Exhibit 3
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AGREEMENT AND PLAN OF MERGER
AMONG
PRECISION CASTPARTS CORP.,
WGC ACQUISITION CORP.
AND
WYMAN-GORDON COMPANY
Dated as of May 17, 1999
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TABLE OF CONTENTS
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ARTICLE I THE OFFER.......................................................................................1
1.1 The Offer.......................................................................................1
1.2 Company Actions.................................................................................3
1.3 Board Representation............................................................................4
1.4 Company Stock Options and Related Matters.......................................................5
1.5 Employee Stock Purchase Plan....................................................................6
ARTICLE II THE MERGER......................................................................................6
2.1 The Merger......................................................................................6
2.2 Effective Time..................................................................................6
2.3 Closing.........................................................................................7
2.4 Directors and Officers..........................................................................7
2.5 Stockholders' Meeting...........................................................................7
2.6 Merger Without Meeting of Stockholders..........................................................8
2.7 Conversion of Securities........................................................................8
2.8 Taking of Necessary Action; Further Action......................................................8
ARTICLE III PAYMENT FOR SHARES; DISSENTING SHARES...........................................................9
3.1 Payment for Shares of Company Common Stock......................................................9
3.2 Appraisal Rights...............................................................................10
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF PARENT AND
ACQUISITION SUB................................................................................11
4.1 Organization...................................................................................11
4.2 Authorization; Validity of Agreement; Necessary Action.........................................12
4.3 Consents and Approvals; No Violations..........................................................12
4.4 Information in Proxy Statement.................................................................12
4.5 Required Financing.............................................................................13
ARTICLE V REPRESENTATIONS AND WARRANTIES OF THE COMPANY..................................................13
5.1 Existence; Good Standing; Authority; Compliance With Law.......................................13
5.2 Authorization, Validity and Effect of Agreements...............................................14
5.3 Capitalization.................................................................................15
5.4 Subsidiaries...................................................................................16
5.5 Other Interests................................................................................16
5.6 No Violation; Consents.........................................................................16
5.7 SEC Documents..................................................................................17
5.8 Litigation.....................................................................................18
5.9 Absence of Certain Changes.....................................................................18
(i)
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5.10 Taxes..........................................................................................18
5.11 Books and Records..............................................................................19
5.12 Properties.....................................................................................19
5.13 Intellectual Property..........................................................................21
5.14 Environmental Matters..........................................................................21
5.15 Employee Benefit Plans.........................................................................22
5.16 Labor Matters..................................................................................24
5.17 No Brokers.....................................................................................24
5.18 Opinion of Financial Advisor...................................................................25
5.19 Year 2000. ...................................................................................25
5.20 Insurance......................................................................................25
5.21 Key Customers..................................................................................25
5.22 Product Quality................................................................................26
5.23 Material Contracts and Agreements..............................................................26
5.24 Definition of the Company's Knowledge..........................................................26
ARTICLE VI CONDUCT OF BUSINESS PENDING THE MERGER........................................................ 26
6.1 Conduct of Business by the Company.............................................................26
ARTICLE VII ADDITIONAL AGREEMENTS..........................................................................28
7.1 Other Filings..................................................................................28
7.2 Additional Agreements..........................................................................28
7.3 Fees and Expenses..............................................................................29
7.4 No Solicitations...............................................................................29
7.5 Officers' and Directors' Indemnification.......................................................31
7.6 Access to Information; Confidentiality.........................................................32
7.7 Financial and Other Statements.................................................................33
7.8 Public Announcements...........................................................................33
7.9 Employee Benefit Arrangements..................................................................33
7.10 Rights Agreement...............................................................................34
7.11 Status of Financing............................................................................35
ARTICLE VIII CONDITIONS TO THE MERGER.......................................................................35
8.1 Conditions to the Obligations of Each Party to Effect the Merger...............................35
ARTICLE IX TERMINATION, AMENDMENT AND WAIVER..............................................................36
9.1 Termination....................................................................................36
9.2 Effect of Termination..........................................................................37
9.3 Amendment......................................................................................38
9.4 Extension; Waiver..............................................................................38
ARTICLE X GENERAL PROVISIONS.............................................................................39
10.1 Notices........................................................................................39
10.2 Interpretation.................................................................................40
10.3 Non-Survival of Representations, Warranties, Covenants and Agreements..........................40
(ii)
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10.4 Miscellaneous..................................................................................40
10.5 Assignment.....................................................................................41
10.6 Severability...................................................................................41
10.7 Choice of Law/Consent to Jurisdiction..........................................................41
10.8 No Agreement Until Executed....................................................................41
(iii)
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(iv)
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ANNEX A......................................................................A-1
(v)
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER (the "AGREEMENT"), dated as of May 17,
1999, by and among Precision Castparts Corp., an Oregon corporation ("PARENT"),
WGC Acquisition Corp., a Massachusetts corporation and a wholly-owned subsidiary
of Parent ("ACQUISITION SUB"), and Wyman-Gordon Company, a Massachusetts
corporation (the "COMPANY").
RECITALS
WHEREAS, the Board of Directors of each of Parent, Acquisition Sub and
the Company has approved, and deems it advisable and in the best interests of
its respective stockholders to consummate, the acquisition of the Company by
Parent upon the terms and subject to the conditions set forth herein;
NOW, THEREFORE, in consideration of the mutual covenants and agreements
set forth herein, Parent, Acquisition Sub and the Company hereby agree as
follows:
ARTICLE I
THE OFFER
1.1 THE OFFER.
(a) Provided that this Agreement shall not have been
terminated in accordance with its terms and none of the events or conditions
specified in ANNEX A hereto shall have occurred or shall exist, Acquisition Sub
shall, as soon as practicable after the date hereof, (but in no event later than
the fifth business day following the public announcement of the Offer (treating
the business day on which such public announcement occurs as the first business
day)), commence (within the meaning of Rule 14d-2 under the Securities Exchange
Act of 1934, as amended, and the rules and regulations thereunder (the "EXCHANGE
ACT")) an offer to purchase (as such offer to purchase may be amended in
accordance with the terms of this Agreement, the "OFFER") all of the issued and
outstanding shares ("SHARES") of common stock, par value $1.00 per share, of the
Company (the "COMPANY COMMON STOCK") at a price of not less than $20.00 per
Share, net to the seller in cash (less applicable withholding taxes, if any)
(such price, or such other price per Share as may be paid in the Offer, being
referred to herein as the "OFFER PRICE"). After the commencement of the Offer,
the Offer and the obligation of Acquisition Sub to accept for payment and pay
for Shares tendered pursuant to the Offer shall be subject only to the
conditions set forth in ANNEX A hereto and the condition (the "MINIMUM
CONDITION") that there be validly tendered and not withdrawn prior to the
expiration of the Offer at least two-thirds of the Shares on a fully diluted
basis (the "MINIMUM PERCENTAGE"). Parent and Acquisition Sub expressly reserve
the right to waive any condition set forth in ANNEX A, to change the form or
amount payable per Share in the Offer (including the Offer Price) and to make
any other changes in the terms and conditions of the Offer;
provided, however, that without the prior written consent of the Company, Parent
shall not amend, or permit to be amended, the Offer to (i) decrease the Offer
Price, (ii) change the consideration into a form other than cash, (iii) add any
conditions to the obligation of Acquisition Sub to accept for payment and pay
for Shares tendered pursuant to the Offer, (iv) amend (other than to waive) the
Minimum Condition or the other conditions set forth in ANNEX A, or (v) reduce
the maximum number of Shares to be purchased in the Offer. If on the initial
scheduled expiration date of the Offer (the "INITIAL EXPIRATION DATE"), which
shall be 20 business days after the date the Offer is commenced, all conditions
to the Offer shall not have been satisfied or waived, Acquisition Sub may, from
time to time, in its sole discretion, extend the expiration date of the Offer
(the "EXPIRATION DATE"); provided, however, that, except as set forth below, the
Expiration Date, as extended, shall be no later than the date that is 60
business days immediately following the Initial Expiration Date (the "FINAL
EXPIRATION DATE"); and provided further that if on the Initial Expiration Date,
all conditions to the Offer shall have been satisfied or waived other than the
Minimum Condition, Acquisition Sub shall be required to extend the Expiration
Date to the date that is ten business days immediately following the Initial
Expiration Date. Notwithstanding the foregoing, if on the Initial Expiration
Date, the applicable waiting period (and any extension thereof) under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the "HSR ACT") in respect
of the Offer shall not have expired or been terminated and all other conditions
to the Offer shall have been satisfied or waived other than the Minimum
Condition and clause (a) of ANNEX A as it relates to compliance with the HSR Act
or other applicable antitrust laws, Acquisition Sub shall be required to extend
the Expiration Date for such additional periods as may be necessary to permit
the parties to seek to obtain termination of the waiting period under the HSR
Act in accordance with Section 7.1 below up to the date that is nine months
after the date upon which
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Parent files a pre-merger notification and report form under the HSR Act (the
"HSR EXPIRATION DATE"); provided, however, that if the applicable waiting period
(and any extension thereof) under the HSR Act in respect of the Offer expires or
is terminated prior to the date that is ten business days prior to the HSR
Expiration Date, the Expiration Date shall be the date which is ten business
days immediately following public disclosure of the expiration or termination of
the waiting period under the HSR Act. Acquisition Sub shall, on the terms and
subject to the prior satisfaction or waiver of the conditions of the Offer,
accept for payment and pay for Shares tendered as soon as it is legally
permitted to do so under this Agreement and applicable law. The Offer shall be
made by means of an offer to purchase (the "OFFER TO PURCHASE") containing the
terms set forth in this Agreement, the Minimum Percentage and the conditions set
forth in ANNEX A hereto.
(b) As soon as practicable after the date the Offer is
commenced, Parent and Acquisition Sub shall file or cause to be filed with the
Securities and Exchange Commission (the "COMMISSION") a Tender Offer Statement
on Schedule 14D-1 (together with all amendments or supplements thereto, the
"SCHEDULE 14D-1"), which shall include as an exhibit or incorporate by
reference, the Offer to Purchase (or portions thereof) and forms of the related
letter of transmittal and summary advertisement (such Schedule 14D-1, the Offer
to Purchase and related documents, together with all amendments or supplements
thereto, are collectively referred to herein as the "OFFER DOCUMENTS"). The
Offer Documents shall comply in all material respects with the provisions of
applicable federal securities laws and, on the date filed with the Commission
and on the date first published, sent or given to the Company's
stockholders, shall not contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary in order
to make the statements therein, in light of the circumstances under which they
were made, not misleading, except that no representation is made by Parent or
Acquisition Sub with respect to information furnished by the Company for
inclusion in the Offer Documents. The information supplied in writing by the
Company for inclusion in the Offer Documents and by Parent or Acquisition Sub
for inclusion in the Schedule 14D-9 (as hereinafter defined) shall not contain
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. Parent, Acquisition Sub and the Company each agrees promptly to
amend or supplement any information provided by it for use in the Offer
Documents if and to the extent that such information shall have become false or
misleading in any material respect or as otherwise required by applicable
federal securities laws, and Parent and Acquisition Sub each further agrees to
take all steps necessary to cause the Offer Documents, as so amended or
supplemented, to be filed with the Commission and disseminated to the holders of
Shares, in each case as and to the extent required by applicable federal
securities laws. The Company and its counsel shall be given a reasonable
opportunity to review and comment upon the Offer Documents and all amendments
and supplements thereto prior to the filing thereof with the Commission or the
dissemination thereof to the holders of Shares.
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1.2 COMPANY ACTIONS.
(a) The Company hereby approves of and consents to the Offer
and represents and warrants that the Board of Directors of the Company (the
"COMPANY BOARD"), at a meeting duly called and held, has unanimously (i)
determined that this Agreement and the transactions contemplated hereby,
including the Offer and the Merger (as hereinafter defined) taken together, are
fair to and in the best interests of the Company and its stockholders, (ii)
approved this Agreement and the transactions contemplated hereby, including,
without limitation, the Merger and the Offer (collectively, the "TRANSACTIONS"),
and such approval constitutes approval of the Transactions for purposes of
Chapter 110F of the Massachusetts General Laws, as amended (the "MGL"), and
Article 6(c)2 of the Restated Articles of Organization of the Company (the
"ARTICLES OF ORGANIZATION") and (iii) voted to recommend that the stockholders
of the Company accept the Offer, tender their Shares thereunder to Acquisition
Sub and, if required by applicable law, approve and adopt this Agreement and the
Merger, subject to the Company's rights under Section 7.4 hereof.
(b) Concurrently with the commencement of the Offer and the
filing by or on behalf of Parent and Acquisition Sub of the Schedule 14D-1, the
Company shall file with the Commission and disseminate to the holders of Shares
a Solicitation/Recommendation Statement on Schedule 14D-9 (together with all
amendments or supplements thereto, the "SCHEDULE 14D-9"), containing (among
other things) the recommendation referred to in clause (iii) of Section 1.2(a)
hereof, subject to the Company's rights under Section 7.4 hereof. The Schedule
14D-9 shall comply in all material respects with the provisions of applicable
federal securities laws and, on the date filed with the Commission and on the
date first published, sent or given to the Company's stockholders, shall not
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading, except that no representation is made by the Company with respect to
information furnished by Parent or Acquisition Sub for inclusion in the Schedule
14D-9. The Company, Parent and Acquisition Sub each agrees promptly to correct,
amend or supplement any information provided by it for use in the Schedule 14D-9
if and to the extent that such information shall have become false or misleading
in any material respect or as otherwise required by applicable federal
securities laws, and the Company further agrees to take all steps necessary to
cause the Schedule 14D-9, as so amended or supplemented, to be filed with the
Commission and disseminated to the holders of Shares, in each case as and to the
extent required by applicable federal securities laws. Parent, Acquisition Sub
and their counsel shall be given a reasonable opportunity to review and comment
upon the Schedule 14D-9 and all amendments and supplements thereto prior to the
filing thereof with the Commission or the dissemination thereof to the holders
of Shares.
(c) In connection with the Offer, the Company shall promptly
furnish Parent and Acquisition Sub with a list of the names and addresses of all
record holders of Shares and security position listings of Shares, each as of a
recent date, and shall promptly furnish Parent and Acquisition Sub with such
additional information, including updated lists of the
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stockholders of the Company, lists of the holders of the Company's outstanding
stock options, mailing labels, security position listings and such other
assistance and information as Parent or Acquisition Sub or their agents may
reasonably request. Subject to the requirements of applicable law, and except
for such steps as are necessary to disseminate the Offer Documents and any other
documents necessary to consummate the Offer, each of Parent and Acquisition Sub
shall use the information described in the preceding sentence only in connection
with the Offer, and if this Agreement is terminated in accordance with its
terms, each of them shall, upon the Company's request, deliver to the Company
all such information and any copies or extracts thereof then in its possession
or under its control.
