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) December 5, 1997
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TALLEY MANUFACTURING AND TECHNOLOGY, INC.
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(Exact Name of Registrant as Specified in Charter)
Delaware 33-49869-01 86-0739329
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(State or other jurisdiction (Commission (IRS Employer Identi-
of incorporation) File Number) fication No.)
2702 North 44th Street, Suite 100A, Phoenix, Arizona 85008
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 602/957-7711
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(Former name or former address, if changed since last report)
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Item 1. Changes in Control of Registrant.
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The Registrant is a wholly owned subsidiary of Talley Industries,
Inc., a Delaware corporation ("Talley"). On December 5, 1997,
Score Acquisition Corp.("Purchaser"), a Delaware corporation and
a wholly-owned subsidiary of Carpenter Technology Corporation, a
Delaware corporation ("Carpenter"), accepted for payment
approximately 10,777,195 shares of Talley's Common Stock, par
value $1 per share, including the associated Preferred Stock
Purchase Rights (the "Common Shares"), approximately 12,509
shares of Talley's Series A Convertible Preferred Stock ("Series
A Preferred Shares") and approximately 497,618 shares of Talley's
Series B $1 Cumulative Convertible Preferred Stock ("Series B
Preferred Shares," and together with the Common Shares and the
Series A Preferred Shares, the "Shares"). The Shares were
acquired pursuant to the Agreement and Plan of Merger dated
September 25, 1997 among Carpenter, Purchaser and Talley, a copy
of which is attached as Exhibit 99.1 hereto and incorporated
herein by reference (the "Merger Agreement"), and upon the terms
and subject to the conditions set forth in Purchaser's Offer to
Purchase dated October 2, 1997 (as amended to date, the "Offer to
Purchase") and the related Letter of Transmittal (together with
the Offer to Purchase, and as amended to date, the "Offer"). The
Offer expired at 12:00 midnight (EST) on Thursday, December 4,
1997, and all Shares validly tendered by stockholders and not
withdrawn prior to such time were accepted for payment by
Purchaser. As a result of the consummation of the Offer,
Purchaser holds approximately 74.4% (measured by aggregate voting
power on a fully diluted basis) of Talley's issued and
outstanding voting securities. A copy of the press releases
issued by Carpenter and Talley on December 5, 1997 announcing the
preliminary results of the Offer are attached hereto as Exhibits
99.4 and 99.5, respectively.
The total consideration paid by Purchaser for the purchase of
Shares pursuant to the Offer was approximately $137.6 million.
Based on information reported by Purchaser in the Offer to
Purchase and in the Schedule 14D-1 filed by Purchaser on October
2, 1997, and the amendments thereto, Talley and the Registrant
believe that (i) Purchaser's source of funds to acquire the
Shares is through a capital contribution and/or a loan from
Carpenter; and (ii) Carpenter's source of funds is principally
through an increase in its unsecured revolving credit agreement
to $400 million. According to Purchaser, the four lenders under
the amended revolving credit facility are Morgan Guaranty Trust
Company of New York acting as agent, Mellon Bank, N.A. as
syndication agent, CoreStates Bank, N.A. and PNC Bank, National
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Association.
The Merger Agreement provides that, following consummation of the
Offer and subject to approval by the stockholders of Talley and
the satisfaction of certain limited conditions, Purchaser will
acquire all of the issued and outstanding Shares not tendered in
the Offer through a cash merger of Purchaser or another wholly-
owned subsidiary of Carpenter with and into Talley (the
"Merger"), with Talley as the surviving corporation. The Merger
Agreement will be submitted to Talley's stockholders for approval
at a special meeting of Talley's stockholders which Talley
anticipates will be held on February 12, 1998. Because Purchaser
has sufficient voting power to approve the Merger Agreement and
is contractually obligated to vote all Shares held by Purchaser
in favor of the Merger Agreement, approval of the Merger
Agreement by the stockholders of Talley is assured. The other
conditions to consummation of the Merger are expected by Talley
and the Registrant to be fulfilled.
On December 9, 1997, in accordance with the terms of the Merger
Agreement, Robert T. Craig, Jack C. Crim, Fred Israel, Alex
Stamatakis and Donald J. Ulrich, Jr. resigned as directors of
Talley and the Registrant, and Robert W. Cardy, Dennis M.
Draeger, G. Walton Cottrell, Robert W. Lodge, John R. Welty, and
Edward B. Bruno, each of whom is a designee of Purchaser, were
appointed to the Board of Directors of Talley and the Registrant.
Paul L. Foster, Joseph A. Orlando, John W. Stodder and David
Victor continue to serve as directors of Talley and the
Registrant, but Admiral Foster has resigned as Chairman of the
Board and Chief Executive Officer of Talley and the Registrant.
Robert W. Cardy has been appointed as Chairman of the Board and
Chief Executive Officer of Talley and the Registrant.
The foregoing summary of certain terms and provisions of the
Merger Agreement is qualified in its entirety by the Merger
Agreement, which is an Exhibit to this Report.
Item 5. Other Events.
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On December 9, 1997, Talley's Board of Directors approved
Amendment No. 1 (the "Amendment") to the Amended and Restated
Rights Agreement (as so amended, the "Amended Rights Agreement")
originally dated as of April 30, 1986, as amended as of July 21,
1986 and as further amended and restated as of February 2, 1996,
between Talley and ChaseMellon Shareholder Services, L.L.C., as
Rights Agent. The Amendment provides that immediately prior to
the "Effective Time" (as such term is defined in the Merger
Agreement) of the Merger, all Preferred Stock Purchase Rights
(the "Rights") outstanding or issuable under the Amended Rights
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Agreement shall be null and void and of no further force and
effect, and Talley's obligations to issue additional Rights and
its obligations under the Amended Rights Agreement shall
terminate. The foregoing summary of certain terms and provisions
of the Amended Rights Agreement and the Amendment is qualified in
its entirety by the Amended Rights Agreement and the Amendment,
copies of which are attached hereto as Exhibits 99.2 and 99.3,
respectively, and incorporated herein by reference.
This Report contains forward-looking statements that are based on
the Registrant's current expectations. Words such as "expects"
and "anticipates" are intended to identify such forward-looking
statements. These statements are not guarantees of future
performance or actions and involve certain risks, uncertainties
and assumptions. Therefore, actual outcomes and results may
differ materially from what is expressed or forecasted in such
forward-looking statements. The Registrant undertakes no
obligation to update publicly any forward-looking statements,
whether as a result of new information, future events or
otherwise.
Item 7. Financial Statements, Pro Forma Financial Information
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and Exhibits.
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(c) Exhibits
99.1 Agreement and Plan of Merger dated September
25, 1997, among Carpenter Technology
Corporation, a Delaware corporation, Score
Acquisition Corp., a Delaware corporation, and
Talley
99.2 Amended and Restated Rights Agreement
originally dated as of April 30, 1986, as
amended as of July 21, 1986 and as further
amended and restated as of February 2, 1996,
between Talley and ChaseMellon Shareholder
Services, L.L.C., as Rights Agent (as so
amended and restated, the "Rights Agreement").
(Incorporated herein by reference to Exhibit
99.1 to the Registrant's Form 8-K dated
February 7, 1996.)
99.3 Amendment No. 1 to the Rights Agreement
99.4 Press Release dated December 5, 1997 issued by
Purchaser regarding completion of the Offer
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<PAGE>
99.5 Press Release dated December 5, 1997 issued by
Talley regarding completion of the Offer
SIGNATURE
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Pursuant to the requirements of the Securities Exchange Act
of 1934, the Registrant has duly caused this Report on Form 8-K
to be signed on its behalf by the undersigned, thereunto duly
authorized.
TALLEY MANUFACTURING
AND TECHNOLOGY, INC.
Dated: December 17, 1997 By /s/ Mark S. Dickerson
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Mark S. Dickerson,
Vice President and
Secretary
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EXHIBIT INDEX
EXHIBIT
NO. EXHIBIT
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99.1 Agreement and Plan of Merger dated
September 25, 1997, among Carpenter
Technology Corporation, a Delaware
corporation, Score Acquisition Corp., a
Delaware corporation, and Talley
Industries, Inc., a Delaware corporation
("Talley")
99.2 Amended and Restated Rights Agreement
originally dated as of April 30, 1986,
as amended as of July 21, 1986 and as
further amended and restated as of
February 2, 1996, between Talley and
ChaseMellon Shareholder Services,
L.L.C., as Rights Agent (as so amended
and restated, the "Rights Agreement").
(Incorporated herein by reference to
Exhibit 99.1 to the Registrant's Form 8-K
dated February 7, 1996.)
99.3 Amendment No. 1 to the Rights Agreement
99.4 Press Release dated December 5, 1997
issued by Purchaser regarding completion
of the Offer
99.5 Press Release dated December 5, 1997
issued by Talley regarding completion of
the Offer
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EXHIBIT 99.1
[EXECUTION COUNTERPART]
AGREEMENT AND PLAN OF MERGER
among
CARPENTER TECHNOLOGY CORPORATION,
SCORE ACQUISITION CORP.
and
TALLEY INDUSTRIES, INC.
Dated September 25, 1997
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Table of Contents
Page
ARTICLE 1 - THE OFFER. . . . . . . . . . . . . . . . . . . . 1
Section 1.1 The Offer. . . . . . . . . . . . . . . . . . 1
Section 1.2 Company Actions. . . . . . . . . . . . . . . 3
ARTICLE 2 - THE MERGER . . . . . . . . . . . . . . . . . . . 6
Section 2.1 The Merger . . . . . . . . . . . . . . . . . 6
Section 2.2 Effective Time . . . . . . . . . . . . . . . 7
Section 2.3 Effects of the Merger. . . . . . . . . . . . 7
Section 2.4 Certificate of Incorporation and Bylaws. . . 7
Section 2.5 Directors and Officers . . . . . . . . . . . 7
Section 2.6 Conversion of Shares . . . . . . . . . . . . 8
Section 2.7 Dissenting Shares. . . . . . . . . . . . . . 8
Section 2.8 Payments for Shares. . . . . . . . . . . . . 9
ARTICLE 3 - REPRESENTATIONS AND WARRANTIES
OF PARENT AND ACQUISITION SUB . . . . . . . . . 10
Section 3.1 Organization and Qualification . . . . . . . 10
Section 3.2 Authority Relating to this Agreement . . . . 11
Section 3.3 Information Supplied . . . . . . . . . . . . 11
Section 3.4 Consents and Approvals; No Violation . . . . 12
Section 3.5 Financing. . . . . . . . . . . . . . . . . . 12
ARTICLE 4 - REPRESENTATIONS AND WARRANTIES
OF THE COMPANY. . . . . . . . . . . . . . . . . 13
Section 4.1 Organization and Qualification. . . . . . . 13
Section 4.2 Capitalization. . . . . . . . . . . . . . . 14
Section 4.3 Authority Relative to this Agreement. . . . 15
Section 4.4 Absence of Certain Changes. . . . . . . . . 16
Section 4.5 Reports . . . . . . . . . . . . . . . . . . 17
Section 4.6 Proxy Statement . . . . . . . . . . . . . . 17
Section 4.7 Consents and Approvals; No Violation. . . . 18
Section 4.8 Fees and Commissions. . . . . . . . . . . . 18
Section 4.9 Information Supplied. . . . . . . . . . . . 19
Section 4.10 Litigation. . . . . . . . . . . . . . . . . 19
Section 4.11 Patents and Other Proprietary Rights. . . . 19
Section 4.12 Benefit Plans; ERISA Compliance . . . . . . 20
Section 4.13 Taxes . . . . . . . . . . . . . . . . . . . 23
Section 4.14 Compliance with Applicable Laws . . . . . . 25
Section 4.15 State Takeover Statutes . . . . . . . . . . 28
Section 4.16 Labor Matters . . . . . . . . . . . . . . . 28
Section 4.17 Undisclosed Liabilities . . . . . . . . . . 28
Section 4.18 Certain Agreements. . . . . . . . . . . . . 28
Section 4.19 Amendment of Rights Agreement . . . . . . . 28
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ARTICLE 5 - COVENANTS. . . . . . . . . . . . . . . . . . . . 29
Section 5.1 Conduct of Business of the Company. . . . . 29
Section 5.2 No Solicitation . . . . . . . . . . . . . . 31
Section 5.3 Access to Information . . . . . . . . . . . 33
Section 5.4 Reasonable Best Efforts . . . . . . . . . . 33
Section 5.5 Indemnification, Exculpation and
Insurance . . . . . . . . . . . . . . . . 34
Section 5.6 Stock Options; Employee Plans and Benefits
and Employment Contracts . . . . . . . . 35
Section 5.7 Meeting of the Company's Stockholders . . . 37
Section 5.8 Public Announcements. . . . . . . . . . . . 38
Section 5.9 Stockholder Litigation. . . . . . . . . . . 38
Section 5.10 Rights Agreement. . . . . . . . . . . . . . 38
ARTICLE 6 - CONDITIONS TO CONSUMMATION OF MERGER . . . . . . 38
Section 6.1 Conditions to Each Party's Obligation to
Effect the Merger . . . . . . . . . . . . 38
ARTICLE 7 - TERMINATION; AMENDMENT; WAIVER
Section 7.1 Termination . . . . . . . . . . . . . . . . 39
Section 7.2 Effect of Termination . . . . . . . . . . . 40
Section 7.3 Termination Fee . . . . . . . . . . . . . . 40
Section 7.4 Amendment . . . . . . . . . . . . . . . . . 40
Section 7.5 Extension; Waiver . . . . . . . . . . . . . 41
Section 7.6 Procedure for Termination, Amendment,
Extension or Waiver . . . . . . . . . . . 41
Section 7.7 Concurrence of Independent Directors. . . . 41
ARTICLE 8 - MISCELLANEOUS. . . . . . . . . . . . . . . . . . 41
Section 8.1 Non-Survival of Representations and
Warranties . . . . . . . . . . . . . . . 41
Section 8.2 Entire Agreement; Assignment. . . . . . . . 42
Section 8.3 Validity. . . . . . . . . . . . . . . . . . 42
Section 8.4 Notices . . . . . . . . . . . . . . . . . . 42
Section 8.5 Governing Law . . . . . . . . . . . . . . . 44
Section 8.6 Jurisdiction. . . . . . . . . . . . . . . . 44
Section 8.7 Descriptive Headings. . . . . . . . . . . . 44
Section 8.8 Parties in Interest . . . . . . . . . . . . 44
Section 8.9 Counterparts. . . . . . . . . . . . . . . . 44
Section 8.10 Fees and Expenses . . . . . . . . . . . . . 44
Section 8.11 Certain Definitions . . . . . . . . . . . . 45
Section 8.12 Performance by Acquisition Sub. . . . . . . 46
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DISCLOSURE SCHEDULES
4.1(b) Subsidiaries
4.2 Capitalization
4.4 Absence of Certain Changes
4.7 Consents and Approvals; No Violation
4.10 Litigation
4.11 Intellectual Property Rights
4.12 Benefits
4.13 Taxes
4.16 Labor Matters
4.18 Covenants Not to Compete
5.6(d) Agreements with Current and Former Officers and
Directors
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<PAGE>
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER (the "Agreement"), dated
September 25, 1997, among CARPENTER TECHNOLOGY CORPORATION, a
Delaware corporation ("Parent"), SCORE ACQUISITION CORP., a
Delaware corporation and a wholly-owned subsidiary of Parent
("Acquisition Sub"), and TALLEY INDUSTRIES, INC., a Delaware
corporation (the "Company").
