Exhibit 2.1
AGREEMENT AND PLAN OF MERGER
dated as of
June 4, 1999
among
HONEYWELL INC.,
ALLIEDSIGNAL INC.
and
BLOSSOM ACQUISITION CORP.
TABLE OF CONTENTS
Page
----
ARTICLE I
THE MERGER
SECTION 1.1 The Merger................................................2
SECTION 1.2 Conversion Of Shares......................................2
SECTION 1.3 Surrender And Payment.....................................3
SECTION 1.4 Stock Options and Equity Awards...........................5
SECTION 1.5 Adjustments...............................................6
SECTION 1.6 Fractional Shares.........................................6
SECTION 1.7 Withholding Rights........................................6
SECTION 1.8 Lost Certificates.........................................6
SECTION 1.9 Shares Held by Company Affiliates.........................7
SECTION 1.10 Appraisal Rights..........................................7
ARTICLE II
CERTAIN GOVERNANCE MATTERS
SECTION 2.1 Parent Name Change........................................7
SECTION 2.2 Parent Board of Directors; CEO............................7
SECTION 2.3 Certificate of Incorporation of the Surviving
Corporation.............................................8
SECTION 2.4 By-laws of the Surviving Corporation......................8
SECTION 2.5 Directors and Officers of the Surviving Corporation.......8
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
SECTION 3.1 Corporate Existence and Power.............................9
SECTION 3.2 Corporate Authorization...................................9
SECTION 3.3 Governmental Authorization...............................10
SECTION 3.4 Non-Contravention........................................10
SECTION 3.5 Capitalization...........................................11
SECTION 3.6 Subsidiaries.............................................12
SECTION 3.7 Commission Filings.......................................13
SECTION 3.8 Financial Statements.....................................13
SECTION 3.9 Disclosure Documents.....................................13
SECTION 3.10 Absence of Certain Changes...............................14
SECTION 3.11 No Undisclosed Material Liabilities......................15
SECTION 3.12 Litigation...............................................16
SECTION 3.13 Taxes....................................................16
SECTION 3.14 Employee Benefit Plans...................................17
SECTION 3.15 Compliance with Laws.....................................18
SECTION 3.16 Finders' or Advisors' Fees...............................18
SECTION 3.17 Environmental Matters....................................18
SECTION 3.18 Opinion of Financial Advisor.............................19
SECTION 3.19 Pooling; Tax Treatment...................................19
SECTION 3.21 Takeover Statutes and Charter Provisions.................19
SECTION 3.22 Rights Agreement.........................................20
SECTION 3.23 Intellectual Property Matters............................20
SECTION 3.24 Year 2000 Compliance Matters.............................20
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT
SECTION 4.1 Corporate Existence and Power............................21
SECTION 4.2 Corporate Authorization..................................21
SECTION 4.3 Governmental Authorization...............................22
SECTION 4.4 Non-Contravention........................................23
SECTION 4.5 Capitalization...........................................23
SECTION 4.6 Subsidiaries.............................................24
SECTION 4.7 Commission Filings.......................................25
SECTION 4.8 Financial Statements.....................................25
SECTION 4.9 Disclosure Documents.....................................25
SECTION 4.10 Absence of Certain Changes...............................26
SECTION 4.11 No Undisclosed Material Liabilities......................27
SECTION 4.12 Litigation...............................................28
SECTION 4.13 Taxes....................................................28
SECTION 4.14 Employee Benefit Plans...................................28
SECTION 4.15 Compliance with Laws.....................................30
SECTION 4.16 Finders' or Advisors' Fees...............................30
SECTION 4.17 Environmental Matters....................................30
SECTION 4.18 Opinion of Financial Advisor.............................30
SECTION 4.19 Pooling; Tax Treatment...................................30
SECTION 4.21 Takeover Statutes........................................31
SECTION 4.22 Intellectual Property Matters............................31
SECTION 4.23 Year 2000 Compliance Matters.............................31
ARTICLE V
COVENANTS OF THE COMPANY
SECTION 5.1 Conduct of the Company...................................32
SECTION 5.2 Company Stockholder Meeting; Proxy Material..............34
ARTICLE VI
COVENANTS OF PARENT
SECTION 6.1 Conduct of Parent........................................35
SECTION 6.2 Obligations of Merger Subsidiary.........................38
SECTION 6.3 Director and Officer Liability...........................38
SECTION 6.4 Parent Stockholder Meeting; Form S-4.....................38
SECTION 6.5 Stock Exchange Listing...................................39
SECTION 6.6 Employee Benefits........................................39
SECTION 6.7 Employment Agreement.....................................42
ARTICLE VII
COVENANTS OF PARENT AND THE COMPANY
SECTION 7.1 Reasonable Best Efforts..................................42
SECTION 7.2 Certain Filings..........................................44
SECTION 7.3 Access to Information....................................44
SECTION 7.4 Tax and Accounting Treatment.............................44
SECTION 7.5 Public Announcements.....................................45
SECTION 7.6 Further Assurances.......................................45
SECTION 7.7 Notices of Certain Events................................45
SECTION 7.8 Affiliates...............................................46
SECTION 7.9 Payment of Dividends.....................................46
SECTION 7.10 No Solicitation..........................................47
SECTION 7.11 Letters from Accountants.................................49
SECTION 7.12 Takeover Statutes........................................49
SECTION 7.13 Headquarters.............................................50
SECTION 7.14 Integration..............................................50
SECTION 7.15 Transfer Statutes........................................50
SECTION 7.16 Section 16(b)............................................50
ARTICLE VIII
CONDITIONS TO THE MERGER
SECTION 8.1 Conditions to the Obligations of Each Party..............51
SECTION 8.2 Conditions to the Obligations of Parent and Merger
Subsidiary............................................52
SECTION 8.3 Conditions to the Obligations of the Company.............53
ARTICLE IX
TERMINATION
SECTION 9.1 Termination..............................................54
SECTION 9.2 Effect of Termination....................................55
ARTICLE X
MISCELLANEOUS
SECTION 10.1 Notices..................................................55
SECTION 10.2 Non-Survival of Representations and Warranties...........56
SECTION 10.3 Amendments; No Waivers...................................57
SECTION 10.4 Expenses.................................................57
SECTION 10.5 Company Termination Fee..................................57
SECTION 10.6 Parent Termination Fee...................................59
SECTION 10.7 Successors and Assigns...................................60
SECTION 10.8 Governing Law............................................60
SECTION 10.9 Jurisdiction.............................................60
SECTION 10.10 Waiver of Jury Trial.....................................61
SECTION 10.11 Counterparts; Effectiveness..............................61
SECTION 10.12 Entire Agreement.........................................61
SECTION 10.13 Captions.................................................61
SECTION 10.14 Severability.............................................61
EXHIBITS
Exhibit A - Form of By-laws Amendment
Exhibit B - Form of Employment Agreement
Exhibit C - Form of Parent Affiliate's Letter
Exhibit D - Form of Company Affiliate's Letter
DEFINITIONS
Section
368 Reorganization......................................... SECTION 3.19(b)
Acquisition Proposal....................................... SECTION 7.10(b)
Affected Employees......................................... SECTION 6.6(b)
Agreement.................................................. Preamble
Canadian Act............................................... SECTION 4.3
Certificate ............................................... SECTION 1.2(c)
Change in Control.......................................... SECTION 6.6(a)
Closing.................................................... SECTION 1.1(d)
Closing Date............................................... SECTION 1.1(d)
Code....................................................... Recitals
Common Stock Issuance...................................... SECTION 4.2(a)
Common Stock Issuance Approval ............................ SECTION 4.2(a)
Commission................................................. Recitals
Company.................................................... Preamble
Company 10-K............................................... SECTION 3.6(b)
Company 10-Q............................................... SECTION 3.7(a)
Company Balance Sheet...................................... SECTION 3.8
Company Balance Sheet Date................................. SECTION 3.8
Company Commission Documents............................... SECTION 3.7(a)
Company Common Stock....................................... Recitals
Company Convertible Security............................... SECTION 3.5
Company Employee Plans..................................... SECTION 3.14(a)
Company Disclosure Schedules............................... Article III
Company Option Agreement................................... Recitals
Company Preferred Stock.................................... SECTION 3.5
Company Proxy Statement.................................... SECTION 3.9(a)
Company Rights............................................. SECTION 3.5
Company Rights Agreement................................... SECTION 3.5
Company Stock Option....................................... SECTION 1.4(a)
Company Stock Plans........................................ SECTION 1.4(a)
Company Stockholder Approval............................... SECTION 3.2
Company Stockholder Meeting................................ SECTION 5.2
Company Subsidiary Convertible Security.................... SECTION 3.6(b)
Confidentiality Agreement.................................. SECTION 7.3
Delaware Law............................................... SECTION 1.1(b)
EC Merger Regulation....................................... SECTION 3.3
Effective Time............................................. SECTION 1.1(a)
End Date................................................... SECTION 9.1(b)(i)
Environmental Laws......................................... SECTION 3.17(b)
ERISA...................................................... SECTION 3.14(a)
Exchange Act............................................... SECTION 3.3(f)
Exchange Agent............................................. SECTION 1.3(a)
Exchange Ratio............................................. SECTION 1.2(a)(iii)
Form S-4................................................... SECTION 4.9(a)
GAAP....................................................... Recitals
Hazardous Materials........................................ SECTION 3.17(b)
HSR Act.................................................... SECTION 3.3
Indemnitees................................................ SECTION 6.3(a)
Intellectual Property...................................... SECTION 3.23(b)
Lien....................................................... SECTION 3.4
Material Adverse Effect.................................... SECTION 3.1
Merger..................................................... Recitals
Merger Consideration....................................... SECTION 1.2(b)
Merger Subsidiary.......................................... Preamble
NYSE....................................................... SECTION 1.6
Option Agreements.......................................... Recitals
Parent..................................................... Preamble
Parent 10-K................................................ SECTION 4.6(b)
Parent 10-Q................................................ SECTION 4.7(a)
Parent Balance Sheet....................................... SECTION 4.8
Parent Balance Sheet Date.................................. SECTION 4.8
Parent Commission Documents................................ SECTION 4.7(a)
Parent Common Stock........................................ Recitals
Parent Convertible Security................................ SECTION 4.5
Parent Disclosure Schedules................................ Article IV
Parent Employee Plans...................................... SECTION 4.14(a)
Parent Option Agreement.................................... Recitals
Parent Preferred Stock..................................... SECTION 4.5
Parent Proxy Statement..................................... SECTION 4.9(a)
Parent Stockholder Approval................................ SECTION 4.2(a)
Parent Stockholder Meeting................................. SECTION 6.4(a)
Parent Subsidiary Convertible Security..................... SECTION 4.6(b)
Person..................................................... SECTION 1.3(c)
Securities Act............................................. SECTION 1.4(c)
Shares..................................................... Recitals
Subsidiary................................................. SECTION 3.6(a)
Superior Proposal.......................................... SECTION 7.10(b)
Surviving Corporation...................................... SECTION 1.1(b)
Tax Returns................................................ SECTION 3.13
Taxes...................................................... SECTION 3.13
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "Agreement") dated as of June
4, 1999 by and among HONEYWELL INC., a Delaware corporation (the
"Company"), ALLIEDSIGNAL INC., a Delaware corporation ("Parent"), and
BLOSSOM ACQUISITION CORP., a newly formed Delaware corporation and a wholly
owned subsidiary of Parent ("Merger Subsidiary").
W I T N E S S E T H:
WHEREAS, the respective Boards of Directors of Parent, Merger
Subsidiary and the Company have approved this Agreement, and deem it
advisable and in the best interests of their respective stockholders to
consummate the merger of Merger Subsidiary with and into the Company on the
terms and conditions set forth in this Agreement (the "Merger");
WHEREAS, for United States federal income tax purposes, it is intended
that the Merger qualify as a "reorganization" within the meaning of Section
368 of the Internal Revenue Code of 1986, as amended, and the rules and
regulations promulgated thereunder (the "Code");
WHEREAS, for accounting purposes, it is intended that the Merger be
accounted for as a "pooling of interests" under United States generally
accepted accounting principles ("GAAP") and the rules and regulations of
the Securities and Exchange Commission (the "Commission"); and
WHEREAS, as a condition and inducement to each of Parent's and the
Company's willingness to enter into this Agreement, concurrently with the
execution and delivery of this Agreement, Parent and the Company are
entering into (i) a Stock Option Agreement dated as of the date of this
Agreement (the "Parent Option Agreement"), pursuant to which the Company is
granting to Parent an option to purchase shares of common stock, par value
$1.50 per share, of the Company ("Company Common Stock") at $109.453 per
share, under certain circumstances, and (ii) a Stock Option Agreement dated
as of the date of this Agreement (the "Company Option Agreement" and,
together with the Parent Option Agreement, the "Option Agreements"),
pursuant to which Parent is granting to the Company an option to purchase
shares of the common stock, par value $1.00 per share, of Parent ("Parent
Common Stock") at $58.375 per share, under certain circumstances.
NOW, THEREFORE, in consideration of the promises and the respective
representations, warranties, covenants, and agreements set forth herein,
the parties agree as follows:
ARTICLE I
THE MERGER
SECTION 1.1 The Merger.
(a) As soon as practicable after satisfaction or, to the extent
permitted hereunder, waiver of all conditions to the Merger, the Company
and Merger Subsidiary will file a certificate of merger with the Secretary
of State of the State of Delaware and make all other filings or recordings
required by Delaware Law to be made in connection with the Merger. The
Merger shall become effective at such time as the certificate of merger is
duly filed with the Secretary of State of the State of Delaware or, if
agreed to by the Company and Parent, at such later time as is specified in
the certificate of merger (the "Effective Time").
(b) At the Effective Time, Merger Subsidiary shall be merged with
and into the Company in accordance with the requirements of the General
Corporation Law of the State of Delaware (the "Delaware Law"), whereupon
the separate existence of Merger Subsidiary shall cease, and the Company
shall be the surviving corporation in the Merger (the "Surviving
Corporation").
(c) From and after the Effective Time, the Surviving Corporation
shall possess all the rights, privileges, powers and franchises and be
subject to all of the restrictions, disabilities and duties of the Company
and Merger Subsidiary, all as provided under Delaware Law.
(d) The closing of the Merger (the "Closing") shall take place
(i) at the offices of Fried, Frank, Harris, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, One New
York Plaza, New York, New York, as soon as practicable, but in any event
within three business days, after the day on which the last to be fulfilled
or waived of the conditions set forth in Article VIII (other than those
conditions that by their nature are to be fulfilled at the Closing, but
subject to the fulfillment or waiver of such conditions) shall be fulfilled
or waived in accordance with this Agreement or (ii) at such other place and
time or on such other date as the Company and Parent may agree in writing
(the "Closing Date").
SECTION 1.2 Conversion Of Shares.
(a) At the Effective Time by virtue of the Merger and without any
action on the part of the holder thereof:
(i) each share of the Company Common Stock held by the
Company as treasury stock or owned by Parent or any subsidiary of
Parent or the Company immediately prior to the Effective Time shall be
canceled, and no payment shall be made with respect thereto;
(ii) each share of common stock of Merger Subsidiary
outstanding immediately prior to the Effective Time shall be converted
into and become one share of common stock of the Surviving Corporation
with the same rights, powers and privileges as the shares so converted
and shall constitute the only outstanding shares of capital stock of
the Surviving Corporation; and
(iii) each share of Company Common Stock outstanding
immediately prior to the Effective Time shall, except as otherwise
provided in Section 1.2(a)(i), be converted into the right to receive
1.875 shares of Parent Common Stock (the "Exchange Ratio").
(b) All Parent Common Stock issued as provided in Section
1.2(a)(iii) shall be of the same class and shall have the same terms as the
currently outstanding Parent Common Stock. The shares of Parent Common
Stock to be received as consideration pursuant to the Merger with respect
to shares of Company Common Stock (together with cash in lieu of fractional
shares of Parent Common Stock as specified below) is referred to herein as
the "Merger Consideration."
(c) From and after the Effective Time, all shares of Company
Common Stock converted in accordance with Section 1.2(a)(iii) shall no
longer be outstanding and shall automatically be canceled and retired and
shall cease to exist, and each holder of a certificate representing any
such shares (a "Certificate") shall cease to have any rights with respect
thereto, except the right to receive the Merger Consideration and any
dividends payable pursuant to Section 1.3(f). From and after the Effective
Time, all certificates representing the common stock of Merger Subsidiary
shall be deemed for all purposes to represent the number of shares of
common stock of the Surviving Corporation into which they were converted in
accordance with Section 1.2(a)(ii).
SECTION 1.3 Surrender And Payment.
(a) Prior to the Effective Time, Parent shall appoint The Bank of
New York or such other exchange agent reasonably acceptable to the Company
(the "Exchange Agent") for the purpose of exchanging Certificates for the
Merger Consideration. Parent will make available to the Exchange Agent, as
needed, the Merger Consideration to be delivered in respect of the shares
of Company Common Stock. Promptly after the Effective Time, Parent will
send, or will cause the Exchange Agent to send, to each holder of record of
shares of Company Common Stock as of the Effective Time, a letter of
transmittal for use in such exchange (which shall specify that the delivery
shall be effected, and risk of loss and title shall pass, only upon proper
delivery of the Certificates to the Exchange Agent) in such form as the
Company and Parent may reasonably agree, for use in effecting delivery of
shares of Company Common Stock to the Exchange Agent.
(b) Each holder of shares of Company Common Stock that have been
converted into a right to receive the Merger Consideration, upon surrender
to the Exchange Agent of a Certificate, together with a properly completed
letter of transmittal, will be entitled to receive the Merger Consideration
in respect of the shares of Company Common Stock represented by such
Certificate. Until so surrendered, each such Certificate shall, after the
Effective Time, represent for all purposes only the right to receive such
Merger Consideration.
(c) If any portion of the Merger Consideration is to be
registered in the name of a Person other than the Person in whose name the
applicable surrendered Certificate is registered, it shall be a condition
to the registration of the Merger Consideration that the surrendered
Certificate shall be properly endorsed or otherwise be in proper form for
transfer and that the Person requesting such delivery of the Merger
Consideration shall pay to the Exchange Agent any transfer or other taxes
required as a result of such registration in the name of a Person other
than the registered holder of such Certificate or establish to the
reasonable satisfaction of the Exchange Agent that such tax has been paid
or is not payable. For purposes of this Agreement, "Person" means an
individual, a corporation, a limited liability company, a partnership, an
association, a trust or any other entity or organization, including a
government or political subdivision or any agency or instrumentality
thereof.
(d) After the Effective Time, there shall be no further
registration of transfers of shares of Company Common Stock. If, after the
Effective Time, Certificates are presented to the Exchange Agent, the
Surviving Corporation or Parent, they shall be canceled and exchanged for
the Merger Consideration provided for, and in accordance with the
procedures set forth, in this Article I.
(e) Any portion of the Merger Consideration made available to the
Exchange Agent pursuant to Section 1.3(a) that remains unclaimed by the
holders of shares of Company Common Stock one year after the Effective Time
shall be returned to Parent, upon demand, and any such holder who has not
exchanged his shares of Company Common Stock for the Merger Consideration
in accordance with this Section 1.3 prior to that time shall thereafter
look only to Parent for delivery of the Merger Consideration in respect of
such holder's shares. Notwithstanding the foregoing, Parent shall not be
liable to any holder of shares for any Merger Consideration delivered to a
public official pursuant to applicable abandoned property laws.
(f) No dividends or other distributions with respect to shares of
Parent Common Stock shall be paid to the holder of any unsurrendered
Certificates until such Certificates are surrendered as provided in this
Section 1.3. Subject to the effect of applicable laws, following such
surrender, there shall be paid, without interest, to the record holder of
the shares of Parent Common Stock issued in exchange therefor (i) at the
time of such surrender, all dividends and other distributions payable in
respect of such Parent Common Stock with a record date after the Effective
Time and a payment date on or prior to the date of such surrender and not
previously paid and (ii) at the appropriate payment date, the dividends or
other distributions payable with respect to such Parent Common Stock with a
record date after the Effective Time but with a payment date subsequent to
such surrender. For purposes of dividends or other distributions in respect
of Parent Common Stock, all shares of Parent Common Stock to be issued
pursuant to the Merger shall be entitled to dividends pursuant to the
immediately preceding sentence as if issued and outstanding as of the
Effective Time.
SECTION 1.4 Stock Options and Equity Awards.