1.3 BOARD REPRESENTATION. Promptly upon the purchase of Shares pursuant
to the Offer, Parent shall be entitled to designate such number of directors,
rounded up to the next whole number, on the Company Board as is equal to the
product of (a) the total number of directors on the Company Board (after giving
effect to the directors designated by Parent pursuant to this sentence) and (b)
the percentage that the total votes represented by such number of Shares in the
election of directors of the Company so purchased bears to the total votes
represented by the number of Shares outstanding. In furtherance thereof, the
Company shall, upon request by Parent, promptly increase the size of the Company
Board and/or exercise its commercially reasonable best efforts to secure the
resignations of such number of its directors as is necessary to enable Parent's
designees to be elected to the Company Board and shall take all actions to cause
Parent's designees to be so elected to the Company Board. At such time, the
Company shall also cause persons designated by Parent to constitute at least the
same percentage (rounded up to the next whole number) as is on the Company Board
of (i) each committee of the Company Board, (ii) each board of directors (or
similar body) of each Subsidiary (as defined in Section 10.2 hereof) of the
Company (each, a "COMPANY SUBSIDIARY") and (iii) each committee (or similar
body) of each such board. The Company shall take, at its expense, all action
required pursuant to Section 14(f) and Rule 14f-1 of the Exchange Act in
order to fulfill its obligations under this Section 1.3 and shall include in
the Schedule 14D-9 to its stockholders such information with respect to the
Company and its officers and directors as is required by such Section 14(f)
and Rule 14f-1 in order to fulfill its obligations under this Section 1.3.
Parent will supply to the Company in writing and be solely responsible for
any information with respect to itself and its nominees, officers, directors
and affiliates required by such Section 14(f) and Rule 14f-1. The provisions
of this Section 1.3 are in addition to and shall not limit any rights which
Acquisition Sub, Parent or any of their affiliates may have as a holder or
beneficial owner of Shares as a matter of law with respect to the election of
directors or otherwise. In the event that Parent's designees are elected to
the Company Board, until the Effective Time (as hereinafter defined), the
Company Board shall have at least two directors who are directors on the date
hereof (the "INDEPENDENT DIRECTORS"); provided that, in such event, if the
number of Independent Directors shall be reduced below two for any reason
whatsoever, the remaining Independent Director shall be entitled to designate
the person to fill such vacancy who shall be deemed to be an Independent
Director for purposes of this Agreement or, if no Independent Director then
remains, the other directors shall designate two persons to fill such
vacancies who shall not be stockholders, affiliates or associates of Parent
or Acquisition Sub and such persons shall be deemed to be
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Independent Directors for purposes of this Agreement. Notwithstanding
anything in this Agreement to the contrary, in the event that Parent's
designees are elected to the Company Board, after the acceptance for payment
of Shares pursuant to the Offer and prior to the Effective Time, the
affirmative vote of a majority of the Independent Directors shall be required
in addition to any other applicable requirement to (a) amend this Agreement
in any material respect in a manner adverse to any stockholder of the Company
or any intended third-party beneficiary of this Agreement, (b) terminate this
Agreement by the Company, (c) exercise or waive any of the Company's material
rights, benefits or remedies hereunder, or (d) extend the time for
performance of Parent's or Acquisition Sub's respective obligations hereunder.
1.4 COMPANY STOCK OPTIONS AND RELATED MATTERS.
(a) Each option and stock appreciation right (collectively,
the "OPTIONS") granted under the Company Stock Option Plans (as hereinafter
defined), which is outstanding (whether or not currently exercisable) as of
immediately prior to the date on which Acquisition Sub accepts for payment
Shares pursuant to the Offer (the "ACCEPTANCE DATE") and which has not been
exercised or canceled prior thereto shall, on the Acceptance Date, be canceled
and upon the surrender and cancellation of the option agreement representing
such Option, Acquisition Sub shall pay to the holder thereof cash in an amount
equal to the product of (i) the number of Shares provided for in such Option and
(ii) the excess, if any, of the Offer Price over the exercise price per Share
provided for in such Option, which cash payment shall be treated as compensation
and shall be net of any applicable federal or state withholding tax. The Company
shall take all actions necessary to ensure that (i) all Options, to the extent
not exercised prior to the Acceptance Date, shall terminate and be canceled as
of the Acceptance Date and thereafter be of no further force or effect, (ii) no
Options are granted after the date of this Agreement, and (iii) as of the
Acceptance Date, the Company Stock Option Plans and all Options issued
thereunder shall terminate.
(b) Except as set forth in Section 1.5 or as may be otherwise
agreed to by Parent or Acquisition Sub and the Company, the Company Stock Option
Plans shall terminate as of the Acceptance Date and the provisions in any other
plan, program or arrangement providing for the issuance or grant of any other
interest in respect of the capital stock of the Company or any of the Company
Subsidiaries shall be of no further force and effect and shall be deemed to be
deleted as of the Acceptance Date and no holder of an Option or any participant
in any Company Stock Option Plan or any other plans, programs or arrangements
shall have any right thereunder to acquire any equity securities of the Company,
the Surviving Corporation (as hereinafter defined) or any Subsidiary thereof.
1.5 EMPLOYEE STOCK PURCHASE PLAN. The Company has taken appropriate
action to provide that (i) the current offering period under the Company's
Employee Stock Purchase Plan (the "STOCK PURCHASE PLAN") shall be terminated as
of the date hereof, (ii) each participant in the Stock Purchase Plan on the date
hereof shall be deemed to have exercised his or her Option (as defined in the
Stock Purchase Plan) on such date and shall acquire from the Company (A) such
number of whole shares of Company Common Stock as his or her
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accumulated payroll deductions on such date will purchase at the Option Price
(as defined in the Stock Purchase Plan) (treating the last business day prior to
the date hereof as the "Exercise Date" for all purposes of the Stock Purchase
Plan) and (B) cash in the amount of any remaining balance in such participant's
account, and (iii) the Stock Purchase Plan shall be terminated effective as of
the date hereof.
ARTICLE II
THE MERGER
2.1 THE MERGER. Subject to the terms and conditions of this Agreement,
at the Effective Time, the Company and Acquisition Sub shall consummate a merger
(the "MERGER") pursuant to which (a) Acquisition Sub shall be merged with and
into the Company and the separate corporate existence of Acquisition Sub shall
thereupon cease, (b) the Company shall be the successor or surviving corporation
in the Merger (sometimes referred to herein as the "SURVIVING CORPORATION") and
shall continue to be governed by the laws of the Commonwealth of Massachusetts,
and (c) the separate corporate existence of the Company with all its rights,
privileges, immunities, powers and franchises shall continue unaffected by the
Merger. The Articles of Organization, as in effect immediately prior to the
Effective Time, shall be the Articles of Organization of the Surviving
Corporation until thereafter amended as provided by law and such Articles of
Organization, and Bylaws of the Company (the "BYLAWS"), as in effect immediately
prior to the Effective Time, shall be the Bylaws of the Surviving Corporation
until thereafter amended as provided by law, by such Articles of Organization or
by such Bylaws. The Merger shall have the effects specified in the MGL.
2.2 EFFECTIVE TIME. As promptly as practicable after all of the
conditions set forth in Article VIII shall have been satisfied or, if
permissible, waived by the party entitled to the benefit of the same, the
Company shall duly execute and file articles of merger (the "ARTICLES
OF MERGER") with the Secretary of State of the Commonwealth of Massachusetts in
accordance with the MGL. The Merger shall become effective at such time as the
Articles of Merger, accompanied by payment of the filing fee (as provided in
Chapter 156B, Section 114 of the MGL), have been examined by and received the
endorsed approval of the Secretary of State of the Commonwealth of Massachusetts
(the "EFFECTIVE TIME").
2.3 CLOSING. The closing of the Merger (the "CLOSING") shall take place
at such time and on a date to be specified by the parties, which shall be no
later than the second business day after satisfaction or waiver of all of the
conditions set forth in Article VIII hereof (the "CLOSING DATE"), at the offices
of Goodwin, Procter & Hoar LLP, Exchange Place, Boston, Massachusetts 02109,
unless another date or place is agreed to by the parties hereto.
2.4 DIRECTORS AND OFFICERS. The directors and officers of Acquisition
Sub immediately prior to the Effective Time shall, immediately after the
Effective Time, be the
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directors and officers of the Surviving Corporation, each to hold office in
accordance with the Articles of Organization and Bylaws of the Surviving
Corporation.
2.5 STOCKHOLDERS' MEETING. If required by applicable law in order to
consummate the Merger, the Company, acting through the Company Board, shall, in
accordance with applicable law:
(a) duly call, give notice of, convene and hold a special
meeting of its stockholders (the "SPECIAL MEETING") as promptly as practicable
following the acceptance for payment and purchase of Shares by Acquisition Sub
pursuant to the Offer for the purpose of considering and taking action upon the
approval of the Merger and the adoption of this Agreement;
(b) prepare as promptly as practicable following the execution
of this Agreement, and file with the Commission as promptly as practicable
following the Expiration Date, a preliminary proxy or information statement
relating to the Merger and this Agreement and use its commercially reasonable
best efforts to obtain and furnish the information required to be included by
the Commission in the Proxy Statement (as hereinafter defined) and, after
consultation with Parent, to respond promptly to any comments made by the
Commission with respect to the preliminary proxy or information statement and
cause a definitive proxy or information statement, including any amendment or
supplement thereto (the "PROXY STATEMENT"), to be mailed to its stockholders,
provided that no amendment or supplement to the Proxy Statement will be made by
the Company without the consultation and approval of Parent and its counsel
(which shall not be unreasonably withheld), and to obtain the necessary
approvals of the Merger and this Agreement by its stockholders; and
(c) include in the Proxy Statement the recommendation of the
Company Board that stockholders of the Company vote in favor of the approval of
the Merger and the adoption of this Agreement.
2.6 MERGER WITHOUT MEETING OF STOCKHOLDERS. Notwithstanding any
provision in this Agreement to the contrary, in the event that Acquisition Sub
shall acquire at least 90% of the outstanding shares of each class of capital
stock of the Company, pursuant to the Offer or otherwise, the parties hereto
shall, at the request of Parent and subject to Article VIII hereof, take all
necessary and appropriate action to cause the merger of the Company with and
into Acquisition Sub to become effective as soon as practicable after such
acquisition, without a meeting of stockholders of the Company, in accordance
with Chapter 156B, Section 82 of the MGL.
2.7 CONVERSION OF SECURITIES. At the Effective Time, by virtue of the
Merger and without any further action on the part of Parent, Acquisition Sub,
the Company or the holders of any Shares:
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(a) Each issued and outstanding Share held by the Company as a
treasury Share or held by any direct or indirect Company Subsidiary and each
issued and outstanding Share owned by Parent, Acquisition Sub or any other
direct or indirect Subsidiary of Parent (a "PARENT SUBSIDIARY") immediately
prior to the Effective Time, shall be canceled and retired and cease to exist
without any conversion thereof and no payment or distribution shall be made with
respect thereto;
(b) Each Share issued and outstanding immediately prior to the
Effective Time, other than (i) those Shares referred to in Section 2.7(a) and
(ii) Dissenting Shares (as hereinafter defined), shall be canceled and shall be
converted automatically into and represent the right to receive the kind and
amount of consideration (without interest) equal to the kind and amount of
consideration paid per Share pursuant to the Offer (the "MERGER CONSIDERATION"),
payable (without interest) to the holder of such Share upon surrender, in the
manner provided in Section 3.1, of the Certificate (as hereinafter defined) that
formerly evidenced such Share. All of the Certificates evidencing Shares, by
virtue of the Merger and without any action on the part of the stockholders of
the Company or the Company, shall be deemed to be no longer outstanding, shall
not be transferable on the books of the Surviving Corporation, and shall
represent solely the right to receive the amount set forth in this Section
2.7(b); and
(c) Each share of common stock, par value $.01 per share, of
Acquisition Sub issued and outstanding immediately prior to the Effective Time
shall be converted into one validly issued, fully paid and non-assessable share
of common stock, par value $1.00 per share, of the Surviving Corporation,
certificates for which shall be issued to the stockholders of Acquisition Sub on
a pro rata basis in accordance with their respective shares of Acquisition Sub
upon surrender to the Surviving Corporation of such stockholders' certificates
formerly representing such shares of Acquisition Sub.
2.8 TAKING OF NECESSARY ACTION; FURTHER ACTION. Each of Parent,
Acquisition Sub and the Company shall use its commercially reasonable best
efforts to take all such action as may be necessary or appropriate in order to
effectuate the Merger under the MGL as promptly as practicable following the
purchase of shares pursuant to the Offer. If at any time after the Effective
Time any further action is necessary or desirable to carry out the purposes of
this Agreement and to vest the Surviving Corporation with full right, title and
possession to all assets, property, rights, privileges, powers and franchises of
both of the Company and Acquisition Sub, the officers of such corporations are
fully authorized in the name of their corporation or otherwise to take, and
shall take, all such lawful and necessary action.
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ARTICLE III
PAYMENT FOR SHARES; DISSENTING SHARES
3.1 PAYMENT FOR SHARES OF COMPANY COMMON STOCK.
(a) Prior to the Effective Time, Parent shall designate a bank
or trust company to act as agent for the holders of the Shares in connection
with the Merger (the "PAYING AGENT") for purposes of effecting the exchange of
certificates for the Merger Consideration which, prior to the Effective Time,
represented Shares entitled to receive the Merger Consideration pursuant to
Section 2.7(b).
(b) From time to time before or after the Effective Time, as
necessary, Parent or Acquisition Sub shall deposit in trust with the Paying
Agent cash in an aggregate amount equal to the product of (i) the number of
Shares issued and outstanding immediately prior to the Effective Time (other
than shares owned by, or issuable upon conversion of other securities to, the
Company, Parent, Acquisition Sub or any direct or indirect Parent Subsidiary or
Company Subsidiary and Shares known immediately prior to the Effective Time to
be Dissenting Shares) (as hereinafter defined) and (ii) the Merger Consideration
(such aggregate amount being hereinafter referred to as the "PAYMENT FUND"). The
Paying Agent shall, pursuant to irrevocable instructions, make the payments
referred to in Section 2.7(b) out of the Payment Fund.
(c) Promptly after the Effective Time, the Surviving
Corporation shall cause the Paying Agent to mail to each person who was a record
holder of an outstanding certificate or certificates which immediately prior to
the Effective Time represented Shares (the "CERTIFICATES"), whose Shares were
converted pursuant to Section 2.7(b) into the right to receive the Merger
Consideration, a letter of transmittal (which shall specify that delivery shall
be effected and risk of loss and title to Certificates shall pass, only upon
proper delivery of the Certificates to the Paying Agent and shall be in such
form and have such other provisions as Parent and the Surviving Corporation may
reasonably specify) and instructions for its use in surrendering Certificates in
exchange for payment of the Merger Consideration. Upon the surrender to the
Paying Agent of such a Certificate, together with such duly executed letter of
transmittal and any other required documents, the holder thereof shall be paid,
without interest thereon, the Merger Consideration to which such holder is
entitled hereunder, and such Certificate shall forthwith be canceled. Until so
surrendered, each such Certificate shall, after the Effective Time, represent
solely the right to receive the Merger Consideration into which the Shares such
Certificate theretofore represented shall have been converted pursuant to
Section 2.7(b), and the holder thereof shall not be entitled to be paid any cash
to which such holder otherwise would be entitled. In case any payment pursuant
to this Section 3.1 is to be made to a holder other than the registered holder
of a surrendered Certificate, it shall be a condition of such payment that the
Certificate so surrendered shall be properly endorsed or otherwise in proper
form for transfer and that the person requesting such exchange shall pay to the
Paying Agent any transfer or other taxes required by reason of the payment of
such cash to
10
a person other than the registered holder of the Certificate surrendered, or
that such person shall establish to the satisfaction of the Paying Agent that
such tax has been paid or is not applicable.
