EXHIBIT 2.1
AGREEMENT AND PLAN OF MERGER
Dated as of April 21, 1999
Among
DANAHER CORPORATION,
H(2)O ACQUISITION CORP.
And
HACH COMPANY
TABLE OF CONTENTS
Page
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ARTICLE I
The Merger
SECTION 1.1. The Merger. . . . . . . . . . . . . . . . . . . . . . . 2
SECTION 1.2. Closing . . . . . . . . . . . . . . . . . . . . . . . . 2
SECTION 1.3. Effective Time. . . . . . . . . . . . . . . . . . . . . 2
SECTION 1.4. Effects of the Merger . . . . . . . . . . . . . . . . . 2
SECTION 1.5. Certificate of Incorporation and By-laws. . . . . . . . 2
SECTION 1.6. Directors . . . . . . . . . . . . . . . . . . . . . . . 3
SECTION 1.7. Officers. . . . . . . . . . . . . . . . . . . . . . . . 3
ARTICLE II
Effect of the Merger on the Capital Stock of the
Constituent Corporations; Exchange of Certificates
SECTION 2.1. Effect on Capital Stock . . . . . . . . . . . . . . . . 3
SECTION 2.2. Exchange of Certificates. . . . . . . . . . . . . . . . 4
ARTICLE III
Representations and Warranties
SECTION 3.1. Representations and Warranties of the Company . . . . . 7
SECTION 3.2. Representations and Warranties of Parent and Sub. . . . 21
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ARTICLE IV
Covenants Relating to Conduct of Business
SECTION 4.1. Conduct of Business . . . . . . . . . . . . . . . . . . 25
SECTION 4.2. No Solicitation . . . . . . . . . . . . . . . . . . . . 28
ARTICLE V
Additional Agreements
SECTION 5.1. Preparation of Form S-4 and the Information Statement . 29
SECTION 5.2. Access to Information; Confidentiality. . . . . . . . . 30
SECTION 5.3. Reasonable Efforts; Notification. . . . . . . . . . . . 30
SECTION 5.4. Employee Stock Purchase Plan. . . . . . . . . . . . . . 31
SECTION 5.5. Stock Option Plans. . . . . . . . . . . . . . . . . . . 31
SECTION 5.6. Benefit Plans and Employee Matters. . . . . . . . . . . 31
SECTION 5.7. Indemnification, Exculpation and Insurance. . . . . . . 33
SECTION 5.8. Fees and Expenses . . . . . . . . . . . . . . . . . . . 33
SECTION 5.9. Public Announcements. . . . . . . . . . . . . . . . . . 33
SECTION 5.10. Affiliates; Accounting and Tax Treatment. . . . . . . . 34
SECTION 5.11. State Takeover Laws . . . . . . . . . . . . . . . . . . 34
ARTICLE VI
Conditions Precedent
SECTION 6.1. Conditions to Each Party's
Obligations to Effect the Merger. . . . . . . . . . . . 35
SECTION 6.2. Additional Conditions to Obligations
of Parent and Sub . . . . . . . . . . . . . . . . . . . 36
SECTION 6.3. Additional Conditions to Obligations of the Company . . 37
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ARTICLE VII
Termination, Amendment and Waiver
SECTION 7.1. Termination . . . . . . . . . . . . . . . . . . . . . . 38
SECTION 7.2. Effect of Termination . . . . . . . . . . . . . . . . . 39
SECTION 7.3. Amendment . . . . . . . . . . . . . . . . . . . . . . . 39
SECTION 7.4. Extension; Waiver . . . . . . . . . . . . . . . . . . . 40
ARTICLE VIII
General Provisions
SECTION 8.1. Nonsurvival of Representations and Warranties . . . . . 40
SECTION 8.2. Notices . . . . . . . . . . . . . . . . . . . . . . . . 40
SECTION 8.3. Definitions . . . . . . . . . . . . . . . . . . . . . . 42
SECTION 8.4. Interpretation. . . . . . . . . . . . . . . . . . . . . 42
SECTION 8.5. Counterparts. . . . . . . . . . . . . . . . . . . . . . 42
SECTION 8.6. Entire Agreement; No Third-Party Beneficiaries. . . . . 42
SECTION 8.7. Governing Law . . . . . . . . . . . . . . . . . . . . . 43
SECTION 8.8. Assignment. . . . . . . . . . . . . . . . . . . . . . . 43
SECTION 8.9. Enforcement . . . . . . . . . . . . . . . . . . . . . . 43
SECTION 8.10. Severability. . . . . . . . . . . . . . . . . . . . . . 43
EXHIBIT 5.10 FORM OF AFFILIATE LETTER
EXHIBIT 6.3(d) FORM OF REGISTRATION RIGHTS AGREEMENT
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AGREEMENT AND PLAN OF MERGER, dated as of April 21, 1999, among
DANAHER CORPORATION, a Delaware corporation ("PARENT"), H2O ACQUISITION CORP., a
Delaware corporation ("SUB") and a direct wholly owned subsidiary of Parent, and
HACH COMPANY, a Delaware corporation (the "COMPANY").
WHEREAS, the respective Boards of Directors of Parent, Sub and the
Company have approved the merger of Sub with and into the Company (the
"MERGER"), upon the terms and subject to the conditions set forth in this
Agreement and in accordance with the Delaware General Corporation Law (the
"DGCL"), whereby the issued and outstanding shares of Company Common Stock (as
defined in Section 3.1(c)) other than shares to be canceled in accordance with
Section 2.1(b), will be converted into the right to receive shares of common
stock, par value $.01 per share, of Parent ("PARENT COMMON STOCK");
WHEREAS, as an inducement to Parent to enter into this Agreement,
certain significant stockholders of the Company have entered into an agreement
with Parent (the "STOCKHOLDERS SUPPORT AGREEMENT") pursuant to which each
significant stockholder has, among other things, agreed to vote his or her
shares of Company Common Stock in favor of the Merger;
WHEREAS, contemporaneously with the execution of this Agreement, the
stockholders of the Company representing a majority of the voting power of the
Company have adopted this Agreement by written consent without a meeting
pursuant to Section 228 of the DGCL, the Restated Certificate of Incorporation
of the Company, as amended (the "RESTATED CERTIFICATE OF INCORPORATION"), and
the By-laws of the Company;
WHEREAS, contemporaneously with the execution of this Agreement,
Parent and certain stockholders of the Company are executing an Agreement and
Plan of Reorganization that provides for the acquisition by Parent of all of the
Company Common Stock held by C&K Enterprises, Ltd., a Delaware corporation, in
exchange for shares of Parent Common Stock, which exchange is intended to be
effected immediately prior to the consummation of the Merger;
WHEREAS, Parent, Sub and the Company desire to make certain
representations, warranties, covenants and agreements in connection with the
Merger and also to prescribe various conditions to the Merger;
WHEREAS, for Federal income tax purposes, it is intended that the
Merger shall qualify as a reorganization within the meaning of Section 368(a) of
the Internal Revenue Code of 1986, as amended (the "CODE"); and
WHEREAS, for accounting purposes, it is intended that the Merger shall
be accounted for as a "pooling-of-interests";
NOW, THEREFORE, in consideration of the representations, warranties,
covenants and agreements contained in this Agreement, the parties agree as
follows:
ARTICLE I
THE MERGER
SECTION 1.1. THE MERGER. Upon the terms and subject to the
conditions set forth in this Agreement, and in accordance with the DGCL, Sub
shall be merged with and into the Company at the Effective Time (as
hereinafter defined). Following the Merger, the separate corporate existence
of Sub shall cease and the Company shall continue as the surviving
corporation (the "SURVIVING CORPORATION") and shall succeed to and assume all
the rights and obligations of the Company and of Sub in accordance with the
DGCL.
SECTION 1.2. CLOSING. The closing of the Merger will take place
at 10:00 a.m. on a date to be specified by the parties, which shall be no
later than the second business day after satisfaction or waiver of the
conditions set forth in Article VI (the "CLOSING DATE"), at the offices of
Wachtell, Lipton, Rosen & Katz, New York, New York, unless another time, date
or place is agreed to in writing by the parties hereto.
SECTION 1.3. EFFECTIVE TIME. Subject to the provisions of this
Agreement, as soon as practicable on or after the Closing Date, the parties
shall file a certificate of merger or other appropriate documents (in any
such case, the "CERTIFICATE OF MERGER") executed in accordance with the
relevant provisions of the DGCL and shall make all other filings or
recordings required under the DGCL. The Merger shall become effective at
such time as the Certificate of Merger is duly filed with the Delaware
Secretary of State, or at such other time as Sub and the Company shall agree
should be specified in the Certificate of Merger (the date and time of such
filing, or such later date or time as may be set forth therein, being the
"EFFECTIVE TIME").
SECTION 1.4. EFFECTS OF THE MERGER. The Merger shall have the
effects set forth in Section 259 of the DGCL.
SECTION 1.5. CERTIFICATE OF INCORPORATION AND BY-LAWS. (a) The
certificate of incorporation of Sub as in effect immediately prior to the
Effective Time shall be the certificate of incorporation of the Surviving
Corporation (except that such certificate of incorporation shall be amended
at the Effective Time to provide that the name of the Surviving Corporation
shall be "HACH COMPANY"), until thereafter changed or amended as provided
therein or by applicable law.
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(b) The by-laws of Sub as in effect at the Effective Time shall be
the by-laws of the Surviving Corporation, until thereafter changed or amended
as provided therein or by applicable law.
SECTION 1.6. DIRECTORS. The directors of Sub immediately prior
to the Effective Time shall be the initial directors of the Surviving
Corporation, until the earlier of their resignation or removal or until their
respective successors are duly elected and qualified, as the case may be.
SECTION 1.7. OFFICERS. The officers of the Company immediately
prior to the Effective Time shall continue as the officers of the Surviving
Corporation, until the earlier of their resignation or removal or until their
respective successors are duly elected and qualified, as the case may be.
ARTICLE II
EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE
CONSTITUENT CORPORATIONS; EXCHANGE OF CERTIFICATES
SECTION 2.1. EFFECT ON CAPITAL STOCK. At the Effective Time, by
virtue of the Merger and without any action on the part of Parent, Sub, the
Company, or the holders of any shares of Company Common Stock or any shares
of capital stock of Sub:
(a) CAPITAL STOCK OF SUB. Each share of the capital stock of Sub
issued and outstanding immediately prior to the Effective Time shall be
converted into and exchanged for 1.4588948 fully paid and nonassessable shares
of common stock of the Surviving Corporation; PROVIDED, that such number shall
be appropriately adjusted to take account of any issuances of Company Common
Stock prior to the Effective Time.
(b) CANCELLATION OF TREASURY STOCK; PARENT OWNED STOCK REMAINS
OUTSTANDING. Each share of Company Common Stock that is owned by the Company
or any subsidiary of the Company, and each share of Company Common Stock that
is owned by Sub, immediately prior to the Effective Time shall automatically
be canceled and retired without any conversion thereof and no consideration
shall be delivered with respect thereto. Each share of Company Common Stock
that is owned by Parent immediately prior to the Effective Time shall be
converted into and exchanged for one hundred thousandth of a fully paid and
non assessable share of common stock of the Surviving Corporation.
(c) CONVERSION OF COMPANY COMMON STOCK. Each share of Company
Common Stock issued and outstanding as of the Effective Time, other than
shares of Company Common Stock to be canceled or to remain outstanding in
accordance with Section 2.1(b), shall be converted, subject to Section
2.2(e), Section 7.1(f) and Section 7.1(g), into the right to receive.
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2987 (the "EXCHANGE RATIO") of a share of Parent Common Stock. If, prior to
the Effective Time, Parent should split or combine the Parent Common Stock,
or pay a stock dividend or other stock distribution in Parent Common Stock,
then the Exchange Ratio will be appropriately adjusted to reflect such split,
combination, dividend or other distribution.
As of the Effective Time, all of the shares of Company Common Stock
converted into the right to receive Parent Common Stock pursuant to this
Section 2.1(c) shall no longer be outstanding and shall automatically be
canceled and retired and shall cease to exist, and each certificate
previously representing any such shares shall thereafter represent the right
to receive a certificate representing the shares of Parent Common Stock into
which such Company Common Stock was converted in the Merger and, if
applicable, cash payments in lieu of fractional shares of Parent Common Stock
pursuant to Section 2.2(e). The holders of such certificates previously
evidencing such shares of Company Common Stock outstanding immediately prior
to the Effective Time shall cease to have any rights with respect to such
shares of Company Common Stock as of the Effective Time except as otherwise
provided herein or by law. Such certificates previously representing such
shares of Company Common Stock shall be exchanged for certificates
representing whole shares of Parent Common Stock issued in consideration
therefor upon the surrender of such certificates in accordance with the
provisions of Section 2.2, without interest. No fractional share of Parent
Common Stock shall be issued, and, in lieu thereof, a cash payment shall be
made pursuant to Section 2.2(e).
SECTION 2.2. EXCHANGE OF CERTIFICATES. (a) EXCHANGE AGENT.
Prior to the Effective Time, Parent shall enter into an agreement with such
bank or trust company as may be designated by Parent and as shall be
reasonably satisfactory to the Company (the "EXCHANGE AGENT"), and, as
contemplated by such agreement, Parent shall deposit, or shall cause to be
deposited, with the Exchange Agent as of the Effective Time (or otherwise
when requested by the Exchange Agent from time to time in order to effect any
exchange pursuant to this Section 2.2), for the benefit of the holders of
shares of Company Common Stock converted into the right to receive Parent
Common Stock, for exchange in accordance with this Article II through the
Exchange Agent, cash sufficient to make payments in lieu of fractional shares
pursuant to Section 2.2(e), and certificates representing the shares of
Parent Common Stock issuable pursuant to Section 2.1 in exchange for such
outstanding shares of Company Common Stock (such cash and certificates
representing shares of Parent Common Stock, together with any dividends or
distributions with respect to shares represented by such certificates, being
collectively referred to as the "EXCHANGE FUND"). The Exchange Agent shall
deliver the Parent Common Stock contemplated to be issued pursuant to Section
2.1 out of the Exchange Fund. Except as contemplated by Section 2.2(e), the
Exchange Fund shall not be used for any other purpose.