The respective Boards of Directors of Parent,
Acquisition Sub and the Company have each determined that it is
advisable, on the terms and subject to the conditions of this
Agreement, (i) for a wholly-owned subsidiary of Parent to
commence a cash tender offer to purchase all outstanding shares
of Series A Convertible Preferred Stock ("Series A Preferred
Shares"), Series B $1 Cumulative Convertible Preferred Stock
("Series B Preferred Shares and together with the Series A
Preferred Shares, "Preferred Shares") and Common Stock, par value
$1 per share, of the Company ("Common Shares" and together with
the Preferred Shares, "Shares") and (ii) following the cash
tender offer, to merge Acquisition Sub with and into the Company.
In consideration of the premises and the mutual
covenants herein contained and intending to be legally bound
hereby, Parent, Acquisition Sub and the Company hereby agree as
follows:
ARTICLE 1
THE OFFER
Section 1.1 The Offer.
(a) As promptly as practicable but in no event
later than the fifth business day after the public announcement
of the execution of this Agreement, Parent shall cause
Acquisition Sub to commence (within the meaning of Rule 14d-2
under the Securities Exchange Act of 1934, as amended (the
"Exchange Act")), and Acquisition Sub shall commence, an offer
(as amended or supplemented in accordance with this Agreement,
the "Offer") to purchase for cash all issued and outstanding
Shares at a price of $11.70 per Series A Preferred Share, $16.00
per Series B Preferred Share and $12.00 per Common Share net to
the seller in cash (such prices, or such higher prices per Share
as may be paid in the Offer, being referred to as the "Offer
Prices"). The obligation of Acquisition Sub, and of Parent to
cause Acquisition Sub, to consummate the Offer, to accept for
payment and to pay for any Shares tendered shall be subject to
only those conditions set forth in Annex A hereto (any of which
<PAGE>
may be waived by Acquisition Sub in its sole discretion; provided
that, without the consent of the Company, Acquisition Sub shall
not waive the Minimum Tender Condition (as defined in Annex A)).
(b) As soon as practicable on the date of
commencement of the Offer, Parent and Acquisition Sub shall file
with the Securities and Exchange Commission (the "SEC") with
respect to the Offer a Tender Offer Statement on Schedule 14D-1
(the "Schedule 14D-1"), which will comply in all material
respects with the provisions of applicable federal securities
laws and will contain the offer to purchase relating to the Offer
(the "Offer to Purchase") and forms of related letters of
transmittal and summary advertisement (which documents, together
with any supplements or amendments thereto, are referred to
herein collectively as the "Offer Documents"). Parent will
deliver copies of the proposed forms of the Schedule 14D-1 and
the Offer Documents (as well as any change thereto) to the
Company within a reasonable time prior to the commencement of the
Offer for prompt review and comment by the Company and its
counsel. Parent will provide the Company and its counsel in
writing any comments that Acquisition Sub, Parent or their
counsel may receive from the SEC or its staff with respect to the
Offer Documents promptly after the receipt thereof. Parent and
Acquisition Sub represent that the Schedule 14D-1 and the Offer
Documents (including any amendments or supplements thereto) (i)
shall comply as to form in all material respects with the
requirements of the Exchange Act and the rules and regulations
thereunder and (ii) shall not, in the case of the Schedule 14D-1
at the time filed with the SEC and at the time the Offer is
consummated and in the case of the Offer Documents when first
published, sent or given to the stockholders of the Company and
at the time the Offer is consummated, contain any untrue
statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which
they are made, not misleading; provided, however, that Parent and
Acquisition Sub make no covenant, representation or warranty as
to any of the information relating to and supplied by the Company
in writing specifically for inclusion in the Schedule 14D-1 or
the Offer Documents (including any amendments or supplements
thereto). Parent and Acquisition Sub shall promptly correct any
information in the Schedule 14D-1 or the Offer Documents that
shall have become false or misleading in any material respect and
take all steps necessary to cause such Schedule 14D-1 or Offer
Documents as so corrected to be filed with the SEC and
disseminated to the stockholders of the Company, as and to the
extent required by applicable law. Parent and Acquisition Sub
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<PAGE>
will provide copies of any amendments or supplements to the Offer
Documents or the Schedule 14D-1 prior to any filing of such
amendments or supplements with the SEC in order to provide the
Company and its counsel with a reasonable opportunity to review
and comment.
(c) Each of Parent and Acquisition Sub expressly
reserves the right to modify the terms of the Offer, except that
neither Parent nor Acquisition Sub shall, without the prior
written consent of the Company, decrease the consideration
payable in the Offer, change the form of consideration payable in
the Offer, decrease the number of Shares sought pursuant to the
Offer, change or modify the conditions to the Offer in a manner
adverse to the Company or holders of Shares, impose additional
conditions to the Offer, waive the Minimum Tender Condition, or
amend any term of the Offer in any manner adverse to the Company
or holders of Shares. Notwithstanding the foregoing, Acquisition
Sub, without the consent of the Company, (i) shall extend the
Offer, if at the then scheduled expiration date of the Offer any
of the conditions to Acquisition Sub's obligation to accept for
payment and pay for Shares shall not have been satisfied, until
such time as such condition is satisfied or waived, if such
condition may in the reasonable judgment of Acquisition Sub be
satisfied in a time period reasonable for such satisfaction, (ii)
may, if any such condition is not waived, extend the Offer until
such condition is waived, (iii) may extend the Offer for any
period required by any rule, regulation, interpretation or
position of the SEC or the staff thereof applicable to the Offer
and (iv) may extend the Offer on one or more occasions for an
aggregate period of not more than five business days if the
Minimum Tender Condition has been satisfied and there has
theretofore been validly tendered and not withdrawn Shares
representing at least 70% but less than 90% of each class of the
outstanding Shares (on a fully diluted basis).
(d) Parent will provide or cause to be provided
to Acquisition Sub on a timely basis the funds necessary to
accept for payment, and pay for, Shares that Acquisition Sub
becomes obligated to accept for payment, and pay for, pursuant to
the Offer.
Section 1.2 Company Actions.
(a) The Company hereby consents to the Offer and
represents that (i) its Board of Directors, at a meeting duly
called and held, has duly and by the affirmative vote of at least
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<PAGE>
4/5ths of the duly elected, qualified and acting members of the
Board at the time of such meeting, adopted resolutions approving
the Offer, the Merger (as defined in Section 2.1) and this
Agreement, determining that the terms of the Offer and the Merger
are fair to, and in the best interests of, the Company's
stockholders and recommending acceptance of the Offer and
approval of the Merger and this Agreement by the stockholders of
the Company and (ii) J. P. Morgan Securities Inc. ("JPMorgan")
has delivered to the Company's Board of Directors its opinion
that as of the date of this Agreement the cash consideration to
be received by holders of the Common Shares for such Shares is
fair to such holders from a financial point of view. The Company
hereby consents to the inclusion in the Offer Documents of the
recommendations of the Company's Board of Directors described in
this Section.
(b) The Company will file with the SEC on the
date of the commencement of the Offer a
Solicitation/Recommendation Statement on Schedule 14D-9 (the
"Schedule 14D-9") containing such recommendations of the Board in
favor of the Offer and the Merger, and shall disseminate the
Schedule 14D-9 as required by Rule 14d-9 promulgated under the
Exchange Act. The Company will deliver the proposed forms of the
Schedule 14D-9 and the exhibits thereto to Parent within a
reasonable time prior to the commencement of the Offer for prompt
review and comment by Parent and its counsel. Parent and its
counsel shall be given a reasonable opportunity to review any
amendments and supplements to the Schedule 14D-9 prior to their
filing with the SEC or dissemination to stockholders of the
Company. The Company will provide Parent and its counsel in
writing any comments that the Company or its counsel may receive
from the SEC or its staff with respect to the Schedule 14D-9
promptly after receipt thereof. The Company represents that the
Schedule 14D-9, on the date filed with the SEC and on the date
first published, sent or given to the stockholders of the
Company, shall not contain any untrue statement of a material
fact or omit to state any material fact required to be stated
therein or necessary in order to make the statements therein, in
light of the circumstances under which they were made, not
misleading. The Company shall promptly correct any information
in the Schedule 14D-9 that shall have become false or misleading
in any material respect and take all steps necessary to cause
such Schedule 14D-9 as so corrected to be filed with the SEC and
disseminated to the stockholders of the Company, as and to the
extent required by applicable federal securities laws.
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<PAGE>
(c) In connection with the Offer, the Company
shall furnish to, or cause to be furnished to, Parent mailing
labels, security position listings and any available listing or
computer file containing the names and addresses of the record
holders of the Shares as of a recent date and shall furnish
Parent with such information and assistance as Parent or its
agents may reasonably request in communicating the Offer to the
stockholders of the Company. Subject to the requirements of law,
and except for such steps as are necessary to disseminate the
Offer Documents and any other documents necessary to consummate
the Merger, Parent and Acquisition Sub shall, and shall cause
each of their affiliates to, hold the information contained in
any of such labels and lists in confidence, use such information
only in connection with the Offer and the Merger, and, if this
Agreement is terminated, deliver to the Company all copies of
such information or extracts therefrom then in their possession
or under their control.
(d) Promptly upon the acceptance for payment of
and payment for any Shares by Acquisition Sub, Acquisition Sub
shall be entitled to designate such number of directors, rounded
up to the next whole number, on the Board of Directors of the
Company as will give Acquisition Sub, subject to compliance with
Section 14(f) of the Exchange Act, representation on the Board of
Directors of the Company equal to the product of (i) the number
of directors on the Board of Directors of the Company and
(ii) the percentage that such number of votes represented by
Shares so purchased bears to the number of votes represented by
Shares outstanding, and the Company shall at such time, subject
to applicable law, including applicable fiduciary duties, cause
Acquisition Sub's designees to be so elected by its existing
Board of Directors; provided, however, that in the event that
Acquisition Sub's designees are elected to the Board of Directors
of the Company, until the Effective Time such Board of Directors
shall have at least three directors who are directors on the date
of this Agreement and who are not officers or affiliates of the
Company (the "Independent Directors"); and provided further,
that, in such event, if the number of Independent Directors shall
be reduced below three for any reason whatsoever any remaining
Independent Directors (or Independent Director, if there shall be
only one remaining) shall designate persons to fill such
vacancies who shall be deemed to be Independent Directors for
purposes of this Agreement or, if no Independent Directors then
remain, the other directors shall designate three persons to fill
such vacancies who shall not be officers or affiliates of the
Company, or officers or affiliates of Parent or any of their
respective subsidiaries, and such persons shall be deemed to be
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<PAGE>
Independent Directors for purposes of this Agreement. Subject to
applicable law, including applicable fiduciary duties, the
Company shall take all action requested by Parent necessary to
effect any such election, including mailing to its stockholders
the information statement (the "Information Statement")
containing the information required by Section 14(f) of the
Exchange Act and Rule 14(f)-1 promulgated thereunder, and the
Company shall make such mailing with the mailing of the Schedule
14D-9 (provided that Parent and Acquisition Sub shall have
provided to the Company on a timely basis all information
required to be included in the Information Statement with respect
to Acquisition Sub's designees). In connection with the
foregoing, the Company will, subject to applicable law, including
applicable fiduciary duties, promptly, at the option of Parent,
either increase the size of the Company's Board of Directors
and/or obtain the resignation of such number of its current
directors as is necessary to enable Acquisition Sub's designees
to be elected or appointed to the Company's Board of Directors as
provided above.
ARTICLE 2
THE MERGER
Section 2.1 The Merger. Upon the terms and subject to
the conditions hereof, and in accordance with the relevant
provisions of the Delaware General Corporation Law (the "DGCL"),
Acquisition Sub shall be merged with and into the Company (the
"Merger") as soon as practicable following the satisfaction or
waiver of the conditions set forth in Article 7. Following the
Merger, the Company shall continue as the surviving corporation
(the "Surviving Corporation") under the name "Score" and shall
continue its existence under the laws of the State of Delaware,
and the separate corporate existence of Acquisition Sub shall
cease. At the election of Parent, and subject to the execution
of an appropriate amendment to this Agreement, any direct or
indirect wholly owned subsidiary of Parent may be substituted for
Acquisition Sub as a constituent corporation in the Merger.
Notwithstanding this Section 2.1, Parent may elect at any time
prior to the fifth business day immediately preceding the date on
which the notice of the meeting of stockholders of the Company to
consider approval of the Merger and this Agreement (the
"Meeting") is first given to the Company's stockholders that
instead of merging Acquisition Sub into the Company as
hereinabove provided, to merge the Company into Acquisition Sub
or another direct or indirect wholly-owned subsidiary of Parent;
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provided, however, that the Company shall not be deemed to have
breached any of its representations, warranties or covenants
herein solely by reason of such election. In such event the
parties shall execute an appropriate amendment to this Agreement
in order to reflect the foregoing and to provide that Acquisition
Sub or such other subsidiary of Parent shall be the Surviving
Corporation and shall continue under the name "Score".
Section 2.2 Effective Time. Upon the terms and subject
to the conditions hereof, as soon as possible after consummation
of the Offer and to the extent required by the DGCL after the
vote of the stockholders of the Company in favor of the approval
of the Merger and this Agreement has been obtained, the Merger
shall be consummated by filing with the Secretary of State of the
State of Delaware, as provided in the DGCL, a certificate of
merger or other appropriate documents (in any such case, the
"Certificate of Merger") and the parties hereto shall make all
other filings or recordings required under the DGCL (the later of
the time of such filing or the time specified in the Certificate
of Merger being the "Effective Time").
Section 2.3 Effects of the Merger. The Merger shall
have the effects set forth in Section 259 of the DGCL. As of the
Effective Time, the Company, as the Surviving Corporation, shall
be a wholly owned subsidiary of Parent.