(d) Promptly following the date which is twelve months after
the Effective Time, the Paying Agent shall return to the Surviving Corporation
all cash, certificates and other instruments in its possession that constitute
any portion of the Payment Fund (including, without limitation, all interest and
other income received by the Paying Agent in respect of all funds made available
to it), and the Paying Agent's duties shall terminate. Thereafter, each holder
of a Certificate shall be entitled to look to the Surviving Corporation (subject
to applicable abandoned property, escheat and similar laws) only as a general
creditor thereof with respect to any Merger Consideration, without interest,
that may be payable upon due surrender of the Certificate or Certificates held
by them. Notwithstanding the foregoing, neither the Paying Agent nor any party
hereto shall be liable to a holder of Certificates that prior to the Effective
Time evidenced Shares for any Merger Consideration delivered pursuant hereto to
a public official pursuant to applicable abandoned property, escheat or other
similar laws.
(e) At the Effective Time, the Company Common Stock transfer
books shall be closed and no transfer of Shares shall be made thereafter. If,
after the Effective Time, Certificates are presented to the Surviving
Corporation or the Paying Agent, they shall be canceled and exchanged for the
Merger Consideration as provided in Section 2.7(b), subject to applicable law in
the case of Dissenting Shares.
(f) In the event any Certificate shall have been lost, stolen
or destroyed, upon the making of an affidavit of that fact by the person
claiming such Certificate to be lost, stolen or destroyed and, if required by
Parent or the Surviving Corporation, upon the posting by such person of a bond
in such amount as Parent or the Surviving Corporation may reasonably direct as
indemnity against any claim that may be made against it with respect to such
Certificate, the Paying Agent will issue in exchange for such lost, stolen or
destroyed Certificate, the cash representing the Merger Consideration
deliverable in respect thereof pursuant to this Agreement.
3.2 APPRAISAL RIGHTS.
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(a) Notwithstanding anything in this Agreement to the
contrary, any Shares which are issued and outstanding immediately prior to the
Effective Time and which are held by stockholders of the Company who have filed
with the Company, before the taking of the vote of the stockholders of the
Company to approve this Agreement, written objections to such approval stating
their intention to demand payment for such Shares, and who have not voted such
Shares in favor of the adoption of this Agreement ("DISSENTING SHARES") will not
be converted as described in Section 2.7 hereof, but will thereafter constitute
only the right to receive payment of the fair value of such Shares in accordance
with the applicable provisions of Chapter 156B of the MGL (the "APPRAISAL RIGHTS
PROVISIONS"); provided, however, that all Shares held by stockholders who shall
have failed to perfect or who effectively shall have withdrawn or lost their
rights to appraisal of such Shares under the Appraisal Rights Provisions shall
thereupon be deemed to have been canceled and retired and to have been
converted, as of the Effective Time, into the right to receive the Merger
Consideration, without interest, in the manner provided in Section 2.7. Persons
who have perfected statutory rights with respect to Dissenting Shares as
aforesaid will not be paid by the Surviving Corporation as provided in this
Agreement and will have only such rights as are provided by the Appraisal Rights
Provisions with respect to such Dissenting Shares. Notwithstanding anything in
this Agreement to the contrary, if Acquisition Sub abandons or is finally
enjoined or prevented from carrying out, or the stockholders rescind their
adoption of, this Agreement, the right of each holder of Dissenting Shares to
receive the fair value of such Dissenting Shares in accordance with the
Appraisal Rights Provisions will terminate, effective as of the time of such
abandonment, injunction, prevention or rescission.
(b) Each dissenting stockholder who becomes entitled under the
MGL to payment for Dissenting Shares shall receive payment therefor after the
Effective Time from the Surviving Corporation (but only after the amount thereof
shall have been agreed upon or finally determined pursuant to the MGL) and such
Dissenting Shares shall thereupon be canceled.
12
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF
PARENT AND ACQUISITION SUB
Parent and Acquisition Sub jointly and severally hereby represent and
warrant to the Company as follows:
4.1 ORGANIZATION. Except as set forth in Section 4.1 of the schedule
attached to this Agreement setting forth exceptions to Parent's and Acquisition
Sub's representations and warranties set forth herein, each of Parent and
Acquisition Sub is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation and has all
requisite corporate power and corporate authority necessary to own, lease and
operate its properties and to carry on its business as now being conducted,
except where the failure to be so organized, existing and in good standing or to
have such power and authority would not reasonably be expected to have a Parent
Material Adverse Effect (as defined below). "PARENT MATERIAL ADVERSE EFFECT"
means any change or effect that has or would reasonably be expected to have a
material adverse effect on the business, results of operations or financial
condition of Parent and its Subsidiaries (the "PARENT SUBSIDIARIES") taken as a
whole.
4.2 AUTHORIZATION; VALIDITY OF AGREEMENT; NECESSARY ACTION. Except as
set forth in Section 4.2 of the schedule attached to this Agreement setting
forth exceptions to Parent's and Acquisition Sub's representations and
warranties set forth herein, (i) each of Parent and Acquisition Sub has full
corporate power and authority to execute and deliver this Agreement and to
consummate the Transactions; (ii) the execution, delivery and performance by
Parent and Acquisition Sub of this Agreement and the consummation of the
Transactions have been duly authorized by the Board of Directors of Parent (the
"PARENT BOARD") and the Board of Directors of Acquisition Sub (the "ACQUISITION
SUB BOARD") and by Parent as the sole stockholder of Acquisition Sub, and no
other corporate action on the part of Parent and Acquisition Sub is necessary to
authorize the execution and delivery by Parent and Acquisition Sub of this
Agreement and the consummation of the Transactions; and (iii) this Agreement has
been duly executed and delivered by Parent and Acquisition Sub and, assuming due
and valid authorization, execution and delivery hereof by the Company, is a
valid and binding obligation of each of Parent and Acquisition Sub, as the case
may be, enforceable against each of them in accordance with its terms, subject
to applicable bankruptcy, insolvency, moratorium or other similar laws relating
to creditors' rights and general principles of equity.
4.3 CONSENTS AND APPROVALS; NO VIOLATIONS. Except as set forth in
Section 4.3 of the schedule attached to this Agreement setting forth exceptions
to Parent's and Acquisition Sub's representations and warranties set forth
herein and except for filings, permits, authorizations, consents and approvals
as may be required under, and other applicable requirements of, the Exchange
Act, the HSR Act, and state securities or state "Blue Sky" laws, none of the
execution, delivery or performance of this Agreement by Parent or Acquisition
Sub, the consummation by Parent or Acquisition Sub of the Transactions or
13
compliance by Parent or Acquisition Sub with any of the provisions hereof will
(i) conflict with or result in any breach of any provision of the respective
articles of incorporation or organization or bylaws of Parent or Acquisition
Sub, (ii) require any filing with, or permit, authorization, consent or approval
of, any state, federal or foreign government or governmental authority or by any
United States, state or foreign court of competent jurisdiction (a "GOVERNMENTAL
ENTITY"), (iii) result in a violation or breach of, or constitute (with or
without due notice or lapse of time or both) a default (or give rise to any
right of termination, cancellation or acceleration) under, any of the terms,
conditions or provisions of any note, bond, mortgage, indenture, lease, license,
contract, agreement or other instrument or obligation to which Parent or any of
the Parent Subsidiaries listed in Section 4.3 of the Schedule attached to this
Agreement (the "MATERIAL PARENT SUBSIDIARIES") is a party or by which any of
them or any of their respective properties or assets may be bound, or (iv)
violate any order, writ, injunction, decree, statute, rule or regulation
applicable to Parent, any of the Material Parent Subsidiaries or any of their
properties or assets, excluding from the foregoing clauses (ii), (iii) and (iv)
such violations, breaches or defaults which would not, individually or in the
aggregate, have a Parent Material Adverse Effect.
4.4 INFORMATION IN PROXY STATEMENT. None of the information supplied by
Parent or Acquisition Sub specifically for inclusion or incorporation by
reference in the Proxy Statement will, as of the date mailed to the Company's
stockholders and except as supplemented by Parent to reflect changes in
information so supplied at the time of any meeting of the Company's stockholders
to be held in connection with the Merger, will 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.
4.5 REQUIRED FINANCING. Parent has a commitment for credit facilities
in place which, if funded, either alone or with cash presently on hand, (i) will
provide sufficient funds to enable Acquisition Sub to purchase and pay for the
Shares pursuant to the Offer and the Merger in accordance with the terms of this
Agreement and to consummate the Transactions and (ii) will cause Parent or
Acquisition Sub to have on the Initial Expiration Date and the Expiration Date,
and at the Effective Time, sufficient funds to purchase and pay for the Shares
pursuant to the Offer and the Merger, respectively, in accordance with the terms
of this Agreement. Neither Parent nor Acquisition Sub has any reason to believe
that any condition to such commitment cannot or will not be satisfied prior to
the Initial Expiration Date. Parent has provided to the Company a true, complete
and correct copy of the commitment letter, including any exhibits, schedules or
amendments thereto (collectively, the "Commitment Letter"), relating to the
financing for the purchase of the Shares pursuant to the Offer and the Merger.
Parent's and Acquisition Sub's commitment for credit facilities permits, subject
to the conditions specified therein, Parent and Acquisition Sub to borrow money
under such facilities and use such funds to purchase and pay for the Shares
pursuant to the Offer and the Merger in accordance with the terms of this
Agreement and to consummate the Transactions.
14
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as set forth in the disclosure schedules delivered at or prior
to the execution hereof to Parent and Acquisition Sub, which shall refer to the
relevant Sections of this Agreement (the "COMPANY DISCLOSURE SCHEDULE"), the
Company represents and warrants to Parent and Acquisition Sub as follows:
5.1 EXISTENCE; GOOD STANDING; AUTHORITY; COMPLIANCE WITH LAW.
(a) The Company is a corporation duly organized, validly
existing and in good standing under the laws of the Commonwealth of
Massachusetts. Except as set forth in Section 5.1 of the Company Disclosure
Schedule, the Company is duly licensed or qualified to do business as a foreign
corporation and is in good standing under the laws of any other state of the
United States in which the character of the properties owned or leased by it
therein or in which the transaction of its business makes such qualification
necessary, except where the failure to be so licensed or qualified would not
have a Company Material Adverse Effect (as defined below). "COMPANY MATERIAL
ADVERSE EFFECT" means any change or effect that has or would reasonably be
expected to have a material adverse effect on the business, results of
operations or financial condition of the Company and the Company Subsidiaries
taken as a whole. The Company has all requisite corporate power and authority to
own, operate, lease and encumber its properties and carry on its business as now
conducted.
(b) Each of the Company Subsidiaries listed in Section 5.1 of
the Company Disclosure Schedule (the "MATERIAL COMPANY SUBSIDIARIES") is a
corporation, partnership or limited liability company (or similar entity or
association in the case of those Material Company Subsidiaries organized and
existing other than under the laws of a state of the United States) duly
incorporated or organized, validly existing and in good standing under the laws
of its jurisdiction of incorporation or organization, has the corporate or other
power and authority to own its properties and to carry on its business as it is
now being conducted, and is duly qualified to do business and is in good
standing in each jurisdiction in which the ownership of its property or the
conduct of its business requires such qualification, except for jurisdictions in
which such failure to be so qualified or to be in good standing would not have a
Company Material Adverse Effect.
(c) Neither the Company nor any of the Material Company
Subsidiaries is in violation of any order of any Governmental Entity or
arbitration board or tribunal, or any law, ordinance, governmental rule or
regulation to which or by which the Company or any Material Company Subsidiary
or any of their respective properties or assets is subject or bound, where such
violation would have a Company Material Adverse Effect. The Company and the
Material Company Subsidiaries have obtained all licenses, permits and other
authorizations and have taken all actions required by applicable law or
governmental regulations in
15
connection with their businesses as now conducted, where the failure to obtain
any such license, permit or authorization or to take any such action would
reasonably be expected to have a Company Material Adverse Effect.
(d) Copies of the Articles of Organization and Bylaws, as
currently in effect, and the other charter documents, bylaws, organizational
documents and partnership, limited liability company and joint venture
agreements, as currently in effect, of the Company and each of the Company
Subsidiaries are listed in, and with respect to the Company and the Material
Company Subsidiaries, are attached to, Section 5.1 of the Company Disclosure
Schedule.
5.2 AUTHORIZATION, VALIDITY AND EFFECT OF AGREEMENTS. The Company has
the requisite power and authority to enter into and consummate the Transactions
and to execute, deliver and perform this Agreement. The Company Board has
approved this Agreement and the Transactions. In connection with the foregoing,
the Company Board has taken such actions and votes as are necessary on its part
to render the provisions of Chapter 110F of the MGL and all other applicable
takeover statutes inapplicable to this Agreement and the Transactions and to
comply with the director approval requirements of Article 6(c)2 of the Articles
of Organization. Subject only to the approval of this Agreement by the holders
of the Company Common Stock, if required, the execution and delivery by the
Company of this Agreement and consummation of the Transactions have been duly
authorized by all requisite corporate action on the part of the Company. This
Agreement, assuming due and valid authorization, execution and delivery thereof
by Parent and Acquisition Sub, constitutes a valid and legally binding
obligation of the Company, enforceable against the Company in accordance with
its terms, subject to applicable bankruptcy, insolvency, moratorium or other
similar laws relating to creditors' rights and general principles of equity.