(b) EXCHANGE PROCEDURE. As soon as reasonably practicable after
the Effective Time, and in no event later than five business days thereafter,
the Exchange Agent shall mail to each holder of record of a certificate or
certificates which immediately prior to the Effective Time represented
outstanding shares of Company Common Stock converted into the right to
receive Parent Common Stock (the "CERTIFICATES"), (i) a letter of transmittal
in customary form (which shall specify that delivery shall be effected, and
risk of loss and title to the Certificates shall pass,
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only upon proper delivery of the Certificates to the Exchange Agent) and (ii)
instructions for use in effecting the surrender of the Certificates in
exchange for certificates representing shares of Parent Common Stock. Upon
surrender of a Certificate for cancellation to the Exchange Agent, together
with such letter of transmittal, duly executed, and such other documents as
may reasonably be required by the Exchange Agent, the holder of such
Certificate shall be entitled to receive in exchange therefor a certificate
evidencing that number of whole shares of Parent Common Stock which such
holder has the right to receive pursuant to this Agreement in respect of the
shares of Company Common Stock formerly evidenced by such Certificate (after
taking into account all shares of Company Common Stock then held of record by
such holder), and a check representing the amount of any cash in lieu of
fractional shares of Parent Common Stock to which such holder is entitled
pursuant to Section 2.2(e) and any dividends or other distributions to which
such holder is entitled pursuant to Section 2.2(c), and the Certificate so
surrendered shall forthwith be canceled. In the event of a transfer of
ownership of Company Common Stock which is not registered in the transfer
records of the Company, a certificate representing the proper number of
shares of Parent Common Stock may be issued to a person other than the person
in whose name the Certificate so surrendered is registered, if such
Certificate, accompanied by all documents required to evidence and effect
such transfer, shall be properly endorsed or otherwise be in proper form for
transfer, and the person requesting such payment shall pay any transfer or
other taxes required by reason of the issuance of shares of Parent Common
Stock to a person other than the registered holder of such Certificate or
establish to the reasoable satisfaction of Parent that such tax has been paid
or is not applicable. Until surrendered as contemplated by this Section 2.2,
each Certificate shall be deemed at any time after the Effective Time to
represent only the right to receive upon such surrender a certificate
evidencing whole shares of Parent Common Stock, cash in lieu of any
fractional shares of Parent Common Stock to which such holder is entitled
pursuant to Section 2.2(e) and any dividends or other distributions to which
such holder is entitled pursuant to Section 2.2(c). No interest will be paid
or will accrue on any cash payable pursuant to Section 2.2(c) or 2.2(e).
(c) DISTRIBUTIONS WITH RESPECT TO UNEXCHANGED SHARES. No
dividends or other distributions declared or made after the Effective Time
with respect to Parent Common Stock with a record date after the Effective
Time shall be paid to the holder of any unsurrendered Certificate with
respect to the shares of Parent Common Stock represented thereby, and no cash
payment in lieu of fractional shares shall be paid to any such holder
pursuant to Section 2.2(e), in each case until the surrender of such
Certificate in accordance with this Article II. Subject to the effect of
applicable escheat laws, following surrender of such Certificate, there shall
be paid to the holder of a certificate representing whole shares of Parent
Common Stock issued in exchange therefor, without interest, (i) at the time
of such surrender, the amount of any cash payable in lieu of a fractional
share of Parent Common Stock to which such holder is entitled pursuant to
Section 2.2(e) and the amount of dividends or other distributions with a
record date after the Effective Time theretofore paid with respect to such
whole shares of Parent Common Stock, and (ii) at the appropriate payment
date, the amount of dividends or other distributions with a record date after
the Effective Time but prior to such surrender and with a payment date
subsequent to such surrender payable with respect to such whole shares of
Parent Common Stock.
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(d) NO FURTHER OWNERSHIP RIGHTS IN COMPANY STOCK. All shares of
Parent Common Stock issued upon the surrender for exchange of Certificates in
accordance with the terms of this Article II (including any cash paid
pursuant to Section 2.2(c) or 2.2(e)) shall be deemed to have been issued
(and paid) in full satisfaction of all rights pertaining to the shares of
Company Common Stock theretofore represented by such Certificates, SUBJECT,
HOWEVER, to the Surviving Corporation's obligation to pay any dividends or
make any other distributions with a record date prior to the Effective Time
which may have been declared or made by the Company on such shares of Company
Common Stock in accordance with the terms of this Agreement or prior to the
date of this Agreement and which remain unpaid at the Effective Time and have
not been paid prior to surrender. At the Effective Time, the stock transfer
books of the Company shall be closed, and there shall be no further
registrations of transfers of shares of Company Common Stock thereafter on
the records of the Company. If, after the Effective Time, Certificates are
presented to the Surviving Corporation, Parent or the Exchange Agent for any
reason, they shall be cancelled and exchanged as provided in this Article II.
(e) NO FRACTIONAL SHARES. No certificates or scrip representing
fractional shares of Parent Common Stock shall be issued upon the surrender
for exchange of Certificates, and such fractional share interests will not
entitle the owner thereof to vote or to any rights of a stockholder of
Parent. Each holder who otherwise would have been entitled to a fraction of
a share of Parent Common Stock shall receive in lieu thereof cash (without
interest) in an amount determined by multiplying the fractional share
interest to which such holder would otherwise be entitled by the closing sale
price of a share of Parent Common Stock on the New York Stock Exchange, Inc.
("NYSE") composite tape on the last full trading day prior to the Effective
Time. No such holder shall be entitled to dividends, voting rights or any
other rights in respect of any fractional share.
(f) TERMINATION OF EXCHANGE FUND. Any portion of the Exchange
Fund that remains undistributed to the holders of Certificates for twelve
months after the Effective Time shall be delivered to Parent, upon demand,
and any holders of Certificates who have not theretofore complied with this
Article II shall thereafter look only to Parent for the shares of Parent
Common Stock, any cash in lieu of fractional shares of Parent Common Stock
and any dividends or distributions with respect to Parent Common Stock to
which they are entitled.
(g) NO LIABILITY. None of Parent, Sub, the Company or the
Exchange Agent shall be liable to any holder of shares of Company Common
Stock for any shares of Parent Common Stock (or dividends or distributions
with respect thereto) or cash from the Exchange Fund delivered to a public
official pursuant to any applicable abandoned property, escheat or similar
law. If any Certificates shall not have been surrendered prior to seven
years after the Effective Time (or immediately prior to such earlier date on
which any cash, any cash in lieu of fractional shares or any dividends or
distributions with respect to whole shares of Parent Common Stock in respect
of such Certificate would otherwise escheat to or become the property of any
Governmental Entity (as defined herein)), any such cash, dividends or
distributions in respect of such Certificate shall, to the extent permitted
by applicable laws, become the property of Parent, free and clear of all
claims or interest of any person previously entitled thereto.
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(h) WITHHOLDING RIGHTS. Parent or the Exchange Agent shall be
entitled to deduct and withhold from the consideration otherwise payable
pursuant to this Agreement to any holder of Certificates such amounts as
Parent or the Exchange Agent, as the case may be, is required to deduct and
withhold with respect to the making of such payment under the Code, or any
provision of state, local or foreign tax law. To the extent that amounts are
so withheld by Parent or the Exchange Agent, such withheld amounts shall be
treated for all purposes of this Agreement as having been paid to the holder
of the Certificates in respect of which such deduction and withholding shall
have been made by Parent or the Exchange Agent.
(i) INVESTMENT OF EXCHANGE FUND. The Exchange Agent shall invest
any cash included in the Exchange Fund, as directed by Parent, on a daily
basis. Any interest and other income resulting from such investments shall be
paid to Parent.
(j) MISSING CERTIFICATES. In the event any Certificate shall have
been lost, stolen or destroyed, upon the making of an affidavit of that fact
and the posting by such person of a bond in such reasonable amount as Parent
may direct 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 shares of Parent Common Stock,
dividends and distributions and cash in lieu of fractional shares deliverable
in respect thereof pursuant to this Agreement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
SECTION 3.1. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. Except
as disclosed by specific reference to the applicable section of the Disclosure
Schedule delivered by the Company to Parent concurrently herewith (the "COMPANY
DISCLOSURE SCHEDULE"), the Company represents and warrants to Parent and Sub as
follows:
(a) ORGANIZATION, STANDING AND CORPORATE POWER. The Company and
each of its subsidiaries is a corporation duly organized, validly existing
and in good standing under the laws of the jurisdiction in which it is
organized and has the requisite corporate power and authority to carry on its
business as now being conducted. The Company and each of its subsidiaries is
duly qualified or licensed to do business and is in good standing in each
jurisdiction in which the nature of its business or the ownership or leasing
of its properties makes such qualification or licensing necessary, other than
in such jurisdictions where the failure to be so qualified or licensed
(individually or in the aggregate) could not reasonably be expected to have a
material adverse effect on the Company. The Company has made available to
Parent complete and correct copies of its certificate of incorporation and
by-laws and the certificates of incorporation and by-laws or other
organizational documents of its Material Subsidiaries, in each case as
amended to the date of this Agreement. For purposes of this Agreement,
"MATERIAL SUBSIDIARY" means each subsidiary
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of the Company designated as a Material Subsidiary in Schedule 3.1(b)(i) of
the Company Disclosure Schedule.
(b) SUBSIDIARIES. Schedule 3.1(b)(i) of the Company Disclosure
Schedule lists each subsidiary of the Company and its jurisdiction of
incorporation or organization. All the outstanding shares of capital stock
of each such subsidiary have been validly issued and are fully paid and
nonassessable and are owned by the Company, by another subsidiary of the
Company or by the Company and another such subsidiary, free and clear of all
pledges, liens, charges, encumbrances and security interests of any kind or
nature whatsoever (collectively, "LIENS"). Except for the capital stock of
its subsidiaries, the Company does not own, directly or indirectly, any
capital stock or other ownership interest in any corporation, partnership,
joint venture or other entity.
(c) CAPITAL STRUCTURE. The authorized capital stock of the
Company consists of 25,000,000 shares of Common Stock, $1.00 par value (the
"COMMON STOCK") and 20,000,000 shares of Class A Common Stock, $1.00 par
value (the "CLASS A COMMON STOCK" and, with the Common Stock, the "COMPANY
COMMON STOCK"). At the close of business on April 19, 1999, (i) 9,005,414
shares of Common Stock and 8,606,364 shares of Class A Common Stock were
issued and outstanding, (ii) there were 2,617,539 shares of Common Stock and
3,016,589 shares of Class A Common Stock held by the Company in its treasury,
(iii) 315,453 shares of Common Stock and 682,953 shares of Class A Common
Stock were reserved for issuance upon exercise of outstanding Stock Options
(as defined in Section 5.5) and (iv) 500,000 shares of Class A Common Stock
reserved for issuance under the Company's Employee Stock Purchase Plan.
Except as set forth above, at the close of business on April 19, 1999, no
shares of capital stock or other voting securities of the Company were
issued, reserved for issuance or outstanding. No subsidiary of the Company
owns any shares of Company Common Stock. Since April 19, 1999, (x) no shares
of Company Common Stock have been issued except pursuant to Stock Options
outstanding on April 19, 1999, and (y) no new Stock Options have been issued.
There are no outstanding stock appreciation rights of the Company which were
not granted in tandem with a related Stock Option and no outstanding limited
stock appreciation rights or other rights to redeem for cash options or
warrants of, or other equity interests in, the Company. All outstanding
shares of capital stock of the Company are, and all shares which may be
issued upon the exercise of Stock Options will be, when issued, duly
authorized, validly issued, fully paid and nonassessable and not subject to
preemptive rights. There are no bonds, debentures, notes or other
indebtedness of the Company having the right to vote (or convertible into, or
exchangeable for, securities having the right to vote) on any matters on
which stockholders of the Company may vote. Except for the Stock Options
described above, of which as of April 21, 1999, 998,406 Stock Options were
outstanding and 671,739 of such Stock Options were exercisable, as of the
date of this Agreement, there are no outstanding securities, options,
warrants, calls, rights, commitments, agreements, arrangements or
undertakings of any kind to which the Company or any of its subsidiaries is a
party or by which any of them is bound obligating the Company or any of its
subsidiaries to issue, deliver or sell, or cause to be issued, delivered or
sold, additional shares of capital stock or other voting securities of the
Company or of any of its subsidiaries or obligating the Company or any of its
subsidiaries to issue, grant, extend or enter into any such security, option,
warrant, all, right, commitment, agreement, arrangement or undertaking.
There are no outstanding contractual obligations of the Company or any of its
subsidiaries to repurchase, redeem
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or otherwise acquire any shares of capital stock (or options to acquire any
such shares) of the Company or any of its subsidiaries. There are no
agreements, arrangements or commitments of any character (contingent or
otherwise) pursuant to which any person is or may be entitled to receive any
earn-out or similar payment based on the revenues, earnings or financial
performance of the Company or any of its subsidiaries or assets or calculated
in accordance therewith. There are no agreements to cause the Company or any
of its subsidiaries to file a registration statement under the Securities Act
of 1933 (the "SECURITIES ACT") or which otherwise relate to the registration
of any securities of the Company.
(d) AUTHORITY; NONCONTRAVENTION. The Company has the requisite
corporate power and authority to enter into this Agreement and to consummate
the transactions contemplated hereby. The execution and delivery of this
Agreement by the Company and the consummation by the Company of the
transactions contemplated hereby have been duly authorized by all necessary
corporate action on the part of the Company and, upon approval by written
consent of stockholders owning a majority of the outstanding shares of Common
Stock, no additional approval or vote of the holders of any class or series
of the Company's securities is necessary to approve this Agreement and the
transactions contemplated hereby. The Board of Directors of the Company (at a
meeting duly called and held) has by a unanimous vote of directors (i)
determined that the Merger is advisable and fair and in the best interests of
the Company and the Company Stockholders, (ii) approved this Agreement and
the Merger in accordance with the provisions of the DGCL, and (iii) submitted
this Agreement to, and recommended the approval and adoption of this
Agreement and the Merger by, the stockholders of the Company. Concurrently
with the execution of this Agreement, the holders of a majority of the
outstanding Common Stock have contemporaneously with the execution hereof
approved and adopted this Agreement and the Merger by written consent without
a meeting pursuant to Section 228 of the DGCL and the Restated Certificate of
Incorporation of the Company, as amended, and the Bylaws of the Company.
Prior to execution and delivery of the Stockholders Support Agreement, the
Board of Directors of the Company has approved the Stockholders Support
Agreement and has taken all necessary action to ensure that the provisions of
Article 9 of the Restated Certificate of Incorporation of the Company shall
not apply to this Agreement or the Stockholders Support Agreement or the
transactions contemplated hereby and thereby. This Agreement has been duly
executed and delivered by the Company and constitutes the valid and binding
obligation of the Company, enforceable against the Company in accordance with
its terms. The execution and delivery of this Agreement does not, and the
consummation of the transactions contemplated hereby and compliance with the
provisions hereof will not, conflict with, or result in any violation of or
default (with or without notice or lapse of time, or both) under, or require
the consent of (or the giving of notice to) a third party with respect to, or
give rise to a right of termination, cancellation or acceleration of any
obligation or to loss of a material benefit under, or result in the creation
of any Lien upon any of the properties or assets of the Company or any of its
subsidiaries under, (i) the certificate of incorporation or by-laws of the
Company or the comparable charter or organizational documents of any of its
subsidiaries, (ii) any loan or credit agreement, note, bond, mortgage,
indenture, lease or other agreement, instrument, permit, concession,
franchise or license applicable to the Company or any of its subsidiaries or
their respective properties or assets, or (iii) subject to the governmental
filings and other matters referred to in the following sentence, any
judgment, order, decree, statute, laws, ordinance, rule or regulation
applicable to the Company or any of its subsidi-
-9-
aries or their respective properties or assets, other than, in the case of
clauses (ii) or (iii), any such conflicts, violations, defaults, rights or
Liens that individually or in the aggregate could not reasonably be expected
to (x) have a material adverse effect on the Company, (y) impair in any
material respect the ability of the Company to perform its obligations under
this Agreement, or (z) prevent or materially delay the consummation of any of
the transactions contemplated hereby. No consent, approval, order or
authorization of, or registration, declaration or filing with, any Federal,
state or local government or any court, administrative or regulatory agency
or commission or other governmental authority or agency, domestic or foreign
(a "GOVERNMENTAL ENTITY"), is required by the Company or any of its
subsidiaries in connection with the execution and delivery of this Agreement
by the Company or the consummation by the Company of the transactions
contemplated hereby, except for (i) the filing with the Federal Trade
Commission and the Antitrust Division of the Department of Justice (the
"SPECIFIED AGENCIES") of a premerger notification and report form by the
Company under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the
"HSR ACT"), (ii) the filing with the Securities and Exchange Commission (the
"SEC") of (x) the Information Statement (as defined in Section 5.1) and (y)
such reports under Section 13(a) of the Securities Exchange Act of 1934, as
amended (the "EXCHANGE ACT"), as may be required in connection with this
Agreement and the transactions contemplated hereby, (iii) the filing of the
Certificate of Merger with the Delaware Secretary of State and appropriate
documents with the relevant authorities of other states in which the Company
is qualified to do business, and (iv) such other consents, approvals, orders,
authorizations, registrations, declarations and filings, including under the
laws of any foreign country in which the Company or any of its subsidiaries
conducts any business or owns any property or assets, the failure of which to
be obtained or made could not, individually or in the aggregate, reasonably
be expected to have a material adverse effect on the Company or prevent or
materially delay the consummation of any of the transactions contemplated by
this Agreement.