Section 2.4 Certificate of Incorporation and Bylaws.
(a) The Certificate of Incorporation of the
Company in effect immediately prior to the Effective Time shall
be the Certificate of Incorporation of the Surviving Corporation
from and after the Effective Time until amended in accordance
with applicable law.
(b) The Bylaws of Acquisition Sub in effect at
the Effective Time shall be the Bylaws of the Surviving
Corporation from and after the Effective Time until amended in
accordance with applicable law.
Section 2.5 Directors and Officers. The directors of
Acquisition Sub and the officers of the Company immediately prior
to the Effective Time shall be the directors and officers of the
Surviving Corporation until their respective successors are duly
elected and qualified, except that the President and Chief
Executive Officer of Acquisition Sub will become the Chairman and
Chief Executive Officer of the Surviving Corporation.
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Section 2.6 Conversion of Shares. At the Effective
Time, by virtue of the Merger and without any action on the part
of Parent, Acquisition Sub, the Company or the holders of any of
the following securities:
(a) each Share held by the Company as treasury stock
and each issued and outstanding Share owned by Parent,
Acquisition Sub or any other subsidiary of Parent shall be
cancelled and retired and no payment made with respect thereto;
(b) each issued and outstanding Share, other than
those Shares referred to in Section 2.6(a) or Dissenting Shares
(as defined in Section 2.7), shall be converted into the right to
receive from the Surviving Corporation an amount of cash, without
interest, equal to the respective Offer Price applicable to such
Share (the "Merger Consideration"); and
(c) each common share, par value $1 per share, of
Acquisition Sub issued and outstanding immediately prior to the
Effective Time shall be converted into one fully-paid and
nonassessable share of common stock, par value $1 per share, of
the Surviving Corporation.
Section 2.7 Dissenting Shares. Notwithstanding
anything in this Agreement to the contrary, any issued and
outstanding Shares held by a person (a "Dissenting Stockholder")
who objects to the Merger and complies with all the provisions of
Delaware law concerning the right of holders of Shares to require
appraisal of their Shares ("Dissenting Shares") shall not be
converted as described in Section 2.6(b) but shall become the
right to receive such consideration as may be determined to be
due to such Dissenting Stockholder pursuant to the laws of the
State of Delaware. If, after the Effective Time, such Dissenting
Stockholder withdraws his demand for appraisal or fails to
perfect or otherwise loses his right of appraisal, in any case
pursuant to the DGCL, his Shares shall be deemed to be converted
as of the Effective Time into the right to receive the Merger
Consideration. The Company shall give Parent (i) prompt notice
of any demands for appraisal of Shares received by the Company
and (ii) the opportunity to participate in and direct all
negotiations and proceedings with respect to any such demands.
The Company shall not, without the prior written consent of
Parent, make any payment with respect to, or settle, offer to
settle or otherwise negotiate, any such demands.
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Section 2.8 Payments for Shares.
(a) Prior to the Effective Time, Parent shall appoint
a commercial bank or trust company reasonably acceptable to the
Company to act as disbursing agent for the Merger (the
"Disbursing Agent"). Parent will enter into a disbursing agent
agreement with the Disbursing Agent, in form and substance
reasonably acceptable to the Company, and shall deposit or cause
to be deposited with the Disbursing Agent in trust for the
benefit of the Company's stockholders cash at such times as shall
be necessary to make the payments pursuant to Section 2.6 to
holders of Shares (such amounts being hereinafter referred to as
the "Exchange Fund"). The Disbursing Agent shall, pursuant to
irrevocable instructions, make the payments provided for in the
preceding sentence out of the Exchange Fund. The Disbursing
Agent shall invest portions of the Exchange Fund as Parent
directs.
(b) Promptly after the Effective Time, the Surviving
Corporation shall cause the Disbursing Agent to mail to each
record holder, as of the Effective Time, of an outstanding
certificate or certificates which immediately prior to the
Effective Time represented Shares (the "Certificates") a form of
letter of transmittal (which shall specify that delivery shall be
effected, and risk of loss and title to the Certificates shall
pass, only upon proper delivery of the Certificates to the
Disbursing Agent) and instructions for use in effecting the
surrender of the Certificate or payment therefor. Upon surrender
to the Disbursing Agent of a Certificate, together with such
letter of transmittal duly executed, the holder of such
Certificate shall be paid in exchange therefor cash in an amount
equal to the product of the number of Shares represented by such
Certificate multiplied by the Merger Consideration, and such
Certificate shall forthwith be cancelled. No interest will be
paid or accrued on the cash payable upon the surrender of the
Certificates. If payment is to be made to a person other than
the person in whose name the Certificate surrendered is
registered, it shall be a condition of payment that the
Certificate so surrendered be properly endorsed or otherwise in
proper form for transfer and that the person requesting such
payment pay any transfer or other taxes required by reason of the
payment to a person other than the registered holder of the
Certificate surrendered or established to the satisfaction of the
Surviving Corporation that such tax has been paid or is not
applicable. Until surrendered in accordance with the provisions
of this Section 2.8, each Certificate (other than Certificates
representing Shares owned by Parent, Acquisition Sub or any other
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subsidiary of Parent or Dissenting Shares) shall represent for
all purposes only the right to receive the Merger Consideration
in cash multiplied by the number of Shares evidenced by such
Certificate, without any interest thereon.
(c) At and after the Effective Time, there shall be no
transfers of Shares which were outstanding immediately prior to
the Effective Time on the stock transfer books of the Surviving
Corporation. If, after the Effective Time, Certificates are
presented to the Surviving Corporation, they shall be cancelled
and exchanged for cash as provided in this Section 2.8.
(d) Any portion of the Exchange Fund (including the
proceeds of any investments thereof) that remains unclaimed by
the stockholders of the Company for six months after the
Effective Time shall be repaid to the Surviving Corporation. Any
stockholders of the Company who have not theretofore complied
with Section 2.8 shall thereafter look only to Parent and the
Surviving Corporation for payment of their claim for the Merger
Consideration per Share, without any interest thereon.
(e) To the fullest extent permitted by applicable law,
none of Parent, Acquisition Sub, the Company or the Disbursing
Agent shall be liable to any person in respect of any cash
delivered to a public official pursuant to any applicable
abandoned property, escheat or similar law.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES
OF PARENT AND ACQUISITION SUB
Parent and Acquisition Sub represent and warrant to the
Company as follows:
Section 3.1 Organization and Qualification. Each of
Parent and Acquisition Sub 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 to carry on its business as it is now being conducted.
Each of Parent and Acquisition Sub is duly qualified as a foreign
corporation to do business, and is in good standing, in each
jurisdiction where the character of its properties owned or
leased or the nature of its activities makes such qualification
necessary, except where the failure to be so qualified would not
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result in a material adverse effect on Parent or its ability to
consummate the transactions contemplated by this Agreement.
Section 3.2 Authority Relating to this Agreement. Each
of Parent and Acquisition Sub has all requisite corporate power
and authority to execute and deliver this Agreement and to
consummate the transactions contemplated hereby. The execution
and delivery by Parent and Acquisition Sub of this Agreement and
the consummation by Parent and Acquisition Sub of the
transactions contemplated hereby have been duly and validly
authorized by the respective Boards of Directors of Parent and
Acquisition Sub, and the stockholder of Acquisition Sub, and no
other corporate proceedings on the part of Parent or Acquisition
Sub are necessary to authorize this Agreement, or commence the
Offer or to consummate the transactions so contemplated by this
Agreement (including the Offer). This Agreement has been duly
and validly executed and delivered by each of Parent and
Acquisition Sub and, assuming this Agreement constitutes a valid
and binding obligation of the Company, this Agreement constitutes
a valid and binding agreement of each of Parent and Acquisition
Sub, enforceable against each of Parent and Acquisition Sub in
accordance with its terms except as enforceability may be limited
by bankruptcy, insolvency, reorganization, moratorium and other
similar laws affecting creditors' rights generally.
Section 3.3 Information Supplied. None of the
information supplied by Parent, Acquisition Sub and their
respective affiliates specifically for inclusion in the Schedule
14D-9 or the Proxy Statement (as hereinafter defined), if
required, shall, with respect to the Schedule 14D-9, at the time
such Schedule is filed with the SEC or first published, sent or
given to holders of Shares or the Offer is consummated or, with
respect to the Proxy Statement, at the time the Proxy Statement
is mailed or at the time of the Meeting, contain any untrue
statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which
they were made, not misleading. The letter to stockholders,
notice of meeting, proxy statement and form of proxy, or the
information statement, as the case may be, to be distributed to
stockholders in connection with the Merger, or any schedule
required to be filed with the SEC in connection therewith, are
collectively referred to herein as the "Proxy Statement." If, at
any time prior to the Effective Time, any event relating to
Parent or any of its affiliates, officers or directors is
discovered by Parent that should be set forth in a supplement to
the Proxy Statement, Parent will promptly inform the Company.
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<PAGE>
Section 3.4 Consents and Approvals; No Violation.
Neither the execution and delivery of this Agreement by Parent
and Acquisition Sub nor the consummation of the transactions
contemplated hereby will (i) conflict with or result in any
breach of any provision of the respective Certificates of
Incorporation or Bylaws of Parent or Acquisition Sub, (ii)
require any consent, approval, order, authorization or permit of,
or registration, declaration or filing with or notification to,
any Federal, state or local government or any court,
administrative or regulatory agency or commission or other
governmental authority or agency, domestic or foreign (a
"Governmental Entity") by Parent or Acquisition Sub, except (A)
the filing of a premerger notification and report form by Parent
under the Hart-Scott-Rodino Antitrust Improvements Act of 1976,
as amended (the "H-S-R Act"), (B) pursuant to the Securities Act
of 1933, as amended (the "Securities Act"), and the Exchange Act,
(C) the filing of the Certificate of Merger pursuant to the DGCL,
(D) such consents, approvals, orders, authorizations,
registrations and declarations as may be required under the law
of any foreign country in which the Parent or any of its
subsidiaries conducts any business or owns any assets, (F) such
filings and approvals as may be required under the "blue sky",
takeover or securities laws of various states, or (G) where the
failure to obtain any such consent, approval, authorization or
permit, or to make any such filing or notification, would not
prevent or delay consummation of the Offer or the Merger or would
not otherwise prevent Parent from performing its obligations
under this Agreement; (iii) result in a default (or give rise to
any right of termination, cancellation or acceleration) under any
of the terms, conditions or provisions of any note, license,
agreement 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 any of their respective assets may be bound,
except for such defaults (or rights of termination, cancellation
or acceleration) as to which requisite waivers or consents have
been obtained or which, in the aggregate, would not result in a
material adverse effect on Parent; or (iv) violate any order,
writ, injunction, decree, statute, rule or regulation applicable
to Parent, any of its subsidiaries or any of their respective
assets, except for violations which in the aggregate would not
result in a material adverse effect on Parent.
Section 3.5 Financing. At each of (i) the time of
acceptance for purchase by Acquisition Sub of Shares pursuant to
the Offer and (ii) the Effective Time, Parent will have, and will
make available to Acquisition Sub, the funds necessary to
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consummate the Offer and the Merger and the transactions
contemplated thereby, and to pay related fees and expenses.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES
OF THE COMPANY
The Company hereby represents and warrants to Parent
and Acquisition Sub as follows:
Section 4.1 Organization and Qualification.
(a) The Company is a corporation duly organized,
validly existing and in good standing under the laws of the State
of Delaware and has the requisite corporate power to carry on its
business as it is now being conducted. The Company is duly
qualified as a foreign corporation to do business, and is in good
standing, in each jurisdiction where the character of its
properties owned or leased or the nature of its activities makes
such qualification necessary, except where the failure to be so
qualified would not result in a Material Adverse Effect.
(b) The only subsidiaries of the Company
(collectively, "Subsidiaries") are those identified in Schedule
4.1(b). Each Subsidiary is a corporation or other organization
duly organized, validly existing and in good standing under the
laws of its jurisdiction of incorporation or organization and has
the requisite corporate or other power to carry on its business
as it is now being conducted, and each Subsidiary is duly
qualified to do business, and is in good standing, in each
jurisdiction where the character of its properties owned or
leased or the nature of its activities makes such qualification
necessary, except where the failure to be so qualified would not
result in a Material Adverse Effect. Except as disclosed on
Schedule 4.1(b), all of the outstanding shares of capital stock
of each Subsidiary have been validly issued and are fully paid
and non-assessable and are owned by the Company, by another
wholly-owned Subsidiary of the Company or by the Company and
another such wholly-owned Subsidiary, free and clear of all
pledges, claims, equities, options, liens, charges, rights of
first refusal, "tag" or "drag" along rights, encumbrances and
security interests of any kind or nature whatsoever
(collectively, "Liens"). Except for the capital stock or other
equity interests of the Subsidiaries or as otherwise specifically
indicated in the SEC Documents (as defined in Section 4.5) or in
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<PAGE>
Schedule 4.1(b), the Company does not own, directly or
indirectly, any capital stock or other equity interest in any
corporation, partnership, joint venture or other entity. The
Company has made available to Parent complete and correct copies
of its Restated Certificate of Incorporation, as amended (the
"Certificate of Incorporation") and Bylaws and the comparable
charters and bylaws or other organizational documents of the
Subsidiaries, in each case as amended to the date of this
Agreement.
Section 4.2 Capitalization.
(a) The authorized capital stock of the Company
consists of 20,000,000 Common Shares and 5,000,000 shares of
Preferred Stock, par value $1 per share. All of the issued and
outstanding Shares have been duly authorized and validly issued
and are fully paid and nonassessable and are not subject to
preemptive rights. As of September 19, 1997, 13,793 Series A
Preferred Shares, 749,486 Series B Preferred Shares and
14,113,623 Common Shares were issued and outstanding and an
aggregate of 1,622,050 Common Shares were reserved for issuance
pursuant to the 1996 Comprehensive Stock Plan of Score
Industries, Inc., the Company's 1978 and 1990 Stock Option Plans
and the 1996 Non-Employee Director Stock Plan (collectively, the
"Stock Plans"). Except as disclosed in Schedule 4.2, such Common
Shares reserved for issuance under the Stock Plans have not been
issued and will not prior to the Effective Time be issued, and,
except as disclosed in Schedule 4.2, no commitment has been or
will be made for their issuance other than under stock options
outstanding under the Stock Plans ("Stock Options") as of the
date of this Agreement. Schedule 4.2 sets forth the exercise
prices and number of Shares in respect of outstanding Stock
Options under the Stock Plans. In addition, each outstanding
Common Share has a Preferred Stock purchase right attached,
allowing the holder upon the occurrence of certain events
described in the Rights Agreement between the Company and
ChaseMellon Shareholder Services L.L.C., as Rights Agent,
relating to such rights (the "Rights"), as amended and restated
on February 2, 1996 (the "Rights Agreement"), to purchase one
one-hundredth of a share of Series C Junior Participating
Preferred Stock at an exercise price of $32. No shares of such
Series C Preferred Stock have been issued as of the date of this
Agreement.
