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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------------------
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) October 20, 1998
--------------------
NEWELL CO.
----------------------------------------------------------------------
(Exact Name of Registrant as Specified in Charter)
Delaware 1-9608 36-3514169
----------------------------------------------------------------------
(State or Other (Commission (IRS Employer
Jurisdiction of File Number) Identification No.)
Incorporation)
29 East Stephenson Street, Freeport, Illinois 61032
----------------------------------------------------------------------
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code (815) 235-4171
-------------------
Item 5. Other Events.
On October 20, 1998, Newell Co., a Delaware corporation
("Newell"), agreed to merge (the "Merger") Rooster Company, a Delaware
corporation and a wholly owned subsidiary of Newell ("Merger
Subsidiary"), with and into Rubbermaid Incorporated, an Ohio
corporation ("Rubbermaid"). The combined company will be called
Newell Rubbermaid Inc. The terms of the Merger are set forth in an
Agreement and Plan of Merger (the "Merger Agreement") dated as of
October 20, 1998 among Newell, Merger Subsidiary and Rubbermaid. In
the Merger, each share of Rubbermaid s common stock, par value $1.00
per share, will be converted into 0.7883 of a share of Newell's common
stock, par value $1.00 per share (the "Newell Common Stock"). Newell
and Rubbermaid issued a joint press release announcing the execution
of the Merger Agreement on October 21, 1998, a copy of which is filed
as Exhibit 99.1 hereto.
The Merger is intended to constitute a tax-free
reorganization under the Internal Revenue Code of 1986, as amended,
and is intended to be accounted for as a pooling of interests.
Consummation of the Merger is subject to various conditions,
including: (i) receipt of necessary approvals by the stockholders of
each of Newell and Rubbermaid; (ii) the expiration or termination of
applicable waiting periods under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended, and the receipt of requisite
regulatory approvals from other foreign regulatory authorities; (iii)
registration of the shares of Newell Common Stock to be issued in the
Merger under the Securities Act of 1933, as amended (the "Securities
Act"); and (iv) satisfaction of certain other conditions.
The foregoing summary of the Merger Agreement is qualified
in its entirety by reference to the text of the Merger Agreement, a
copy of which is filed as Exhibit 2.1 hereto.
Item 7. Financial Statements, Pro Forma Financial Information and
Exhibits.
(a)--(b) Not applicable.
(c) Exhibits.
2.1 Agreement and Plan of Merger dated as of October
20, 1998 among Newell Co., Rooster Company and
Rubbermaid Incorporated.
99.1 Text of joint press release dated October 21,
1998, issued by Newell Co. and Rubbermaid
Incorporated.
-2-
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act
of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned hereunto duly authorized.
NEWELL CO.
(Registrant)
Date: October 21, 1998 By: /s/ Dale L. Matschullat
---------------------------------
Dale L. Matschullat
Vice President -- General Counsel
-3-
EXHIBIT INDEX
Exhibit
No. Description
------- -----------
2.1 Agreement and Plan of Merger dated as of October
20, 1998 among Newell Co., Rooster Company and
Rubbermaid Incorporated.
99.1 Text of joint press release dated October 21,
1998, issued by Newell Co. and Rubbermaid
Incorporated.
-4-
EXHIBIT 2.1
-----------
AGREEMENT AND PLAN OF MERGER
by and between
NEWELL CO.,
ROOSTER COMPANY
and
RUBBERMAID INCORPORATED
Dated as of October 20, 1998
TABLE OF CONTENTS
PAGE
ARTICLE 1
THE MERGER
Section 1.1 The Merger . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.2 Closing . . . . . . . . . . . . . . . . . . . . . . . 2
Section 1.3 Effective Time . . . . . . . . . . . . . . . . . . . . 2
Section 1.4 Effects of the Merger . . . . . . . . . . . . . . . . 2
Section 1.5 Articles of Incorporation and Code of Regulations . . 2
Section 1.6 Directors and Officers of the Surviving Corporation . 2
ARTICLE 2
EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE CONSTITUENT
CORPORATIONS; EXCHANGE OF CERTIFICATES
Section 2.1 Effect on Capital Stock . . . . . . . . . . . . . . . 3
(a) Cancellation of Treasury Stock and Company-Owned
Stock. . . . . . . . . . . . . . . . . . . . . . . . 3
(b) Conversion of Company Common Stock . . . . . . . . . 3
(c) Capital Stock of Merger Sub . . . . . . . . . . . . 3
Section 2.2 Exchange of Certificates . . . . . . . . . . . . . . . 3
(a) Exchange Agent . . . . . . . . . . . . . . . . . . . 3
(b) Exchange Procedures . . . . . . . . . . . . . . . . 4
(c) Distributions with Respect to Unexchanged Shares . . 4
(d) No Further Ownership Rights in Company Common Stock 5
(e) No Fractional Shares . . . . . . . . . . . . . . . . 5
(f) Termination of Exchange Fund . . . . . . . . . . . . 6
(g) No Liability . . . . . . . . . . . . . . . . . . . . 6
(h) Investment of Exchange Fund . . . . . . . . . . . . 6
(i) Lost Certificates . . . . . . . . . . . . . . . . . 6
Section 2.3 Certain Adjustments . . . . . . . . . . . . . . . . . 6
Section 2.4 Dissenters' Rights . . . . . . . . . . . . . . . . . . 7
Section 2.5 Further Assurances . . . . . . . . . . . . . . . . . . 7
ARTICLE 3
REPRESENTATIONS AND WARRANTIES
Section 3.1 Representations and Warranties of the Company . . 7
(a) Organization, Standing and Corporate Power . . . . . 8
(b) Subsidiaries . . . . . . . . . . . . . . . . . . . . 8
(c) Capital Structure . . . . . . . . . . . . . . . . . 8
(d) Authority; Noncontravention . . . . . . . . . . . . 9
(e) Reports; Undisclosed Liabilities . . . . . . . . . . 10
ii
(f) Information Supplied . . . . . . . . . . . . . . . . 11
(g) Absence of Certain Changes or Events . . . . . . . . 11
(h) Compliance with Applicable Laws; Litigation . . . . 12
(i) Absence of Changes in Benefit Plans . . . . . . . . 12
(j) ERISA Compliance . . . . . . . . . . . . . . . . . . 13
(k) Taxes . . . . . . . . . . . . . . . . . . . . . . . 15
(l) Voting Requirements . . . . . . . . . . . . . . . . 16
(m) State Takeover Statutes . . . . . . . . . . . . . . 16
(n) Accounting Matters . . . . . . . . . . . . . . . . . 17
(o) Brokers . . . . . . . . . . . . . . . . . . . . . . 17
(p) Ownership of Acquiror Capital Stock . . . . . . . . 17
(q) Certain Contracts . . . . . . . . . . . . . . . . . 17
(r) The Company Rights Agreement . . . . . . . . . . . . 17
(s) Opinion of Financial Advisor . . . . . . . . . . . . 17
(t) Environmental Matters . . . . . . . . . . . . . . . 18
(u) Intellectual Property. . . . . . . . . . . . . . . . 19
Section 3.2 Representations and Warranties of Acquiror and
Merger Sub . . . . . . . . . . . . . . . . . . . . . 20
(a) Capitalization of Merger Sub . . . . . . . . . . . . 20
(b) Organization, Standing and Corporate Power . . . . . 21
(c) Subsidiaries . . . . . . . . . . . . . . . . . . . . 21
(d) Capital Structure . . . . . . . . . . . . . . . . . 21
(e) Authority; Noncontravention . . . . . . . . . . . . 22
(f) Reports; Undisclosed Liabilities . . . . . . . . . . 23
(g) Information Supplied . . . . . . . . . . . . . . . . 24
(h) Absence of Certain Changes or Events . . . . . . . . 24
(i) Compliance with Applicable Laws; Litigation . . . . 25
(j) Absence of Changes in Benefit Plans . . . . . . . . 26
(k) ERISA Compliance . . . . . . . . . . . . . . . . . . 26
(l) Taxes . . . . . . . . . . . . . . . . . . . . . . . 28
(m) Voting Requirements . . . . . . . . . . . . . . . . 29
(n) State Takeover Statutes . . . . . . . . . . . . . . 29
(o) Accounting Matters . . . . . . . . . . . . . . . . . 29
(p) Brokers . . . . . . . . . . . . . . . . . . . . . . 29
(q) Ownership of the Company Capital Stock . . . . . . . 29
(r) Certain Contracts . . . . . . . . . . . . . . . . . 30
(s) Opinion of Financial Advisor . . . . . . . . . . . . 30
(t) Environmental Matters . . . . . . . . . . . . . . . 30
(u) Intellectual Property. . . . . . . . . . . . . . . . 31
ARTICLE 4
COVENANTS RELATING TO CONDUCT OF BUSINESS
Section 4.1 Conduct of Business . . . . . . . . . . . . . . . . . 32
(a) Conduct of Business by the Company . . . . . . . . . 32
(b) Conduct of Business by Acquiror . . . . . . . . . . 34
(c) Coordination of Dividends . . . . . . . . . . . . . 36
(d) Other Actions . . . . . . . . . . . . . . . . . . . 36
(e) Advice of Changes . . . . . . . . . . . . . . . . . 36
(f) Control of Other Party's Business . . . . . . . . . 36
iii
Section 4.2 No Solicitation by the Company . . . . . . . . . . . 37
Section 4.3 No Solicitation by Acquiror . . . . . . . . . . . . 39
ARTICLE 5
ADDITIONAL AGREEMENTS
Section 5.1 Preparation of the Form S-4 and the Joint Proxy
Statement; Stockholders Meetings . . . . . . . . . . 41
Section 5.2 Letters of the Company's Accountants . . . . . . . . 42
Section 5.3 Letters of Acquiror's Accountants . . . . . . . . . 43
Section 5.4 Access to Information; Confidentiality . . . . . . . 43
Section 5.5 Reasonable Best Efforts; Cooperation . . . . . . . . 44
Section 5.6 Stock Options, Restricted Stock and Employment
Agreements . . . . . . . . . . . . . . . . . . . . . 45
Section 5.7 Indemnification . . . . . . . . . . . . . . . . . . 46
Section 5.8 Fees and Expenses . . . . . . . . . . . . . . . . . 48
Section 5.9 Public Announcements . . . . . . . . . . . . . . . . 49
Section 5.10 Affiliates . . . . . . . . . . . . . . . . . . . . . 49
Section 5.11 NYSE Listing . . . . . . . . . . . . . . . . . . . . 50
Section 5.12 Stockholder Litigation . . . . . . . . . . . . . . . 50
Section 5.13 Tax Treatment . . . . . . . . . . . . . . . . . . . 50
Section 5.14 Pooling of Interests . . . . . . . . . . . . . . . . 50
Section 5.15 Standstill Agreements; Confidentiality Agreements . 50