(e) SEC DOCUMENTS; FINANCIAL STATEMENTS. Since January 1, 1996, the
Company has filed with the SEC all required reports, forms and other documents
(the "SEC DOCUMENTS"). As of their respective dates, the SEC Documents complied
in all material respects with the requirements of the Securities Act or the
Exchange Act, as the case may be, and the rules and regulations of the SEC
promulgated thereunder applicable to such SEC Documents, and none of the SEC
Documents contained any untrue statement of a material fact or omitted to state
a material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading. Except to the extent that information contained in any SEC
Document has been revised or superseded by a later-filed SEC Document filed and
publicly available prior to the date of this Agreement, none of the SEC
Documents contains any untrue statement of a material fact or omits to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading. The financial statements of the Company included in the SEC
Documents comply as to form in all material respects with all applicable
accounting requirements and the published rules and regulations of the SEC with
respect thereto, have been prepared in accordance with generally accepted
accounting principles (except, in the case of unaudited statements, as permitted
by Form 10-Q of the SEC) applied on a consistent basis during the periods
involved (except as may be indicated in the notes thereto) and fairly present
the consolidated financial position of the Company and its consolidated
subsidiaries as of the dates
-10-
thereof and the consolidated results of their operations and cash flows for
the periods then ended (subject, in the case of unaudited statements, to
normal year-end audit adjustments). Except as set forth in the SEC Documents
filed prior to the date of this Agreement (or, with respect to any future
repetition of this representation, prior to the time of such repetition), and
except for liabilities and obligations incurred in the ordinary course of
business consistent with past practice since the date of the most recent
consolidated balance sheet included in the SEC Documents, neither the Company
nor any of its subsidiaries has any liabilities or obligations of any nature
(whether accrued, absolute, contingent or otherwise) required by generally
accepted accounting principles to be set forth on a consolidated balance
sheet of the Company and its consolidated subsidiaries or in the notes
thereto.
(f) INFORMATION SUPPLIED. None of the information supplied or to
be supplied by the Company specifically for inclusion or incorporation by
reference in (i) the Form S-4 (as defined in Section 5.1(a)) will, at the
time the Form S-4 is filed with the SEC, at any time it is amended or
supplemented or at the time it becomes effective under the Securities Act,
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they are made,
not misleading or (ii) the Information Statement will, at the date it is
mailed to the Company's stockholders, contain any untrue statement of a
material fact or omit to state any material fact required to be stated
therein or necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading. The Information
Statement will comply as to form in all material respects with the
requirements of the Exchange Act and the rules and regulations thereunder,
except that no representation or warranty is made by the Company with respect
to statements made or incorporated by reference therein based on information
supplied by Parent or Sub specifically for inclusion or incorporation by
reference in the Information Statement.
(g) ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as disclosed in the
SEC Documents filed prior to the date of this Agreement, since April 30, 1998
the Company has conducted its business only in the ordinary course consistent
with prior practice, and there has not been (i) any material adverse change in
the Company, (ii) except for regular quarterly cash dividends, any declaration,
setting aside or payment of any dividend or other distribution (whether in cash,
stock or property) with respect to any of the Company's capital stock, (iii) any
split, combination or reclassification of any of its capital stock or any
issuance or the authorization of any issuance of any other securities in respect
of, in lieu of or in substitution for shares of its capital stock, (iv) (x) any
granting by the Company or any of its subsidiaries to any officer of the Company
or any of its subsidiaries of any increase in compensation, except in the
ordinary course of business consistent with prior practice or as was required
under employment agreements in effect as of the date of the most recent audited
financial statements included in the SEC Documents filed prior to the date of
this Agreement (a list of all such employment agreements being set forth in
Section 3.1(g) of the Company Disclosure Schedule), (y) any granting by the
Company or any of its subsidiaries to any such officer of any increase in
severance or termination pay, except as was required under employment, severance
or termination agreements in effect as of the date of the most recent audited
financial statements included in the SEC Documents filed prior to the date of
this Agreement, or (z) any entry into, or renewal or modification of, any
employment, consulting,
-11-
severance or termination agreement with any such officer by the Company or
any of its subsidiaries, (v) any damage, destruction or loss, whether or not
covered by insurance, that, individually or in the aggregate, has or could
reasonably be expected to have a material adverse effect on the Company, (vi)
any change in accounting methods, principles or practices by the Company,
except insofar as may have been required by a change in generally accepted
accounting principles or (vii) any agreement to do any of the things
described in the preceding clauses (i) through (vi).
(h) LITIGATION. Except as disclosed in the SEC Documents filed
prior to the date of this Agreement, there is no suit, action, investigation,
audit or proceeding pending or, to the knowledge of the Company, threatened
against the Company or any of its subsidiaries that, individually or in the
aggregate, could reasonably be expected to (i) have a material adverse effect
on the Company, (ii) impair in any material respect the ability of the
Company to perform its obligations under this Agreement, or (iii) prevent the
consummation of any of the transactions contemplated by this Agreement, nor
is there any judgment, decree, injunction, rule or order of any Governmental
Entity or arbitrator outstanding against the Company or any of its
subsidiaries having, or which could reasonably be expected to have, any
effect referred to in the foregoing clauses (i) through (iii).
(i) BENEFIT PLANS; ERISA COMPLIANCE. (i) For purposes of this
Section 3.1(i), the following terms have the meanings set forth below:
"CONTROLLED GROUP LIABILITY" means any and all material liabilities
(i) under Title IV of ERISA, (ii) under section 302 of ERISA, (iii) under
sections 412 and 4971 of the Code, (iv) as a result of a failure to comply
with the continuation coverage requirements of section 601 et seq. of ERISA
and section 4980B of the Code, and (v) under corresponding or similar
provisions of foreign laws or regulations, other than such liabilities that
arise solely out of, or relate solely to, the Employee Benefit Plans.
An "EMPLOYEE BENEFIT PLAN" means any employee benefit plan, program,
policy, practices, or other arrangement providing benefits to any current
or former employee, officer or director of the Company or any of its
subsidiaries or any beneficiary or dependent thereof that is sponsored or
maintained by the Company or any of its subsidiaries or to which the
Company or any of its subsidiaries contributes or is obligated to
contribute, whether or not written, including without limitation any
employee welfare benefit plan within the meaning of Section 3(1) of ERISA,
any employee pension benefit plan within the meaning of Section 3(2) of
ERISA (whether or not such plan is subject to ERISA) and any bonus,
incentive, deferred compensation, vacation, stock purchase, stock option,
severance, employment, change of control or fringe benefit plan, program or
agreement.
"ERISA AFFILIATE" means, with respect to any entity, trade or
business, any other entity, trade or business that is a member of a group
described in Section 414(b), (c), (m) or (o) of the Code or Section
4001(b)(1) of ERISA that includes the first entity, trade or
-12-
business, or that is a member of the same "controlled group" as the first
entity, trade or business pursuant to Section 4001(a)(14) of ERISA.
A "MULTIEMPLOYER PLAN" means any "multiemployer plan" within the
meaning of Section 4001(a)(3) of ERISA.
A "PLAN" means any Employee Benefit Plan other than a Multiemployer
Plan.
"WITHDRAWAL LIABILITY" means liability to a Multiemployer Plan as a
result of a complete or partial withdrawal from such Multiemployer Plan, as
those terms are defined in Part I of Subtitle E of Title IV of ERISA.
(ii) Schedule 3.1(i)(ii) of the Company Disclosure Schedule
sets forth a true, complete and correct complete list of all material
Employee Benefit Plans (the "PLAN LIST").
(iii) With respect to each Plan, the Company has delivered to
Parent a true, correct and complete copy of to the extent applicable:
(A) each Plan document and any related trust agreements, and insurance
contracts and other funding vehicles; (B) the most recent Annual
Report (Form 5500 Series) and accompanying schedule, if any; (C) the
current summary plan description and any material modifications
thereto, if any; (D) the most recent annual financial report, if any;
(E) the most recent actuarial report, if any; and (F) the most recent
determination letter from the IRS, if any. Except as specifically
provided in the foregoing documents delivered to Parent, there are no
amendments to any Plan that have been adopted or approved nor has the
Company or any of its subsidiaries undertaken to make any such
amendments or to adopt or approve any new Plan.
(iv) The Plan List identifies each Plan that is intended to be
a "qualified plan" within the meaning of Section 401(a) of the Code
("QUALIFIED PLANS"). The Internal Revenue Service has issued a
favorable determination letter with respect to each Qualified Plan and
the related trust that has not been revoked, and to the Company's
knowledge there are no existing circumstances nor any events that have
occurred that could adversely affect the qualified status of any
Qualified Plan or the related trust unless such circumstances or
events could be cured without any material liability to the Company
and its subsidiaries. The Plan List identifies each Plan which is
intended to meet the requirements of Code Section 501(c)(9), and each
such plan meets such requirements in all material respects and
provides no disqualified benefits (as such term is defined in Code
Section 4976(b).
-13-
(v) All contributions required to be made to any Plan by
applicable law or regulation or by any plan document or other
contractual undertaking, and all premiums due or payable with respect
to insurance policies funding any Plan, for any period through the
date hereof have been timely made or paid in full or, to the extent
not required to be made or paid on or before the date hereof, have
been fully reflected on the Company's most recent balance sheet
included in the SEC Documents filed prior to the date hereof. Each
Employee Benefit Plan that is an employee welfare benefit plan under
Section 3(1) of ERISA is either (A) funded through an insurance
company contract and is not a "welfare benefit fund" with the meaning
of Section 419 of the Code or (B) unfunded.
(vi) With respect to each Employee Benefit Plan, the Company
and its subsidiaries have complied, and are now in compliance, in all
material respects with all provisions of ERISA, the Code and all laws
and regulations applicable to such Employee Benefit Plans and each
Employee Benefit Plan has been administered in all material respects
in accordance with its terms. There is not now, nor do any
circumstances exist that could give rise to, any requirement for the
posting of security with respect to a Plan or the imposition of any
material lien on the assets of the Company or any of its subsidiaries
under ERISA or the Code.
(vii) With respect to each Plan that is subject to Title IV or
Section 302 of ERISA or Section 412 or 4971 of the Code: (A) there
does not exist any accumulated funding deficiency within the meaning
of Section 412 of the Code or Section 302 of ERISA, whether or not
waived; (B) no reportable event within the meaning of Section 4043(c)
of ERISA for which the 30-day notice requirement has not been waived
has occurred, and the consummation of the transactions contemplated by
this agreement will not result in the occurrence of any such
reportable event; (C) all premiums to the Pension Benefit Guaranty
Corporation have been timely paid in full; (D) no material liability
(other than for premiums to the PBGC) under Title IV of ERISA has been
or is expected to be incurred by the Company; and (E) the PBGC has not
instituted proceedings to terminate any such Plan and, to the
Company's knowledge, no condition exists that presents a material risk
that such proceedings will be instituted or which would constitute
grounds under Section 4042 of ERISA for the termination of, or the
appointment of a trustee to administer, any such Plan.
(viii) No Employee Benefit Plan is a Multiemployer Plan or a
plan that has two or more contributing sponsors at least two of whom
are not under common control, within the meaning of Section 4063 of
ERISA (a "MULTIPLE EMPLOYER PLAN"). None of the Company and its
subsidiaries nor any of their respective ERISA Affiliates has, at any
time during the last six years, contributed to or been obligated to
contribute to any Multiemployer Plan or Multiple Employer Plan. None
of the Company and its subsidiaries nor any ERISA Affiliates has
incurred any Withdrawal Liability that has not been satisfied in full.
-14-
(ix) There does not now exist, nor do any circumstances exist
that could result in, any Controlled Group Liability that would be a
material liability of the Company following the Closing. Without
limiting the generality of the foregoing, neither the Company nor any
ERISA Affiliate of the Company has engaged in any transaction
described in Section 4069 or Section 4204 or 4212 of ERISA.
(x) Except as disclosed in the SEC Reports, the Company has no
material liability for life, health, medical or other welfare benefits
to former employees or beneficiaries or dependents thereof, except for
health continuation coverage as required by Section 4980B of the Code
or Part 6 of Title I of ERISA and except for coverage provided at no
expense to the Company.
(xi) Except as set forth on Schedule 3.1(i)(xi) of the Company
Disclosure Schedule, neither the execution and delivery of this
Agreement nor the consummation of the transactions contemplated hereby
will (either alone or in conjunction with any other event) result in,
cause the accelerated vesting or delivery of, or increase the amount
or value of, any payment or benefit to any employee, officer or
director of the Company or any of its subsidiaries.
(xii) None of the Company and its subsidiaries nor any other
person, including any fiduciary, has engaged in any "prohibited
transaction" (as defined in Section 4975 of the Code or Section 406 of
ERISA), which could subject any of the Employee Benefit Plans or their
related trusts, the Company, any of its subsidiaries or any person
that the Company or any of its subsidiaries has an obligation to
indemnify, to any material tax or penalty imposed under Section 4975
of the Code or Section 502 of ERISA.
(xiii) There are no pending or threatened claims (other than
claims for benefits in the ordinary course), lawsuits or arbitrations
which have been asserted or instituted, or to Company's knowledge, no
set of circumstances exists which may reasonably give rise to a claim
or lawsuit, against the Plans, any fiduciaries thereof with respect to
their duties to the Plans or the assets of any of the trusts under any
of the Plans which could reasonably be expected to result in any
material liability of the Company or any of its subsidiaries to the
Pension Benefit Guaranty Corporation, the Department of Treasury, the
Department of Labor, any Multiemployer Plan, any Plan or any
participant in a Plan.
(xiv) All Employee Benefit Plans subject to the laws of any
jurisdiction outside of the United States (i) have been maintained in
accordance with all applicable requirements, (ii) if they are intended
to qualify for special tax treatment meet all requirements for such
treatment, and (iii) if they are intended to be funded
-15-
and/or book-reserved are fully funded and/or book-reserved, as
appropriate, based upon reasonable actuarial assumptions.