5.3 CAPITALIZATION. The authorized capital stock of the Company
consists of 70,000,000 shares of Company Common Stock and 5,000,000 shares of
preferred stock, no par value per share, of the Company (the "COMPANY PREFERRED
STOCK"). As of the date of this Agreement, (i) 35,538,733 shares of Company
Common Stock were issued and outstanding, (ii) 1,129,229 shares of Company
Common Stock have been authorized and reserved for issuance and are available
for grant pursuant to the Company's stock option plans listed in Section 5.3 of
the Company Disclosure Schedule (the "COMPANY STOCK OPTION PLANS"), subject to
adjustment on the terms set forth in the Company Stock Option Plans, (iii)
2,599,653 Options were outstanding under the Company Stock Option Plans, (iv)
250,000 shares of Company Common Stock have been authorized and reserved for
issuance pursuant to the Stock Purchase Plan, (v) no shares of Company Preferred
Stock were issued and outstanding, (vi) 100,000 shares of Company Preferred
Stock have been designated as "Series B Junior Participating Cumulative
Preferred Stock" and reserved for issuance upon exercise of the rights (the
"RIGHTS") issued pursuant to the Shareholder Rights Agreement, dated as of
October 21, 1998, by and between the Company and State Street Bank and Trust
Company (the "RIGHTS AGREEMENT"), and (vii) 1,513,987 shares of Company Common
Stock and no shares of Company Preferred Stock were held in the treasury of the
Company. As of the date
16
of this Agreement, the Company had no shares of Company Common Stock issued and
outstanding or reserved for issuance other than as described above. All such
issued and outstanding shares of capital stock of the Company are duly
authorized, validly issued, fully paid, nonassessable and free of preemptive
rights. The Company has no outstanding bonds, debentures, notes or other
agreements or obligations the holders of which have the right to vote (or which
are convertible into or exercisable for securities having the right to vote)
with the stockholders of the Company on any matter. Except for the Options (all
of which have been issued under the Company Stock Option Plans) and the Stock
Purchase Plan, there are not at the date of this Agreement any existing options,
warrants, calls, subscriptions, convertible securities, or other rights,
agreements or commitments which obligate the Company to issue, transfer or sell
any shares of capital stock of the Company. Section 5.3 of the Company
Disclosure Schedule sets forth a full list of the Options, including the name of
the person to whom such Options have been granted, the number of shares subject
to each Option, the per share exercise price for each Option and the vesting
schedule for each Option. As of the Acceptance Date, pursuant to the Company
Stock Option Plans, the Options will be fully vested and immediately
exercisable. Except as set forth in Section 5.3 of the Company Disclosure
Schedule, there are no agreements or understandings to which the Company or any
Material Company Subsidiary is a party with respect to the voting of any shares
of capital stock of the Company or which restrict the transfer of any such
shares, nor does the Company have knowledge of any third party agreements or
understandings with respect to the voting of any such shares or which restrict
the transfer of any such shares. Except as set forth in Section 5.3 of the
Company Disclosure Schedule, there are no outstanding contractual obligations of
the Company or any Material Company Subsidiary to repurchase, redeem or
otherwise acquire any shares of capital stock, partnership interests or any
other securities of the Company or any Material Company Subsidiary. Except as
set forth in Section 5.3 of the Company Disclosure Schedule, neither the Company
nor any Material Company Subsidiary is under any obligation, contingent or
otherwise, by reason of any agreement to register the offer and sale or resale
of any of their securities under the Securities Act of 1933, as amended, and the
rules and regulations promulgated thereunder (the "SECURITIES ACT").
5.4 SUBSIDIARIES. No Company Subsidiary that is not a Material Company
Subsidiary (i) is actively engaged in the conduct of any material business, (ii)
owns any material assets or interests or investments in any corporation,
partnership, limited liability company, joint venture, business trust or other
entity, or (iii) is subject to any material claims of third parties. Except as
set forth in Section 5.4 of the Company Disclosure Schedule, the Company owns
directly or indirectly each of the outstanding shares of capital stock or other
equity interest of each of the Material Company Subsidiaries. Each of the
outstanding shares of capital stock of each of the Material Company Subsidiaries
having corporate form is duly authorized, validly issued, fully paid and
nonassessable. Except as set forth in Section 5.4 of the Company Disclosure
Schedule, each of the outstanding shares of capital stock or other equity
interest of each of the Material Company Subsidiaries is owned, directly or
indirectly, by the Company free and clear of all liens, pledges, security
interests, claims or other encumbrances. The following information for each
Company Subsidiary is correctly set forth in Section 5.4 of the Company
Disclosure Schedule: (i) its name and jurisdiction of
17
incorporation or organization; (ii) its authorized capital stock, share capital
or other equity interest, to the extent applicable; and (iii) the name of each
stockholder or equity interest holder and the number of issued and outstanding
shares of capital stock, share capital or other equity interest held by it.
5.5 OTHER INTERESTS. Except as set forth in Section 5.5 of the Company
Disclosure Schedule, neither the Company nor any Material Company Subsidiary
owns directly or indirectly any interest or investment (whether equity or debt)
in any corporation, partnership, limited liability company, joint venture,
business, trust or other entity (other than investments in short-term investment
securities). Except as set forth in Section 5.5 of the Company Disclosure
Schedule, to the Company's knowledge, there is no material dispute among the
equity holders of any entity of which the Company and/or any Company Subsidiary
owns more than five percent, but less than all of the voting interests or voting
securities therein.
5.6 NO VIOLATION; CONSENTS. Except as set forth in Section 5.6 of the
Company Disclosure Schedule, neither the execution and delivery by the Company
of this Agreement nor consummation by the Company of the Transactions in
accordance with the terms hereof, will conflict with or result in a breach of
any provisions of the Articles of Organization or the Bylaws. Except as set
forth in Section 5.6 of the Company Disclosure Schedule, the execution and
delivery by the Company of this Agreement and consummation by the Company of the
Transactions in accordance with the terms hereof will not violate, or conflict
with, or result in a breach of any provision of, or constitute a default (or an
event which, with notice or lapse of time or both, would constitute a default)
under, or result in the termination or in a right of termination or cancellation
of, or accelerate the performance required by, or result in the creation of any
lien, security interest, charge or encumbrance upon any of the properties of the
Company or the Material Company Subsidiaries under, or result in being declared
void, voidable or without further binding effect, any of the terms, conditions
or provisions of (x) any note, bond, mortgage, indenture or deed of trust or (y)
any license, franchise, permit, lease, contract, agreement or other instrument,
commitment or obligation to which the Company or any of the Material Company
Subsidiaries is a party, or by which the Company or any of the Material Company
Subsidiaries or any of their properties is bound, except as otherwise would not
have a Company Material Adverse Effect. Other than the filings provided for in
Article II of this Agreement, the HSR Act, the Exchange Act or applicable state
securities and "Blue Sky" laws (collectively, the "REGULATORY FILINGS"), the
execution and delivery of this Agreement by the Company does not, and the
performance of this Agreement by the Company and consummation of the
Transactions does not, require any consent, approval or authorization of, or
declaration, filing or registration with, any Governmental Entity or regulatory
authority, except where the failure to obtain any such consent, approval or
authorization of, or declaration, filing or registration with, any Governmental
Entity or regulatory authority would not have a Company Material Adverse Effect
or significantly delay any of the Transactions. Except as set forth in Section
5.6 of the Company Disclosure Schedule, there are no material agreements to
which the Company or any Material Company Subsidiary is a party or to which
their respective assets may be bound that would result in a
18
material change in the rights or obligations of the parties thereto as a result
of a change in control of the Company as contemplated by this Agreement.
5.7 SEC DOCUMENTS. The Company has timely filed all required forms,
reports and documents with the Commission since May 31, 1995 (collectively, the
"COMPANY SEC REPORTS"), all of which were prepared in accordance with the
applicable requirements of the Exchange Act, the Securities Act and the rules
and regulations promulgated thereunder (the "SECURITIES LAWS"). All required
Company SEC Reports have been timely filed with the Commission and constitute
all forms, reports and documents required to be filed by the Company under the
Securities Laws since May 31, 1995. As of their respective dates, the Company
SEC Reports (i) complied as to form in all material respects with the applicable
requirements of the Securities Laws and (ii) did not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements made therein, in the light of
the circumstances under which they were made, not misleading. Each of the
consolidated balance sheets of the Company included in or incorporated by
reference into the Company SEC Reports (including the related notes and
schedules) fairly presents the consolidated financial position of the Company
and the Company Subsidiaries as of its date and each of the consolidated
statements of income, retained earnings and cash flows of the Company included
in or incorporated by reference into the Company SEC Reports (including any
related notes and schedules) fairly presents the results of operations, retained
earnings or cash flows, as the case may be, of the Company and the Company
Subsidiaries for the periods set forth therein (subject, in the case of
unaudited statements, to normal year-end audit adjustments which were or will
not be material in amount or effect), in each case in accordance with generally
accepted accounting principles consistently applied during the periods involved,
except as may be noted therein and except, in the case of the unaudited
statements, as permitted by Form 10-Q pursuant to Section 13 or 15(d) of the
Exchange Act.
5.8 LITIGATION. Except as set forth in Section 5.8 of the Company
Disclosure Schedule, there is no litigation, suit, action or proceeding pending
or, to the knowledge of the Company, threatened against the Company or any of
the Company Subsidiaries, which, if adversely determined, individually or in the
aggregate with all such other litigation, suits, actions or proceedings, would
(i) have a Company Material Adverse Effect, (ii) materially and adversely affect
the Company's ability to perform its obligations under this Agreement or (iii)
prevent or significantly delay the consummation of any of the Transactions.
Except as set forth in Section 5.8 of the Company Disclosure Schedule, there is
no writ, order, injunction, ordinance, judgment or decree in effect or, to the
knowledge of the Company, threatened that would materially and adversely affect
the Company's ability to perform its obligations under this Agreement or prevent
or significantly delay the consummation of any of the Transactions.
5.9 ABSENCE OF CERTAIN CHANGES. Except as disclosed in Section 5.9 of
the Company Disclosure Schedule or in the Company SEC Reports filed with the
Commission prior to the date of this Agreement, since May 31, 1998, the Company
and the Material Company Subsidiaries have conducted their businesses only in
the ordinary course of business and there has not been: (i) as of the date
hereof, any declaration, setting aside or payment of
19
any dividend or other distribution with respect to the Company Common Stock;
(ii) any material commitment, contractual obligation (including, without
limitation, any management or franchise agreement, any lease (capital or
otherwise) or any letter of intent), borrowing, liability, guaranty, capital
expenditure or transaction (each, a "COMMITMENT") entered into by the Company or
any of the Material Company Subsidiaries outside the ordinary course of business
except for Commitments for expenses of attorneys, accountants and investment
bankers incurred in connection with the Transactions; or (iii) any material
change in the Company's accounting principles, practices or methods. Between
February 28, 1999 and the date of this Agreement, there has not occurred any
change or effect concerning the Company or the Company Subsidiaries which has
had or would reasonably be expected to have a material adverse effect on the
business, operations or condition (financial or otherwise) of the Company and
the Company Subsidiaries taken as a whole.
5.10 TAXES.
(a) Except as set forth in Section 5.10 of the Company
Disclosure Schedule, each of the Company and the Material Company Subsidiaries
(i) has timely filed all Tax Returns (as defined below) which it was required to
file (after giving effect to any filing extension granted by a Governmental
Entity) and all such Tax Returns are accurate and complete in all material
respects, and (ii) has paid all Taxes (as defined below) shown on such Tax
Returns as required to be paid by it, except, in each case, where the failure to
file (or timely file) such Tax Returns or pay such Taxes would not have a
Company Material Adverse Effect. The most recent audited financial statements
contained in the Company's Annual Report on Form 10-K for the fiscal year ended
May 31, 1998 reflect, to the knowledge of the Company, an adequate reserve for
all material Taxes payable by the Company and the Material Company Subsidiaries
for all taxable periods and portions thereof through the date of such financial
statements. To the knowledge of the Company, and except as set forth in Section
5.10 of the Company Disclosure Schedule, no deficiencies for any Taxes have been
proposed, asserted or assessed against the Company or any of the Material
Company Subsidiaries, and no requests for waivers of the time to assess any such
Taxes are pending. The Company has previously furnished to Parent (a) correct
and complete copies of all federal and material state or foreign Tax Returns by
the Company or any Material Company Subsidiary for taxable periods ending on or
after June 1, 1996, and (b) copies of all agreements that, to the knowledge of
the Company, under certain circumstances could obligate the Company to make any
payments that will not be deductible under Code Section 280G. Section 5.10 of
the Company Disclosure Schedule lists all (A) Tax sharing agreements, (B) all
Tax Returns currently under audit (the "AUDITS") and (C) agreements for
extensions with Governmental Entities to which the Company or any of the
Material Company Subsidiaries is a party. Section 5.10 of the Company Disclosure
Schedule discusses all material issues which have been raised to date in the
Audits.
(b) For purposes of this Agreement, "TAXES" means all federal,
state, local and foreign income, property, sales, use, franchise, employment,
withholding, excise and
20
other taxes, tariffs or governmental charges of any nature whatsoever, together
with any interest, penalties or additions to Tax with respect thereto.
(c) For purposes of this Agreement, "TAX RETURNS" means all
reports, returns, declarations, statements, schedules, attachments or other
information required to be supplied to a taxing authority in connection with
Taxes.
5.11 BOOKS AND RECORDS.
(a) The books of account and other financial records of the
Company and each of the Material Company Subsidiaries are true, complete and
correct in all material respects, have been maintained in accordance with good
business practices, and are accurately reflected in all material respects in the
financial statements included in the Company SEC Reports.
(b) The minute books and other records of the Company and each
of the Material Company Subsidiaries have been made available to Parent and
Acquisition Sub, contain in all material respects accurate records of all
meetings and accurately reflect in all material respects all other corporate
action of the stockholders and directors and any committees of the Company Board
and the boards of directors of each of the Material Company Subsidiaries and all
actions of the directors, partners or managers of each of the Material Company
Subsidiaries, as applicable.
5.12 PROPERTIES.
21
(a) All of the real estate properties owned or leased by the
Company or any of the Material Company Subsidiaries are set forth in Section
5.12 of the Company Disclosure Schedule. The Company has no ownership interest
in any real property other than the properties owned by the Company or the
Material Company Subsidiaries and set forth in Section 5.12 of the Company
Disclosure Schedule. Except as set forth in Section 5.12 of the Company
Disclosure Schedule, the Company or such Material Company Subsidiary owns fee
simple title to each of the real properties identified in Section 5.12 of the
Company Disclosure Schedule (the "COMPANY PROPERTIES"), free and clear of any
liens, mortgages or deeds of trust, claims against title, charges which are
liens, security interests or other encumbrances on title (collectively,
"ENCUMBRANCES"), and the Company Properties are not subject to any easements,
rights of way, covenants, conditions, restrictions or other written agreements,
laws, ordinances and regulations materially affecting building use or occupancy,
or reservations of an interest in title (collectively, "PROPERTY RESTRICTIONS"),
except for (i) Encumbrances, Property Restrictions and other matters set forth
in Section 5.12 of the Company Disclosure Schedule, (ii) Property Restrictions
imposed or promulgated by law or any governmental body or authority with respect
to real property, including zoning regulations, that do not materially and
adversely affect the current or currently contemplated use of the property,
materially detract from the value of or materially interfere with the present or
currently contemplated use of the property, (iii) Encumbrances and Property
Restrictions disclosed on existing title policies or reports or current surveys,
and (iv) mechanics', carriers', suppliers', workmen's or repairmen's liens and
other Encumbrances, Property Restrictions and other limitations of any kind, if
any, which, individually or in the aggregate, are not material in amount, do not
materially detract from the value of or materially interfere with the present
use of any of the Company Properties subject thereto or affected thereby, and do
not otherwise materially impair business operations conducted by the Company and
the Material Company Subsidiaries and which have arisen or been incurred only in
the ordinary course of business. Except as set forth in Section 5.12 of the
Company Disclosure Schedule, (A) no written notice of any material violation of
any federal, state or municipal law, ordinance, order, regulation or requirement
affecting any portion of any of the Company Properties has been issued to the
Company by any governmental authority; (B) to the Company's knowledge, there are
no material structural defects relating to any of the Company Properties; (C) to
the Company's knowledge, there is no Company Property whose building systems are
not in working order in any material respect; and (D) to the Company's
knowledge, there is no physical damage for which the Company is responsible to
any Company Property in excess of $250,000 for which there is no insurance in
effect covering the full cost of the restoration.