(b) There are no bonds, debentures, notes or other
indebtedness of the Company having the right to vote (or
convertible into, or exchangeable for, securities having the
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right to vote) on any matters on which stockholders of the
Company may vote. Except as set forth above or otherwise on
Schedule 4.2, there are no outstanding securities, options,
warrants, calls, rights, commitments, agreements, arrangements or
undertakings of any kind to which the Company or any of the
Subsidiaries is a party or by which any of them is bound,
obligating the Company or any of the Subsidiaries to issue,
deliver or sell, or cause to be issued, delivered or sold,
additional shares of capital stock or other voting securities of
the Company or any of the Subsidiaries or obligating the Company
or any of the Subsidiaries to issue, grant, extend or enter into
any such security, option, warrant, call, right, commitment,
agreement, arrangement or undertaking. Except as disclosed in
Schedule 4.2, there are no outstanding contractual obligations of
the Company or any of the Subsidiaries to repurchase, redeem or
otherwise acquire, or providing preemptive or registration rights
with respect to, any shares of capital stock of the Company or
any of the Subsidiaries. The Company and the Subsidiaries do not
have outstanding any loans to any person in respect of the
purchase of securities issued by the Company or any Subsidiary.
Section 4.3 Authority Relative to this Agreement. The
Company has all requisite corporate power and authority to
execute and deliver this Agreement and to consummate the
transactions contemplated hereby (subject with respect to the
Merger to approval of the Merger and this Agreement by the
holders of a majority of the votes represented by the Shares).
The execution and delivery of this Agreement by the Company and
the consummation by the Company of the transactions contemplated
hereby have been duly and validly authorized and approved by the
affirmative vote of no fewer than 4/5ths of the duly elected,
qualified and acting members of the Board of Directors of the
Company, 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 (with
respect to the Merger) the approval of this Agreement by the
holders of a majority of the votes represented by the Shares,
voting together as one class, and no separate vote of the
Preferred Shares will be required for such approval. This
Agreement has been duly and validly executed and delivered by the
Company, and, assuming this Agreement constitutes a valid and
binding obligation of each of Parent and Acquisition Sub,
constitutes a valid and binding agreement of the Company,
enforceable against the Company in accordance with its terms,
except as the enforceability thereof may be limited by
bankruptcy, insolvency, reorganization, moratorium, and other
similar laws affecting creditors' rights generally.
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Section 4.4 Absence of Certain Changes. Except as
disclosed in the SEC Documents or in Schedule 4.4 or as
contemplated by this Agreement, since June 30, 1997 until the
commencement of the Offer, no event has occurred or will occur
and no circumstances exist or will exist, and as of the date
hereof the Company is not aware of any event or circumstances
which may reasonably be likely to occur or exist, that would be
reasonably likely to result in a Material Adverse Effect, except
for general economic changes, changes that affect the industry of
the Company or any Subsidiary generally, and changes in the
Company's business after the date hereof attributable solely to
actions taken by Parent or Acquisition Sub. Except as disclosed
in the SEC Documents or in Schedule 4.4, since June 30, 1997,
there has not been (a) any declaration, setting aside or payment
of any dividend or other distribution in respect of the capital
stock of the Company or any redemption or other acquisition by
the Company of any Shares; (b) any entry into any agreement,
commitment or transaction by the Company or any Subsidiary which
is material to the Company and the Subsidiaries taken as a whole,
except agreements, commitments or transactions in the ordinary
course of business, (c) any split, combination or
reclassification of the Company's capital stock or any issuance
or the authorization of any issuance of any other securities in
respect of, in lieu of or in substitution for shares of its
capital stock, (d)(i) any granting by the Company or any of the
Subsidiaries to any officer or key employee of the Company or any
of the Subsidiaries of any increase in compensation, except in
the ordinary course of business or as was required under
employment agreements in effect as of the date of the most recent
financial statements included in the SEC Documents or (ii) any
entry by the Company or any Subsidiary into any employment,
severance or termination agreement with any such officer or key
employee or granting by the Company or any Subsidiary to any such
officer or key employee of any increase in severance or
termination pay, except (A) as was required under employment,
severance or termination agreements in effect as of the date of
the most recent financial statements included in the SEC
Documents or (B) as disclosed on Schedule 5.6(d) of the
Disclosure Schedule, or (e) any damage, destruction or loss,
whether or not covered by insurance, that has or would be
reasonably likely to have a Material Adverse Effect or (f) any
change in accounting methods, principles or practices by the
Company or any Subsidiary materially affecting its assets,
liabilities or business, except insofar as may have been required
by a change in generally accepted accounting principles.
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Section 4.5 Reports. Since January 1, 1995, the
Company has filed all required forms, reports and documents with
the SEC required to be filed by it pursuant to the federal
securities laws and the SEC rules and regulations thereunder
(collectively, the "SEC Documents"), all of which have complied
as of their respective filing dates in all material respects with
all applicable requirements of the Securities Act and the
Exchange Act, and the rules promulgated thereunder. None of such
forms, reports or documents required by the Exchange Act at the
time filed, nor any of such forms, reports or documents required
by the Securities Act as of the date of their effectiveness
contained any untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary
in order to make the statements therein, in light of the
circumstances under which they were made, not misleading, except
to the extent that information contained in any SEC Document has
been revised or superseded by a later-filed SEC Document filed
and publicly available prior to the date hereof. The financial
statements of the Company included in the SEC Documents comply as
to form in all material respects with applicable accounting
requirements and the published rules and regulations of the SEC
with respect thereto, have been prepared in accordance with
generally accepted accounting principles (except, in the case of
unaudited statements, as permitted by Form 10-Q of the SEC)
applied on a consistent basis during the periods involved (except
as may be indicated in the notes thereto) and fairly present the
consolidated financial position of the Company and its
consolidated Subsidiaries as of the dates thereof and the
consolidated results of their operations and cash flows for the
periods then ended (subject, in the case of unaudited statements,
to normal year-end audit adjustments).
Section 4.6 Proxy Statement. If a Proxy Statement is
required for the consummation of the Merger under applicable law,
the Proxy Statement will comply in all material respects with the
Exchange Act, except that no representation is made by the
Company with respect to information supplied by Parent or any
affiliate of Parent specifically for inclusion in the Proxy
Statement. None of the information supplied by the Company
specifically for inclusion in the Proxy Statement shall, at the
time the Proxy Statement is mailed or at the time of the Meeting,
contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary in
order to make the statements therein, in light of the
circumstances under which they were made, not misleading.
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Section 4.7 Consents and Approvals; No Violation.
Except as set forth on Schedule 4.7, neither the execution and
delivery of this Agreement by the Company nor the consummation of
the transactions contemplated hereby will conflict with, or
result in any violation of, or default (with or without notice or
lapse of time, or both) under, or require any consent or approval
by a party under or give rise to a right of termination,
cancellation or acceleration of any obligation or to loss of a
material benefit under, or result in the creation of any Lien
upon any of the properties or assets or the Company or any
Subsidiary under (i) the Certificate of Incorporation or Bylaws
of the Company or the comparable charter or organizational
documents of any Subsidiary, (ii) any loan or credit agreement,
note, bond, mortgage, indenture, lease or other agreement,
instrument, permit, concession, franchise or license applicable
to the Company or any Subsidiary or its respective properties or
assets or (iii) subject to the governmental filings and other
matters referred to in the following sentence, any judgment,
order, decree, statute, law, ordinance, rule or regulation
applicable to the Company or any Subsidiary or their respective
properties or assets, other than, in the case of clauses (ii) or
(iii), any such conflicts, violations, defaults, rights or Liens
that individually or in the aggregate would not have a Material
Adverse Effect. Except as set forth on Schedule 4.7, no consent,
approval, order or authorization of, or registration, declaration
or filing with, any Governmental Entity is required by the
Company or any Subsidiary in connection with the execution and
delivery of this Agreement by the Company or the consummation by
the Company of the transactions contemplated by this Agreement,
except for (i) the filing of a premerger notification and report
form by the Company under the H-S-R Act, (ii) requirements under
the Securities Act and the Exchange Act, (iii) the filing of the
Certificate of Merger pursuant to the DGCL and appropriate
documents with the relevant authorities of other states in which
the Company is qualified to do business; (iv) requirements under
state environmental statutes or regulations and (v) such other
consents, approvals, orders, authorizations, registrations,
declarations and filings the failure of which to be obtained or
made would not have a Material Adverse Effect.
Section 4.8 Fees and Commissions. Except for those
fees and expenses payable to JPMorgan pursuant to the letter
agreement, dated July 23, 1997, no person is entitled to receive
from the Company or any Subsidiary any investment banking,
brokerage or finder's fee in connection with this Agreement or
the transactions contemplated hereby. A copy of the
aforementioned agreement has previously been delivered to Parent.
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Section 4.9 Information Supplied. None of the
information supplied or to be supplied by the Company for
inclusion or incorporation by reference in (i) the Offer
Documents, (ii) the Schedule 14D-9 or (iii) the information to be
filed by the Company in connection with the Offer pursuant to
Rule 14f-1 promulgated under the Exchange Act (the "Information
Statement"), will, at the respective times the Offer Documents,
the Schedule 14D-9 and the Information Statement are filed with
the SEC or first published, sent or given to the Company's
stockholders, contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of
the circumstances under which they are made, not misleading. The
Schedule 14D-9 and the Information Statement will comply as to
form in all material respects with the requirements of the
Exchange Act and the rules and regulations thereunder, except
that no representation or warranty is made by the Company with
respect to statements made or incorporated by reference therein
based on information supplied by Parent or Acquisition Sub
specifically for inclusion or incorporation by reference therein.
Section 4.10 Litigation. Except as disclosed in the
SEC Documents or in Schedule 4.10 of the Disclosure Statement, as
of the date hereof there is no suit, action or proceeding pending
or, to the knowledge of the Company, threatened against the
Company or any Subsidiary before any court or arbitrator or
before or by any governmental body, agency or official that would
be reasonably likely to have a Material Adverse Effect, nor is
there any judgment, decree, injunction, rule or order of any
Governmental Entity or arbitrator outstanding against the Company
or any Subsidiary having, or which is reasonably likely to have,
a Material Adverse Effect.
Section 4.11 Patents and Other Proprietary Rights. To
the Company's knowledge, except as disclosed in Schedule 4.11,
the Company and Subsidiaries have rights to use, whether through
ownership, licensing or otherwise, all patents, trademarks,
service marks, trade names, copyrights, trade secrets, licenses,
information, proprietary rights and processes of which the
Company is aware that are necessary for its business as now
conducted (collectively, "Intellectual Property Rights"). Except
as disclosed in Schedule 4.11, the Company and Subsidiaries have
not assigned, hypothecated or otherwise encumbered any of the
Intellectual Property Rights and none of the licenses included in
the Intellectual Property Rights purport to grant sole or
exclusive licenses to another entity or person, including,
without limitation, sole or exclusive licenses limited to
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specific fields of use. To the Company's knowledge, except as
disclosed in Schedule 4.11, the patents owned by the Company and
Subsidiaries are valid and enforceable and any patent issuing
from patent applications of the Company and Subsidiaries will be
valid and enforceable, except as such invalidity or
unenforceability would not, individually or in the aggregate, be
reasonably likely to have a Material Adverse Affect. Except as
disclosed in writing to Parent prior to the date hereof: (i) the
Company has no knowledge of any infringement by any other party
of any of the Intellectual Property Rights, and (ii) the Company
and Subsidiaries have not entered into any agreement to indemnify
any other party against any charge of infringement of any of its
Intellectual Property Rights except for such matters as would
not, individually or in the aggregate, be reasonably likely to
have a Material Adverse Affect. To the Company's knowledge, the
Company and Subsidiaries have not and do not violate or infringe
any intellectual property right of any other person or entity,
and the Company and Subsidiaries have not received any
communication alleging that any of them violates or infringes the
intellectual property right of any other person or entity, except
as disclosed in writing to Parent prior to the date hereof and
except for any such violations or infringements as would not,
individually or in the aggregate, be reasonably likely to have a
Material Adverse Effect. The Company and Subsidiaries are not
subject to any pending suit for infringing any intellectual
property right of another entity or person.
Section 4.12 Benefit Plans; ERISA Compliance.
(a) Schedule 4.12(a) sets forth a complete list of all
"employee benefit plans" (as defined in Section 3(3) of the
Employee Retirement Income Security Act of 1974, as amended
("ERISA")), bonus, pension, profit sharing, deferred
compensation, incentive compensation, excess benefit, stock,
stock option, severance, termination pay, change in control or
other material employee benefit plans, programs or arrangements,
including, but not limited to, those providing medical, dental,
vision, disability, life insurance and vacation benefits (other
than those required to be maintained by law), qualified or
unqualified, funded or unfunded, foreign or domestic currently
maintained, or contributed to, or required to be maintained or
contributed to, by the Company or any other person or entity
that, together with the Company, is treated as a single employer
under Section 414 of the Internal Revenue Code of 1986, as
amended (the "Code") (each a "Commonly Controlled Entity") for
the benefit of any current or former employees, officers,
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directors or independent contractors of the Company or any
Subsidiary and with respect to which the Company or any
Subsidiary has any liability (collectively, the "Benefit Plans").
Except with respect to any "multiemployer plan" (as defined in
Section 3(37) of ERISA), the Company has delivered or made
available to Parent true, complete and correct copies of each
Benefit Plan and related trust agreement and annuity contract and
(to the extent applicable) a copy of each Benefit Plan's current
summary plan description. In addition, to the extent applicable,
the Company has provided or made available to Parent a copy of
the most recent IRS determination letter issued, and copies of
the two most recently filed IRS Forms 5500 together with all
schedules, actuarial reports and accountants' statements for each
Benefit Plan, including Form 5500, Schedule B for each Benefit
Plan that is a "defined benefit plan" (as defined in Section
3(35) of ERISA), other than a multiemployer plan.
(b) To the Company's knowledge, each Benefit Plan has
been administered in accordance with its terms and in compliance
with the applicable provisions of ERISA and the Code where the
failure to so administer or comply would have a Material Adverse
Effect.