(j) TAXES. (i) Each of the Company and its subsidiaries has
timely filed all material Federal, state, local and foreign tax returns and
reports required to be filed by it through the date hereof and shall timely
file all such returns and reports required to be filed on or before the
Effective Time. All such returns and reports are and will be true, complete
and correct in all material respects. The Company and each of its
subsidiaries has paid and discharged (or the Company has paid and discharged
on its behalf) all material taxes due from them, other than such taxes as are
being contested in good faith by appropriate proceedings and are adequately
reserved for on the most recent financial statements contained in the SEC
Documents filed prior to the date of the Agreement. All taxes payable by the
Company and its subsidiaries (A) for all taxable periods and portions thereof
through the date of the most recent financial statements contained in the SEC
Documents filed prior to the date of this Agreement are properly reflected in
accordance with generally accepted accounting principles in such financial
statements, and (B) the unpaid taxes of the Company and its subsidiaries do
not exceed the amount shown therefor on such financial statements adjusted
for the passage of time through the Effective Time in accordance with past
custom and practice of the Company and its subsidiaries in filing their tax
returns. The Company and each of its subsidiaries has withheld all material
amounts required to be withheld under applicable tax laws from any employee,
creditor or other person. There are no material liens for taxes upon the
assets of the Company or any of its subsidiaries, other than liens for
current taxes not yet due.
(ii) Except for taxes being contested in good faith and
adequately reserved for in the Company's financial statements, no
claim or deficiency for any taxes has been proposed, threatened,
asserted or assessed by the IRS or any other taxing authority or
agency against the Company, or any of its subsidiaries which, if
resolved against the Company or any of its subsidiaries, could,
individually or in the aggregate, reasonably be expected to have a
material adverse effect upon the Company, and no requests for waivers
of the time to assess any material taxes or file any material tax
return or report are pending. The Federal income tax returns of the
Company and each of its subsidiaries consolidated in such returns have
been examined by and settled with the Internal Revenue Service for all
years through fiscal year 1995. The Company has made available to
Parent true and correct copies of all federal, state, local and
foreign income tax returns, and state and local property and sales tax
returns and any other tax returns filed by the Company or any of its
subsidiaries for any of the taxable periods that remains open, as of
the date hereof, for examination or assessment of tax.
(iii) Neither the Company nor any of its subsidiaries has made
an election under Section 341(f) of the Code. The Company is not and
has never been a United States real property holding corporation
within the meaning of Section 897 of the Code. Neither the Company
nor any of its subsidiaries has constituted either a "distributing
corporation" or a "controlled corporation" in a distribution of stock
-16-
qualifying for tax-free treatment under Section 355 of the Code
(x) in the prior 24 month period or (y) in a distribution which could
otherwise constitute part of a "plan" or "series of related
transactions" (within the meaning of Section 355(e) of the Code) in
conjunction with the Merger.
(iv) Neither the Company nor any of its subsidiaries has any
liability for material taxes of any person (other than the Company and
its subsidiaries) under Treasury Regulation Section 1.1502-6 (or any
comparable provision of state, local or foreign law), by contract or
otherwise. Neither the Company nor any subsidiary is a party to any
agreement, understanding or arrangement relating to the allocation or
sharing of taxes.
(v) Neither the Company nor any of its subsidiaries has taken
or agreed to take any action or has any knowledge of any fact or
circumstance that might prevent or impede the Merger from qualifying
as a reorganization within the meaning of Section 368(a) of the Code.
(vi) As used in this Agreement, "TAXES" shall include all
Federal, state, local and foreign income, property, sales,
withholding, excise and other taxes, of any nature whatsoever (whether
payable directly or by withholding), together with any interest and
penalties, additions to tax or additional amounts imposed with respect
thereto. Notwithstanding the definition of "subsidiary" set forth in
Section 8.3 of this Agreement, for the purposes of this Section
3.1(j), references to the Company and each of its subsidiaries shall
also include former subsidiaries of the Company for the periods during
which any such corporations were included in any consolidated,
combined or unitary tax return of the Company.
(k) NO EXCESS PARACHUTE PAYMENTS. Any amount that could be received
(whether in cash or property or the vesting of property) as a result of any of
the transactions contemplated by this Agreement by any employee, officer or
director of the Company or any of its affiliates who is a "disqualified
individual" (as such term is defined in proposed Treasury Regulation Section
1.280G-1) under any employment, severance or termination agreement, other
compensation arrangement or Benefit Plan currently in effect would not be
characterized as an "excess parachute payment" (as such term is defined in
Section 280G(b)(1) of the Code).
(l) LABOR AGREEMENTS. Neither the Company nor any of its
subsidiaries is a party to any collective bargaining agreement or other labor
agreement with any union or labor organization and, to the knowledge of the
Company, there is no activity or proceeding of any labor organization (or
representative thereof) to organize any such employees. The Company and its
subsidiaries are not subject to any pending or, to the knowledge of the
Company, threatened (i) material unfair labor practice, employment
discrimination or other complaint, (ii) strike or lockout or material
dispute, slowdown or work stoppage or (iii) material claim, suit, action or
govern-
-17-
mental investigation, in respect of which any director, officer, employee or
agent of the Company or any of its subsidiaries is or may be entitled to
claim indemnification from the Company or any subsidiary.
(m) COMPLIANCE WITH APPLICABLE LAWS. (i) Each of the Company and
its subsidiaries has in effect all Federal, state, local and foreign
governmental approvals, authorizations, certificates, filings, franchises,
licenses, notices, permits and rights ("PERMITS") necessary for it to own,
lease or operate its properties and assets and to carry on its business as
now conducted, and there has occurred no default under any such Permit,
except for the lack of Permits and for defaults under Permits which lack or
default individually or in the aggregate could not reasonably be expected to
have a material adverse effect on the Company. Except as disclosed in the
SEC Documents filed prior to the date of this Agreement, the Company and its
subsidiaries are in compliance with all applicable statutes, laws,
ordinances, rules, orders and regulations of any Governmental Entity, except
for noncompliance which individually or in the aggregate could not have a
material adverse effect on the Company.
(ii) To the knowledge of the Company, the Company and each of
its subsidiaries is, and has been, and each of the Company's former
subsidiaries, while subsidiaries of the Company, was, in compliance in
all material respects with all applicable Environmental Laws, except
for noncompliance which individually or in the aggregate could not
reasonably be expected to have a material adverse effect on the
Company. The term "ENVIRONMENTAL LAWS" means any Federal, state,
local or foreign statute, code, ordinance, rule, regulation, policy,
guideline, permit, consent, approval, license, judgment, order, writ,
decree, injunction or other authorization, including the requirement
to register underground storage tanks, relating to: (A) emissions,
discharges, releases or threatened releases of Hazardous Material (as
hereinafter defined) into the environment, including, without
limitation, into ambient air, soil, sediments, land surface or
subsurface, buildings or facilities, surface water, groundwater,
publicly owned treatment works, septic systems or land; or (B) the
generation, treatment, storage, disposal, use, handling,
manufacturing, transportation or shipment of Hazardous Material.
(iii) During the period of ownership or operation by the Company
and its subsidiaries of any of their respective current or previously
owned or leased properties, to the knowledge of the Company there have
been no releases of Hazardous Material in, on, under or affecting such
properties or any surrounding site, except in each case for those
which individually or in the aggregate could not reasonably be
expected to have a material adverse effect on the Company. Prior to
the period of ownership or operation by the Company and its
subsidiaries of any of their respective current or previously owned or
leased properties, to the knowledge of the Company, no Hazardous
Material was generated, treated, stored, disposed of, used, handled or
manufactured at, or transported, shipped or disposed of from, such
currently or previously owned or leased properties, and there were no
releases of Hazardous Material in, on, under or affecting any such
property or any
-18-
surrounding site, except in each case for those which individually
or in the aggregate could not reasonably be expected to have
a material adverse effect on the Company. The term "HAZARDOUS
MATERIAL" means (A) hazardous materials, contaminants, constituents,
medical wastes, hazardous or infectious wastes and hazardous
substances as those terms are defined in the following statutes and
their implementing regulations: the Hazardous Materials
Transportation Act, 49 U.S.C. Section 1801 ET SEQ., the Resource
Conservation and Recovery Act, 42 U.S.C. Section 6901 ET SEQ., the
Comprehensive Environmental Response, Compensation and Liability Act,
as amended by the Superfund Amendments and Reauthorization Act, 42
U.S.C. Section 9601 ET SEQ., the Clean Water Act, 33 U.S.C. Section
1251 ET SEQ. and the Clean Air Act, 42 U.S.C. Section 7401 ET SEQ.,
(B) petroleum, including crude oil and any fractions thereof, (C)
natural gas, synthetic gas and any mixtures thereof, (D) asbestos
and/or asbestos-containing material, and (E) PCBs, or materials or
fluids containing PCBs in excess of 50 ppm.
(n) CONTRACTS; DEBT INSTRUMENTS. Except as disclosed in Schedule
3.1(n) of the Company Disclosure Schedule or for contracts filed as an exhibit
to the Company's latest Annual Report on Form 10-K, there is no contract or
agreement that is material to the business, financial condition or results of
operations of the Company and its subsidiaries taken as a whole ("MATERIAL
CONTRACT"). Each Material Contract of the Company is valid and binding and in
full force and effect, and neither the Company nor any of its subsidiaries is in
violation of or in default under (nor does there exist any condition which upon
the passage of time or the giving of notice, or both, would cause such a
violation of or default under) any loan or credit agreement, note, bond,
mortgage, indenture or lease, or any other Material Contract to which it is a
party or by which it or any of its properties or assets is bound, except for
such failures to be valid and binding and for violations or defaults that could
not, individually or in the aggregate, reasonably be expected to result in a
material adverse effect on the Company. Set forth in Section 3.1(n) of the
Company Disclosure Schedule is a description of any material changes to the
amount and terms of the indebtedness of the Company and its subsidiaries as
described in the Company's Form 10-Q for the quarter ended January 31, 1999.
The Company and its subsidiaries are not, and after the Effective Time neither
the Surviving Corporation nor Parent will be (by reason of any agreement to
which the Company is a party), subject to any noncompetition or similar
restriction on their respective businesses.
(o) INTELLECTUAL PROPERTY. Except as could not, individually and in
the aggregate, reasonably be expected to have a material adverse effect on the
Company, (i) the Company and each of its subsidiaries owns, has the right to
acquire or is licensed or otherwise has the right to use (in each case, free and
clear of any Liens), all Intellectual Property (as defined below) used in the
conduct of its business as currently conducted, (ii) no claims are pending or,
to the knowledge of the Company, threatened, that the Company or any of its
subsidiaries is infringing on or otherwise violating the rights of any person
with regard to any Intellectual Property, and (iii) to the knowledge of the
Company, no person is infringing on or otherwise violating any right of the
Company or any of its subsidiaries with respect to any Intellectual Property
owned by the Company or its subsidiaries. For purposes of this Agreement,
"INTELLECTUAL PROPERTY" shall mean patents, copyrights, trademarks (registered
or unregistered), service marks, brand names, trade dress,
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trade names, the goodwill associated with the foregoing and registrations in
any jurisdiction of, and applications in any jurisdiction to register, the
foregoing; and trade secrets and rights in any jurisdiction to limit the use
or disclosure thereof by any person.
(p) ACCOUNTING MATTERS. Neither the Company nor, to its knowledge,
any of its affiliates has taken or agreed to take any action or has knowledge of
any fact or circumstance relating to the Company that would prevent Parent from
accounting for the business combination to be effected by the Merger as a
pooling-of-interests.
(q) OPINION OF FINANCIAL ADVISOR. The Company has received the
opinion of Lazard Freres & Co. LLC, dated the date of this Agreement, to the
effect that, as of such date, the Exchange Ratio to be used in the Merger is
fair to the Company's stockholders, taken as a whole, from a financial point
of view, and a copy of such signed opinion will be delivered to Parent as
soon as practicable.
(r) BROKERS. No broker, investment banker, financial advisor or
other person, other than Lazard Freres & Co. LLC, the fees and expenses of which
have been disclosed to Parent and will be paid by the Company, is entitled to
any broker's, finder's, financial advisor's or other similar fee or commission
in connection with the transactions contemplated by this Agreement based upon
arrangements made by or on behalf of the Company. The Company has separately
disclosed to Parent the amount of payment due to Lazard Freres & Co. LLC in
respect of the Merger. The Company will promptly deliver to Parent a complete
and correct set of all agreements (and amendments thereof) between the Company
and Lazard Freres & Co. LLC pursuant to which such firm would be entitled to any
payment relating to the Merger.
(s) STATE TAKEOVER STATUTES. The Company has taken all requisite
action to render inapplicable to this Agreement, the Stockholders Support
Agreement and the transactions contemplated hereby and thereby the provisions
of Section 203 of the DGCL and such action is effective at the date of this
Agreement. To the knowledge of the Company, no other state takeover statute
or similar statute or regulation is applicable to the Company or applies to
the Merger, this Agreement, the Stockholders Support Agreement, or any of the
transactions contemplated by this Agreement or the Stockholders Support
Agreement.
(t) YEAR 2000 COMPLIANCE. The Company has initiated a review and
assessment of the Year 2000 Problem (as hereinafter defined), has developed a
plan for addressing the Year 2000 Problem on a timely basis and has to date
implemented such plan, except where the Company's failure to do so is not
reasonably likely to have a material adverse effect on the Company. Except
as could not reasonably be expected to have a material adverse effect on the
Company, to the knowledge of the Company none of the assets or properties
owned or utilized by the Company will fail to perform because of the Year
2000 Problem. The term "YEAR 2000 PROBLEM" means the material inability of
any hardware, software or process to recognize and correctly calculate dates
on and after January 1, 2000, or the failure of computer systems, products or
services
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to perform any of their intended functions in a proper manner in connection
with data containing any date on or after January 1, 2000.
SECTION 3.2. REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB.
Except as disclosed by specific reference to the applicable section of the
Disclosure Schedule delivered by Parent to the Company concurrently herewith
(the "PARENT DISCLOSURE SCHEDULE"), Parent and Sub represent and warrant to
the Company as follows:
(a) ORGANIZATION, STANDING AND CORPORATE POWER. Each of Parent
and Sub is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction in which it is incorporated and
has the requisite corporate power and authority to carry on its business as
now being conducted. Each of Parent and Sub is duly qualified or licensed to
do business and is in good standing in each jurisdiction in which the nature
of its business or the ownership or leasing of its properties makes such
qualification or licensing necessary, other than in such jurisdictions where
the failure to be so qualified or licensed (individually or in the aggregate)
could not reasonably be expected to have a material adverse effect on Parent.
Parent has made available to the Company complete and correct copies of its
certificate of incorporation and by-laws and the certificate of incorporation
and by-laws of Sub, in each case as amended to the date of this Agreement.
(b) CAPITAL STRUCTURE. The authorized capital stock of Parent as of
the date of this Agreement consists of 300,000,000 shares of Parent Common Stock
and 15,000,000 shares of preferred stock, without par value. At the close of
business on April 16, 1999, (i) 135,408,036 shares of Parent Common Stock and no
shares of preferred stock were issued and outstanding, (ii) 11,595,000 shares of
Parent Common Stock were held by Parent in its treasury, and (iii) 15,000,000
shares of Parent Common Stock were reserved for issuance upon exercise of
outstanding employee stock options to purchase shares of Parent Common Stock.