(b) Except as set forth in Section 5.12 of the Company
Disclosure Schedule, the Company and the Company Subsidiaries own good and
marketable title, free and clear of all Encumbrances, to all of the personal
property and assets shown on the Company's balance sheet at February 28, 1999 as
reflected in the Company SEC Reports (the "BALANCE SHEET") or acquired after
February 28, 1999, except for (A) assets which have been disposed of to
nonaffiliated third parties since May 31, 1998 in the ordinary course of
business, (B) Encumbrances reflected in the Balance Sheet, (C) Encumbrances or
imperfections of title which are not, individually or in the aggregate, material
in character, amount or extent and
22
which do not materially detract from the value or materially interfere with the
present or presently contemplated use of the assets subject thereto or affected
thereby, and (D) Encumbrances for current Taxes not yet due and payable. All of
the machinery, equipment and other tangible personal property and assets owned
or used by the Company and the Material Company Subsidiaries are, to the
Company's knowledge, (i) in good condition and repair, except for ordinary wear
and tear not caused by neglect and (ii) useable in the ordinary course of
business of the Company or the Material Company Subsidiaries.
5.13 INTELLECTUAL PROPERTY. To the knowledge of the Company, the
Company or the Material Company Subsidiaries is the owner of, or a licensee
under a valid license for, all items of intangible property which are material
to the business of the Company and the Material Company Subsidiaries as
currently conducted or contemplated, including, without limitation, trade names,
unregistered trademarks and service marks, brand names, domain names, software,
patents and copyrights. Except as disclosed in the Company SEC Reports filed
prior to the date of this Agreement or Section 5.13 of the Company Disclosure
Schedule, there are no claims pending or, to the Company's knowledge,
threatened, that the Company or any Material Company Subsidiary is in violation
of any material intellectual property right of any third party which would have
a Company Material Adverse Effect, and, to the knowledge of the Company, no
third party is in violation of any intellectual property rights of the Company
or any Material Company Subsidiary which would have a Company Material Adverse
Effect. Except as disclosed in the Company SEC Reports filed prior to the date
of this Agreement or Section 5.13 of the Company Disclosure Schedule, neither
the Company nor any Material Company Subsidiary is violating or has violated the
intellectual property rights of any third party.
5.14 ENVIRONMENTAL MATTERS. The Company and the Material Company
Subsidiaries are in compliance with all Environmental Laws (as defined below),
except for any noncompliance that, either singly or in the aggregate, would not
reasonably be expected to have a Company Material Adverse Effect. As used in
this Agreement, "ENVIRONMENTAL LAWS" shall mean all federal, state, provincial,
territorial, international and local laws, rules, regulations, ordinances and
orders that purport to regulate the release of hazardous substances or other
materials into the environment, or impose requirements relating to environmental
protection or human health. As used in this Agreement, "HAZARDOUS MATERIALS"
means any hazardous, toxic, noxious, radioactive or infectious substance
material, pollutant or waste as defined, listed or regulated under any
Environmental Law, and includes, without limitation, petroleum oil and its
fractions. Except as set forth in Section 5.14 of the Company Disclosure
Schedule, there is no administrative or judicial enforcement proceeding or, to
the knowledge of the Company, investigation pending, or threatened, against the
Company or any Material Company Subsidiary under any Environmental Law. Except
as set forth in Section 5.14 of the Company Disclosure Schedule, neither the
Company nor any Material Company Subsidiary or, to the knowledge of the Company,
any legal predecessor of the Company or any Material Company Subsidiary, has
received any written notice that it is actually or potentially responsible under
any Environmental Law for investigation, removal, remedial or other response
costs or natural resource damages or other damages from the release of a
Hazardous
23
Material into the environment at any location. Except as set forth in Section
5.14 of the Company Disclosure Schedule, neither the Company nor any Material
Company Subsidiary has transported or disposed of, or allowed or arranged for
any third party to transport or dispose of, any Hazardous Materials at any
location included on the National Priorities List, as defined under the
Comprehensive Environmental Response, Compensation, and Liability Act, or any
location proposed for inclusion on that list or at any location proposed for
inclusion on any analogous state list. Except as set forth in Section 5.14 of
the Company Disclosure Schedule, (i) the Company has no knowledge of any release
on the real property currently or previously owned or leased by the Company or
any Material Company Subsidiary or predecessor entity of Hazardous Materials in
a manner that could result in an order to perform a response action or in
material liability under the Environmental Laws, and (ii) to the Company's
knowledge, there is no hazardous waste treatment, storage or disposal facility,
underground storage tank, landfill, surface impoundment, underground injection
well, friable asbestos or PCB's, as those terms are defined under the
Environmental Laws, located at any of the real property currently or previously
owned or leased by the Company or any Material Company Subsidiary or predecessor
entity or facilities utilized by the Company or the Material Company
Subsidiaries, except which are either permitted uses or have been adequately
reserved for in the Company's financial statements. Except as set forth in
Section 5.14 of the Company Disclosure Schedule, neither the Company nor any
Company Subsidiary has compromised or released any insurance policies that may
provide coverage for liabilities under Environmental Laws or liabilities or
damages otherwise arising out of the release of Hazardous Materials into the
environment. Except as set forth in Section 5.14 of the Company Disclosure
Schedule, neither the Company nor any Company Subsidiary has agreed to assume
the liability of any other person or entity for, nor has the Company or any
Company subsidiary agreed to indemnify any other person or entity against,
claims arising out of the release of Hazardous Materials into the environment or
other claims under Environmental Laws.
5.15 EMPLOYEE BENEFIT PLANS.
(a) Section 5.15 of the Company Disclosure Schedule sets forth
a list of every Company Benefit Plan (as hereinafter defined) that is maintained
by the Company or an Affiliate (as hereinafter defined) on the date hereof.
(b) Each Company Benefit Plan which has been intended to
qualify under Section 401(a) of the Internal Revenue Code of 1986, as amended
(the "CODE"), has received a favorable determination or approval letter from the
Internal Revenue Service ("IRS") regarding its qualification covering all
legally required updates and any other plan amendments for which the remedial
amendment period has expired under such section and no such Company Benefit Plan
has been maintained in a manner that would preclude qualified status, including,
without limitation, any failure to adopt a legally required amendment or comply
with a legally required administrative procedure within the time required. Each
Company Benefit Plan which has been intended to qualify under Code Sections 79,
105, 106, 125 or 127 is documented and has been maintained in a manner that
meets the applicable qualification
24
requirements in all material respects. No event has occurred relating to any
Company Benefit Plan that has caused (or to the knowledge of the Company or any
Affiliate, is likely to cause) any excise or penalty tax liability under the
Code for the Company or any Affiliate that would have a Company Material Adverse
Effect.
(c) With respect to any Company Benefit Plan, there has been
no (i) "prohibited transaction," as defined in Section 406 of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), or Code Section
4975, for which an exemption is not available or (ii) material failure to comply
with any provision of ERISA, other applicable law, or any agreement, which, in
either case, would subject the Company or any Affiliate to liability (including,
without limitation, through any obligation of indemnification or contribution)
for any damages, penalties, or taxes, or any other material loss or expense that
would have a Company Material Adverse Effect. No litigation or governmental
administrative proceeding or investigation or other proceeding is pending or, to
the Company's knowledge, threatened with respect to any such Company Benefit
Plan.
(d) Neither the Company nor any Affiliate has incurred any
liability under Title IV of ERISA which has not been paid in full as of the date
of this Agreement. There has been no "accumulated funding deficiency" (whether
or not waived) with respect to any employee pension benefit plan maintained by
the Company or any Affiliate and subject to Code Section 412 or ERISA Section
302. With respect to any Company Benefit Plan maintained by the Company or any
Affiliate and subject to Title IV of ERISA, there has been no (other than as a
result of the transactions contemplated by this Agreement) (i) "reportable
event," within the meaning of ERISA Section 4043 or the regulations thereunder,
for which the notice requirement is not waived by the regulations thereunder,
and (ii) event or condition which presents a material risk of a plan termination
or any other event that may cause the Company or any Affiliate to incur
liability or have a lien imposed on its assets under Title IV of ERISA. Except
as set forth in Section 5.15 of the Company Disclosure Schedule, neither the
Company nor any Affiliate has ever maintained a Multiemployer Plan (as
hereinafter defined) or a Multiple Employer Plan (as hereinafter defined).
(e) With respect to each Company Benefit Plan, complete and
correct copies of the following documents (if applicable to such Company Benefit
Plan) have previously been delivered to Parent: (i) all documents embodying or
governing such Company Benefit Plan, and any funding medium for such Company
Benefit Plan (including, without limitation, trust agreements) as they may have
been amended to the date hereof; (ii) the most recent IRS determination or
approval letter with respect to such Company Benefit Plan under Code Section
401(a), and any applications for determination or approval subsequently filed
with the IRS; (iii) the most recently filed IRS Form 5500, with all applicable
schedules and accountants' opinions attached thereto; and (iv) the current
summary plan description for such Company Benefit Plan (or other descriptions of
such Company Benefit Plan provided to employees) and all modifications thereto.
25
(f) For purposes of this Section:
(i) "COMPANY BENEFIT PLAN" means (A) all employee
benefit plans within the meaning of ERISA Section 3(3)
maintained by the Company or any Affiliate, (B) all stock
option plans and stock purchase plans and (C) all executive
severance arrangements that have payments or other benefits
triggered by a change of control;
(ii) An entity "MAINTAINS" a Company Benefit Plan if
such entity sponsors, contributes to, or provides benefits
under or through such Company Benefit Plan, or has any
obligation (by agreement or under applicable law) to
contribute to or provide benefits under or through such
Company Benefit Plan, or if such Company Benefit Plan provides
benefits to or otherwise covers employees of such entity (or
their spouses, dependents, or beneficiaries);
(iii) An entity is an "AFFILIATE" of the Company for
purposes of this Section 5.15 if it would have ever been
considered a single employer with the Company under ERISA
Section 4001(b) or part of the same "controlled group" as the
Company for purposes of ERISA Section 302(d)(8)(C); and
(iv) "MULTIEMPLOYER PLAN" means an employee pension
or welfare benefit plan to which more than one unaffiliated
employer contributes and which is maintained pursuant to one
or more collective bargaining agreements.
(v) "MULTIPLE EMPLOYER PLAN" means an employee
pension or welfare plan to which more than one unaffiliated
employer contributes and which is not a Multiemployer Plan.
5.16 LABOR MATTERS. Except as set forth in Section 5.16 of the Company
Disclosure Schedule, neither the Company nor any Material Company Subsidiary is
a party to, or bound by, any collective bargaining agreement, contract or other
agreement or understanding with a labor union or labor union organization. There
is no unfair labor practice or labor arbitration proceeding or grievance pending
or, to the knowledge of the Company, threatened against the Company or any of
the Material Company Subsidiaries relating to their business, except for any
such proceeding which would have a Company Material Adverse Effect. To the
Company's knowledge, there is no labor strike, dispute, request for
representation, slowdown or stoppage pending or threatened against the Company
or any Material Company Subsidiary. To the Company's knowledge, there are no
organizational efforts with respect to the formation of a collective bargaining
unit presently being made or threatened involving employees of the Company or
any of the Material Company Subsidiaries. The Company and each Material Company
Subsidiary has complied in all material respects with all labor and employment
laws, including provisions thereof relating to wages, hours, equal opportunity,
collective bargaining and the payment of social security and other taxes, except
as otherwise would not reasonably be expected to have a Company Material Adverse
Effect.
26
5.17 NO BROKERS. Neither the Company nor any of the Company
Subsidiaries has entered into any contract, arrangement or understanding with
any person or firm which may result in the obligation of such entity or Parent
or Acquisition Sub to pay any finder's fees, brokerage or agent's commissions or
other like payments in connection with the negotiations leading to this
Agreement or consummation of the Transactions, except that the Company has
retained Goldman, Sachs & Co. ("GOLDMAN SACHS") as its financial advisor in
connection with the Transactions. Other than the foregoing arrangements and
Parent's arrangements with Schroder & Co., Inc., the Company is not aware of any
claim for payment of any finder's fees, brokerage or agent's commissions or
other like payments in connection with the negotiations leading to this
Agreement or consummation of the Transactions.
5.18 OPINION OF FINANCIAL ADVISOR. The Company has received the opinion
of Goldman Sachs to the effect that, as of the date hereof, the Offer Price and
the Merger Consideration are fair to the holders of the Company Common Stock
from a financial point of view and such opinion has not been subsequently
modified or withdrawn.
5.19 YEAR 2000. To the Company's knowledge, there are no impediments to
the Company being year 2000 compliant by December 31, 1999 (i.e., that products,
hardware, software and other date-sensitive equipment and systems manufactured,
sold, owned, licensed or used by the Company will be capable of correctly
processing date data (including, but not limited to, calculating, comparing and
sequencing) accurately prior to, during and after the calendar year 2000 when
used, assuming that all third party products, hardware, software and other
date-sensitive equipment and systems used in combination therewith are capable
of properly exchanging date data).
5.20 INSURANCE. The Company and the Material Company Subsidiaries are
covered by insurance in scope and amount customary and reasonable for the
businesses in which they are engaged. Except as disclosed in Section 5.20 of the
Company Disclosure Schedule, each insurance policy to which the Company or any
of the Material Company Subsidiaries is a party is in full force and effect and
will not require any consent as a result of the consummation of the
Transactions. Neither the Company nor any of the Material Company Subsidiaries
is in material breach or default (including with respect to the payment of
premiums or the giving of notices) under any insurance policy to which it is a
party, and no event has occurred which, with notice or the lapse of time, would
constitute such a material breach or default by the Company or any of the
Material Company Subsidiaries or would permit termination, modification or
acceleration, under such policies; and the Company has not received any notice
from the insurer disclaiming coverage or reserving rights with respect to any
material claim or any such policy in general. Section 5.20 of the Company
Disclosure Schedule contains a list of all material insurance policies (i)
insuring the business or properties of the Company or the Company Subsidiaries
or (ii) which provides insurance for any director, officer, employee, fiduciary
or agent of the Company or any of the Company Subsidiaries, that is paid for or
maintained by the Company or any Company Subsidiary.
27
5.21 KEY CUSTOMERS. Schedule 5.21 of the Company Disclosure Schedule
sets forth a list of each customer that accounted for five percent or more of
the consolidated revenues of the Company and the Company Subsidiaries in the
year ended May 31, 1998. Except as set forth in Section 5.21 of the Company
Disclosure Schedule, the Company and the Material Company Subsidiaries have no
material pending disputes with any customers or notice of any intent of a
customer to terminate its business relationship with the Company or any of the
Material Company Subsidiaries which in the aggregate would have a Company
Material Adverse Effect.
5.22 PRODUCT QUALITY. The products sold by the Company and the Material
Company Subsidiaries prior to the date of this Agreement are not subject to any
general recall notice or Federal Aviation Administration airworthiness directive
which in the aggregate would have a Company Material Adverse Effect.
5.23 MATERIAL CONTRACTS AND AGREEMENTS. Neither the Company nor any
Material Company Subsidiary is in material default under any material contract
or agreement (and to the knowledge of the Company, no other party to a material
contract or agreement with the Company or any Material Company Subsidiary is in
material default or breach) which defaults, in the aggregate, would have a
Company Material Adverse Effect.