(a) At the Effective Time, each outstanding employee or director
option to purchase shares of Company Common Stock (a "Company Stock
Option") granted under the Company's plans or agreements pursuant to which
Company Stock Options or other stock-based awards of the Company have been
or may be granted (collectively, the "Company Stock Plans"), whether vested
or not vested, shall be deemed assumed by Parent. At and after the
Effective Time (1) each Company Stock Option then outstanding shall entitle
the holder thereof to acquire the number (rounded down to the nearest whole
number) of shares of Parent Common Stock determined by multiplying (x) the
number of shares of Company Common Stock subject to such Company Stock
Option immediately prior to the Effective Time by (y) the Exchange Ratio,
and (2) the exercise price per share of Parent Common Stock subject to any
such Company Stock Option at and after the Effective Time shall be an
amount (rounded down to the nearest one-hundredth of a cent) equal to (x)
the exercise price per share of Company Common Stock subject to such
Company Stock Option prior to the Effective Time, divided by (y) the
Exchange Ratio. Other than as provided above, as of and after the Effective
Time, each Company Stock Option shall be subject to the same terms and
conditions as in effect immediately prior to the Effective Time (including,
but not limited to, the acceleration of exercisability as of the date of
approval of the Merger by the shareholders of the Company), but giving
effect to the Merger. Prior to the approval of the Merger by the
shareholders of the Company, the Company shall take all actions necessary
to cause all restricted shares, restricted stock units and any other
stock-based awards outstanding under the Company Stock Plans and the
Honeywell Non-Employee Directors Fee and Stock Unit Plan which would
otherwise be settled in cash to be settled in shares of Parent Common Stock
(with, in the case of restricted stock units, each such unit representing
one share of Company Common Stock and with the number of shares of Parent
Common Stock to be issued reflecting the Exchange Ratio). To the extent
that any such award of restricted shares, restricted stock units or other
stock-based award does not become fully vested and free of restrictions in
connection with the transactions contemplated hereby, such award shall be
converted into a similar award for that number of shares of Parent Common
Stock equal to the product of (1) the number of shares of Company Common
Stock subject to the portion of such award which had not become fully
vested and free of restrictions and (2) the Exchange Ratio, and shall
otherwise remain subject to the terms and conditions in effect immediately
prior to the Effective Time (it being understood that any performance
criteria to which such award remains subject may be equitably adjusted by
the Management Development and Compensation Committee of Parent Board
(taking into account the recommendation of the Personnel Committee of the
Company Board) to reflect the consummation of the Merger).
(b) Parent shall take all corporate action necessary to reserve
for issuance a sufficient number of shares of Parent Common Stock for
delivery upon exercise of Company Stock Options and settlement of other
stock-based awards of the Company at and after the Effective Time.
(c) On or as soon as practicable after the Effective Time, Parent
shall file with the Commission a registration statement on an appropriate
form or a post-effective amendment to a previously filed registration
statement under the Securities Act of 1933, as amended (the "Securities
Act"), with respect to the Parent Common Stock subject to Company Stock
Options and other stock-based awards of the Company, and shall use its
reasonable best efforts to maintain the current status of the prospectus
contained therein, as well as comply with any applicable state securities
or "blue sky" laws, for so long as such options or other stock-based awards
remain outstanding.
SECTION 1.5 Adjustments. If at any time during the period between the
date of this Agreement and the Effective Time, any change in the
outstanding shares of capital stock of Parent or the Company shall occur by
reason of any reclassification, recapitalization, stock split or
combination, exchange or readjustment of shares, or any similar
transaction, or any stock dividend thereon with a record date during such
period, the Merger Consideration shall be appropriately adjusted to provide
the holders of shares of Company Common Stock the same economic effect as
contemplated by this Agreement prior to such event.
SECTION 1.6 Fractional Shares. No fractional shares of Parent Common
Stock shall be issued in the Merger, but in lieu thereof, each holder of
shares of Company Common Stock otherwise entitled to a fractional share of
Parent Common Stock will be entitled to receive, from the Exchange Agent in
accordance with the provisions of this Section 1.6, an amount of cash,
without interest thereon (rounded to the nearest whole cent), equal to the
product of (i) such fraction of a share of Parent Common Stock, multiplied
by (ii) the average of the closing prices of the shares of Parent Common
Stock on the New York Stock Exchange (the "NYSE") Composite Transaction
Reporting System as reported in The Wall Street Journal (but subject to
correction for typographical or other manifest errors in such reporting)
over the ten trading-day period immediately preceding the Closing Date.
SECTION 1.7 Withholding Rights. Each of the Surviving Corporation and
Parent shall be entitled to deduct and withhold from the consideration
otherwise payable to any person pursuant to this Article 1 such amounts as
it is required to deduct and withhold with respect to the making of such
payment under any provision of federal, state, local or foreign tax law. To
the extent that amounts are so withheld by the Surviving Corporation or
Parent, as the case may be, such withheld amounts shall be treated for all
purposes of this Agreement as having been paid to the holder of the shares
of Company Common Stock in respect of which such deduction and withholding
was made by the Surviving Corporation or Parent, as the case may be.
SECTION 1.8 Lost Certificates. If any Certificate shall have been
lost, stolen or destroyed, upon the making of an affidavit of that fact by
the Person claiming the Certificate to be lost, stolen or destroyed and, if
required by Parent or the Surviving Corporation, the posting by that Person
of a bond, in such reasonable amount as the Surviving Corporation may
direct (which shall not exceed amounts generally required by Parent from
holders of Parent Common Stock under similar circumstances), as indemnity
against any claim that may be made against it with respect to such
Certificate, the Exchange Agent will issue in exchange for such lost,
stolen or destroyed Certificate the Merger Consideration to be paid in
respect of the Shares represented by such Certificates as contemplated by
this Article I.
SECTION 1.9 Shares Held by Company Affiliates. Anything to the
contrary in this Agreement notwithstanding, no shares of Parent Common
Stock (or certificates therefor) shall be issued in exchange for any
Certificate to any Person who may be an "affiliate" of the Company
(identified pursuant to Section 7.8) until the Person shall have delivered
to Parent and the Company a duly executed letter as contemplated by Section
7.8.
SECTION 1.10 Appraisal Rights. In accordance with Section 262 of the
Delaware Law, no appraisal rights shall be available to holders of shares
of Company Common Stock in connection with the Merger.
ARTICLE II
CERTAIN GOVERNANCE MATTERS
SECTION 2.1 Parent Name Change. At the Effective Time, Parent shall
cause its certificate of incorporation to be amended to change its name to
" Honeywell International Inc." by causing a Subsidiary of Parent to be
merged with and into Parent and having the terms of such merger provide for
such name change.
SECTION 2.2 Parent Board of Directors; CEO; By-law Amendment.
(a) Prior to the Effective Time, the Board of Directors of Parent
shall take all action necessary to cause the Board of Directors of Parent
to consist, as of the Effective Time, of fifteen directors, (x) nine of
whom shall be persons designated by Parent who were directors of Parent
prior to the Effective Time and (y) six of whom shall be persons designated
by the Company who were directors of the Company prior to the Effective
Time. No more than one person who is an officer of Parent shall be
designated by Parent, and no more than one person who is an officer of the
Company shall be designated by the Company, in each case pursuant to the
prior sentence. If any such persons are not able to serve, the party on
whose Board such person presently sits shall select a replacement. The
persons designated to serve as directors by each party shall be apportioned
proportionately among each of the three classes of directors; it being
understood, however, that ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ shall be elected to serve
as a member of the class with the longest tenure as of the Effective Time.
(b) Prior to the Effective Time, the Board of Directors of Parent
shall take all necessary actions to cause (x) the following committees of
the Board of Directors of Parent to exist as of the Effective Time: Audit
Committee, Corporate Governance Committee, Corporate Responsibility
Committee, Management Development and Compensation Committee, Retirement
Plans and Finance Committee and Technology Committee; and (y) the
Chairpersons of four of those committees to be persons designated by Parent
and the Chairpersons of two of those committees to be persons designated by
the Company.
(c) Prior to the Effective Time, the Board of Directors of Parent
shall take all action necessary (x) to cause ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ to be
elected as Chief Executive Officer of Parent as of the Effective Time, (y)
to cause ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ to be elected as Chairman of the Board of
Directors of Parent effective as of April 1, 2000 or such earlier date as
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ shall retire as Chairman of the Board of Directors of
Parent, and (z) to create an Executive Office (the "Executive Office") as
of the Effective Time consisting of ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ until his
retirement as Chairman of the Board of Directors of Parent, ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇▇▇ as the Chief Executive Officer of Parent and, after the
retirement of ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, as Chairman of the Board of Directors of
Parent, and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇▇▇▇▇ Ferrari, each of whom shall
be elected as a Chief Operating Officer and an Executive Vice President of
Parent.
(d) At the Effective Time, Parent shall cause its By-laws to be
amended to incorporate the provisions set forth in Exhibit A hereto (such
amendment of the By-laws of Parent being referred to herein as the "By-laws
Amendment").
SECTION 2.3 Certificate of Incorporation of the Surviving Corporation.
The certificate of incorporation of the Company in effect at the Effective
Time shall be the certificate of incorporation of the Surviving Corporation
(until amended in accordance with applicable law), except that the first
sentence of Article FOURTH thereof shall be amended as of the Effective
Time to read in its entirety as follows: "The Corporation shall have the
authority to issue 1,000 shares of par value $1.50 per share designated as
Common Stock."
SECTION 2.4 By-laws of the Surviving Corporation. The by-laws of the
Company in effect at the Effective Time shall be the by-laws of the
Surviving Corporation (until amended in accordance with applicable law).
SECTION 2.5 Directors and Officers of the Surviving Corporation. From
and after the Effective Time, until successors are duly elected or
appointed and qualified in accordance with applicable law, (a) the
directors of Merger Subsidiary at the Effective Time shall be the directors
of the Surviving Corporation, who shall consist as of the Effective Time of
those people mutually agreed upon by the chief executive officers of the
Company and Parent, and (b) the officers of the Company at the Effective
Time shall be the officers of the Surviving Corporation.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Parent that except as set forth
in the disclosure schedules delivered by the Company to Parent
simultaneously with the execution of this Agreement (the "Company
Disclosure Schedules") or the Company Commission Documents (as defined in
Section 3.7(a)) filed prior to the date of this Agreement:
SECTION 3.1 Corporate Existence and Power. The Company is a
corporation duly incorporated, validly existing and in good standing under
the laws of the State of Delaware, and has all corporate powers and all
governmental licenses, authorizations, consents and approvals required to
carry on its business as now conducted, except for those the absence of
which would not, individually or in the aggregate, have a Material Adverse
Effect on the Company. The Company is duly qualified to do business as a
foreign corporation and is in good standing in each jurisdiction where the
character of the property owned or leased by it or the nature of its
activities makes such qualification necessary, except for those
jurisdictions where the failure to be so qualified would not, individually
or in the aggregate, have a Material Adverse Effect on the Company. For
purposes of this Agreement, a "Material Adverse Effect" with respect to any
Person means a material adverse effect on the financial condition,
business, liabilities, properties, assets or results of operations, taken
as a whole, of this Person and its Subsidiaries, taken as a whole, except
to the extent resulting from any changes in general United States or global
economic conditions or general economic conditions in industries in which
the Person competes or resulting from the announcement of the transaction
or any action required to be taken by the terms hereof. The Company has
heretofore made available to Parent true and complete copies of the
Company's certificate of incorporation and by-laws as currently in effect.
SECTION 3.2 Corporate Authorization.
(a) The execution, delivery and performance by the Company of
this Agreement and the Option Agreements and the consummation by the
Company of the transactions contemplated hereby and thereby are within the
Company's corporate powers and, except for any required approval by the
Company's stockholders in accordance with Delaware Law (the "Company
Stockholder Approval") in connection with the consummation of the Merger,
have been duly authorized by all necessary corporate action. The
affirmative vote of holders of the outstanding shares of Company Common
Stock having votes representing a majority of the votes of all such
outstanding capital stock, voting together as a single class, in favor of
the approval and adoption of this Agreement and the Merger is the only vote
of the holders of any of the Company's capital stock necessary in
connection with consummation of the Merger. Assuming due authorization,
execution and delivery of this Agreement and the Option Agreements by
Parent and/or Merger Subsidiary, as applicable, each of this Agreement and
the Option Agreements constitutes a valid and binding agreement of the
Company enforceable against the Company in accordance with its terms,
subject to bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and similar laws of general applicability relating to or
affecting creditors' rights, and to general equity principles.
(b) The Company's Board of Directors, at a meeting duly called
and held, has (i) determined that this Agreement and the Option Agreements
and the transactions contemplated hereby and thereby (including the Merger)
are fair to and in the best interests of the Company's stockholders, (ii)
approved and adopted this Agreement and the Option Agreements and the
transactions contemplated hereby and thereby (including the Merger), and
(iii) resolved (subject to Section 5.2) to recommend that the Company
stockholders vote for the approval and adoption of this Agreement and the
Merger.
SECTION 3.3 Governmental Authorization. The execution, delivery and
performance by the Company of this Agreement and the Option Agreements and
the consummation by the Company of the transactions contemplated hereby and
thereby require no action by or in respect of, or filing with, any
governmental body, agency, official or authority other than (a) the filing
of a certificate of merger in connection with the Merger in accordance with
Delaware Law, (b) compliance with any applicable requirements of the
▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of ▇▇▇▇ (▇▇▇ "▇▇▇ ▇▇▇"), (▇)
compliance with any applicable requirements of Council Regulation No.
4064/89 of the European Community, as amended (the "EC Merger Regulation"),
(d) compliance with any other applicable requirements of foreign anti-trust
or investment laws, (e) compliance with any applicable environmental
transfer statutes, (f) compliance with any applicable requirements of the
Securities Exchange Act of 1934, as amended, and the rules and regulations
promulgated thereunder (the "Exchange Act"), (g) compliance with any
applicable requirements of the Securities Act and (h) other actions or
filings which if not taken or made would not, individually or in the
aggregate, have a Material Adverse Effect on the Company or prevent or
materially delay the Company's consummation of the Merger.
SECTION 3.4 Non-Contravention. The execution, delivery and performance
by the Company of this Agreement and the Option Agreements and the
consummation by the Company of the transactions contemplated hereby and
thereby do not and will not (a) contravene or conflict with the certificate
of incorporation or by-laws of the Company, (b) assuming compliance with
the matters referred to in Section 3.3 and subject to receipt of the
Company Stockholder Approval, contravene or conflict with or constitute a
violation of any provision of any law, regulation, judgment, injunction,
order or decree binding upon or applicable to the Company or any of its
Subsidiaries (as defined in Section 3.6), (c) subject to receipt of the
Company Stockholder Approval, constitute a default under or give rise to
any right of termination, cancellation or acceleration of any right or
obligation of the Company or any of its Subsidiaries or to a loss of any
benefit to which the Company or any of its Subsidiaries is entitled under
any provision of any agreement, contract or other instrument binding upon
the Company or any of its Subsidiaries or any license, franchise, permit or
other similar authorization held by the Company or any of its Subsidiaries,
or (d) result in the creation or imposition of any Lien on any asset of the
Company or any of its Subsidiaries, except for such contraventions,
conflicts or violations referred to in clause (b) or defaults, rights of
termination, cancellation or acceleration, or losses or Liens referred to
in clause (c) or (d) that would not, individually or in the aggregate, have
a Material Adverse Effect on the Company. For purposes of this Agreement,
"Lien" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such
asset other than any such mortgage, lien, pledge, charge, security interest
or encumbrance (i) for Taxes (as defined in Section 3.13) not yet due or
being contested in good faith or (ii) which is a carriers', warehousemen's,
mechanics', materialmen's, repairmen's or other like lien arising in the
ordinary course of business. Neither the Company nor any Subsidiary of the
Company is a party to any agreement that expressly limits the ability of
the Company or any Subsidiary of the Company to compete in or conduct any
line of business or compete with any Person or in any geographic area or
during any period of time except to the extent that any such limitation,
individually or in the aggregate, would not have a Material Adverse Effect
on Parent or the Surviving Corporation immediately after the Effective
Time.
SECTION 3.5 Capitalization. The authorized capital stock of the
Company consists of 375,000,000 shares of Company Common Stock and
25,000,000 shares of preferred stock, par value $1.00 per share (of which
2,000,000 are designated "Series B Junior Participating Preferred Stock"
and the remaining shares of such preferred stock are not subject to any
designation) (the "Company Preferred Stock"). As of the close of business
on June 1, 1999, there were outstanding (i) 126,841, 802 shares of Company
Common Stock and (ii) no shares of Company Preferred Stock (all of the
Series B Junior Participating Preferred Stock being reserved for issuance
in accordance with the Rights Agreement (the "Company Rights Agreement"),
dated as of January 16, 1996, by and between the Company and ▇▇▇▇▇ ▇▇▇▇▇▇
Shareholder Services, L.L.C., as Rights Agent, pursuant to which the
Company has issued rights to purchase the Series B Junior Participating
Preferred Stock ("Company Rights")) and no other shares of capital stock or
other voting securities of the Company were then outstanding. All
outstanding shares of capital stock of the Company have been duly
authorized and validly issued and are fully paid and nonassessable. Except
for (a) Company Stock Options to acquire no more than 6,491,358 shares of
Company Common Stock issued pursuant to the Company Stock Plans, (b)
Company Rights none of which are exercisable, (c) the option granted
pursuant to the Parent Option Agreement, (d) stock units for no more than
231,954 shares of Company Common Stock and (e) shares issuable under the
Company's employee stock purchase plans in the ordinary course of business
consistent with past practice, as of the close of business on June 1, 1999,
there were no outstanding options, warrants or other rights to acquire from
the Company, and no preemptive or similar rights, subscription or other
rights, convertible or exchangeable securities, agreements, arrangements or
commitments of any character, relating to the capital stock of the Company,
obligating the Company to issue, transfer or sell, any capital stock,
voting securities or securities convertible into or exchangeable for
capital stock or voting securities of the Company or obligating the Company
to grant, extend or enter into any such option, warrant, subscription or
other right, convertible or exchangeable security, agreement, arrangement
or commitment (each of the foregoing, a "Company Convertible Security").
Since the close of business on June 1, 1999, the Company has not issued any
shares of capital stock or any Company Convertible Securities other than
the issuance of Company Common Stock in connection with the exercise of the
Company Stock Options described in clause (a) above and/or as permitted by
Section 5.1 hereof. Except as required by the terms of any Company Stock
Options, the Blossom Non-Employee Directors Fee and Stock Unit Plan and/or
as permitted by Section 5.1, there are no outstanding obligations of the
Company or any of its Subsidiaries to repurchase, redeem or otherwise
acquire any shares of capital stock of the Company or any Company
Convertible Securities.
SECTION 3.6 Subsidiaries.
(a) Each Subsidiary of the Company is duly organized, validly
existing and in good standing under the laws of its jurisdiction of
organization, has all powers and all governmental licenses, authorizations,
consents and approvals required to carry on its business as now conducted,
except for those the absence of which would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect on the
Company. For purposes of this Agreement, the word "Subsidiary" when used
with respect to any Person means any other Person, whether incorporated or
unincorporated, of which (i) more than fifty percent of the securities or
other ownership interests or (ii) securities or other interests having by
their terms ordinary voting power to elect more than fifty percent of the
board of directors or others performing similar functions with respect to
such corporation or other organization, is directly owned or controlled by
such Person or by any one or more of its Subsidiaries. Each Subsidiary of
the Company is duly qualified to do business and is in good standing in
each jurisdiction where the character of the property owned or leased by it
or the nature of its activities makes such qualification necessary, except
for those jurisdictions where failure to be so qualified would not,
individually or in the aggregate, have a Material Adverse Effect on the
Company.
(b) Except for directors' qualifying shares and except as set
forth in the Company's annual report on Form 10-K for the fiscal year ended
December 31, 1998 (the "Company 10-K"), all of the outstanding capital
stock of, or other ownership interests in, each Significant Subsidiary (as
such term is defined in rule 12b-2 under the Exchange Act) of the Company
is, directly or indirectly, owned by the Company. All shares of capital
stock of, or other ownership interests in, Subsidiaries of the Company,
directly or indirectly, owned by the Company are owned free and clear of
any Lien and free of any other limitation or restriction (including any
restriction on the right to vote, sell or otherwise dispose of such capital
stock or other ownership interests), except as would not, individually or
in the aggregate, have a Material Adverse Effect on the Company. There are
no outstanding options, warrants or other rights to acquire from the
Company or any of its Subsidiaries, and, except as may be required by
applicable foreign corporate laws, no preemptive or similar rights,
subscriptions or other rights, convertible or exchangeable securities,
agreements, arrangements or commitments of any character, relating to the
capital stock of any Subsidiary of the Company, obligating the Company or
any of its Subsidiaries to issue, transfer or sell, any capital stock,
voting securities or other ownership interests in, or any securities
convertible into or exchangeable for any capital stock, voting securities
or ownership interests in, any Subsidiary of the Company or obligating the
Company or any Subsidiary of the Company to grant, extend or enter into any
such option, warrant, subscription or other right, convertible or
exchangeable security, agreement, arrangement or commitment (each of the
foregoing, a "Company Subsidiary Convertible Security"). There are no
outstanding obligations of the Company or any of its Subsidiaries to
repurchase, redeem or otherwise acquire from any Person (other than the
Company or a wholly owned Subsidiary of the Company) any outstanding shares
of capital stock of any Subsidiary of the Company or any Company Subsidiary
Convertible Securities.