(c) All Benefit Plans (other than a multiemployer
plan) intended to be qualified under Section 401(a) of the Code
have been the subject of determination letters from the Internal
Revenue Service to the effect that such Benefit Plans are
qualified and exempt from Federal income taxes under Section
401(a) and 501(a), respectively, of the Code as amended at least
through the statutory changes implemented under the Tax Reform
Act of 1986, and no such determination letter has been revoked
nor, to the knowledge of the Company, has revocation been
threatened, nor has any such Benefit Plan been amended since the
date of its most recent determination letter or application
therefor in any respect that would adversely affect its
qualification.
(d) No Benefit Plan which is a "single-employer plan"
(as defined in Section 4001(a)(15) of ERISA) and which is subject
to Title IV of ERISA is, as of its most recent valuation date,
unfunded by an amount which would have Material Adverse Effect
based on actuarial assumptions indicated in the most recent
actuarial valuation report. To the knowledge of the Company,
neither the Company nor any of the Subsidiaries is aware of any
facts or circumstances that would materially and adversely change
the funded status of any such Benefit Plans. None of the Benefit
Plans has an "accumulated funding deficiency" (as such term is
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defined in Section 302 of ERISA or Section 412 of the Code), and
there has been no application for a waiver of the minimum funding
standards imposed by Section 412 of the Code with respect to any
Benefit Plan.
(e) To the Company's knowledge, no person or entity
has incurred any liability under Title IV of ERISA or Section 412
of the Code during the time such person or entity was required to
be treated as a single employer with the Company under Section
414 of the Code that would have a Material Adverse Effect.
(f) During the last five years, to the Company's
knowledge, there has been no "reportable event" (as that term is
defined in Section 4043 of ERISA) which is reasonably likely to
have a Material Adverse Effect with respect to any Benefit Plan
that is a single employer plan subject to Title IV of ERISA.
(g) With respect to any Benefit Plan that is an
employee welfare benefit plan (as defined in Section 3(1) of
ERISA), (i) to the best of the Company's knowledge, no such
Benefit Plan provides benefits, including without limitation,
death or medical benefits, except as set forth on Schedule
4.12(g), beyond termination of employment or retirement other
than (A) coverage mandated by law or (B) death or retirement
benefits under a Benefit Plan qualified under Section 401(a) of
the Code, and (ii) each such Benefit Plan (including any such
Plan covering retirees or other former employees) may be amended
or terminated without liability that would have a Material
Adverse Effect to the Company or any of its subsidiaries on or at
any time after the consummation of the Offer.
(h) Except as set forth on Schedule 4.12(h), no
employee of the Company or any Commonly Controlled Entity will
become entitled to any retirement, severance or similar benefit
or enhanced or accelerated benefit solely as a result of the
transactions contemplated hereby. Without limiting the
generality of the foregoing, no amount required to be paid or
payable to or with respect to any employee of the Company or any
Commonly Controlled Entity in connection with the transactions
contemplated hereby (either solely as a result thereof or as a
result of such transactions in conjunction with any other event)
will be an "excess parachute payment" within the meaning of
Section 280G of the Code.
(i) Except as indicated on Schedule 4.12(i), at no
time since December 31, 1990, have the Company or any Commonly
Controlled Entity, been required to contribute to, or incurred
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any withdrawal liability, within the meaning of Section 4201 of
ERISA to any multiemployer pension plan, within the meaning of
Section 3(37) of ERISA. All required contributions, withdrawal
liability payments or other payments of any type that the Company
or any Commonly Controlled Entity have been obligated to make to
any multiemployer plan have been duly and timely made. Any
withdrawal liability incurred with respect to any multiemployer
plan has been fully paid as of the date hereof. Neither the
Company nor any Commonly Controlled Entity has undertaken any
course of action that could reasonably be expected to lead to a
complete or partial withdrawal from any multiemployer plan that
would reasonably be expected to result in a withdrawal liability
that would have a Material Adverse Effect. Set forth next to
each multiemployer plan listed on Schedule 4.12(i) is the amount
of the withdrawal liability that would be incurred by the Company
or any Commonly Controlled Entity with respect to such plan,
under Section 4201 of ERISA, if the Company or any Commonly
Controlled Entity were to completely withdraw from such
multiemployer plan on the date hereof.
(j) Except as listed on Schedule 4.12(j), neither the
Company nor any Commonly Controlled Entity has any secondary
liability resulting from a transaction described in ERISA Section
4204 that would, if the Company or Commonly Controlled Entity
were to become primarily liable, reasonably be likely to have a
Material Adverse Effect.
(k) Except as disclosed in the SEC Documents or in
Schedule 5.6(d), there exist no employment, consulting,
severance, termination or indemnification agreements,
arrangements or understandings between either of the Company or
any Subsidiary and any current or former officer or director of
either of the Company or any Subsidiary or for which either of
the Company or any Subsidiary is liable.
Section 4.13 Taxes.
(a) Each of the Company and each Subsidiary has filed
all Federal income tax returns and all other material tax returns
and reports (including information returns and reports) required
to be filed by it on or before the date hereof and on or before
the date Shares are accepted for payment pursuant to the Offer
(or requests for extensions to file such tax returns have been
timely filed, granted and have not expired). All such returns
are complete and correct in all material respects, have been
prepared in accordance with all applicable laws and requirements
and accurately reflect in all material respects the taxable
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income (or other measure of tax) of the party filing the same.
Except as disclosed on Schedule 4.13, each of the Company and
each Subsidiary has paid (or the Company has paid on their
behalf) all taxes shown to be due on such return, all material
taxes for which no return was required to be filed and all other
taxes for which a notice of assessment or demand for payment has
been received. The most recent financial statements contained in
the SEC Documents reflect an adequate reserve for all taxes
payable by the Company and the Subsidiaries for all taxable
periods and portions thereof through the date of such financial
statements.
(b) True and complete copies of federal and state
income returns of the Company and each Subsidiary for each of the
taxable years ended December 31, 1992 through December 31, 1996
have been made available to Parent.
(c) Except as disclosed on Schedule 4.13, no
deficiencies for any taxes have been proposed, asserted or
assessed against the Company or any Subsidiary that have not yet
been paid or settled, and no requests for waivers of the time to
assess any such taxes are pending and neither the Company nor any
Subsidiary is currently the subject of an audit or examination
with respect to tax matters and neither the Company nor any
Subsidiary has received notice from a taxing authority of its
intention to conduct such an audit or examination. No taxing
authority for a jurisdiction in which the Company or any
Subsidiary does not file tax returns has asserted that the
Company or any such Subsidiary is or may be subject to tax by
such jurisdiction. The Federal income tax returns of the Company
and each of the Subsidiaries consolidated in such returns have
been examined by and settled with the Internal Revenue Service
for all years through December 31, 1992.
(d) Except as disclosed on Schedule 4.13, neither the
Company nor any Subsidiary (i) currently has in effect any
consent under Section 341(f) of the Code; (ii) currently has in
effect a waiver or consent extending any statute of limitation
for the assessment or collection of tax, which waiver or consent
remains outstanding; (iii) has ever joined in or been required to
join in the filing of a consolidated Federal income tax return or
a combined or consolidated state income tax return other than one
for which the Company is the common parent; (iv) has ever applied
for a ruling with respect to a tax matter or entered into a
closing agreement with respect to a tax matter that has a
continuing effect; (v) has ever filed or been the subject of an
election under Section 338(g) or Section 338(h)(10) of the Code
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<PAGE>
or caused or been the subject of a deemed election under Section
338(e) of the Code; or (vi) has ever agreed to make or been
required to make an adjustment under Section 481 of the Code by
reason of a change in accounting method or otherwise that has
continuing effect. Except as disclosed on Schedule 4.13, neither
the Company nor any Subsidiary (i) owns an interest in any entity
or is a party to an arrangement that is treated as a partnership
for federal income tax purposes or (ii) is a party to a tax
sharing or tax allocation agreement pursuant to which it could be
liable for taxes of another person.
(e) As used in this Agreement, "taxes" shall include
all Federal, state, local and foreign income, property, sales,
excise and other taxes, tariffs or governmental charges of any
nature whatsoever.
(f) The Company is not a "real property holding
corporation" as defined in the Code.
Section 4.14 Compliance with Applicable Laws.
(a) Except for matters disclosed in the SEC Documents
and during the Phase I site assessments performed by Dames &
Moore, to the knowledge of the Company, each of the Company and
each Subsidiary has obtained and maintained all Federal, state,
local and foreign governmental approvals, authorizations,
certificates, filings, franchises, licenses, notices, permits and
rights ("Permits") necessary as of the Effective Time for it to
own, lease or operate its properties and assets as now owned,
leased or operated and to carry on its business as now conducted,
except for any failure to obtain or maintain such Permits which
is not reasonably likely to have a Material Adverse Effect.
Except for matters disclosed in the SEC Documents and during the
Phase I site visits performed by Dames & Moore, to the knowledge
of the Company, each of the Company and each Subsidiary has
complied with and is in compliance with all statutes, laws,
Environmental Laws, ordinances, rules, orders and regulations of
any Governmental Entity, Permits and Environmental Permits
applicable prior to or as of the Effective Time, except for
noncompliance which is not reasonably likely to have a Material
Adverse Effect. "Environmental Permit" means Permit under any
federal, state, local or foreign Environmental Law (as
hereinafter defined) applicable prior to or as of the Effective
Time. The term "Environmental Laws" means any federal, state,
local or foreign statute, code, ordinance, rule, regulation,
judgment, order, writ, decree, injunction, common law, Permit, or
settlement or consent agreement applicable prior to or as of the
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Effective Time relating to the protection of the environment or
human health or to Hazardous Materials (as defined below).
(b) Except for matters disclosed in the SEC Documents
and during the Phase I site assessments performed by Dames &
Moore, to the knowledge of the Company, there have been no
releases of Hazardous Materials by the Company or any Subsidiary
or by any predecessor in interest in, on or under any properties
now owned, operated or leased by the Company or any Subsidiary
which could be the basis for liability under Environmental Laws
and, to the knowledge of the Company, there have been no releases
of Hazardous Material by the Company or any Subsidiary or any
predecessor in interest in, on or under any properties formerly
owned, operated or leased by the Company or any Subsidiary which
could be the basis for liability under Environmental Laws, except
for those which are not reasonably likely to have a Material
Adverse Effect. The term "Hazardous Materials" means hazardous
or toxic materials, substances or wastes that are regulated by or
that could be the basis for liability under Environmental Laws.
(c) Except for matters disclosed in the SEC Documents
and during the Phase I site assessments performed by Dames &
Moore, to the knowledge of the Company, neither the Company nor
any Subsidiary has received any written notice of violation,
citation, summons or order, been served with a complaint or
assessed a penalty and no investigation is pending or has been
threatened by any governmental entity within the five year period
immediately preceding the date hereof or, if prior to that time
period, which remains unresolved, and which reasonably could be
expected to require the Company or any Subsidiary to expend money
or abide by conditions contained in settlement agreements or
consent decrees, which is reasonably likely to have a Material
Adverse Effect: (i) with respect to any alleged violation by the
Company or any Subsidiary or any of its or their predecessors in
interest of any Environmental Law; or (ii) with respect to any
alleged failure by the Company or any Subsidiary to have complied
with any Environmental Permit; or (iii) with respect to any use,
possession, generation, treatment, storage, recycling,
transportation or disposal (collectively, "Management" or when
used as a verb, "Managed"), or release of any Hazardous Materials
by or on behalf of the Company or any Subsidiary or any of their
predecessors in interest.
(d) Except for matters disclosed in the SEC Documents
and during the Phase I site assessments performed by Dames &
Moore, to the knowledge of the Company, neither the Company nor
any Subsidiary has received any written request for information,
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<PAGE>
notice of claim, demand or notification that it or any
predecessor in interest is or may be potentially responsible
or/and liable under Environmental Laws, with respect to any
investigation or clean-up of any threatened or actual release of
any Hazardous Material within the five-year period immediately
preceding the date hereof or, if prior to that time period, which
remains unresolved, and which reasonably could be expected to
require the Company or any Subsidiary to expend money to an
extent which is reasonably likely to have a Material Adverse
Effect.
(e) Except for matters disclosed in the SEC Documents
and during the Phase I site assessments performed by Dames &
Moore, to the knowledge of the Company, no Hazardous Materials
Managed by or on behalf of the Company or any of the Subsidiaries
or any predecessor in interest has come to be located at any site
which is listed pursuant to the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended
("CERCLA"), the Comprehensive Environmental Response,
Compensation and Liability Information System ("CERCLIS") or on
any similar published state list, or which is the subject of
federal, state or local enforcement actions or investigations
which may reasonably lead to claims against the Company or any
Subsidiary under Environmental Laws for cleanup costs, remedial
work, damages to natural resources or for personal injury claims,
which are reasonably likely to have a Material Adverse Effect.
(f) Except for matters disclosed in the SEC Documents,
in the materials made available for review by Parent and during
the Phase I site assessments performed by Dames & Moore, to the
knowledge of the Company, there have been no environmental
inspections, investigations, studies, audits, tests, reviews or
other analyses, other than those required to be done routinely
pursuant to Environmental Permits or Environmental Laws,
conducted in relation to any property or business now or
previously owned, operated or leased by the Company or any
Subsidiary which have been performed by or on behalf of the
Company or any Subsidiary or, to the knowledge of the Company, by
any other person regarding any environmental condition, matter or
activity which could be the basis of liability under
Environmental Laws which is reasonably likely to have a Material
Adverse Effect.
(g) For the purposes of this Section 4.14 only, the
"knowledge of the Company" shall mean the actual knowledge of the
executive officers of the Company.
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Section 4.15 State Takeover Statutes. The Board of
Directors of the Company has approved the Offer, the Merger and
the other transactions contemplated by this Agreement in
accordance with the provisions of Section 203 of the DGCL.
Section 4.16 Labor Matters. Except as disclosed in
Schedule 4.16, to the knowledge of the Company, as of the date
hereof (a) no employee of the Company or any Subsidiary is
represented by any union or other labor organization; (b) the
Company and all of the Subsidiaries are in material compliance
with applicable laws respecting employment and employment
practices, terms and conditions of employment and wages and
hours, and are not engaged in any unfair labor practice; (c)
there is no unfair labor practice complaint against the Company
or any of the Subsidiaries pending before the National Labor
Relations Board; (d) there is no labor strike, dispute, slowdown,
representation campaign or work stoppage pending or threatened
against or affecting the Company or any of the Subsidiaries; (e)
no material grievance or arbitration proceeding arising out of or
under collective bargaining agreements is pending and no claim
therefor has been asserted against the Company or the
Subsidiaries; and (f) neither the Company nor any of the
Subsidiaries has experienced any material work stoppage since
January 1, 1996.