Section 5.16 Employee Benefit Plans . . . . . . . . . . . . . . . 51
Section 5.17 Post-Merger Operations . . . . . . . . . . . . . . . 52
Section 5.18 Acquiror Corporate Office. . . . . . . . . . . . . . 52
Section 5.19 Acquiror Board of Directors; Acquiror Officers . . . 52
ARTICLE 6
CONDITIONS PRECEDENT
Section 6.1 Conditions to Each Party's Obligation to Effect the
Merger . . . . . . . . . . . . . . . . . . . . . . . 53
(a) Stockholder Approvals . . . . . . . . . . . . . . . 53
(b) Governmental and Regulatory Approvals . . . . . . . 53
(c) No Injunctions or Restraints . . . . . . . . . . . . 53
(d) Form S-4 . . . . . . . . . . . . . . . . . . . . . . 53
(e) NYSE Listing . . . . . . . . . . . . . . . . . . . . 53
(f) Pooling . . . . . . . . . . . . . . . . . . . . . . 54
(g) Dissenting Shares. . . . . . . . . . . . . . . . . . 54
(h) HSR Act. . . . . . . . . . . . . . . . . . . . . . . 54
Section 6.2 Conditions to Obligations of Acquiror . . . . . . . 54
(a) Representations and Warranties . . . . . . . . . . . 54
(b) Performance of Obligations of the Company . . . . . 54
(c) Tax Opinion . . . . . . . . . . . . . . . . . . . . 54
(d) No Material Adverse Change . . . . . . . . . . . . . 54
Section 6.3 Conditions to Obligations of the Company . . . . . . 54
(a) Representations and Warranties . . . . . . . . . . . 55
(b) Performance of Obligations of Acquiror . . . . . . . 55
(c) Tax Opinion . . . . . . . . . . . . . . . . . . . . 55
iv
(d) No Material Adverse Change . . . . . . . . . . . . . 55
Section 6.4 Frustration of Closing Conditions . . . . . . . . . 55
ARTICLE 7
TERMINATION, AMENDMENT AND WAIVER
Section 7.1 Termination . . . . . . . . . . . . . . . . . . . . 55
Section 7.2 Effect of Termination . . . . . . . . . . . . . . . 56
Section 7.3 Amendment . . . . . . . . . . . . . . . . . . . . . 57
Section 7.4 Extension; Waiver . . . . . . . . . . . . . . . . . 57
Section 7.5 Procedure for Termination, Amendment, Extension or
Waiver . . . . . . . . . . . . . . . . . . . . . . . 57
ARTICLE 8
GENERAL PROVISIONS
Section 8.1 Nonsurvival of Representations and Warranties . . . 57
Section 8.2 Notices . . . . . . . . . . . . . . . . . . . . . . 57
Section 8.3 Definitions . . . . . . . . . . . . . . . . . . . . 58
Section 8.4 Interpretation . . . . . . . . . . . . . . . . . . . 59
Section 8.5 Counterparts . . . . . . . . . . . . . . . . . . . . 59
Section 8.6 Entire Agreement; No Third-Party Beneficiaries . . . 59
Section 8.7 Governing Law . . . . . . . . . . . . . . . . . . . 60
Section 8.8 Assignment . . . . . . . . . . . . . . . . . . . . . 60
Section 8.9 Consent to Jurisdiction . . . . . . . . . . . . . . 60
Section 8.10 Headings . . . . . . . . . . . . . . . . . . . . . . 60
Section 8.11 Severability . . . . . . . . . . . . . . . . . . . . 60
v
TABLE OF DEFINED TERMS
TERM SECTION
Acquiror . . . . . . . . . . . . . . . . . . . . . . . . . . Recitals
Acquiror Acquisition Agreement . . . . . . . . . . . . . . . . 4.3(b)
Acquiror Authorized Preferred Stock . . . . . . . . . . . . . . 3.2(d)
Acquiror Benefit Plans . . . . . . . . . . . . . . . . . . . . 3.2(j)
Acquiror Board . . . . . . . . . . . . . . . . . . . . . . . 5.19(a)
Acquiror Common Stock . . . . . . . . . . . . . . . . . . . . . 2.1(b)
Acquiror Disclosure Schedule . . . . . . . . . . . . . . . . . . 3.2
Acquiror Employee Stock Options . . . . . . . . . . . . . . . . 3.2(d)
Acquiror Filed SEC Documents . . . . . . . . . . . . . . . . . 3.2(h)
Acquiror Intellectual Property . . . . . . . . . . . . . . 3.2(u)(i)
Acquiror Notice . . . . . . . . . . . . . . . . . . . . . . . . 4.3(a)
Acquiror Permits . . . . . . . . . . . . . . . . . . . . . . . 3.2(i)
Acquiror Rights Agreement . . . . . . . . . . . . . . . . . . . 3.2(d)
Acquiror SEC Documents . . . . . . . . . . . . . . . . . . . . 3.2(f)
Acquiror Stock Plans . . . . . . . . . . . . . . . . . . . . . 3.2(d)
Acquiror Stockholder Approval . . . . . . . . . . . . . . . . . 3.2(m)
Acquiror Stockholder Meeting . . . . . . . . . . . . . . . . . 5.1(c)
Acquiror Superior Proposal . . . . . . . . . . . . . . . . . . 4.3(b)
Acquiror Takeover Proposal . . . . . . . . . . . . . . . . . . 4.3(a)
Acquiror Termination Fee . . . . . . . . . . . . . . . . . . . 5.8(c)
Adjusted Option . . . . . . . . . . . . . . . . . . . . . . . . 5.6(a)
Adjustment Event . . . . . . . . . . . . . . . . . . . . . . . . 2.3
Affiliate . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.3(a)
Agreement . . . . . . . . . . . . . . . . . . . . . . . . . Recitals
Certificates . . . . . . . . . . . . . . . . . . . . . . . . . 2.2(b)
Certificate of Merger . . . . . . . . . . . . . . . . . . . . . . 1.3
Cleanup . . . . . . . . . . . . . . . . . . . . . . . . . . 3.1(t)(iv)
Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.2
Closing Date . . . . . . . . . . . . . . . . . . . . . . . . . . 1.2
Code . . . . . . . . . . . . . . . . . . . . . . . . . . . . Recitals
Company . . . . . . . . . . . . . . . . . . . . . . . . . . . Recitals
Company Acquisition Agreement . . . . . . . . . . . . . . . . . 4.2(b)
Company Authorized Preferred Stock . . . . . . . . . . . . . . 3.1(c)
Company Award . . . . . . . . . . . . . . . . . . . . . . . . . 5.6(b)
Company Benefit Plans . . . . . . . . . . . . . . . . . . . . . 3.1(i)
Company Board . . . . . . . . . . . . . . . . . . . . . . . . 5.19(a)
Company Common Stock . . . . . . . . . . . . . . . . . . . . Recitals
Company Disclosure Schedule . . . . . . . . . . . . . . . . . . . 3.1
Company Employee Stock Options . . . . . . . . . . . . . . . . 3.1(c)
Company Filed SEC Documents . . . . . . . . . . . . . . . . . . 3.1(g)
Company Intellectual Property . . . . . . . . . . . . . . . 3.1(u)(i)
Company Notice . . . . . . . . . . . . . . . . . . . . . . . . 4.2(a)
Company Permits . . . . . . . . . . . . . . . . . . . . . . . . 3.1(h)
Company Rights Agreement . . . . . . . . . . . . . . . . . . . 3.1(r)
Company SEC Documents . . . . . . . . . . . . . . . . . . . . . 3.1(e)
Company Stock Plan . . . . . . . . . . . . . . . . . . . . . . 3.1(c)
Company Stockholder Approval . . . . . . . . . . . . . . . . 3.1(l)
Company Stockholders Meeting . . . . . . . . . . . . . . . . . 5.1(b)
vi
Company Superior Proposal . . . . . . . . . . . . . . . . . . . 4.2(b)
Company Takeover Proposal . . . . . . . . . . . . . . . . . . . 4.2(a)
Company Termination Fee . . . . . . . . . . . . . . . . . . . . 5.8(b)
Confidentiality Agreement . . . . . . . . . . . . . . . . . . . . 5.4
Control . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.3(a)
Dissenting Shares . . . . . . . . . . . . . . . . . . . . . . . 2.1(b)
Dissenting Stockholders . . . . . . . . . . . . . . . . . . . . 2.1(b)
Effective Time . . . . . . . . . . . . . . . . . . . . . . . . . 1.3
Environmental Claim . . . . . . . . . . . . . . . . . . . . 3.1(t)(v)
Environmental Laws . . . . . . . . . . . . . . . . . . . . 3.1(t)(vi)
ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.1(j)(i)
ERISA Affiliate . . . . . . . . . . . . . . . . . . . . . 3.1(j)(iii)
Exchange Act . . . . . . . . . . . . . . . . . . . . . . . . . 3.1(d)
Exchange Agent . . . . . . . . . . . . . . . . . . . . . . . . 2.2(a)
Exchange Fund . . . . . . . . . . . . . . . . . . . . . . . . . 2.2(a)
Exchange Ratio . . . . . . . . . . . . . . . . . . . . . . . . 2.1(b)
Foreign Antitrust Laws . . . . . . . . . . . . . . . . . . . . 3.1(d)
Form S-4 . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.1(f)
Governmental Entity . . . . . . . . . . . . . . . . . . . . . . 3.1(d)
Hazardous Materials . . . . . . . . . . . . . . . . . . . 3.1(t)(vii)
HSR Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.1(d)
Incentive Compensation . . . . . . . . . . . . . . . . . . . 5.16(a)
Indemnified Liabilities . . . . . . . . . . . . . . . . . . . . 5.7(a)
Indemnified Party(ies) . . . . . . . . . . . . . . . . . . . . 5.7(a)
Joint Proxy Statement . . . . . . . . . . . . . . . . . . . . . 3.1(d)
Knowledge . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.3(b)
Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.1(b)
Material(ly) . . . . . . . . . . . . . . . . . . . . . . . . . 8.3(c)
Material Adverse Change . . . . . . . . . . . . . . . . . . . . 8.3(c)
Material Adverse Effect . . . . . . . . . . . . . . . . . . . . 8.3(c)
Material Company Trademarks . . . . . . . . . . . . . . . . 3.1(u)(i)
Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . Recitals
Merger Consideration . . . . . . . . . . . . . . . . . . . . . 2.1(b)
Merger Sub . . . . . . . . . . . . . . . . . . . . . . . . . Recitals
Newell Rubbermaid Inc. . . . . . . . . . . . . . . . . . . . . 5.1(c)
NYSE . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.2(e)(ii)
OGCL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.1
Person . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.3(d)
Pooling Affiliate . . . . . . . . . . . . . . . . . . . . . . 5.10(a)
Release . . . . . . . . . . . . . . . . . . . . . . . . . 3.1(t)(viii)
Restraints . . . . . . . . . . . . . . . . . . . . . . . . . . 6.1(c)
SEC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.1(b)
Securities Act . . . . . . . . . . . . . . . . . . . . . . . . 3.1(e)
Subsidiary . . . . . . . . . . . . . . . . . . . . . . . . . . 8.3(e)
Surviving Corporation . . . . . . . . . . . . . . . . . . . . . . 1.1
Takeover Statute . . . . . . . . . . . . . . . . . . . . . . . 3.1(m)
Tax Certificates . . . . . . . . . . . . . . . . . . . . . . . 5.5(c)
Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.1(k)(iv)
Trust Documents . . . . . . . . . . . . . . . . . . . . . . . . 3.2(d)
vii
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER (this "Agreement"), dated as of
October 20, 1998, among Rubbermaid Incorporated, an Ohio corporation
(the "Company"), Newell Co., a Delaware corporation ("Acquiror"), and
Rooster Company, an Ohio corporation and a wholly owned subsidiary of
Acquiror ("Merger Sub").