SECTION 3.7 Commission Filings.
(a) The Company has made available to Parent (i) its annual
reports on Form 10-K for its fiscal years ended December 31, 1996, 1997 and
1998, (ii) its quarterly reports on Form 10-Q for its fiscal quarters ended
after December 31, 1998, (iii) its proxy or information statements relating
to meetings of, or actions taken without a meeting by, the stockholders of
the Company held since December 31, 1998, and (iv) all of its other
reports, statements, schedules and registration statements filed with the
Commission since December 31, 1998 (the documents referred to in this
Section 3.7(a) being referred to collectively as the "Company Commission
Documents"). The Company's quarterly report on Form 10-Q for its fiscal
quarter ended April 4, 1999 is referred to as the "Company 10-Q".
(b) As of its filing date, each Company Commission Document
complied as to form in all material respects with the applicable
requirements of the Exchange Act and the Securities Act.
(c) As of its filing date, each Company Commission Document filed
pursuant to the Exchange Act did not contain any untrue statement of a
material fact or omit to state any material fact necessary in order to make
the statements made therein, in the light of the circumstances under which
they were made, not misleading.
(d) Each registration statement, as amended or supplemented, if
applicable, filed by the Company pursuant to the Securities Act since
December 31, 1996, as of the date such statement or amendment became
effective did not contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary to
make the statements therein not misleading.
SECTION 3.8 Financial Statements. The audited consolidated financial
statements and unaudited consolidated interim financial statements of the
Company (including any related notes and schedules) included in its annual
reports on Form 10-K and the quarterly reports on Form 10-Q referred to in
Section 3.7 present fairly, in all material respects, the financial
position of the Company and its subsidiaries as of the dates thereof and
their results of operations and cash flows for the periods then ended
(subject to normal year-end adjustments and the absence of notes in the
case of any unaudited interim financial statements), in each case in
conformity GAAP applied on a consistent basis (except as may be indicated
in the notes thereto). For purposes of this Agreement, "Company Balance
Sheet" means the consolidated balance sheet of the Company as of April 4,
1999 set forth in the Company 10-Q and "Company Balance Sheet Date" means
April 4, 1999.
SECTION 3.9 Disclosure Documents.
(a) Neither the proxy statement of the Company (the "Company
Proxy Statement") to be filed with the Commission in connection with the
Merger, nor any amendment or supplement thereto, will, at the date the
Company Proxy Statement or any such amendment or supplement is first mailed
to stockholders of the Company or at the time such stockholders vote on the
adoption and approval of this Agreement and the transactions contemplated
hereby, contain any untrue statement of a material fact or omit to state
any material fact necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading. The
Company Proxy Statement will, when filed, comply as to form in all material
respects with the requirements of the Exchange Act. No representation or
warranty is made by the Company in this Section 3.9 with respect to
statements made or incorporated by reference therein based on information
supplied by Parent or Merger Subsidiary for inclusion or incorporation by
reference in the Company Proxy Statement.
(b) None of the information supplied or to be supplied by the
Company for inclusion or incorporation by reference in the Parent Proxy
Statement (as defined in Section 4.9) or in the Form S-4 (as defined in
Section 4.9) or any amendment or supplement thereto will, at the time the
Parent Proxy Statement or any such supplement or amendment thereto is first
mailed to the stockholders of Parent or at the time the stockholders vote
on the matters constituting the Parent Stockholder Approval (as defined in
Section 4.2) or at the time the Form S-4 or any such amendment or
supplement becomes effective under the Securities Act or at the Effective
Time, as the case may be, contain any untrue statement of a material fact
or omit to state a material fact necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading.
SECTION 3.10 Absence of Certain Changes. Since the Company Balance
Sheet Date and, other than with respect to clause (a) below, prior to the
date hereof, the Company and its Subsidiaries have conducted their
respective businesses in the ordinary course, consistent with past
practice, and there has not been:
(a) any event, occurrence or development which, individually or
in the aggregate, would have a Material Adverse Effect on the Company;
(b) any declaration, setting aside or payment of any dividend or
other distribution with respect to any shares of capital stock of the
Company (other than regular quarterly cash dividends payable by the Company
in respect of the shares of Company Common Stock consistent with past
practice), or any repurchase (other than repurchases of Company Common
Stock which occurred subsequent to the Company Balance Sheet Date and prior
to the date hereof), redemption or other acquisition by the Company or any
of its Significant Subsidiaries of any outstanding shares of their capital
stock or any Company Convertible Securities or Company Subsidiary
Convertible Securities (except (x) as required by the terms of any Company
Stock Option, (y) in accordance with any dividend reinvestment plan as in
effect on the date of this Agreement in the ordinary course of the
operation of such plan consistent with past practice and/or (z) as
otherwise permitted by Section 5.1);
(c) any amendment of any material term of any outstanding
security of the Company or any of its Significant Subsidiaries;
(d) any transaction or commitment made, or any contract,
agreement or settlement entered into, by (or judgment, order or decree
affecting) the Company or any of its Subsidiaries relating to its assets or
business (including the acquisition or disposition of any material amount
of assets) or any relinquishment by the Company or any of its Subsidiaries
of any contract or other right, in either case, material to the Company and
its Subsidiaries taken as a whole, other than transactions, commitments,
contracts, agreements or settlements (including without limitation
settlements of litigation and tax proceedings) in the ordinary course of
business consistent with past practice and those contemplated by this
Agreement;
(e) any change in any method of accounting or accounting practice
(other than any change for tax purposes) by the Company or any of its
Subsidiaries, except for any such change which is not material or which is
required by reason of a concurrent change in GAAP;
(f) any (i) grant of any severance or termination pay to (or
amendment to any such existing arrangement with) any director, officer or
employee of the Company or any of its Subsidiaries, (ii) entering into of
any employment, deferred compensation, supplemental retirement or other
similar agreement (or any amendment to any such existing agreement) with
any director, officer or employee of the Company or any of its
Subsidiaries, (iii) increase in, or accelerated vesting and/or payment of,
benefits under any existing severance or termination pay policies or
employment agreements or (iv) increase in or enhancement of any rights or
features related to compensation, bonus or other benefits payable to
directors, officers or employees of the Company or any of its Subsidiaries,
in each case, other than in the ordinary course of business consistent with
past practice or as permitted by this Agreement; or
(g) any material Tax election made or changed, any material audit
settled or any material amended Tax Returns filed.
SECTION 3.11 No Undisclosed Material Liabilities. There are no
liabilities of the Company or any Subsidiary of the Company of any kind
whatsoever, whether accrued, contingent, absolute, determined, determinable
or otherwise, other than:
(a) liabilities disclosed or provided for in the Company Balance
Sheet or in the notes thereto;
(b) liabilities incurred since such date in the ordinary course
of business;
(c) liabilities which, individually or in the aggregate, would
not have a Material Adverse Effect on the Company;
(d) liabilities disclosed in the Company Commission Documents
filed prior to the date of this Agreement; and
(e) liabilities under this Agreement.
SECTION 3.12 Litigation. There is no action, suit, investigation or
proceeding pending against, or to the knowledge of the Company threatened
against or affecting, the Company or any of its Subsidiaries or any of
their respective properties or any of their respective officers or
directors before any court or arbitrator or any governmental body, agency
or official except as would not, individually or in the aggregate, have a
Material Adverse Effect on the Company or prevent or materially delay the
consummation of the Merger.
SECTION 3.13 Taxes. Except as provided for in the Company Balance
Sheet (including the notes thereto) or as would not, individually or in the
aggregate, have a Material Adverse Effect on the Company, (i) all Company
Tax Returns required to be filed with any taxing authority by, or with
respect to, the Company and its Subsidiaries have been filed in accordance
with all applicable laws; (ii) the Company and its Subsidiaries have timely
paid all Taxes shown as due and payable on the Company Tax Returns that
have been so filed, and, as of the time of filing, the Company Tax Returns
correctly reflected the facts regarding the income, business, assets,
operations, activities and the status of the Company and its Subsidiaries
(other than Taxes which are being contested in good faith and for which
adequate reserves are reflected on the Company Balance Sheet); (iii) the
Company and its Subsidiaries have made provision for all Taxes payable by
the Company and its Subsidiaries for which no Company Tax Return has yet
been filed; (iv) the charges, accruals and reserves for Taxes with respect
to the Company and its Subsidiaries reflected on the Company Balance Sheet
are adequate under GAAP to cover the Tax liabilities accruing through the
date thereof; (v) there is no action, suit, proceeding, audit or claim now
proposed or pending against or with respect to the Company or any of its
Subsidiaries in respect of any Tax where there is a reasonable possibility
of an adverse determination; and (vi) to the best of the Company's
knowledge and belief, neither the Company nor any of its Subsidiaries is
liable for any Tax imposed on any entity other than such Person, except as
the result of the application of Treas. Reg. Sections 1.1502-6 (and any
comparable provision of the tax laws of any state, local or foreign
jurisdiction) to the affiliated group of which the Company is the common
parent. For purposes of this Agreement, "Taxes" shall mean any and all
taxes, charges, fees, levies or other assessments, including, without
limitation, all net income, gross income, gross receipts, excise, stamp,
real or personal property, ad valorem, withholding, social security (or
similar), unemployment, occupation, use, production, service, service use,
license, net worth, payroll, franchise, severance, transfer, recording,
employment, premium, windfall profits, environmental (including taxes under
Section 59A of the Code), customs duties, capital stock, profits,
disability, sales, registration, value added, alternative or add-on
minimum, estimated or other taxes, assessments or charges imposed by any
federal, state, local or foreign governmental entity and any interest,
penalties, or additions to tax attributable thereto. For purposes of this
Agreement, "Tax Returns" shall mean any return, report, form 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 3.14 Employee Benefit Plans.
(a) For purposes of this Agreement, the term "Company Employee
Plans" shall mean and include: each material management, consulting,
non-compete, employment, severance or similar contract, plan, including,
without limitation, all Company Stock Plans, arrangement or policy
applicable to any director, former director, employee or former employee of
the Company and each material plan, program, policy, agreement or
arrangement (written or oral), providing for compensation, bonuses,
profit-sharing, stock option or other stock related rights or other forms
of incentive or deferred compensation, vacation benefits, insurance
coverage (including any self-insured arrangements), health or medical
benefits, disability benefits, workers' compensation, supplemental
unemployment benefits, severance benefits and post-employment or retirement
benefits (including compensation, pension, health, medical or life
insurance benefits) or other employee benefits of any kind, whether funded
or unfunded, which is maintained, administered or contributed to by the
Company or any Subsidiary and covers any employee or director or former
employee or director of the Company or any Subsidiary, or under which the
Company has any liability contingent or otherwise (including but not
limited to each material "employee benefit plan," as defined in Section
3(3) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), but excluding any such plan that is a "multiemployer plan," as
defined in Section 3(37) of ERISA).
(b) Each Company Employee Plan has been established and
maintained in compliance with its terms and with the requirements
prescribed by any and all statutes, orders, rules and regulations
(including but not limited to ERISA and the Code) which are applicable to
such Plan, except where failure to so comply would not, individually or in
the aggregate, have a Material Adverse Effect on the Company.
(c) Neither the Company nor any affiliate of the Company has
incurred a liability under Title IV of ERISA that has not been satisfied in
full, and no condition exists that presents a material risk to the Company
or any affiliate of the Company of incurring any such liability other than
liability for premiums due the Pension Benefit Guaranty Corporation (which
premiums have been paid when due). All contributions required to be made
under the terms of any Company Employee Plan maintained in the United
States have been made, and, where applicable to a Company Employee Plan,
the Company and its affiliates have complied with the minimum funding
requirements under Section 412 of the Code and Section 302 of ERISA with
respect to each such Company Employee Plan.
(d) Each Company Employee Plan which is intended to be qualified
under section 401(a) of the Code is so qualified and has been so qualified
during the period from its adoption to date, and each trust forming a part
thereof is exempt from federal income tax pursuant to section 501(a) of the
Code and, to the Company's knowledge, no circumstances exist which will
adversely affect such qualification or exemption.
(e) No director or officer or other employee of the Company or
any of its Subsidiaries will become entitled to any retirement, severance
or similar benefit or enhanced or accelerated benefit (including any
acceleration of vesting or lapse of repurchase rights or obligations with
respect to any Company Stock Plans or other benefit under any compensation
plan or arrangement of the Company) solely as a result of the transactions
contemplated hereby; and (ii) no payment made or to be made to any current
or former employee or director of the Company or any of its affiliates by
reason of the transactions contemplated hereby (whether alone or in
connection with any other event) will constitute an "excess parachute
payment" within the meaning of Section 280G of the Code.
(f) Since the Company Balance Sheet Date, there has been no
amendment to, or change in employee participation or coverage under, any
Company Employee Plan which would increase materially the expense of
maintaining such Company Employee Plan above the level of the expense
incurred in respect thereof for the 12 months ended on the Company Balance
Sheet Date.
(g) The Company and its Subsidiaries are in compliance with all
applicable federal, state, local and foreign statutes, laws, (including
without limitation, common law), judicial decisions, regulations,
ordinances, rules, judgments, orders and codes respecting employment,
employment practices, labor, terms and conditions of employment and wages
and hours, and no work stoppage or labor strike against the Company and its
Subsidiaries are pending or threatened, nor are the Company and its
Subsidiaries involved in or threatened with any labor dispute, grievance,
or litigation relating to labor matters involving any employees, in each
case except as would not, individually or in the aggregate, have a Material
Adverse Effect on the Company. There are no suits, actions, disputes,
claims (other than routine claims for benefits), investigations or audits
pending or, to the knowledge of the Company, threatened in connection with
any Company Employee Plan, but excluding any of the foregoing which would
not have a Material Adverse Effect on the Company.
SECTION 3.15 Compliance with Laws. Neither the Company nor any of its
Subsidiaries is in violation of, or has since January 1, 1997 violated, any
applicable provisions of any laws, statutes, ordinances or regulations
except for any violations that, individually or in the aggregate, would not
have a Material Adverse Effect on the Company.
SECTION 3.16 Finders' or Advisors' Fees. Except for Bear, ▇▇▇▇▇▇▇ &
Co. Inc., a copy of whose engagement agreement has been provided to Parent,
there is no investment banker, broker, finder or other intermediary which
has been retained by or is authorized to act on behalf of the Company or
any of its Subsidiaries who might be entitled to any fee or commission in
connection with the transactions contemplated by this Agreement.
SECTION 3.17 Environmental Matters.
(a) Except for matters which, individually or in the aggregate,
would not have a Material Adverse Effect on the Company, (i) no written
notice, notification, demand, request for information, citation, summons,
complaint or order has been received by, and no investigation, action,
claim, suit, proceeding or review is pending or, to the knowledge of the
Company or any of its Subsidiaries, threatened by any Person against, the
Company or any of its Subsidiaries, and no penalty has been assessed within
the past three years against the Company or any of its Subsidiaries, in
each case, with respect to any matters relating to or arising out of any
Environmental Law; (ii) the Company and its Subsidiaries are in compliance
with all Environmental Laws; and (iii) to the knowledge of the Company,
there are no liabilities of or relating to the Company or any of its
Subsidiaries relating to or arising out of any Environmental Law and, to
the knowledge of the Company, there is no existing condition, situation or
set of circumstances which could reasonably be expected to result in such a
liability.
(b) For purposes of this Section 3.17 and Section 4.17, the term
"Environmental Laws" means federal, state, local and foreign statutes,
laws, judicial decisions, regulations, ordinances, rules, judgments,
orders, codes, injunctions, permits and governmental agreements relating to
human health and the environment, including, but not limited to, Hazardous
Materials; and the term "Hazardous Material" means all substances or
materials regulated as hazardous, toxic, explosive, dangerous, flammable or
radioactive under any Environmental Law including, but not limited to: (i)
petroleum, asbestos, or polychlorinated biphenyls and (ii) in the United
States, all substances defined as Hazardous Substances, Oils, Pollutants or
Contaminants in the National Oil and Hazardous Substances Pollution
Contingency Plan, 40 C.F.R. ss. 300.5.
SECTION 3.18 Opinion of Financial Advisor. The Company has received
the opinion of Bear, ▇▇▇▇▇▇▇ & Co. Inc. to the effect that, as of the date
of its opinion, the Exchange Ratio is fair from a financial point of view
to the holders of shares of Company Common Stock.
SECTION 3.19 Pooling; Tax Treatment.
(a) The Company intends that the Merger be accounted for under
the "pooling of interests" method under the requirements of Opinion No. 16
(Business Combinations) of the Accounting Principles Board of the American
Institute of Certified Public Accountants and the rules and regulations of
the SEC.
(b) Neither the Company nor any of its affiliates has taken or
agreed to take any action or is aware of any fact or circumstance with
respect to the Company or its affiliates that would prevent the Merger from
qualifying (i) for "pooling of interests" accounting treatment as described
in (a) above or (ii) as a reorganization within the meaning of Section 368
of the Code (a "368 Reorganization").
SECTION 3.20 Takeover Statutes and Charter Provisions. The Board of
Directors of the Company has taken the necessary action to render Section
203 of the Delaware Law, any other potentially applicable anti-takeover or
similar statute or regulation and the provisions of Sections A and B.2 of
Article EIGHTH of the Company's certificate of incorporation inapplicable
to this Agreement and the Parent Option Agreement and the transactions
contemplated hereby and thereby.
SECTION 3.21 Rights Agreement. The Board of Directors of the Company
has resolved to, and the Company promptly after the execution hereof will,
take all action necessary to render the rights issued pursuant to the terms
of the Company Rights Agreement inapplicable to the Merger, this Agreement,
the Parent Option Agreement and the other transactions contemplated hereby
and thereby and for the rights to expire as of the Effective Time.
SECTION 3.22 Intellectual Property Matters.
(a) The Company and its Subsidiaries own, free and clear of all
Liens, or have the right to use pursuant to valid license, sublicense,
agreement or permission all items of Intellectual Property (as defined in
Section 3.23(b)) necessary for their operations as presently conducted or
as contemplated to be conducted, except where the failure to have such
rights, individually or in the aggregate, would not have a Material Adverse
Effect on the Company. The conduct of the Company's and its Subsidiaries'
businesses as currently conducted or contemplated to be conducted does not
interfere, infringe, misappropriate or violate any of the Intellectual
Property rights of any third party, except for interferences,
infringements, misappropriations and violations which, individually or in
the aggregate, would not have a Material Adverse Effect on the Company. To
the best of the Company's knowledge, no third party has interfered with,
infringed upon, misappropriated, diluted, violated or otherwise come into
conflict with any Intellectual Property rights of the Company or any of its
Subsidiaries, except for misappropriations and violations which,
individually or in the aggregate, would not have a Material Adverse Effect
on the Company.
(b) The term "Intellectual Property" as used in this Agreement
means, collectively, patents, trademarks, service marks, trade dress,
logos, trade names, Internet domain names, designs, slogans and general
intangibles of like nature, copyrights and all registrations, applications,
reissuances, continuations, continuations-in-part, revisions, extensions,
reexaminations and associated good will with respect to each of the
foregoing, computer software (including source and object codes), computer
programs, computer data bases and related documentation and materials,
data, documentation, technology, trade secrets, confidential business
information (including ideas, formulae, algorithms, models, methodologies,
compositions, know-how, manufacturing and production processes and
techniques, research and development information, drawings, designs, plans,
proposals and technical data, financial, marketing and business data and
pricing and cost information) and other intellectual property rights (in
whatever form or medium).
SECTION 3.23 Year 2000 Compliance Matters. Except for matters which,
individually and in the aggregate, would not have a Material Adverse Effect
on the Company, all proprietary and third-party licensed computer systems
including computer hardware and software owned, leased or licensed by the
Company and computer software incorporated in products manufactured by the
Company and its Subsidiaries (a) will, prior to December 31, 1999,
accurately and without interruption recognize the advent of the year 2000
without any adverse change in operation associated with such recognition,
(b) can accurately and without interruption recognize and manipulate date
information relating to dates prior to, on and after January 1, 2000 and
(c) can accurately and without interruption interact with other year 2000
compliant computer systems and computer software in a way that does not
compromise their ability to correctly recognize the advent of the year 2000
or to accurately and without interruption recognize and manipulate date
information relating to dates prior to, on or after January 1, 2000. The
costs of the adaptations to such computer systems, hardware and software
being made by the Company and its Subsidiaries in order to achieve year
2000 compliance are not expected to have a Material Adverse Effect on the
Company.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT
Parent represents and warrants to the Company that except as set forth
in the disclosure schedules delivered by Parent to the Company
simultaneously with the execution of this Agreement (the "Parent Disclosure
Schedules") and Parent Commission Documents (as defined in Section 4.7)
filed prior to the date hereof:
SECTION 4.1 Corporate Existence and Power. Each of Parent and Merger
Subsidiary is a corporation duly incorporated, validly existing and in good
standing under the laws of its jurisdiction of incorporation and has all
corporate powers and all governmental licenses, authorizations, consents
and approvals required to carry on its business as now conducted, except
for those the absence of which would not, individually or in the aggregate,
have a Material Adverse Effect on Parent. Parent is duly qualified to do
business as a foreign corporation and is in good standing in each
jurisdiction where the character of the property owned or leased by it or
the nature of its activities makes such qualification necessary, except for
those jurisdictions where the failure to be so qualified would not,
individually or in the aggregate, have a Material Adverse Effect on Parent.