5.24 DEFINITION OF THE COMPANY'S KNOWLEDGE. As used in this Agreement,
the phrase "TO THE KNOWLEDGE OF THE COMPANY" or any similar phrase means the
actual (and not the constructive or imputed) knowledge of those individuals
identified in Section 5.24 of the Company Disclosure Schedule.
ARTICLE VI
CONDUCT OF BUSINESS PENDING THE MERGER
6.1 CONDUCT OF BUSINESS BY THE COMPANY. During the period from the date
of this Agreement to the Effective Time, except as otherwise contemplated by
this Agreement, the Company shall use its commercially reasonable best efforts
to, and shall cause each of the Company Subsidiaries to use its commercially
reasonable best efforts to, carry on their respective businesses in the usual,
regular and ordinary course, consistent with the requirements of law and past
practice, and use their commercially reasonable best efforts to preserve intact
their present business organizations, keep available the services of their
present advisors, managers, officers and employees and preserve their
relationships with customers, suppliers, licensors and others having business
dealings with them and continue existing contracts as in effect on the date
hereof (for the term provided in such contracts). Without limiting the
generality of the foregoing, neither the Company nor any of the Company
Subsidiaries will (except as expressly permitted by this Agreement or as
contemplated by the Offer or the Transactions contemplated hereby or to the
extent that Parent shall otherwise consent in writing):
28
(a) (i) declare, set aside or pay any dividend or other
distribution (whether in cash, stock, or property or any combination thereof) in
respect of any of its capital stock (other than dividends or other distributions
declared, set aside or paid by any wholly-owned Company Subsidiary consistent
with past practice), (ii) split, combine or reclassify any of its capital stock
or (iii) repurchase, redeem or otherwise acquire any of its securities, except,
in the case of clause (iii), for the acquisition of Shares from holders of
Options in full or partial payment of the exercise price payable by such holders
upon exercise of Options outstanding on the date of this Agreement;
(b) authorize for issuance, issue, sell, deliver or agree or
commit to issue, sell or deliver (whether through the issuance or granting of
options, warrants, commitments, subscriptions, rights to purchase or otherwise)
any stock of any class or any other securities (including indebtedness having
the right to vote) or equity equivalents (including, without limitation, stock
appreciation rights) (other than the issuance of Shares upon the exercise of
Options outstanding on the date of this Agreement in accordance with their
present terms);
(c) acquire, sell, lease, encumber, transfer or dispose of any
assets outside the ordinary course of business which are material to the Company
or any of the Company Subsidiaries (whether by asset acquisition, stock
acquisition or otherwise), except pursuant to obligations in effect on the date
hereof or as set forth in Section 6.1 of the Company Disclosure Schedule;
(d) (i) incur any amount of indebtedness for borrowed money,
guarantee any indebtedness, guarantee (or become liable for) any debt of others,
make any loans, advances or capital contributions, mortgage, pledge or otherwise
encumber any material assets, create or suffer any material lien thereupon other
than in the ordinary course of business consistent with prior practice, (ii)
incur any short-term indebtedness for borrowed money or (iii) issue or sell debt
securities or warrants or rights to acquire any debt securities, except, in the
case of clause (i) or (ii) above, pursuant to credit facilities in existence on
the date hereof in accordance with the current terms of such credit facilities;
(e) pay, discharge or satisfy any claims, liabilities or
obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise), other than any payment, discharge or satisfaction (i) in the
ordinary course of business consistent with past practice, or (ii) as
contemplated by the Transactions;
(f) change any of the accounting principles or practices used
by it (except as required by generally accepted accounting principles, in which
case written notice shall be provided to Parent and Acquisition Sub prior to any
such change);
(g) except as required by law, (i) enter into, adopt, amend or
terminate any Company Benefit Plan, (ii) enter into, adopt, amend or terminate
any agreement, arrangement, plan or policy between the Company or any of the
Company Subsidiaries and one or more of
29
their directors or officers, or (iii) except for normal increases in the
ordinary course of business consistent with past practice, increase in any
manner the compensation or fringe benefits of any director, officer or employee
or pay any benefit not required by any Company Benefit Plan or arrangement as in
effect as of the date hereof;
(h) adopt any amendments to the Articles of Organization, the
Bylaws or the Rights Agreement, except as expressly provided by the terms of
this Agreement;
(i) adopt a plan of complete or partial liquidation or
resolutions providing for or authorizing such a liquidation or a dissolution,
merger, consolidation, restructuring, recapitalization or reorganization (other
than plans of complete or partial liquidation or dissolution of inactive Company
Subsidiaries);
(j) settle or compromise any litigation (whether or not
commenced prior to the date of this Agreement) other than settlements or
compromises of litigation where the amount paid (after giving effect to
insurance proceeds actually received) in settlement or compromise does not
exceed $250,000; or
(k) enter into an agreement to take any of the foregoing
actions.
30
ARTICLE VII
ADDITIONAL AGREEMENTS
7.1 OTHER FILINGS. As promptly as practicable, the Company, Parent and
Acquisition Sub each shall properly prepare and file any other filings required
under the Exchange Act or any other federal, state or foreign law relating to
the Merger and the Transactions (including filings, if any, required under the
HSR Act) (collectively, "OTHER FILINGS"). Each of Parent and the Company shall
promptly notify the other of the receipt of any comments on, or any request for
amendments or supplements to, any Other Filings by the Commission or any other
Governmental Entity or official, and each of the Company and Parent shall supply
the other with copies of all correspondence between it and each of its
Subsidiaries and representatives, on the one hand, and the Commission or the
members of its staff or any other appropriate Governmental Entity or official,
on the other hand, with respect to any Other Filings. The Company, Parent and
Acquisition Sub each shall use its respective commercially reasonable best
efforts to obtain and furnish the information required to be included in any
Other Filings. Parent and Acquisition Sub hereby covenant and agree to use their
respective commercially reasonable best efforts to secure termination of any
waiting periods under the HSR Act and obtain the approval of the Federal Trade
Commission (the "FTC") or any other Governmental Entity for the Transactions,
including, without limitation, promptly entering into good faith negotiations
with the FTC or other Governmental Entity to enter into a consent decree or
other arrangement as may be necessary to secure termination of such waiting
periods or obtain such other approval. Nothing in this Section 7.1 shall
prevent, or be construed to prevent, Parent or Acquisition Sub from agreeing to
extend the waiting period under the HSR Act in connection with good faith
settlement negotiations with any Governmental Entity. Notwithstanding anything
to the contrary in this Agreement, Parent and Acquisition Sub shall use their
commercially reasonable best efforts to have any non-final Injunction (as
defined in Section 8.1(d)) stayed or reversed.
7.2 ADDITIONAL AGREEMENTS. Subject to the terms and conditions herein
provided, each of the parties hereto agrees to use its commercially reasonable
best efforts to take, or cause to be taken, all actions and to do, or cause to
be done, all things necessary, proper or advisable to consummate and make
effective as promptly as practicable the Transactions contemplated by this
Agreement and to cooperate with each other in connection with the foregoing,
including the taking of such actions as are reasonably necessary to obtain any
necessary consents, approvals, orders, exemptions and authorizations by or from
any public or private third party, including, without limitation, any that are
required to be obtained under any federal, state, local or foreign law or
regulation or any contract, agreement or instrument to which the Company or any
Company Subsidiary is a party or by which any of their respective properties or
assets are bound, to defend all lawsuits or other legal proceedings challenging
this Agreement or the consummation of the Transactions, to cause to be lifted or
rescinded any injunction or restraining order or other order adversely affecting
the ability of the parties to consummate the Transactions, and to effect all
necessary registrations and Other Filings, including, but not limited to,
filings under the HSR Act, if any, and submissions of
31
information requested by Governmental Entities. For purposes of the foregoing
sentence, the obligations of the Company, Parent and Acquisition Sub to use
their "commercially reasonable best efforts" to obtain waivers, consents and
approvals to loan agreements, leases and other contracts shall not include any
obligation to agree to an adverse modification of the terms of such documents or
to prepay or incur additional obligations to such other parties.
7.3 FEES AND EXPENSES. Whether or not any of the Transactions are
consummated, all fees, costs and expenses incurred in connection with this
Agreement and the Transactions shall be paid by the party incurring such fees,
costs or expenses.
7.4 NO SOLICITATIONS.
(a) The Company will immediately cease any discussions or
negotiations with any parties that may be ongoing with respect to an Acquisition
Proposal (as defined below). Except as explicitly permitted hereunder, the
Company shall not, and shall not authorize or permit any of its officers,
directors or employees or any investment banker, financial advisor, attorney,
accountant or other representative, directly or indirectly, to, (i) solicit,
initiate or encourage (including by way of furnishing non-public information),
or take any other action to facilitate, any inquiries or the making of any
proposal that constitutes an Acquisition Proposal, or (ii) participate in any
discussions or negotiations regarding an Acquisition Proposal; provided,
however, that if the Company Board determines in good faith, after consultation
with counsel, that such action is necessary to comply with its fiduciary duties
to the Company's stockholders under applicable law, the Company, in response to
an Acquisition Proposal and in compliance with Section 7.4(e), may (i) furnish
non-public information with respect to the Company to the person who made such
Acquisition Proposal pursuant to a confidentiality agreement on terms no more
favorable to such person than the Confidentiality Agreement (as defined in
Section 7.6); provided that such confidentiality agreement need not include the
same standstill provisions as those contained in the Confidentiality Agreement,
it being understood that if there are no standstill provisions in such
confidentiality agreement or if such provisions are more favorable to the person
who made such Acquisition Proposal than those in the Confidentiality Agreement,
the Confidentiality Agreement shall be deemed amended to exclude the existing
standstill provision or include such more favorable provisions, as the case may
be, and (ii) may participate in negotiations regarding such Acquisition
Proposal.
(b) The Company Board shall not (i) withdraw or modify in a
manner adverse to Parent or Acquisition Sub its approval or recommendation of
this Agreement, the Offer or the Merger, (ii) approve or recommend an
Acquisition Proposal to its stockholders or (iii) cause the Company to enter
into any definitive acquisition agreement with respect to an Acquisition
Proposal, unless the Company Board (A) shall have determined in good faith,
after consultation with counsel, that the Acquisition Proposal is a Superior
Proposal (as defined below) and such action is necessary to comply with its
fiduciary duties to the Company's stockholders under applicable law and (B) in
the case of clause (iii) above, complies with Section 9.1(c)(ii) hereof. In the
event that before the Acceptance Date the Company Board
32
determines in good faith, after consultation with counsel, that it is necessary
to do so in order to comply with its fiduciary duties to the Company's
stockholders under applicable law, the Company may enter into an agreement with
respect to a Superior Proposal, but only forty-eight hours after Parent's
receipt of written notice (i) advising Parent that the Company Board has
received a Superior Proposal and that the Company has elected to terminate this
Agreement pursuant to Section 9.1(c)(ii) of this Agreement and (ii) setting
forth such other information required to be included therein as provided in
Section 9.1(c)(ii) of this Agreement. If the Company enters into an agreement
with respect to a Superior Proposal, it shall have paid, to Parent the
Liquidated Amount (as defined below) in accordance with Section 9.2(b) of this
Agreement. For purposes of this Agreement, a "SUPERIOR PROPOSAL" means a bona
fide Acquisition Proposal to acquire two thirds or more of the Shares then
outstanding or all or substantially all of the assets of the Company and the
Company Subsidiaries on terms which the Company Board determines in its good
faith judgement (after consultation with Goldman Sachs or another financial
advisor of nationally recognized reputation) to be more favorable to the
Company's stockholders than the Offer and the Merger.
(c) Nothing contained in this Section 7.4 shall prohibit the
Company from at any time disclosing information to its stockholders as required
by Rule 14e-2 promulgated under the Exchange Act.
(d) As used in this Agreement, the term "ACQUISITION PROPOSAL"
shall mean any proposed or actual (i) acquisition, merger, consolidation or
similar transaction involving the Company, (ii) sale, lease or other
disposition, directly or indirectly, by merger, consolidation, share exchange or
otherwise, of any assets of the Company or the Company Subsidiaries representing
15% or more of the consolidated assets of the Company and the Company
Subsidiaries, (iii) issue, sale or other disposition of (including by way of
merger, consolidation, share exchange or any similar transaction) securities (or
options, rights or warrants to purchase, or securities convertible into, such
securities) representing 15% or more of the votes associated with the
outstanding securities of the Company, (iv) transaction in which any person
shall acquire beneficial ownership (as such term is defined in Rule 13d-3 under
the Exchange Act), or the right to acquire beneficial ownership, or any "group"
(as such term is defined under the Exchange Act) shall have been formed which
beneficially owns or has the right to acquire beneficial ownership of, 15% or
more of the outstanding Shares, (v) recapitalization, restructuring,
liquidation, dissolution, or other similar type of transaction with respect to
the Company or (vi) transaction which is similar in form, substance or purpose
to any of the foregoing transactions; provided, however, that the term
"Acquisition Proposal" shall not include the Offer, the Merger and the
Transactions.
(e) The Company will within 24 hours notify Parent of its
receipt of an Acquisition Proposal and the material terms and conditions of such
Acquisition Proposal. Notwithstanding anything to the contrary in this
Agreement, except as provided in Sections 9.1(c)(ii) and 7.4(b), the Company
shall have no duty to notify or update Parent or Acquisition Sub on the status
of discussions or negotiations (including the status of such Acquisition
Proposal or any amendments or proposed amendments thereto) between the Company
and the
33
person making the Acquisition Proposal.
7.5 OFFICERS' AND DIRECTORS' INDEMNIFICATION.
(a) In the event of any threatened or actual claim, action,
suit, proceeding or investigation, whether civil, criminal or administrative,
including, without limitation, any such claim, action, suit, proceeding or
investigation in which any person who is now, or has been at any time prior to
the date hereof, or who becomes prior to the Effective Time, a director,
officer, employee, fiduciary or agent of the Company or any of the Company
Subsidiaries (the "INDEMNIFIED PARTIES") is, or is threatened to be, made a
party based in whole or in part on, or arising in whole or in part out of, or,
pertaining to (i) the fact that he is or was a director, officer, employee,
fiduciary or agent of the Company or any of the Company Subsidiaries, or is or
was serving at the request of the Company or any of the Company Subsidiaries as
a director, officer, employee, fiduciary or agent of another corporation,
partnership, joint venture, trust or other enterprise, or (ii) the negotiation,
execution or performance of this Agreement or any of the transactions
contemplated hereby, whether in any case asserted or arising before or after the
Effective Time, the parties hereto agree to cooperate and use their commercially
reasonable best efforts to defend against and respond thereto. It is understood
and agreed that the Company shall indemnify and hold harmless, and after the
Effective Time the Surviving Corporation and Parent shall indemnify and hold
harmless, as and to the full extent permitted by applicable law, each
Indemnified Party against any losses, claims, damages, liabilities, costs,
expenses (including reasonable attorneys' fees and expenses), judgments, fines
and amounts paid in settlement in connection with any such threatened or actual
claim, action, suit, proceeding or investigation, and in the event of any such
threatened or actual claim, action, suit, proceeding or investigation (whether
asserted or arising before or after the Effective Time), (A) the Company, and
the Surviving Corporation and Parent after the Effective Time, shall promptly
pay reasonable expenses in advance of the final disposition of any claim, suit,
proceeding or investigation to each Indemnified Party to the full extent
permitted by law, (B) the Indemnified Parties may retain counsel satisfactory to
them, and the Company, and the Surviving Corporation and Parent after the
Effective Time, shall pay all reasonable fees and expenses of such counsel for
the Indemnified Parties within 30 days after statements therefor are received,
and (C) the Company, the Surviving Corporation and Parent will use their
respective commercially reasonable best efforts to assist in the vigorous
defense of any such matter; provided that none of the Company, the Surviving
Corporation or Parent shall be liable for any settlement effected without its
prior written consent (which consent shall not be unreasonably withheld); and
provided further that the Surviving Corporation and Parent shall have no
obligation hereunder to any Indemnified Party when and if a court of competent
jurisdiction shall ultimately determine, and such determination shall have
become final and non-appealable, that indemnification of such Indemnified Party
in the manner contemplated hereby is prohibited by applicable law (whereupon any
advances received shall be repaid to the Parent or the Surviving Corporation).
Any Indemnified Party wishing to claim indemnification under this Section 7.5,
upon learning of any such claim, action, suit, proceeding or investigation,
shall notify the Company and, after the Effective Time, the Surviving
Corporation and Parent, thereof; provided that the failure to so notify shall
not
34
affect the obligations of the Company, the Surviving Corporation and Parent
except to the extent such failure to notify materially prejudices such party.
(b) Parent and Acquisition Sub agree that all rights to
indemnification existing in favor of, and all limitations on the personal
liability of, the directors, officers, employees and agents of the Company and
the Company Subsidiaries provided for in the Articles of Organization or Bylaws
as in effect as of the date hereof with respect to matters occurring prior to
the Effective Time, and including the Offer and the Merger, shall continue in
full force and effect for a period of not less than six years from the Effective
Time; provided, however, that all rights to indemnification in respect of any
claims (each a "CLAIM") asserted or made within such period shall continue until
the disposition of such Claim. Prior to the Effective Time, the Company shall
purchase an extended reporting period endorsement under the Company's existing
directors' and officers' liability insurance coverage for the Company's
directors and officers in a form acceptable to the Company which shall provide
such directors and officers with coverage for six years following the Effective
Time of not less than the existing coverage under, and have other terms not
materially less favorable to, the insured persons than the directors' and
officers' liability insurance coverage presently maintained by the Company.
(c) This Section 7.5 is intended for the irrevocable benefit
of, and to grant third party rights to, the Indemnified Parties and shall be
binding on all successors and assigns of Parent, the Company and the Surviving
Corporation. Each of the Indemnified Parties shall be entitled to enforce the
covenants contained in this Section 7.5.
(d) In the event that the Surviving Corporation or any of its
successors or assigns (i) consolidates with or merges into any other person or
entity and shall not be the continuing or surviving corporation or entity of
such consolidation or merger or (ii) transfers or conveys all or substantially
all of its properties and assets to any person or entity, then, and in each such
case, proper provision shall be made so that the successors and assigns of the
Surviving Corporation assume the obligations set forth in this Section 7.5.
7.6 ACCESS TO INFORMATION; CONFIDENTIALITY. From the date hereof until
the Effective Time, the Company shall, and shall cause each of the Company
Subsidiaries and each of the Company's and Company Subsidiaries' officers,
employees and agents to, afford to Parent and to the officers, employees and
agents of Parent complete access at all reasonable times to such officers,
employees, agents, properties, books, records and contracts, and shall furnish
Parent such financial, operating and other data and information as Parent may
reasonably request. Prior to the Effective Time, Parent and Acquisition Sub
shall hold in confidence all such information on the terms and subject to the
conditions contained in that certain confidentiality agreement between Parent
and the Company dated March 26, 1999 (the "CONFIDENTIALITY AGREEMENT"). The
Company hereby waives the provisions of the Confidentiality Agreement as and to
the extent necessary to permit the making and consummation of the Transactions.
At the Effective Time, such Confidentiality Agreement shall terminate.
35
7.7 FINANCIAL AND OTHER STATEMENTS. Notwithstanding anything contained
in Section 7.6, during the term of this Agreement, the Company shall also
provide to Parent the following documents and information:
(a) As soon as reasonably available, but in no event more than
45 days after the end of each fiscal quarter ending after the date of this
Agreement, the Company will deliver to Parent its Quarterly Report on Form 10-Q
as filed under the Exchange Act. As soon as reasonably available, but in no
event more than 90 days after the end of each fiscal year ending after the date
of this Agreement, the Company will deliver to Parent its Annual Report on Form
10-K as filed under the Exchange Act. The Company will also deliver to Parent,
contemporaneously with its being filed with the Commission, a copy of each
Current Report on Form 8-K.
(b) Promptly upon receipt thereof, the Company will furnish to
Parent copies of all internal control reports submitted to the Company or any
Company Subsidiary by independent accountants in connection with each annual,
interim or special audit of the books of the Company or any such Company
Subsidiary made by such accountants.
(c) As soon as practicable, the Company will furnish to Parent
copies of all such financial statements and reports as it or any Company
Subsidiary shall send to its stockholders, the Commission or any other
regulatory authority, to the extent any such reports furnished to any such
regulatory authority are not confidential and except as legally prohibited
thereby.
7.8 PUBLIC ANNOUNCEMENTS. The Company and Parent shall consult with
each other before issuing any press release or otherwise making any public
statements with respect to this Agreement or any of the Transactions and shall
not issue any such press release or make any such public statement without the
prior consent of the other party, which consent shall not be unreasonably
withheld; provided, however, that a party may, without the prior consent of the
other party, issue such press release or make such public statement as may be
required by law or the applicable rules of any stock exchange if it has used its
commercially reasonable best efforts to consult with the other party and to
obtain such party's consent but has been unable to do so in a timely manner.
7.9 EMPLOYEE BENEFIT ARRANGEMENTS.
36
(a) After the Closing, Parent shall cause the Surviving
Corporation to honor all obligations under (i) the existing terms of the
employment and severance agreements to which the Company or any Company
Subsidiary is presently a party, except as may otherwise be agreed to by the
parties thereto, and (ii) the Company's and any Company Subsidiary's general
severance policy as set forth in Section 7.9 of the Company Disclosure Schedule.
For a period of six months following the Effective Time (the "TRANSITION
PERIOD"), employees of the Surviving Corporation will continue to participate in
the Company Benefit Plans (other than deferred compensation plans, stock option
plans or employee stock purchase plans or other employer stock match or other
employer stock related provisions) on substantially similar terms to those
currently in effect. For a period of 18 months following the expiration of the
Transition Period, the Surviving Corporation's employees will be entitled to
participate in employee benefit plans, the terms of which will be similar in
material respects in the aggregate to the Company Benefit Plans as in effect on
the date hereof (other than deferred compensation plans, stock option plans or
employee stock purchase plans or other employer stock match or other employer
stock related provisions).
(b) After the Closing, Parent shall cause the Surviving
Corporation to honor all obligations which accrued prior to the Effective Time
under the Company's deferred compensation plans. Except as is otherwise required
by the existing terms of employment and severance agreements to which the
Company is presently a party, future accruals may be (but are not required to
be) provided for under any such plan(s) or under any similar plan(s) of the
Surviving Corporation or Parent. Except as is otherwise required by the existing
terms of employment and severance agreements to which the Company is a presently
party, if future accruals are not provided for with respect to any current
employee participant in such plan as of the Effective Time, and such person
remains an employee of the Company or the Surviving Corporation or Parent, the
person's continuing employment in such capacity shall be counted for purposes of
vesting (but not for purposes of benefit accrual) under such plan. Except as is
otherwise required by the existing terms of employment and severance agreements
to which the Company is a party, transfer of employment from the Company to the
Surviving Corporation or to the Parent or to an affiliate of the Parent shall
not constitute a termination of employment for purposes of payment of benefits
under any such plan.
(c) If any employee of the Company or any of the Company
Subsidiaries becomes a participant in any employee benefit plan, practice or
policy of Parent, any of its affiliates or the Surviving Corporation, such
employee shall be given credit under such plan for all service prior to the
Effective Time with the Company and the Company Subsidiaries and prior to the
time such employee becomes such a participant, for purposes of eligibility
(including, without limitation, waiting periods) and vesting but not for any
other purposes for which such service is either taken into account or recognized
(including, without limitation, benefit accrual); provided, however, that such
employees will be given credit for such service for purposes of any vacation
policy. In addition, if any employees of the Company or any of the Company
Subsidiaries employed as of the Closing Date become covered by a medical plan of
Parent, any of its affiliates or the Surviving Corporation, such medical plan
shall not impose any exclusion on coverage for preexisting medical conditions
with respect to these
37
employees.
7.10 RIGHTS AGREEMENT. The Company Board has amended the Rights
Agreement prior to the execution of this Agreement (i) so that neither the
execution nor the delivery of this Agreement will trigger or otherwise affect
any rights or obligations under the Rights Agreement, including causing the
occurrence of a "Distribution Date" or a "Stock Acquisition Date," as defined in
the Rights Agreement, and (ii) to terminate the Rights Plan immediately upon the
Effective Time.
7.11 STATUS OF FINANCING. Parent and Acquisition Sub shall keep the
Company informed of the status of their financing arrangements for the
Transactions, including providing written notice to the Company as promptly as
possible (but in any event within 24 hours after obtaining knowledge thereof)
with respect to (i) any facts of circumstances which reasonable indicate that
the Lenders (as defined in the Commitment Letter) may be unable to provide the
financing contemplated by the Commitment Letter, (ii) the prospective inability
of Parent or Acquisition Sub to satisfy any of the conditions set forth in the
Commitment Letter, and (iii) any material adverse developments relating to the
availability of the financing contemplated by the Commitment Letter.
ARTICLE VIII
CONDITIONS TO THE MERGER
8.1 CONDITIONS TO THE OBLIGATIONS OF EACH PARTY TO EFFECT THE MERGER.
The respective obligations of each party to effect the Merger shall be subject
to the fulfillment or waiver, where permissible, at or prior to the Closing
Date, of each of the following conditions:
(a) STOCKHOLDER APPROVAL. If required by applicable law, this
Agreement and the Transactions, including the Merger, shall have been approved
and adopted by the affirmative vote of the stockholders of the Company to the
extent required by the MGL and the Articles of Organization.
(b) HART-SCOTT-RODINO ACT. Any waiting period (and any
extension thereof) applicable to the consummation of the Merger under the HSR
Act shall have expired or been terminated.
(c) OTHER REGULATORY APPROVALS. All necessary approvals,
authorizations and consents of any governmental or regulatory entity required to
consummate the Merger shall have been obtained and remain in full force and
effect, and all waiting periods relating to such approvals, authorizations and
consents shall have expired or been terminated, except where such failure would
not have a Company Material Adverse Effect or a Parent Material Adverse Effect,
as the case may be, or would not be reasonably likely to affect adversely the
38
ability of the Company or Acquisition Sub, as the case may be, to consummate the
Merger.
(d) NO INJUNCTIONS, ORDERS OR RESTRAINTS; ILLEGALITY. No
preliminary or permanent injunction or other order, decree or ruling issued by a
court of competent jurisdiction or by a governmental, regulatory or
administrative agency or commission (an "INJUNCTION") nor any statute, rule,
regulation or executive order promulgated or enacted by any governmental
authority shall be in effect which would (i) make the consummation of the Merger
illegal, or (ii) otherwise restrict, prevent or prohibit the consummation of any
of the Transactions, including the Merger.
(e) PURCHASE OF SHARES IN OFFER. Parent, Acquisition Sub or
their affiliates shall have purchased Shares pursuant to the Offer.
ARTICLE IX
TERMINATION, AMENDMENT AND WAIVER
9.1 TERMINATION. This Agreement may be terminated at any time prior to
the Effective Time, whether before or after stockholder approval thereof:
(a) by the mutual written consent of Parent or Acquisition Sub
and the Company.
(b) by either of the Company or Parent or Acquisition Sub:
(i) if any Governmental Entity shall have issued an
order, decree or ruling or taken any other action (which order, decree,
ruling or other action the parties hereto shall use their commercially
reasonable best efforts to lift), which permanently restrains, enjoins
or otherwise prohibits the acceptance for payment of, or payment for,
Shares pursuant to the Offer or the Merger; or
(ii) if, without any material breach by the
terminating party of its obligations under this Agreement, Parent or
Acquisition Sub shall not have purchased Shares pursuant to the Offer
on or prior to the later of (i) the Final Expiration Date or (ii) the
HSR Expiration Date (if applicable).
(c) by the Company:
(i) if Parent or Acquisition Sub shall have failed to
commence the Offer on or prior to five business days following the date
of the initial public announcement of the Offer; or
39
(ii) in connection with entering into a definitive
agreement to effect a Superior Proposal in accordance with Section
7.4(b) hereof; provided, however, that prior to terminating this
Agreement pursuant to this Section 9.1(c)(ii), (A) the Company shall
have paid the Liquidated Amount, as set forth in Section 9.2(b), and
(B) the Company shall have provided Acquisition Sub with 48 hours prior
written notice of the Company's decision to so terminate. Such notice
shall indicate in reasonable detail the material terms and conditions
of such Superior Proposal, including, without limitation, the amount
and form of the proposed consideration and whether such Superior
Proposal is subject to any material conditions; or
(iii) if Parent or Acquisition Sub shall have
breached in any material respect any of their respective
representations, warranties, covenants or other agreements contained in
this Agreement, which breach cannot be or has not been cured within 15
days after the giving of written notice to Parent or Acquisition Sub
except, in any case, for such breaches which are not reasonably likely
to affect adversely Parent's or Acquisition Sub's ability to consummate
the Offer or the Merger; provided, however, that no cure period shall
be applicable under any circumstances to the matters set forth in
Section 9.1(c)(i).
(d) by Parent or Acquisition Sub if, prior to the purchase of
Shares pursuant to the Offer:
(i) the Company shall have breached any
representation or warranty or failed to have performed any
covenant or other agreement contained in this Agreement which
breach or failure to perform (A) would give rise to the
failure of a condition set forth in ANNEX A hereto, and (B)
cannot be or has not been cured within 15 days after the
giving of written notice to the Company; or
(ii) (A) the Company Board shall withdraw, modify or
change its recommendation or approval in respect of this
Agreement or the Offer in a manner adverse to Parent, (B) the
Company Board shall recommend any proposal other than by
Parent and Acquisition Sub in respect of an Acquisition
Proposal or (C) the Company shall have exercised a right with
respect to an Acquisition Proposal and shall, directly or
through its representatives, continue discussions with any
third party concerning such Acquisition Proposal for more than
20 business days after the date of receipt of such Acquisition
Proposal.
40
9.2 EFFECT OF TERMINATION.
(a) In the event of the termination of this Agreement pursuant
to Section 9.1 hereof, this Agreement shall forthwith become null and void and
have no effect, without any liability on the part of any party hereto or its
affiliates, trustees, directors, officers or stockholders and all rights and
obligations of any party hereto shall cease except for the agreements contained
in Sections 7.3 and 7.6, this Section 9.2 and Article X; provided, however, that
nothing contained in this Section 9.2 shall relieve any party from liability for
any fraud or willful breach of this Agreement.