The number of shares of Parent Common Stock issuable under this Agreement has
been or will be reserved for issuance. Except as set forth above, at the close
of business on April 16, 1999, no shares of capital stock or other voting
securities of the Parent were issued, reserved for issuance or outstanding. All
outstanding shares of capital stock of Parent are, and all shares which may be
issued pursuant to this Agreement will be, when issued, duly authorized, validly
issued, fully paid and nonassessable and not subject to preemptive rights. As
of the date of this Agreement, there are no bonds, debentures, notes or other
indebtedness of Parent having the right to vote (or convertible into, or
exchangeable for, securities having the right to vote) on any matters on which
stockholders of Parent may vote. Except as set forth above, as of the date of
this Agreement, there are no outstanding securities, options, warrants, calls,
rights, commitments, agreements, arrangements or undertakings of any kind to
which Parent is a party or by which it is bound obligating Parent to issue,
deliver or sell, or cause to be issued, delivered or sold, additional shares of
capital stock or other voting securities or obligating Parent to issue, grant,
extend or enter into any such security, option, warrant, call, right,
commitment, agreement, arrangement or undertaking. As of the date of this
Agreement, there are no outstanding contractual oblgations of Parent to
repurchase, redeem or otherwise acquire any shares of its capital stock. As of
the date of this Agreement, the authorized capital stock of Sub consists of
1,000 shares of common stock, par value $.01 per
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share, of which 100 shares have been validly issued, are fully paid and
nonassessable and are owned by Parent free and clear of any Liens.
(c) AUTHORITY; NONCONTRAVENTION. Parent and Sub have the requisite
corporate power and authority to enter into this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby have been duly
authorized by all necessary corporate action on the part of Parent and Sub.
This Agreement has been duly executed and delivered by Parent and Sub and
constitutes a valid and binding obligation of each such party, enforceable
against each such party in accordance with its terms. The execution and
delivery of this Agreement does not, and the consummation of the transactions
contemplated hereby and compliance with the provisions hereof will not, conflict
with, or result in any violation of, or default (with or without notice or lapse
of time, or both) under, or require the consent of (or the giving notice to) a
third party with respect to, or give rise to a right of termination,
cancellation or acceleration of any obligation or to loss of a material benefit
under, or result in the creation of any Lien upon any of the properties or
assets of Parent or any of its subsidiaries under, (i) the certificate of
incorporation or by-laws of Parent or Sub, (ii) any loan or credit agreement,
note, bond, mortgage, indenture, lease or other agreement, instrument, permit,
concession, franchise or license applicable to Parent or any of its subsidiaries
or their respective properties or assets as of the date hereof, or (iii) subject
to the governmental filings and other matters referred to in the following
sentence, any judgment, order, decree, statute, law, ordinance, rule or
regulation applicable to Parent or any of its subsidiaries or their respective
properties or assets, other than, in the case of clauses (ii) or (iii), any such
conflicts, violations, defaults, rights or Liens that individually or in the
aggregate could not reasonably be expected to (x) have a material adverse effect
on Parent, (y) impair in any material respect the ability of Parent and Sub to
perform their respective obligations under this Agreement, or (z) prevent or
materially delay the consummation of any of the transactions contemplated
hereby. No consent, approval, order or authorization of, or registration,
declaration or filing with any Governmental Entity is required by Parent or any
of its subsidiaries in connection with the execution and delivery of this
Agreement or the consummation by Parent or Sub, as the case may be, of any of
the transactions contemplated hereby, except for (i) the filing with the
Specified Agencies of a premerger notification and report form under the HSR
Act, (ii) the filing with the SEC of (x) the Form S-4 and (y) such reports under
Sections 13(a), 13(d) and 16(a) of the Exchange Act as may be required in
connection with this Agreement and the transactions contemplated hereby, (iii)
the filing of the Certificate of Merger with the Delaware Secretary of State and
appropriate documents with the relevant authorities of other states in which the
Company is qualified to do business, and (iv) such other consents, approvals,
orders, authorizations, registrations, declarations and filings, including under
(x) the laws of any foreign country in which the Company or any of its
subsidiaries conducts any business or owns any property or assets or (y) the
"takeover" or "blue sky" laws of various states, the failure of which to be
obtained or made could not, individually or in the aggregate, reasonably be
expected to have a material adverse effect on Parent or prevent or materially
delay the consummation of any of the transactions contemplated by this
Agreement.
(d) SEC DOCUMENTS; FINANCIAL STATEMENTS. Since January 1, 1997,
Parent has filed with the SEC all required reports and forms and other documents
(the "PARENT SEC DOCU-
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MENTS"). As of their respective dates, the Parent SEC Documents complied in
all material respects with the requirements of the Securities Act or the
Exchange Act, as the case may be, and the rules and regulations of the SEC
promulgated thereunder applicable to such Parent SEC Documents, and none of
the Parent SEC Documents contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary
in order to make the statements therein, in light of the circumstances under
which they were made, not misleading. Except to the extent that information
contained in any Parent SEC Document has been revised or superseded by a
later-filed Parent SEC Document filed and publicly available prior to the
date of this Agreement, none of the Parent SEC Documents contains any untrue
statement of a material fact or omits to state any material fact required to
be stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading. The
financial statements of Parent included in the Parent SEC Documents comply as
to form in all material respects with all applicable accounting requirements
and the published rules and regulations of the SEC with respect thereto, have
been prepared in accordance with generally accepted accounting principles
(except, in the case of unaudited statements, as permitted by Form 10-Q of
the SEC) applied on a consistent basis during the periods involved (except as
may be indicated in the notes thereto) and fairly present the consolidated
financial position of Parent and its consolidated subsidiaries as of the
dates thereof and the consolidated results of their operations and cash flows
for the periods then ended (subject, in the case of unaudited statements, to
normal year-end adjustments). Except as set forth in the SEC Documents filed
prior to the date of this Agreement (or, with respect to any future
repetition of this representation, prior to the time of such repetition), and
except for liabilities and obligations incurred in the ordinary course of
business consistent with past practice since the date of the most recent
consolidated balance sheet included in the SEC Documents, neither Parent nor
any of its subsidiaries has any liabilities or obligations of any nature
(whether accrued, absolute, contingent or otherwise) required by generally
accepted accounting principles to be set forth on a consolidated balance
sheet of Parent and its consolidated subsidiaries or in the notes thereto.
(e) INFORMATION SUPPLIED. None of the information supplied or to be
supplied by Parent or Sub for inclusion or incorporation by reference in (i) the
Form S-4 will, at the time the Form S-4 is filed with the SEC, at any time it is
amended or supplemented or at the time it becomes effective under the Securities
Act, contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they are made, not
misleading or (ii) the Information Statement will, at the date the Information
Statement is mailed to the Company's stockholders, contain any untrue statement
of a material fact or omit to state any material fact required to be stated
therein or necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading. The Form S-4 will
comply as to form in all material respects with the requirements of the
Securities Act and the rules and regulations promulgated thereunder, except that
no representation or warranty is made by Parent or Sub with respect to
statements made or incorporated by reference in either the Form S-4 or the
Information Statement based on information supplied by the Company specifically
for inclusion or incorporation by reference therein.
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(f) ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as disclosed in
the Parent SEC Documents filed prior to the date of this Agreement, since
January 1, 1999, Parent has conducted its business only in the ordinary
course consistent with prior practice and there has not been (i) any material
adverse change in Parent, (ii) except for regular quarterly cash dividends,
any declaration, setting aside or payment of any dividend or distribution
(whether in cash, stock or property) with respect to any of Parent's capital
stock, (iii) any split, combination or reclassification of any of its capital
stock or any issuance or the authorization of any issuance of any other
securities in respect of, in lieu of or in substitution for shares of its
capital stock, (iv) any damage, destruction or loss, whether or not covered
by insurance, that has or could reasonably be expected to have a material
adverse effect on Parent, (v) any change in accounting methods, principles or
practices by Parent materially affecting its assets, liabilities or business
except insofar as may have been required by a change in generally accepted
accounting principles, or (vi) any agreement to do any of the things
described in the preceding clauses (i) through (v).
(g) LITIGATION. Except as disclosed in the Parent SEC Documents
filed prior to the date of this Agreement, as of the date of this Agreement
there is no suit, action or proceeding pending or, to the knowledge of
Parent, threatened against Parent or any of its subsidiaries that,
individually or in the aggregate, could reasonably be expected to (i) have a
material adverse effect on Parent, (ii) impair in any material respect the
ability of Parent to perform its obligations under this Agreement, or (iii)
prevent the consummation of any of the transactions contemplated by this
Agreement, nor is there any judgment, decree, injunction, rule or order of
any Governmental Entity or arbitrator outstanding against Parent or any of
its subsidiaries having, or which is reasonably likely to have, any effect
referred to in the foregoing clauses (i) through (iii).
(h) COMPLIANCE WITH APPLICABLE LAWS. (i) Each of Parent and its
subsidiaries has in effect all Permits necessary for it to own, lease or operate
its properties and assets and to carry on its business as now conducted, and
there has occurred no default under any such Permit, except for the lack of
Permits and for defaults under Permits which lack or default individually or in
the aggregate could not reasonably be expected to have a material adverse effect
on Parent. Except as disclosed in the Parent SEC Documents filed prior to the
date of this Agreement, Parent and its subsidiaries are in compliance with all
applicable statutes, laws, ordinances, rules, orders and regulations of any
Governmental Entity, except for possible noncompliance which individually or in
the aggregate could not reasonably be expected to have a material adverse effect
on Parent.
(ii) To the knowledge of Parent, Parent and each of its
subsidiaries is, and has been, and each of Parent's former
subsidiaries, while subsidiaries of Parent, was, in compliance in all
material respects with all applicable Environmental Laws, except for
possible noncompliance which individually or in the aggregate could
not reasonably be expected to have a material adverse effect on
Parent.
(i) ACCOUNTING MATTERS; TAX TREATMENT. Neither Parent nor, to its
best knowledge, any of its affiliates has taken or agreed to take any action or
has knowledge of any
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fact or circumstance relating to Parent that would prevent Parent from
accounting for the business combination to be effected by the Merger as a
pooling-of-interests. Neither Parent nor any of its subsidiaries has taken
or agreed to take any action or has any knowledge of any fact or circumstance
that might prevent or impede the Merger from qualifying as a reorganization
within the meaning of Section 368(a) of the Code.
(j) BROKERS. No broker, investment banker, financial advisor or
other person, other than Salomon Smith Barney Inc., the fees and expenses of
which will be paid by Parent, is entitled to any broker's, finder's, financial
advisor's or other similar fee or commission in connection with the transactions
contemplated by this Agreement based upon arrangements made by or on behalf of
Parent or Sub.
(k) INTERIM OPERATIONS OF SUB. Sub was formed solely for the purpose
of engaging in the transactions contemplated hereby, has engaged in no other
business activities and has conducted its operations only as contemplated
hereby.
ARTICLE IV
COVENANTS RELATING TO CONDUCT OF BUSINESS
SECTION 4.1. CONDUCT OF BUSINESS. (a) CONDUCT OF BUSINESS BY
THE COMPANY. Between the date of this Agreement and the Effective Time, the
Company shall, and shall cause its subsidiaries to, carry on their respective
businesses in the ordinary course consistent with past practice and use all
reasonable efforts to preserve intact their current business organizations,
keep available the services of their current officers and employees and
preserve their relationships with customers, suppliers and others having
business dealings with them. Without limiting the generality of the
foregoing, between the date of this Agreement and the Effective Time, except
(a) as expressly contemplated by this Agreement or (b) as set forth in
Section 4.1(a) of the Company Disclosure Schedule, the Company shall not, and
shall not permit any of its subsidiaries, without the prior written approval
of Parent, to:
(i) (A) declare, set aside or pay (whether in cash, stock,
property, or otherwise) any dividends on, or make any other
distributions in respect of, any of its capital stock, other than (x)
the Company's regular quarterly cash dividends in amounts and with
record and payment dates in the ordinary course of business consistent
with past practice and (y) dividends and distributions by any direct
or indirect wholly owned subsidiary of the Company to its parent, (B)
split, combine or reclassify any of its capital stock, or issue or
authorize the issuance of any other securities in respect of, in lieu
of or in substitution for shares of its capital stock, or (C)
purchase, redeem or otherwise acquire any shares of capital stock of
the Company or any of its subsidiaries or any other securities thereof
or any rights, warrants or options to acquire any such shares or other
securities;
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(ii) other than the issuance of Company Common Stock upon the
exercise of Stock Options outstanding on the date of this Agreement in
accordance with their present terms or in accordance with the present
terms of any employment agreements existing on the date of this
Agreement and described in Section 4.1(a) of the Company Disclosure
Schedule, (A) issue, deliver, sell, award, pledge, dispose of or
otherwise encumber or authorize or propose the issuance, delivery,
grant, sale, award, pledge or other encumbrance (including limitations
in voting rights) or authorization of, any shares of its capital
stock, any other voting securities or any securities convertible into,
or any rights, warrants or options to acquire, any such shares, voting
securities or convertible securities, (B) amend or otherwise modify
the terms of any such rights, warrants or options, or (C) accelerate
the vesting of any of the Stock Options;
(iii) amend its certificate of incorporation, by-laws or other
comparable charter or organizational documents;
(iv) acquire or agree to acquire (for cash or shares of stock
or otherwise) (A) by merging or consolidating with, or by purchasing a
substantial portion of the assets of, or by any other manner, any
business or any corporation, partnership, joint venture, association
or other business organization or division thereof or (B) except for
capital assets consistent with (vii) below, any assets except in the
ordinary course of business consistent with past practice;
(v) mortgage or otherwise encumber or subject to any Lien, or
sell, lease, exchange or otherwise dispose of any of, its properties
or assets, except for sales of its products in the ordinary course of
business consistent with past practice;
(vi) (A) incur any indebtedness for borrowed money (including
under existing credit facilities) or guarantee any such indebtedness
of another person, issue or sell any debt securities or warrants or
other rights to acquire any debt securities of the Company or any of
its subsidiaries, guarantee any debt securities of another person,
enter into any "keep well" or other agreement to maintain any
financial statement condition of another person or enter into any
arrangement having the economic effect of any of the foregoing, except
for the incurrence of indebtedness to finance the Company's working
capital needs which, in the aggregate, do not exceed $1,000,000,
provided that the terms of any such indebtedness (including any
prepayment penalty) shall be subject to the approval of Parent, or (B)
make any loans, advances or capital contributions to, or investments
in, any other person, other than to the Company or any direct or
indirect wholly owned subsidiary of the Company;
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(vii) make or agree to make any capital expenditures except as
consistent with the Company's Fiscal 1999 and Fiscal 2000 Capital
Budget previously provided to Parent on a pro rata basis in each of
those fiscal years;
(viii) make or rescind any express or deemed election relating
to taxes, settle or compromise any claim, action, suit, litigation,
proceeding, arbitration, investigation, audit or controversy relating
to taxes, change any of its methods of reporting income or deductions
for Federal income tax purposes except as may be required by
applicable law or file any tax return or report other than in a manner
consistent with past practice;
(ix) pay, discharge or satisfy any claims, liabilities or
obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise), other than the payment, discharge or satisfaction, in the
ordinary course of business consistent with past practice or in
accordance with their terms, of liabilities reflected or reserved
against in the most recent consolidated financial statements of the
Company included in the SEC Documents or incurred in the ordinary
course of business consistent with past practice;
(x) (A) increase the rate or terms of compensation payable or
to become payable generally to any of the Company's directors,
officers or employees other than in connection with promotions and
regular raise cycle increases in the ordinary course and in accordance
with past practices and after consultation with Parent, (B) pay or
agree to pay any pension, retirement allowance or other employee
benefit not provided for by any existing Employee Benefit Plan or
employment agreement described in the SEC Documents filed prior to the
date of this Agreement, (C) commit itself to any additional pension,
profit sharing, bonus, incentive, deferred compensation, stock
purchase, stock option, stock appreciation right, group insurance,
severance pay, continuation pay, termination pay, retirement or other
employee benefit plan, agreement or arrangement, or increase the rate
or terms of any employee plan or benefit arrangement, (D) enter into
any employment agreement with or for the benefit of any person, or (E)
increase the rate of compensation under or otherwise change the terms
of any existing employment agreement;
(xi) except in the ordinary course of business consistent with
past practice, modify, amend or terminate or fail to use reasonable
business efforts to renew any material contract or agreement to which
the Company or any subsidiary is a party, or waive, release or assign
any material rights or claims (including any rights under any
confidentiality agreements); or
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(xii) authorize any of, or commit or agree to take any of, the
foregoing actions.