Section 4.17 Undisclosed Liabilities. Except as and to
the extent disclosed in the SEC Documents, except for liabilities
incurred in the ordinary course of business and otherwise not in
contravention of this Agreement and except for liabilities or
obligations under this Agreement or incurred in connection with
the transactions contemplated hereby, the Company does not have
any liabilities or obligations of any nature (whether absolute,
contingent or otherwise) that would be reasonably likely to have
a Material Adverse Effect.
Section 4.18 Certain Agreements. Except as disclosed
in Schedule 4.18, neither the Company nor any of the Subsidiaries
is a party to, or bound by, any contract or agreement that
materially limits the ability of the Company directly or through
any of its subsidiaries to compete in any line of business or
with any person in any geographic area during any period of time.
Section 4.19 Amendment of Rights Agreement. The Board
of Directors of the Company has taken all action necessary to (i)
render the Rights Agreement inapplicable to the Offer, the Merger
and the other transactions contemplated by this Agreement and
(ii) ensure that (A) neither Parent nor any of its wholly-owned
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subsidiaries will become an "Acquiring Person" (as defined in the
Rights Agreement) by reason of consummation of the transactions
contemplated by this Agreement and (B) a "Shares Acquisition
Date", "Distribution Date" or "Triggering Event" (each as defined
in the Rights Agreement) does not occur by reason of the
approval, execution or delivery of this Agreement, the
consummation of the Offer, the Merger or the other transactions
contemplated by this Agreement.
ARTICLE 5
COVENANTS
Section 5.1 Conduct of Business of the Company. Except
as contemplated by this Agreement or as approved in writing by
Parent, during the period from the date of this Agreement to the
acceptance of Shares for payment, the Company and the
Subsidiaries will each conduct its operations according to its
ordinary and usual course of business. Without limiting the
generality of the foregoing, and except as otherwise expressly
provided in this Agreement, neither the Company nor any
Subsidiary, without the prior written consent of Parent, will
(i) issue, sell or pledge, or authorize or
propose the issuance, sale or pledge of (A) additional shares of
capital stock of any class (including the Shares), or securities
convertible into any such shares, or any rights, warrants or
options to acquire any such shares or other convertible
securities, or grant or accelerate any right to convert or
exchange any securities of the Company for shares, other than (1)
Shares issuable pursuant to the terms of outstanding Stock
Options and commitments disclosed in Section 4.2, or (2) issuance
of shares of capital stock to the Company by a wholly-owned
Subsidiary, or (B) any other securities in respect of, in lieu of
or in substitution for Shares outstanding on the date thereof or
split, combine or reclassify any of the Company's capital stock;
(ii) purchase, redeem or otherwise acquire,
or propose to purchase or otherwise acquire, any of its
outstanding securities (including the Shares);
(iii) declare, set aside or pay any dividend
or other distribution on any shares of capital stock of the
Company other than the regular quarterly dividends of $.275 per
share with respect to the Series A Preferred Shares and $.25 per
share with respect to the Series B Preferred Shares, except that
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<PAGE>
a direct or indirect wholly-owned Subsidiary may pay a dividend
or distribution to its parent;
(iv) except as disclosed to Parent prior to
the date hereof, make any acquisition of a material amount of
assets or securities, any disposition (including by way of
mortgage, license, encumbrance or any Lien) of a material amount
of assets or securities, or enter into a material contract or
release or relinquish any material contract rights, or make any
amendments, or modifications thereto, except in all instances for
actions in the ordinary course of business;
(v) (A) except in the ordinary course of
business, incur any indebtedness for borrowed money or guarantee
any such indebtedness of another person, issue or sell any debt
securities or warrants or other rights to acquire any debt
securities of the Company or any Subsidiary, guarantee any debt
securities of another person, enter into any "keep well" or other
agreement to maintain any financial statement condition of
another person or enter into any arrangement having the economic
effect of any of the foregoing or (B) make any loans, advances of
capital contributions to, or investments in, any other person,
other than to the Company or any direct or indirect wholly owned
Subsidiary;
(vi) pay, discharge, settle or satisfy any
material claims, liabilities or obligations (absolute, accrued,
asserted or unasserted, contingent or otherwise), other than the
payment, discharge, settlement or satisfaction, in the ordinary
course of business or in accordance with their terms;
(vii) propose or adopt any amendments
(initiated by the Board of Directors) to the Certificate of
Incorporation or Bylaws of the Company (or any such similar
organizational documents of the Subsidiaries);
(viii) except as disclosed in Schedule 5.6(d)
of the Disclosure Statement, enter into any new employment,
severance or termination agreements with, or grant any increase
in severance or termination pay to, any officers, directors or
key employees or grant any material increases in the compensation
or benefits to officers, directors and key employees;
(ix) change any accounting methods,
principles or practices materially affecting their assets,
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<PAGE>
liabilities or business, except insofar as may be required by a
change in generally accepted accounting principles;
(x) make any material tax election or settle
or compromise any material income tax liability;
(xi) except as disclosed to Parent prior to
the date hereof, make or agree to make any new capital
expenditure or expenditures not previously committed to which
individually is in excess of $500,000 or which in the aggregate
are in excess of $1 million; or
(xii) agree in writing or otherwise to take
any of the foregoing actions or any action which would make any
representation or warranty in this Agreement untrue or incorrect
at any time prior to acceptance of Shares for payment in the
Offer.
Section 5.2 No Solicitation.
(a) The Company shall not, nor shall it permit any
Subsidiary to, nor shall it authorize or permit any officer,
director or employee of or any investment banker, attorney or
other advisor or representative of the Company or any of its
subsidiaries to, directly or indirectly, (i) solicit, initiate or
knowingly encourage the submission of any Takeover Proposal or
(ii) participate in any discussions or negotiations regarding, or
furnish to any person any information with respect to any
inquiries or the making of any proposal that constitutes or may
reasonably be expected to lead to a Takeover Proposal; provided,
however, that prior to the acceptance for payment of Shares
pursuant to the Offer, to the extent consistent with the
fiduciary obligations of the Board of Directors of the Company,
as determined in good faith by the Board of Directors after
consultation with outside counsel, the Company may upon receipt
by the Company of an unsolicited written, bona fide Takeover
Proposal, furnish information with respect to the Company
pursuant to a customary confidentiality agreement containing
"standstill" provisions no less onerous than in the
Confidentiality Agreement (as defined in Section 5.3) and
participate in negotiations regarding such Takeover Proposal.
Without limiting the foregoing, it is understood that any
violation of the restrictions set forth in the preceding sentence
by any officer, director or employee of the Company or any
Subsidiary or any investment banker, attorney or other advisor or
representative of the Company or any Subsidiary, shall be deemed
to be a breach of this Section 5.2(a) by the Company. For
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purposes of this Agreement, "Takeover Proposal" means any
proposal or offer for, or any expression of interest (by public
announcement or otherwise) by any person other than Parent or its
affiliates in, a merger or other business combination involving
the Company or any proposal or offer to acquire in any manner
(including through a joint venture with the Company), directly or
indirectly, an equity interest in not less than 20% of the
outstanding voting securities of, or assets representing not less
than 20% of the annual revenues or net earnings of the Company
and the Subsidiaries taken as a whole.
(b) Neither the Board of Directors of the Company nor
any committee thereof shall (i) approve or recommend, or propose
to approve or recommend, any Takeover Proposal or (ii) cause the
Company or any of its Subsidiaries to enter into any agreement
with respect to any Takeover Proposal. Notwithstanding the
foregoing, in the event the Board of Directors of the Company
receives an unsolicited Takeover Proposal that, in the exercise
of its fiduciary obligations (as determined in good faith by the
Board of Directors and after consultation with outside counsel),
it determines to be a Superior Proposal, the Board of Directors
may (subject to the following sentences) withdraw or modify its
approval or recommendation of the Offer, this Agreement and the
Merger taken together, or approve or recommend any such Superior
Proposal, in order to enter into an agreement with respect to
such a Superior Proposal, in each case at any time after the
third business day following Parent's receipt of written notice
(a "Notice of Superior Proposal") advising Parent that the Board
of Directors has received a Superior Proposal and specifying the
material terms and conditions of such Superior Proposal. For
purposes of this Agreement, a "Superior Proposal" means any bona
fide Takeover Proposal on terms which the Board of Directors of
the Company determines in its good faith judgment, after
consultation with JPMorgan or another financial advisor of
nationally recognized reputation, to be more favorable to the
Company's stockholders than the Offer and the Merger and for
which financing is available. Nothing contained herein shall
prohibit the Company from taking and disclosing to its
stockholders a position contemplated by Rule 14e-2(a) promulgated
under the Exchange Act.
(c) In addition to the obligations of the Company set
forth in paragraph (b) above, the Company shall promptly advise
Parent of any request for non-public information or any Takeover
Proposal, or any inquiry with respect to or which could
reasonably be expected to lead to any Takeover Proposal and the
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material terms and conditions of such request, Takeover Proposal
or inquiry.
(d) Neither the Board of Directors of the Company nor
any committee thereof shall withdraw or modify, or propose to
withdraw or modify, in a manner adverse to Parent or Acquisition
Sub, the approval or recommendation by such Board of Directors or
any such committee of the Offer, this Agreement or the Merger,
unless failure to do so could be a breach of its fiduciary
obligations as they would exist without the foregoing prohibition
(as determined in good faith by the Board of Directors and after
consultation with outside counsel).
Section 5.3 Access to Information.
(a) Between the date of this Agreement and the
Effective Time, the Company will upon reasonable notice (i) give
Parent and its authorized representatives reasonable access
during regular business hours to the Company's and each
Subsidiary's plants, offices, warehouses and other facilities and
to its books and records, (ii) permit Parent to make such
inspections as it may require, and (iii) cause its officers and
those of the Subsidiaries to furnish Parent with such financial
and operating data and other information with respect to the
business and properties of the Company and the Subsidiaries as
Parent may from time to time reasonably request.
(b) Information obtained by Parent pursuant to this
Section 5.3 shall be subject to the provisions of the
confidentiality agreement between the Company and Parent, dated
August 7, 1997 (the "Confidentiality Agreement"), which remains
in full force and effect, but shall terminate upon the acceptance
for payment of the Shares pursuant to the Offer.
Section 5.4 Reasonable Best Efforts.
(a) Subject to Section 5.2, each of the parties hereto
will use its reasonable best efforts to take, or cause to be
taken, all appropriate action, and to do, or cause to be done,
all things necessary, proper or advisable under applicable laws
and regulations to consummate and make effective the transactions
contemplated by this Agreement. Such reasonable best efforts
shall include, without limitation, (i) obtaining all necessary
consents, approvals or waivers from third parties and
governmental authorities necessary to the consummation of the
transactions contemplated by this Agreement and (ii) opposing
vigorously any litigation or administrative proceeding relating
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to this Agreement or the transactions contemplated hereby,
including, without limitation, promptly appealing any adverse
court or agency order. Notwithstanding the foregoing or any
other provisions contained in this Agreement to the contrary,
neither Parent nor any of its affiliates shall be under any
obligation of any kind to agree with any Governmental Entity,
including but not limited to any governmental or regulatory
authority with jurisdiction over the enforcement of any
applicable federal, state, local and foreign antitrust,
competition or other similar laws, or any other party to sell or
otherwise dispose of, hold separate (through the establishment of
a trust or otherwise) particular assets or categories of assets
or businesses of any of the Company, Parent or any of Parent's
affiliates.
(b) The Company shall give and make all required
notices, filings and reports to the appropriate persons with
respect to the Permits and Environmental Permits and comply with
all applicable requirements under Environmental Laws that may be
necessary for the sale and purchase of the business and the
ownership, operation and use of the assets of Surviving
Corporation by Parent after the Effective Time.
(c) The Company and its Board of Directors shall (i)
take all action necessary to ensure that no state takeover
statute or similar statute or regulation is or becomes applicable
to the Offer, the Merger, this Agreement or any of the other
transactions contemplated by the foregoing and (ii) if any state
takeover statute or similar statute or regulation becomes
applicable to the Offer, the Merger, this Agreement or any other
transactions contemplated by the foregoing, take all action
necessary to ensure that the Offer, the Merger and the other
transactions contemplated by this Agreement may be consummated as
promptly as practicable on the terms contemplated by this
Agreement and otherwise to minimize the effect of such statute or
regulation on the Offer, the Merger and the other transactions
contemplated by this Agreement.
Section 5.5 Indemnification, Exculpation and Insurance.
(a) All rights to indemnification and exculpation from
liabilities for acts or omissions occurring at or prior to the
Effective Time now existing in favor of the current or former
directors or officers of the Company and the Subsidiaries as
provided in their respective certificates of incorporation or by-
laws (or comparable organizational documents) and any
indemnification agreements of the Company, the existence of which
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does not constitute a breach of this Agreement, shall be assumed
by the Surviving Corporation in the Merger, without further
action, as of the Effective Time and shall survive the Merger and
shall continue in full force and effect (to the extent consistent
with applicable law) in accordance with their terms.
(b) For six years after the Effective Time, Parent
shall cause the Surviving Corporation to honor its commitments
and obligations pursuant to this Section 5.5. In the event that
Parent or the Surviving Corporation or any of their respective
successors or assigns (i) consolidates with or merges into any
other person and is not the continuing or surviving corporation
or entity of such consolidation or merger or (ii) transfers or
conveys all or substantially all of its properties and assets to
any person, then, and in each such case, proper provision will be
made so that the successors and assigns of Parent or the
Surviving Corporation, as the case may be, assume the obligations
set forth in this Section 5.5(b).
(c) For six years after the Effective Time, the
Surviving Corporation shall provide officers' and directors'
liability insurance in respect of acts or omissions occurring
prior to the Effective Time, including but not limited to the
transactions contemplated by this Agreement, covering each person
currently covered by the Company's officers' and directors'
liability insurance policy, or who becomes covered by such policy
prior to the Effective Time, on terms with respect to coverage
and amount no less favorable than those of such policy in effect
on the date hereof; provided that in satisfying its obligation
under this Section 5.5 the Surviving Corporation shall not be
obligated to pay annual premiums in excess of 175% of the amount
per annum the Company paid in its last full fiscal year.
(d) The provisions of this Section 5.5 are (i)
intended to be for the benefit of, and will be enforceable by,
each indemnified party, his or her heirs and his or her
representatives and (ii) in addition to, and not in substitution
or, any other rights to indemnification or contribution that any
such person may have by contract or otherwise.
Section 5.6 Stock Options; Employee Plans and Benefits
and Employment Contracts.