Since the date of its incorporation, Merger Subsidiary has not engaged in
any activities other than in connection with or as contemplated by this
Agreement. Parent has heretofore made available to the Company true and
complete copies of Parent's and Merger Subsidiary's certificate of
incorporation and by-laws as currently in effect. As of the date hereof,
neither Parent nor any of its Subsidiaries owns any shares of Company
Common Stock.
SECTION 4.2 Corporate Authorization.
(a) The execution, delivery and performance by Parent and Merger
Subsidiary of this Agreement, and by Parent of the Option Agreements, and
the consummation by Parent and Merger Subsidiary of the transactions
contemplated hereby and thereby are within the corporate powers of Parent
and Merger Subsidiary and have been duly authorized by all necessary
corporate action, and, except for the required approval of Parent's
stockholders, for the issuance of Parent Common Stock (the "Common Stock
Issuance") in connection with the Merger (the "Common Stock Issuance
Approval" or the "Parent Stockholders Approval"), the Common Stock Issuance
is in accordance with the rules and regulations of the NYSE. The
affirmative vote of the holders of shares of Parent Common Stock having
votes representing a majority of the votes cast with respect to the Common
Stock Issuance, voting together as a single class, in favor of the Common
Stock Issuance (provided that the total number of the votes cast in favor
and against the Common Stock Issuance represents over 50% of all of votes
eligible to be cast by all holders of Parent Common Stock) is the only vote
of the holders of any of Parent's capital stock necessary in connection
with obtaining the Common Stock Issuance Approval. Assuming due
authorization, execution and delivery of this Agreement and the Option
Agreements by the Company, this Agreement constitutes a valid and binding
agreement of each of Parent and Merger Subsidiary and the Option Agreements
constitute valid and binding agreements of Parent, in each case enforceable
against such party in accordance with its terms, subject to bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium and similar
laws of general applicability relating to or affecting creditors' rights
and to general equity principles. The shares of Parent Common Stock issued
pursuant to the Merger, when issued in accordance with the terms hereof,
will be duly authorized, validly issued, fully paid and nonassessable and
not subject to preemptive rights.
(b) Parent's Board of Directors, at a meeting duly called and
held, has (i) determined that this Agreement and the Option Agreements and
the transactions contemplated hereby and thereby (including the Merger) are
fair to and in the best interests of Parent's stockholders, (ii) approved
this Agreement and the Option Agreements and the transactions contemplated
hereby and thereby (including the Merger, the Common Stock Issuance and the
By-laws Amendment), and (iii) resolved (subject to Section 6.4) to
recommend that Parent's stockholders vote in favor of the Common Stock
Issuance.
SECTION 4.3 Governmental Authorization. The execution, delivery and
performance by Parent and Merger Subsidiary of this Agreement, and by
Parent of the Option Agreements, and the consummation by Parent and Merger
Subsidiary of the transactions contemplated hereby and thereby require no
action by or in respect of, or filing with, any governmental body, agency,
official or authority other than (a) the filing of a certificate of merger
in connection with the Merger, and a certificate of merger in connection
with the merger contemplated by Section 2.1, in each case in accordance
with Delaware Law, (b) compliance with any applicable requirements of the
HSR Act, (c) compliance with any applicable requirements of the EC Merger
Regulation, (d) compliance with any other applicable requirements of
foreign anti-trust or investments laws, (e) compliance with any applicable
environmental transfer statutes, (f) compliance with any applicable
requirements of the Exchange Act, (g) compliance with any applicable
requirements of the Securities Act, and (h) other actions or filings which
if not taken or made would not, individually or in the aggregate, have a
Material Adverse Effect on Parent or prevent or materially delay Parent's
and/or Merger Subsidiary's consummation of the Merger.
SECTION 4.4 Non-Contravention. The execution, delivery and performance
by Parent and Merger Subsidiary of this Agreement, and by Parent of the
Option Agreements, and the consummation by Parent and Merger Subsidiary of
the transactions contemplated hereby and thereby do not and will not (a)
contravene or conflict with the certificate of incorporation or by-laws of
Parent or Merger Subsidiary, (b) assuming compliance with the matters
referred to in Section 4.3 and subject to receipt of the Parent Stockholder
Approval, contravene or conflict with or constitute a violation of any
provision of any law, regulation, judgment, injunction, order or decree
binding upon or applicable to Parent or any of its Subsidiaries, (c)
subject to receipt of the Parent Stockholder Approval, constitute a default
under or give rise to any right of termination, cancellation or
acceleration of any right or obligation of Parent or any of its
Subsidiaries or to a loss of any benefit to which Parent or any of its
Subsidiaries is entitled under any provision of any agreement, contract or
other instrument binding upon Parent or any of its Subsidiaries or any
license, franchise, permit or other similar authorization held by Parent or
any of its Subsidiaries or (d) result in the creation or imposition of any
Lien on any asset of Parent or any of its Subsidiaries, except for such
contraventions, conflicts or violations referred to in clause (b) or
defaults, rights of termination, cancellation or acceleration, or losses or
Liens referred to in clause (c) or (d) that would not, individually or in
the aggregate, have a Material Adverse Effect on Parent. Neither Parent nor
any Subsidiary of Parent is a party to any agreement that expressly limits
the ability of Parent or any Subsidiary of Parent to compete in or conduct
any line of business or compete with any Person or in any geographic area
or during any period of time except to the extent that any such limitation,
individually or in the aggregate, would not have a Material Adverse Effect
on Parent immediately after the Effective Time.
SECTION 4.5 Capitalization. The authorized capital stock of Parent
consists of 1,000,000,000 shares of Parent Common Stock and 20,000,000
shares of preferred stock, without par value (of which 51,250 are
designated "$91.25 Series A Cumulative Preferred Shares", 3,593,281 are
designated "$6.74 Series C Cumulative Convertible Preferred Shares",
984,089 are designated "$12 Series D Cumulative Convertible Preferred
Shares", 2,755,173 are designated "Adjustable Rate Series F Cumulative
Preferred Shares," 24,929 are designated "$86.25 Series G Cumulative
Preferred Shares", 968,754 are designated "8.25% Series AA Cumulative
Convertible Preferred Shares," and the remaining shares of such preferred
stock are not subject to any designation) ("Parent Preferred Stock"). As of
the close of business on June 3, 1999, there were outstanding 549,289,134
shares of Parent Common Stock, no shares of Parent Preferred Stock and no
other shares of capital stock or other voting securities of Parent were
outstanding. All outstanding shares of capital stock of Parent have been
duly authorized and validly issued and are fully paid and nonassessable.
Except for (a) employee or director stock options to acquire no more than
38,472,492 shares of Parent Common Stock, (b) shares of Parent Common Stock
to be issued in connection with the Merger, (c) the option granted pursuant
to the Company Option Agreement and (d) 1,458,867 shares issuable pursuant
to Parent's employee stock purchase plans in the ordinary course of
business consistent with past practice, as of the close of business on June
3, 1999, there were no outstanding options, warrants or other rights to
acquire from Parent, and no preemptive or similar rights, subscription or
other rights, convertible or exchangeable securities, agreements,
arrangements, or commitments of any character, relating to the capital
stock of Parent, obligating Parent to issue, transfer or sell any capital
stock, voting securities or securities convertible into or exchangeable for
capital stock or voting securities of Parent or obligating Parent to grant,
extend or enter into any such option, warrant, subscription or other right,
convertible or exchangeable security, agreement, arrangement or commitment
(each of the foregoing, a "Parent Convertible Security"). Since the close
of business on June 3, 1999, Parent has not issued any shares of capital
stock or Parent Convertible Securities, other than in connection with the
exercise of employee stock options described in clause (a) above and/or as
permitted by Section 6.1 hereof. Except as required by the terms of any
employee or director stock options and/or as permitted by 6.1, there are no
outstanding obligations of Parent or any of its Subsidiaries to repurchase,
redeem or otherwise acquire any shares of capital stock of Parent and of
any Parent Convertible Securities.
SECTION 4.6 Subsidiaries.
(a) Each Subsidiary of Parent is duly organized, validly existing
and in good standing under the laws of its jurisdiction of organization,
has all powers and all governmental licenses, authorizations, permits,
consents and approvals required to carry on its business as now conducted,
except for those the absence of which would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect on
Parent. Each Subsidiary of Parent is duly qualified to do business and is
in good standing in each jurisdiction where the character of the property
owned or leased by it or the nature of its activities makes such
qualifications necessary, except for those jurisdictions where failure to
be so qualified would not, individually or in the aggregate, have a
Material Adverse Effect on Parent.
(b) Except for directors' qualifying shares and except as set
forth in Parent's annual report on Form 10-K for the fiscal year ended
December 31, 1998 ("Parent 10-K"), all of the outstanding capital stock of,
or other ownership interests in, each Significant Subsidiary of Parent is
owned, directly or indirectly, by Parent. All shares of capital stock of,
or other ownership interests in, Subsidiaries of the Parent owned, directly
or indirectly, by Parent are owned free and clear of any Lien and free of
any other limitation or restriction (including any restriction on the right
to vote, sell or otherwise dispose of such capital stock or other ownership
interests), except as would not, individually or in the aggregate, have a
Material Adverse Effect on the Parent. There are no outstanding options,
warrants or other rights to acquire, and, except as may be required by
applicable foreign corporate laws, no preemptive or similar rights,
subscriptions or other rights, convertible or exchangeable securities,
agreements, arrangements or commitments of any character, relating to the
capital stock of any Subsidiary of Parent, obligating Parent or any of its
Subsidiaries to issue, transfer or sell, any capital stock, voting
securities or other ownership interests in, or any securities convertible
into or exchangeable for any capital stock, voting securities or ownership
interests in, any Subsidiary of Parent or obligating Parent or any
Subsidiary of Parent to grant, extend or enter into any such option,
warrant, subscription or other right, convertible or exchangeable security,
agreement, arrangement or commitment (each of the foregoing, a "Parent
Subsidiary Convertible Security"). There are no outstanding obligations of
Parent or any of its Subsidiaries to repurchase, redeem or otherwise
acquire from any Person (other than Parent or a wholly owned Subsidiary of
Parent) any outstanding shares of capital stock of any Subsidiary of Parent
or any Parent Subsidiary Convertible Securities.
SECTION 4.7 Commission Filings.
(a) Parent has made available to the Company (i) its annual
reports on Form 10-K for its fiscal years ended December 31, 1996, 1997 and
1998, (ii) its quarterly reports on Form 10-Q for its fiscal quarters ended
after December 31, 1998, (iii) its proxy or information statements relating
to meetings, of, or actions taken without a meeting by, the stockholders of
Parent held since December 31, 1998, and (iv) all of its other reports,
statements, schedules and registration statements filed with the Commission
since December 31, 1998 (the documents referred to in this Section 4.7(a)
being referred to collectively as the "Parent Commission Documents").
Parent's quarterly report on Form 10-Q for its fiscal quarter ended March
31, 1999 is referred to as the "Parent 10-Q".
(b) As of its filing date, each Parent Commission Document
complied as to form in all material respects with the applicable
requirements of the Exchange Act and the Securities Act.
(c) As of its filing date, each Parent Commission Document filed
pursuant to the Exchange Act did not contain any untrue statement of a
material fact or omit to state any material fact necessary in order to make
the statements made therein, in the light of the circumstances under which
they were made, not misleading.
(d) Each registration statement, as amended or supplemented, if
applicable, filed by Parent pursuant to the Securities Act since December
31, 1996, as of the date such statement or amendment became effective did
not contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the
statements therein not misleading.
SECTION 4.8 Financial Statements. The audited consolidated financial
statements and unaudited consolidated interim financial statements of
Parent (including any related notes and schedules) included in the annual
reports on Form 10-K and the quarterly reports on Form 10-Q referred to in
Section 4.7 present fairly, in all material respects, the financial
position of Parent and its subsidiaries as of the dates thereof and their
results of operations and cash flows for the periods then ended (subject to
normal year-end adjustments and the absence of notes in the case of any
unaudited interim financial statements), in each case in conformity with
GAAP applied on a consistent basis (except as may be indicated in the notes
thereto). For purposes of this Agreement, "Parent Balance Sheet" means the
consolidated balance sheet of Parent as of March 31, 1999 set forth in the
Parent 10-Q and "Parent Balance Sheet Date" means March 31, 1999.
SECTION 4.9 Disclosure Documents.
(a) The proxy statement of Parent (the "Parent Proxy Statement")
to be filed with the Commission in connection with the Merger and the
Registration Statement on Form S-4 of Parent (the "Form S-4") to be filed
under the Securities Act relating to the issuance of Parent Common Stock in
the Merger, and any amendments or supplements thereto, will, when filed,
subject to the last sentence of Section 4.9(b), comply as to form in all
material respects with the applicable requirements of the Securities Act.
(b) Neither the Parent Proxy Statement nor any amendment or
supplement thereto, will, at the date the Parent Proxy Statement or any
such amendment or supplement is first mailed to stockholders of Parent or
at the time such stockholders vote on the matters constituting the Parent
Stockholder Approval, contain any untrue statement of a material fact or
omit to state any material fact necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. Neither the Form S-4 nor any amendment or supplement thereto
will at the time it becomes effective under the Securities Act or at the
Effective Time contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make
the statements therein not misleading. No representation or warranty is
made by Parent in this Section 4.9 with respect to statements made or
incorporated by reference therein based on information supplied by the
Company for inclusion or incorporation by reference in the Parent Proxy
Statement or the Form S-4.
(c) None of the information supplied or to be supplied by Parent
for inclusion or incorporation by reference in the Company Proxy Statement
or any amendment or supplement thereto will, at the date the Company Proxy
Statement or any amendment or supplement thereto is first mailed to the
stockholders of the Company or at the time the stockholders vote on the
adoption and approval of this Agreement and the transactions contemplated
hereby, contain any untrue statement of a material fact or omit to state
any material fact necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading.
SECTION 4.10 Absence of Certain Changes. Since the Parent Balance
Sheet Date, and, other than with respect to clause (a) below, prior to the
date hereof, Parent and its Subsidiaries have conducted their respective
businesses in the ordinary course, consistent with past practice and there
has not been:
(a) any event, occurrence or development which, individually or
in the aggregate, would have a Material Adverse Effect on Parent;
(b) any declaration, setting aside or payment of any dividend or
other distribution with respect to any shares of capital stock of Parent
(other than regular quarterly cash dividends payable by Parent in respect
of shares of Parent Common Stock consistent with past practice) or any
repurchase (other than repurchases of Parent Common Stock which occurred
subsequent to the Parent Balance Sheet Date and prior to the date hereof),
redemption or other acquisition by Parent or any of its Significant
Subsidiaries of any outstanding shares of its capital stock or any Parent
Convertible Securities (except (x) as required by the terms of any employee
or stock option plan or compensation plan or arrangement, (y) in accordance
with any dividend reinvestment plan as in effect as of the date of this
Agreement in the ordinary course of operation of such plan consistent with
past practice, and/or (z) as otherwise permitted by Section 6.1); or
(c) any amendment of any material term of any outstanding
security of Parent or any of its Significant Subsidiaries;
(d) any transaction or commitment made, or any contract,
agreement or settlement entered into, by (or judgment, order or decree
affecting) Parent or any of its Subsidiaries relating to its assets or
business (including the acquisition or disposition of any material amount
of assets) or any relinquishment by Parent or any of its Subsidiaries of
any contract or other right, in either case, material to Parent and its
Subsidiaries taken as a whole, other than transactions, commitments,
contracts, agreements or settlements (including without limitation
settlements of litigation and tax proceedings) in the ordinary course of
business consistent with past practice and those contemplated by this
Agreement;
(e) any change prior to the date hereof in any method of
accounting or accounting practice (other than any change for tax purposes)
by Parent or any of its Subsidiaries, except for any such change which is
not material or which is required by reason of a concurrent change in GAAP;
or
(f) any (i) grant of any severance or termination pay to (or
amendment to any such existing arrangement with) any director, officer or
employee of Parent or any of its Subsidiaries, (ii) entering into of any
employment, deferred compensation, supplemental retirement or other similar
agreement (or any amendment to any such existing agreement) with any
director, officer or employee of Parent or any of its Subsidiaries, (iii)
increase in, or accelerated vesting and/or payment of, benefits under any
existing severance or termination pay policies or employment agreements or
(iv) increase in or enhancement of any rights or features related to
compensation, bonus or other benefits payable to directors, officers or
employees of Parent or any of its Subsidiaries, in each case, other than in
the ordinary course of business consistent with past practice or as
permitted by this Agreement; or
(g) any material Tax election made or changed, any material audit
settled or any material amended Tax Returns filed.
SECTION 4.11 No Undisclosed Material Liabilities. There are no
liabilities of Parent or any Subsidiary of Parent of any kind whatsoever,
whether accrued, contingent, absolute, determined, determinable or
otherwise, other than:
(a) liabilities disclosed or provided for in the Parent Balance
Sheet or in the notes thereto;
(b) liabilities incurred since such date in the ordinary course
of business;
(c) liabilities which, individually or in the aggregate, would
not have a Material Adverse Effect on Parent;
(d) liabilities disclosed in the Parent Commission Documents
filed prior to the date of this Agreement; and
(e) liabilities under this Agreement.
SECTION 4.12 Litigation. There is no action, suit, investigation or
proceeding pending against, or to the knowledge of Parent threatened
against or affecting, Parent or any of its Subsidiaries or any of their
respective properties or any of their respective officers or directors
before any court or arbitrator or any governmental body, agency or official
except as would not, individually or in the aggregate, have a Material
Adverse Effect on Parent or prevent or materially delay the consummation of
the Merger.
SECTION 4.13 Taxes. Except as provided for in the Parent Balance Sheet
(including the notes thereto) or as would not, individually or in the
aggregate, have a Material Adverse Effect on Parent, (i) all Parent Tax
Returns required to be filed with any taxing authority by, or with respect
to, Parent and its Subsidiaries have been filed in accordance with all
applicable laws; (ii) Parent and its Subsidiaries have timely paid all
Taxes shown as due and payable on Parent Tax Returns that have been so
filed, and, as of the time of filing, the Parent Tax Returns correctly
reflected the facts regarding the income, business, assets, operations,
activities and the status of Parent and its Subsidiaries (other than Taxes
which are being contested in good faith and for which adequate reserves are
reflected on the Parent Balance Sheet); (iii) Parent and its Subsidiaries
have made provision for all Taxes payable by Parent and its Subsidiaries
for which no Parent Tax Return has yet been filed; (iv) the charges,
accruals and reserves for Taxes with respect to Parent and its Subsidiaries
reflected on the Parent Balance Sheet are adequate under GAAP to cover the
Tax liabilities accruing through the date thereof; (v) there is no action,
suit, proceeding, audit or claim now proposed or pending against or with
respect to Parent or any of its Subsidiaries in respect of any Tax where
there is a reasonable possibility of an adverse determination; and (vi) to
the best of Parent's knowledge and belief, neither Parent nor any of its
Subsidiaries is liable for any Tax imposed on any entity other than such
Person, except as the result of the application of Treas. Reg. Sections
1.1502-6 (and any comparable provision of the tax laws of any state, local
or foreign jurisdiction) to the affiliated group of which Parent is the
common parent.
SECTION 4.14 Employee Benefit Plans.
(a) For purposes of this Agreement, the term "Parent Employee
Plans" shall mean and include: each material management, consulting,
non-compete, employment, severance or similar contract, plan, arrangement
or policy applicable to any director, former director, employee or former
employee of Parent and each material plan, program, policy, agreement or
arrangement (written or oral), providing for compensation, bonuses,
profit-sharing, stock option or other stock related rights or other forms
of incentive or deferred compensation, vacation benefits, insurance
coverage (including any self-insured arrangements), health or medical
benefits, disability benefits, workers' compensation, supplemental
unemployment benefits, severance benefits and post-employment or retirement
benefits (including compensation, pension, health, medical or life
insurance benefits) or other employee benefits of any kind, whether funded
or unfunded, which is maintained, administered or contributed to by Parent
or any Subsidiary and covers any employee or director or former employee or
director of Parent, or under which Parent or any Subsidiary has any
liability, contingent or otherwise (including but not limited to each
material "employee benefit plan," as defined in Section 3(3) of ERISA, but
excluding any such plan that is a "multiemployer plan," as defined in
Section 3(37) of ERISA).
