1
Exhibit (a)(11)
CONFORMED COPY
------------------------
AGREEMENT AND PLAN OF MERGER
AMONG
TEXTRON INC.,
E.I. TEXTRON INC.,
AND
ELCO INDUSTRIES, INC.
DATED AS OF SEPTEMBER 12, 1995
------------------------
2
TABLE OF CONTENTS
PAGE
----
ARTICLE I THE OFFER.................................................................... 1
Section 1.1 The Offer............................................................ 1
Section 1.2 Company Actions...................................................... 2
ARTICLE II THE MERGER.................................................................. 3
Section 2.1 The Merger........................................................... 3
Section 2.2 Effective Time....................................................... 3
Section 2.3 Effects of the Merger................................................ 3
Section 2.4 Certificate of Incorporation and Bylaws; Directors and Officers...... 3
Section 2.5 Conversion of Securities............................................. 4
Section 2.6 Exchange of Certificates............................................. 4
Section 2.7 Dissenting Company Common Shares..................................... 5
Section 2.8 Merger Without Meeting of Stockholders............................... 5
Section 2.9 No Further Ownership Rights in Common Stock.......................... 5
Section 2.10 Closing of Company Transfer Books.................................... 5
ARTICLE III REPRESENTATIONS AND WARRANTIES OF PARENT................................... 5
Section 3.1 Organization, Standing and Power..................................... 5
Section 3.2 Authority; Non-Contravention......................................... 5
Section 3.3 Schedule 14D-9, Information and Proxy Statements..................... 6
Section 3.4 Financing............................................................ 7
Section 3.5 Brokers and Finders.................................................. 7
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE COMPANY............................... 7
Section 4.1 Organization, Standing and Power..................................... 7
Section 4.2 Capital Structure.................................................... 7
Section 4.3 Subsidiaries......................................................... 7
Section 4.4 Other Interests...................................................... 8
Section 4.5 Authority; Non-Contravention......................................... 8
Section 4.6 SEC Documents........................................................ 9
Section 4.7 Offer Documents and Proxy Statement.................................. 10
Section 4.8 Absence of Certain Events............................................ 10
Section 4.9 Litigation........................................................... 10
Section 4.10 Compliance with Applicable Law....................................... 10
Section 4.11 Employee Plans....................................................... 11
Section 4.12 Employment Relations and Agreement................................... 12
Section 4.13 Limitation on Business Conduct....................................... 12
Section 4.14 Environmental Laws and Regulations................................... 12
Section 4.15 Patents, Trademarks, Copyrights...................................... 13
Section 4.16 Takeover Statutes.................................................... 13
Section 4.17 Acquiring Person..................................................... 13
Section 4.18 Taxes................................................................ 13
Section 4.19 Brokers.............................................................. 14
ARTICLE V REPRESENTATIONS AND WARRANTIES REGARDING SUB................................. 14
Section 5.1 Organization and Standing............................................ 14
Section 5.2 Capital Structure.................................................... 14
Section 5.3 Authority; Non-Contravention......................................... 14
i
3
PAGE
----
ARTICLE VI COVENANTS RELATING TO CONDUCT OF BUSINESS................................... 14
Section 6.1 Conduct of Business by the Company Pending the Merger................ 14
Section 6.2 Acquisition Proposals................................................ 16
Section 6.3 Annual Meeting of Stockholders....................................... 17
Section 6.4 Conduct of Business of Sub Pending the Merger........................ 17
ARTICLE VII ADDITIONAL AGREEMENTS...................................................... 17
Section 7.1 Company Stockholder Approval; Proxy Statement........................ 17
Section 7.2 Access to Information; Confidentiality............................... 18
Section 7.3 Fees and Expenses.................................................... 18
Section 7.4 Company Stock Options................................................ 18
Section 7.5 Performance Shares................................................... 19
Section 7.6 Reasonable Best Efforts.............................................. 19
Section 7.7 Public Announcements................................................. 19
Section 7.8 Indemnification; Directors and Officers Insurance.................... 19
Section 7.9 Employees............................................................ 20
Section 7.10 Board Representation................................................. 21
Section 7.11 Notification of Certain Matters...................................... 21
Section 7.12 Okabe................................................................ 21
Section 7.13 Nagoya Notification.................................................. 21
ARTICLE VIII CONDITIONS PRECEDENT...................................................... 21
Section 8.1 Conditions to Each Party's Obligation to Effect the Merger........... 21
ARTICLE IX TERMINATION, AMENDMENT AND WAIVER........................................... 22
Section 9.1 Termination.......................................................... 22
Section 9.2 Effect of Termination................................................ 23
Section 9.3 Amendment............................................................ 23
Section 9.4 Waiver............................................................... 23
Section 9.5 Procedure for Termination, Amendment or Waiver....................... 23
ARTICLE X GENERAL PROVISIONS........................................................... 23
Section 10.1 Non-Survival of Representations and Warranties....................... 23
Section 10.2 Notices.............................................................. 23
Section 10.3 Interpretation....................................................... 24
Section 10.4 Counterparts......................................................... 24
Section 10.5 Entire Agreement; No Third-Party Beneficiaries....................... 24
Section 10.6 Governing Law........................................................ 24
Section 10.7 Assignment........................................................... 25
Section 10.8 Severability......................................................... 25
Section 10.9 Enforcement of this Agreement........................................ 25
Section Incorporation of Exhibits............................................
10.10 25
EXHIBIT A CONDITIONS OF THE OFFER...................................................... 27
ii
4
CONFORMED COPY
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
5
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. 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 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
2
6
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.
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
3
7
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.
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 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
4
8
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, 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
5
9
hereby have 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 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
6
10
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 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 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
7
11
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 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
8
12
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 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 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.
9
13
(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 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
10
14
conduct of their respective businesses (the "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.
(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
11
15
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.
(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 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
12
16
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. sec. 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, 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
13
17
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 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.
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
14
18
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 (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 (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;
15
19
(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
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
16
20
bona fide proposal in writing to engage in an Acquisition Proposal transaction
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 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, ▇▇▇▇▇▇▇ &
▇▇▇▇. 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
17
21
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 (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.
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
18
22
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 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
19
23
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 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.
(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
Offeror 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.
20
24
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 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
21
25
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 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 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
22
26
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 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
23
27
overnight courier) to the parties at the following addresses (or at such other
address for a party as shall be specified by like notice):
(a) if to Parent or 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 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.
24
28
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.
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.
25
29
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
26
30
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 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
27
31
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.
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.
28