(a) As soon as practicable following the date of this
Agreement, the Board of Directors of the Company (or, if
appropriate, any committee administering the Stock Plans) shall
adopt such resolutions or take such other actions as are required
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in accordance with the Stock Plans to adjust the terms of all
outstanding Stock Options to provide that, at the Effective Time,
each Stock Option, whether vested or not, outstanding immediately
prior to the Effective Time be cancelled in exchange for a cash
payment by the Company of an amount equal to (i) the excess, if
any, of (x) the price per Share to be paid pursuant to the Offer
over (y) the exercise price per Share subject to such Stock
Option, multiplied by (ii) the number of Shares for which such
Stock Option shall not theretofore have been exercised.
(b) All amounts payable pursuant to Section 5.6(a)
shall be subject to any required withholding of taxes and shall
be paid without interest. The Company shall use its best efforts
to obtain all consents of the holders of the Stock Options as
shall be necessary to effectuate the foregoing. Notwithstanding
anything to the contrary contained in this Agreement, payment
shall, at Parent's request, be withheld in respect of any Stock
Option until all necessary consents of the holder are obtained
with respect to such Stock Option.
(c) The Stock Plans shall terminate as of the
Effective Time, and the provisions in any other Benefit Plan
providing for the potential issuance, transfer or grant of any
capital stock of the Company or any Subsidiary or any interest in
respect of any capital stock of the Company or any Subsidiary
shall be deleted as of the Effective Time, and the Company shall
ensure that following the Effective Time no holder of a Stock
Option or any participant in the Stock Plans or other Benefit
Plan shall have any right thereunder to acquire any capital stock
of the Company or any Subsidiary or the Surviving Corporation.
(d) From and after the Effective Time, Parent shall
cause the Surviving Corporation to honor in accordance with their
terms all existing employment, severance, consulting or other
compensation agreements, plans or contracts between the Company
or any Subsidiary and any officer, director or employee of the
Company or any Subsidiary which are specifically disclosed on
Schedule 5.6(d).
(e) For the one-year period immediately following the
Effective Time, Parent shall cause the Company to provide such
benefit plans, programs and arrangements that are no less
favorable in the aggregate than the Benefit Plans.
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Section 5.7 Meeting of the Company's Stockholders.
(a) After consummation of the Offer, to the extent
required by applicable law, the Company shall promptly take all
action necessary in accordance with the DGCL and its Certificate
of Incorporation and Bylaws to convene the Meeting to consider
and vote on the Merger and this Agreement. At the Meeting, all
of the Shares then owned by Parent, Acquisition Sub or any other
subsidiary of Parent shall be voted to approve the Merger and
this Agreement. Subject to its fiduciary duties and Section 5.2,
the Board of Directors of the Company shall recommend that the
Company's stockholders vote to approve the Merger and this
Agreement if such vote is sought, shall use its best efforts to
solicit from stockholders of the Company proxies in favor of the
Merger and shall take all other reasonable action in its judgment
necessary and appropriate to secure the vote of stockholders
required by the DGCL to effect the Merger.
(b) If required under applicable law, the Company and
Parent shall prepare the Proxy Statement, file it with the SEC
under the Exchange Act as promptly as practicable after
Acquisition Sub purchases Shares pursuant to the Offer, and use
all reasonable efforts to have it cleared by the SEC. As
promptly as practicable after the Proxy Statement has been
cleared by the SEC, the Company shall mail the Proxy Statement to
the stockholders of the Company as of the record date for the
Meeting.
(c) Parent and Acquisition Sub shall not, and they
shall cause their subsidiaries not to, sell, transfer, assign,
encumber or otherwise dispose of the Shares acquired pursuant to
the Offer or otherwise prior to the Meeting; provided, however,
that this Section 5.7(c) shall not apply to the sale, transfer,
assignment, encumbrance or other disposition of any or all such
Shares in transactions involving solely Parent, Acquisition Sub
and/or one or more of their wholly owned subsidiaries.
(d) Notwithstanding the foregoing, in the event that
Acquisition Sub shall acquire Preferred Shares representing at
least 90% of the votes represented by all outstanding Preferred
Shares and Common Shares representing at least 90% of the votes
represented by all outstanding Common Shares, the parties hereto
agree, at the request of Acquisition Sub, to take all necessary
and appropriate action to cause the Merger to become effective,
in accordance with Section 253 of the DGCL, as soon as reasonably
practicable after such acquisition, without a meeting of the
stockholders of the Company.
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Section 5.8 Public Announcements. Parent and the
Company shall consult with each other before issuing, and provide
each other the opportunity to review, comment upon and concur
with, any press release or other public statement with respect to
the transactions contemplated by this Agreement, including the
Offer and the Merger, and shall not issue any such press release
or make any such public statement prior to such consultation,
except as either party may determine is required by applicable
law or by obligations pursuant to any listing agreement with any
national securities exchange.
Section 5.9 Stockholder Litigation. The Company shall
keep Parent reasonably informed, and shall consult with Parent on
a regular basis, concerning the defense or settlement of any
stockholder litigation against the Company and its directors
relating to any of the transactions contemplated by this
Agreement.
Section 5.10 Rights Agreement. The Board of Directors
of the Company shall take all further action (in addition to that
previously taken referred to in Section 4.19) reasonably
requested in writing by Parent (including redeeming the Rights
immediately prior to the Effective Time or amending the Rights
Agreement) in order to render the Rights inapplicable to the
Offer, the Merger and the other transactions contemplated by this
Agreement.
ARTICLE 6
CONDITIONS TO CONSUMMATION OF MERGER
Section 6.1 Conditions to Each Party's Obligation to
Effect the Merger. The respective obligation of each party to
effect the Merger is subject to the satisfaction or waiver, where
permissible, prior to the Effective Time, of the following
conditions:
(a) Stockholder Approval. If required by applicable
law, this Agreement shall have been approved by the affirmative
vote of the stockholders of the Company by the requisite vote in
accordance with applicable law;
(b) Purchase of Shares. Acquisition Sub shall have
accepted for payment and purchased Shares tendered pursuant to
the Offer.
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<PAGE>
(c) No Injunctions or Restraints. No judgment, order,
decree, statute, law, ordinance, rule, regulation, temporary
restraining order, preliminary or permanent injunction or other
order enacted, entered, promulgated, enforced or issued by any
court of competent jurisdiction or other Government Entity or
other legal restraint or prohibition (collectively, "Restraints")
preventing the consummation of the Merger shall be in effect;
provided, however, that the party seeking to assert this
condition shall have used reasonable efforts to prevent the entry
of any such Restraints and to appeal as promptly as possible any
such Restraints that may be entered.
ARTICLE 7
TERMINATION; AMENDMENT; WAIVER
Section 7.1 Termination. This Agreement may be
terminated and the Merger contemplated hereby may be abandoned at
any time prior to the Effective Time, notwithstanding approval
thereof by the stockholders of the Company:
(a) by mutual written consent of the Company and
Parent;
(b) by either the Company or Parent, if
(i) the Offer terminates or expires in
accordance with its terms without Acquisition Sub's having
purchased any Shares pursuant to the Offer because of a failure
of any of the conditions set forth in Annex A hereto to have been
satisfied at the time of such termination or expiration;
provided, however, that the right to terminate this Agreement
pursuant to this Section 7.1(b)(i) shall not be available to any
party whose failure to fulfill any of its obligations under this
Agreement results in the failure to have satisfied any such
condition;
(ii) Shares have not been accepted for
payment pursuant to the Offer on or prior to December 31, 1997;
provided, however, that the right to terminate this Agreement
pursuant to this Section 7.1(b)(ii) shall not be available to any
party whose failure to fulfill any of its obligations under this
Agreement results in the failure of the Offer to be consummated
by such time;
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(iii) any Governmental Entity shall have
issued a Restraint or taken any other action permanently
enjoining, restraining or otherwise prohibiting consummation of
the Merger or any of the other transactions contemplated by this
Agreement and such Restraint or other action shall have become
final and nonappealable; provided, however, that the party
seeking to terminate this Agreement pursuant to this Section
7.1(b)(iii) shall have used all reasonable efforts to prevent the
entry of and to remove such Restraint or other action; or
(iv) the Board of Directors of the Company
(or, if applicable, any committee thereof) shall have (A)
withdrawn or modified in a manner adverse to Parent and
Acquisition Sub its approval or recommendation of the Offer or
the Merger or (B) approved or recommended any Takeover Proposal
in respect of the Company or (C) resolved to take any of the
foregoing actions, in each case in compliance with the provisions
contained in Section 5.2(b) or (d).
Section 7.2 Effect of Termination. In the event of
termination of this Agreement by either Parent or the Company as
provided in Section 7.1, this Agreement shall forthwith become
void and have no effect, without any liability on the part of any
party or its directors, officers or stockholders, other than the
provisions of Section 5.3(b), this Section 7.2, Section 7.3 and
Section 8.9, which provisions will survive such termination, and
except to the extent that such termination results from the
willful and material breach by a party of any of its
representations, warranties, covenants or other agreements set
forth in this Agreement.
Section 7.3 Termination Fee. In the event that this
Agreement is terminated by the Company or Parent pursuant to
Section 7.1(b)(iv), the Company shall promptly, but in no event
later than two business days after such event, pay Parent a fee
of $6 million (the "Termination Fee") in cash in immediately
available funds by wire transfer to an account designated by
Parent.
Section 7.4 Amendment. To the extent permitted by
applicable law, this Agreement may be amended by the parties at
any time before or after approval of this Agreement by the
stockholders of the Company; provided, however, that after any
such stockholder approval, no amendment shall be made which by
law requires further approval of the Company's stockholders
without the approval of such stockholders. This Agreement may
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not be amended except by an instrument in writing signed on
behalf of each of the parties.
Section 7.5 Extension; Waiver. At any time prior to
the Effective Time, a party hereto may (a) extend the time for
the performance of any of the obligations or other acts of the
other parties hereto, (b) waive any inaccuracies in the
representations and warranties contained herein or in any
document delivered pursuant hereto by any other party or (c)
subject to Section 7.4, waive compliance by any other party with
any of the agreements or conditions contained herein. Any
agreement on the part of any party to any such extension or
waiver shall be valid only if set forth in an instrument in
writing signed on behalf of such party. The failure of any party
to this Agreement to assert any of its rights under this
Agreement or otherwise shall not constitute a waiver of such
rights.
Section 7.6 Procedure for Termination, Amendment,
Extension or Waiver. A termination of this Agreement pursuant to
Section 7.1, an amendment of this Agreement pursuant to Section
7.4 or an extension or waiver pursuant to Section 7.5 in order to
be effective shall require, in the case of Parent or the Company,
action by its Board of Directors or, with respect to any
amendment of this Agreement, a duly authorized committee of its
Board of Directors.
Section 7.7 Concurrence of Independent Directors.
Notwithstanding any other provision of this Agreement, from and
after the consummation of the Offer, the concurrence of a
majority of the Independent Directors shall be required for any
amendment or determination of this Agreement by the Company, any
waiver of any of the Company's rights hereunder or otherwise
pursuant to Sections 7.1, 7.4 or 7.5, any extension of the time
for performance of Parent's or Acquisition Sub's obligations or
other acts hereunder, or any other action taken by the Company's
Board of Directors in connection with this Agreement (including
actions to enforce this Agreement).
ARTICLE 8
MISCELLANEOUS
Section 8.1 Non-Survival of Representations and
Warranties. None of the representations and warranties made in
this Agreement or in any instrument delivered pursuant to this
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Agreement shall survive after the Effective Time. This Section
8.1 shall not limit any covenant or agreement of the parties
hereto which by its terms contemplates performance after the
Effective Time.
Section 8.2 Entire Agreement; Assignment. This
Agreement (including the Schedules hereto) and, to the extent
contemplated in Section 5.3(b), the Confidentiality Agreement,
(a) constitute the entire agreement among the parties with
respect to the subject matter hereof and supersede all other
prior agreements and understandings, both written and oral, among
the parties or any of them with respect to the subject matter
hereof and (b) shall not be assigned by operation of law or
otherwise, provided that Parent or Acquisition Sub may assign any
of their rights and obligations to any direct or indirect wholly
owned subsidiary of Parent, but no such assignment shall relieve
Parent or Acquisition Sub of its obligations hereunder. Either
Parent, Acquisition Sub or any direct or indirect wholly owned
subsidiary of Parent may purchase Shares under the Offer.
Section 8.3 Validity. The invalidity or
unenforceability of any provision of this Agreement shall not
affect the validity or enforceability of any other provisions of
this Agreement, which shall remain in full force and effect.
Section 8.4 Notices. All notices, requests, claims,
demands and other communications hereunder shall be in writing
and shall be deemed to have been duly given when delivered in
person, by facsimile transmission with confirmation of receipt,
by overnight courier (with delivery confirmed), or by registered
or certified mail (postage prepaid, return receipt requested) to
the respective parties as follows:
(a) if to Parent or Acquisition Sub:
Carpenter Technology Corporation
101 West Bern Street
Reading, PA 19601
Attention: John R. Welty, Esq.,
Vice President, General
Counsel & Secretary
Fax No. 610-208-3068
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with a copy to:
Dechert Price & Rhoads
4000 Bell Atlantic Tower
1717 Arch Street
Philadelphia, PA 19103
Attention: Herbert F. Goodrich, Jr., Esq.
Fax No. 215-994-2222
(b) if to the Company:
Talley Industries, Inc.
2702 North 44th Street - Suite 100-A
Phoenix, AZ 85008
Attention: Mark S. Dickerson, Esq.
Vice President, General Counsel
& Secretary
Fax No. 602-852-6972
with copies to:
Osborn Maledon
2929 North Central Avenue
Phoenix, AZ 85012
Attention: David Victor, Esq.
Fax No. 602-640-9355
and to:
Davis Polk & Wardwell
450 Lexington Avenue
New York, NY 10017
Attention: William L. Rosoff, Esq.
Fax No. 212-450-4800
or to such other address as the person to whom notice is given
may have previously furnished to the others in writing in the
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<PAGE>
manner set forth above (provided that notice of any change of
address shall be effective only upon receipt thereof).
Section 8.5 Governing Law. This Agreement shall be
governed by and construed in accordance with the laws of the
State of Delaware.
Section 8.6 Jurisdiction. Any suit, action or
proceeding seeking to enforce any provision of, or based on any
matter arising out of or in connection with, this Agreement or
the transactions contemplated hereby may be brought against any
of the parties in any federal court located in the State of
Delaware or any Delaware state court, and each of the parties
hereto hereby consents to the exclusive jurisdiction of such
courts (and of the appropriate appellate courts therefrom) in any
such suit, action or proceeding and waives any objection to venue
laid therein. Process in any such suit, action or proceeding may
be served on any party anywhere in the world, whether within or
without the State of Delaware. Without limiting the generality
of the foregoing, each party hereto agrees that service of
process upon such party at the address referred to in Section
8.4, together with written notice of such service to such party,
shall be deemed effective service of process upon such party.