W I T N E S S E T H:
WHEREAS, the respective Boards of Directors of the Company,
Acquiror and Merger Sub have approved the merger of Merger Sub with and
into the Company (the "Merger"), upon the terms and subject to the
conditions set forth in this Agreement, whereby each issued and
outstanding common share, par value $1.00 per share, of the Company
("Company Common Stock"), other than Dissenting Shares (as defined in
Section 2.1(b)) and any shares owned by Acquiror, Merger Sub or any
direct or indirect subsidiary of the Company, Acquiror or Merger Sub or
any Company Common Stock held in the treasury of the Company, will be
converted into the right to receive the Merger Consideration (as defined
in Section 2.1(b));
WHEREAS, the respective Boards of Directors of the Company,
Acquiror and Merger Sub have each determined that the Merger and the
other transactions contemplated hereby are consistent with, and in
furtherance of, their respective business strategies and goals;
WHEREAS, the Company, Acquiror and Merger Sub desire to make
certain representations, warranties, covenants and agreements in
connection with the Merger and also to prescribe various conditions to
the Merger;
WHEREAS, for federal income tax purposes, it is intended that
the Merger will qualify as a reorganization under the provisions of
Section 368(a) of the Internal Revenue Code of 1986, as amended (the
"Code"); and
WHEREAS, for financial accounting purposes, it is intended
that the Merger will be accounted for as a pooling-of-interests
transaction.
NOW, THEREFORE, in consideration of the representations,
warranties, covenants and agreements contained in this Agreement, the
parties agree as follows:
ARTICLE 1
THE MERGER
Section 1.1 THE MERGER. Upon the terms and subject to the
conditions set forth in this Agreement, and in accordance with the Ohio
General Corporation Law (the "OGCL"), Merger Sub shall be merged with
and into the Company at the Effective Time (as defined in Section 1.3)
and the separate corporate existence of Merger Sub shall thereupon
cease. Following the Effective Time, the Company shall be the surviving
corporation (the "Surviving Corporation"), and shall be a wholly owned
subsidiary of Acquiror.
Section 1.2 CLOSING. The closing of the Merger (the
"Closing") will take place at 10:00 a.m. on a date to be specified by
the parties, which shall be no later than the second business day after
satisfaction or waiver (subject to applicable law) of the conditions
(excluding conditions that, by their terms, cannot be satisfied until
the Closing Date) set forth in Article 6, unless another time or date is
agreed to by the parties hereto. The Closing will be held at the
offices of Jones, Day, Reavis & Pogue, North Point, 901 Lakeside Avenue,
Cleveland, Ohio 44114 or such other location as the parties hereto shall
agree to in writing. The date on which the Closing occurs is
hereinafter referred to as the "Closing Date."
Section 1.3 EFFECTIVE TIME. Subject to the provisions of
this Agreement, as soon as practicable on or after the Closing Date, the
parties shall (i) file a Certificate of Merger (the "Certificate of
Merger") in such form as is required by and executed in accordance with
the relevant provisions of the OGCL and (ii) make all other filings or
recordings required under the OGCL. The Merger shall become effective
at such time as the Certificate of Merger is duly filed with the
Secretary of State of the State of Ohio, or at such subsequent date or
time as the Company and Acquiror shall agree and specify in the
Certificate of Merger (the date and time the Merger becomes effective
being the "Effective Time").
Section 1.4 EFFECTS OF THE MERGER. The Merger shall have the
effects set forth in the OGCL. Without limiting the generality of the
foregoing, and subject thereto, at the Effective Time all the property,
rights, privileges, powers and franchises of the Company and Merger Sub
shall be vested in the Surviving Corporation, and all debts, liabilities
and duties of the Company and Merger Sub shall become the debts,
liabilities and duties of the Surviving Corporation.
Section 1.5 ARTICLES OF INCORPORATION AND CODE OF
REGULATIONS. The articles of incorporation and code of regulations of
Merger Sub shall be the articles of incorporation and code of
regulations, respectively, of the Surviving Corporation until thereafter
changed or amended as provided therein or by applicable law.
2
Section 1.6 DIRECTORS AND OFFICERS OF THE SURVIVING
CORPORATION. The directors of Merger Sub immediately prior to the
Effective Time shall be the directors of the Surviving Corporation and
the officers of the Company immediately prior to the Effective Time
shall be the officers of the Surviving Corporation, in each case, until
the earlier of their death, resignation or removal or until their
respective successors are duly elected and qualified, as the case may
be.
ARTICLE 2
EFFECT OF THE MERGER ON THE CAPITAL STOCK
OF THE CONSTITUENT CORPORATIONS;
EXCHANGE OF CERTIFICATES
Section 2.1 EFFECT ON CAPITAL STOCK. As of the Effective
Time, by virtue of the Merger and without any action on the part of the
holder of any shares of capital stock of the Company or Merger Sub:
(a) CANCELLATION OF TREASURY STOCK AND COMPANY-OWNED STOCK.
Each share of Company Common Stock that is owned by Acquiror, Merger Sub
and any direct or indirect subsidiary of the Company, Acquiror or Merger
Sub and any Company Common Stock held in the treasury of the Company
shall automatically be canceled and retired and shall cease to exist,
and no consideration shall be delivered in exchange therefor.
(b) CONVERSION OF COMPANY COMMON STOCK. Subject to Section
2.2(e), each issued and outstanding share of Company Common Stock (other
than shares to be canceled in accordance with Section 2.1(a) and shares
("Dissenting Shares") that are owned by stockholders ("Dissenting
Stockholders") that have properly exercised appraisal rights pursuant to
Section 1701.85 of the OGCL) shall be converted into the right to
receive 0.7883 (the "Exchange Ratio") fully paid and nonassessable
shares of common stock, par value $1.00 per share (the "Acquiror Common
Stock"), of Acquiror (the "Merger Consideration"). As of the Effective
Time, all such shares of Company Common Stock shall no longer be
outstanding and shall automatically be canceled and retired and shall
cease to exist, and each holder of a certificate representing any such
shares of Company Common Stock shall cease to have any rights with
respect thereto, except the right to receive the Merger Consideration
and any cash in lieu of fractional shares of Acquiror Common Stock to be
issued or paid in consideration therefor upon surrender of such
certificate in accordance with Section 2.2, without interest.
(c) CAPITAL STOCK OF MERGER SUB. At the Effective Time, each
share of common stock, no par value, of Merger Sub issued and
outstanding immediately prior to the Effective Time shall be converted
into one share of common stock of the Surviving Corporation.
3
Section 2.2 EXCHANGE OF CERTIFICATES.
(a) EXCHANGE AGENT. First Chicago Trust Company of New York,
or such other national bank or trust company as shall be designated by
Acquiror and the Company prior to the Effective Time, shall act as agent
of Acquiror for purposes of, among other things, mailing and receiving
transmittal letters and distributing certificates for Acquiror Common
Stock, and cash in lieu of fractional shares of Acquiror Common Stock,
to the Company stockholders (the "Exchange Agent"). As of the Effective
Time, Acquiror and the Exchange Agent shall enter into an agreement
which shall provide that Acquiror shall deposit with the Exchange Agent
as of the Effective Time, for the benefit of the holders of shares of
Company Common Stock, for exchange in accordance with this Article 2,
through the Exchange Agent, certificates representing the shares of
Acquiror Common Stock (such shares of Acquiror Common Stock, together
with any dividends or distributions with respect thereto with a record
date after the Effective Time, and any cash payable in lieu of any
fractional shares of Acquiror Common Stock being hereinafter referred to
as the "Exchange Fund") issuable pursuant to Section 2.1 in exchange for
outstanding shares of Company Common Stock.
(b) EXCHANGE PROCEDURES. As soon as reasonably practicable
after the Effective Time, the Exchange Agent shall mail to each holder
of record of a certificate or certificates which immediately prior to
the Effective Time represented outstanding shares of Company Common
Stock (the "Certificates") whose shares were converted into the right to
receive the Merger Consideration pursuant to Section 2.1(b), (i) a
letter of transmittal (which shall specify that delivery shall be
effected, and risk of loss and title to the Certificates shall pass,
only upon delivery of the Certificates to the Exchange Agent and shall
be in such form and have such other provisions as the Company and
Acquiror may reasonably specify) and (ii) instructions for use in
surrendering the Certificates in exchange for the Merger Consideration.