(b) Each Parent Employee Plan has been established and maintained
in compliance with its terms and with the requirements prescribed by any
and all statutes, orders, rules and regulations (including but not limited
to ERISA and the Code) which are applicable to such Plan, except where
failure to so comply would not, individually or in the aggregate, have a
Material Adverse Effect on Parent.
(c) Neither Parent nor any affiliate of Parent has incurred a
liability under Title IV of ERISA that has not been satisfied in full, and
no condition exists that presents a material risk to Parent or any
affiliate of Parent of incurring any such liability other than liability
for premiums due the Pension Benefit Guaranty Corporation (which premiums
have been paid when due). All contributions required to be made under the
terms of any Parent Employee Plan maintained in the United States have been
made, and, where applicable to a Parent Employee Plan, Parent and its
affiliates have complied with the minimum funding requirements under
Section 412 of the Code and Section 302 of ERISA with respect to each such
Parent Employee Plan.
(d) Each Parent Employee Plan which is intended to be qualified
under section 401(a) of the Code is so qualified and has been so qualified
during the period from its adoption to date, and each trust forming a part
thereof is exempt from federal income tax pursuant to section 501(a) of the
Code and, to Parent's knowledge, no circumstances exist which will
adversely affect such qualification or exception.
(e) No director or officer or other employee of Parent or any of
its Subsidiaries will become entitled to any retirement, severance or
similar benefit or enhanced or accelerated benefit (including any
acceleration of vesting or lapse of repurchase rights or obligations with
respect to any Parent Stock Plans or other benefit under any compensation
plan or arrangement of Parent) solely as a result of the transactions
contemplated in this Agreement.
(f) Since the Parent Balance Sheet Date, there has been no
amendment to, or change in employee participation or coverage under, any
Parent Employee Plan which would increase materially the expense of
maintaining such Employee Plan above the level of the expense incurred in
respect thereof for the 12 months ended on the Parent Balance Sheet Date.
(g) Parent and its Subsidiaries are in compliance with all
applicable federal, state, local and foreign statutes, laws (including,
without limitation, common law), judicial decisions, regulations,
ordinances, rules, judgments, orders and codes respecting employment,
employment practices, labor, terms and conditions of employment and wages
and hours, and no work stoppage or labor strike against Parent and its
Subsidiaries is pending or threatened, nor is Parent or its Subsidiaries
involved in or threatened with any labor dispute, grievance or litigation
relating to labor matters involving any employees, in each case except as
would not, individually or in the aggregate, have a Material Adverse Effect
on Parent. There are no suits, actions, disputes, claims (other than
routine claims for benefits), investigations or audits pending or, to the
knowledge of the Company, threatened in connection with any Parent Employee
Plan, but excluding any of the foregoing which would not have a Material
Adverse Effect on Parent.
SECTION 4.15 Compliance with Laws. Neither Parent nor any of its
Subsidiaries is in violation of, or has since January 1, 1997 violated, any
applicable provisions of any laws, statutes, ordinances or regulations
except for any violations that, individually or in the aggregate, would not
have a Material Adverse Effect on Parent.
SECTION 4.16 Finders' or Advisors' Fees. Except for ▇.▇. ▇▇▇▇▇▇ & Co.
Incorporated whose fees will be paid by Parent, there is no investment
banker, broker, finder or other intermediary which has been retained by or
is authorized to act on behalf of Parent or any of its Subsidiaries who
might be entitled to any fee or commission in connection with the
transactions contemplated by this Agreement.
SECTION 4.17 Environmental Matters. Except for matters which,
individually or in the aggregate, would not have a Material Adverse Effect
on Parent, (i) no written notice, notification, demand, request for
information, citation, summons, complaint or order has been received by,
and no investigation, action, claim, suit, proceeding or review is pending
or, to the knowledge of Parent or any of its Subsidiaries, threatened by
any Person against, Parent or any of its Subsidiaries, and no penalty has
been assessed within the past three years against Parent or any of its
Subsidiaries, in each case, with respect to any matters relating to or
arising out of any Environmental Law; (ii) Parent and its Subsidiaries are
in compliance with all Environmental Laws; and (iii) to the knowledge of
Parent, there are no liabilities of or relating to Parent or any of its
Subsidiaries relating to or arising out of any Environmental Law, and, to
the knowledge of Parent, there is no existing condition, situation or set
of circumstances which could reasonably be expected to result in such a
liability.
SECTION 4.18 Opinion of Financial Advisor. Parent has received the
opinion of ▇.▇. ▇▇▇▇▇▇ & Co. Incorporated to the effect that, as of the
date of this Agreement, the consideration to be paid by Parent in the
Merger is fair, from a financial point of view, to Parent.
SECTION 4.19 Pooling; Tax Treatment.
(a) Parent intends that the Merger be accounted for as a "pooling
of interests" as described in Section 3.19(a).
(b) Neither Parent nor any of its affiliates has taken or agreed
to take any action or is aware of any fact or circumstance with respect to
Parent or its affiliates that would prevent the Merger from qualifying (i)
for "pooling of interests" accounting treatment as described in Section
3.19(a) or (ii) as a 368 Reorganization.
SECTION 4.20 Takeover Statutes. The Board of Directors of Parent has
taken the necessary action to render Section 203 of the Delaware Law, and
any other potentially applicable anti-takeover or similar statute or
regulation inapplicable to this Agreement and the Company Option Agreement
and the transactions contemplated hereby and thereby.
SECTION 4.21 Intellectual Property Matters. Parent and its
Subsidiaries own, free and clear of all Liens, or have the right to use
pursuant to valid license, sublicense, agreement or permission all items of
Intellectual Property necessary for their operations as presently conducted
or as contemplated to be conducted, except where the failure to have such
rights, individually or in the aggregate, would not have a Material Adverse
Effect on Parent. The conduct of Parent's and its Subsidiaries' businesses
as currently conducted or as contemplated to be conducted does not
interfere, infringe, misappropriate or violate any of the Intellectual
Property rights of any third party, except for interferences,
infringements, misappropriations and violations which, individually or in
the aggregate, would not have a Material Adverse Effect on Parent. To the
best of Parent's knowledge, no third party has interfered with, infringed
upon, misappropriated, diluted, violated or otherwise come into conflict
with any Intellectual Property rights of Parent or any of its Subsidiaries,
except for misappropriations and violations which, individually or in the
aggregate, would not have a Material Adverse Effect on Parent.
SECTION 4.22 Year 2000 Compliance Matters. Except for matters which,
individually and in the aggregate, would not have a Material Adverse Effect
on Parent, all proprietary and third-party licensed computer systems
including computer hardware and software owned, leased or licensed by
Parent and computer software incorporated in products manufactured by
Parent and its Subsidiaries (a) will, prior to December 31, 1999,
accurately and without interruption recognize, the advent of the year 2000
without any adverse change in operation associated with such recognition,
(b) can accurately and without interruption recognize and manipulate date
information relating to dates prior to, on and after January 1, 2000 and
(c) can accurately and without interruption interact with other year 2000
compliant computer systems and computer software in a way that does not
compromise their ability to correctly recognize the advent of the year 2000
or to accurately and without interruption recognize and manipulate date
information relating to dates prior to, on or after January 1, 2000. The
costs of the adaptations to such computer systems, hardware and software
being made by Parent and its Subsidiaries in order to achieve year 2000
compliance are not expected to have a Material Adverse Effect on Parent.
ARTICLE V
COVENANTS OF THE COMPANY
The Company agrees that:
SECTION 5.1 Conduct of the Company. From the date of this Agreement
until the Effective Time, the Company and its Subsidiaries shall, subject
to the last sentence of this Section 5.1, conduct their business in the
ordinary course consistent with past practice and shall use their
reasonable best efforts to preserve intact their business organizations and
relationships with third parties. Without limiting the generality of the
foregoing and subject to the last sentence of this Section 5.1, with the
prior written consent of Parent (which shall not be unreasonably withheld)
or as contemplated by this Agreement or the Option Agreements, from the
date of this Agreement until the Effective Time:
(a) the Company will not, and will not permit any of its
Subsidiaries to, adopt or propose any change in its certificate of
incorporation or by-laws;
(b) the Company will not, and will not permit any Subsidiary of
the Company to, adopt a plan or agreement of complete or partial
liquidation, dissolution, merger, consolidation, restructuring,
recapitalization or other reorganization of the Company or any of its
Subsidiaries (other than transactions between direct and/or indirect wholly
owned Subsidiaries of the Company);
(c) the Company will not, and will not permit any Subsidiary of
the Company to, issue, sell, transfer, pledge, dispose of or encumber any
shares of, or securities convertible into or exchangeable for, or options,
warrants, calls, commitments or rights of any kind to acquire, any shares
of capital stock of any class or series of the Company or its any of its
Subsidiaries other than (i) issuances of Company Common Stock pursuant to
the exercise of Company Stock Options that are outstanding on the date of
this Agreement, or pursuant to Company Stock Options or other stock based
awards granted in accordance with clause (ii) below and (ii) additional
Company Stock Options or other stock-based awards to acquire shares of
Company Common Stock granted under the terms of any employee or director
stock option or compensation plan or arrangement of the Company as in
effect on the date of this Agreement in the ordinary course of business
consistent with past practice;
(d) the Company will not (i) split, combine, subdivide or
reclassify its outstanding shares of capital stock, or (ii) declare, set
aside or pay any dividend or other distribution payable in cash, stock or
property with respect to its capital stock other than, subject to Sections
7.4 and 7.9, regular quarterly cash dividends payable by the Company in
respect of shares of Company Stock consistent with past practice;
(e) the Company will not, and will not permit any Subsidiary of
the Company to, redeem, purchase or otherwise acquire directly or
indirectly any of the Company's capital stock, Company Convertible
Securities or Company Subsidiary Convertible Securities, except for
repurchases, redemptions or acquisitions (x) required by or in connection
with the terms of any Company Stock Plan or (y) in accordance with any
dividend reinvestment plan as in effect on the date of this Agreement in
the ordinary course of the operations of such plan consistent with past
practice and, in the case of each of (x) and (y) above, only to the extent
consistent with Section 7.4;
(f) the Company will not amend the terms (including the terms
relating to accelerating the vesting or lapse of repurchase rights or
obligations) of any employee or director stock options or other stock based
awards;
(g) the Company will not, and will not permit any Subsidiary of
the Company to, (i) grant any severance or termination pay to (or amend any
such existing arrangement with) any director, officer or employee of the
Company or any of its Subsidiaries, (ii) enter into any employment,
deferred compensation or other similar agreement (or any amendment to any
such existing agreement) with any director, officer or employee of the
Company or any of its Subsidiaries, (iii) increase any benefits payable
under any existing severance or termination pay policies or employment
agreements, (iv) increase (or amend the terms of) any compensation, bonus
or other benefits payable to directors, officers or employees of the
Company or any of its Subsidiaries or (v) permit any director, officer or
employee who is not already a party to an agreement or a participant in a
plan providing benefits upon or following a "change in control" to become a
party to any such agreement or a participant in any such plan, in the case
of each of clauses (i) through (iv), other than in the ordinary course of
business consistent with past practice but subject to Sections 7.4 and 7.9
and, in the case of the establishment of any retention and/or pay-to-stay
plans or individual severance arrangements that the Company reasonably
believes to be appropriate, after notice to Parent and the Company's
good-faith effort to obtain Parent's approval;
(h) the Company will not, and will not permit any of its
Subsidiaries to, acquire a material amount of assets or property of any
other Person except in the ordinary course of business consistent with past
practice;
(i) other than as contemplated by Section 7.1, the Company will
not, and will not permit any of its Subsidiaries to, sell, lease, license
or otherwise dispose of any material amount of assets or property except
pursuant to existing contracts or commitments and except in the ordinary
course of business consistent with past practice;
(j) except for any such change which is not material or which is
required by reason of a concurrent change in GAAP, the Company will not,
and will not permit any Subsidiary of the Company to, change any method of
accounting or accounting practice (other than any change for tax purposes)
used by it;
(k) the Company will not, and will not permit any Subsidiary of
the Company to, enter into any material joint venture, partnership or other
similar arrangement;
(l) the Company will not, and will not permit any of its
Subsidiaries to, take any action that would make any representation or
warranty of the Company hereunder inaccurate in any material respect at, or
as of any time prior to, the Effective Time;
(m) the Company will not enter into any standstill agreement, or
amend or waive any provisions of, or grant any approval under, any
standstill agreement; provided that the Board of Directors of the Company
may grant a waiver of provisions of, or approval under, a standstill
agreement with any Person solely to permit such Person to make a Superior
Proposal if the Board of Directors of the Company determines in its good
faith judgment, after receiving the advice of outside legal counsel, that,
in light of the Superior Proposal, there is a reasonable possibility that
the Board of Directors would be in violation of its fiduciary duties under
applicable law if it failed to grant such waiver;
(n) the Company will not make or change any material Tax
election, settle any material audit or file any material amended Tax
Returns, except in the ordinary course of business consistent with past
practice; and
(o) the Company will not, and will not permit any of its
Subsidiaries to, agree or commit to do any of the foregoing.
Notwithstanding the foregoing but subject to Section 7.4, from the date
hereof until the Effective Time, the Company and its Subsidiaries may (x)
make acquisitions of property, assets or any business (other than pursuant
to a merger or consolidation with or into the Company) solely for cash so
long as no one acquisition or series of related acquisitions involves the
payment of consideration in an amount in excess of $ 500 million, and all
acquisitions pursuant to this clause (x) do not involve the payment of
consideration in excess of $ 500 million, in the aggregate, and (y) sell,
transfer or otherwise dispose of assets or property so long as the Company
and its Subsidiaries do not sell, transfer and otherwise dispose of assets
and property pursuant to this clause (y) having a fair market value in
excess of $ 500 million, in the aggregate.
SECTION 5.2 Company Stockholder Meeting; Proxy Material.
(a) The Company shall cause a meeting of its stockholders (the
"Company Stockholder Meeting") to be duly called and noticed, and, to the
extent practicable, held on the same date as the Parent Stockholder Meeting
(as defined below) for the purpose of obtaining the Company Stockholder
Approval. In connection with the Company Stockholder Meeting, the Company
(x) will promptly prepare and file with the Commission, will use its
reasonable best efforts to have cleared by the Commission and will
thereafter mail to its stockholders as promptly as practicable, the Company
Proxy Statement and all other proxy materials for the Company Stockholder
Meeting, (y) will use its reasonable best efforts, subject to paragraph (b)
of this Section 5.2, to obtain the Company Stockholder Approval and (z)
will otherwise comply with all legal requirements applicable to the Company
Stockholder Meeting.
(b) Except as provided in the next sentence, the Board of
Directors of the Company shall recommend approval and adoption of this
Agreement and the Merger by the Company's stockholders. The Board of
Directors of the Company shall be permitted (i) not to recommend to the
Company's stockholders that they give the Company Stockholder Approval or
(ii) to withdraw or modify in a manner adverse to Parent its recommendation
to the Company's stockholders that they give the Company Stockholder
Approval, only (w) if after receiving an Acquisition Proposal that
constitutes a Superior Proposal (each as defined in Section 7.10 below),
the Board of Directors of the Company determines in its good faith
judgment, after receiving the advice of outside legal counsel, that, in
light of this Superior Proposal, there is a reasonable possibility that the
Board of Directors would be in violation of its fiduciary duties under
applicable law if it failed to withdraw or modify its recommendation, (x)
after the fifth business day following delivery by the Company to Parent of
written notice advising Parent that the Board of Directors of the Company
intends to resolve to so withdraw or modify its recommendation absent
modification of the terms and conditions of this Agreement, (y) if,
assuming this Agreement was amended to reflect all adjustments to the terms
and conditions hereof proposed by Parent during such five business day
period, such Acquisition Proposal would nonetheless constitute a Superior
Proposal (it being understood that Parent shall be permitted to propose
adjustments to the terms and conditions hereof, notwithstanding anything
contained in the Confidentiality Agreement (as defined in Section 7.3));
and (z) if the Company has complied, in all material respects, with its
obligations set forth in Section 7.10; provided, however, that nothing in
this paragraph (b) shall be interpreted to excuse the Company from
complying with its obligations under paragraph (a) of this Section 5.2.
ARTICLE VI
COVENANTS OF PARENT
Parent agrees that:
SECTION 6.1 Conduct of Parent. From the date of this Agreement until
the Effective Time, Parent and its Subsidiaries shall, subject to the last
sentence of this Section 6.1 and except as set forth on the Parent
Disclosure Schedules, conduct their business in the ordinary course
consistent with past practice and shall use their reasonable best efforts
to preserve intact their business organizations and relationships with
third parties. Without limiting the generality of the foregoing and subject
to the last sentence of this Section 6.1 and except as set forth on the
Parent Disclosure Schedules, with the prior written consent of the Company
(which shall not be unreasonably withheld) or as contemplated by this
Agreement or the Option Agreements, from the date of this Agreement until
the Effective Time:
(a) Parent will not, and will not permit any of its Subsidiaries
to, adopt or propose any change in its certificate of incorporation or
by-laws, except as contemplated by Sections 2.1 and 2.2, and except for
such changes to increase the number of authorized shares of Parent Common
Stock to no more than 2 billion shares and the number of authorized shares
of Parent Preferred Stock to no more than 40 million shares and to delete
the provisions currently contained in such certificate of incorporation
setting forth the terms of series of Parent Preferred Stock designated
therein;
(b) Parent will not, and will not permit any of its Subsidiaries
to, adopt a plan or agreement of complete or partial liquidation,
dissolution, merger, consolidation, restructuring, recapitalization or
other reorganization of Parent or any of its Subsidiaries (other than
transactions between direct and/or indirect wholly owned Subsidiaries of
Parent);
(c) Parent will not, and will not permit any Subsidiary of Parent
to, issue, sell, transfer, pledge, dispose of or encumber any shares of, or
securities convertible into or exchangeable for, or options, warrants,
calls, commitments or rights of any kind to acquire, any shares of capital
stock of any class or series of Parent or any of its Subsidiaries, other
than (i) issuances of Parent Common Stock pursuant to the exercise of
employee or director stock options outstanding on the date of this
Agreement or that are granted in accordance with clause (ii) below, or (ii)
additional options or stock-based awards to acquire Parent Common Stock
granted under the terms of any employee or director stock option or
compensation plan or arrangement of Parent as in effect as of the of this
Agreement in the ordinary course consistent with past practice;
(d) Parent will not (i) split, combine, subdivide or reclassify
its outstanding shares of capital stock or (ii) declare, set aside or pay
any dividend or other distribution payable in cash, stock or property with
respect to its capital stock other than, subject to Sections 7.4 and 7.9,
regular quarterly cash dividends payable by Parent in respect of the shares
of Parent Common Stock consistent with past practice;
(e) Parent will not, and will not permit any Subsidiary of Parent
to, redeem, purchase or otherwise acquire directly or indirectly any of
Parent's capital stock, Parent Convertible Securities or Parent Subsidiary
Convertible Securities, except for repurchases, redemptions or acquisitions
(x) required by or in connection with the respective terms of any employee
stock option plan or compensation plan or arrangement of Parent, or (y) in
accordance with any dividend reinvestment plan as in effect as of the date
of this Agreement in the ordinary course of the operation of such plan
consistent with past practice and, in the case of each of (x) and (y)
above, only to the extent consistent with Section 7.4;
(f) Parent will not amend the terms (including the terms relating
to accelerating the vesting or lapse of repurchase rights or obligations)
of any employee or director stock options or other stock based awards;
(g) Parent will not, and will not permit any Subsidiary of Parent
to, (i) grant any severance or termination pay to (or amend any such
existing arrangement with) any director, officer or employee of Parent or
any of its Subsidiaries, (ii) enter into any employment, deferred
compensation or other similar agreement (or any amendment to any such
existing agreement) with any director, officer or employee of Parent or any
of its Subsidiaries, (iii) increase any benefits payable under any existing
severance or termination pay policies or employment agreements, (iv)
increase (or amend the terms of) any compensation, bonus or other benefits
payable to directors, officers or employees of Parent or any of its
Subsidiaries or (v) permit any director, officer or employee who is not
already a party to an agreement or a participant in a plan providing
benefits upon or following a "change in control" to become a party to any
such agreement or a participant in any such plan, in the case of each of
clauses (i) through (iv), other than in the ordinary course of business
consistent with past practice but subject to Sections 7.4 and 7.9 and, in
the case of the establishment of any retention and/or pay-to-stay plans or
individual severance arrangements that Parent reasonably believes to be
appropriate, after notice to the Company and Parent's good-faith effort to
obtain the Company's approval;
(h) Parent will not, and will not permit any of its Subsidiaries
to, acquire a material amount of assets or property of any other Person
except in the ordinary course of business consistent with past practice;
(i) Other than as contemplated by Section 7.1, Parent will not,
and will not permit any of its Subsidiaries to, sell, lease, license or
otherwise dispose of any material amount of assets or property except
pursuant to existing contracts or commitments and except in the ordinary
course of business consistent with past practice;
(j) except for any such change which is not material or which is
required by reason of a concurrent change in GAAP, Parent will not, and
will not permit any Subsidiary of Parent to, change any method of
accounting or accounting practice (other than any change for tax purposes)
used by it;
(k) Parent will not, and will not permit any Subsidiary of Parent
to, enter into any material joint venture, partnership or other similar
arrangement;
(l) Parent will not, and will not permit any of its Subsidiaries
to, take any action that would make any representation or warranty of
Parent hereunder inaccurate in any material respect at, or as of any time
prior to, the Effective Time;
(m) Parent will not enter into any standstill agreement, or amend
or waive any provisions of, or grant any approval under, any standstill
agreement; provided that the Board of Directors of Parent may grant a
waiver of provisions of, or approval under, a standstill agreement with any
Person solely to permit such Person to make a Superior Proposal if the
Board of Directors of Parent determines in its good faith judgment, after
receiving the advice of outside legal counsel that, in light of the
Superior Proposal, there is a reasonable possibility that the Board of
Directors would be in violation of its fiduciary duties under applicable
law if it failed to grant such waiver;
(n) Parent will not make or change any material Tax election,
settle any material audit or file any material amended Tax Returns, except
in the ordinary course of business, consistent with past practice; and
(o) Parent will not, and will not permit any of its Subsidiaries
to, agree or commit to do any of the foregoing.
Notwithstanding the foregoing but subject to Section 7.4, from the date
hereof until the Effective Time, Parent and its Subsidiaries may (x) make
acquisitions of property, assets or any business for cash, securities
(including equity securities) or other consideration, pursuant to a merger,
consolidation, reorganization or otherwise, so long as no one acquisition
or series of related acquisitions involves the payment of consideration
having a fair market value in excess of $1 billion and all acquisitions
pursuant to this clause (x) do not involve the payment of consideration
having a fair market value in excess of $2 billion, in the aggregate, and
(y) sell, transfer or otherwise dispose of assets or property of Parent and
its Subsidiaries so long as Parent and its Subsidiaries do not sell,
transfer or otherwise dispose of assets and property pursuant to this
clause (y) having a fair market value in excess of $1 billion, in the
aggregate.
SECTION 6.2 Obligations of Merger Subsidiary. Parent will take all
action necessary to cause Merger Subsidiary to perform its obligations
under this Agreement and to consummate the Merger on the terms and
conditions set forth in this Agreement.
SECTION 6.3 Director and Officer Liability.
(a) Parent shall indemnify and hold harmless, to the fullest
extent permitted under applicable law, the individuals who on or prior to
the Effective Time were officers, directors and employees of the Company or
its Subsidiaries (collectively, the "Indemnitees") with respect to all acts
or omissions by them in their capacities as such or taken at the request of
the Company or any of its Subsidiaries at any time on or prior to the
Effective Time. Following the Effective Time, Parent shall cause the
Surviving Corporation to honor all indemnification obligations presently
provided under the Company's certificate of incorporation and by-laws in
effect on the date hereof. Parent shall cause the Surviving Corporation to
honor all indemnification agreements with Indemnitees (including under the
Company's by-laws) in effect as of the date of this Agreement in accordance
with the terms thereof. The Company has disclosed to Parent all such
indemnification agreements prior to the date of this Agreement.
(b) For six years after the Effective Time, Parent shall procure
the provision of officers' and directors' liability insurance in respect of
acts or omissions occurring prior to the Effective Time covering each such
Person currently covered by the Company's officers' and directors'
liability insurance policy on terms with respect to coverage and in amounts
no less favorable than those of such policy in effect on the date hereof;
provided, that if the aggregate annual premiums for such insurance at any
time during such period shall exceed 200% of the per annum rate of premium
paid by the Company and its Subsidiaries as of the date hereof for such
insurance, then Parent shall, or shall cause its Subsidiaries to, provide
only such coverage as shall then be available at an annual premium equal to
200% of such rate.
(c) The obligations of Parent under this Section 6.3 shall not be
terminated or modified in such a manner as to adversely affect any
Indemnitee to whom this Section 6.3 applies without the consent of the
affected Indemnitee (it being expressly agreed that the Indemnitees to whom
this Section 6.3 applies shall be third party beneficiaries of this Section
6.3).
SECTION 6.4 Parent Stockholder Meeting; Form S-4.
(a) Parent shall cause a meeting of its stockholders (the "Parent
Stockholder Meeting") to be duly called and noticed, and, to the extent
practicable, held on the same day as the Company Stockholder Meeting for
the purpose of obtaining the Parent Stockholders Approval. In connection
with the Parent Stockholder Meeting, Parent (x) will promptly prepare and
file with the Commission, will use its reasonable best efforts to have
cleared by the Commission and will thereafter mail to its stockholders as
promptly as practicable, the Parent Proxy Statement and all other proxy
materials for such meeting, (y) will use its reasonable best efforts,
subject to paragraph (b) of this Section 6.4, to obtain the Parent
Stockholder Approval and (z) will otherwise comply with all legal
requirements applicable to the Parent Stockholder Meeting. Subject to the
terms and conditions of this Agreement, Parent shall prepare and file with
the Commission under the Securities Act the Form S-4, and shall use its
reasonable best efforts to cause the Form S-4 to be declared effective by
the Commission as promptly as practicable. Parent shall promptly take any
action required to be taken under foreign or state securities or Blue Sky
laws in connection with the issuance of Parent Common Stock in connection
with the Merger.
(b) Except as provided in the next sentence, the Board of
Directors of Parent shall recommend approval of the Common Stock Issuance.
The Board of Directors of Parent shall be permitted (i) not to recommend to
Parent's stockholders that they give the Parent Stockholder Approval or
(ii) to withdraw or modify in a manner adverse to the Company its
recommendation to the Parent's stockholders that they give the Parent
Stockholder Approval, only (w) if after receiving an Acquisition Proposal
that constitutes a Superior Proposal, the Board of Directors of Parent
determines in its good faith judgment, after receiving the advice of
outside legal counsel, that, in light of this Superior Proposal, there is a
reasonable possibility that the Board of Directors would be in violation of
its fiduciary duties under applicable law if it failed to withdraw or
modify its recommendation, (x) after the fifth business day following
delivery by Parent to the Company of written notice advising the Company
that the Board of Directors of Parent intends to resolve to so withdraw or
modify its recommendation absent modification to the terms and conditions
of this Agreement (y) if, assuming this Agreement was amended to reflect
all adjustments to the terms and conditions hereof proposed by the Company
during such five business day period, such Acquisition Proposal would
nonetheless constitute a Superior Proposal (it being understood that the
Company shall be permitted to propose adjustments to the terms and
conditions hereof, notwithstanding anything contained in the
Confidentiality Agreement); and (z) if Parent has complied, in all material
respects, with it obligations set forth in Section 7.10; provided, however,
that nothing in this paragraph (b) shall be interpreted to excuse Parent
from complying with its obligations contained in paragraph (a) of this
Section 6.4.
SECTION 6.5 Stock Exchange Listing. Parent shall use its reasonable
best efforts to cause the shares of Parent Common Stock to be issued in
connection with the Merger to be approved for listing on the NYSE, subject
to official notice of issuance.
SECTION 6.6 Employee Benefits.
(a) From and after the Effective Time, Parent shall cause the
Surviving Corporation to honor in accordance with their terms all benefits
and obligations under the Company Employee Plans, each as in effect on the
date of this Agreement (or as amended as contemplated hereby or with the
prior written consent of Parent). Subject to the previous sentence, no
provision of this Agreement shall be construed as a limitation on the right
of Parent or the Surviving Corporation to amend or terminate any Company
Employee Plan to the extent permitted by the terms thereof (as in effect on
the date hereof) and applicable law, and no provision of this Agreement
shall be construed to create a right in any employee or beneficiary of such
employee under a Company Employee Plan that such employee or beneficiary
would not otherwise have under the terms of that Company Employee Plan.
Parent and the Company hereby agree that (i) except as contemplated by
clause (i) of Section 6.6(e), approval of the Merger by the Company's
shareholders shall constitute a "Change in Control" for purposes of all
Company Employee Plans and other employee plans or arrangements of the
Company which contain "change in control" provisions, pursuant to the terms
of such plans in effect on the date hereof, and (ii) neither the execution
of this Agreement nor the consummation of the transactions contemplated
hereby shall constitute an "Acceleration Event" or a "Change in Control"
for purposes of any Parent Employee Plan or other employee plan or
arrangement of Parent which contains an "acceleration event" or "change in
control" provision, pursuant to the terms of such plan in effect on the
date hereof.
(b) Following the Effective Time, Parent shall provide to
individuals who are employed by the Company and its Subsidiaries as of the
Effective Time ("Affected Employees"), for so long as such Affected
Employees remain so employed, employee benefits (including salary,
incentive compensation and stock-based benefits) which, in the aggregate,
are substantially equivalent to the benefits provided, at Parent's option,
either (i) pursuant to the Company's or its Subsidiaries' employee benefit
plans, programs, policies and arrangements immediately prior to the
Effective Time, or (ii) pursuant to employee benefit plans, programs,
policies or arrangements maintained by Parent or any Subsidiary of Parent
to employees of Parent and its Subsidiaries in positions comparable to
positions held by Affected Employees with Parent or its Subsidiaries from
time to time after the Effective Time; provided, however, that neither of
the foregoing clauses (i) or (ii) shall be construed to limit Parent's
flexibility in determining the design of any benefit plan or program.
(c) Parent will, or will cause the Surviving Corporation to, give
Affected Employees full credit for purposes of eligibility, vesting,
benefit accrual and determination of the level of benefits under any
employee benefit plans or arrangements maintained by Parent or any
Subsidiary of Parent for such Affected Employees' service with the Company
or any Subsidiary of the Company to the same extent recognized by the
Company immediately prior to the Effective Time; provided, however, that
(i) in the case of a qualified or non-qualified defined benefit plan of
Parent or any of its Subsidiaries, Parent need not recognize the
pre-Effective Time service of an Affected Employee with the Company or any
of its Subsidiaries for benefit accrual purposes so long as the failure to
recognize such service does not adversely affect the accrued benefits of
such Affected Employee as of the Effective Time under the qualified and
non-qualified defined benefit plans of the Company or any of its
Subsidiaries in which such Affected Employee then participated, and (ii) in
the case of a qualified or non-qualified defined contribution plan of
Parent or any of its Subsidiaries, Parent shall be required only to
recognize pre-Effective Time participation of an Affected Employee in a
qualified or non-qualified defined contribution plan of the Company or any
of its Subsidiaries for purposes of determining eligibility for matching or
other contributions and the level of such contributions.
(d) Prior to the date hereof, the Company has taken or has caused
to be taken all action necessary such that neither the execution of this
Agreement nor any of the transactions contemplated in this Agreement
(including but not limited to approval of the Merger by the stockholders of
the Company) shall constitute an event that requires the funding of any
rabbi trust or similar trust; provided, however, that any such trust may be
required to be funded following the Effective Time should any participant
in any plan covered by any such trust fail, promptly after written notice
has been given Parent, to be paid any benefit required to be paid under
such covered plan.
(e) Prior to approval of the Merger by the stockholders of the
Company, (i) the Company shall take or shall cause to be taken all action
(including but not limited to the adoption of amendments to applicable
plans and trusts) necessary such that neither approval of the Merger by the
stockholders of the Company nor consummation of the transactions
contemplated hereby shall constitute a "Change in Control" for purposes of
Section 11.4 of the Company's Retirement Benefit Plan (the "RBP") or any
similar provision in any other defined benefit plan maintained by the
Company or any of its Subsidiaries, in any case as in effect on the date
hereof (provided, however, that in the event the RBP or such other plan is
terminated within three years following the approval of the Merger by the
shareholders of the Company or if, within such three-year period, a
tax-qualified plan of Parent or any of its Subsidiaries with which the RBP
or such other plan has been merged or consolidated or to which any assets
or liabilities of the RBP or such other plan has been transferred (a
"Successor Plan") is terminated, the provisions of Section 11.4 of the RBP
or the applicable provision of such other plan shall be applied to the RBP
or such other plan or any Successor Plan, as the case may be, as if such
approval of the Merger had constituted a "Change in Control"), and (ii) the
Company may take or cause to be taken such action as may be necessary such
that participants in the Company's Corporate Executive Compensation Plan,
Supplemental Defined Benefit Retirement Plan and other plans providing for
the deferral of cash payments or the accelerated payment of lump sum
benefits may continue to defer the payment of awards or benefits thereunder
until termination of employment following the Effective Time or otherwise
in accordance with the terms of such plan.
(f) For purposes of the Company's Tier 1-A severance agreements,
the amount of the "on-plan" bonus under the Corporate Executive
Compensation Plan referred to under such an agreement for each executive
who is a party thereto has been disclosed to Parent prior to the date
hereof.
(g) Parent will, or will cause the Surviving Corporation to, (i)
waive all limitations as to preexisting conditions, exclusions and waiting
periods with respect to participation and coverage requirements applicable
to the Affected Employees under any welfare benefit plans that such
employees may be eligible to participate in after the Effective Time, other
than limitations or waiting periods that are already in effect with respect
to such employees and that have not been satisfied as of the Effective Time
under any welfare plan maintained for the Affected Employees immediately
prior to the Effective Time, and (ii) provide each Affected Employee with
credit for any co-payments and deductibles paid prior to the Effective Time
in satisfying any applicable deductible or out-of-pocket requirements under
any welfare plans that such employees are eligible to participate in after
the Effective Time.
SECTION 6.7 Employment Agreement. At the Effective Time, Parent shall
enter into an agreement with ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ substantially in the
form of Exhibit B attached hereto.
ARTICLE VII
COVENANTS OF PARENT AND THE COMPANY
The parties hereto agree that:
SECTION 7.1 Reasonable Best Efforts.
(a) Subject to Sections 7.1(b) and 7.1(c), the Company and Parent
shall each cooperate with the other and use (and shall cause their
respective Subsidiaries to use) their respective reasonable best efforts to
promptly (i) take or cause to be taken all necessary actions, and do or
cause to be done all things, necessary, proper or advisable under this
Agreement and applicable laws to consummate and make effective the Merger
and the other transactions contemplated by this Agreement as soon as
practicable, including, without limitation, preparing and filing promptly
and fully all documentation to effect all necessary filings, notices,
petitions, statements, registrations, submissions of information,
applications and other documents and (ii) obtain all approvals, consents,
registrations, permits, authorizations and other confirmations required to
be obtained from any third party necessary, proper or advisable to
consummate the Merger and the other transactions contemplated by this
Agreement. Subject to applicable laws relating to the exchange of
information, the Company and Parent shall have the right to review in
advance, and to the extent practicable each will consult the other on, all
the information relating to the Company and its Subsidiaries or Parent and
its Subsidiaries, as the case may be, that appears in any filing made with,
or written materials submitted to, any third party and/or any governmental
authority in connection with the Merger and the other transactions
contemplated by this Agreement.
(b) Without limiting Section 7.1(a), Parent and the Company
shall, subject to Section 7.1(c):
(i) each use its reasonable best efforts to avoid the entry
of, or to have vacated or terminated, any decree, order, or judgment that
would restrain, prevent or delay the Closing, on or before the End Date (as
defined in Section 9.1(b)(i)), including without limitation defending
through litigation on the merits any claim asserted in any court by any
Person; and
(ii) each use its reasonable best efforts to avoid or
eliminate each and every impediment under any antitrust, competition or
trade regulation law that may be asserted by any governmental authority
with respect to the Merger so as to enable the Closing to occur as soon as
reasonably possible (and in any event no later than the End Date),
including, without limitation (x) proposing, negotiating, committing to and
effecting, by consent decree, hold separate order, or otherwise, the sale,
divestiture or disposition of such assets or businesses of Parent or the
Company (or any of their respective Subsidiaries) and (y) otherwise taking
or committing to take actions that limit its or its Subsidiaries' freedom
of action with respect to, or its ability to retain, one or more of its or
its Subsidiaries' businesses, product lines or assets, in each case as may
be required in order to avoid the entry of, or to effect the dissolution
of, any injunction, temporary restraining order, or other order in any suit
or proceeding, which would otherwise have the effect of preventing or
materially delaying the Closing. At the request of Parent, the Company
shall agree to divest, sell, dispose or, hold separate, or otherwise take
or commit to take any action that limits its freedom of action with respect
to, its or its Subsidiaries' ability to retain, any of the businesses,
product lines or assets of the Company or any of its Subsidiaries, provided
that any such action is conditioned upon the consummation of the Merger and
such action when taken together with any similar action by Parent would not
have a Material Adverse Effect on Parent at and after the Effective Time.
The Company agrees and acknowledges that, notwithstanding anything to the
contrary in this Section 7.1, in connection with any filing or submission
required, action to be taken or commitment to be made by Parent, the
Company or any of their respective Subsidiaries to consummate the Merger or
other transactions contemplated in this Agreement, neither the Company nor
any of its Subsidiaries shall, without Parent's prior written consent
(which shall not be unreasonably withheld), sell, divest or dispose of any
assets, commit to any sale, divestiture or disposal of assets or businesses
of the Company and its Subsidiaries or take any other action or commit to
take any action that would limit the Company's, Parent's or any of their
Subsidiaries' freedom of action with respect to, or their ability to retain
any of, their businesses, product lines or assets. Parent also agrees and
acknowledges that notwithstanding anything to the contrary in this Section
7.1, in connection with any filing or submission required, action to be
taken or commitment to be made by Parent, the Company or any of their
respective Subsidiaries to consummate the Merger or other transactions
contemplated in this Agreement, neither Parent nor any of its Subsidiaries
shall, without the Company's prior written consent (which shall not be
unreasonably withheld), sell, divest or dispose of any assets, commit to
any sale, divestiture or disposal of assets or businesses of Parent and its
Subsidiaries or take any other action or commit to take any action that
would limit the Company's, Parent's or any of their Subsidiaries' freedom
of action with respect to, or their ability to retain any of, their
businesses, product lines or assets.
(c) The provisions of this Section 7.1 shall not be construed to
require Parent to agree to the sale, transfer, divestiture or other
disposition of any businesses, product lines or assets of Parent, the
Company or any of their respective subsidiaries if the action would, or
would reasonably be expected to, have a Material Adverse Effect on Parent
at and after the Effective Time. The provisions of this Section 7.1 shall
not be construed to require the Company to agree to the sale, transfer,
divestiture or other disposition of any businesses, product lines or assets
of the Company or any of its subsidiaries unless any such action, if such
action would reasonably be expected to have a Material Adverse Effect on
the Company, is subject to consummation of the Merger and such action would
not have a Material Adverse Effect on Parent at and after the Effective
Time. Any actions taken by Parent or the Company to comply with their
respective obligations under Section 7.1(b), including a decision by Parent
or the Company to waive any of the provisions of Section 7.1(b), shall be
deemed not to have or be reasonably expected not to have a Material Adverse
Effect on Parent at and after the Effective Time.
SECTION 7.2 Certain Filings. The Company and Parent shall cooperate
with one another (a) in connection with the preparation of the Company
Proxy Statement, the Parent Proxy Statement and the Form S-4, (b) in
determining whether any action by or in respect of, or filing with, any
governmental body, agency or official, or authority is required, or any
actions, consents, approvals or waivers are required to be obtained from
parties to any material contracts, in connection with the consummation of
the transactions contemplated by this Agreement and (c) in seeking any such
actions, consents, approvals or waivers or making any such filings,
furnishing information required in connection therewith or with the Company
Proxy Statement, the Parent Proxy Statement or the Form S-4 and seeking
timely to obtain any such actions, consents, approvals or waivers.
SECTION 7.3 Access to Information. From the date hereof until the
Effective Time, to the extent permitted by applicable law, the Company and
Parent will upon reasonable request give the other party, its counsel,
financial advisors, auditors and other authorized representatives access to
the offices, properties, books and records of such party and its
Subsidiaries during normal business hours, furnish to the other party, its
counsel, financial advisors, auditors and other authorized representatives
such financial and operating data and other information as such Persons may
reasonably request and will instruct its own employees, counsel and
financial advisors to cooperate with the other party in its investigation
of the business of the Company or Parent, as the case may be; provided that
no investigation of the other party's business shall affect any
representation or warranty given by either party hereunder, and neither
party shall be required to provide any such information if the provision of
such information may cause a waiver of an attorney-client privilege. All
information obtained by Parent or the Company pursuant to this Section 7.3
shall be kept confidential in accordance with, and shall otherwise be
subject to the terms of, the Confidentiality Agreement dated May 5, 1999
between Parent and the Company (the "Confidentiality Agreement").
SECTION 7.4 Tax and Accounting Treatment.
(a) Neither Parent nor the Company shall, nor shall they permit
their Subsidiaries to, take any action or fail to take any action which
action or failure to act would prevent, or would be reasonably likely to
prevent, the Merger from qualifying (a) for "pooling of interests"
accounting treatment under GAAP and the rules and regulations of the
Commission or (b) as a 368 Reorganization.
(b) Parent shall use its reasonable best efforts to provide to
Fried, Frank, Harris, ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇ and Skadden, Arps, Slate,
▇▇▇▇▇▇▇ and ▇▇▇▇ LLP a certificate substantially in the form agreed to by
the Company and Parent prior to the date of this Agreement. The Company
shall use its reasonable best efforts to provide to Fried, Frank, Harris,
▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇ and Skadden, Arps, Slate, ▇▇▇▇▇▇▇ and ▇▇▇▇ LLP a
certificate substantially in the form agreed to by the Company and Parent
prior to the date of this Agreement.
SECTION 7.5 Public Announcements. Parent and the Company will consult
with each other before issuing any press release or making any public
statement with respect to this Agreement and the transactions contemplated
hereby and shall not issue any press release or make any public statement
without the prior consent of the other party, which consent shall not be
unreasonably withheld. Notwithstanding the foregoing, any such press
release or public statement as may be required by applicable law or any
listing agreement with any national securities exchange may be issued prior
to such consultation, if the party making the release or statement has used
its reasonable efforts to consult with the other party.
SECTION 7.6 Further Assurances. At and after the Effective Time, the
officers and directors of the Surviving Corporation will be authorized to
execute and deliver, in the name and on behalf of the Company or Merger
Subsidiary, any deeds, bills of sale, assignments or assurances and to take
any other actions and do any other things, in the name and on behalf of the
Company or Merger Subsidiary, reasonably necessary to vest, perfect or
confirm of record or otherwise in the Surviving Corporation any and all
right, title and interest in, to and under any of the rights, properties or
assets of the Company acquired or to be acquired by the Surviving
Corporation as a result of, or in connection with, the Merger.
SECTION 7.7 Notices of Certain Events.
(a) Each of the Company and Parent shall promptly notify the
other party of:
(i) any notice or other communication from any Person
alleging that the consent of such Person is or may be required in
connection with the transactions contemplated by this Agreement if the
failure of the Company or Parent, as the case may be, to obtain such
consent would be material to the Company or Parent as applicable; and
(ii) any notice or other communication from any governmental
or regulatory agency or authority in connection with the transactions
contemplated by this Agreement.
(b) The Company and Parent shall promptly notify the other party
of any actions, suits, claims, investigations or proceedings commenced or,
to the best of its knowledge threatened against, relating to or involving
or otherwise affecting such party or any of its Subsidiaries which relate
to the consummation of the transactions contemplated by this Agreement.
SECTION 7.8 Affiliates.
(a) Not less than 30 days prior to the Effective Time, each of
Parent and the Company (i) shall have delivered to the other party a letter
identifying all Persons who, in the opinion of the party delivering the
letter, may be, as of the date of the Company Stockholder Meeting or Parent
Stockholder Meeting, as applicable, its "affiliates" for purposes of SEC
Accounting Series Releases 130 and 135 and/or, in the case of the Company,
for purposes of Rule 145 under the Securities Act, and (ii) shall use its
reasonable best efforts to cause each Person who is identified as an
"affiliate" of it in such letter to deliver, as promptly as practicable but
in no event later than 20 days prior to the Closing (or after such later
date as the Parent and the Company may agree), a signed agreement to Parent
in the case of affiliates of Parent, substantially in the form attached as
Exhibit C, and in the case of affiliates of the Company, substantially in
the form attached as Exhibit D. Each of Parent and the Company shall notify
the other party from time to time after the delivery of the letter
described in Section 7.8(a)(i) of any Person not identified on such letter
who then is, or may be, such an "affiliate" and use its reasonable best
efforts to cause each additional Person who is identified as an "affiliate"
to execute a signed agreement as set forth in this Section 7.8(a).
(b) Shares of Parent Common Stock and shares of Company Common
Stock beneficially owned by each such "affiliate" of Parent or Company who
has not provided a signed agreement in accordance with Section 7.8(a) shall
not be transferable during any period prior to and after the Effective Time
if, as a result of this transfer during any such period, taking into
account the nature, extent and timing of this transfer and similar
transfers by all other "affiliates" of Parent and the Company, this
transfer will, in the reasonable judgment of accountants of Parent,
interfere with, or prevent the Merger from being accounted for, as a
"pooling of interests" under GAAP and/or the rules and regulations of the
SEC. Neither Parent nor the Company shall register, or allow its transfer
agent to register, on its books any transfer of any shares of Parent Common
Stock or Company Common Stock of any affiliate of Parent or the Company who
has not provided a signed agreement in accordance with Section 7.8(a). The
restrictions on the transferability of shares held by Persons who execute
an agreement pursuant to Section 7.8(a) shall be as provided in those
agreements.
SECTION 7.9 Payment of Dividends. From the date of the Agreement until
the Effective Time, Parent and the Company will coordinate with each other
regarding the declaration of dividends in respect of the shares of Parent
Common Stock and the shares of Company Common Stock and the record dates
and payment dates relating thereto, it being the intention of the parties
that holders of shares of Company Common Stock will not receive two
dividends, or fail to receive one dividend, for any single calendar quarter
with respect to their shares of Company Common Stock and the shares of
Parent Common Stock any holder of shares of Company Common Stock receives
in exchange therefor in connection with the Merger.
SECTION 7.10 No Solicitation.
(a) Each of Parent and the Company and their respective
Subsidiaries will not, and will use their reasonable best efforts to cause
their respective officers, directors, employees, investment bankers,
consultants, attorneys, accountants, agents and other representatives not
to, directly or indirectly, take any action to solicit, initiate, encourage
or facilitate the making of any Acquisition Proposal (including without
limitation, in the case of the Company, by amending, or granting any waiver
under, the Company Rights Agreement) or any inquiry with respect thereto or
engage in substantive discussions or negotiations with any Person with
respect thereto, or in connection with any Acquisition Proposal or
potential Acquisition Proposal, disclose any nonpublic information relating
to it or its Subsidiaries or afford access to the properties, books or
records of it or its Subsidiaries to, any Person that has made, or to such
party's knowledge, is considering making, any Acquisition Proposal;
provided, however, that, in the event that (x) Parent or the Company shall
receive a Superior Proposal that was not solicited by it and did not
otherwise result from a breach of this Section 7.10, (y) prior to receipt
of the Parent Stockholder Approval (in the case of Parent) or the Company
Stockholder Approval (in the case of the Company), the Board of Directors
of either Parent or the Company, as applicable, determines in its good
faith judgment, after receiving the advice of outside counsel that, in
light of this Superior Proposal, if Parent or the Company, as applicable,
fails to participate in such discussions or negotiations with, or provide
such information to, the party making the Superior Proposal, there is a
reasonable possibility that such Board of Directors would be in violation
of its fiduciary duties under applicable law, and (z) after giving the
other party two business days' notice of its intention to do so, the party
receiving such Superior Proposal may (i) furnish information with respect
to it and its subsidiaries to the Person making such Superior Proposal
pursuant to a customary confidentiality agreement containing terms
generally no less restrictive than the terms contained in the
Confidentiality Agreement (but not containing any exclusivity provision and
permitting the Person to submit to the Board of Directors of the Company or
Parent, as applicable, Acquisition Proposals with respect to the Company or
Parent, as applicable, provided that any such Acquisition Proposal is
subject to the approval of the Board of Directors of the Company or Parent,
as applicable, (which approval may be granted solely in accordance with the
terms of Sections 5.1(m) or 6.1(m) hereof)), provided that a copy of all
such written information is simultaneously provided to the other party
hereto and (ii) participate in discussions and negotiations regarding such
Superior Proposal.
(b) Nothing contained in this Agreement shall prevent the Board
of Directors of Parent or the Company from complying with Rule 14e-2 under
the Exchange Act with regard to an Acquisition Proposal; provided that the
Board of Directors of that party shall not recommend that the stockholders
of that party tender their shares in connection with a tender offer except
to the extent, after receiving a Superior Proposal, the Board of Directors
of that party determines in its good faith judgment, after receiving the
advice of outside legal counsel, that, in light of the Superior Proposal,
there is a reasonable possibility that the Board of Directors would be in
violation of its fiduciary duties under applicable law if it fails to make
such a recommendation.
(c) Any party receiving an Acquisition Proposal will (A) promptly
(and in no event later than 48 hours after receipt of any Acquisition
Proposal) notify (which notice shall be provided orally and in writing and
shall identify the Person making the Acquisition Proposal and set forth the
material terms thereof) the other party to this Agreement after receipt of
any Acquisition Proposal, or any request for nonpublic information relating
to such party or any Subsidiary of such party or for access to the
properties, books or records of such party or any Subsidiary of such party
by any Person that has made, or to such party's knowledge may be
considering making, an Acquisition Proposal, and (B) will keep the other
party to this Agreement reasonably informed of any changes to the material
terms of any such Acquisition Proposal or request. Each of Parent and the
Company shall, and shall cause their respective Subsidiaries to,
immediately cease and cause to be terminated, and use reasonable best
efforts to cause its officers, directors, employees, investment bankers,
consultants, attorneys, accountants, agents and other representatives to,
immediately cease and cause to be terminated, all discussions and
negotiations, if any, that have taken place prior to the date hereof with
any Persons with respect to any Acquisition Proposal.
For purposes of this Agreement, "Acquisition Proposal" means any
written offer or proposal for, or any written indication of interest in,
any (i) direct or indirect acquisition or purchase of a business or asset
of Parent or the Company or any of their respective Subsidiaries that
constitutes 20% or more of the net revenues, net income or assets of such
party and its Subsidiaries, taken as a whole; (ii) direct or indirect
acquisition or purchase of 20% or more of any class of equity securities of
Parent or the Company or any of their respective Subsidiaries whose
business constitutes 20% or more of the net revenues, net income or assets
of such party and its Subsidiaries, taken as a whole; (iii) tender offer or
exchange offer that, if consummated, would result in any Person
beneficially owning 20% or more of any class of equity securities of Parent
or the Company or any of their respective Subsidiaries whose business
constitutes 20% or more the net revenues, net income or assets of such
party and its Subsidiaries, taken as a whole; or (iv) merger,
consolidation, business combination, recapitalization, liquidation,
dissolution or similar transaction involving Parent or the Company or any
of their respective Subsidiaries whose business constitutes 20% or more of
the net revenue, net income or assets of such party and its Subsidiaries,
taken as a whole, other than the transactions contemplated by this
Agreement. For purposes of this Agreement, "Superior Proposal" means any
bona fide written Acquisition Proposal for or in respect of all of the
outstanding shares of Company Common Stock, or Parent Common Stock, as
applicable, (i) on terms that the Board of Directors of Parent or the
Company, as applicable, determines in its good faith judgment (after
consultation with a financial advisor of nationally recognized reputation
and taking into account all the terms and conditions of the Acquisition
Proposal deemed relevant by such Board of Directors, including any break-up
fees, expense reimbursement provisions, conditions to consummation, and the
ability of the party making such proposal to obtain financing for such
Acquisition Proposal) are more favorable (other than in immaterial
respects) from a financial point of view to its stockholders than the
Merger; and (ii) that constitutes a transaction that, in such Board of
Directors' judgment, is reasonably likely to be consummated on the terms
set forth, taking into account all legal, financial, regulatory and other
aspects of such proposal.
(d) Nothing contained in this Agreement shall prohibit a deferral
of the distribution of rights issued pursuant to the Company Rights
Agreement following the commencement of a tender offer or an exchange offer
for Company Common Stock.
(e) Each of the Company and Parent agrees that it will take the
necessary steps promptly to inform its officers, directors, investment
bankers, consultants, attorneys, accountants, agents and other
representatives of the obligations undertaken in this Section 7.10.
SECTION 7.11 Letters from Accountants.
(a) Parent shall use reasonable best efforts to cause to be
delivered to Parent and the Company two letters from PricewaterhouseCoopers
LLP, one dated no earlier than three business days prior to the date on
which the Form S-4 shall become effective and one dated no earlier than
three business days prior to the Closing Date, each addressed to the Boards
of Directors of Parent and the Company, in form reasonably satisfactory to
the Company and customary in scope for comfort letters delivered by
independent public accountants in connection with registration statements
similar to the Form S-4.
(b) Parent shall use reasonable best efforts to cause to be
delivered to Parent and the Company a letter from PricewaterhouseCoopers
LLP, dated as of the Closing Date, addressed to the Boards of Directors of
Parent and the Company, stating that PricewaterhouseCoopers LLP concurs
with Parent's management's conclusion that accounting for the Merger as a
"pooling of interests" under Opinion No. 16 (Business Combination) of the
Accounting Principles Board of the American Institute of Certified Public
Accountants and the rules and regulations of the Commission is appropriate
if the Merger is closed and consummated in accordance with the terms
hereof.
(c) The Company shall use reasonable best efforts to cause to be
delivered to the Company and Parent two letters from Deloitte & Touche LLP,
one dated no earlier than three business days prior to the date on which
the Form S-4 shall become effective and one dated no earlier than three
business days prior to the Closing Date, each addressed to the Boards of
Directors of the Company and Parent, in form reasonably satisfactory to
Parent and customary in scope for comfort letters delivered by independent
public accountants in connection with registration statements similar to
the Form S-4.
(d) The Company shall use reasonable best efforts to cause to be
delivered to Parent a letter from Deloitte & Touche LLP, dated as of the
Closing Date, addressed to the Boards of Directors of the Company and
Parent, stating that Deloitte & Touche LLP concurs with the Company's
management's conclusion that the Company is eligible to participate in a
transaction accounted for as a "pooling of interests" under Opinion No. 16
(Business Combination) of the Accounting Principles Board of the American
Institute of Certified Public Accountants and the rules and regulations of
the Commission.
SECTION 7.12 Takeover Statutes. If any anti-takeover or similar
statute or regulation is or may become applicable to the transactions
contemplated hereby, each of the parties and its Board of Directors shall
grant such approvals and take all such actions as are legally permissible
so that the transactions contemplated hereby may be consummated as promptly
as practicable on the terms contemplated hereby and otherwise act to
eliminate or minimize the effects of any such statute or regulation on the
transactions contemplated hereby.
SECTION 7.13 Headquarters.
(a) After the Effective Time, the headquarters of Parent shall
continue to be located in Morristown, N.J.
(b) Both Parent and the Company acknowledge the long-standing,
mutually beneficial relationship between the Company and the Greater Twin
City community. In recognition of this, Parent and the Company hereby
confirm their intention to maintain this relationship subsequent to the
Effective Time, including, by continuing, following the Effective Time, to
provide funding to The Honeywell Foundation and to otherwise maintain the
Company's charitable and communal endeavors in the Twin City community, in
either instance at levels at least as great as the Company provided or
maintained prior to the Effective Time. Parent and the Company also confirm
their intention, following the Effective Time, to explore opportunities to
minimize the effects, if any, on the local communities served by the
Company that the provisions of Section 7.13(a) may have.
SECTION 7.14 Integration. Prior to the Effective Time, Parent and the
Company shall appoint an integration team (the "Integration Team") half the
members of which shall be persons designated by Parent and half the members
of which shall be persons designated by the Company. The Integration Team
shall have two co-chairpersons, one designated by Parent and one designated
by the Company. Prior to the Effective Time, the Integration Team shall
report to the persons contemplated by Section 2.2(c) to constitute the
Executive Office as of the Effective Time. As of and after the Effective
Time, the Integration Team shall report to the Executive Office.
SECTION 7.15 Transfer Statutes. Each of Parent and the Company agrees
to use its commercially reasonable efforts to comply promptly with all
requirements of the New Jersey, Connecticut and other state property
transfer statutes to the extent applicable to the transactions contemplated
hereby, and to take all actions necessary to cause the transactions
contemplated hereby to be effected in compliance with such statutes. Parent
and the Company agree that they will consult with each other to determine
what, if any, actions must be taken prior to or after the Effective time to
ensure compliance with such statutes. Each of Parent and the Company agrees
to provide the other with any documents to be submitted to the relevant
state agencies prior to submission. For purposes of this section, the New
Jersey and Connecticut Property Transfer Statutes means the New Jersey
Industrial Site Recovery Act, 1993 N.J. Laws 139, and the Connecticut
Transfer Act, Conn. Gen. Stat. ▇▇▇. ss.22a.-134(b).
SECTION 7.16 Section 16(b). Parent and the Company shall take all such
steps reasonably necessary to cause the transactions contemplated hereby
and any other dispositions of equity securities of the Company (including
derivative securities) or acquisitions of Parent equity securities
(including derivative securities) in connection with this Agreement by each
individual who (a) is a director or officer of the Company or (b) at the
Effective Time, will become a director or officer of Parent, to be exempt
under Rule 16b-3 promulgated under the Exchange Act.10
ARTICLE VIII
CONDITIONS TO THE MERGER
SECTION 8.1 Conditions to the Obligations of Each Party. The
obligations of the Company, Parent and Merger Subsidiary to consummate the
Merger are subject to the satisfaction (or, to the extent legally
permissible, waiver) of the following conditions:
(a) this Agreement and the Merger shall have been approved and
adopted by the stockholders of the Company in accordance with Delaware Law;
(b) the Common Stock Issuance shall have been approved by the
stockholders of Parent in accordance with the rules and regulations of the
NYSE;
(c) any applicable waiting period (including any extension
thereof) under the HSR Act relating to the Merger shall have expired or
been terminated;
(d) the approval by the European Commission of the transactions
contemplated by this Agreement shall have been obtained pursuant to the EC
Merger Regulation;
(e) no provision of any applicable law or regulation and no
judgment, injunction, order or decree shall prohibit or enjoin the
consummation of the Merger;
(f) the Form S-4 shall have been declared effective under the
Securities Act and no stop order suspending the effectiveness of the Form
S-4 shall be in effect and no proceedings for such purpose shall be pending
before or threatened by the SEC;
(g) the shares of Parent Common Stock to be issued in the Merger
shall have been approved for listing on the NYSE, subject to official
notice of issuance;
(h) the letters of PricewaterhouseCoopers LLP and Deloitte &
Touche LLP contemplated by paragraphs (b) and (d) of Section 7.11 shall
have been delivered as contemplated thereby; and
(i) (i) all required approvals or consents of any governmental
authority (whether domestic, foreign or supranational) in connection with
the Merger and the consummation of the other transactions contemplated
hereby shall have been obtained (and all relevant statutory, regulatory or
other governmental waiting periods, whether domestic, foreign or
supranational, shall have expired) unless the failure to receive any such
approval or consent would not, and would not be reasonably expected to,
have a Material Adverse Effect on Parent at or after the Effective Time and
(ii) all such approvals and consents which have been obtained shall be on
terms that would not, and would not reasonably be expected to, have a
Material Adverse Effect on Parent at or after the Effective Time.
SECTION 8.2 Conditions to the Obligations of Parent and Merger
Subsidiary. The obligations of Parent and Merger Subsidiary to consummate
the Merger are subject to the satisfaction (or, to the extent legally
permissible, waiver) of the following further conditions:
(a) (i) the Company shall have performed in all material respects
all of its obligations hereunder required to be performed by it at or prior
to the Effective Time, (ii) the representations and warranties of the
Company contained in this Agreement and in any certificate or other writing
delivered by the Company pursuant hereto shall be true and correct (without
giving effect to any limitation as to "materiality" or "Material Adverse
Effect" set forth therein) at and as of the Effective Time as if made at
and as of such time (except to the extent expressly made as of an earlier
date, in which case as of such earlier date), except where the failure of
such representations and warranties to be true and correct (without giving
effect to any limitation as to "materiality" or "Material Adverse Effect"
set forth therein) would not, individually or in the aggregate, have a
Material Adverse Effect on the Company, and (iii) Parent shall have
received a certificate signed by an executive officer of the Company to the
foregoing effect;
(b) there shall not be instituted or pending any action or
proceeding by any governmental authority (whether domestic, foreign or
supranational) before any court or governmental authority or agency,
domestic, foreign or supranational, seeking to (i) restrain, prohibit or
otherwise interfere with the ownership or operation by Parent or any
Subsidiary of Parent of all or any portion of the business of the Company
or any of its Subsidiaries or of Parent or any of its Subsidiaries or to
compel Parent or any Subsidiary of Parent to dispose of or hold separate
all or any portion of the business or assets of the Company or any of its
Subsidiaries or of Parent or any of its Subsidiaries; (ii) to impose or
confirm limitations on the ability of Parent or any Subsidiary of Parent
effectively to exercise full rights of ownership of the shares of Company
Common Stock (or shares of stock of the Surviving Corporation) including,
without limitation, the right to vote any shares of Company Common Stock
(or shares of stock of the Surviving Corporation) on any matters properly
presented to stockholders; or (iii) seeking to require divestiture by
Parent or any Subsidiary of Parent of any shares of Company Common Stock
(or shares of stock of the Surviving Corporation), if any such matter
referred in subclauses (i), (ii) and (iii) would, or would reasonably be
expected to, have a Material Adverse Effect on Parent at or after the
Effective Time.