(b) CONDUCT OF BUSINESS BY PARENT. During the period from the date
of this Agreement to the Effective Time, Parent shall, and shall cause its
subsidiaries to, carry on their respective businesses in the ordinary course
consistent with past practice and use all reasonable efforts to preserve their
relationships with customers, suppliers and others having business dealings with
them; PROVIDED that the foregoing shall not prevent Parent or any of its
subsidiaries from discontinuing or disposing of any part of its assets or
business or from acquiring any assets or businesses or from entering into any
financing transactions if such action is, in the judgment of Parent, desirable
in the conduct of the business of Parent and its subsidiaries. Without limiting
the generality of the foregoing, during the period from the date of this
Agreement to the Effective Time, except as (i) expressly contemplated by this
Agreement or (ii) as set forth in a writing delivered to the Company prior to
the execution hereof, Parent shall not, and shall not permit any of its
subsidiaries to:
(i) (A) declare, set aside or pay (whether in cash or
property) any dividends on, or make any other distributions in respect
of, any capital stock other than dividends and distributions by any
direct or indirect wholly owned subsidiary of Parent to its parent and
except for regular quarterly cash dividends (in an amount determined
in a manner consistent with Parent's past practice) declared by the
Board of Directors of Parent with customary record and payment dates,
or (B) split, combine or reclassify any of its capital stock or issue
or authorize the issuance of any other securities in respect of, in
lieu of or in substitution for shares of Parent's capital stock;
(ii) amend its certificate of incorporation (except to increase
the number of shares authorized), by-laws or other comparable charter
or organizational documents in a manner which could reasonably be
expected to be materially adverse to the stockholders of the Company;
or
(iii) authorize, or commit or agree to take any of, the
foregoing actions.
(c) OTHER ACTIONS. The Company and Parent shall not, and shall not
permit any of their respective subsidiaries to, take any action that would
result in (i) any of the representations and warranties of such party set forth
in this Agreement that are qualified as to materiality, becoming untrue or (ii)
any of such representations and warranties that are not so qualified becoming
untrue in any material respect.
SECTION 4.2. NO SOLICITATION. (a) The Company shall not, nor shall
it permit any of its subsidiaries to, nor shall it authorize or permit any
officer, director or employee of, or any investment banker, attorney or other
advisor or representative of, the Company or any of its
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subsidiaries to, (i) solicit or initiate, or encourage or facilitate the
submission of, any proposal or offer for a merger or other business
combination involving the Company or any of its subsidiaries or any
acquisition of any capital stock of, or any significant amount of the assets
of, the Company or any of its subsidiaries, or (ii) participate in any
discussions or negotiations regarding, or furnish to any person any
information with respect to, or take any other action to facilitate any
inquiries or the making of any proposal that constitutes, or may reasonably
be expected to lead to, any such transaction (other than with respect to, and
in connection with, the Merger and any other transaction contemplated by this
Agreement). The Company shall immediately terminate any currently on-going
discussions with respect to any such transaction and shall request the return
or destruction of any confidential information provided to any other party in
connection with any such discussions during the past 12 months. The Company
shall promptly advise Parent orally and in writing of any request for
information or of any proposal received from any third party relating to the
Company or its securities, including the material terms and conditions of
such request, proposal or inquiry, and the identity of the person making the
same. The Company shall keep Parent informed on a current basis of the status
and details of any such request, proposal or inquiry.
ARTICLE V
ADDITIONAL AGREEMENTS
SECTION 5.1. PREPARATION OF FORM S-4 AND THE INFORMATION
STATEMENT. As promptly as practicable after the execution of this Agreement,
(i) the Company shall prepare and file with the SEC on Schedule 14C an
information statement relating to this Agreement, the transactions
contemplated hereby and the approval thereof by written consent of the
stockholders of the Company (together with any amendments and supplements
thereof or supplements thereto, the "INFORMATION STATEMENT"), and (ii) Parent
shall prepare and file with the SEC a registration statement on Form S-4
(together with all amendments thereto, the "FORM S-4") in which the
Information Statement shall be included as a prospectus, in connection with
the registration under the Securities Act of the shares of Parent Common
Stock to be issued to the stockholders of the Company pursuant to the Merger.
Each of Parent and the Company shall use all reasonable efforts to cause the
Form S-4 to become effective as promptly as practicable, and shall take all
or any action required under any applicable Federal or state securities laws
in connection with the issuance of shares of Parent Common Stock pursuant to
the Merger. Each of Parent and the Company shall furnish all information
concerning itself to the other as the other may reasonably request in
connection with such actions and the preparation of the Form S-4 and
Information Statement. Parent will advise the Company, and (where
applicable) the Company will advise Parent, promptly after receiving from the
SEC or any other Governmental Entity any of the following: (i) notice that
the Form S-4 has become effective, (ii) notice of the issuance of any stop
order or the suspension of the qualification of the shares of Parent Common
Stock issuable in connection with the Merger for offering or sale in any
jurisdiction, (iii) a request for amendment of the Form S-4 or the
Information Statement, or (iv) SEC comments to the Form S-4 or the
Information Statement or requests for additional information with respect
thereto. As promptly as practicable after the Form S-4 shall have become
effective, the Company shall mail the Information Statement to its
stockholders. Without limiting the foregoing, if Parent so requests, the
Company will take all action necessary in accordance with applicable law and
its Restated Certificate of Incorporation and By-Laws to convene a
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meeting of its stockholders to consider and vote upon the approval and
adoption of this Agreement and the transactions contemplated hereby, and to
submit this Agreement to the stockholders of the Company for their approval,
or to solicit a further written consent, in lieu of a stockholders' meeting,
of its stockholders approving and adopting this Agreement and the
transactions contemplated hereby, and the Company and its Board of Directors
shall take all lawful reasonable action to solicit, and use all reasonable
efforts to obtain, such approval, including making any required filings with
Governmental Entities.
SECTION 5.2. ACCESS TO INFORMATION; CONFIDENTIALITY. Subject to any
applicable law and that certain confidentiality agreement executed in 1993, the
general nature of which has been disclosed, the Company shall, and shall cause
each of its subsidiaries to, afford to Parent, and to its officers, employees,
accountants, counsel, financial advisers and other representatives, full access
during normal business hours upon receipt of reasonable prior notice during the
period prior to the Effective Time to all of the Company's properties, books,
contracts, commitments, personnel and records and, during such period, the
Company shall, and shall cause each of its subsidiaries to, furnish promptly to
Parent, (a) a copy of each report, schedule, registration statement and other
document filed by it during such period pursuant to the requirements of Federal
or state securities laws and (b) all other information concerning its business,
properties and personnel as Parent may reasonably request. Except as required
by law, Parent will hold, and will cause its officers, employees, accountants,
counsel, financial advisers and other representatives and affiliates to hold,
any confidential information in accordance with the Confidentiality Agreement
between Parent and the Company executed in connection with the Merger (the
"CONFIDENTIALITY AGREEMENT").
SECTION 5.3. REASONABLE EFFORTS; NOTIFICATION. (a) Upon the
terms and subject to the conditions set forth in this Agreement, each of the
parties agrees to use all reasonable efforts to take, or cause to be taken,
all actions, and to do, or cause to be done, and to assist and cooperate with
the other parties in doing, all things necessary, proper or advisable to
consummate and make effective, in the most expeditious manner practicable,
the Merger and the other transactions contemplated by this Agreement,
including (i) the making of all necessary registrations and filings
(including filings with Governmental Entities, if any), (ii) the obtaining of
all necessary consents, approvals or waivers from third parties, and (iii)
the execution and delivery of any additional instruments necessary to
consummate the transactions contemplated by, and to fully carry out the
purposes of, this Agreement. Each party shall promptly notify the other
parties of any communication to that party from any Governmental Entity and
permit the other parties to review in advance any proposed communications to
any Governmental Entity. Parent and the Company shall not (and shall cause
their respective affiliates and representatives not to) participate in any
meeting with any Governmental Entity in respect of any filings, investigation
or other inquiry unless it consults with the other party in advance and, to
the extent permitted by such Governmental Entity, gives the other party the
opportunity to attend and participate thereat. Each of the parties hereto
will coordinate and cooperate fully with the other parties hereto in
exchanging such information and providing such assistance as such other
parties may reasonably request in connection with the foregoing and in
seeking early termination of any applicable waiting periods under the HSR Act
or in connection with other required consents. Each of the Company and
Parent agrees to respond promptly to and comply fully with any request for
additional infor-
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mation or documents under the HSR Act. Each party will provide the others
with copis of all correspondence, filings or communications (or memoranda
setting forth the substance thereof) between such party or any of its
representatives, on the one hand, and any Governmental Entity or members of
its staff, on the other hand, with respect to this Agreement and the
transactions contemplated hereby.
(b) The Company shall give prompt notice to Parent, and Parent shall
give prompt notice to the Company, of (i) any representation or warranty made by
it contained in this Agreement that is qualified as to materiality becoming
untrue or inaccurate in any respect or any such representation or warranty that
is not so qualified becoming untrue or inaccurate in any material respect or
(ii) the failure by it to comply with or satisfy in any material respect any
covenant, condition or agreement to be complied with or satisfied by it under
this Agreement; PROVIDED, HOWEVER, that no such notification shall affect the
representations, warranties, covenants, or agreements of the parties or the
conditions to the obligations of the parties under this Agreement.
SECTION 5.4. EMPLOYEE STOCK PURCHASE PLAN. The Company shall take
all necessary action so that any offering under the Company's Employee Stock
Purchase Plan that begins before the Effective Time and would otherwise end
after the Effective Time ends before the Effective Time and no such offering
begins after the Effective Time.
SECTION 5.5. STOCK OPTION PLANS. The Company and Parent shall take
all necessary action to provide that, at the Effective Time, and except as
provided in Section 5.4, all outstanding stock options to purchase shares of
Company Common Stock ("STOCK OPTIONS") heretofore granted under any stock option
or stock appreciation rights plan, program or arrangement of the Company
(collectively, the "STOCK OPTION PLANS") will be canceled and retired and shall
cease to exist, and that each holder of a Stock Option, whether or not then
exercisable, shall receive with respect to such Stock Option, without any action
on the part of such holder, the number of whole shares of Parent Common Stock
equal to (i) the Fair Value of such Stock Option (as defined below) divided by
(ii) the Average Parent Stock Price (as defined below), where: the "FAIR VALUE
OF SUCH STOCK OPTION" is equal to the product of (x) the number of shares of
Company Common Stock subject to such Stock Option and (y) the excess, if any, of
(A) the product of the Exchange Ratio and the Average Parent Stock Price over
(B) the exercise price of such Stock Option. The Company shall use its
reasonable best efforts to receive any consents necessary to effectuate the
foregoing. The Company represents and warrants that, under the terms of the
Stock Option Plans and the Stock Options, following the Effective Time, no
holder of a Stock Option or participant in any Stock Option Plan shall have any
right thereunder to acquire any capital stock of the Company, Parent or the
Surviving Corporation.
SECTION 5.6. BENEFIT PLANS AND EMPLOYEE MATTERS. (a) Parent
agrees that the Company will honor, and, from and after the Effective Time,
Parent will cause the Surviving Corporation to honor, in accordance with
their respective terms as in effect on the date hereof, the employment,
severance and bonus agreements and similar arrangements to which the Com-
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pany is a party and which are set forth on Sections 3.1(i) and 5.5 of the
Company Disclosure Schedule.
(b) Parent agrees that (i) for the period ending December 31,
1999, the Surviving Corporation shall continue the compensation and employee
benefit and welfare plans and programs of the Company to the extent
practicable as in effect on the date hereof, and (ii) thereafter the
Surviving Corporation shall provide employees of the Company and its
subsidiaries immediately prior to the Effective Time ("COMPANY EMPLOYEES") as
a whole (A) compensation (including bonus and incentive awards) programs and
plans and (B) employee benefit and welfare plans, programs, contracts,
agreements and policies (including insurance and pension plans), fringe
benefits and vacation policies which are substantially the same as or not
materially less favorable in the aggregate to such Company Employees than
those generally in effect with respect to similarly situated employees of
Parent.
(c) For all purposes under the employee benefit plans of Parent
and its Affiliates providing benefits after the Effective Time, each Company
Employee shall be credited with his or her years of service with the Company
and its affiliates before the Effective Time, to the same extent as such
Company Employee was entitled, before the Effective Time, to credit for such
service under any similar Employee Benefit Plans (as defined in Section
3.1(i)), except to the extent such credit would result in a duplication of
benefits. In addition, and without limiting the generality of the foregoing:
(i) each Company Employee shall be immediately eligible to participate,
without any waiting time, in any and all employee benefit plans sponsored by
Parent and its affiliates for the benefit of Company Employees (such plans,
collectively, the "NEW PLANS") to the extent coverage under such New Plan
replaces coverage under a comparable Employee Benefit Plan in which such
Company Employee participated immediately before the Effective Time (such
plans, collectively, the "OLD PLANS"); and (ii) for purposes of each New Plan
providing medical, dental, pharmaceutical and/or vision benefits to any
Company Employee, Parent shall cause all pre-existing condition exclusions
and actively-at-work requirements of such New Plan to be waived for such
employee and his or her covered dependents to the extent currently applicable
to such persons.
(d) Parent and the Company shall take all steps necessary or
appropriate to terminate the Company's Deferred Compensation Plan on the
terms and conditions set forth in this Section 5.6(d). Parent shall
determine which of the Company Employees who participate in such Deferred
Compensation Plan will be eligible to participate in Parent's Executive
Deferred Incentive Program (the "EDIP") immediately following the Effective
Time, and shall offer each such Company Employee (an "EDIP PARTICIPANT") the
opportunity to elect, not later than the tenth day after the Effective Time,
whether or not such EDIP Participant's account balance under such Deferred
Compensation Plan will be transferred to an EDIP account for such EDIP
Participant as of December 31, 2000. Such Deferred Compensation Plan shall
terminate effective as of December 31, 2000, and the account balance
thereunder as of December 31, 2000 of each participant who is not an EDIP
Participant, as well as the account balance thereunder as of December 31,
2000 of each EDIP Participant who does not elect to have his or her account
balance transferred
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as provided in the preceding sentence, shall be paid to such individual in
cash as promptly as possible thereafter.