Upon surrender of a Certificate for cancellation to the Exchange Agent,
together with such letter of transmittal, duly executed, and such other
documents as may reasonably be required by the Exchange Agent, the
holder of such Certificate shall be entitled to receive in exchange
therefor a certificate representing that number of whole shares of
Acquiror Common Stock which such holder has the right to receive
pursuant to the provisions of this Article 2, certain dividends or other
distributions, if any, in accordance with Section 2.2(c) and cash in
lieu of any fractional share of Acquiror Common Stock in accordance with
Section 2.2(e), and the Certificate so surrendered shall forthwith be
canceled. In the event of a transfer of ownership of Company Common
Stock which is not registered in the transfer records of the Company, a
certificate representing the proper number of shares of Company Common
Stock may be issued to a person other than the person in whose name the
Certificate so surrendered is registered if such Certificate is properly
endorsed or otherwise in proper form for transfer and the person
requesting such issuance pays any transfer or other taxes required by
reason of the issuance of shares of Acquiror Common Stock to a person
other than the registered holder of such Certificate or establishes to
4
the satisfaction of Acquiror that such tax has been paid or is not
applicable. Until surrendered as contemplated by this Section 2.2, each
Certificate shall be deemed at any time after the Effective Time to
represent only the right to receive upon such surrender the Merger
Consideration that the holder thereof has the right to receive in
respect of such Certificate pursuant to the provisions of this Article
2, certain dividends or other distributions, if any, in accordance with
Section 2.2(c) and cash in lieu of any fractional share of Acquiror
Common Stock in accordance with Section 2.2(e). No interest shall be
paid or will accrue on any cash payable to holders of Certificates
pursuant to the provisions of this Article 2.
(c) DISTRIBUTIONS WITH RESPECT TO UNEXCHANGED SHARES. No
dividends or other distributions with respect to Acquiror Common Stock
with a record date after the Effective Time shall be paid to the holder
of any unsurrendered Certificate with respect to the shares of Acquiror
Common Stock represented thereby, and, in the case of Certificates
representing Company Common Stock, no cash payment in lieu of fractional
shares shall be paid to any such holder pursuant to Section 2.2(e), and
all such dividends, other distributions and cash in lieu of fractional
shares of Acquiror Common Stock shall be paid by Acquiror to the
Exchange Agent and shall be included in the Exchange Fund, in each case
until the surrender of such Certificate in accordance with this Article
2. Subject to the effect of applicable escheat or similar laws,
following surrender of any such Certificate there shall be paid to the
holder of the certificate representing whole shares of Acquiror Common
Stock issued in exchange therefor, without interest, (i) at the time of
such surrender, the amount of dividends or other distributions with a
record date after the Effective Time theretofore paid with respect to
such whole shares of Acquiror Common Stock and, in the case of
Certificates representing Company Common Stock, the amount of any cash
payable in lieu of a fractional share of Acquiror Common Stock to which
such holder is entitled pursuant to Section 2.2(e) and (ii) at the
appropriate payment date, the amount of dividends or other distributions
with a record date after the Effective Time but prior to such surrender
and with a payment date subsequent to such surrender payable with
respect to such whole shares of Acquiror Common Stock.
(d) NO FURTHER OWNERSHIP RIGHTS IN COMPANY COMMON STOCK. All
shares of Acquiror Common Stock issued upon the surrender for exchange
of Certificates in accordance with the terms of this Article 2
(including any cash paid pursuant to this Article 2) shall be deemed to
have been issued (and paid) in full satisfaction of all rights
pertaining to the shares of Company Common Stock, theretofore
represented by such Certificates, subject, however, to Acquiror's
obligation to pay any dividends or make any other distributions with a
record date prior to the Effective Time which may have been declared or
made by the Company on such shares of Company Common Stock which remain
unpaid at the Effective Time, and there shall be no further registration
of transfers on the stock transfer books of the Surviving Corporation of
the shares of Company Common Stock which were outstanding immediately
prior to the Effective Time. If, after the Effective Time, Certificates
5
are presented to the Surviving Corporation or the Exchange Agent for any
reason, they shall be canceled and exchanged as provided in this Article
2, except as otherwise provided by law.
(e) NO FRACTIONAL SHARES.
(i) No certificates or scrip representing fractional shares
of Acquiror Common Stock shall be issued upon the surrender for
exchange of Certificates, no dividend or distribution of Acquiror
shall relate to such fractional share interests and such fractional
share interests will not entitle the owner thereof to vote or to
any rights of a stockholder of Acquiror.
(ii) Each holder of Company Common Stock entitled to receive a
fractional share of Acquiror Common Stock shall receive in lieu
thereof an amount in cash equal to the product obtained by
multiplying (A) the fractional share interest to which such former
holder (after taking into account all shares of Company Common
Stock held at the Effective Time by such holder) would otherwise be
entitled by (B) the closing price for a share of Acquiror Common
Stock as reported on the New York Stock Exchange, Inc. ("NYSE")
Composite Transaction Tape (as reported in THE WALL STREET JOURNAL,
or, if not reported thereby, any other authoritative source) on the
Closing Date.
(iii) As soon as practicable after the determination of the
amount of cash, if any, to be paid to holders of Certificates
formerly representing Company Common Stock with respect to any
fractional share interests, the Exchange Agent shall make available
such amounts to such holders of Certificates formerly representing
Company Common Stock subject to and in accordance with the terms of
Section 2.2(c).
(f) TERMINATION OF EXCHANGE FUND. Any portion of the
Exchange Fund which remains undistributed to the holders of the
Certificates for six months after the Effective Time shall be delivered
to Acquiror, upon demand, and any holders of the Certificates who have
not theretofore complied with this Article 2 shall thereafter look only
to Acquiror for payment of their claim for Merger Consideration, any
dividends or distributions with respect to Acquiror Common Stock and any
cash in lieu of fractional shares of Acquiror Common Stock.
(g) NO LIABILITY. None of Acquiror, the Surviving
Corporation or the Exchange Agent shall be liable to any person in
respect of any shares of Acquiror Common Stock, any dividends or
distributions with respect thereto, any cash in lieu of fractional
shares of Acquiror Common Stock or any cash from the Exchange Fund, in
each case, delivered to a public official pursuant to any applicable
abandoned property, escheat or similar law.
(h) INVESTMENT OF EXCHANGE FUND. The Exchange Agent shall
invest any cash included in the Exchange Fund, as directed by Acquiror,
6
on a daily basis. Any interest and other income resulting from such
investments shall be paid to Acquiror.
(i) LOST CERTIFICATES. If any Certificate shall have been
lost, stolen or destroyed, upon the making of an affidavit of that fact
by the person claiming such Certificate to be lost, stolen or destroyed
and, if required by the Surviving Corporation, the posting by such
person of a bond in such reasonable amount as the Surviving Corporation
may direct as indemnity against any claim that may be made against it
with respect to such Certificate, the Exchange Agent shall issue in
exchange for such lost, stolen or destroyed Certificate the Merger
Consideration and, if applicable, any unpaid dividends and distributions
on shares of Acquiror Common Stock deliverable in respect thereof and
any cash in lieu of fractional shares, in each case, due to such person
pursuant to this Agreement.
Section 2.3 CERTAIN ADJUSTMENTS. If after the date hereof
and on or prior to the Effective Time the outstanding shares of Acquiror
Common Stock or Company Common Stock shall be changed into a different
number of shares by reason of any reclassification, recapitalization,
split-up, combination or exchange of shares, or any dividend payable in
stock or other securities shall be declared thereon with a record date
within such period, or any similar event shall occur (any such action,
an "Adjustment Event"), the Exchange Ratio shall be adjusted accordingly
to provide to the holders of Company Common Stock the same economic
effect and percentage ownership of Acquiror Common Stock as contemplated
by this Agreement prior to such reclassification, recapitalization,
split-up, combination, exchange or dividend or similar event.
Section 2.4 DISSENTERS' RIGHTS. No Dissenting Stockholder
shall be entitled to any portion of the Merger Consideration or cash in
lieu of fractional shares thereof or any dividends or other
distributions pursuant to this Article 2 unless and until the holder
thereof shall have failed to perfect or shall have effectively withdrawn
or lost such holder's right to dissent from the Merger under the OGCL,
and any Dissenting Shareholder shall be entitled to receive only the
payment provided by Section 1701.85 of the OGCL with respect to Company
Common Stock owned by such Dissenting Stockholder. If any Person who
otherwise would be deemed a Dissenting Stockholder shall have failed to
properly perfect or shall have effectively withdrawn or lost the right
to dissent with respect to any Company Common Stock, such shares of
Company Common Stock shall thereupon be treated as though such Company
Common Stock had been converted into the right to receive the Merger
Consideration with respect to such Company Common Stock as provided in
this Article 2. The Company shall give Acquiror (i) prompt notice of
any written demands for appraisal, attempted withdrawals of such demands
and any other instruments served pursuant to applicable law received by
the Company relating to stockholders' rights of appraisal and (ii) the
opportunity to direct all negotiations and proceedings with respect to
demand for appraisal under the OGCL. The Company shall not, except with
the prior written consent of Acquiror, voluntarily make any payment with
respect to any demands for appraisals of Dissenting Shares, offer to
7
settle or settle any such demands or approve any withdrawal of any such
demands.
Section 2.5 FURTHER ASSURANCES. At and after the Effective
Time, the officers and directors of the Surviving Corporation will be
authorized to execute and deliver, in the name and on behalf of the
Company or Merger Sub, any deeds, bills of sale, assignments or
assurances and to take and do, in the name and on behalf of the Company
or Merger Sub, any other actions and things to vest, perfect or confirm
of record or otherwise in the Surviving Corporation any and all right,
title and interest in, to and under any of the rights, properties or
assets acquired or to be acquired by the Surviving Corporation as a
result of, or in connection with, the Merger.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES
Section 3.1 REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
Except as disclosed in the Company Filed SEC Documents (as defined in
Section 3.1(g)) or as set forth on the Disclosure Schedule delivered by
the Company to Acquiror prior to the execution of this Agreement (the
"Company Disclosure Schedule"), the Company hereby represents and
warrants to Acquiror and Merger Sub as follows:
(a) ORGANIZATION, STANDING AND CORPORATE POWER. Each of the
Company and its subsidiaries (as defined in Section 8.3(e)) is a
corporation or other legal entity duly organized, validly existing and
in good standing (with respect to jurisdictions which recognize such
concept) under the laws of the jurisdiction in which it is organized and
has the requisite corporate or other power, as the case may be, and
authority to carry on its business as now being conducted, except, as to
subsidiaries, for those jurisdictions where the failure to be so
organized, existing or in good standing individually or in the aggregate
would not have a material adverse effect (as defined in Section 8.3(c))
on the Company. Each of the Company and its subsidiaries is duly
qualified or licensed to do business and is in good standing (with
respect to jurisdictions which recognize such concept) in each
jurisdiction in which the nature of its business or the ownership,
leasing or operation of its properties makes such qualification or
licensing necessary, except for those jurisdictions where the failure to
be so qualified or licensed or to be in good standing individually or in
the aggregate would not have a material adverse effect on the Company.