Section 8.7 Descriptive Headings. The descriptive
headings herein are inserted for convenience of reference only
and shall not constitute a part of or affect the meaning or
interpretation of this Agreement.
Section 8.8 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 confer upon any other person any rights or remedies
of any nature whatsoever under or by reason of this Agreement
except for Section 5.5 (which is intended to be for the benefit
of the persons entitled to therein, and may be enforced by such
persons).
Section 8.9 Counterparts. This Agreement may be
executed in two or more counterparts, each of which shall be
deemed to be an original, but all of which shall constitute one
and the same agreement.
Section 8.10 Fees and Expenses. Except as set forth in
Section 7.3, all fees, costs and expenses incurred in connection
with the transactions contemplated by this Agreement shall be
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paid by the party incurring such fees and expenses, whether or
not the Offer or the Merger is consummated.
Section 8.11 Certain Definitions. For purposes of this
Agreement (including Annex A hereto), the following terms shall
have the meanings ascribed to them below:
(a) "affiliate" of a person shall mean (i) 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 and (ii) an "associate", as that term is
defined in Rule 12b-2 promulgated under the Exchange Act as in
effect on the date of this Agreement.
(b) "beneficial owner" (including the term
"beneficially own" or correlative terms) with respect to any
securities means a person who shall be deemed to be the
beneficial owner of such securities which (i) such person or any
of its affiliates beneficially owns, directly or indirectly,
(ii) such person or any of its affiliates has, directly or
indirectly, (A) the right to acquire (whether such right is
exercisable immediately or only after 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) are
beneficially owned, directly or indirectly, by any other person
with which such person or any of its affiliates has any
agreement, arrangement or understanding for the purpose of
acquiring, holding, voting or disposing of any of such
securities.
(c) "control" (including the terms "controlling",
"controlled by" and "under common control with" or correlative
terms) shall mean the possession, direct or indirect, of the
power to direct or cause the direction of the management and
policies of a person, whether through ownership of voting
securities, by contract, or otherwise.
(d) "fully diluted" in reference to the Shares means
all outstanding securities entitled generally to vote in the
election of directors of the Company on a fully diluted basis,
after giving effect to the exercise or conversion of all options,
rights and securities exercisable or convertible into such voting
securities.
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(e) "knowledge" shall mean the actual knowledge of the
executive officers of the Company after reasonable investigation,
including consultation with the principal executive officers of
each of the operating Subsidiaries.
(f) "Material Adverse Effect" shall mean a material
adverse effect (i) on the financial condition, assets,
liabilities, business, or results of operations of the Company
and the Subsidiaries, taken as a whole, except for changes in the
general economic conditions and changes that affect the industry
of the Company or any of the Subsidiaries generally, or (ii) on
the ability of the Company to perform its obligations under this
Agreement or to consummate the transactions contemplated by this
Agreement.
(g) "person" shall mean a natural person, company,
corporation, partnership, association, trust or any
unincorporated organization.
(h) "subsidiary" shall mean, when used with reference
to a person means a corporation (or other entity) the majority of
the outstanding voting securities (or equity interests) of which
are owned directly or indirectly by such person.
Section 8.12 Performance by Acquisition Sub. Parent
hereby agrees to cause Acquisition Sub to comply with its
obligations hereunder and under the Offer and to cause
Acquisition Sub to consummate the Merger as contemplated herein.
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IN WITNESS WHEREOF, each of the parties has caused this
Agreement to be executed on its behalf by its officer thereunto
duly authorized, on the day and year first above written.
CARPENTER TECHNOLOGY CORPORATION
By: /s/ Robert W. Cardy
-----------------------------
Robert W. Cardy,
Chairman, President &
Chief Executive Officer
SCORE ACQUISITION CORP.
By: /s/ Robert W. Cardy
-----------------------------
Robert W. Cardy,
President &
Chief Executive Officer
TALLEY INDUSTRIES, INC.
By: /s/ Paul L. Foster
-----------------------------
Paul L. Foster
Chairman of the Board &
Chief Executive Officer
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ANNEX A
to
Agreement and Plan of Merger
----------------------------
CONDITIONS TO THE OFFER
Notwithstanding any other provision of the Offer or
this Agreement, Acquisition Sub shall not be required to accept
for payment or pay for, subject to Rule 14e-1(c) of the Exchange
Act, any Shares not theretofore accepted for payment, and may
terminate or amend the Offer if (i) that number of Shares which
would represent at least a majority of the voting power
represented by the Shares and other securities entitled generally
to vote in the election of directors of the Company outstanding
on a fully diluted basis after giving effect to the exercise or
conversion of all options, rights and securities exercisable or
convertible into or exchangeable for Shares or such voting
securities shall not have been validly tendered and not withdrawn
immediately prior to the expiration of the Offer (the "Minimum
Tender Condition"), (ii) any applicable waiting period under the
H-S-R Act shall not have expired or been terminated prior to the
expiration of the Offer or (iii) at any time on or after the date
of commencement of the Offer and before the acceptance of such
Shares for payment or the payment therefor, any of the following
conditions exist or shall occur:
(a) there shall have occurred (i) any general
suspension of trading in, or limitation on prices for,
securities on the New York Stock Exchange or in the over-
the-counter market, (ii) any declaration of a banking
moratorium or any suspension of payments in respect of banks
in the United States, (iii) any limitation, whether or not
mandatory, by any Governmental Entity on, or other event
that materially affects, the extension of credit by banks or
other lending institutions, (iv) any commencement of a war,
armed hostilities or other national or international
calamity involving the armed forces of the United States,
(v) any decline, measured from the date of this Agreement,
in either the Dow Jones Industrial Average or the Standard &
Poor's Index of 400 Industrial Companies by an amount in
excess of 20%, (vi) in the case of any of the foregoing
occurrences existing on or at the time of the commencement
of the Offer, a material acceleration or worsening thereof;
or
(b) there shall be pending by any Governmental
Entity, or threatened by the staff of any Governmental
Entity, any suit, action or proceeding, (i) challenging the
acquisition by Parent or Acquisition Sub of any Shares,
seeking to restrain or prohibit the making or consummation
of the Offer or the Merger or the performance of any of the
other transactions contemplated by this Agreement (ii)
seeking to prohibit or limit the ownership or operation by
the Company, Parent or any of their respective subsidiaries
<PAGE>
of a material portion of the business or assets of the Company or
the Subsidiaries, or Parent or its subsidiaries, or to compel the
Company or Parent to dispose of or hold separate any material
portion of the business or assets of the Company or the
Subsidiaries, or Parent or its subsidiaries, as a result of the
Offer or any of the other transactions contemplated by this
Agreement, (iii) seeking to impose limitations on the ability of
Parent or Acquisition Sub to acquire or hold, or exercise full
rights of ownership of, any Shares accepted for payment pursuant
to the Offer including, without limitation, the right to vote the
Shares accepted for payment by it on all matters properly
presented to the stockholders of the Company, or (iv) seeking to
prohibit Parent or any of its subsidiaries from effectively
controlling in any material respect the business or operations of
the Company or the Subsidiaries;
(c) there shall be any statute, rule, regulation,
judgment, order or injunction enacted, entered, enforced,
promulgated or deemed applicable to the Offer or the Merger,
or any other action shall be taken by any Governmental
Entity or court, other than the application to the Offer or
the Merger of applicable waiting periods under the H-S-R
Act, that is reasonably likely to result, directly or
indirectly, in any of the consequences referred to in
clauses (i) though (iv) of paragraph (b) above;
(d) any applicable waiting period (and any
extension thereof) under the H-S-R Act shall have been
terminated or shall have expired;
(e) the Company shall have entered into an
agreement concerning any Superior Proposal, or the Board of
Directors of the Company or any committee thereof shall have
resolved to enter into such an agreement;
(f) any person or group (as defined in Section
13(d)(3) of the Exchange Act) (other than Parent,
Acquisition Sub or any affiliate thereof) shall have become
the beneficial owner (as defined in Rule 13d-3 promulgated
under the Exchange Act) of Shares representing a majority of
the total votes represented by all outstanding Shares;
(g) the Merger Agreement shall have been
terminated in accordance with its terms; or
(h) any of the representations and warranties of
the Company set forth in the Merger Agreement were
inaccurate in any material respect when made or become
A-2
<PAGE>
inaccurate in any material respect at any time thereafter,
or the Company shall have failed in any material respect to
perform any obligation or covenant required by the Merger
Agreement to be performed or complied with by it;
which, in the reasonable judgment of Acquisition Sub and
regardless of the circumstances giving rise to any such
condition, makes it inadvisable to proceed with the Offer or with
such acceptance for payment, purchase of, or payment for Shares.
The foregoing conditions are for the sole benefit of
Acquisition Sub and Parent and may be asserted by Acquisition Sub
or Parent regardless of the circumstances giving rise to any such
condition and may be waived by Acquisition Sub or Parent, in
whole or in part, at any time and from time to time, in the sole
discretion of Acquisition Sub or Parent. The failure by
Acquisition Sub or Parent at any time to exercise any of the
foregoing rights will not be deemed a waiver of any right and
each right will be deemed an ongoing right which may be asserted
at any time and from time to time.
A-3
EXHIBIT 99.3
AMENDMENT NO. 1
to the
AMENDED AND RESTATED RIGHTS AGREEMENT
between
TALLEY INDUSTRIES, INC.
and
CHASEMELLON SHAREHOLDER SERVICES, L.L.C. , as Rights Agent
Originally dated as of April 30, 1986,
and amended as of July 21, 1986,
and amended and restated as of February 2, 1996
Section 29 of the Amended and Restated Rights Agreement originally dated as of
April 30, 1986, as amended as of July 21, 1986, and as further amended and
restated as of February 2, 1996 (the "Amended Rights Agreement"), is hereby
amended to add the following additional sentence at the end of said Section 29:
Notwithstanding any other provision of this Agreement, effective
immediately prior to the "Effective Time" (as such term is defined in
the Agreement and Plan of Merger dated September 25, 1997
among Carpenter Technology Corporation, a Delaware corporation
("Carpenter"), Score Acquisition Corp., a Delaware corporation and
a wholly-owned subsidiary of Carpenter, and the Company), all
Rights then outstanding (or issuable under this Agreement) shall
be null and void and of no further force and effect, and the
Company's obligations to issue additional Rights and its obligations
under this Agreement shall terminate.
IN WITNESS WHEREOF, the undersigned have caused this Amendment
to be duly executed and attested as of December 9, 1997.
Attest: TALLEY INDUSTRIES, INC.
By /s/ Mark S. Dickerson By /s/ Jack C. Crim
-------------------------- ------------------------------
Secretary President
<PAGE>
Attest: CHASEMELLON SHAREHOLDER
SERVICES, L.L.C.
By /s/ Joseph Cannata By /s/ Martha O. Mijango
------------------------------- --------------------------------
Its Assistant Vice President Its Assistant Vice President
-------------------------- ---------------------------
EXHIBIT 99.4
CARPENTER
Carpenter Technology Corporation
P.O. Box 14662
Reading, Pennsylvania, 19612-4662
Robert J. Dickson
(610) 208-2165
IMMEDIATE RELEASE
CARPENTER SUCCESSFULLY COMPLETES TENDER OFFER FOR TALLEY
Reading, PA (December 5, 1997) - Carpenter Technology Corporation
(NYSE:CRS) announced today that it successfully completed its
tender offer for all outstanding shares of Talley Industries, Inc.
(NYSE:TAL). The offer expired as scheduled at midnight (EST) on
Thursday, December 4.
Based on a preliminary count from the depositary for the offer,
approximately 10,777,195 shares of common stock, 12,509 shares of Series
A convertible preferred stock and 497,618 shares of Series B $1
cumulative convertible preferred stock of Talley had been tendered
and accepted for payment. On a fully diluted basis, this represents
approximately 74.4 percent of Talley's outstanding shares of common
stock, Series A convertible preferred stock and Series B $1 cumulative
convertible preferred stock.
Carpenter now will take the necessary steps to merge its
subsidiary, Score Acquisition Corp., with Talley during the first quarter
of 1998. Any remaining Talley shares then will be converted into cash
amounts equivalent to the tender offer, which are $12 per share of
common stock, $11.70 per share of Series A convertible preferred stock
and $16 per share of Series B $1 cumulative convertible preferred stock.
MORE
<PAGE>
Carpenter Technology Corporation/page 2
Carpenter, a specialty materials company based in Reading, Pa.,
that makes and sells stainless steel, titanium and other specialty alloys,
and various engineered products, is acquiring Talley to expand its
metals manufacturing capacity and distribution outlets. The aggregate
value of the transaction will be approximately $312 million.
Carpenter's sales for fiscal year 1997 (ended June 30, 1997) were
$939 million. In 1996, Phoenix-based Talley, a diversified manufacturer,
had revenues of $502.7 million.
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EXHIBIT 99.5
Talley Industries, Inc.
2702 N. 44th St., 100A
Phoenix, Arizona 85008
http://www.talleyind.com
==================================================================
FOR IMMEDIATE RELEASE Contact: Daniel R. Mullen
V.P. & Treasurer
(602) 957-7711
CARPENTER CONCLUDES SUCCESSFUL TALLEY TENDER OFFER
--------------------------------------------------
PHOENIX, Ariz. (December 5, 1997)(TAL:NYSE) -- Talley Industries,
Inc. announced today that is shareholders have tendered a majority
of the outstanding shares to Score Acquisition Corp., a wholly-owned
subsidiary of Carpenter Technology Corporation (NYSE:CRS). The tender
offer expired at midnight (EST) on Thursday, December 4, 1997.
Based on a preliminary count from the depositary for the offer,
11,442,202 shares were tendered and accepted for payment. Shares tendered
represented 74% of the aggregate voting power of Talley on a fully diluted
basis.
The all-cash tender offer was $12 per share of Talley Common Stock,
$16 per share of Talley Series B Preferred Stock (NYSE:TALprB) and $11.70
per share of Talley Series A Preferred Stock.
"We are pleased with the overwhelming number of shares tendered, as
this is an extremely positive endorsement of the cash offer by Carpenter
Technology," commented Paul L. Foster, Talley Chairman and Chief Executive
Officer. "It represents the successful culmination of efforts by the
Talley Board of Directors to maximize value for our shareholders,"
Mr. Foster concluded.
Talley Industries, Inc. designs, manufactures, and supplies
specialized industrial, commercial, and aerospace products and services,
including stainless steel bar and wire rod, and high reliability
electronic components. The Company was a pioneer in the automotive airbag
industry and is currently developing new airbag technologies.
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