(b) If the Company terminates this Agreement in accordance
with Section 9.1(c)(ii), then the Company shall concurrently pay to Parent an
amount in cash equal to $25,000,000 (the "LIQUIDATED AMOUNT"). If any of the
circumstances described in Section 9.1(d)(i) (if such breach or failure relates
to the Company's obligations under Section 7.4 of this Agreement) or Section
9.1(d)(ii) hereof shall have occurred and within 9 months thereafter the Company
shall have entered into a definitive agreement to consummate an acquisition
pursuant to an Acquisition Proposal, then the Company shall pay to Parent
concurrently with the consummation of the acquisition contemplated by the
Acquisition Proposal, the Liquidated Amount.
(c) Any payment required by this Section 9.2 shall be payable
by the Company to Parent by wire transfer of immediately available funds to an
account designated by Parent.
(d) Notwithstanding anything to the contrary in this
Agreement, Parent and Acquisition Sub hereto expressly acknowledge and agree
that, with respect to any termination of this Agreement pursuant to Section
9.1(c)(ii) hereof, the payment of the Liquidated Amount shall constitute
liquidated damages with respect to any claim for damages or any other claim
which Parent or Acquisition Sub would otherwise be entitled to assert against
the Company or any of the Company Subsidiaries or any of their respective
assets, or against any of their respective directors, officers, employees,
partners, managers, members or shareholders, with respect to this Agreement and
the Transactions and shall constitute the sole and exclusive remedy available to
Parent and Acquisition Sub. The parties hereto expressly acknowledge and agree
that, in light of the difficulty of accurately determining actual damages with
respect to the foregoing upon any termination of this Agreement pursuant to
Section 9.1(c)(ii) hereof, the rights to payment under Section 9.2(b): (i)
constitute a reasonable estimate of the damages that will be suffered by reason
of any such proposed or actual termination of this Agreement pursuant to Section
9.1(c)(ii) hereof and (ii) shall be in full and complete satisfaction of any and
all damages arising as a result of the foregoing. Except for nonpayment of the
amounts set forth in Section 9.2(b), Parent and Acquisition Sub hereby agree
that, upon any termination of this Agreement pursuant to Section 9.1(c)(ii)
hereof, in no event shall Parent or Acquisition Sub be entitled to seek or to
obtain any recovery or judgment against the Company or any of the Company
Subsidiaries or any of their respective assets, or against any of their
respective directors, officers, employees, partners, managers, members or
shareholders, and in no event
41
shall Parent or Acquisition Sub be entitled to seek or obtain any other damages
of any kind, including, without limitation, consequential, indirect or punitive
damages.
9.3 AMENDMENT. This Agreement may be amended by the parties hereto by
an instrument in writing signed on behalf of each of the parties hereto at any
time before or after any approval hereof by the stockholders of the Company and
Acquisition Sub, but in any event following authorization by the Acquisition Sub
Board and the Company Board; provided, however, that after any such stockholder
approval, no amendment shall be made which by law requires further approval by
stockholders without obtaining such approval.
9.4 EXTENSION; WAIVER. At any time prior to the Closing, the parties
hereto may, to the extent legally allowed, (i) extend the time for the
performance of any of the obligations or other acts of the other parties hereto,
(ii) waive any inaccuracies in the representations and warranties contained
herein or in any document delivered pursuant hereto and (iii) waive compliance
with any of the agreements or conditions contained herein. Any agreement on the
part of a party hereto to any such extension or waiver shall be valid only if
set forth in a written instrument signed on behalf of such party.
ARTICLE X
GENERAL PROVISIONS
10.1 NOTICES. All notices and other communications given or made
pursuant hereto shall be in writing and shall be deemed to have been duly given
or made as of the date delivered or sent if delivered personally or sent by
telecopier (which is confirmed) or sent by prepaid overnight carrier to the
parties at the following addresses (or at such other addresses as shall be
specified by the parties by like notice) (provided that with respect to any
notice required to be given within 48 hours or less notice shall be deemed given
when actually received):
(a) if to Parent or Acquisition Sub:
Precision Castparts Corp.
4650 SW Macadum Avenue
Suite 440
Portland, OR 97201-4254
Attn: William D. Larsson
Telecopy No.: (503) 417-4817
42
with a copy to:
Stoel Rives LLP
900 SW Fifth Avenue, Suite 2600
Portland, OR 97204-1268
Attn: Ruth A. Beyer
Telecopy No.: (503) 220-2480
(b) if to the Company:
Wyman-Gordon Company
244 Worcester Street
Box 8001
North Grafton, MA 01536-8001
Attn: Wallace F. Whitney, Jr., Esq.
Telecopy No.: (508) 839-7564
with a copy to:
Goodwin, Procter & Hoar LLP
Exchange Place
Boston, Massachusetts 02109
Attn: David F. Dietz, P.C.
Joseph L. Johnson III, P.C.
Telecopy No.: (617) 523-1231
10.2 INTERPRETATION. When a reference is made in this Agreement to
subsidiaries of Parent, Acquisition Sub or the Company, the word "SUBSIDIARY"
means any corporation more than 50% of whose outstanding voting securities, or
any partnership, joint venture or other entity more than 50% of whose total
equity interest, is directly or indirectly owned by Parent, Acquisition Sub or
the Company, as the case may be. The headings contained in this Agreement are
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
10.3 NON-SURVIVAL OF REPRESENTATIONS, WARRANTIES, COVENANTS AND
AGREEMENTS. Except for Sections 3.1, 7.3, 7.5 and 7.9, the last sentence of
Section 2.8 and Article X, none of the representations, warranties, covenants
and agreements contained in this Agreement or in any instrument delivered
pursuant to this Agreement shall survive the Effective Time, and thereafter
there shall be no liability on the part of either Parent, Acquisition Sub or the
Company or any of their respective officers, directors or stockholders in
respect thereof. Except as expressly set forth in this Agreement, there are no
representations or warranties of any party hereto, express or implied.
43
10.4 MISCELLANEOUS. This Agreement (i) constitutes, together with the
exhibits hereto, the Confidentiality Agreement, ANNEX A hereto, the Company
Disclosure Schedule and the schedule referred to in Article IV hereof, the
entire agreement and supersedes all of the prior agreements and understandings,
both written and oral, among the parties, or any of them, with respect to the
subject matter hereof, (ii) shall be binding upon and inure to the benefits of
the parties hereto and their respective permitted successors and assigns and is
not intended to confer upon any other person (except as set forth below) any
rights or remedies hereunder and (iii) may be executed in two or more
counterparts which together shall constitute a single agreement. Section 7.5 and
Section 7.9 are intended to be for the benefit of those persons described
therein and the covenants contained therein may be enforced by such persons. The
parties hereto agree that irreparable damage would occur in the event that any
of the provisions of this Agreement were not performed in accordance with their
specific terms or were otherwise breached. It is accordingly agreed that the
parties shall be entitled to an injunction or injunctions to prevent breaches of
this Agreement and to enforce specifically the terms and provisions hereof in
the Delaware Courts (as hereinafter defined), this being in addition to any
other remedy to which they are entitled at law or in equity.
10.5 ASSIGNMENT. Except as expressly permitted by the terms hereof,
neither this Agreement nor any of the rights, interests or obligations hereunder
may be assigned by any of the parties hereto without the prior written consent
of the other parties.
10.6 SEVERABILITY. If any provision of this Agreement, or the
application thereof to any person or circumstance is held invalid or
unenforceable, the remainder of this Agreement, and the application of such
provision to other persons or circumstances, shall not be affected thereby, and
to such end, the provisions of this Agreement are agreed to be severable.
10.7 CHOICE OF LAW/CONSENT TO JURISDICTION. All disputes, claims or
controversies arising out of this Agreement, or the negotiation, validity or
performance of this Agreement, or the Transactions shall be governed by and
construed in accordance with the laws of the Commonwealth of Massachusetts
without regard to its rules of conflict of laws. Each of the Company, Parent and
Acquisition Sub hereby irrevocably and unconditionally consents to submit to the
sole and exclusive jurisdiction of the courts of the State of Delaware and of
the United States District Court for the District of Delaware (the "DELAWARE
COURTS") for any litigation arising out of or relating to this Agreement, or the
negotiation, validity or performance of this Agreement, or the Transactions (and
agrees not to commence any litigation relating thereto except in such courts),
waives any objection to the laying of venue of any such litigation in the
Delaware Courts and agrees not to plead or claim in any Delaware Court that such
litigation brought therein has been brought in any inconvenient forum. Each of
the parties hereto agrees, (a) to the extent such party is not otherwise subject
to service of process in the State of Delaware, to appoint and maintain an agent
in the State of Delaware as such party's agent for acceptance of legal process,
and (b) that service of process may also be made on such party by prepaid
certified mail with a proof of mailing receipt validated by the United States
Postal Service constituting evidence of valid service. Service made pursuant to
(a) or (b) above shall have the same legal force and effect as if served upon
such party
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personally within the State of Delaware. For purposes of implementing the
parties' agreement to appoint and maintain an agent for service of process in
the State of Delaware, each such party does hereby appoint CT Corporation,
Corporation Trust Center, 1209 Orange Street, Wilmington, DE 19801, as such
agent.
10.8 NO AGREEMENT UNTIL EXECUTED. Irrespective of negotiations among
the parties or the exchanging of drafts of this Agreement, this Agreement shall
not constitute or be deemed to evidence a contract, agreement, arrangement or
understanding among the parties hereto unless and until (i) the Board of
Directors of the Company has approved, for purposes of Chapter 110F of the MGL
and any applicable provision of the Articles of Organization, the terms of this
Agreement, and (ii) this Agreement is executed by the parties hereto.
[Remainder of page intentionally left blank]
45
IN WITNESS WHEREOF, Parent, Acquisition Sub and the Company have caused
this Agreement to be executed as of the date first written above by their
respective officers thereunto duly authorized.
PRECISION CASTPARTS CORP.
By: /s/ William D. Larsson
-------------------------------
Name: William D. Larsson
Title: Chief Financial Officer
WGC ACQUISITION CORP.
By: /s/ William C. McCormick
-------------------------------
Name: William C. McCormick
Title: President
By: /s/ William D. Larsson
-------------------------------
Name: William D. Larsson
Title: Treasurer
WYMAN-GORDON COMPANY
By: /s/ J. Douglas Whelan
-------------------------------
Name: J. Douglas Whelan
Title: President and Treasurer
46
ANNEX A
OFFER CONDITIONS
The capitalized terms used in this ANNEX A have the meanings set forth
in the attached Agreement, except that the term "Agreement" shall be deemed to
refer to the attached Agreement together with this ANNEX A.
Notwithstanding any other provision of the Offer or the Agreement and
subject to Rule 14e-1(c) under the Exchange Act, Acquisition Sub shall not be
required to accept for payment or pay for any Shares and may delay the
acceptance for payment of and payment for any Shares, (A) until any applicable
waiting period (and any extension thereof) under the HSR Act in respect of the
Offer shall have expired or been terminated, (B) if there shall not have been
validly tendered to Acquisition Sub pursuant to the Offer and not withdrawn
immediately prior to the Expiration Date, at least that number of Shares that,
when taken as a whole with all other Shares owned or acquired by Acquisition Sub
(whether pursuant to the Offer or otherwise), constitutes at least the Minimum
Condition, or (C) at any time on or after the date of the Agreement, and prior
to the Expiration Date, any of the following conditions exist or shall occur or
remain in effect:
(a) Any Governmental Entity shall have issued an order, decree
or ruling or taken any other action, including instituting any legal proceeding,
(which, order, decree, ruling or other action the parties hereto shall use their
commercially reasonable best efforts to lift), which seeks to restrain, enjoin
or otherwise prohibit or significantly delay any of the Transactions;
(b) (i) Any of the representations and warranties of the
Company set forth in the Agreement which are qualified by materiality or a
Company Material Adverse Effect or words of similar effect shall not have been,
or cease to be, true and correct (except to the extent such representations and
warranties expressly relate to a specific date, in which case such
representations and warranties shall not have been true and correct as of such
date) or (ii) any of the representations and warranties of the Company set forth
in the Agreement which are not so qualified shall not have been, or cease to be,
true and correct in all material respects (except to the extent such
representations and warranties expressly relate to a specific date, in which
case such representations and warranties shall not have been true and correct in
all material respects as of such date);
(c) The Company shall not have performed all obligations
required to be performed by it under the Agreement, including, without
limitation, the covenants contained in Article VI or VII thereof, except where
any failure to perform would, individually or in the aggregate, not reasonably
be expected to have a Company Material Adverse Effect or materially impair or
significantly delay the ability of Acquisition Sub to consummate the Offer;
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(d) There shall have occurred after the date of this Agreement
any change or effect concerning the Company or the Company Subsidiaries which
has had or would reasonably be expected to have a material adverse effect on the
business, operations or condition (financial or otherwise) of the Company and
the Company Subsidiaries taken as a whole (other than any changes that are
related to or result from the announcement or pendency of the Offer and/or the
Merger, including disruptions to the Company's business or the Company
Subsidiaries' businesses, and their respective employees, customers and
suppliers);
(e) The Agreement shall have been terminated in accordance
with its terms;
(f) Any consent, authorization, order or approval of (or
filing or registration with) any Governmental Entity or other third party
required to be made or obtained by the Company or any of the Company
Subsidiaries or affiliates in connection with the execution, delivery and
performance of the Agreement and the consummation of the Transactions shall not
have been obtained or made, except where the failure to have obtained or made
any such consent, authorization, order, approval, filing or registration, would
not have a Company Material Adverse Effect or would not reasonably be expected
to materially impair or significantly delay the ability of Acquisition Sub to
consummate the Offer; or
(g) There shall have occurred (i) any general suspension of
trading in, or limitation on prices for securities on the New York Stock
Exchange, the American Stock Exchange or the Nasdaq Stock Market for a period in
excess of 24 hours (excluding suspension or limitations resulting solely from
physical damage or interference with such exchanges not related to market
conditions), (ii) a declaration of a general banking moratorium or any general
suspension of payments in respect of banks in the United States (whether or not
mandatory), or (iii) in the case of any of the foregoing existing at the time of
the commencement of the Offer, a material acceleration or worsening thereof;
The foregoing conditions (i) may be asserted by Parent or Acquisition
Sub regardless of the circumstances (including any action or inaction by Parent
or Acquisition Sub or any of their affiliates other than a material breach of
the Agreement), and (ii) are for the sole benefit of Parent, Acquisition Sub and
their respective affiliates. The foregoing conditions may be waived by Parent,
in whole or in part, at any time and from time to time, in the sole discretion
of Parent. The foregoing conditions are material to the Offer. The failure by
Parent or Acquisition Sub at any time to exercise any of the foregoing rights
will not be deemed a waiver of any right and each right will be deemed an
ongoing right which may be asserted at any time and from time to time.
Should the Offer be terminated due to the foregoing provisions, all
tendered Shares not theretofore accepted for payment shall promptly be returned
to the tendering stockholders.
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