The Company has made available to Acquiror prior to the execution of
this Agreement complete and correct copies of its articles of
incorporation and code of regulations, each as amended to date.
(b) SUBSIDIARIES. Section 3.1(b) of the Company Disclosure
Schedule includes all the subsidiaries of the Company which as of the
date of this Agreement are Significant Subsidiaries (as defined in Rule
1-02 of Regulation S-X of the Securities and Exchange Commission (the
"SEC")). All the outstanding shares of capital stock of, or other
8
equity interests in, each Significant Subsidiary (i) have been validly
issued and are fully paid and nonassessable, (ii) are owned directly or
indirectly by the Company, free and clear of all pledges, claims, liens,
charges, encumbrances and security interests of any kind or nature
whatsoever (collectively, "Liens") and (iii) are free of any other
restriction (including any restriction on the right to vote, sell or
otherwise dispose of such capital stock or other ownership interests),
except in the case of clauses (ii) and (iii) for any Liens or
restrictions that would not have a material adverse effect on the
Company.
(c) CAPITAL STRUCTURE. The authorized capital stock of the
Company consists of (i) 400,000,000 shares of Company Common Stock and
(ii) 20,000,000 shares of preferred stock, without par value, of the
Company ("Company Authorized Preferred Stock"). At the close of
business on September 30, 1998: (i) 149,975,019 shares of Company Common
Stock were issued and outstanding; (ii) 12,702,063 shares of Company
Common Stock were held by the Company in its treasury; (iii) no shares
of Company Authorized Preferred Stock were issued or outstanding; and
(iv) 3,210,548 shares of Company Common Stock were subject to
outstanding employee stock options to purchase Company Common Stock
granted under The Amended and Restated 1989 Stock Incentive and Option
Plan (the "Company Stock Plan") at September 30, 1998 (collectively,
"Company Employee Stock Options"). All outstanding shares of capital
stock of the Company are, and all shares which may be issued will be,
when issued, duly authorized, validly issued, fully paid and
nonassessable and not subject to preemptive rights. Except (i) as set
forth in this Section 3.1(c), (ii) for changes since September 30, 1998
resulting from the issuance of shares of Company Common Stock pursuant
to the Company Employee Stock Options, (iii) for outstanding rights
issued pursuant to the Company Rights Agreement, and (iv) as permitted
by Section 4.1(a)(ii), (x) there are not issued, reserved for issuance
or outstanding (A) any shares of capital stock or other voting
securities of the Company, (B) any securities of the Company convertible
into or exchangeable or exercisable for shares of capital stock or
voting securities of the Company or (C) any warrants, calls, options or
other rights to acquire from the Company or any Company subsidiary, and
no obligation of the Company or any Company subsidiary to issue, any
capital stock, voting securities or securities convertible into or
exchangeable or exercisable for capital stock or voting securities of
the Company and (y) there are no outstanding obligations of the Company
or any Company subsidiary to repurchase, redeem or otherwise acquire any
such securities or, other than agreements entered into with respect to
the Company Stock Plan in effect as of the close of business on
September 30, 1998, to issue, deliver or sell, or cause to be issued,
delivered or sold, any such securities. Neither the Company nor any
Company subsidiary is a party to any voting agreement with respect to
the voting of any such securities. There are no outstanding (A)
securities of the Company or any Company subsidiary convertible into or
exchangeable or exercisable for shares of capital stock or other voting
securities or ownership interests in any Company subsidiary, (B)
warrants, calls, options or other rights to acquire from the Company or
9
any Company subsidiary, and no obligation of the Company or any Company
subsidiary to issue, any capital stock, voting securities or other
ownership interests in, or any securities convertible into or
exchangeable or exercisable for any capital stock, voting securities or
ownership interests in, any Company subsidiary or (C) obligations of the
Company or any Company subsidiary to repurchase, redeem or otherwise
acquire any such outstanding securities of Company subsidiaries or to
issue, deliver or sell, or cause to be issued, delivered or sold, any
such securities.
(d) AUTHORITY; NONCONTRAVENTION. The Company has all
requisite corporate power and authority to enter into this Agreement
and, subject to the Company Stockholder Approval (as defined in Section
3.1(l)), to consummate the transactions contemplated by this Agreement.
The execution and delivery of this Agreement by the Company and the
consummation by the Company of the transactions contemplated hereby have
been duly authorized by all necessary corporate action on the part of
the Company, subject, in the case of the Merger, to the Company
Stockholder Approval. This Agreement has been duly executed and
delivered by the Company and, assuming the due authorization, execution
and delivery by Acquiror and Merger Sub, constitutes a legal, valid and
binding obligation of the Company, enforceable against the Company in
accordance with its terms. The execution and delivery of this Agreement
does not, and the consummation of the transactions contemplated by this
Agreement and compliance with the provisions of this Agreement will not,
conflict with, or result in any violation of, or default (with or
without notice or lapse of time, or both) under, or give rise to a right
of termination, cancellation or acceleration of any obligation or loss
of a benefit under, or result in the creation of any Lien upon any of
the properties or assets of the Company or any of its subsidiaries
under, (i) the articles of incorporation or code of regulations of the
Company or the comparable organizational documents of any of its
subsidiaries, (ii) any loan or credit agreement, note, bond, mortgage,
indenture, lease or other agreement, instrument, permit, concession,
franchise, license or similar authorization applicable to the Company or
any of its subsidiaries or their respective properties or assets or
(iii) subject to the governmental filings and other matters referred to
in the following sentence, any judgment, order, decree, statute, law,
ordinance, rule or regulation applicable to the Company or any of its
subsidiaries or their respective properties or assets, other than, in
the case of clauses (ii) and (iii), any such conflicts, violations,
defaults, rights, losses or Liens that individually or in the aggregate
would not (x) have a material adverse effect on the Company or (y)
reasonably be expected to materially impair or delay the ability of the
Company to perform its obligations under this Agreement. No consent,
approval, order or authorization of, action by or in respect of, or
registration, declaration or filing with, any federal, state, local or
foreign government, any court, administrative, regulatory or other
governmental agency, commission or authority or any non-governmental
U.S. or foreign self-regulatory agency, commission or authority or any
arbitral tribunal (each, a "Governmental Entity") is required by the
Company or any of its subsidiaries in connection with the execution and
10
delivery of this Agreement by the Company or the consummation by the
Company of the transactions contemplated hereby, except for: (1) the
filing with the SEC of (A) a proxy statement relating to the Company
Stockholders Meeting (as defined in Section 5.1(b)) (such proxy
statement, together with the proxy statement relating to the Acquiror
Stockholders Meeting (as defined in Section 5.1(c)), in each case as
amended or supplemented from time to time, the "Joint Proxy Statement"),
and (B) such reports under Section 13(a), 13(d), 15(d) or 16(a) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), as may
be required in connection with this Agreement and the transactions
contemplated hereby; (2) the filing of the Certificate of Merger with
the Secretary of State of the State of Ohio and such filings with
Governmental Entities to satisfy the applicable requirements of state
securities or "blue sky" laws; (3) the filing of a premerger
notification and report form by the Company under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended ("HSR Act"); (4) such
filings, consents, approvals, orders or authorizations required to be
made or obtained pursuant to the laws of any non-U.S. jurisdiction
relating to antitrust matters or competition ("Foreign Antitrust Laws");
and (5) such consents, approvals, orders or authorizations the failure
of which to be made or obtained individually or in the aggregate would
not (x) have a material adverse effect on the Company or (y) reasonably
be expected to materially impair or delay the ability of Company to
perform its obligations under this Agreement.
(e) REPORTS; UNDISCLOSED LIABILITIES. The Company has filed
all required reports, schedules, forms, statements and other documents
(including exhibits and all other information incorporated therein) with
the SEC since January 1, 1995 (the "Company SEC Documents"). As of
their respective dates, the Company SEC Documents complied in all
material respects with the requirements of the Securities Act of 1933,
as amended (the "Securities Act"), or the Exchange Act, as the case may
be, and the rules and regulations of the SEC promulgated thereunder
applicable to such Company SEC Documents, and none of the Company SEC
Documents when filed contained any untrue statement of a material fact
or omitted to state a material fact required to be stated therein or
necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. Except to the
extent that information contained in any Company SEC Document has been
revised or superseded by a later filed Company SEC Document, none of the
Company SEC Documents contains any untrue statement of a material fact
or omits to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. The financial
statements of the Company included in the Company SEC Documents comply
as to form, as of their respective dates of filing with the SEC, in all
material respects with applicable accounting requirements and the
published rules and regulations of the SEC with respect thereto, have
been prepared in accordance with generally accepted accounting
principles (except, in the case of unaudited statements, as permitted by
Form 10-Q of the SEC) applied on a consistent basis during the periods
involved (except as may be indicated in the notes thereto) and fairly
11
present in all material respects the consolidated financial position of
the Company and its consolidated subsidiaries as of the dates thereof
and the consolidated statement of earnings, cash flows and shareholders'
equity for the periods then ended (subject, in the case of unaudited
statements, to normal recurring year-end audit adjustments). Except (A)
as reflected in such financial statements or in the notes thereto or (B)
for liabilities incurred in connection with this Agreement or the
transactions contemplated hereby, neither the Company nor any of its
subsidiaries has any liabilities or obligations of any nature which,
individually or in the aggregate, would have a material adverse effect
on the Company.
(f) INFORMATION SUPPLIED. None of the information supplied
or to be supplied by the Company specifically for inclusion or
incorporation by reference in (i) the registration statement on Form S-4
to be filed with the SEC by Acquiror in connection with the issuance of
Acquiror Common Stock in the Merger (the "Form S-4") will, at the time
the Form S-4 becomes effective under the Securities Act, contain any
untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements
therein not misleading or (ii) the Joint Proxy Statement will, at the
date it is first mailed to the Company's stockholders or at the time of
the Company Stockholders Meeting, contain any untrue statement of a
material fact or omit to state any material fact required to be stated
therein or necessary in order to make the statements therein, in light
of the circumstances under which they are made, not misleading. The
Joint Proxy Statement will comply as to form in all material respects
with the requirements of the Exchange Act and the rules and regulations
thereunder, except that no representation or warranty is made by the
Company with respect to statements made or incorporated by reference
therein based on information supplied by Acquiror or Merger Sub
specifically for inclusion or incorporation by reference in the Joint
Proxy Statement.