SECTION 5.7. INDEMNIFICATION, EXCULPATION AND INSURANCE. (a)
The certificate of incorporation and the by-laws of the Surviving Corporation
shall contain the provisions with respect to indemnification and exculpation
from liability set forth in the Company's Restated Certificate of
Incorporation and By-laws on the date of this Agreement, which provisions
shall not be amended, repealed or otherwise modified for a period of six
years following the Effective Time in any manner that would adversely affect
the rights thereunder of individuals who on or prior to the Effective Time
were directors, officers, employees or agents of the Company, unless such
modification is required by law. Parent shall cause the Surviving Corporation
to comply with its obligations with respect to the indemnification provisions
contained in the Surviving Corporation's certificate of incorporation and
by-laws.
(b) For three years following the Effective Time, Parent shall
maintain in effect directors' and officers' liability insurance covering
those persons who are currently covered by the Company's directors' and
officers' liability insurance policy (a copy of which has been heretofore
delivered to Parent) (the "INDEMNIFIED PARTIES") with coverage limits no
less favorable than the terms of such current insurance coverage; PROVIDED,
HOWEVER, that in no event shall Parent be required to expend in any one year
an amount in excess of 200% of the annual premiums currently paid by the
Company for such insurance; and PROVIDED FURTHER that if the annual premiums
of such insurance coverage exceed such amount, Parent shall be obligated to
obtain a policy with the greatest coverage available for a cost not exceeding
such amount.
(c) In the event Parent, the Surviving Corporation or any of their
successors or assigns (i) consolidates with or merges into any other person and
shall not be the continuing or surviving corporation or entity of such
consolidation or merger or (ii) transfers all or substantially all of its
properties and assets to any person, then and in each such case, proper
provisions shall be made so that the successors and assigns of Parent or the
Surviving Corporation, as the case may be, shall assume the obligations set
forth in this Section 5.7.
(d) This Section 5.7 shall survive the consummation of the Merger at
the Effective Time, is intended to benefit the Company, Parent, the Surviving
Corporation and the Indemnified Parties, and shall be binding on all successors
and assigns of Parent and the Surviving Corporation.
SECTION 5.8. FEES AND EXPENSES. All fees and expenses incurred
in connection with the Merger, this Agreement and the transactions
contemplated hereby shall be paid by the party incurring such fees or
expenses, whether or not the Merger is consummated.
SECTION 5.9. PUBLIC ANNOUNCEMENTS. Parent and Sub, on the one hand,
and the Company, on the other hand, will consult with each other before issuing,
and provide each
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other the opportunity to review and comment upon, any press release or other
public statements with respect to the transactions contemplated by this
Agreement, including the Merger, and shall not issue any such press release
or make any such public statement prior to such consultation, except as may
be required by applicable law, court process or by obligations pursuant to
any listing agreement with any national securities exchange. The parties
agree that the initial press release to be issued with respect to the
transactions contemplated by this Agreement shall be in the form heretofore
agreed to by the parties.
SECTION 5.10. AFFILIATES; ACCOUNTING AND TAX TREATMENT. (a) The
Company shall (x) within 30 days after the date of this Agreement, deliver to
Parent a letter identifying all persons who may be deemed affiliates of the
Company under Rule 145 of the Securities Act or otherwise under applicable SEC
accounting releases with respect to pooling-of-interests accounting treatment
and (y) use all reasonable efforts to obtain from each such affiliate, by the
thirtieth day prior to the Effective Time, a written agreement substantially in
the form of Exhibit 5.10 hereto. The Company shall use all reasonable efforts
to obtain such a written agreement as soon as practicable from any person who
may be deemed to have become an affiliate of the Company, after the Company's
delivery of the letter referred to above and prior to the Effective Time.
(b) Each party hereto shall (i) use all reasonable efforts to cause
the Merger to qualify, and shall not take any actions which such party knows or
has reason to know could prevent the Merger from qualifying, for
pooling-of-interests accounting treatment and as a reorganization under the
provisions of Section 368(a) of the Code and (ii) use its reasonable efforts to
obtain the letters from the accountants referred to in Sections 6.2(e) and the
opinions of counsel referred to in Section 6.2(d) and Section 6.3(c).
(c) The Company shall (i) use all reasonable best efforts to
secure the waiver of any limited stock appreciation rights or other rights to
redeem for cash options or warrants of the Company by each holder thereof and
(ii) subject to the prior consent of Parent, which shall not be unreasonably
withheld, take such other actions as are necessary to cure any facts or
circumstances that could prevent the Merger from qualifying for
pooling-of-interests accounting treatment, including by reissuing "tainted
treasury shares" of Company Common Stock in a manner (including pursuant to
any registration statements filed with the SEC), limited to a number and at a
time reasonably acceptable to Parent.
SECTION 5.11. STATE TAKEOVER LAWS. The Company shall, upon the
request of Parent, take all reasonable steps to assist in any challenge by
Parent to the validity or applicability to the transactions contemplated by this
Agreement and the Stockholder Support Agreement, including the Merger, of any
state takeover law.
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ARTICLE VI
CONDITIONS PRECEDENT
SECTION 6.1. CONDITIONS TO EACH PARTY'S OBLIGATIONS TO EFFECT THE
MERGER. The respective obligation of each party to effect the Merger is subject
to the satisfaction or waiver on or prior to the Closing Date of the following
conditions:
(a) NYSE LISTING. The shares of Parent Common Stock issuable to the
Company's stockholders pursuant to this Agreement shall have been approved for
listing on the NYSE, subject to official notice of issuance.
(b) NO INJUNCTIONS; LITIGATION. No litigation brought by a
Governmental Entity shall be pending which seeks to enjoin or prohibit the
consummation of the Merger, and no temporary restraining order, preliminary or
permanent injunction or other order issued by any court of competent
jurisdiction or other legal restraint or prohibition preventing the consummation
of the Merger shall be in effect.
(c) FORM S-4. The Form S-4 shall have been declared effective by the
SEC under the Securities Act. No stop order suspending the effectiveness of the
Form S-4 shall have been issued by the SEC, and no proceedings for that purpose
shall have been initiated or, to the knowledge of Parent or the Company,
threatened by the SEC which, in the case of any of the foregoing, shall be
ongoing.
(d) HSR ACT. The applicable waiting period (and any extension
thereof) under the HSR Act shall have expired or been terminated.
(e) APPROVALS. Other than the filing of merger documents in
accordance with the DGCL, all authorizations, consents, waivers, orders or
approvals required to be obtained, and all filings, notices or declarations
required to be made, by Parent, Sub and the Company prior to the consummation of
the Merger and the transactions contemplated hereunder shall have been obtained
from, and made with, all required Governmental Entities except for such
authorizations, consents, waivers, orders, approvals, filings, notices or
declarations the failure to obtain or make which would not have a material
adverse effect, at or after the Effective Time, on the Company or Parent.
(f) INFORMATION STATEMENT. At least twenty calendar days shall have
elapsed from the mailing of the Information Statement to the stockholders of the
Company.
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SECTION 6.2. ADDITIONAL CONDITIONS TO OBLIGATIONS OF PARENT AND SUB.
The obligations of Parent and Sub to effect the Merger are also subject to
the following conditions:
(a) REPRESENTATIONS AND WARRANTIES. Each of the representations
and warranties of the Company contained in this Agreement (when read to
exclude any qualification or exception as to materiality or material adverse
effect) shall, as of the Closing Date as though made on and as of the Closing
Date, be true and correct except for such failures to be true and correct as
could not, individually or in the aggregate, reasonably be expected to result
in a material adverse effect on the Company or Parent; PROVIDED that those
representations and warranties which address matters only as of a particular
date shall remain true and correct in all material respects (except that
where any statement in a representation or warranty expressly includes a
standard of materiality, such statement shall be true and correct in all
respects giving effect to such standard) as of such date. Parent shall have
received a certificate of the Chief Executive Officer and Chief Financial
Officer of the Company to such effect.
(b) AGREEMENTS AND COVENANTS. The Company shall have performed or
complied in all material respects with the agreements and covenants required by
this Agreement to be performed or complied with by it on or prior to the Closing
Date. Parent shall have received a certificate of the Chief Executive Officer
and Chief Financial Officer of the Company to such effect.
(c) CONSENTS UNDER AGREEMENTS. The Company shall have obtained the
consent or approval of each person whose consent or approval shall be required
in connection with the Merger under all loan or credit agreements, notes,
mortgages, indentures, leases or other agreements or instruments to which it or
any of its Material Subsidiaries is a party, except those for which failure to
obtain such consents and approvals would not have a material adverse effect on
the Company prior to or after the Effective Time or a material adverse effect on
Parent after the Effective Time.
(d) TAX OPINION. Parent shall have received the opinion of Wachtell,
Lipton, Rosen & Katz, counsel to Parent, dated as of the Closing Date, to the
effect that, on the basis of facts, representations and assumptions set forth in
such opinion, the Merger will be treated for Federal income tax purposes as a
reorganization qualifying under the provisions of Section 368(a) of the Code.
The issuance of such opinion shall be conditioned on the receipt of customary
representation letters in form and substance reasonably acceptable to Wachtell,
Lipton, Rosen & Katz.
(e) POOLING LETTER. Parent shall have received from Arthur
Andersen LLP, as independent auditors of Parent, on the date of the
Information Statement and on the Closing Date, letters, in each case dated as
of such respective dates, addressed to Parent, in form and substance
reasonably acceptable to Parent and to the effect that the business
combination to be effected by the Merger is required to be accounted for as a
pooling-of-interests by Parent for pur-
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poses of its consolidated financial statements under generally accepted
accounting principles and applicable SEC rules and regulations.
(f) AFFILIATE AGREEMENTS. Parent shall have received from each
person who may be deemed to be an affiliate of the Company (under Rule 145 of
the Securities Act or otherwise under applicable SEC accounting releases with
respect to pooling-of-interests accounting treatment) on or prior to the Closing
Date a signed agreement substantially in the form of Exhibit 5.10 hereto.
SECTION 6.3. ADDITIONAL CONDITIONS TO OBLIGATIONS OF THE COMPANY.
The obligations of the Company to effect the Merger are also subject to the
following conditions:
(a) REPRESENTATIONS AND WARRANTIES. Each of the representations
and warranties of Parent contained in this Agreement (when read to exclude
any qualification or exception as to materiality or material adverse effect)
shall, as of the Closing Date as though made on and as of the Closing Date,
be true and correct, except for such failures to be true and correct as could
not, individually or in the aggregate, reasonably be expected to result in a
material adverse effect on Parent; PROVIDED that those representations and
warranties which address matters only as of a particular date shall remain
true and correct in all material respects (except that where any statement in
a representation or warranty expressly includes a standard of materiality,
such statement shall be true and correct in all respects giving effect to
such standard) as of such date. The Company shall have received a
certificate of the Chief Executive Officer and Chief Financial Officer of
Parent to such effect.
(b) AGREEMENTS AND COVENANTS. Parent shall have performed or
complied in all material respects with the agreements and covenants required
by this Agreement to be performed or complied with by it on or prior to the
Closing Date. The Company shall have received a certificate of the Chief
Executive Officer and Chief Financial Officer of Parent to such effect.
(c) TAX OPINION. The Company shall have received the opinion of
McBride Baker & Coles, counsel to the Company, dated as of the Closing Date,
to the effect that, on the basis of facts, representations and assumptions
set forth in such opinion, 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 neither the Company nor any of its stockholders
will recognize any gain or loss for federal income tax purposes as a result
of the Merger or receipt of the merger consideration (except with respect to
cash paid in lieu of fractional shares). The issuance of such opinion shall
be conditioned on the receipt of customary representation letters in form and
substance reasonably acceptable to McBride Baker & Coles.
(d) REGISTRATION RIGHTS AGREEMENT. Parent shall have executed and
delivered to the other parties thereto a registration rights agreement in the
form of Exhibit 6.3(d) hereto.
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ARTICLE VII
TERMINATION, AMENDMENT AND WAIVER
SECTION 7.1. TERMINATION. This Agreement may be terminated at
any time prior to the Effective Time, whether before or after approval of
matters presented in connection with the Merger by the stockholders of the
Company:
(a) by mutual written consent of Parent and the Company;
(b) by Parent, upon a breach of any representation, warranty,
covenant or agreement on the part of the Company set forth in this Agreement,
or if any representation or warranty of the Company shall have become untrue,
in either case such that the conditions set forth in Section 6.2(a) or
Section 6.2(b), as the case may be, would be incapable of being satisfied by
October 31, 1999;
(c) by the Company, upon a breach of any representation, warranty,
covenant or agreement on the part of Parent set forth in this Agreement, or if
any representation or warranty of Parent shall have become untrue, in either
case such that the conditions set forth in Section 6.3(a) or Section 6.3(b), as
the case may be, would be incapable of being satisfied by October 31, 1999;
(d) by either Parent or the Company, if any Governmental Entity shall
have issued an order, decree or ruling or taken any other action permanently
enjoining, restraining or otherwise prohibiting the consummation of the Merger
and such order, decree or ruling or other action shall have become final and
nonappealable;
(e) by either Parent or the Company, if the Merger shall not have
occurred by October 31, 1999 unless the failure to consummate the Merger is the
result of a material breach of any representation, or warranty, covenant or
agreement set forth in this Agreement by the party seeking to terminate this
Agreement;
(f) by the Company, by a vote of a majority of the members of its
entire Board of Directors, at any time during the two-day period commencing at
the close of business on the Determination Date (as defined below), in the event
the Average Parent Stock Price (as defined below) is less than $57.09; PROVIDED,
HOWEVER, that if the Company elects to exercise its termination right pursuant
to this Section 7.1(f), it shall give prompt written notice thereof to Parent,
and during the two-day period commencing with its receipt of such notice, Parent
may elect to increase the Exchange Ratio to equal that fraction of a share of
Parent Common Stock (rounded to four decimal points), the numerator of which is
the product of $57.09 and the Exchange Ratio (as then in effect) and the
denominator of which is the Average Parent Stock Price; if Parent makes
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an election contemplated by the above proviso to this Section 7.1(f) within
such two-day period, it shall give prompt written notice to the Company of
such election and the revised Exchange Ratio, whereupon no termination shall
have occurred pursuant to this Section 7.1(f) and this Agreement shall remain
in effect in accordance with its terms, except that the Exchange Ratio shall
be fixed at the number determined in accordance with this Section 7.1(f) and
any references in this Agreement to the "Exchange Ratio" shall thereafter be
deemed to refer to the Exchange Ratio as so adjusted; or
(g) by Parent, at any time during the two-day period commencing at
the close of business on the Determination Date, in the event the Average
Parent Stock Price is greater than $73.41; PROVIDED, HOWEVER, that if Parent
elects to exercise its termination right pursuant to this Section 7.1(g), it
shall give prompt written notice thereof to the Company, and during the
two-day period commencing with its receipt of such notice, the Company may
elect to decrease the Exchange Ratio to equal that fraction of a share of
Parent Common Stock (rounded to four decimal points), the numerator of which
is the product of $73.41 and the Exchange Ratio (as then in effect) and the
denominator of which is the Average Parent Stock Price; if the Company makes
an election contemplated by the above proviso to this Section 7.1(g) within
such two-day period, it shall give prompt written notice to Parent of such
election and the revised Exchange Ratio, whereupon no termination shall have
occurred pursuant to this Section 7.1(g) and this Agreement shall remain in
effect in accordance with its terms, except that the Exchange Ratio shall be
fixed at the number determined in accordance with this Section 7.1(g) and any
references in this Agreement to the "Exchange Ratio" shall thereafter be
deemed to refer to the Exchange Ratio as so adjusted.
