than 25% of the outstanding shares of
Class A Common Stock or Class B Common Stock, would acquire an
additional 5% or more of such securities, whether from the
Company or pursuant to a tender offer or exchange offer or
otherwise, (ii) a merger or other business combination involving
the Company pursuant to which any Third Party acquires more than
25% of the outstanding equity securities of the Company or the
entity surviving such merger or business combination, or (iii)
any other transaction pursuant to which any Third Party acquires
or would acquire control of assets (including for this purpose
the outstanding equity securities of subsidiaries of the Company,
and the entity surviving any merger or business combination
including any of them) of the Company, or any of its subsidiaries
having a fair market value (as determined by the Board of
Directors of the Company in good faith) equal to more than 25% of
the fair market value of all the assets of the Company and its
subsidiaries, taken as a whole, immediately prior to such transaction;
<PAGE>
<PAGE>
provided, however, that the term Alternative
-------- -------
Transaction shall not include any acquisition of securities by a
broker dealer in connection with a bona fide public offering of
such securities.
SECTION 7.02. Effect of Termination. In the event of
---------------------
the termination of this Agreement pursuant to Section 7.01, this
Agreement shall forthwith become void and there shall be no
liability on the part of any party hereto or any of its
affiliates, directors, officers or stockholders except (i) as set
forth in Section 7.03 and Section 8.01 hereof, and (ii) nothing
herein shall relieve any party from liability for any breach
hereof.
SECTION 7.03. Fees and Expenses. (a) Except as set
-----------------
forth in this Section 7.03, all fees and expenses incurred in
connection with this Agreement and the transactions contemplated
hereby shall be paid by the party incurring such expenses,
whether or not the Merger is consummated; provided, however, that
-------- -------
Parent and the Company shall share equally all SEC filing fees
and printing expenses incurred in connection with the printing
and filing of the Proxy Statement/Prospectus (including any
preliminary materials related thereto) and the Registration
Statement (including financial statements and exhibits) and any
amendments or supplements thereto.
(b) The Company shall pay Parent a fee of $4 million
(the "Fee"), plus Parent's actual, documented and reasonable out-
of-pocket expenses relating to the transactions contemplated by
this Agreement (including but not limited to, fees and expenses
of counsel and accountants and out-of-pocket expenses (but not
fees) of financial advisors) ("Expenses"), but in no event more
than $500,000, incurred from and after April 29, 1996, upon the
first to occur of any of the following events:
(i) the termination of this Agreement by Parent
pursuant to Section 7.01(d) as a result of the failure
to receive the requisite vote for approval and adoption
of this Agreement by the stockholders of the Company by
October 31, 1996; or
(ii) the termination of this Agreement by Parent
pursuant to Section 7.01(e); or
(iii) the termination of this Agreement by the
Company pursuant to Section 7.01(f); or
(iv) the termination of this Agreement by Parent
pursuant to Section 7.01(i).
(c) Upon a termination of this Agreement by Parent
pursuant to Section 7.01(g), the Company shall pay to Parent the
Expenses of Parent relating to the transactions contemplated by
this Agreement, but in no event more than $500,000, incurred from
and after April 29, 1996. Upon termination of this Agreement by
Company pursuant to Section 7.01(g), Parent shall pay to the
Company the Expenses of the Company relating to the transactions
contemplated by this Agreement, but in no event more than
$500,000, incurred from and after April 29, 1996.
<PAGE>
<PAGE>
(d) The Fee and/or Expenses payable pursuant to
Section 7.03(b) or Section 7.03(c) shall be paid within one
business day after the first to occur of any of the events
described in Section 7.03(b) or Section 7.03(c); provided that,
-------- ----
in no event shall the Company or Parent, as the case may be, be
required to pay such Fee and/or Expenses to the other party, if,
immediately prior to the termination of this Agreement, the party
entitled to receive such Fee and/or Expenses was in material
breach of its obligations under this Agreement.
ARTICLE VIII
GENERAL PROVISIONS
------------------
SECTION 8.01. Effectiveness of Representations,
---------------------------------
Warranties and Agreements; Knowledge, Etc. (a) Except as
-----------------------------------------
otherwise provided in this Section 8.01, the representations,
warranties and agreements of each party hereto shall remain
operative and in full force and effect regardless of any
investigation made by or on behalf of any other party hereto, any
person controlling any such party or any of their officers or
directors, whether prior to or after the execution of this
Agreement. The representations, warranties and agreements in
this Agreement shall terminate at the Effective Time or upon the
termination of this Agreement pursuant to Section 7.01, as the
case may be, except that the agreements set forth in Article I
and Section 5.06 shall survive the Effective Time indefinitely
and those set forth in Section 7.03 shall survive termination
indefinitely. The Confidentiality Letter shall survive
termination of this Agreement as provided therein.
(b) Any disclosure made with reference to one or more
Sections of the Company Disclosure Schedule or the Parent
Disclosure Schedule shall be deemed disclosed with respect to
each other section therein as to which such disclosure is
relevant provided that such relevance is reasonably apparent.
SECTION 8.02. 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 if and when
delivered personally or by overnight courier to the parties at
the following addresses or sent by electronic transmission, with
confirmation received, to the telecopy numbers specified below
(or at such other address or telecopy number for a party as
shall be specified by like notice):
(a) If to Parent or Merger Sub:
Tyco International Ltd.
One Tyco Park
Exeter, NH 03833
Telecopier No.: (603) 778-7330
Telephone No.: (603) 778-9700
Attention: Chairman
<PAGE>
<PAGE>
With a copy to:
Kramer, Levin, Naftalis & Frankel
919 Third Avenue
New York, NY 10022
Telecopier No.: (212) 715-8000
Telephone No.: (212) 715-9100
Attention: Joshua M. Berman, Esq.
(b) If to the Company:
Carlisle Plastics, Inc.
1314 North Third Street
Phoenix, AZ 85004
Telecopier No.:
Telephone No.: (602) 407-2100
Attention: Chairman
With a copy to:
Weil, Gotshal & Manges LLP
767 Fifth Avenue
New York, NY 10153
Telecopier No.: (212) 310-8007
Telephone No.: (212) 310-8000
Attention: Stephen E. Jacobs, Esq.
SECTION 8.03. Certain Definitions. For purposes of
-------------------
this Agreement, the term:
(a) "affiliates" means a person that directly or
indirectly, through one or more intermediaries, controls, is
controlled by, or is under common control with, the first
mentioned person; including, without limitation, any
partnership or joint venture in which the Company (either
alone, or through or together with any other subsidiary)
has, directly or indirectly, an interest of 5% or more;
(b) "beneficial owner" with respect to any shares of
Company Common Stock means a person who shall be deemed to
be the beneficial owner of such shares (i) which such person
or any of its affiliates or associates (as such term is
defined in Rule 12b-2 of the Exchange Act) beneficially
owns, directly or indirectly, (ii) which such person or any
of its affiliates or associates has, directly or indirectly,
(A) the right to acquire (whether such right is exercisable
immediately or subject only to the passage of time),
pursuant to any agreement, arrangement or understanding or
upon the exercise of consideration rights, exchange rights,
warrants or options, or otherwise, or (B) the right to vote
pursuant to any agreement, arrangement or understanding, or
(iii) which are beneficially owned, directly or indirectly,
by any other persons with whom such person or any of its
affiliates or associates has any agreement, <PAGE>
<PAGE>
arrangement or understanding for the purpose of acquiring,
holding, voting or disposing of any shares;
(c) "business day" means any day other than a day on
which banks in New York are required or authorized to be
closed;
(d) "control" (including the terms "controlled by" and
"under common control with") means the possession, directly
or indirectly or as trustee or executor, of the power to
direct or cause the direction of the management or policies
of a person, whether through the ownership of stock, as
trustee or executor, by contract or credit arrangement or
otherwise;
(e) "person" means an individual, corporation,
partnership, association, trust, unincorporated
organization, other entity or group (as defined in Section
13(d)(3) of the Exchange Act); and
(f) "subsidiary" or "subsidiaries" of the Company, the
Surviving Corporation, Parent or any other person means any
corporation, partnership, joint venture or other legal
entity of which the Company, the Surviving Corporation,
Parent or such other person, as the case may be (either
alone or through or together with any other subsidiary),
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.
SECTION 8.04. Amendment. This Agreement may be
---------
amended by the parties hereto by action taken by or on behalf of
their respective Boards of Directors at any time prior to the
Effective Time; 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.
SECTION 8.05. Waiver. At any time prior to the
------
Effective Time, any party hereto may with respect to any other
party hereto (a) extend the time for the performance of any of
the obligations or other acts, (b) waive any inaccuracies in the
representations and warranties contained herein or in any
document delivered pursuant hereto, or (c) waive compliance with
any of the agreements or conditions contained herein. Any such
extension or waiver shall be valid if set forth in an instrument
in writing signed by the party or parties to be bound thereby.
SECTION 8.06. 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 8.07. Severability. (a) 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
<PAGE>
<PAGE>
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 transactions contemplated hereby are fulfilled to the
extent possible.
(b) The Company and Parent agree that the Fee provided
in Section 7.03(b) is fair and reasonable in the circumstances,
considering not only the Merger Consideration but also the
outstanding funded indebtedness (including capital leases) of the
Company and its subsidiaries. If a court of competent
jurisdiction shall nonetheless, by a final, non-appealable
judgment, determine that the amount of the Fee exceeds the
maximum amount permitted by law, then the amount of the Fee shall
be reduced to the maximum amount permitted by law in the
circumstances, as determined by such court of competent
jurisdiction.
SECTION 8.08. Entire Agreement. This Agreement
----------------
constitutes the entire agreement and supersedes all prior
agreements and undertakings (other than the Confidentiality
Letters), both written and oral, among the parties, or any of
them, with respect to the subject matter hereof and, except as
otherwise expressly provided herein.
SECTION 8.09. Assignment; Merger Sub. This Agreement
----------------------
shall not be assigned by operation of law or otherwise, except
that all or any of the rights of Merger Sub hereunder may be
assigned to any direct, wholly-owned subsidiary of Parent
provided that no such assignment shall relieve the assigning
party of its obligations hereunder. Parent guarantees the full
and punctual performance by Merger Sub of all the obligations
hereunder of Merger Sub or any such assignees.
SECTION 8.10. Parties in Interest. 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 or shall confer upon any other person any right,
benefit or remedy of any nature whatsoever under or by reason of
this Agreement, including, without limitation, by way of
subrogation, other than Section 5.06 (which is intended to be for
the benefit of the Indemnified Parties and Officer Employees and
may be enforced by such Indemnified Parties and Officer
Employees).
SECTION 8.11. Failure or Indulgence Not Waiver;
---------------------------------
Remedies Cumulative. No failure or delay on the part of any
-------------------
party hereto in the exercise of any right hereunder shall impair
such right or be construed to be a waiver of, or acquiescence in,
any breach of any representation, warranty or agreement herein,
nor shall any single or partial exercise of any such right
preclude other or further exercise thereof or of any other right.
All rights and remedies existing under this Agreement are
cumulative to, and not exclusive of, any rights or remedies
otherwise available.
SECTION 8.12. Governing Law; Jurisdiction. (a) This
---------------------------
Agreement shall be governed by, and construed in accordance with,
the internal laws of the State of New York applicable to
contracts executed and fully performed within the State of New
York.
<PAGE>
<PAGE>
(b) Each of the parties hereto submits to the non-
exclusive jurisdiction of the federal courts of the United States
and the courts of the State of New York located in the City of
New York, Borough of Manhattan with respect to any claim or cause
of action arising out of this Agreement or the transactions
contemplated hereby.
SECTION 8.13. 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 taken
together shall constitute one and the same agreement.
SECTION 8.14. WAIVER OF JURY TRIAL. EACH OF PARENT,
--------------------
MERGER SUB AND THE COMPANY HEREBY IRREVOCABLY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY LAW, ALL RIGHTS TO TRIAL BY JURY IN
ANY ACTION, PROCEEDING, OR COUNTERCLAIM (WHETHER BASED UPON
CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO THIS
AGREEMENT OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREBY.
[This space intentionally left blank.]
<PAGE>
<PAGE>
IN WITNESS WHEREOF, Parent, Merger Sub and the Company
have caused this Agreement to be executed as of the date first
written above by their respective officers thereunto duly
authorized.
TYCO INTERNATIONAL LTD.
By /s/ Barbara S. Miller
---------------------------
Name: Barbara S. Miller
Title: Treasurer
T2 ACQUISITION CORP.
By /s/ Barbara S. Miller
---------------------------
Name: Barbara S. Miller
Title: Treasurer
CARLISLE PLASTICS, INC.
By /s/ William H. Binnie
---------------------------
Name: William H. Binnie
Title: Chairman
<PAGE>
PRESS RELEASE
Carlisle Plastics, Inc.
1314 North Third Street
Phoenix AZ 85004-1751
Contact: Investor Relations
Phone: 602-407-2182
FAX: 602-407-2177
FOR IMMEDIATE RELEASE
TYCO INTERNATIONAL LTD. TO ACQUIRE CARLISLE PLASTICS, INC.
----------------------------------------------------------
Phoenix, Arizona, May 15, 1996 -- Carlisle Plastics, Inc. (NYSE: CPA)
announced today that it has agreed to be acquired by Tyco
International Ltd. (NYSE: TYC).
The Companies have entered into a definitive merger agreement pursuant
to which Tyco will acquire Carlisle in a stock for stock transaction.
The transaction calls for Tyco to issue 0.172185 shares of Tyco stock
for each of Carlisle's approximately 17.88 million outstanding shares.
Tyco is a worldwide manufacturer with strong leadership positions in
disposable medical products, packaging materials, flow control
products, electrical and electronic components and is the world's
largest manufacturer and installer of fire protection systems. Tyco
operates in more than 50 countries around the world and has revenues
in excess of $4.5 billion.
William H. Binnie, Carlisle's Chairman, said "This is a positive
transaction for all of our shareholders, employees, vendors and
customers. Tyco's financial strength will enable Carlisle to
aggressively pursue growth opportunities in all of our markets. There
are also significant synergies between Carlisle and Tyco's specialty
packaging businesses."
The transaction, which is intended to be tax free to Carlisle
shareholders, is contingent upon regulatory review and approval by the
shareholders of Carlisle. The Boards of Directors of both companies
have approved the transaction, which is expected to close before
September 1, 1996.
Carlisle Plastics, Inc. is a global leader in the production of
plastic products sold into retail and industrial markets, including
garment hangers, trash can liners, consumer, agricultural and
commercial sheeting and packaging products.
NYFS07...:\56\33856\0010\1187\PUB5156T.010