(g) ABSENCE OF CERTAIN CHANGES OR EVENTS. Except for
liabilities incurred in connection with this Agreement or the
transactions contemplated hereby, since December 31, 1997, the Company
and its subsidiaries have conducted their business only in the ordinary
course or as disclosed in any Company Filed SEC Document, and there has
not been (1) any declaration, setting aside or payment of any dividend
or other distribution (whether in cash, stock or property) with respect
to any of the Company's capital stock, other than regular quarterly cash
dividends on the Company Common Stock, (2) any split, combination or
reclassification of any of the Company's capital stock or any issuance
or the authorization of any issuance of any other securities in respect
of, in lieu of or in substitution for shares of the Company's capital
stock, except for issuances of Company Common Stock upon the exercise of
Company Employee Stock Options awarded prior to September 30, 1998 in
accordance with their present terms or issued pursuant to Section 4.1(a)
or in accordance with the terms of the Company Stock Plan, (3) (A) any
granting by the Company or any of its subsidiaries to any current or
former director, executive officer or other key employee of the Company
12
or its subsidiaries of any increase in compensation, bonus or other
benefits, except for normal increases in the ordinary course of business
or as was required under any employment agreements in effect as of the
date of the most recent audited financial statements included in the
Company SEC Documents filed and publicly available prior to the date of
this Agreement (as amended to the date of this Agreement, the "Company
Filed SEC Documents"), (B) any granting by the Company or any of its
subsidiaries to any such current or former director, executive officer
or key employee of any increase in severance or termination pay, except
in the ordinary course of business, or (C) any entry by the Company or
any of its subsidiaries into, or any amendment of, any employment,
deferred compensation, consulting, severance, termination or
indemnification agreement with any such current or former director,
executive officer or key employee, other than in the ordinary course of
business, (4) except insofar as may have been disclosed in the Company
Filed SEC Documents or required by a change in generally accepted
accounting principles, any change in accounting methods, principles or
practices by the Company materially affecting its assets, liabilities or
business or (5) except insofar as may have been disclosed in the Company
Filed SEC Documents, any tax election that individually or in the
aggregate would reasonably be expected to have a material adverse effect
on the Company or any of its tax attributes or any settlement or
compromise of any material income tax liability.
(h) COMPLIANCE WITH APPLICABLE LAWS; LITIGATION. The
Company, its subsidiaries and employees hold all permits, licenses,
variances, exemptions, orders, registrations and approvals of all
Governmental Entities which are required for the operation of the
businesses of Company and its subsidiaries (collectively, the "Company
Permits"), except where the failure to have any such Company Permits
individually or in the aggregate would not have a material adverse
effect on the Company. The Company and its subsidiaries are in
compliance with the terms of the Company Permits and all applicable
statutes, laws, ordinances, rules and regulations, except where the
failure so to comply individually or in the aggregate would not have a
material adverse effect on the Company. As of the date of this
Agreement, except as disclosed in the Company Filed SEC Documents, no
action, demand, requirement or investigation by any Governmental Entity
and no suit, action or proceeding by any person, in each case with
respect to the Company or any of its subsidiaries or any of their
respective properties is pending or, to the knowledge (as defined in
Section 8.3(b)) of the Company, threatened, other than, in each case,
those the outcome of which individually or in the aggregate would not
(i) reasonably be expected to have a material adverse effect on the
Company or (ii) reasonably be expected to materially impair or delay the
ability of the Company to perform its obligations under this Agreement.
(i) ABSENCE OF CHANGES IN BENEFIT PLANS. Since February 1,
1998, there has not been any (i) adoption by the Company or any of its
subsidiaries of any collective bargaining agreement or any material
bonus, pension, profit sharing, deferred compensation, incentive
compensation, stock ownership, stock purchase, stock option, phantom
13
stock, retirement, vacation, severance, disability, death benefit,
hospitalization, medical, life, severance or other plan, arrangement or
understanding providing benefits to any current or former employee,
officer or director of Company or any of its wholly owned subsidiaries
(collectively, the "Company Benefit Plans") to which any of the
Company's executive officers is a participant or (ii) amendment to any
Company Benefit Plan that resulted in a material increase in the
benefits received or to be received thereunder by any executive officer
of the Company. Since January 1, 1998, there has not been any material
increase in the aggregate benefits provided under the Company Benefit
Plans.
(j) ERISA COMPLIANCE.
(i) With respect to the Company Benefit Plans, no event has
occurred and, to the knowledge of the Company, there exists no
condition or set of circumstances, in connection with which the
Company or any of its subsidiaries could be subject to any
liability that individually or in the aggregate would have a
material adverse effect on the Company under the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), the
Code or any other applicable law.
(ii) Each Company Benefit Plan has been administered in
accordance with its terms, all applicable laws, including ERISA and
the Code, and the terms of all applicable collective bargaining
agreements, except for any failures so to administer any Company
Benefit Plan that individually or in the aggregate would not
reasonably be expected to have a material adverse effect on the
Company. The Company, its subsidiaries and all the Company Benefit
Plans are in compliance with the applicable provisions of ERISA,
the Code and all other applicable laws and the terms of all
applicable collective bargaining agreements, except for any
failures to be in such compliance that individually or in the
aggregate would not reasonably be expected to have a material
adverse effect on the Company. Each Company Benefit Plan that is
intended to be qualified under Section 401(a) or 401(k) of the Code
has received a favorable determination letter from the IRS that it
is so qualified and each trust established in connection with any
Company Benefit Plan that is intended to be exempt from federal
income taxation under Section 501(a) of the Code has received a
determination letter from the IRS that such trust is so exempt. To
the knowledge of the Company, no fact or event has occurred since
the date of any determination letter from the IRS which is
reasonably likely to affect adversely the qualified status of any
such Company Benefit Plan or the exempt status of any such trust,
except for any occurrence that individually or in the aggregate
would not reasonably be expected to have a material adverse effect
on the Company, and to the knowledge of the Company, all
contributions to, and payments from, such Plans which are required
to be made in accordance with such Plans, ERISA or the Code have
been timely made other than any failures that individually or in
14
the aggregate would not reasonably be expected to have a material
adverse effect on the Company.
(iii) Except as any of the following either individually or
in the aggregate would not reasonably be expected to have a
material adverse effect on the Company, (x) neither the Company nor
any trade or business, whether or not incorporated (an "ERISA
Affiliate"), which together with the Company would be deemed to be
a "single employer" within the meaning of Section 4001(b) of ERISA,
has incurred any liability under Title IV of ERISA and no condition
exists that presents a risk to the Company or any ERISA Affiliate
of the Company of incurring any such liability (other than
liability for benefits or premiums to the Pension Benefit Guaranty
Corporation arising in the ordinary course), (y) no Company Benefit
Plan has incurred an "accumulated funding deficiency" (within the
meaning of Section 302 of ERISA or Section 412 of the Code) whether
or not waived and (z) to the knowledge of the Company, there are
not any facts or circumstances that would materially change the
funded status of any Company Benefit Plan that is a "defined
benefit" plan (as defined in Section 3(35) of ERISA) since the date
of the most recent actuarial report for such plan.
(iv) Neither the Company nor any of its subsidiaries is a
party to any collective bargaining or other labor union contract
applicable to persons employed by the Company or any of its
subsidiaries and no collective bargaining agreement is being
negotiated by the Company or any of its subsidiaries, in each case
that is material to the Company and its subsidiaries taken as a
whole. As of the date of this Agreement, there is no labor
dispute, strike or work stoppage against the Company or any of its
subsidiaries pending or, to the knowledge of the Company,
threatened which may interfere with the respective business
activities of the Company or any of its subsidiaries, except where
such dispute, strike or work stoppage individually or in the
aggregate would not reasonably be expected to have a material
adverse effect on the Company. As of the date of this Agreement,
(x) to the knowledge of the Company, none of the Company, any of
its subsidiaries or any of their respective representatives or
employees has committed any unfair labor practice in connection
with the operation of the respective businesses of the Company or
any of its subsidiaries, and (y) there is no charge or complaint
against the Company or any of its subsidiaries by the National
Labor Relations Board or any comparable governmental agency pending
or threatened in writing, except for any occurrence that
individually or in the aggregate would not reasonably be expected
to have a material adverse effect on the Company.
(v) No Company Benefit Plan provides medical benefits
(whether or not insured) with respect to current or former
employees after retirement or other termination of service the cost
of which is material to the Company and its subsidiaries taken as a
whole.
15
(vi) The consummation of the transactions contemplated by this
Agreement will not, either alone or in combination with another
event, (A) entitle any current or former employee, officer or
director of the Company or any ERISA Affiliate of the Company to
severance pay, unemployment compensation or any other payment,
except as expressly provided in this Agreement, (B) accelerate the
time of payment or vesting, or increase the amount of compensation
due any such employee, officer or director or (C) constitute a
"change of control" under any Company Benefit Plan.
(vii) With respect to each Company Benefit Plan: (x) no
actions, suits, claims or disputes are pending or, to the knowledge
of the Company, threatened, other than claims for benefits made in
accordance with the terms of such Company Benefit Plan, except for
such actions, suits, claims or disputes that individually or in the
aggregate would not reasonably be expected to have a material
adverse effect on the Company; (y) no audits are pending with any
governmental or regulatory agency and to the knowledge of the
Company there are no facts which could give rise to any liability
in the event of such an audit that either individually or in the
aggregate would have a material adverse effect on the Company; and
(z) to the knowledge of the Company, all reports and returns
required to be filed with any governmental agency or distributed to
any participant in any Company Benefit Plan have been so duly filed
or distributed other than any failure to file or distribute such
reports or returns that individually or in the aggregate would not
reasonably be expected to have a material adverse effect on the
Company.
(viii) The Company has not incurred any liability under Code
Section 4975, and no fact exists which could result in a liability
to the Company under Code Section 4975 that would reasonably be
expected to have a material adverse effect on the Company.