The "AVERAGE PARENT STOCK PRICE" means the average of the Daily Per Share
Prices (as defined below) for the 15 consecutive trading days ending on the
date the last of the conditions set forth in Section 6.1 shall be satisfied
(or, if such day is not a trading day, ending on the immediately preceding
trading day) (the "DETERMINATION DATE"). The "DAILY PER SHARE PRICE" for any
trading day means the daily last sale price for the Parent Common Stock, as
reported on the NYSE Composite Transactions reporting system (as reported in
THE WALL STREET JOURNAL or, if not reported therein, in another mutually
agreed upon authoritative source) for that day.
SECTION 7.2. EFFECT OF TERMINATION. In the event of termination
of this Agreement by either the Company or Parent as provided in Section 7.1,
this Agreement shall forthwith become void and have no effect, without any
liability or obligation on the part of Parent, Sub or the Company, other than
the provisions of Section 3.1(r), Section 3.2(j), the last sentence of
Section 5.2, Section 5.8, this Section 7.2 and Article VIII and except to the
extent that such termination results from the willful and material breach by
a party of any of its representations, warranties, covenants or agreements
set forth in this Agreement.
SECTION 7.3. AMENDMENT. This Agreement may be amended by the
parties by action of their respective boards of directors at any time,
PROVIDED that there shall not be made any amendment that by law requires
further approval by the stockholders of the Company without
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the further approval of such stockholders. This Agreement may not be amended
except by an instrument in writing signed on behalf of each of the parties.
SECTION 7.4. EXTENSION; WAIVER. At any time prior to the
Effective Time, the parties may (a) extend the time for the performance of
any of the obligations or other acts of the other parties, (b) waive any
inaccuracies in the representations and warranties contained in this
Agreement or in any document delivered pursuant to this Agreement or (c)
subject to the proviso of Section 7.3, waive compliance with any of the
agreements or conditions contained in this Agreement. Any agreement on the
part of a party to any such extension or waiver shall be valid only if set
forth in an instrument in writing, signed on behalf of such party. The
failure of any party to this Agreement to assert any of its rights under this
Agreement or otherwise shall not constitute a waiver of those rights.
ARTICLE VIII
GENERAL PROVISIONS
SECTION 8.1. NONSURVIVAL OF REPRESENTATIONS AND WARRANTIES. None
of the representations and warranties in this Agreement or in any instrument
delivered pursuant to this Agreement shall survive the Effective Time. This
Section 8.1 shall not limit any covenant or agreement of the parties which by
its terms contemplates performance after the Effective Time of the Merger.
SECTION 8.2. NOTICES. All notices, requests, claims, demands and
other communications under this Agreement shall be in writing and shall be
deemed given if delivered personally or sent by overnight courier (providing
proof of delivery) or telecopy (with receipt acknowledged) to the parties at
the following addresses (or at such other address for a party as shall be
specified by like notice):
(a) if to Parent or Sub, to
Danaher Corporation
1250 24th Street, NW
Washington, D.C. 20037
Facsimile: (202) 828-0860
Attention: Patrick W. Allender
with a copy to:
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Wachtell, Lipton, Rosen & Katz
51 West 52nd Street
New York, NY 10019
Facsimile: (212) 403-2000
Attention: Trevor S. Norwitz, Esq.
and a copy to:
Wilmer, Cutler & Pickering
2445 "M" Street, NW
Washington, D.C. 20037-1420
Facsimile: (202) 663-6363
Attention: Mark Dewire, Esq.
if to the Company, to
Hach Company
5600 Lindbergh Drive
P.O. Box 389
Loveland, CO 80539
Facsimile: (970) 669-2932
Attention: Gary R. Dreher
with a copy to:
McBride Baker & Coles
500 West Madison Street, 40th Floor
Chicago, IL 60661-2511
Facsimile: (312) 993-9350
Attention: Robert O. Case, Esq.
and a copy to:
Sidley & Austin
One First National Plaza
Chicago, IL 60603
Facsimile: (312) 853-7036
Attention: Thomas A. Cole, Esq.
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SECTION 8.3. DEFINITIONS. For purposes of this Agreement:
(a) an "AFFILIATE" "or "AFFILIATE" of any person means another person
that directly or indirectly, through one or more intermediaries, controls, is
controlled by, or is under common control with, such first person;
(b) "KNOWLEDGE" means, when used in connection with the Company or
Parent, knowledge of the individuals listed in Section 8.3 of the Company
Disclosure Schedule, and, when used in connection with Parent, knowledge of the
individuals listed in Section 8.3 of the Parent Disclosure Schedule, in each
case, after due inquiry for such purpose;
(c) "MATERIAL ADVERSE CHANGE" or "MATERIAL ADVERSE EFFECT" means,
when used in connection with the Company or Parent, any change or effect that is
or could, individually or in the aggregate, reasonably be expected to be
materially adverse to the business, assets, liabilities, financial condition,
results of operations or prospects of such party and its subsidiaries taken as a
whole;
(d) "PERSON" means an individual, corporation, partnership, joint
venture, association, trust, unincorporated organization or other entity; and
(e) a "SUBSIDIARY" of any person means another person, an amount of
the voting securities, other voting ownership or voting partnership interests of
which is sufficient to elect at least a majority of its board of directors or
other governing body (or, if there are no such voting interests, more than 50%
of the equity interests of which) is owned directly or indirectly by such first
person.
SECTION 8.4. INTERPRETATION. When a reference is made in this
Agreement to a Section, Exhibit or Schedule, such reference shall be to a
Section of, or an Exhibit or Schedule to, this Agreement unless otherwise
indicated. The table of contents and headings contained in this Agreement are
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. Whenever the words "include," "includes" and
"including" are used in this Agreement, they shall be deemed to be followed by
the words "without limitation."
SECTION 8.5. COUNTERPARTS. This Agreement may be executed in one
or more counterparts, all of which shall be considered one and the same
agreement and shall become effective when one or more counterparts have been
signed by each of the parties and delivered to the other parties.
SECTION 8.6. ENTIRE AGREEMENT; NO THIRD-PARTY BENEFICIARIES. This
Agreement and the Confidentiality Agreement constitute the entire agreement, and
supersede all prior
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agreements and understandings, both written and oral, among the parties with
respect to the subject matter hereof and thereof and except for the
provisions of Section 5.7, are not intended to confer upon any person other
than the parties hereto any rights or remedies hereunder.
SECTION 8.7. GOVERNING LAW. This Agreement shall be governed by,
and construed in accordance with, the laws of the State of Delaware,
regardless of the laws that might otherwise govern under applicable
principles of conflict of laws thereof.
SECTION 8.8. ASSIGNMENT. Neither this Agreement nor any of the
rights, interests or obligations under this Agreement shall be assigned, in
whole or in part, by operation of law or otherwise by any of the parties
without the prior written consent of the other parties. Subject to the
preceding sentence, this Agreement will be binding upon, inure to the benefit
of, and be enforceable by, the parties and their respective successors and
assigns.
SECTION 8.9. ENFORCEMENT. The parties agree that irreparable
damage would occur in the event that any of the provisions of this Agreement
were not performed in accordance with their specific terms or were otherwise
breached. It is accordingly agreed that the parties shall be entitled to an
injunction or injunctions to prevent breaches of this Agreement and to
enforce specifically the terms and provisions of this Agreement in any court
of the United States located in the State of Delaware or in Delaware state
court, this being in addition to any other remedy to which they are entitled
at law or in equity. In addition, each of the parties hereto (a) consents to
submit itself to the personal jurisdiction of any Federal court located in
the State of Delaware or any Delaware state court in the event any dispute
arises out of this Agreement or any of the transactions contemplated by this
Agreement, (b) agrees that it will not attempt to deny or defeat such
personal jurisdiction by motion or other request for leave from any such
court, and (c) agrees that it will not bring any action relating to this
Agreement or any of the transactions contemplated by this Agreement in any
court other than a Federal or state court sitting in the State of Delaware.
SECTION 8.10. SEVERABILITY. If any term or other provision of
this Agreement is invalid, illegal or incapable of being enforced by any rule
of law or public policy, all other conditions and provisions of this
Agreement shall nevertheless remain in full force and effect so long as the
economic or legal substance of the transactions contemplated hereby is not
affected in any manner materially adverse to any party. Upon such
determination that any term or other provision is invalid, illegal or
incapable of being enforced, the parties hereto shall negotiate in good faith
to modify this Agreement so as to effect the original intent of the parties
as closely as possible in any acceptable manner to the end that transactions
contemplated hereby are fulfilled to the extent possible.
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IN WITNESS WHEREOF, Parent, Sub and the Company have caused this
Agreement to be signed by their respective officers thereunto duly
authorized, all as of the date first written above.
Attest: DANAHER CORPORATION
By: /s/ Patrick W. Allender
------------------------------------------
Name: Patrick W. Allender
Title: Senior Vice President and Chief
Financial Officer
H2O ACQUISITION CORP.
By: /s/ Patrick W. Allender
------------------------------------------
Name: Patrick W. Allender
Title: President
HACH COMPANY
By: /s/ Kathryn C. Hach-Darrow
------------------------------------------
Name: Kathryn C. Hach-Darrow
Title: Chairman
FORM OF AFFILIATE LETTER
Danaher Corporation
1250 24th Street, NW
Washington, D.C. 20037
Ladies and Gentlemen:
I have been advised that as of the date of this letter I may be
deemed to be an "affiliate" of HACH COMPANY, a Delaware corporation (the
"COMPANY"), as the term "affiliate" is (i) defined within the meaning of Rule
145 of the rules and regulations (the "RULES AND REGULATIONS") of the
Securities and Exchange Commission (the "COMMISSION") under the Securities
Act of 1933, as amended (the "ACT"), and/or (ii) used in and for purposes of
Accounting Series Releases 130 and 135, as amended, of the Commission.
Pursuant to the terms of the Agreement and Plan of Merger dated as of April
20, 1999 (the "AGREEMENT"), among Danaher Corporation, a Delaware corporation
("PARENT"), H(2)O Acquisition Corp., a Delaware corporation ("SUB"), and the
Company, Sub will be merged with and into the Company (the "MERGER").
In connection with the Merger, I am entitled to receive shares of
common stock, par value $.01 per share, of Parent (the "PARENT SHARES") in
exchange for shares (or options for shares) owned by me of common stock of the
Company (the "COMPANY SHARES").
I represent, warrant and covenant to Parent that in the event I
receive any Parent Shares as a result of the Merger:
(a) I shall not make any sale, transfer or other disposition of the
Parent Shares in violation of the Act or the Rules and Regulations.
(b) I have carefully read this letter and the Agreement and
discussed the requirements of such documents and other applicable limitations
upon my ability to sell, transfer or otherwise dispose of Parent Shares, to
the extent I felt necessary, with my counsel or counsel for the Company.
(c) I have been advised that the issuance of Parent Shares to me
pursuant to the Merger has been or will be registered with the Commission
under the Act on a Registration Statement on Form S-4. However, because I
have been advised that, at the time the Merger was submitted for a vote of
the stockholders of the Company, (a) I may be deemed to have been an
affiliate of the Company, and (b) other than as set forth in the Agreement,
the distribution by me of the Parent Shares has not been registered under the
Act, I will not sell, transfer, hedge, encumber or otherwise dispose of
Parent Shares issued to me in the Merger unless (i) such sale, transfer or
other disposition is made in conformity with the volume and other limitations
of Rule 145 promulgated by the Commission under the Act, (ii) such sale,
transfer or other disposition has been made pursuant to an effective
registration statement under the Act, or (iii) in the opinion of counsel
reasonably acceptable to Parent or as described in a "no-action" or
interpretive letter from the Staff of the Commission, such sale, transfer or
other disposition is otherwise exempt from registration under the Act.
(d) I understand that Parent is under no obligation, other than as
set forth in the Agreement, to register the sale, transfer or other
disposition of the Parent Shares by me or on my behalf under the Act or to
take any other action necessary in order to make compliance with an exemption
from such registration available solely as a result of the Merger.
(e) I also understand that there will be placed on the Certificates
for the Parent Shares issued to me, or any substitutions therefor, a legend
stating in substance:
THE SHARES REPRESENTED BY THIS CERTIFICATE WERE ISSUED IN A
TRANSACTION TO WHICH RULE 145 PROMULGATED UNDER THE SECURITIES ACT OF
1933 APPLIES. THE SHARES REPRESENTED BY THIS CERTIFICATE MAY ONLY BE
TRANSFERRED IN ACCORDANCE WITH THE TERMS OF AN AGREEMENT BETWEEN THE
REGISTERED HOLDER HEREOF AND DANAHER CORPORATION, A COPY OF WHICH
AGREEMENT IS ON FILE AT THE PRINCIPAL OFFICES OF DANAHER CORPORATION.
(f) I also understand that unless a sale or transfer is made in
conformity with the provisions of Rule 145, or pursuant to a registration
statement, Parent reserves the right to put the following legend on the
certificates issued to my transferee:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933 AND WERE ACQUIRED FROM A PERSON WHO
RECEIVED SUCH SHARES IN A TRANSACTION TO WHICH RULE 145 PROMULGATED
UNDER THE SECURITIES ACT OF 1933 APPLIES. THE SHARES HAVE BEEN
ACQUIRED BY THE HOLDER NOT WITH A VIEW TO, OR FOR RESALE IN CONNECTION
WITH, ANY DISTRIBUTION THEREOF WITHIN THE MEANING OF THE SECURITIES
ACT OF 1933 AND MAY NOT BE SOLD, PLEDGED OR OTHERWISE TRANSFERRED
EXCEPT IN ACCORDANCE WITH AN EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT OF 1933.
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It is understood and agreed that the legends set forth in
paragraphs (e) and (f) above shall be removed by delivery of substitute
certificates without such legend if the undersigned shall have delivered to
Parent a copy of a letter from the staff of the Commission, or an opinion of
counsel reasonably satisfactory to Parent in form and substance reasonably
satisfactory to Parent, to the effect that such legend is not required for
purposes of the Act.
I further represent to, and covenant with, Parent that I will not,
during the 30 days prior to the Effective Time (as defined in the Agreement),
sell, transfer, hedge, encumber or otherwise dispose or reduce my rights with
respect to the Company Shares or shares of the capital stock of Parent that I
may hold and, furthermore, that I will not sell, transfer, hedge, encumber or
otherwise dispose of or reduce my rights with respect to Parent Shares received
by me in the Merger or any other shares of the capital stock of Parent until
after such time as results covering at least 30 days of combined operations of
the Company and Parent have been published by Parent, in the form of a quarterly
earnings report, an effective registration statement filed with the Commission,
a report to the Commission on Form 10-K, 10-Q, or 8-K, or any other public
filing or announcement which includes such combined results of operations.
Execution of this letter should not be considered an admission on my
part that I am an "affiliate" of the Company as described in the first paragraph
of this letter, or as a waiver of any rights I may have to object to any claim
that I am such an affiliate on or after the date of this letter.
Very truly yours,
--------------------------------------
Name:
Accepted this ______ day of
_________ 1999, by
DANAHER CORPORATION
By --------------------
Name:
Title: