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AGREEMENT AND PLAN OF MERGER
AMONG
TEXTRON INC.,
E.I. TEXTRON INC.,
AND
ELCO INDUSTRIES, INC.
DATED AS OF SEPTEMBER 12, 1995
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TABLE OF CONTENTS
Page
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ARTICLE I THE OFFER . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
Section 1.1 The Offer. . . . . . . . . . . . . . . . . . . . . . . . .1
Section 1.2 Company Actions. . . . . . . . . . . . . . . . . . . . . .3
ARTICLE II THE MERGER . . . . . . . . . . . . . . . . . . . . . . . . . . . .5
Section 2.1 The Merger . . . . . . . . . . . . . . . . . . . . . . . .5
Section 2.2 Effective Time . . . . . . . . . . . . . . . . . . . . . .5
Section 2.3 Effects of the Merger. . . . . . . . . . . . . . . . . . .5
Section 2.4 Certificate of Incorporation and Bylaws; Directors and
Officers. . . . . . . . . . . . . . . . . . . . . . . . .5
Section 2.5 Conversion of Securities . . . . . . . . . . . . . . . . .6
Section 2.6 Exchange of Certificates . . . . . . . . . . . . . . . . .6
Section 2.7 Dissenting Company Common Shares . . . . . . . . . . . . .7
Section 2.8 Merger Without Meeting of Stockholders . . . . . . . . . .8
Section 2.9 No Further Ownership Rights in Common Stock. . . . . . . .8
Section 2.10 Closing of Company Transfer Books. . . . . . . . . . . . .8
ARTICLE III REPRESENTATIONS AND WARRANTIES OF PARENT. . . . . . . . . . . . .8
Section 3.1 Organization, Standing and Power . . . . . . . . . . . . .8
Section 3.2 Authority; Non-Contravention . . . . . . . . . . . . . . .8
Section 3.3 Schedule 14D-9, Information and Proxy Statements . . . . 10
Section 3.4 Financing. . . . . . . . . . . . . . . . . . . . . . . . 10
Section 3.5 Brokers and Finders. . . . . . . . . . . . . . . . . . . 10
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE COMPANY. . . . . . . . . . 11
Section 4.1 Organization, Standing and Power . . . . . . . . . . . . 11
Section 4.2 Capital Structure. . . . . . . . . . . . . . . . . . . . 11
Section 4.3 Subsidiaries . . . . . . . . . . . . . . . . . . . . . . 12
Section 4.4 Other Interests. . . . . . . . . . . . . . . . . . . . . 12
Section 4.5 Authority; Non-Contravention . . . . . . . . . . . . . . 12
Section 4.6 SEC Documents. . . . . . . . . . . . . . . . . . . . . . 14
Section 4.7 Offer Documents and Proxy Statement. . . . . . . . . . . 15
Section 4.8 Absence of Certain Events. . . . . . . . . . . . . . . . 15
Section 4.9 Litigation . . . . . . . . . . . . . . . . . . . . . . . 16
Section 4.10 Compliance with Applicable Law . . . . . . . . . . . . . 16
Section 4.11 Employee Plans . . . . . . . . . . . . . . . . . . . . . 17
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Section 4.12 Employment Relations and Agreement . . . . . . . . . . . 19
Section 4.13 Limitation on Business Conduct . . . . . . . . . . . . . 19
Section 4.14 Environmental Laws and Regulations . . . . . . . . . . . 20
Section 4.15 Patents, Trademarks, Copyrights. . . . . . . . . . . . . 20
Section 4.16 Takeover Statutes. . . . . . . . . . . . . . . . . . . . 21
Section 4.17 Acquiring Person . . . . . . . . . . . . . . . . . . . . 21
Section 4.18 Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . 21
Section 4.19 Brokers. . . . . . . . . . . . . . . . . . . . . . . . . 22
ARTICLE V REPRESENTATIONS AND WARRANTIES REGARDING SUB. . . . . . . . . . . 22
Section 5.1 Organization and Standing. . . . . . . . . . . . . . . . 22
Section 5.2 Capital Structure. . . . . . . . . . . . . . . . . . . . 22
Section 5.3 Authority; Non-Contravention . . . . . . . . . . . . . . 23
ARTICLE VI COVENANTS RELATING TO CONDUCT OF BUSINESS. . . . . . . . . . . . 23
Section 6.1 Conduct of Business by the Company Pending the Merger. . 23
Section 6.2 Acquisition Proposals. . . . . . . . . . . . . . . . . . 26
Section 6.3 Annual Meeting of Stockholders . . . . . . . . . . . . . 27
Section 6.4 Conduct of Business of Sub Pending the Merger. . . . . . 27
ARTICLE VII ADDITIONAL AGREEMENTS . . . . . . . . . . . . . . . . . . . . . 27
Section 7.1 Company Stockholder Approval; Proxy Statement. . . . . . 27
Section 7.2 Access to Information; Confidentiality . . . . . . . . . 28
Section 7.3 Fees and Expenses. . . . . . . . . . . . . . . . . . . . 29
Section 7.4 Company Stock Options. . . . . . . . . . . . . . . . . . 30
Section 7.5. Performance Shares . . . . . . . . . . . . . . . . . . . 30
Section 7.6 Reasonable Best Efforts. . . . . . . . . . . . . . . . . 30
Section 7.7 Public Announcements . . . . . . . . . . . . . . . . . . 31
Section 7.8 Indemnification; Directors and Officers Insurance. . . . 31
Section 7.9 Employees. . . . . . . . . . . . . . . . . . . . . . . . 32
Section 7.10 Board Representation . . . . . . . . . . . . . . . . . . 33
Section 7.11 Notification of Certain Matters. . . . . . . . . . . . . 34
Section 7.12 Okabe. . . . . . . . . . . . . . . . . . . . . . . . . . 34
Section 7.13 Nagoya Notification. . . . . . . . . . . . . . . . . . . 34
ARTICLE VIII CONDITIONS PRECEDENT . . . . . . . . . . . . . . . . . . . . . 34
Section 8.1 Conditions to Each Party's Obligation to Effect the
Merger. . . . . . . . . . . . . . . . . . . . . . . . . 34
ARTICLE IX TERMINATION, AMENDMENT AND WAIVER. . . . . . . . . . . . . . . . 35
Section 9.1 Termination. . . . . . . . . . . . . . . . . . . . . . . 35
Section 9.2 Effect of Termination. . . . . . . . . . . . . . . . . . 36
Section 9.3 Amendment. . . . . . . . . . . . . . . . . . . . . . . . 37
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Section 9.4 Waiver . . . . . . . . . . . . . . . . . . . . . . . . . 37
Section 9.5 Procedure for Termination, Amendment or Waiver . . . . . 37
ARTICLE X GENERAL PROVISIONS. . . . . . . . . . . . . . . . . . . . . . . . 37
Section 10.1 Non-Survival of Representations and Warranties . . . . . 37
Section 10.2 Notices. . . . . . . . . . . . . . . . . . . . . . . . . 37
Section 10.3 Interpretation . . . . . . . . . . . . . . . . . . . . . 38
Section 10.4 Counterparts . . . . . . . . . . . . . . . . . . . . . . 39
Section 10.5 Entire Agreement; No Third-Party Beneficiaries . . . . . 39
Section 10.6 Governing Law. . . . . . . . . . . . . . . . . . . . . . 39
Section 10.7 Assignment . . . . . . . . . . . . . . . . . . . . . . . 39
Section 10.8 Severability . . . . . . . . . . . . . . . . . . . . . . 39
Section 10.9 Enforcement of this Agreement. . . . . . . . . . . . . . 39
Section 10.10 Incorporation of Exhibits. . . . . . . . . . . . . . . . 40
EXHIBIT A CONDITIONS OF THE OFFER. . . . . . . . . . . . . . . . . . . . . .A-1
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of September 12, 1995 (this
"Agreement"), among Textron Inc., a Delaware corporation ("Parent"), E. I.
Textron Inc., a Delaware corporation ("Sub") and a wholly owned subsidiary of
Parent, and Elco Industries, Inc., a Delaware corporation (the "Company") (Sub
and the Company being hereinafter collectively referred to as the "Constituent
Corporations").
W I T N E S S E T H:
WHEREAS, the respective Boards of Directors of Parent, Sub and the
Company have approved the acquisition of the Company by Parent pursuant to a
tender offer (the "Offer") by Sub for all of the outstanding shares of Common
Stock, par value $5.00 per share ("Common Stock"), of the Company together with
the associated Rights (as hereafter defined) at a price of $36.00 per share, net
to the seller in cash, without interest, followed by a merger (the "Merger") of
Sub with and into the Company all upon the terms and subject to the conditions
set forth herein;
WHEREAS, the Board of Directors of the Company has adopted resolutions
approving the Offer and the Merger and recommending that the Company's
stockholders accept the Offer; and
WHEREAS, pursuant to the Merger, each issued and outstanding share of
Common Stock not owned directly or indirectly by Parent or the Company, except
shares of Common Stock held by holders who comply with the provisions of
Delaware law regarding the right of stockholders to dissent from the Merger and
require appraisal of their shares of Common Stock, will be converted into the
right to receive the per share consideration paid pursuant to the Offer.
NOW, THEREFORE, in consideration of the premises and the
representations, warranties, covenants and agreements herein contained, Parent,
Sub and the Company hereby agree as follows:
ARTICLE I
THE OFFER
Section 1.1 THE OFFER. (a) Subject to the provisions of this
Agreement, within five business days after the first public announcement of this
Agreement, Sub
shall, and Parent shall cause Sub to, commence, within the meaning of Rule 14d-2
under the Exchange Act (as hereinafter defined), the Offer. The obligation of
Sub to, and of Parent to cause Sub to, commence the Offer and accept for
payment, and pay for, any shares of Common Stock (and the associated Rights)
tendered pursuant to the Offer shall be subject to the conditions set forth in
Exhibit A. The Offer shall initially expire 20 business days after the date of
its commencement, unless this Agreement is terminated in accordance with Article
IX, in which case the Offer (whether or not previously extended in accordance
with the terms hereof) shall expire on such date of termination. Without the
prior written consent of the Company, Sub shall not (i) impose conditions to the
Offer in addition to those set forth in Exhibit A, (ii) modify or amend the
conditions set forth in Exhibit A or any other term of the Offer in a manner
adverse to the holders of shares of Common Stock, (iii) waive or amend (below
50.01% of the outstanding shares of Common Stock on a fully diluted basis) the
Minimum Condition (as defined in Exhibit A), (iv) reduce the number of shares of
Common Stock subject to the Offer, (v) reduce the price per share of Common
Stock to be paid pursuant to the Offer, (vi) except as provided in the following
sentence, extend the Offer, if all of the Offer conditions are satisfied or
waived, or (vii) change the form of consideration payable in the Offer.
Notwithstanding the foregoing, Sub may, without the consent of the Company,
extend the Offer at any time, and from time to time, (i) if at the then
scheduled expiration date of the Offer any of the conditions to Sub's obligation
to accept for payment and pay for shares of Common Stock shall not have been
satisfied or waived, until the such time as such conditions are satisfied or
waived; (ii) for any period required by any rule, regulation, interpretation or
position of the SEC (as hereinafter defined) or its staff applicable to the
Offer; or (iii) if all Offer conditions are satisfied or waived but the number
of shares of Common Stock tendered is less than 90% of the then outstanding
number of shares of Common Stock, for an aggregate period of not more than 10
business days (for all such extensions) beyond the latest expiration date that
would be permitted under clause (i) or (ii) of this sentence. So long as this
Agreement is in effect and the Offer conditions have not been satisfied or
waived, Sub shall, and Parent shall cause Sub to, cause the Offer not to expire.
Subject to the terms and conditions of the Offer (but subject to the right of
termination in accordance with Article IX), Sub shall, and Parent shall cause
Sub to, pay for all shares of Common Stock validly tendered and not withdrawn
pursuant to the Offer as soon as practicable after the expiration of the Offer.
(b) On the date of commencement of the Offer, Parent and Sub shall
file with the Securities and Exchange Commission (the "SEC") a Tender Offer
Statement on Schedule 14D-1 with respect to the Offer, which shall contain an
offer to purchase and a related letter of transmittal (such Schedule 14D-1 and
the documents therein pursuant to which the Offer will be made, together with
any supplements or amendments thereto, the "Offer Documents"). The Company and
its counsel shall be given an opportunity to review and comment upon the Offer
Documents prior to the filing thereof with the SEC.
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The Offer Documents shall comply as to form in all material respects with the
requirements of the Securities Exchange Act of 1934, as amended (including the
rules and regulations promulgated thereunder, the "Exchange Act"), and on the
date filed with the SEC and on the date first published, sent or given to the
Company's stockholders, the Offer Documents 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, except that no
representation is made by Parent or Sub with respect to information supplied by
the Company for inclusion in the Offer Documents. Each of Parent, Sub and the
Company agrees promptly to correct any information provided by it for use in the
Offer Documents if and to the extent that such information shall have become
false or misleading in any material respect, and each of Parent and Sub further
agrees to take all steps necessary to cause the Offer Documents as so corrected
to be filed with the SEC and to be disseminated to holders of shares of Common
Stock, in each case as and to the extent required by applicable federal
securities laws. Parent and Sub agree to provide the Company and its counsel in
writing with any comments Parent, Sub or their counsel may receive from the SEC
or its staff with respect to the Offer Documents promptly upon receipt of such
comments.
Section 1.2 COMPANY ACTIONS. (a) The Company hereby approves of
and consents to the Offer and represents that the Board of Directors of the
Company at a meeting duly called and held has duly adopted resolutions
(i) approving this Agreement, the Offer and the Merger, (ii) determining that
the terms of the Offer and Merger are fair to, and in the best interests of, the
Company and its stockholders, and (iii) recommending that the Company's
stockholders accept the Offer and tender their shares of Common Stock and
approve the Merger and this Agreement. The Company hereby consents to the
inclusion in the Offer Documents of such recommendation of the Board of
Directors of the Company. The Company represents that its Board of Directors
has received the written opinion (the "Fairness Opinion") of The Chicago
Dearborn Company (the "Financial Advisor") that the proposed consideration to be
received by the holders of shares of Common Stock pursuant to the Offer and the
Merger is fair to such holders from a financial point of view. The Company has
been authorized by the Financial Advisor to permit, subject to the prior review
and consent by the Financial Advisor (such consent not to be unreasonably
withheld), the inclusion of the Fairness Opinion (or a reference thereto) in the
Offer Documents, the Schedule 14D-9 (as hereinafter defined) and the Proxy
Statement (as hereinafter defined).
(b) On the date the Offer Documents are filed with the SEC, the
Company shall file with the SEC a Solicitation/Recommendation Statement on
Schedule 14D-9 with respect to the Offer (such Schedule 14D-9, as amended from
time to time, the "Schedule 14D-9") containing the recommendations described in
paragraph (a) above and shall mail the Schedule 14D-9 to the stockholders of the
Company as required by Rule
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14D-9 promulgated under the Exchange Act. To the extent practicable, the
Company shall cooperate with Parent in mailing or otherwise disseminating the
Schedule 14D-9 with the appropriate Offer Documents to the Company's
stockholders. Parent and its counsel shall be given an opportunity to review
and comment upon the Schedule 14D-9 prior to the filing thereof with the SEC.
The Schedule 14D-9 shall comply as to form in all material respects with the
requirements of the Exchange Act and, on the date filed with the SEC and on the
date first published, sent or given to the Company's stockholders, 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, except that no representation is made by the Company with respect to
information supplied by Parent or Sub for inclusion in the Schedule 14D-9. Each
of the Company, Parent and Sub agrees promptly to correct any information
provided by it for use in the Schedule 14D-9 if and to the extent that such
information shall have become false or misleading in any material respect, and
the Company further agrees to take all steps necessary to cause the Schedule
14D-9 as so corrected to be filed with the SEC and disseminated to the holders
of shares of Common Stock, in each case as and to the extent required by
applicable federal securities laws. The Company agrees to provide Parent and
Sub and their counsel in writing with any comments the Company or its counsel
may receive from the SEC or its staff with respect to the Schedule 14D-9
promptly after the receipt of such comments.
(c) In connection with the Offer, the Company shall cause its
transfer agent to promptly furnish Sub with a list of the holders of Common
Stock and mailing labels containing the names and addresses of the record
holders of Common Stock as of a recent date and of those persons becoming record
holders subsequent to such date, together with copies of all lists of
stockholders, security position listings (including shares of Common Stock held
by depositories) and computer files and all other information in the Company's
possession or control regarding the beneficial owners of Common Stock, and shall
furnish to Sub such information and assistance (including updated lists of
stockholders, security position listings and computer files) as Sub may
reasonably request in communicating the Offer to the Company's stockholders.
Parent and Sub shall treat the foregoing information provided by the Company
pursuant to this Section 1.2(c) as "Information" under (and as defined in) that
certain letter agreement, dated September 1, 1995 (as amended, modified or
supplemented, the "Confidentiality Agreement") between the Company and Parent.
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ARTICLE II
THE MERGER
Section 2.1 THE MERGER. Upon the terms and subject to the
conditions hereof, and in accordance with the General Corporation Law of the
State of Delaware, as amended (the "DGCL"), Sub shall be merged with and into
the Company at the Effective Time (as hereinafter defined). Following the
Merger, the separate corporate existence of Sub shall cease and the Company
shall continue as the surviving corporation (the "Surviving Corporation") and
shall succeed to and assume all the rights and obligations of Sub in accordance
with the DGCL.
Section 2.2 EFFECTIVE TIME. The Merger shall become effective when
the Certificate of Merger or, if applicable, the Certificate of Ownership and
Merger (each, the "Certificate of Merger"), executed in accordance with the
relevant provisions of the DGCL, are accepted for record by the Secretary of
State of the State of Delaware. When used in this Agreement, the term
"Effective Time" shall mean the later of the date and time at which the
Certificate of Merger is accepted for record or such later time established by
the Certificate of Merger. The filing of the Certificate of Merger shall be
made as soon as reasonably practicable (but not later than the third business
day) after the satisfaction or waiver of the conditions to the Merger set forth
herein.
Section 2.3 EFFECTS OF THE MERGER. The Merger shall have the
effects set forth in the DGCL.
Section 2.4 CERTIFICATE OF INCORPORATION AND BYLAWS; DIRECTORS AND
OFFICERS. (a) The Certificate of Incorporation of Sub, as in effect immediately
prior to the Effective Time, shall be amended to change the name of Sub to "Elco
Industries, Inc." and, as so amended, the Certificate of Incorporation and the
Bylaws of Sub shall be the Certificate of Incorporation and the Bylaws of the
Surviving Corporation until thereafter changed or amended as provided therein or
by applicable law.
(b) The directors of Sub at the Effective Time shall, from and after
the Effective Time, be the initial directors of the Surviving Corporation until
their successors have been duly elected or appointed and qualified or until
their earlier death, resignation or removal, in accordance with the Surviving
Corporation's Certificate of Incorporation and Bylaws.
(c) The officers of the Company at the Effective Time and such other
persons as designated by Parent shall, from and after the Effective Time, be the
initial officers of the Surviving Corporation until their successors have been
duly elected or appointed and qualified or until their earlier death,
resignation or removal, in accordance with the Surviving Corporation's
Certificate of Incorporation and Bylaws.
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Section 2.5 CONVERSION OF SECURITIES. As of the Effective Time, by
virtue of the Merger and without any action on the part of any stockholder of
the Company:
(a) All shares of Common Stock that are held in the treasury of
the Company or by any wholly owned Subsidiary (as hereinafter defined)
of the Company and any shares of Common Stock owned by Parent, Sub or
any other wholly owned Subsidiary of Parent shall be canceled and no
consideration shall be delivered in exchange therefor.
(b) Each share of Common Stock (together with the associated
Rights) issued and outstanding immediately prior to the Effective Time
(other than shares to be canceled in accordance with Section 2.5(a)
and other than Dissenting Company Common Shares (as defined in Section
2.7)) shall be converted into the right to receive from the Surviving
Corporation in cash, without interest, the per share consideration in
the Offer (the "Merger Consideration"). All such shares of Common
Stock, when so converted, shall no longer be outstanding and shall
automatically be canceled and retired and each holder of a certificate
or certificates (the "Certificates") representing any such shares
shall cease to have any rights with respect thereto, except the right
to receive the Merger Consideration.
(c) Each issued and outstanding share of the capital stock of
Sub shall be converted into and become one fully paid and
nonassessable share of Common Stock, par value $.01 per share, of the
Surviving Corporation.
Section 2.6 EXCHANGE OF CERTIFICATES. (a) PAYING AGENT. Prior to
the Effective Time, Parent shall appoint a commercial bank or trust company to
act as paying agent hereunder (the "Paying Agent") for the payment of the Merger
Consideration upon surrender of Certificates. All of the fees and expenses of
the Paying Agent shall be borne by Parent.
(b) SURVIVING CORPORATION TO PROVIDE FUNDS. Parent shall take all
steps necessary to enable and cause the Surviving Corporation to provide the
Paying Agent with cash in amounts necessary to pay for all of the shares of
Common Stock pursuant to Section 2.5 (determined as though there are no
Dissenting Company Common Shares), when and as such amounts are needed by the
Paying Agent.
(c) EXCHANGE PROCEDURES. As soon as practicable after the Effective
Time, the Paying Agent shall mail to each holder of record of a Certificate,
other than Parent, the Company and any wholly owned Subsidiary of Parent or the
Company, (i) a letter of transmittal (which shall specify that delivery shall be
effected, and risk of loss and title to the Certificates shall pass, only upon
actual delivery of the Certificates to the Paying Agent and shall be in a form
and have such other provisions as Parent may
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reasonably specify) and (ii) instructions for the use thereof in effecting the
surrender of the Certificates in exchange for the Merger Consideration. Upon
surrender of a Certificate for cancellation to the Paying Agent or to such other
agent or agents as may be appointed by the Surviving Corporation, together with
such letter of transmittal, duly executed, and such other documents as may
reasonably be required by the Paying Agent, the holder of such Certificate shall
be entitled to receive in exchange therefor the amount of cash into which the
shares of Common Stock theretofore represented by such Certificate shall have
been converted pursuant to Section 2.5, and the Certificates so surrendered
shall forthwith be canceled. No interest will be paid or will accrue on the
cash payable upon the surrender of any Certificate. If payment is to be made to
a person other than the person in whose name the Certificate so surrendered is
registered, it shall be a condition of payment that such Certificate shall be
properly endorsed or otherwise in proper form for transfer and that the person
requesting such payment shall pay any transfer or other taxes required by reason
of the transfer of such Certificate or establish to the satisfaction of the
Surviving Corporation that such tax has been paid or is not applicable. Until
surrendered as contemplated by this Section 2.6, each Certificate (other than
Certificates representing Dissenting Company Common Shares and Certificates
representing any shares of Common Stock owned by Parent or any wholly owned
Subsidiary of Parent or held in the treasury of the Company or by any wholly
owned Subsidiary of the Company) shall be deemed at any time after the Effective
Time to represent only the right to receive upon such surrender the amount of
cash, without interest, into which the shares of Common Stock theretofore
represented by such Certificate shall have been converted pursuant to Section
2.5. Notwithstanding the foregoing, none of the Paying Agent, the Surviving
Corporation or any party hereto shall be liable to a former stockholder of the
Company for any cash or interest delivered to a public official pursuant to
applicable abandoned property, escheat or similar laws.
Section 2.7 DISSENTING COMPANY COMMON SHARES. Notwithstanding any
provision of this Agreement to the contrary, if required by the DGCL but only to
the extent required thereby, shares of Common Stock which are issued and
outstanding immediately prior to the Effective Time and which are held by
holders of such shares of Common Stock who have properly exercised appraisal
rights with respect thereto in accordance with Section 262 of the DGCL (the
"Dissenting Company Common Shares") will not be exchangeable for the right to
receive the Merger Consideration, and holders of such shares of Common Stock
will be entitled to receive payment of the appraised value of such shares of
Common Stock in accordance with the provisions of such Section 262 unless and
until such holders fail to perfect or effectively withdraw or lose their rights
to appraisal and payment under the DGCL. If, after the Effective Time, any such
holder fails to perfect or effectively withdraws or loses such right, such
shares of Common Stock will thereupon be treated as if they had been converted
into and have become exchangeable for, at the Effective Time, the right to
receive the Merger Consideration,
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without any interest thereon. The Company will give Parent prompt notice of any
demands received by the Company for appraisals of shares of Common Stock. The
Company shall not, except with the prior written consent of Parent, make any
payment with respect to any demands for appraisal or offer to settle or settle
any such demands.
Section 2.8 MERGER WITHOUT MEETING OF STOCKHOLDERS.
Notwithstanding the foregoing in this Article II, in the event that Sub, or any
other direct or indirect subsidiary of Parent, shall acquire at least 90 percent
of the outstanding shares of Common Stock, the parties hereto agree to take all
necessary and appropriate action to cause the Merger to become effective as soon
as practicable after the expiration of the Offer without a meeting of
stockholders of the Company, in accordance with Section 253 of the DGCL.
Section 2.9 NO FURTHER OWNERSHIP RIGHTS IN COMMON STOCK. From and
after the Effective Time, the holders of shares of Common Stock which were
outstanding immediately prior to the Effective Time shall cease to have any
rights with respect to such shares of Common Stock except as otherwise provided
in this Agreement or by applicable law. All cash paid upon the surrender of
Certificates in accordance with the terms hereof shall be deemed to have been
issued in full satisfaction of all rights pertaining to the shares of Common
Stock.
Section 2.10 CLOSING OF COMPANY TRANSFER BOOKS. At the Effective
Time, the stock transfer books of the Company shall be closed and no transfer of
shares of Common Stock shall thereafter be made. If, after the Effective Time,
Certificates are presented to the Surviving Corporation, they shall be canceled
and exchanged as provided in this Article II.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PARENT
Parent represents and warrants to the Company as follows:
Section 3.1 ORGANIZATION, STANDING AND POWER. Parent 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 and authority to
carry on its business as now being conducted.
Section 3.2 AUTHORITY; NON-CONTRAVENTION. Parent has all requisite
corporate power and authority to enter into this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
by Parent and the consummation by Parent of the transactions contemplated hereby
have
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been duly authorized by all necessary corporate action on the part of Parent.
This Agreement has been duly executed and delivered by Parent and (assuming the
valid authorization, execution and delivery of this Agreement by the Company)
constitutes a valid and binding obligation of Parent enforceable against Parent
in accordance with its terms. The execution and delivery of this Agreement do
not, and the consummation of the transactions contemplated hereby and compliance
with the provisions hereof will not, conflict with, or result in any violation
of, or default (with or without notice or lapse of time, or both) under, or give
rise to a right of termination, cancellation or acceleration of any obligation
or to the loss of a material benefit under, or result in the creation of any
lien, security interest, charge or encumbrance upon any of the properties or
assets of Parent or any of its Subsidiaries under, any provision of (i) the
Certificate of Incorporation or Bylaws of Parent (true and complete copies of
which have been delivered to the Company) or the comparable charter or
organization documents of any of its Subsidiaries, (ii) any loan or credit
agreement, note, bond, mortgage, indenture, lease or other agreement,
instrument, permit, concession, franchise or license applicable to Parent or any
of its Subsidiaries or (iii) subject to the government filings and other matters
referred to in the following sentence, any judgment, order, decree, statute,
law, ordinance, rule or regulation applicable to Parent or any of its
Subsidiaries or any of their respective properties or assets, other than, in the
case of clauses (ii) or (iii), any such conflicts, violations, defaults, rights,
losses, liens, security interests, charges or encumbrances that, individually or
in the aggregate, would not have a Material Adverse Effect (as defined below) on
Parent, materially impair the ability of Parent or Sub to perform their
respective obligations hereunder or prevent the consummation of any of the
transactions contemplated hereby. No filing or registration with, or
authorization, consent or approval of, any domestic (federal and state), foreign
or supranational court, commission, governmental body, regulatory or
administrative agency, authority or tribunal (a "Governmental Entity") is
required by or with respect to Parent or any of its Subsidiaries in connection
with the execution and delivery of this Agreement by Parent or Sub or is
necessary for the consummation of the Offer, the Merger and the other
transactions contemplated by this Agreement, except for (i) in connection or in
compliance with the Exchange Act, (ii) the filing of the Certificate of Merger
with the Secretary of State of the State of Delaware and appropriate documents
with the relevant authorities of other states in which the Company is qualified
to do business, (iii) such filings and consents, if any, as may be required
under any environmental, health or safety law or regulation pertaining to any
notification, disclosure or required approval triggered by the Offer, the Merger
or the transactions contemplated by this Agreement, (iv) such filings and
approvals as may be required under the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements
Act of 1976, as amended (the "Improvements Act"), (v) such filings and approvals
as may be required by any applicable state securities or "blue sky" laws or
state takeover laws, (vi) such filings, consents, approvals, orders,
registrations, declarations and filings as may be required under the laws of any
foreign country in which Parent or
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any of its Subsidiaries conducts any business or owns any assets, and (vii) such
other consents, orders, authorizations, approvals, registrations, declarations
and filings the failure of which to be obtained or made would not, individually
or in the aggregate, have a Material Adverse Effect on Parent, materially impair
the ability of Parent or Sub to perform their respective obligations hereunder
or prevent the consummation of any of the transactions contemplated hereby. For
purposes of this Agreement, (a) "Material Adverse Change" or "Material Adverse
Effect" means, when used with respect to Parent, Sub or the Company, as the case
may be, any change or effect, either individually or in the aggregate, that is
materially adverse to the business, assets, financial condition or results of
operations of Parent and its Subsidiaries taken as a whole, Sub, or the Company
and its Subsidiaries taken as a whole, as the case may be, and (b) "Subsidiary"
means any corporation, partnership, joint venture or other legal entity of which
Parent or the Company, as the case may be (either alone or through or together
with any other Subsidiary), owns, directly or indirectly, 50% or more of the
stock or other equity interests the holders of which are generally entitled to
vote for the election of the board of directors or other governing body of such
corporation or other legal entity.
Section 3.3 SCHEDULE 14D-9, INFORMATION AND PROXY STATEMENTS. None
of the information to be supplied by Parent or Sub for inclusion or
incorporation by reference in the Offer Documents, the Schedule 14D-9, the
information statement, if any, filed by the Company in connection with the Offer
pursuant to Rule 14F-1 promulgated under the Exchange Act (the "Information
Statement"), or the proxy statement (together with any amendments or supplements
thereto, the "Proxy Statement") relating to the Stockholder Meeting (as defined
in Section 7.1) will (i) in the case of the Offer Documents, the Schedule 14D-9
and the Information Statement, at the respective times such documents are filed
with the SEC and are first published, sent or given to the Company's
stockholders, or (ii) in the case of the Proxy Statement, at the time of the
mailing of the Proxy Statement, at the time of the Stockholder Meeting and at
the Effective Time, contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they are
made, not misleading.
Section 3.4 FINANCING. Parent or Sub has sufficient funds
available to enable it to purchase all outstanding shares on a fully diluted
basis of Common Stock pursuant to the Offer and the Merger and to pay all fees
and expenses related to the transactions contemplated by this Agreement.
Section 3.5 BROKERS AND FINDERS. Except for the fees and expenses
payable to ▇▇▇▇▇▇, Read & Co. Inc. by Parent, neither Parent nor Sub has
employed any investment banker, broker, finder, consultant or intermediary in
connection with the transactions contemplated by this Agreement which would be
entitled to any investment
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banking, brokerage, finder's or similar fee or commission in connection with
this Agreement or the transactions contemplated hereby.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Parent and Sub as follows:
Section 4.1 ORGANIZATION, STANDING AND POWER. The Company and each
of its Subsidiaries is a corporation duly organized, validly existing and in
good standing under the laws of the jurisdiction in which it is incorporated and
has the requisite corporate power and authority to carry on its business as now
being conducted. The Company and each of its Subsidiaries is duly qualified to
do business, and is in good standing, in each jurisdiction where the character
of its properties owned or held under lease or the nature of its activities
makes such qualification necessary, except where the failure to be so qualified
and in good standing would not, individually or in the aggregate, have a
Material Adverse Effect on the Company.
Section 4.2 CAPITAL STRUCTURE. The authorized capital stock of the
Company consists of 20,000,000 shares of Common Stock and 250,000 shares of
Preferred Stock, par value $1.00 per share ("Preferred Stock"). At the close of
business on September 8, 1995, (i) 4,982,869 shares of Common Stock were issued
and outstanding, (ii) 225,000 shares of Common Stock were reserved for issuance
upon the exercise of outstanding Company Stock Options (as defined in Section
7.4) and (iii) 4,766 shares of Common Stock were held by the Company in its
treasury. As of the date hereof there are no shares of Preferred Stock
outstanding. All outstanding shares of capital stock of the Company are validly
issued, fully paid and nonassessable and not subject to preemptive rights. As
of September 8, 1995, there were 153,875 Company Stock Options outstanding, in
the aggregate, under the Company's 1991 Stock Option Plan and the 1992 Stock
Option Plan for Non-employee Directors (the "Stock Plans") to acquire 153,875
shares of Common Stock. Except for such Company Stock Options and rights issued
pursuant to the Company Rights Agreement (as defined in Section 4.17) and as set
forth in the Company Disclosure Letter (as defined below), there are no options,
warrants, rights, commitments, agreements, arrangements or undertakings of any
kind to which the Company or any of its Subsidiaries is a party or by which any
of them is bound obligating the Company or any of its 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 of any of its
Subsidiaries. The Company Disclosure Letter sets forth the aggregate exercise
price for all outstanding Company Stock Options as of September 8, 1995. Since
September 8, 1995, no shares of the Company's capital stock have been
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issued other than pursuant to the exercise of Company Stock Options already in
existence on such date and the Company has not granted any stock options for any
capital stock of the Company.
Section 4.3 SUBSIDIARIES. Except as set forth in the letter from
the Company to Parent dated the date hereof, which letter relates to this
Agreement and is designated therein as the Company Disclosure Letter (the
"Company Disclosure Letter"), all of the outstanding capital stock of, or
ownership interests in, each Subsidiary of the Company is owned by the Company,
directly or indirectly, free and clear of any security interests, liens, claims,
pledges, options, rights of first refusal, agreements, charges or other
encumbrances of any nature ("Liens") or any other limitation or restriction
(including any restriction on the right to vote or sell the same, except as may
be provided as a matter of law). Except as set forth in the Company Disclosure
Letter, there are no (i) securities of the Company or any of its Subsidiaries
convertible into or exchangeable for, (ii) options or other rights to acquire
from the Company or any of its Subsidiaries, or (iii) other contracts,
understandings, arrangements or obligations (whether or not contingent)
providing for the issuance or sale, directly or indirectly, in each case, with
respect to any capital stock or other ownership interests in, or any other
securities of, any Subsidiary of the Company. There are no outstanding
contractual obligations of the Company or any of its Subsidiaries to repurchase,
redeem or otherwise acquire any outstanding shares of capital stock or other
ownership interest in any Subsidiary of the Company nor are there any
irrevocable proxies with respect to any shares of the capital stock of any of
the Company's Subsidiaries. All of the shares of capital stock of each
Subsidiary of the Company are validly existing, fully paid and nonassessable.
Except for statutory and regulatory restrictions or as disclosed in the Company
Disclosure Letter, there are no restrictions which prevent or limit the payment
of dividends by any of the Company's Subsidiaries.
Section 4.4 OTHER INTERESTS. Except for the Company's interest in
its Subsidiaries or as set forth in the Company Disclosure Letter, neither the
Company nor its Subsidiaries owns directly or indirectly any equity interest or
equity investment in, nor is the Company or any of its Subsidiaries subject to
any obligation or requirement to provide for or to make any equity investment
in, any corporation, limited liability company, partnership, joint venture,
business, trust or entity.
Section 4.5 AUTHORITY; NON-CONTRAVENTION. The Board of Directors
of the Company has approved this Agreement and determined that the Offer and the
Merger are fair and in the best interests of the Company and its stockholders
and the Company has all requisite corporate power and authority to enter into
this Agreement and, subject to approval of the Merger by the stockholders of the
Company (if required), to consummate the transactions contemplated hereby. The
execution and delivery of this Agreement by the Company and the consummation by
the Company of the transactions contemplated
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hereby have been duly authorized by all necessary corporate action on the part
of the Company, subject to such approval of the Merger by the stockholders of
the Company (if required). This Agreement has been duly executed and delivered
by the Company and (assuming the valid authorization, execution and delivery of
this Agreement by Parent and Sub) constitutes a valid and binding obligation of
the Company enforceable against the Company in accordance with its terms.
Except as set forth in the Company Disclosure Letter, the execution and delivery
of this Agreement do not, and the consummation of the transactions contemplated
hereby and compliance with the provisions hereof will not, conflict with, or
result in any violation of, or default (with or without notice or lapse of time,
or both) under, or give rise to a right of termination, cancellation or
acceleration of any obligation, contractually require any offer to purchase or
any prepayment of any debt, contractually require the payment of (or result in
the vesting of) any severance, golden parachute, change of control or similar
type of payment, or give rise to the loss of a material benefit under, or result
in the creation of any lien, security interest, charge or encumbrance upon any
of the properties or assets of the Company or any of its Subsidiaries under, any
provision of (i) the Certificate of Incorporation or Bylaws of the Company (true
and complete copies of which as of the date hereof have been delivered to
Parent) or the comparable charter or organization documents of any of its
Subsidiaries, (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 of its Subsidiaries or (iii) subject
to the governmental filings and other matters referred to in the following
sentence and approval of this Agreement by the Company's stockholders (if
required), any judgment, order, decree, statute, law, ordinance, rule or
regulation applicable to the Company or any of its Subsidiaries or any of their
respective properties or assets, other than, in the case of clauses (ii) or
(iii), any such conflicts, violations, defaults, rights, offers, prepayments,
payments, losses, liens, security interests, charges or encumbrances that,
individually or in the aggregate, would not have a Material Adverse Effect on
the Company, materially impair the ability of the Company to perform its
obligations hereunder or prevent the consummation of any of the transactions
contemplated hereby. Copies of all contracts, agreements, instruments or other
documents referred to in the Company Disclosure Letter pursuant to this Section
4.5 will be promptly furnished to Parent after the date of this Agreement. The
Company Disclosure Letter lists the amounts payable or that will or may become
payable to directors, officers or employees or former directors, officers or
employees of the Company and its Subsidiaries under each such contract,
agreement, instrument or other document referred to in the Company Disclosure
Letter pursuant to this Section 4.5, except as noted in such Company Disclosure
Letter. No filing or registration with, or authorization, consent or approval
of, any Governmental Entity is required by or with respect to the Company or any
of its Subsidiaries in connection with the execution and delivery of this
Agreement by the Company or the consummation by the Company of the transactions
contemplated hereby, except for (i) in connection or in
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compliance with the provisions of the Exchange Act, (ii) the filing of the
Certificate of Merger with the Secretary of State of the State of Delaware and
appropriate documents with the relevant authorities of other states in which the
Company is qualified to do business, (iii) such filings and consents, if any, as
may be required under any environmental, health or safety law or regulation
pertaining to any notification, disclosure or required approval triggered by the
Offer, the Merger or the transactions contemplated by this Agreement, (iv) such
filings and approvals as may be required under the Improvements Act, (v) such
filings in connection with any state or local tax which is attributable to the
beneficial ownership of the Company's or its Subsidiaries' real property, if any
(collectively, the "Gains Taxes"), (vi) such filings and approvals as may be
required by any applicable state securities or "blue sky" laws or state takeover
laws, (vii) such filings, consents, approvals, orders, registrations and
declarations as may be required under the laws of any foreign country in which
the Company or any of its subsidiaries conducts any business or owns any assets,
and (viii) such other consents, orders, authorizations, registrations,
approvals, declarations and filings the failure of which to be obtained or made
would not, individually or in the aggregate, have a Material Adverse Effect on
the Company, materially impair the ability of Company to perform its obligations
hereunder or prevent the consummation of any of the transactions contemplated
hereby.
Section 4.6 SEC DOCUMENTS. (a) Since July 1, 1993, the Company has
filed all documents with the SEC required to be filed under the Securities Act
of 1933, as amended (including the rules and regulations promulgated thereunder
the "Securities Act"), or the Exchange Act (such documents filed with the SEC on
or before September 8, 1995 being the "Company SEC Documents"). As of their
respective dates, (i) the Company SEC Documents complied in all material
respects with the requirements of the Securities Act or the Exchange Act, as the
case may be, and (ii) none of the Company SEC Documents 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. The Company has
delivered to Parent its draft Annual Report on Form 10-K for the fiscal year
ended June 30, 1995 (the "1995 Draft 10-K") including audited consolidated
balance sheets and statements of income, changes in stockholders' equity, and
cash flow and notes thereto as of and for the fiscal year ended June 30, 1995
(the "1995 Financial Statements"). The financial statements of the Company
included in the Company SEC Documents and the 1995 Financial Statements 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
therein or in the notes thereto) and fairly present the consolidated
-14-
financial position of the Company and its consolidated Subsidiaries as at the
dates thereof and the consolidated results of their operations and changes in
financial position for the periods then ended (subject, in the case of unaudited
statements, to normal year-end audit adjustments and to any other adjustments
described therein). The Form 10-K of the Company as of and for the fiscal year
ended June 30, 1995 to be filed by the Company with the SEC will not differ in
any material respect from the 1995 Draft 10-K.
(b) Except as set forth in the Company SEC Documents, the 1995 Draft
10-K, the 1995 Financial Statements or the Company Disclosure Letter, neither
the Company nor any of its Subsidiaries has any liability or obligation of any
nature (whether accrued, absolute, contingent or otherwise) which would be
required to be reflected on a balance sheet, or in the notes thereto, prepared
in accordance with generally accepted accounting principles, except for
liabilities and obligations incurred in the ordinary course of business
consistent with past practice since July 1, 1995 which would not, individually
or in the aggregate, have a Material Adverse Effect on the Company.
(c) The Company has heretofore made available or promptly will make
available to Parent a complete and correct copy of any amendments or
modifications which have not yet been filed with the SEC to agreements,
documents or other instruments which previously have been filed with the SEC
pursuant to the Exchange Act.
Section 4.7 OFFER DOCUMENTS AND PROXY STATEMENT. None of the
information supplied or to be supplied by the Company for inclusion or
incorporation by reference in the Offer Documents or the Schedule 14D-9, the
Information Statement, if any, the Proxy Statement, if any, or any amendment or
supplement thereto, will (i) in the case of the Offer Documents, the Schedule
14D-9 and the Information Statement, at the respective times such documents are
filed with the SEC or first published, sent or given to the Company's
stockholders, or (ii) in the case of the Proxy Statement, at the time of the
mailing of the Proxy Statement and at the time of the Stockholder 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 the light of the circumstances under which they are made, not
misleading. If at any time prior to the Effective Time any event with respect
to the Company, its officers and directors or any of its Subsidiaries should
occur which is required to be described in an amendment of, or a supplement to,
the Proxy Statement or the Offer Documents, such event shall be so described,
and such amendment or supplement shall be promptly filed with the SEC and, as
required by law, disseminated to the stockholders of the Company. The Proxy
Statement will comply as to form in all material respects with the requirements
of the Exchange Act.
Section 4.8 ABSENCE OF CERTAIN EVENTS. Since July 1, 1995, the
Company and its Subsidiaries have operated their respective businesses only in
the ordinary course
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consistent with past practice and, except as contemplated by this Agreement or
disclosed in the Company SEC Documents, the 1995 Draft 10-K, the 1995 Financial
Statements or the Company Disclosure Letter, there has not occurred (i) any
Material Adverse Change in the Company; (ii) any change by the Company or any of
its Subsidiaries in its accounting methods, principles or practices; (iii) any
amendments or changes in the Certificate of Incorporation or Bylaws of the
Company; (iv) any revaluation by the Company or any of its Subsidiaries of any
of their respective assets, including, without limitation, write-offs of
accounts receivable, other than in the ordinary course of the Company's and its
Subsidiaries' businesses consistent with past practices; (v) any damage,
destruction or loss with respect to the property or assets of the Company or its
Subsidiaries which resulted in, or is reasonably likely to result in, a Material
Adverse Effect on the Company; (vi) except for regular quarterly dividends of
$.15 per share declared and paid in accordance with past practice, any
declaration, setting aside or payment of any dividend or other distribution with
respect to any shares of capital stock of the Company, or any repurchase,
redemption or other acquisition by the Company or any of its Subsidiaries of any
outstanding shares of capital stock or other securities of, or other ownership
interests in, the Company; (vii) any grant of any severance or termination pay
to any director, executive officer or key employee of the Company or any of its
Subsidiaries, except as required under the severance agreements disclosed in the
Company Disclosure Letter pursuant to Section 4.12; (viii) any entry into any
employment, deferred compensation or other similar agreement (or any amendment
to any such existing agreement) with any director, executive officer or key
employee of the Company or any of its Subsidiaries; (ix) any increase in
benefits payable under any existing severance or termination pay policies or
employment agreements with any director, executive officer or key employee of
the Company or any of its Subsidiaries except in the ordinary course of business
consistent with past practice; or (x) any increase in compensation, bonus or
other benefits payable to directors, executive officers or key employees of the
Company or any of its Subsidiaries except in the ordinary course of business
consistent with past practice.
Section 4.9 LITIGATION. Except as set forth in the Company SEC
Documents, the 1995 Draft 10-K or the Company Disclosure Letter, there are no
actions, suits, proceedings, investigations or reviews pending against the
Company or its Subsidiaries or, to the knowledge of the Company, threatened
against the Company or its Subsidiaries, at law or in equity, or before or by
any federal or state commission, board, bureau, agency, regulatory or
administrative instrumentality or other Governmental Entity or any arbitrator or
arbitration tribunal, that are reasonably likely to have a Material Adverse
Effect on the Company.
Section 4.10 COMPLIANCE WITH APPLICABLE LAW. The Company and its
Subsidiaries hold all permits, licenses, variances, exceptions, orders and
approvals of all Governmental Entities necessary for the lawful conduct of their
respective businesses (the
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"Company Permits"), except for failures to hold such permits, licenses,
variances, exemptions, orders and approvals which do not, individually or in the
aggregate, have, and are not reasonably likely to have, a Material Adverse
Effect on the Company. The Company and its Subsidiaries are conducting their
businesses in compliance with the terms of the Company Permits, except where the
failure so to comply does not have a Material Adverse Effect on the Company.
Except for those matters referred to in Section 4.14, the businesses of the
Company and its Subsidiaries are not being, and have not been, conducted in
violation of any law, Company Permit, ordinance or regulation of any
Governmental Entity except for violations which, individually or in the
aggregate, do not and are not reasonably likely to have a Material Adverse
Effect on the Company.
Section 4.11 EMPLOYEE PLANS. (a) The Company and each Subsidiary
has complied with and performed all contractual obligations and all obligations
under applicable federal, state and local laws, rules and regulations required
to be performed by it under or with respect to any of the Company Benefit Plans
(as defined below) or any related trust agreement or insurance contract, other
than where the failure to so comply or perform does not have, nor is reasonably
likely to have, a Material Adverse Effect on the Company. All contributions and
other payments required to be made by the Company and its Subsidiaries to any
Company Benefit Plan prior to the date hereof have been made, other than where
the failure to so contribute or make payments will not have a Material Adverse
Effect on the Company, and all accruals required to be made under any Company
Benefit Plan have been made. There is no claim, dispute, grievance, charge,
complaint, restraining or injunctive order, litigation or proceeding pending,
or, to the best knowledge of the Company and its Subsidiaries, threatened or
anticipated (other than routine claims for benefits) against or relating to any
Company Benefit Plan or against the assets of any Company Benefit Plan, which is
reasonably likely to have a Material Adverse Effect on the Company. Neither the
Company nor any of its Subsidiaries has communicated generally to employees or
specifically to any employee regarding any future increase of benefit levels (or
future creations of new benefits) with respect to any Company Benefit Plan
beyond those reflected in the Company Benefit Plans, which benefit increases or
creations, either individually or in the aggregate, will have or are reasonably
likely to have, a Material Adverse Effect on the Company. Neither the Company
nor any of its Subsidiaries presently sponsors, maintains, contributes to, nor
is the Company or its Subsidiaries required to contribute to, nor has the
Company or any of its Subsidiaries ever sponsored, maintained, contributed to,
or been required to contribute to, any employee pension benefit plan within the
meaning of section 3(2) of the Employee Retirement Income Security Act of 1974,
as amended ("ERISA"), other than those plans described in note 7 to the
financial statements included in the 1995 Draft 10-K.
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(b) With respect to each Company Benefit Plan subject to Title IV of
ERISA, (i) no termination of any Company Benefit Plan has occurred pursuant to
which all liabilities have not been satisfied in full, and no event has occurred
and no condition exists that could reasonably be expected to result in the
Company or Subsidiary incurring a liability under Title IV of ERISA or could
constitute grounds for terminating any Pension Plan; (ii) each such Company
Benefit Plan which is subject to Part 3 of Subtitle B of Title I of ERISA or
Section 412 of the Code, has been maintained in compliance with the minimum
funding standards of ERISA and the Code and no such Company Benefit Plan has
incurred any "accumulated funding deficiency," as defined in Section 412 of the
Code and Section 302 of ERISA, whether or not waived; (iii) neither the Company
or any Subsidiary has sought or received a waiver of its funding requirements
with respect to any Company Benefit Plan and all contributions payable with
respect to each Pension Plan have been timely made; (iv) no reportable event,
within the meaning of Section 4043 of ERISA, and no event described in Section
4062 or 4063 of ERISA, has occurred with respect to any Company Benefit Plan;
and (v) the aggregate accumulated benefit obligations of each Company Benefit
Plan subject to Title IV of ERISA (as of the date of the most recent actuarial
valuation prepared for such Company Benefit Plan) do not exceed the fair market
value of the assets of such Company Benefit Plan (as of the date of such
valuation).
(c) Neither the Company nor any of its Subsidiaries has incurred, nor
has any event occurred which has imposed or is reasonably likely to impose upon
the Company or any of its Subsidiaries, any withdrawal liability (complete or
partial within the meanings of sections 4203 or 4205 of ERISA, respectively) in
respect of any multiemployer plan (within the meaning of section 3(37) or
4001(a)(3) of ERISA) (a "Multiemployer Plan"), which withdrawal liability has
not been satisfied or discharged in full or which, either individually or in the
aggregate, will cause, or is reasonably likely to cause, a Material Adverse
Effect on the Company.
(d) The execution, delivery and performance of this Agreement and
consummation of the transactions contemplated hereby will not result in the
imposition of any federal excise tax under section 4975 of the Code with respect
to any Company Benefit Plan by virtue of such Company Benefit Plan's
relationship with The ▇▇▇▇ ▇▇▇▇▇▇ Corporation or any of its subsidiaries (which
include the words "▇▇▇▇ ▇▇▇▇▇▇" in their name).
(e) Except as set forth in the Company Disclosure Letter, neither the
Company nor any Subsidiary maintains or contributes (or has maintained or
contributed to) any Company Benefit Plan which provides, or has a liability to
provide, life insurance, medical, severance, or other employee welfare benefit
to any employee upon his retirement or termination of employment, except as may
be required by Section 4980B of the Code.
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(f) (i) "Plan" means any bonus, incentive compensation, deferred
compensation, pension, profit sharing, retirement, stock purchase, stock option,
stock ownership, stock appreciation rights, phantom stock, leave of absence,
layoff, vacation, day or dependent care, legal services, cafeteria, life,
health, accident, disability, workers' compensation or other insurance,
severance, separation or other employee benefit plan, practice, policy or
arrangement of any kind, including, but not limited to, any "employee benefit
plan" within the meaning of section 3(3) of ERISA and (ii) "Company Benefit
Plan" means any employee pension benefit plan and any Plan, other than a
Multiemployer Plan, established by the Company or any of its Subsidiaries or to
which the Company or any of its Subsidiaries contributes or has contributed
(including any such Plans not now maintained by the Company or any of its
Subsidiaries or to which the Company or any of its Subsidiaries does not now
contribute, but with respect to which the Company or any of its Subsidiaries has
or may have any liability). Copies of all Plans (and, if applicable, related
trust agreements) and all amendments thereto and written interpretations thereof
and the most recent Forms 5500 required to be filed with respect thereto will be
promptly furnished to Parent after the date of this Agreement. The Company
Disclosure Letter sets forth each Plan with respect to which benefits will be
accelerated, vested, increased or paid as a result of the transactions
contemplated by this Agreement.
Section 4.12 EMPLOYMENT RELATIONS AND AGREEMENT. (a) Except as
would not constitute a Material Adverse Effect on the Company, (i) each of the
Company and its Subsidiaries is in compliance in all material respects with all
federal, state or other applicable laws respecting employment and employment
practices, terms and conditions of employment and wages and hours; (ii) as of
the date of this Agreement, there is no labor strike, dispute, slowdown or
stoppage actually pending or, to the best knowledge of the Company or its
Subsidiaries, threatened against or involving the Company or any of its
Subsidiaries; (iii) no collective bargaining agreement is being negotiated as of
the date of this Agreement by the Company or any of its Subsidiaries; and (iv)
the Company and its Subsidiaries taken as a whole have not experienced any
material labor difficulty during the last three years.
(b) Except as set forth in the Company Disclosure Letter, neither the
Company nor any of its Subsidiaries has any written, or to the knowledge of the
Company, any binding oral, employment, severance, "change of control",
collective bargaining or similar agreements ("Employment Agreements"). Copies
of all Employment Agreements and all amendments thereto have been previously
furnished to Parent.
Section 4.13 LIMITATION ON BUSINESS CONDUCT. Except as set forth in
the Company Disclosure Letter, neither the Company nor its Subsidiaries is a
party to, or has any obligation under, any contract or agreement, written or
oral, which contains any covenants currently or prospectively limiting in any
material respect the freedom of the
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Company or any of its Subsidiaries to engage in any line of business or to
compete with any entity.
Section 4.14 ENVIRONMENTAL LAWS AND REGULATIONS. (a) The Company and
its Subsidiaries are in compliance with all applicable Environmental Laws,
except as otherwise disclosed in the Company SEC Documents, the 1995 Draft 10-K
or the Company Disclosure Letter and except for non-compliance which
individually or in the aggregate would not have a Material Adverse Effect on the
Company. The term "Environmental Laws" means any federal, state, local or
foreign statute, ordinance, rule, regulation, policy, permit, consent, approval,
license, judgment, order, decree, injunction or other authorization, relating
to: (A) pollution or protection of human health or safety, health or safety of
employees, sanitation, or the environment (including, without limitation,
ambient air, surface water, ground water, land surface or subsurface strata),
(B) Releases (as defined in 42 U.S.C. Section 9601(22)) or threatened Releases
of Hazardous Material (as hereinafter defined) into the environment or (C) the
generation, treatment, storage, disposal, use, handling, manufacturing,
transportation or shipment of Hazardous Material.
(b) During the period of ownership or operation by the Company and
its Subsidiaries of any of their respective current or previously owned or
leased properties, there have been no Releases of Hazardous Material in, on,
under or affecting such properties or any surrounding site, and none of the
Company or its Subsidiaries has disposed of any Hazardous Material or any other
substance in a manner that has led, or could reasonably be anticipated to lead,
to a Release, except as otherwise disclosed in the Company SEC Documents, the
1995 Draft 10-K or the Company Disclosure Letter and except in each case for
those which individually or in the aggregate are not reasonably likely to have a
Material Adverse Effect on the Company. Except as disclosed in the Company SEC
Documents, the 1995 Draft 10-K, the 1995 Financial Statements or the Company
Disclosure Letter, neither the Company nor its Subsidiaries has received any
notice that it is a "potentially responsible person" under any Environmental
Laws. The term "Hazardous Material" means any pollutants, contaminants,
hazardous substances, hazardous chemicals, toxic substances, hazardous wastes,
infectious and medical wastes, radioactive materials, petroleum (including crude
oil or any fraction thereof), natural gas, synthetic gas and mixtures thereof,
PCBs, or materials containing PCBs in excess of 50 ppm, asbestos and/or
asbestos-containing materials or solid wastes, including but not limited to
those defined in any Environmental Law and all regulations promulgated under
each and all amendments thereto, or any other federal, state or local
environmental law, ordinance, regulations, rule or order.
Section 4.15 PATENTS, TRADEMARKS, COPYRIGHTS. Except as set forth
in the Company Disclosure Letter, the Company or its Subsidiaries own or possess
adequate licenses or other valid rights to use all material patents, patent
rights, trademarks,
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trademark rights, trade names, trade name rights, copyrights, know-how and other
proprietary information used or held for use in connection with the business of
the Company or any of its Subsidiaries as currently being conducted and, to the
knowledge of the Company, there are no assertions or claims challenging the
validity of any of the foregoing, except where the failure to own or possess, or
where such assertions or claims, would not have a Material Adverse Effect on the
Company.
Section 4.16 TAKEOVER STATUTES. The Board of Directors of the
Company has taken all appropriate action so that neither Parent nor Sub will be
an "interested stockholder" within the meaning of Section 203 of the DGCL or
Article Tenth of the Company's Certificate of Incorporation by virtue of
Parent's or Sub's entry into this Agreement and the consummation of the
transactions contemplated hereunder.
Section 4.17 ACQUIRING PERSON. The Company has taken all necessary
actions to ensure that, for the purposes of the Rights Agreement of the Company
dated as of January 20, 1988, as amended June 24, 1988 and September 12, 1995
(the "Company Rights Agreement"), neither Parent nor Sub will become an
"Acquiring Person", the execution of this Agreement does not, and the
commencement or consummation of the Offer, the Merger and the other transactions
contemplated hereunder (including a tender offer by Parent or Sub at a higher
cash price per share for all outstanding shares of Common Stock and associated
Rights pursuant to this Agreement), will not result in the grant of any rights
to any person under the Company Rights Agreement or enable or require any
outstanding rights to be exercised, distributed or triggered, and that the
Rights (as defined in the Company Rights Agreement) will expire without any
further force or effect as of the Effective Time. This Agreement, the Offer and
the Merger have been duly approved by the "Continuing Directors" (as defined in
the Company Rights Agreement) in resolutions specifically referring to, INTER
ALIA, Subsection 1(a) of the Company Rights Agreement. Other than Parent or Sub
(and their affiliates), the Company (or its Board of Directors) has not exempted
(or taken any other action tantamount to exempting) any person or entity from
the potential application of the Company Rights Agreement, except that Okabe
Company Ltd. ("Okabe") and its affiliates are permitted to beneficially own up
to 21% of the outstanding shares of Common Stock without triggering the
potential application of the Company Rights Agreement.
Section 4.18 TAXES. Except as set forth in the Company Disclosure
Letter, (i) the Company and each Subsidiary have filed all material Tax Returns
required to have been filed on or before the date hereof, which returns are true
and complete in all material respects and all Taxes shown due thereon have been
paid; (ii) no issues that have been raised in writing by the relevant taxing
authority in connection with the examination of the Tax Returns referred to in
clause (i) are currently pending; and (iii) all deficiencies asserted or
assessments made as a result of any examination of the Tax Returns referred to
in clause (i) by a taxing authority have been paid in full or are being
contested in good
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faith by the Company or such Subsidiary. For purposes of this Agreement (a)
"Tax" (and, with correlative meaning, "Taxes" and "Taxable") means any federal,
state, local or foreign income, gross receipts, property, sales, use, license,
excise, franchise, employment, payroll, premium, withholding, alternative or
added minimum, ad valorem, transfer or excise tax, or any other tax, custom,
duty, governmental fee or other like assessment or charge of any kind
whatsoever, together with any interest or penalty, imposed by any governmental
authority, and (b) "Tax Return" means any return, report or similar statement
required to be filed with respect to any Tax (including any attached schedules),
including, without limitation, any information return, claim for refund, amended
return or declaration of estimated Tax.
Section 4.19 BROKERS. No broker, investment banker or other person,
other than The Chicago Dearborn Company, the fees and expenses of which will be
paid by the Company, is entitled to any broker's, finder's or other similar fee
or commission in connection with the transactions contemplated by this Agreement
based upon arrangements made by or on behalf of the Company. A copy of the
engagement letter between The Chicago Dearborn Company and the Company setting
forth the fees and expenses to be paid by the Company in connection with the
transactions contemplated by this Agreement has been provided to Parent, and
does not bind Parent and its Subsidiaries (including, after consummation of the
Offer, the Company and its Subsidiaries) other than with respect to
indemnification and contribution and the payment of such fees and expenses.
ARTICLE V
REPRESENTATIONS AND WARRANTIES REGARDING SUB
Parent and Sub jointly and severally represent and warrant to the
Company as follows:
Section 5.1 ORGANIZATION AND STANDING. Sub is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware. Sub was organized solely for the purpose of acquiring the Company and
engaging in the transactions contemplated by this Agreement and has not engaged
in any business since it was incorporated which is not in connection with the
acquisition of the Company and this Agreement.
Section 5.2 CAPITAL STRUCTURE. The authorized capital stock of Sub
consists of 1,000 shares of common stock, par value $1.00 per share, all of
which are validly issued and outstanding, fully paid and nonassessable and are
owned by Parent free and clear of all Liens.
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Section 5.3 AUTHORITY; NON-CONTRAVENTION. Sub has the requisite
power and authority to enter into this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement,
the performance by Sub of its obligations hereunder and the consummation of the
transactions contemplated hereby have been duly authorized by its Board of
Directors and Parent as its sole stockholder, and, except for the corporate
filings required by state law, no other corporate proceedings on the part of Sub
are necessary to authorize this Agreement and the transactions contemplated
hereby. This Agreement has been duly and validly executed and delivered by Sub
and (assuming the due authorization, execution and delivery hereof by the
Company) constitutes a valid and binding obligation of Sub enforceable against
Sub in accordance with its terms.
ARTICLE VI
COVENANTS RELATING TO CONDUCT OF BUSINESS
Section 6.1 CONDUCT OF BUSINESS BY THE COMPANY PENDING THE MERGER.
Except as otherwise expressly contemplated by this Agreement or as set forth in
the Company Disclosure Letter, during the period from the date of this Agreement
through the earlier of the time that the change in composition of the Board of
Directors of the Company contemplated by Section 7.10 has occurred and the
Effective Time, the Company shall, and shall cause its Subsidiaries (except with
respect to the Company's 50% joint venture with Nagoya Screw Manufacturing Co.
Ltd. (the "Joint Venture"), in which case the Company shall use all reasonable
efforts to cause the Joint Venture) to, in all material respects carry on their
respective businesses in, and not enter into any material transaction other than
in accordance with, the regular and ordinary course and, to the extent
consistent therewith, use its reasonable best efforts to preserve intact their
current business organizations, keep available the services of their current
officers and employees and preserve their relationships with customers,
suppliers and others having business dealings with them. Without limiting the
generality of the foregoing, and except as otherwise expressly contemplated by
this Agreement (including the time period specified above) or as set forth in
the Company Disclosure Letter, the Company shall not, and shall not permit any
of its Subsidiaries (except with respect to the Joint Venture, in which case the
Company shall use all reasonable efforts to cause the Joint Venture not) to,
without the prior written consent of Parent:
(a) (x) declare, set aside or pay any dividends on, or make any
other actual, constructive or deemed distributions in respect of, any
of its capital stock, or otherwise make any payments to stockholders
of the Company in their capacity as such, other than (1) quarterly
dividends of $.15 per share declared and payable consistent with past
practices and
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(2) dividends payable to the Company declared by any of the Company's
Subsidiaries, (y) split, combine or reclassify any of its capital stock
or issue or authorize the issuance of any other securities in respect of,
in lieu of or in substitution for shares of its capital stock or (z)
purchase, redeem or otherwise acquire any shares of capital stock of the
Company or any of its Subsidiaries or any other securities thereof or any
rights, warrants or options to acquire any such shares or other
securities;
(b) issue, deliver, sell, pledge, dispose of or otherwise
encumber any shares of its capital stock, any other voting securities
or equity equivalent or any securities convertible into, or any
rights, warrants or options to acquire, any such shares, voting
securities or convertible securities or equity equivalent (other than,
in the case of the Company, the issuance of Common Stock during the
period from the date of this Agreement through the Effective Time upon
the exercise of Company Stock Options outstanding (as set forth in
Section 4.2) on the date of this Agreement in accordance with their
current terms);
(c) amend or change its charter or bylaws or amend, change or
waive (or exempt any person or entity from the effect of) the Company
Rights Agreement, except in connection with the exercise of its
fiduciary duties by the Board of Directors of the Company as set forth
in Section 6.2 of this Agreement;
(d) acquire or agree to acquire by merging or consolidating
with, or by purchasing a substantial portion of the assets of or
equity in, or by any other manner, any business or any corporation,
partnership, association or other business organization or division
thereof or otherwise acquire or agree to acquire any assets, in each
case that are material, individually or in the aggregate, to the
Company and its Subsidiaries taken as a whole, except for purchases of
inventory in the ordinary course of business consistent with past
practice;
(e) sell, lease or otherwise dispose of, or agree to sell, lease
or otherwise dispose of, any of its assets that are material,
individually or in the aggregate, to the Company and its Subsidiaries
taken as a whole, except sales of inventory in the ordinary course of
business consistent with past practice;
(f) make any commitment or enter into any contract or agreement
except (x) in the ordinary course of business consistent with past
practice or
-24-
(y) for capital expenditures to be made in fiscal 1996 as identified in the
Company's Capital Expenditure Budget previously delivered to Parent;
(g) incur any indebtedness for borrowed money or guarantee any
such indebtedness or issue or sell any debt securities or guarantee
any debt securities of others, except for borrowings or guarantees
incurred in the ordinary course of business consistent with past
practice, or make any loans, advances or capital contributions to, or
investments in, any other person, other than to the Company or any
wholly owned Subsidiary of the Company and other than in the ordinary
course of business consistent with past practice;
(h) alter through merger, liquidation, reorganization,
restructuring or in any other fashion the corporate structure or
ownership of any Subsidiary of the Company;
(i) except as may be required as a result of a change in law or
in generally accepted accounting principles, change any of the
accounting principles or practices used by it;
(j) revalue any of its assets, including, without limitation,
writing down the value of its inventory or writing off notes or
accounts receivable, other than in the ordinary course of business;
(k) make any tax election or settle or compromise any material
income tax liability;
(l) settle or compromise any pending or threatened suit, action
or claim relating to the transactions contemplated hereby;
(m) pay, discharge or satisfy any claims, liabilities or
obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise), other than the payment, discharge or satisfaction in the
ordinary course of business of liabilities reflected or reserved
against in, or contemplated by, the financial statements (or the notes
thereto) of the Company or incurred in the ordinary course of business
consistent with past practice;
(n) increase in any manner the compensation or fringe benefits
of any of its directors, officers and other key employees or pay any
pension or retirement allowance not required by any existing plan or
agreement to any such employees, or become a party to, amend or commit
itself to any pension, retirement, profit-sharing or welfare benefit
plan or agreement or employment agreement with or for the benefit of
any employee, other than
-25-
increases in the compensation of employees who are not officers or
directors of the Company made in the ordinary course of business consistent
with past practice, or (except pursuant to the terms of preexisting plans
or agreements) accelerate the vesting of any compensation or benefit;
(o) except in connection with the exercise of its fiduciary
duties by the Board of Directors of the Company as set forth in
Section 6.2, waive, amend or allow to lapse any term or condition of
any confidentiality or "standstill" agreement to which the Company or
any Subsidiary is a party; or
(p) take, or agree in writing or otherwise to take, any of the
foregoing actions or any action which would make any of the
representations or warranties of the Company contained in this
Agreement untrue or incorrect as of the date when made.
Section 6.2 ACQUISITION PROPOSALS. From and after the date of this
Agreement and prior to the Effective Time, except as provided below, the Company
agrees (a) that neither the Company nor its Subsidiaries shall, and the Company
shall direct and use its reasonable best efforts to cause its officers,
directors, employees and authorized agents and representatives (including,
without limitation, any investment banker, attorney or accountant retained by it
or any of its Subsidiaries) not to, initiate, solicit or encourage, directly or
indirectly, any inquiries or the making or implementation of any proposal or
offer (including, without limitation, any proposal or offer to its stockholders)
with respect to a merger, acquisition, consolidation or similar transaction
involving, or any purchase of, any equity securities or all or any significant
portion of the assets of, the Company or its Subsidiaries (any such proposal or
offer being hereinafter referred to as an "Acquisition Proposal") or engage in
any negotiations concerning, or provide any confidential information or data to,
or have any discussions with, any person or entity relating to an Acquisition
Proposal, or otherwise facilitate any effort or attempt to make or implement an
Acquisition Proposal; (b) that it will immediately cease and cause to be
terminated any existing activities, discussions or negotiations with any person
or entity conducted heretofore with respect to any of the foregoing and will
take the necessary steps to inform the person or entity referred to above of the
obligations undertaken in this Section 6.2; and (c) that it will notify Parent
immediately if any such inquiries or proposals are received by, any such
information is requested from, or any such negotiations or discussions are
sought to be initiated or continued with, it, but need not disclose the identity
of the other party or the terms of its proposals; PROVIDED, HOWEVER, that
nothing contained in this Section 6.2 shall prohibit the Board of Directors of
the Company from (i) furnishing information to, or entering into discussions or
negotiations with, any person or entity that makes an unsolicited bona fide
proposal in writing to engage in an Acquisition Proposal transaction which the
Board of Directors of
-26-
the Company in good faith determines represents a financially superior
transaction for the stockholders of the Company as compared to the Offer and the
Merger if, and only to the extent that, (A) the Board of Directors determines,
after consultation with Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇, that failure to
take such action would be inconsistent with the compliance by the Board of
Directors with its fiduciary duties to stockholders imposed by law, (B) prior to
or concurrently with furnishing such information to, or entering into
discussions or negotiations with, such a person or entity, the Company provides
written notice to Parent to the effect that it is furnishing information to, or
entering into discussions or negotiations with, such a person or entity, and (C)
the Company keeps Parent informed of the status (including the identity of such
person or entity and terms of any proposal) of any such discussions or
negotiations; and (ii) to the extent applicable, complying with Rule 14e-2
promulgated under the Exchange Act with regard to an Acquisition Proposal.
Nothing in this Section 6.02 shall (x) permit the Company to terminate this
Agreement, (y) permit the Company to enter into any agreement with respect to an
Acquisition Proposal during the term of this Agreement, or (z) affect any other
obligation of any party under this Agreement.
Section 6.3 ANNUAL MEETING OF STOCKHOLDERS. The Company shall
defer and/or postpone the holding of its Annual Meeting of Stockholders (the
"Company Annual Meeting") indefinitely pending consummation of the Merger unless
the Company is otherwise required to hold the Company Annual Meeting by an order
from a court of competent jurisdiction.
Section 6.4 CONDUCT OF BUSINESS OF SUB PENDING THE MERGER. During
the period from the date of this Agreement through the Effective Time, Sub shall
not engage in any activities of any nature except as provided in or contemplated
by this Agreement.
ARTICLE VII
ADDITIONAL AGREEMENTS
Section 7.1 COMPANY STOCKHOLDER APPROVAL; PROXY STATEMENT. (a) If
approval or action in respect of the Merger by the stockholders of the Company
is required by applicable law, the Company shall (i) if appropriate, call a
meeting of its stockholders (the "Stockholder Meeting") for the purpose of
voting upon the Merger and shall use its reasonable best efforts to obtain
stockholder approval of the Merger, (ii) hold the Stockholder Meeting as soon as
practicable following the purchase of shares of Common Stock pursuant to the
Offer, and (iii) recommend to its stockholders the approval of the Merger
through its Board of Directors, but subject in each case to the fiduciary duties
of its Board of Directors under applicable law as determined by the Board of
Directors in good faith after consultation with Skadden, Arps, Slate, ▇▇▇▇▇▇▇ &
▇▇▇▇.
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The record date for the Stockholder Meeting shall be a date subsequent to the
date Parent or Sub becomes a record holder of Common Stock purchased pursuant to
the Offer.
(b) If required by applicable law, the Company will, as soon as
practicable following the expiration of the Offer, prepare and file a
preliminary Proxy Statement or, if applicable, an Information Statement with the
SEC with respect to the Stockholder Meeting and will use its reasonable best
efforts to respond to any comments of the SEC or its staff and to cause the
Proxy Statement to be cleared by the SEC. The Company will notify Parent of the
receipt of any comments from the SEC or its staff and of any request by the SEC
or its staff for amendments or supplements to the Proxy Statement or for
additional information and will supply Parent with copies of all correspondence
between the Company or any of its representatives, on the one hand, and the SEC
or its staff, on the other hand, with respect to the Proxy Statement or the
Merger. The Company shall give Parent and its counsel the opportunity to review
the Proxy Statement prior to its being filed with the SEC and shall give Parent
and its counsel the opportunity to review all amendments and supplements to the
Proxy Statement and all responses to requests for additional information and
replies to comments prior to their being filed with, or sent to, the SEC. Each
of the Company and Parent agrees to use its reasonable best efforts, after
consultation with the other parties hereto, to respond promptly to all such
comments of and requests 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. If at any time prior to the
approval of this Agreement by the Company's stockholders there shall occur any
event that should be set forth in an amendment or supplement to the Proxy
Statement, the Company will prepare and mail to its stockholders such an
amendment or supplement.
(c) The Company shall use its reasonable best efforts to obtain the
necessary approvals by its stockholders of the Merger, this Agreement and the
transactions contemplated hereby.
(d) Parent agrees, subject to applicable law, to cause all shares of
Common Stock purchased pursuant to the Offer and all other shares of Common
Stock owned by Sub or any other Subsidiary or affiliate of Parent to be voted in
favor of the approval of the Merger.
Section 7.2 ACCESS TO INFORMATION; CONFIDENTIALITY. The Company
shall, and shall cause each of its Subsidiaries to, afford to Parent, and to
Parent's accountants, counsel, financial advisers and other representatives,
reasonable access and permit them to make such inspections as they may
reasonably require during normal business hours during the period from the date
of this Agreement through the Effective Time to all their respective properties,
books, contracts, commitments and records and, during such period, the Company
shall, and shall cause each of its Subsidiaries to, furnish promptly to Parent
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(i) a copy of each report, schedule, registration statement and other document
filed by it during such period pursuant to the requirements of federal or state
laws and (ii) all other information concerning its business, properties and
personnel as Parent may reasonably request. Except as required by Section 6.2,
the Company shall not be required to supply to Parent, or to Parent's
accountants, counsel, financial advisors or other representatives, any
information relating to indications of interest from, or discussions with, any
other potential acquirors of the Company which were received or conducted prior
to the date hereof, except to the extent necessary for use in the Offer
Documents, the Schedule 14D-9 and the Proxy Statement. The Confidentiality
Agreement shall remain in effect, except as modified as contemplated by this
Agreement.
Section 7.3 FEES AND EXPENSES. (a) Whether or not the Merger is
consummated, all costs and expenses incurred in connection with this Agreement
and the transactions contemplated hereby shall be paid by the party incurring
such costs and expenses.
(b) The Company agrees that if this Agreement is terminated pursuant
to (i) Section 9.1(d)(i) or (iv) and at the time of such termination (x) the
Minimum Condition has not been satisfied and (y) an Acquisition Proposal
existed; (ii) Section 9.1(b)(ii); (iii) Section 9.1(c) and at the time of such
termination an Acquisition Proposal existed; or (iv) Section 9.1(a) or Section
9.1(d)(i) and at the time of such termination any person, entity or group (as
defined in Section 13(d)(3) of the Exchange Act) (other than Parent or any of
its affiliates) shall have become the beneficial owner of more than 20% of the
outstanding shares of Common Stock and such person, entity or group (or any
affiliate of such person, entity or group) thereafter shall consummate an
Acquisition Proposal at any time on or prior to the date which is six months
after such termination of this Agreement with a value per share of Common Stock
of at least $36.00 (with appropriate adjustments for reclassifications of
capital stock, stock dividends, stock splits, reverse stock splits and similar
events), then the Company shall pay to Parent the sum of (a) $5 million, plus
(b) the amount of all documented costs and expenses (not to exceed $2.5 million)
incurred by Parent, Sub or their affiliates in connection with this Agreement or
the transactions contemplated hereby. Such payment shall be made as promptly as
practicable but in no event later than two business days following termination
of this Agreement pursuant to the immediately preceding sentence, or, in the
case of clause (iv) of the immediately preceding sentence, upon consummation of
such Acquisition Proposal, and shall be made by wire transfer of immediately
available funds to an account designated by Parent. If the Company fails to pay
such amount when due in accordance with the immediately preceding sentence,
Parent shall be entitled to the payment from the Company, in addition to such
amount, of any legal fees and expenses incurred in collecting such amount and
interest thereon at the rate of 10% per annum.
-29-
Section 7.4 COMPANY STOCK OPTIONS. (a) The Company shall (i)
terminate the Stock Plans immediately prior to the Effective Time without
prejudice to the holders of Company Stock Options (as hereinafter defined) and
(ii) grant no additional Company Stock Options after the date hereof.
(b) At the Effective Time (i) each outstanding option to purchase
shares of Common Stock (including options granted to directors of the Company,
each, a "Company Stock Option") granted under the Stock Plans, whether or not
exercisable, and whether or not vested, shall become fully exercisable and
vested and (ii) each Company Stock Option which is then outstanding shall be
canceled. In consideration of such cancellation, the Surviving Corporation shall
deliver on or promptly after the Effective Time to each holder thereof cash in
an amount per share subject to such canceled Company Stock Option equal to the
excess of the Merger Consideration over the exercise price per share of such
Company Stock Option. The Company shall use its best efforts to cause each
holder of a Company Stock Option to execute an agreement with the Company, prior
to the Effective Time, consenting to the payment described in the preceding
sentence as consideration for the cancellation of any Company Stock Options held
by such holder. No payment shall be made by the Surviving Corporation with
respect to any Company Stock Option having an exercise price equal or greater
than the Merger Consideration. The committee that administers each of the Stock
Plans shall determine and take all necessary action so that the right to receive
the cash consideration referred to in this Section 7.4(b) shall be the only
right of each holder of a Company Stock Option on and after the Effective Time.