(ix) Neither the Company nor any ERISA Affiliate contributes
to a multiemployer plan described in Section 3(37) of ERISA, no
withdrawal liability has been incurred with respect to any such
plan and no withdrawal liability would be incurred upon the
withdrawal from any such plan by the Company or any ERISA Affiliate
as of the date hereof, except for any withdrawal that individually
or in the aggregate would not have a material adverse effect on the
Company.
(k) TAXES.
(i) Each of the Company and its subsidiaries has filed all
material tax returns and reports required to be filed by it and all
such returns and reports are complete and correct in all material
respects, or requests for extensions to file such returns or
reports have been timely filed, granted and have not expired,
except to the extent that such failures to file, to be complete or
correct or to have extensions granted that remain in effect
16
individually or in the aggregate would not have a material adverse
effect on the Company. The Company and each of its subsidiaries
has paid (or the Company has paid on its behalf) all taxes (as
defined below) shown as due on such returns, and the most recent
financial statements contained in the Company SEC Documents reflect
an adequate reserve for all taxes payable by the Company and its
subsidiaries for all taxable periods and portions thereof accrued
through the date of such financial statements.
(ii) No deficiencies for any taxes have been proposed,
asserted or assessed against the Company or any of its subsidiaries
that are not adequately reserved for, except for deficiencies that
individually or in the aggregate would not have a material adverse
effect on the Company.
(iii) Neither the Company nor any of its subsidiaries has
taken any action or knows of any fact, agreement, plan or other
circumstance that is reasonably likely to prevent the Merger from
qualifying as a reorganization within the meaning of Section 368(a)
of the Code.
(iv) As used in this Agreement, "taxes" shall include all (x)
federal, state, local or foreign net and gross income, alternative
or add-on minimum, environmental, gross receipts, ad valorem, value
added, goods and services, capital stock, profits, license, single
business, employment, severance, stamp, unemployment, customs,
property, sales, excise, use, occupation, service, transfer,
payroll, franchise, withholding and other taxes or similar
governmental duties, charges, fees, levies or other assessments
including any interest, penalties or additions with respect
thereto, (y) liability for the payment of any amounts of the type
described in clause (x) as a result of being a member of an
affiliated, consolidated, combined or unitary group, and (z)
liability for the payment of any amounts as a result of being party
to any tax sharing agreement or as a result of any express or
implied obligation to indemnify any other person with respect to
the payment of any amounts of the type described in clause (x) or
(y).
(l) VOTING REQUIREMENTS. The affirmative vote of the holders
of two-thirds of the outstanding shares of Company Common Stock at the
Company Stockholders Meeting to adopt this Agreement (the "Company
Stockholder Approval") is the only vote of the holders of any class or
series of the Company's capital stock necessary to adopt and approve
this Agreement and the Merger and the transactions contemplated hereby.
The Board of Directors of the Company has duly and validly approved and
taken all corporate action required to be taken by the Company Board of
Directors for the consummation of the transactions contemplated by this
Agreement.
(m) STATE TAKEOVER STATUTES. The Board of Directors of the
Company has taken all necessary action so that no "fair price,"
17
"moratorium," "control share acquisition" or other similar anti-takeover
statute or regulation (each, a "Takeover Statute") (including the
control share acquisition provisions codified in Sections 1701.831 et
seq. of the OGCL and the moratorium provisions codified in Section
1704.02 et seq. of the OGCL) or any applicable anti-takeover provision
in the Company's articles of incorporation or code of regulations is
applicable to the Merger and the other transactions contemplated by this
Agreement. To the knowledge of the Company, no other state takeover
statute is applicable to the Merger or the other transactions
contemplated by this Agreement.
(n) ACCOUNTING MATTERS. The Company has disclosed to its
independent public accountants all actions taken by it or its
subsidiaries that would impact the accounting of the business
combination to be effected by the Merger as a pooling of interests. As
of the date hereof, the Company believes that the Merger will qualify
for "pooling of interests" accounting.
(o) BROKERS. Except for Goldman, Sachs & Co., no broker,
investment banker, financial advisor or other person is entitled to any
broker's, finder's, financial advisor's or other similar fee or
commission in connection with the transactions contemplated by this
Agreement based upon arrangements made by or on behalf of the Company.
(p) OWNERSHIP OF ACQUIROR CAPITAL STOCK. Except for shares
owned by the Company Benefit Plans or shares held or managed for the
account of another person or as to which the Company is required to act
as a fiduciary or in a similar capacity, as of the date hereof, neither
the Company nor, to its knowledge without independent investigation, any
of its affiliates, (i) beneficially owns (as defined in Rule 13d-3 under
the Exchange Act), directly or indirectly, or (ii) is party to any
agreement, arrangement or understanding for the purpose of acquiring,
holding, voting or disposing of, in each case, shares of capital stock
of Acquiror.
(q) CERTAIN CONTRACTS. Except as set forth in the Company
Filed SEC Documents or as permitted pursuant to Section 4.1(a), neither
the Company nor any of its subsidiaries is a party to or bound by (i)
any agreement relating to the incurring of indebtedness (including sale
and leaseback and capitalized lease transactions and other similar
financing transactions) providing for payment or repayment in excess of
$100.0 million, (ii) any "material contract" (as such term is defined in
Item 601(b)(10) of Regulation S-K of the SEC) or (iii) any non-
competition agreement which purports to limit in any material respect
the manner in which, or the localities in which, all or any substantial
portion of the business of the Company and its subsidiaries, taken as a
whole, or, after the Effective Time, the business of Acquiror and its
subsidiaries, taken as a whole, is or would be conducted.
(r) THE COMPANY RIGHTS AGREEMENT. The Rights Agreement dated
June 25, 1996 between the Company and The First National Bank of Boston
(the "Company Rights Agreement") has been amended to (i) render the
18
Company Rights Agreement inapplicable to the Merger and the other
transactions contemplated by this Agreement, (ii) ensure that (x) none
of Acquiror or its wholly owned subsidiaries is an Acquiring Person (as
defined in the Company Rights Agreement) pursuant to the Company Rights
Agreement, (y) a Distribution Date, a Triggering Event or a Share
Acquisition Date (as such terms are defined in the Company Rights
Agreement) does not occur solely by reason of the execution of this
Agreement, the consummation of the Merger, or the consummation of the
other transactions contemplated by this Agreement and (z) ensure that
the Company Rights Agreement will expire or otherwise terminate
immediately prior to the Effective Time.
(s) OPINION OF FINANCIAL ADVISOR. The Company has received
the opinion of Goldman, Sachs & Co., dated the date of this Agreement,
to the effect that, as of such date, the Exchange Ratio is fair from a
financial point of view to holders of shares of Company Common Stock
(other than Acquiror and its affiliates), a signed copy of which opinion
will be made available to Acquiror promptly after the date hereof.
(t) ENVIRONMENTAL MATTERS.
(i) During the three-year period immediately preceding the
date of this Agreement, neither the Company nor any of its
subsidiaries has received any written communication, whether from a
Governmental Entity, citizens' group, employee or otherwise,
alleging that the Company or any of its subsidiaries is not in
compliance with applicable Environmental Laws, other than those
instances of alleged noncompliance which individually or in the
aggregate would not (x) reasonably be expected to have a material
adverse effect on the Company or (y) reasonably be expected to
materially impair or delay the ability of the Company to perform
its obligations under this Agreement.
(ii) There is no Environmental Claim pending or, to the
knowledge of the Company, threatened, against the Company or any of
its subsidiaries or, to the knowledge of the Company, against any
person whose liability for any Environmental Claim the Company or
any of its subsidiaries has or may have retained or assumed either
contractually or by operation of law, other than those
Environmental Claims which individually or in the aggregate would
not (x) reasonably be expected to have a material adverse effect on
the Company or (y) reasonably be expected to materially impair or
delay the ability of the Company to perform its obligations under
this Agreement.
(iii) There are no present actions, activities, circumstances,
conditions, events or incidents, including, without limitation, the
Release or presence of any Hazardous Material at any property, that
could reasonably be expected to result in liability under any
Environmental Law for the Company or any of its subsidiaries or, to
the knowledge of the Company, for any person whose liability for
any Environmental Claim the Company or any of its subsidiaries has
19
or may have retained or assumed either contractually or by
operation of law, other than those liabilities which individually
or in the aggregate would not (x) reasonably be expected to have a
material adverse effect on the Company or (y) reasonably be
expected to materially impair or delay the ability of the Company
to perform its obligations under this Agreement.
(iv) As used herein, the term "Cleanup" means all actions
required to (w) cleanup, remove, treat, manage or remediate
Hazardous Materials in the indoor or outdoor environment; (x)
prevent the Release of Hazardous Materials so that they do not
migrate, endanger or threaten to endanger public health or welfare
or the indoor or outdoor environment; (y) perform pre-remedial
studies and investigations and post-remedial monitoring and care;
or (z) respond to any government requests for information or
documents in any way relating to cleanup, removal, treatment or
remediation or potential cleanup, removal, treatment or remediation
of Hazardous Materials in the indoor or outdoor environment.
(v) As used herein, the term "Environmental Claim" means any
claim, action, cause of action, investigation or written notice by
any person alleging potential liability or responsibility
(including, without limitation, potential liability for
investigatory costs, Cleanup costs, governmental response costs,
natural resources damages, property damages, personal injuries,
fines or penalties) arising out of, based on or resulting from (x)
the presence or Release of any Hazardous Materials at any location,
whether or not owned or operated by the Company or any of its
subsidiaries or (y) circumstances forming the basis of any
violation of any Environmental Law.
(vi) As used herein, the term "Environmental Laws" means all
federal, state, local and foreign laws and regulations relating to
pollution or protection of the environment, including, without
limitation, laws relating to Releases of Hazardous Materials or
otherwise relating to the manufacture, processing, distribution,
use, treatment, storage, disposal, transport or handling of
Hazardous Materials.
(vii) As used herein, the term "Hazardous Materials" means all
substances defined as Hazardous Substances, Hazardous Waste, Oils,
Pollutants or Contaminants in the National Oil and Hazardous
Substances Pollution Contingency Plan, 40 C.F.R. Section 300.5, or
defined as such by, or regulated as such under, any Environmental
Law, including all matters adversely affecting air, ground, ground
water and/or environmental quality or safety, including, without
limitation, petroleum, petroleum-derived products, underground
storage tanks and asbestos.