(c) there shall not be any statute, rule, regulation, injunction,
order or decree, enacted, enforced, promulgated, entered, issued or deemed
applicable to the Merger and the other transactions contemplated hereby (or
in the case of any statute, rule or regulation, awaiting signature or
reasonably expected to become law), by any court, government or
governmental authority or agency or legislative body, domestic, foreign or
supranational, that would, or would reasonably be expected to, have a
Material Adverse Effect on Parent at or after the Effective Time.
(d) Parent shall have received an opinion of Fried, Frank,
Harris, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ (or other counsel reasonably acceptable to
Parent) in form and substance reasonably satisfactory to Parent, on the
basis of customary representations and assumptions set forth in such
opinion, dated the Effective Time, to the effect that the Merger will be
treated for federal income tax purposes as a reorganization qualifying
under the provisions of Section 368(a) of the Code and that each of Parent,
Merger Subsidiary and the Company will be a party to the reorganization
within the meaning of Section 368(b) of the Code. In rendering its opinion,
counsel shall be entitled to rely upon customary representations of
officers of Parent and the Company reasonably requested by counsel,
including, without limitation, those contained in certificates
substantially in the form agreed to by the Company and Parent prior to the
date of this Agreement.
SECTION 8.3 Conditions to the Obligations of the Company. The
obligation of the Company to consummate the Merger is subject to the
satisfaction (or, to the extent legally permissible, waiver) of the
following further conditions:
(a) (i) Parent shall have performed in all material respects all
of its obligations hereunder required to be performed by it at or prior to
the Effective Time, (ii) the representations and warranties of Parent and
Merger Sub contained in this Agreement and in any certificate or other
writing delivered by Parent pursuant hereto shall be true and correct
(without giving effect to any limitation as to "materiality" or "Material
Adverse Effect" set forth herein) at and as of the Effective Time as if
made at and as of such time (except to the extent expressly made as of an
earlier date, in which case as of such earlier date, except where the
failure of such representations to be true and correct (without giving
effect to any limitation as to "materiality" or "Material Adverse Effect"
set forth herein) would not, individually as in the aggregate, have a
Material Adverse Effect on Parent and (iii) the Company shall have received
a certificate signed by a vice-president of Parent to the foregoing effect;
and
(b) the Company shall have received an opinion of Skadden, Arps,
Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP (or other counsel reasonably acceptable to the
Company) in form and substance reasonably satisfactory to the Company, on
the basis of customary representations and assumptions set forth in such
opinion, dated the Effective Time, to the effect that the Merger will be
treated for federal income tax purposes as a reorganization qualifying
under the provisions of Section 368(a) of the Code and that each of Parent,
Merger Subsidiary and the Company will be a party to the reorganization
within the meaning of Section 368(b) of the Code. In rendering this
opinion, counsel shall be entitled to rely upon customary representations
of officers of Parent and the Company reasonably requested by counsel,
including, without limitation, those contained in certificates
substantially in the form agreed to by the Company and Parent prior to the
date of this Agreement.
(c) Parent shall have taken all such actions as shall be
necessary so that the By-laws Amendment shall become effective not later
than the Effective Time.
ARTICLE IX
TERMINATION
SECTION 9.1 Termination. This Agreement may be terminated and the
Merger may be abandoned at any time prior to the Effective Time
(notwithstanding any approval of this Agreement by the stockholders of the
Company or any approval of the Common Stock Issuance by the stockholders of
Parent):
(a) by mutual written consent of the Company and Parent;
(b) by either the Company or Parent,
(i) if the Merger has not been consummated as of the eight
month anniversary hereof (the "End Date"); provided, however, that if
(x) the Effective Time has not occurred by such date by reason of
nonsatisfaction of any of the conditions set forth in Section 8.1(c),
8.1(d), 8.1(e), 8.1(i), 8.2(b) and 8.2(c) and (y) all other conditions
set forth in Article 8 have heretofore been satisfied or waived or are
then capable of being satisfied, 60 days after such eight month
anniversary (which shall then be the "End Date"); provided, further
that at the End Date the right to terminate this Agreement under this
Section 9.1(b)(i) shall not be available to any party whose failure to
fulfill in any material respect any obligation under this Agreement
has caused or resulted in the failure of the Effective Time to occur
on or before the End Date;
(ii) if the Company Stockholder Approval shall not have been
obtained by reason of the failure to obtain the required vote at a
duly held meeting of stockholders or any adjournment thereof; or
(iii) if the Common Stock Issuance Approval shall not have
been obtained by reason of the failure to obtain the required vote at
a duly held meeting of stockholders or any adjournment thereof;
(c) by either the Company or Parent, if there shall be any law or
regulation that makes consummation of the Merger illegal or otherwise
prohibited or if any judgment, injunction, order or decree enjoining Parent
or the Company from consummating the Merger is entered and such judgment,
injunction, order or decree shall become final and nonappealable; provided
that the terminating party has fulfilled its obligations under Section 7.1;
(d) by Parent, if the Board of Directors of the Company shall
have failed to recommend or withdrawn or modified or changed in a manner
adverse to Parent its approval or recommendation of this Agreement or the
Merger, whether or not permitted by the terms hereof, or shall have failed
to call the Company Stockholder Meeting in accordance with Section 5.2, or
shall have recommended a Superior Proposal (or the Board of Directors of
the Company shall resolve to do any of the foregoing);
(e) by the Company, if the Board of Directors of Parent shall
have failed to recommend or shall have withdrawn or modified or changed in
a manner adverse to the Company its approval and recommendation of this
agreement or the Common Stock Issuance, whether or not permitted by the
terms hereof, or shall have failed to call the Parent Stockholder Meeting
in accordance with Section 6.4 or shall have recommended a Superior
Proposal (or the Board of Directors of Parent resolves to do any of the
foregoing); or
(f) by either Parent or the Company, if there shall have been a
breach by the other of any of its representations, warranties, covenants or
obligations contained in this Agreement, which breach would result in the
failure to satisfy one or more of the conditions set forth in Section
8.2(a) (in the case of a breach by the Company) or Section 8.3(a) (in the
case of a breach by Parent), and in any such case such breach shall be
incapable of being cured or, if capable of being cured, shall not have been
cured within 30 days after written notice thereof shall have been received
by the party alleged to be in breach.
The party desiring to terminate this Agreement pursuant to clause (b),
(c), (d), (e) or (f) of this Section 9.1 shall give written notice of such
termination to the other party in accordance with Section 10.1, specifying
the provision hereof pursuant to which such termination is effected.
SECTION 9.2 Effect of Termination. If this Agreement is terminated
pursuant to Section 9.1, this Agreement shall become void and of no effect
with no liability on the part of any party hereto, except that (a) the
agreements contained in this Section 9.2, in Section 10.4, Section 10.5, in
the Option Agreements and in the Confidentiality Agreement, and the
representations and warranties with respect to the Option Agreements shall
survive the termination hereof and (b) no such termination shall relieve
any party of any liability or damages resulting from any willful breach by
that party of this Agreement.
ARTICLE X
MISCELLANEOUS
SECTION 10.1 Notices. All notices, requests and other communications
to any party hereunder shall be in writing (including facsimile or similar
writing) and shall be given,
if to Parent or Merger Subsidiary, to:
AlliedSignal Inc.
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇
▇.▇. ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Senior Vice President, General Counsel
and Secretary
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Fried, Frank, Harris, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇., Esq.
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
if to the Company, to:
Honeywell Inc.
Honeywell ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Vice President and General Counsel
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇.▇. ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, Esq.
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
or such other address or facsimile number as such party may hereafter
specify for the purpose by notice to the other parties. Each such notice,
request or other communication shall be effective (a) if given by
facsimile, when such facsimile is transmitted to the facsimile number
specified in this Section and the appropriate facsimile confirmation is
received or (b) if given by any other means, when delivered at the address
specified in this Section.
SECTION 10.2 Non-Survival of Representations and Warranties. The
representations and warranties contained herein and in any certificate or
other writing delivered pursuant hereto shall not survive the Effective
Time.
SECTION 10.3 Amendments; No Waivers.
(a) Any provision of this Agreement (including the Exhibits and
Schedules hereto) may be amended or waived prior to the Effective Time at
any time prior to or after the receipt of the Parent Stockholder Approval
and/or the Company Stockholder Approval, if, and only if, such amendment or
waiver is in writing and signed, in the case of an amendment, by the
Company, Parent and Merger Subsidiary, or in the case of a waiver, by the
party against whom the waiver is to be effective; provided that after the
receipt of any such approval, if any such amendment or waiver shall by law
or in accordance with the rules and regulations of any relevant securities
exchange requires further approval of stockholders, the effectiveness of
such amendment or waiver shall be subject to the necessary stockholder
approval.
(b) No failure or delay by any party in exercising any right,
power or privilege hereunder shall operate as a waiver thereof nor shall
any single or partial exercise thereof preclude any other or further
exercise thereof or the exercise of any other right, power or privilege.
The rights and remedies herein provided shall be cumulative and not
exclusive of any rights or remedies provided by law.
SECTION 10.4 Expenses.
(a) Except as otherwise specified in Sections 10.5 or 10.6, the
Option Agreements or as otherwise agreed to in writing by the parties, all
costs and expenses incurred in connection with this Agreement and the
transactions contemplated by this Agreement shall be paid by the party
incurring such cost or expense, except that (a) the filing fees in respect
to filings made pursuant to the HSR Act, the EC Merger Regulation and all
similar filings in other jurisdictions, (b) filing fees in connection with
the filing with the SEC of the Form S-4, the Parent Proxy Statement and the
Company Proxy Statement, (c) all printing, mailing and related expenses
incurred in connection with printing and mailing of the Form S-4, the
Parent Proxy Statement and the Company Proxy Statement and (d) all other
expenses not directly attributable to any one of the parties, shall be
shared equally by Parent and the Company.
SECTION 10.5 Company Termination Fee.
(a) If:
(i) Parent shall terminate this Agreement pursuant to
Section 9.1(d), unless at the time of such failure to recommend,
withdrawal or adverse modification or change, failure to call the
Company Stockholder Meeting or recommendation of a Superior Proposal,
any of the conditions set forth in Section 8.3(a) would not have been
satisfied as of such date and would not be reasonably capable of being
satisfied; or
(ii) either the Company or Parent shall terminate this
Agreement pursuant to Section 9.1(b)(ii) and prior to the Company
Stockholder Meeting any Person shall have made to the Company or to
the stockholders of the Company an Acquisition Proposal relating to
the Company; or
(iii) either the Company or Parent shall terminate this
Agreement pursuant to Section 9.1(b)(i) and (x) prior to such
termination any Person shall have made to the Company or to the
stockholders of the Company an Acquisition Proposal relating to the
Company and (y) within nine months after such termination, the Company
enters into a definitive agreement with respect to any Acquisition
Proposal made prior to, as of or after such termination; or
(iv) Parent shall terminate this Agreement pursuant to
Section 9.1(f) and prior to such termination any Person shall have
made to the Company or to the stockholders of the Company an
Acquisition Proposal relating to the Company;
then, (x) in the case of clause (i), the Company shall pay to Parent, not
later than the date of termination of this Agreement, an amount equal to
$350 million, (y) in the case of clause (iii), the Company shall pay to
Parent, not later than the date the Company enters into a definitive
agreement with respect to any Acquisition Proposal, $350 million, and (z)
in the case of clauses (ii) or (iv), (a) the Company shall pay to Parent,
not later than the date of termination of this Agreement, an amount equal
to $200 million, and (b) if within nine months after the termination of
this Agreement, the Company enters into a definitive agreement in respect
of an Acquisition Proposal, the Company shall pay to Parent, not later than
the date such agreement is entered into, an additional amount equal to $150
million. Acceptance by Parent of the final payment to which Parent is
entitled in connection with the events described in clauses (i), (ii),
(iii) or (iv) (other than in the case of the events described in clause
(iv), if the breach involved constitutes a willful breach), as applicable,
referred to in the foregoing sentence shall constitute conclusive evidence
that this Agreement has been validly terminated and upon acceptance of
payment of such amount, the Company shall be fully released and discharged
from any liability or obligation resulting from or under this Agreement
(except for its obligations under the Company Option Agreement). For
purposes of clause (ii) of this Section 10.5(a), the term "Acquisition
Proposal" shall have the meaning set forth in Section 7.10, except that all
references to "20%" shall be replaced with "40%," and for purposes of
clauses (iii) and (iv) of this Section 10.5(a), such term shall have the
meaning set forth in Section 7.10, except that all references to "20%"
shall be replaced with "50%".
(b) If:
(i) either the Company or Parent shall terminate this
Agreement pursuant to Section 9.1(b)(ii) and no Acquisition Proposal
relating to the Company has been made to the Company or the
stockholders of the Company prior to the Company Stockholder Meeting;
or
(ii) Parent shall terminate this Agreement pursuant to
Section 9.1(f) and no Acquisition Proposal relating to the Company has
been made prior thereto to the Company or the stockholders of the
Company,
then, in any such case, the Company shall, upon request of Parent,
reimburse Parent for all of its out-of-pocket expenses incurred by Parent
in connection with this Agreement and the transactions contemplated hereof,
including, without limitation, reasonable fees and expenses of accountants,
attorneys and financial advisors, and costs and expenses otherwise
allocated to Parent pursuant to Section 10.4, up to an aggregate of $20
million.
(c) All payments and reimbursements made under this Section 10.5
shall be made by wire transfer of immediately available funds to an account
specified by Parent.
SECTION 10.6 Parent Termination Fee.
(a) If:
(i) The Company shall terminate this Agreement pursuant to
Section 9.1(e), unless at the time of such failure to recommend,
withdrawal or adverse modification or change, failure to call the
Parent Stockholder Meeting or recommendation of a Superior Proposal,
any of the conditions set forth in Section 8.2(a) would not have been
satisfied as of such date and would not be reasonably capable of being
satisfied; or
(ii) either the Company or Parent shall terminate this
Agreement pursuant to Section 9.1(b)(iii), and prior to the Parent
Stockholder Meeting any Person shall have made to Parent or to the
stockholders of Parent an Acquisition Proposal relating to Parent; or
(iii) either the Company or Parent shall terminate this
Agreement pursuant to Section 9.1(b)(i) and (x) prior to such
termination any Person shall have made to Parent or to the
stockholders of Parent an Acquisition Proposal relating to Parent and
(y) within nine months after such termination, Parent enters into a
definitive agreement with respect to any Acquisition Proposal made
prior to, as of or after such termination; or
(iv) the Company shall terminate this Agreement pursuant to
Section 9.1(f) and prior to such termination any Person shall have
made to Parent or to the stockholders of Parent an Acquisition
Proposal relating to Parent;
then, (x) in the case of clause (i), Parent shall pay to the Company not
later than the date of termination of this Agreement an amount equal to
$350 million, (y) in the case of clause (iii), Parent shall pay to the
Company, not later than the date Parent enters into a definitive agreement
with respect to any Acquisition Proposal, $350 million, and (z) in the case
of clauses (ii) or (iv), (a) Parent shall pay to the Company, not later
than the date of termination of this Agreement, $200 million, and (b) if
within nine months after the termination of this Agreement, Parent enters
into a definitive agreement in respect of an Acquisition Proposal, Parent
shall pay to the Company, no later than the date such agreement is entered
into, an additional amount equal to $150 million. Acceptance by the Company
of the final payment to which the Company is entitled in connection with
the events described in clauses (i), (ii), (iii) or (iv) (other than in the
case of the events described in clause (iv), if the breach involved
constitutes a willful breach), as applicable, referred to in the foregoing
sentence shall constitute conclusive evidence that this Agreement has been
validly terminated and upon acceptance of payment of such amount, Parent
shall be fully released and discharged from any liability or obligation
resulting from or under this Agreement (except for its obligations under
Parent Option Agreement). For purposes of clause (ii) of this Section
10.6(a), the term "Acquisition Proposal" shall have the meaning set forth
in Section 7.10, except that all references to "20%" shall be replaced with
"40%," and for purposes of clauses (iii) and (iv) of this Section 10.6(a),
such term shall have the meaning set forth in Section 7.10, except that all
references to "20%" shall be replaced with "50%".
(b) If:
(i) either the Company or Parent shall terminate this
Agreement pursuant to Section 9.1(b)(iii) and no Acquisition Proposal
relating to Parent has been made to Parent or the stockholders of
Parent prior to the Parent Stockholder Meeting; or
(ii) the Company shall terminate this Agreement pursuant to
Section 9.1(f) and no Acquisition Proposal relating to Parent has been
made prior thereto to Parent or the stockholders of Parent,
then, in any such case, Parent shall upon request of the Company, reimburse
the Company for all of its out-of-pocket expenses incurred by the Company
in connection with this Agreement and the transaction contemplated hereof,
including, without limitation, reasonable fees and expenses of accountants,
attorneys and financial advisors, and costs and expenses otherwise
allocated to the Company pursuant to Section 10.4, up to an aggregate of
$20 million.
(c) All payments and reimbursements made under this Section 10.6
shall be made by wire transfer of immediately available funds to an account
specified by the Company.
SECTION 10.7 Successors and Assigns. The provisions of this Agreement
shall be binding upon and inure to the benefit of the parties hereto and
their respective successors and assigns; provided that no party may assign,
delegate or otherwise transfer any of its rights or obligations under this
Agreement without the consent of the other parties hereto except that
Merger Subsidiary may transfer or assign, in whole or from time to time in
part, to one or more of its affiliates, its rights under this Agreement,
but any such transfer or assignment will not relieve Merger Subsidiary of
its obligations hereunder.
SECTION 10.8 Governing Law. This Agreement shall be construed in
accordance with and governed by the law of the State of Delaware, without
regard to principles of conflicts of law.
SECTION 10.9 Jurisdiction. Any suit, action or proceeding seeking to
enforce any provision of, or based on any matter arising out of or in
connection with, this Agreement, the Option Agreements or the transactions
contemplated hereby or thereby may be brought in any federal or state court
located in the State of Delaware, and each of the parties hereby consents
to the jurisdiction of such courts (and of the appropriate appellate courts
therefrom) in any such suit, action or proceeding and irrevocably waives,
to the fullest extent permitted by law, any objection which it may now or
hereafter have to the laying of the venue of any such suit, action or
proceeding in any such court or that any such suit, action or proceeding
which is brought in any such court has been brought in an inconvenient
forum. Process in any such suit, action or proceeding may be served on any
party anywhere in the world, whether within or without the jurisdiction of
any such court. Without limiting the foregoing, each party agrees that
service of process on such party as provided in Section 10.1 shall be
deemed effective service of process on such party.
SECTION 10.10 Waiver of Jury Trial. EACH OF THE PARTIES HERETO HEREBY
IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL
PROCEEDING ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY.
SECTION 10.11 Counterparts; Effectiveness. This Agreement may be
signed in any number of counterparts, each of which shall be an original,
with the same effect as if the signatures thereto and hereto were upon the
same instrument. This Agreement shall become effective when each party
hereto shall have received counterparts hereof signed by all of the other
parties hereto.
SECTION 10.12 Entire Agreement. This Agreement (including the Exhibits
and Schedules), the Option Agreements and the Confidentiality Agreement
constitute the entire agreement between the parties with respect to the
subject matter of this Agreement and supersede all prior agreements and
understandings, both oral and written, between the parties with respect to
the subject matter hereof and thereof. Except as provided in Section
6.3(c), no provision of this Agreement or any other agreement contemplated
hereby is intended to confer on any Person other than the parties hereto
any rights or remedies.
SECTION 10.13 Captions. The captions herein are included for
convenience of reference only and shall be ignored in the construction or
interpretation hereof.
SECTION 10.14 Severability. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction
or other authority to be invalid, void or unenforceable, the remainder of
the terms, provisions, covenants and restrictions of this Agreement shall
remain in full force and effect and shall in no way be affected, impaired
or invalidated so long as the economic or legal substance of the
transactions contemplated hereby is not affected in any manner materially
adverse to any party. Upon such a determination, the parties shall
negotiate in good faith to modify this Agreement so as to effect the
original intent of the parties as closely as possible in an acceptable
manner in order that the transactions contemplated hereby be consummated as
originally contemplated to the fullest extent possible.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed by their respective authorized officers as of the day and
year first above written.
ALLIEDSIGNAL INC.
By: /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-----------------------------------
Name: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Chairman and Chief Executive
Officer
HONEYWELL INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
-----------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
Title: Chairman and Chief Executive
Officer
BLOSSOM ACQUISITION CORP.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
-----------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: Senior Vice President and
Secretary