Section 7.5. PERFORMANCE SHARES. (a) The Company shall (i)
terminate the Company's 1988 Performance Share Plan (the "Performance Share
Plan") immediately prior to the Effective Time and without prejudice to the
holders of Performance Shares (as defined in the Performance Share Plan) and
(ii) grant no additional Performance Shares from and after the date hereof.
(b) At the Effective Time, all outstanding Performance Shares shall
be cancelled and all Performance Awards (as defined in the Performance Share
Plan) shall be deemed 100 percent earned for the relevant Performance Period and
shall be paid in cash by the Surviving Corporation as soon as practicable after
the Effective Time.
Section 7.6 REASONABLE BEST EFFORTS. Upon the terms and subject to
the conditions set forth in this Agreement, each of the parties agrees to use
its reasonable best efforts to take, or cause to be taken, all actions
(including entering into transactions), and to do, or cause to be done, and to
assist and cooperate with the other parties in doing, all things necessary,
proper or advisable to consummate and make effective, in the most expeditious
manner practicable, the Merger, and the other transactions contemplated by this
Agreement, including (a) the prompt making of their respective filings and
thereafter
-30-
the making of any other required submission under the Improvements Act with
respect to the Offer and the Merger, (b) the obtaining of all additional
necessary actions or non-actions, waivers, consents and approvals from
Governmental Entities and the making of all necessary registrations and filings
(including filings with Governmental Entities) and the taking of all reasonable
steps as may be necessary to obtain an approval or waiver from any Governmental
Entity, (c) the obtaining of all necessary consents, approvals or waivers from
third parties, (d) the defending of any lawsuits or other legal proceedings,
whether judicial or administrative, challenging this Agreement or the
consummation of the transactions contemplated hereby, including seeking to have
any stay or temporary restraining order entered by any court or other
Governmental Entity vacated or reversed, and (e) the execution and delivery of
any additional instruments necessary to consummate the transactions contemplated
by this Agreement; PROVIDED, HOWEVER, that neither Parent, Sub nor the Company
shall be required to take any action pursuant to clauses (b), (c), (d) or (e)
above that would in any event have a Material Adverse Effect on either Parent or
the Company; and PROVIDED, FURTHER, HOWEVER, that neither Parent, Sub nor any of
their affiliates shall be required to enter into any transaction or take any
other action that would require a waiver of, or that is inconsistent with
satisfaction of, the conditions of the Offer set forth in clauses (a)(iii), (iv)
or (v) in Exhibit A hereto.
Section 7.7 PUBLIC ANNOUNCEMENTS. Parent and Sub, on the one hand,
and the Company, on the other hand, will consult with each other before issuing
any press release or otherwise making any public statements with respect to the
transactions contemplated by this Agreement, and shall not issue any such press
release or make any such public statement prior to such consultation, except as
may be required by applicable law or by obligations pursuant to any listing
agreement with any national securities exchange.
Section 7.8 INDEMNIFICATION; DIRECTORS AND OFFICERS INSURANCE. (a)
From and after the Effective Time, Parent agrees to, and to cause the Surviving
Corporation to, indemnify and hold harmless all past and present officers,
directors, employees and agents (the "Indemnified Parties") of the Company and
of its Subsidiaries to the full extent such persons may be indemnified by the
Company pursuant to the Company's Certificate of Incorporation and Bylaws as in
effect as of the date hereof for acts and omissions occurring at or prior to the
Effective Time and shall advance reasonable litigation expenses incurred by such
persons in connection with defending any action arising out of such acts or
omissions, provided that such persons provide the requisite affirmations and
undertaking, as set forth in the Company's Bylaws as in effect prior to the
Effective Time.
(b) Any Indemnified Party will promptly notify Parent and the
Surviving Corporation of any claim, action, suit, proceeding or investigation
for which such party may seek indemnification under this Section; PROVIDED,
HOWEVER, that the failure to
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furnish any such notice shall not relieve Parent or the Surviving Corporation
from any indemnification obligation under this Section except to the extent
Parent or the Surviving Corporation is prejudiced thereby. In the event of any
such claim, action, suit, proceeding, or investigation, (x) the Surviving
Corporation will have the right to assume the defense thereof, and the Surviving
Corporation will not be liable to such Indemnified Parties for any legal
expenses of other counsel or any other expenses subsequently incurred thereafter
by such Indemnified Parties in connection with the defense thereof, except that
all Indemnified Parties (as a group) will have the right to retain one separate
counsel, reasonably acceptable to such Indemnified Party and Parent, at the
expense of the indemnifying party if the named parties to any such proceeding
include both the Indemnified Party and the Surviving Corporation and the
representation of such parties by the same counsel would be inappropriate due to
a conflict of interest between them, (y) the Indemnified Parties will cooperate
in the defense of any such matter, and (z) the Surviving Corporation will not be
liable for any settlement effected without its prior written consent. In
addition, Parent will provide, or cause the Surviving Corporation to provide,
for a period of not less than six years after the Effective Time, the Company's
current directors and officers an insurance and indemnification policy that
provides coverage for events occurring at or prior to the Effective Time (the
"D&O Insurance") that is no less favorable than the existing policy or, if
substantially equivalent insurance coverage is unavailable, the best available
coverage; PROVIDED, HOWEVER, that Parent and the Surviving Corporation shall not
be required to pay an annual premium for the D&O Insurance in excess of
$105,000, but in such case shall purchase as much such coverage as possible for
such amount.
(c) This Section 7.8 is intended to benefit the Indemnified Parties
and shall be binding on all successors and assigns of Parent, Sub, the Company
and the Surviving Corporation. Parent hereby guarantees the performance by the
Surviving Corporation of the indemnified obligations pursuant to this Section
7.8.
Section 7.9 EMPLOYEES. (a) To the extent permitted by law, for a
period of one year following the Effective Time, Parent shall cause the
Surviving Corporation to provide the current and former non-union employees of
the Company and its Subsidiaries employee benefits no less favorable, in
aggregate value, than those provided by the Company on the date hereof to those
employees, it being understood that (i) neither Parent nor the Surviving
Corporation will be obligated to provide an employee stock ownership plan to
such employees or to continue any one or more of such benefits, (ii) that for
purposes of this Section 7.9 "employee benefits" include benefits provided under
any "employee benefit plan" (as defined under section 3(3) of ERISA) of the
Company and its Subsidiaries but do not include benefits or compensation
provided under the Individual Agreements referenced in Section 7.9(b) herein,
and (iii) neither Parent nor the Surviving Corporation will be obligated to
provide any benefits which are payable pursuant to a "change in control", except
as otherwise provided in this Agreement.
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(b) Parent and the Surviving Corporation hereby agree to honor
(without modification) and assume the employment agreements, severance
agreements and individual benefit arrangements listed on the Company Disclosure
Letter, all as in effect at the Effective Time (the "Individual Agreements"),
but neither Purchaser nor Surviving Corporation shall have any obligation to
enter into any new or replacement employment agreements, severance agreements,
or individual benefit agreements with any employee, officer or director. The
Surviving Corporation shall pay for customary out placement services to any
executive officer of the Company whose employment is terminated by the Surviving
Corporation and who is entitled to payments under an existing severance
agreement, on the same basis as out placement services are provided to executive
officers of the Parent or its Subsidiaries of a comparable level.
Section 7.10 BOARD REPRESENTATION. (a) Promptly upon the purchase
of shares of Common Stock pursuant to the Offer, Parent 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 Parent, subject to compliance
with Section 14(f) of the Exchange Act, representation on the Board of Directors
equal to the product of (a) the total number of directors on the Board of
Directors and (b) the percentage that the number of shares of Common Stock
purchased by Parent bears to the number of shares of Common Stock outstanding,
and the Company shall, upon request by Parent, promptly increase the size of the
Board of Directors and/or exercise its reasonable best efforts to secure the
resignations of such number of directors as is necessary to enable Parent's
designees to be elected to the Board of Directors and shall cause Parent's
designees to be so elected. The Company shall take, at its expense, all action
required pursuant to Section 14(f) and Rule 14f-1 in order to fulfill its
obligations under this Section 7.10 and shall include in the Schedule 14D-9 or
otherwise timely mail to its stockholders such information with respect to the
Company and its officers and directors as is required by Section 14(f) and Rule
14f-1 in order to fulfill its obligations under this Section 7.10. Parent will
supply to the Company in writing and be solely responsible for any information
with respect to itself and its nominees, officers, directors and affiliates
required by Section 14(f) and Rule 14f-1.
(b) Following the election of designees of Sub pursuant to this
Section 7.10, prior to the Effective Time, any amendment of this Agreement or
the Certificate of Incorporation or By-Laws of the Company, any termination of
this Agreement by the Company, any extension by the Company of the time for the
performance of any of the obligations or other acts of Parent or Sub or waiver
of any of the Company's rights hereunder shall require the concurrence of a
majority of the directors of the Company then in office who are directors as of
the date hereof or persons designated by such directors and neither were
designated by Sub nor are employees of the Company ("CONTINUING DIRECTORS").
Prior to the Effective Time, the Company and Sub shall use all
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reasonable efforts to ensure that the Company's Board of Directors at all times
includes at least three Continuing Directors.
Section 7.11 NOTIFICATION OF CERTAIN MATTERS. The Company shall
give prompt notice to Parent and Sub, and Parent and Sub shall give prompt
notice to the Company, of (i) the occurrence or nonoccurrence of any event the
occurrence or nonoccurrence of which would be likely to cause any representation
or warranty contained in this Agreement to be untrue or inaccurate in any
material respect at or prior to the Effective Time and (ii) any material failure
of the Company, Parent or Sub, as the case may be, to comply with or satisfy any
covenant, condition or agreement to be complied with or satisfied by it
hereunder; provided, that the delivery of any notice pursuant to this Section
7.10 shall not cure such breach or non-compliance or limit or otherwise affect
the remedies available hereunder to the party receiving such notice.
Section 7.12 OKABE. The Company shall use its reasonable efforts to
encourage Okabe Company Limited to tender its shares of Common Stock to Sub in
the Offer.
Section 7.13 NAGOYA NOTIFICATION. Promptly following the date
hereof, the Company shall notify Nagoya Screw Manufacturing Co. Ltd. ("Nagoya")
of the transactions contemplated by this Agreement in accordance with
Section 6.2 of the Joint Venture Agreement dated as of June 14, 1989 between the
Company and Nagoya.
ARTICLE VIII
CONDITIONS PRECEDENT
Section 8.1 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE
MERGER. The respective obligations of each party to effect the Merger shall be
subject to the fulfillment at or prior to the Effective Time of the following
conditions:
(a) STOCKHOLDER APPROVAL. If approval of the Merger by the
holders of the Common Stock is required by applicable law, the Merger
shall have been approved by the requisite vote of such holders.
(b) NO ORDER. No Governmental Entity or court of competent
jurisdiction shall have enacted, issued, promulgated, enforced or
entered any law, rule, regulation, executive order, decree or
injunction which prohibits or has the effect of prohibiting the
consummation of the Merger; PROVIDED, HOWEVER, that, prior to invoking
this provision, the Company, Parent and Sub shall use their reasonable
best efforts (subject to the other
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terms and conditions of this Agreement) to have any such order, decree or
injunction vacated.
ARTICLE IX
TERMINATION, AMENDMENT AND WAIVER
Section 9.1 TERMINATION. This Agreement may be terminated at any
time prior to the Effective Time, whether before or after any approval by the
stockholders of the Company:
(a) by mutual written consent of Parent and the Company;
(b) by the Company if:
(i) the Offer has not been timely commenced (except as a result
of actions or omissions by the Company) in accordance with Section 1.1(a);
or
(ii) there is an Acquisition Proposal which the Board of
Directors of the Company in good faith determines represents a financially
superior transaction for the stockholders of the Company as compared to the
Offer and the Merger and the Board of Directors of the Company determines,
after consultation with Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇, that failure
to terminate this Agreement would be inconsistent with the compliance by
the Board of Directors with its fiduciary duties to stockholders imposed by
law; PROVIDED, HOWEVER, that the right to terminate this Agreement pursuant
to this clause shall not be available (i) if the Company has breached in
any material respect its obligations under Section 6.2, or (ii) if, prior
to or concurrently with any purported termination pursuant to this clause,
the Company shall not have paid the fee contemplated by Section 7.3(b);
and, in each case, unless the Company has provided Parent and Sub with one
business day's prior written notice of its intent to so terminate this
Agreement together with a summary of the material terms and conditions of
such offer; or
(iii) there has been a breach by Parent or Sub of any
representation or warranty that would have a material adverse effect on
Parent's or Sub's ability to perform its obligations under this Agreement
and which breach has not been cured within twenty business days following
receipt by Parent or Sub of notice of the breach; or
(iv) Parent or Sub fails to comply in any material respect with
any of its material obligations or covenants contained herein, including,
without
-35-
limitation, the obligation of Sub to purchase shares of Common Stock
pursuant to the Offer, unless such failure results from a breach of the
Company of any obligation, representation, or warranty hereunder, which has
not been cured within twenty business days following Company's receipt of
notice of the breach;
(c) by Parent if the Board of Directors of the Company shall
have failed to recommend, or shall have withdrawn, modified or amended
in any material respect its approval or recommendations of the Offer
or the Merger or shall have resolved to do any of the foregoing; or
(d) by either Parent or the Company if:
(i) the Merger has not been effected on or prior to the close of
business on March 31, 1996; PROVIDED, HOWEVER, that the right to terminate
this Agreement pursuant to this clause shall not be available (y) to Parent
if Sub or any affiliate of Sub acquires shares of Common Stock pursuant to
the Offer, or (z) to any party whose failure to fulfill any obligation of
this Agreement has been the cause of, or resulted in, the failure of the
Merger to have occurred on or prior to the aforesaid date; or
(ii) any court of competent jurisdiction or any governmental,
administrative or regulatory authority, agency or body shall have issued an
order, decree or ruling or taken any other action permanently enjoining,
restraining or otherwise prohibiting the transactions contemplated by this
Agreement and such order, decree, ruling or other action shall have become
final and nonappealable; or
(iii) upon a vote at a duly held meeting or upon any
adjournment thereof, the stockholders of the Company shall have failed to
give any approval required by applicable law; or
(iv) as the result of the failure of any of the conditions set
forth in Exhibit A hereto, the Offer shall have terminated or expired in
accordance with its terms without Sub having purchased any shares of Common
Stock pursuant to the Offer; PROVIDED, HOWEVER, that the right to terminate
this Agreement pursuant to this Section 9.1(d)(iv) shall not be available
to any party whose failure to fulfill any of its obligations under this
Agreement results in the failure of any such condition.
Section 9.2 EFFECT OF TERMINATION. In the event of termination of
this Agreement by either Parent or the Company, as provided in Section 9.1, this
Agreement shall forthwith become void and there shall be no liability hereunder
on the part of the Company, Parent or Sub or their respective officers or
directors (except as set forth in the last sentence of Section 7.2 and except
for Section 7.3, which shall survive the
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termination); PROVIDED, HOWEVER, that nothing contained in this Section 9.2
shall relieve any party hereto from any liability for any breach of this
Agreement.
Section 9.3 AMENDMENT. This Agreement may be amended by the
parties hereto, by or pursuant to action taken by their respective Boards of
Directors, at any time before or after any approval of the Merger by the
stockholders of the Company but, after the purchase of shares of Common Stock
pursuant to the Offer, no amendment shall be made which decreases the Merger
Consideration or which in any way materially adversely affects the rights of
such stockholders, without the further approval of such stockholders. This
Agreement may not be amended except by an instrument in writing signed on behalf
of each of the parties hereto.
Section 9.4 WAIVER. At any time prior to the Effective Time, the
parties hereto may (i) extend the time for the performance of any of the
obligations or other acts of the other parties hereto, (ii) waive any
inaccuracies in the representations and warranties contained herein or in any
document delivered pursuant hereto and (iii) waive compliance with any of the
agreements or conditions contained herein which may legally be waived. Any
agreement on the part of a party hereto to any such extension or waiver shall be
valid only if set forth in an instrument in writing signed on behalf of such
party.
Section 9.5 PROCEDURE FOR TERMINATION, AMENDMENT OR WAIVER. A
termination of this Agreement pursuant to Section 9.1, an amendment of this
Agreement pursuant to Section 9.3 or a waiver pursuant to Section 9.4 shall, in
order to be effective, require (a) in the case of Parent or Sub, action by its
Board of Directors or the duly authorized designee of its Board of Directors and
(b) in the case of the Company, action by its Board of Directors.
ARTICLE X
GENERAL PROVISIONS
Section 10.1 NON-SURVIVAL OF REPRESENTATIONS AND WARRANTIES. None
of the representations and warranties in this Agreement or in any instrument
delivered pursuant to this Agreement shall survive the termination of this
Agreement in accordance with Article IX or the Effective Time; PROVIDED,
HOWEVER, that termination of this Agreement shall not relieve any party hereto
from any liability for any knowing or willful breach by such party of its
representations or warranties.
Section 10.2 NOTICES. All notices and other communications
hereunder shall be in writing and shall be deemed given if delivered personally,
sent by overnight courier or telecopied (with a confirmatory copy sent by
overnight courier) to the parties at
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the following addresses (or at such other address for a party as shall be
specified by like notice):
(a) if to Parent or Sub, to:
Textron Inc.
▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: Executive Vice President
and General Counsel
Fax: ▇▇▇-▇▇▇-▇▇▇▇
with a copy to:
Fried, Frank, Harris, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Fax: ▇▇▇-▇▇▇-▇▇▇▇
(b) if to the Company, to:
Elco Industries, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇.▇. ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇▇▇▇, Chief Executive Officer
Fax: ▇▇▇-▇▇▇-▇▇▇▇
with a copy to:
Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇
▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Fax: ▇▇▇-▇▇▇-▇▇▇▇
Section 10.3 INTERPRETATION. When a reference is made in this
Agreement to a Section, such reference shall be to a Section of this Agreement
unless otherwise indicated. The table of contents and headings contained in
this Agreement are for reference purposes only and shall not affect in any way
the meaning or interpretation of this Agreement. Whenever the words "include,"
"includes" or "including" are used in this Agreement, they shall be deemed to be
followed by the words "without limitation." As
-38-
used in this Agreement, "business day" shall have the meaning ascribed thereto
in Rule 14d-1(c)(6) under the Exchange Act.
Section 10.4 COUNTERPARTS. This Agreement may be executed in
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to the other parties.
Section 10.5 ENTIRE AGREEMENT; NO THIRD-PARTY BENEFICIARIES. This
Agreement, including the documents and instruments referred to herein, (a)
constitutes the entire agreement and supersedes all prior agreements and
understandings, both written and oral, among the parties with respect to the
subject matter hereof and (b) except for the provisions of Section 7.8, is not
intended to confer upon any person other than the parties any rights or remedies
hereunder.
Section 10.6 GOVERNING LAW. This Agreement shall be governed by,
and construed in accordance with, the laws of the State of Delaware, regardless
of the laws that might otherwise govern under applicable principles of conflicts
of laws thereof.
Section 10.7 ASSIGNMENT. Neither this Agreement nor any of the
rights, interests or obligations hereunder shall be assigned by any of the
parties without the prior written consent of the other parties, except that Sub
may assign, in its sole discretion, any of or all its rights, interests and
obligations under this Agreement to Parent or to any direct or indirect wholly
owned subsidiary of Parent, but no such assignment shall relieve Sub of any of
its obligations hereunder. Subject to the preceding sentence, this Agreement
shall be binding upon, inure to the benefit of, and be enforceable by, the
parties and their respective successors and assigns.
Section 10.8 SEVERABILITY. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of law,
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby are not affected in any manner
materially adverse to any party.
Section 10.9 ENFORCEMENT OF THIS AGREEMENT. The parties agree that
irreparable damage would occur in the event that any of the provisions of this
Agreement were not performed in accordance with their specific terms or were
otherwise breached. It is accordingly agreed that the parties shall be entitled
to an injunction or injunctions to prevent breaches of this Agreement and to
enforce specifically the terms and provisions hereof in any court of the United
States or any state having jurisdiction, this being in addition to any other
remedy to which they are entitled at law or in equity.
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Section 10.10 INCORPORATION OF EXHIBITS. The Company Disclosure
Letter and all Exhibits and annexes attached hereto and referred to herein are
hereby incorporated herein and made a part hereof for all purposes as if fully
set forth herein.
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IN WITNESS WHEREOF, Parent, Sub and the Company have caused this
Agreement to be signed by their respective officers thereunto duly authorized
all as of the date first written above.
TEXTRON INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Group Vice President
E.I. TEXTRON INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Vice President
ELCO INDUSTRIES, INC.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇
------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇
Title: President
-41-
EXHIBIT A
CONDITIONS OF THE OFFER
Notwithstanding any other term of the Offer or this Agreement, Sub
shall not be required to accept for payment or pay for, subject to any
applicable rules and regulations of the SEC, including Rule 14e-1(c) of the
Exchange Act, any shares of Common Stock not theretofore accepted for payment or
paid for and may terminate or amend the Offer as to such shares of Common Stock
unless (i) there shall have been validly tendered and not withdrawn prior to the
expiration of the Offer that number of shares of Common Stock which would
represent at least 66 2/3% of the outstanding shares of Common Stock on a fully
diluted basis (the "Minimum Condition"), and (ii) any waiting period under the
Improvements Act applicable to the purchase of shares of Common Stock pursuant
to the Offer shall have expired or been terminated. Furthermore,
notwithstanding any other term of the Offer or this Agreement, Sub shall not be
required to accept for payment or, subject as aforesaid, to pay for any shares
of Common Stock not theretofore accepted for payment or paid for, and may
terminate or amend the Offer if at any time on or after the date of this
Agreement and before the acceptance of such shares of Common Stock for payment
or the payment therefor, any of the following conditions exist or shall occur
and remain in effect:
(a) there shall have been instituted, pending or threatened any
action or proceeding by any court or other Governmental Entity, which
(i) seeks to challenge the acquisition by Parent or Sub (or any of its
affiliates) of shares of Common Stock pursuant to the Offer, restrain,
prohibit or delay the making or consummation of the Offer or the
Merger, or obtain damages in connection therewith in an amount which
would have a Material Adverse Effect on the Company, (ii) seeks to
make the purchase of or payment for some or all of the shares of
Common Stock pursuant to the Offer or the Merger illegal, (iii) seeks
to impose limitations on the ability of Parent (or any of its
affiliates) effectively to acquire or hold, or to require Parent or
the Company or any of their respective affiliates or subsidiaries to
dispose of or hold separate, any portion of the assets or the business
of Parent and its affiliates or any material portion of the assets or
the business of the Company and its Subsidiaries taken as a whole,
(iv) seeks to impose material limitations on the ability of Parent (or
its affiliates) to exercise full rights of ownership of the shares of
Common Stock purchased by it, including, without limitation, the right
to vote the shares purchased by it on all matters properly presented
to the stockholders of the Company, or (v) seeks to restrict any
future business activity by Parent (or any of its affiliates),
including, without limitation, requiring the prior
A-1
consent of any person or entity (including any Governmental Entity) to
future transactions by Parent (or any of its affiliates); or
(b) there shall have been promulgated, enacted, entered,
enforced or deemed applicable to the Offer or the Merger, by any
state, federal or foreign Governmental Entity or by any court,
domestic or foreign, any statute, rule, regulation, judgment, decree,
order or injunction, that is reasonably likely to directly or
indirectly result in any of the consequences referred to in clauses
(i) through (v) of subsection (a) above; or
(c) the Merger Agreement shall have been terminated in
accordance with its terms; or
(d) any of the representations and warranties made by the
Company in the Merger Agreement shall not have been true and correct
in all material respects when made, or shall thereafter have ceased to
be true and correct in all material respects as if made as of such
later date (other than representations and warranties made as of a
specified date), or the Company shall not in all material respects
have performed each obligation and agreement and complied with each
covenant to be performed and complied with by it under the Merger
Agreement; or
(e) the Company's Board of Directors shall have modified or
amended its recommendation of the Offer in any manner adverse to
Parent or shall have withdrawn its recommendation of the Offer, or
shall have recommended acceptance of any Acquisition Proposal or shall
have resolved to do any of the foregoing; or
(f) (i) any corporation, entity or "group" (as defined in
Section 13(d)(3) of the Exchange Act) ("person"), other than Parent,
shall have acquired beneficial ownership of more than 20% (or, in the
case of Okabe and its affiliates, 21%) of the outstanding shares of
Common Stock, or shall have been granted any options or rights,
conditional or otherwise, to acquire a total of more than 20% of the
outstanding shares of Common Stock; (ii) any new group shall have been
formed which beneficially owns more than 20% (or, in the case of Okabe
and its affiliates, 21%) of the outstanding shares of Common Stock; or
(iii) any person (other than Parent or one or more of its affiliates)
shall have entered into an agreement in principle or definitive
agreement with the Company with respect to a tender or exchange offer
for any shares of Common Stock or a merger, consolidation or other
business combination with or involving the Company.
A-2
The foregoing conditions are for the sole benefit of Parent and Sub
and may be asserted by Parent or Sub regardless of the circumstances giving rise
to any such condition and may be waived by Parent or Sub, in whole or in part,
at any time and from time to time, in the sole discretion of Parent. The
failure by Parent or Sub at any time to exercise any of the foregoing rights
will not be deemed a waiver of any right, the waiver of such right with respect
to any particular facts or circumstances shall not be deemed a waiver with
respect to any other facts or circumstances, and each right will be deemed an
ongoing right which may be asserted at any time and from time to time.
Should the Offer be terminated pursuant to the foregoing provisions,
all tendered shares of Common Stock not theretofore accepted for payment shall
forthwith be returned by the Paying Agent to the tendering stockholders.
A-3