(viii) As used herein, the term "Release" means any release,
spill, emission, discharge, leaking, pumping, injection, deposit,
disposal, dispersal, leaching or migration into the environment
20
(including, without limitation, ambient air, surface water,
groundwater and surface or subsurface strata) or into or out of any
property (including the abatement or discarding of barrels or other
containers containing Hazardous Materials), including the movement
of Hazardous Materials through, on or in the air, soil, surface
water, ground water or property.
(u) INTELLECTUAL PROPERTY.
(i) The Company and its subsidiaries own or have a binding,
enforceable right to use all letters patent, patent applications,
trade names, brand names, trademarks, service marks, trademark and
service mark registrations and applications, copyright
registrations and applications, both domestic and foreign
(collectively, the "Company Intellectual Property") used in their
businesses substantially as currently conducted except for such
Company Intellectual Property, the failure of which to own or have
a binding, enforceable right to use individually or in the
aggregate would not reasonably be expected to have a material
adverse effect on the Company. Neither the Company nor any of its
subsidiaries has received any written notice of infringement of or
conflict with and, to the knowledge of the Company, there are no
infringements of or conflicts with, the rights of others with
respect to the use of any Company Intellectual Property that
individually or in the aggregate, in either such case, would
reasonably be expected to have a material adverse effect on the
Company or would reasonably be expected to materially impair or
delay the ability of the Company to perform its obligations under
this Agreement. Neither the Company nor any of its subsidiaries
has received any written notice that the conduct of another
person's business or the nature of any products sold or services
provided by another person infringes upon or conflicts with the
Company's registered trademarks set forth in its Annual Report on
Form 10-K for the fiscal year ended December 31, 1997 (the
"Material Company Trademarks") other than those infringements or
conflicts that individually or in the aggregate would not
reasonably be expected to (x) have a material adverse effect on the
Company or (y) materially impair or delay the ability of the
Company to perform its obligations under this Agreement.
(ii) The Company has conducted a comprehensive review of its
computer systems' ability to process properly year date codes after
December 31, 1999, has formulated a plan to modify or replace
programs where necessary and believes that all necessary
reprogramming efforts will be completed prior to December 31, 1999,
except for any failures to complete such reprogramming efforts as
would not individually or in the aggregate have a material adverse
effect on the Company.
Section 3.2 REPRESENTATIONS AND WARRANTIES OF ACQUIROR AND
MERGER SUB. Except as disclosed in the Acquiror Filed SEC Documents (as
defined in Section 3.2(h)) or as set forth on the Disclosure Schedule
21
delivered by Acquiror to the Company prior to the execution of this
Agreement (the "Acquiror Disclosure Schedule"), Acquiror and Merger Sub
each hereby represents and warrants to the Company as follows:
(a) CAPITALIZATION OF MERGER SUB. The authorized capital
stock of Merger Sub consists of 100 shares of common stock, no par
value, all of which are validly issued and outstanding. All of the
issued and outstanding capital stock of Merger Sub is, and at the
Effective Time will be, owned by Acquiror, and there are (i) no other
shares of capital stock or voting securities of Merger Sub, (ii) no
securities of Merger Sub convertible into or exchangeable for shares of
capital stock or voting securities of Merger Sub and (iii) no options or
other rights to acquire from Merger Sub, and no obligations of Merger
Sub to issue, any capital stock, voting securities or securities
convertible into or exchangeable for capital stock or voting securities
of Merger Sub. Merger Sub has not conducted any business prior to the
date hereof and has no, and prior to the Effective Time will have no,
assets, liabilities or obligations of any nature other than those
incident to its formation and pursuant to this Agreement and the Merger
and the other transactions contemplated by this Agreement.
(b) ORGANIZATION, STANDING AND CORPORATE POWER. Each of
Acquiror and its subsidiaries is a corporation or other legal entity
duly organized, validly existing and in good standing (with respect to
jurisdictions which recognize such concept) under the laws of the
jurisdiction in which it is organized and has the requisite corporate or
other power, as the case may be, and authority to carry on its business
as now being conducted, except, as to subsidiaries, for those
jurisdictions where the failure to be so organized, existing or in good
standing individually or in the aggregate would not have a material
adverse effect on Acquiror. Each of Acquiror and its subsidiaries is
duly qualified or licensed to do business and is in good standing (with
respect to jurisdictions which recognize such concept) in each
jurisdiction in which the nature of its business or the ownership,
leasing or operation of its properties makes such qualification or
licensing necessary, except for those jurisdictions where the failure to
be so qualified or licensed or to be in good standing individually or in
the aggregate would not have a material adverse effect on Acquiror.
Acquiror has made available to the Company prior to the execution of
this Agreement complete and correct copies of its certificate of
incorporation and bylaws and the articles of incorporation and code of
regulations of Merger Sub, each as amended to date.
(c) SUBSIDIARIES. Section 3.2(c) of the Acquiror Disclosure
Schedule includes all the subsidiaries of Acquiror which as of the date
of this Agreement are Significant Subsidiaries (as defined in Rule 1-02
of Regulation S-X of the SEC). All the outstanding shares of capital
stock of, or other equity interests in, each Significant Subsidiary (i)
have been validly issued and are fully paid and nonassessable, (ii) are
owned directly or indirectly by Acquiror, free and clear of all Liens
and (iii) are free of any other restriction (including any restriction
on the right to vote, sell or otherwise dispose of such capital stock or
22
other ownership interests), except in the case of clauses (ii) and (iii)
for any Liens or restrictions that would not have a material adverse
effect on Acquiror.
(d) CAPITAL STRUCTURE. The authorized capital stock of
Acquiror consists of shares of (i) 400,000,000 shares of Acquiror Common
Stock and (ii) 10,000,000 shares of preferred stock of Acquiror,
consisting of 10,000 shares without par value and 9,990,000 shares par
value $1.00 per share ("Acquiror Authorized Preferred Stock"). At the
close of business on September 30, 1998: (i) 162,634,182 shares of
Acquiror Common Stock were issued and outstanding; (ii) 20,834 shares of
Acquiror Common Stock in the aggregate were held by Acquiror in its
treasury; (iii) no shares of Acquiror Preferred Stock were issued and
outstanding; (iv) 2,147,237 shares of Acquiror Common Stock were subject
to outstanding employee stock options pursuant to the plans set forth in
Section 3.2(d)(iv) of the Acquiror Disclosure Schedule (collectively,
the "Acquiror Stock Plans") at September 30, 1998 (collectively,
"Acquiror Employee Stock Options"); and (v) 9,865,000 shares of Acquiror
Common Stock were reserved for issuance upon the conversion of
outstanding convertible trust preferred securities of a subsidiary trust
of Acquiror pursuant to the Amended and Restated Trust Agreement, dated
as of December 12, 1997 among Newell Co., as Depositor, The Chase
Manhattan Bank, as Property Trustee, Chase Manhattan Bank Delaware, as
Delaware Trustee and C.R. Davenport, Brett E. Gries and Ronn L.
Claussen, as Administrative Trustees, the Junior Convertible
Subordinated Indenture for the 5.25% Convertible Subordinated
Debentures, dated as of December 12, 1997, among Newell Co. and The
Chase Manhattan Bank, as Indenture Trustee, and the Guaranty Agreement
between Newell Co. and The Chase Manhattan Bank, as Guaranty Trustee,
dated December 12, 1997 (the "Trust Documents"). All outstanding shares
of capital stock of Acquiror are, and all shares which may be issued
will be, when issued, duly authorized, validly issued, fully paid and
nonassessable and not subject to preemptive rights. Except (i) as set
forth in this Section 3.2(d), (ii) for changes since September 30, 1998
resulting from the issuance of shares of Acquiror Common Stock pursuant
to the Acquiror Employee Stock Options, (iii) for up to an aggregate of
9,865,000 shares of Acquiror Common Stock authorized for issuance as of
September 30, 1998 upon the conversion of outstanding convertible trust
preferred securities of a subsidiary trust of Acquiror pursuant to the
Trust Documents, (iv) for outstanding preferred stock purchase rights
issued pursuant to the Rights Agreement, dated as of October 20, 1988,
by and between Acquiror and First Chicago Trust Company of New York
(formerly known as Morgan Shareholders Service Trust Company) or the
Rights Agreement, dated as of August 6, 1998, by and between Acquiror
and First Chicago Trust Company (referred to herein collectively as the
"Acquiror Rights Agreement"), and (v) as permitted by Section
4.1(b)(ii), (x) there are not issued, reserved for issuance or
outstanding (A) any shares of capital stock or other voting securities
of Acquiror, (B) any securities of Acquiror convertible into or
exchangeable or exercisable for shares of capital stock or voting
securities of Acquiror or (C) any warrants, calls, options or other
rights to acquire from Acquiror or any Acquiror subsidiary, and no
23
obligation of Acquiror or any Acquiror subsidiary to issue, any capital
stock, voting securities or securities convertible into or exchangeable
or exercisable for capital stock or voting securities of Acquiror and
(y) there are no outstanding obligations of Acquiror or any Acquiror
subsidiary to repurchase, redeem or otherwise acquire any such
securities or to issue, deliver or sell, or cause to be issued,
delivered or sold, any such securities. Neither Acquiror nor any
Acquiror subsidiary is a party to any voting agreement with respect to
the voting of any such securities. There are no outstanding (A)
securities of Acquiror or any Acquiror subsidiary convertible into or
exchangeable or exercisable for shares of capital stock or other voting
securities or ownership interests in any Acquiror subsidiary, (B)
warrants, calls, options or other rights to acquire from Acquiror or any
Acquiror subsidiary, and no obligation of Acquiror or any Acquiror
subsidiary to issue, any capital stock, voting securities or other
ownership interests in, or any securities convertible into or
exchangeable or exercisable for any capital stock, voting securities or
ownership interests in, any Acquiror subsidiary or (C) obligations of
Acquiror or any Acquiror subsidiary to repurchase, redeem or otherwise
acquire any such outstanding securities of Acquiror subsidiaries or to
issue, deliver or sell, or cause to be issued, delivered or sold, any
such securities.
(e) AUTHORITY; NONCONTRAVENTION. Each of Acquiror and Merger
Sub has all requisite corporate power and authority to enter into this
Agreement and, subject to the Acquiror Stockholder Approval (as defined
in Section 3.2(m)), to consummate the transactions contemplated by this
Agreement. The execution and delivery of this Agreement by Acquiror and
Merger Sub and the consummation by Acquiror and Merger Sub of the
transactions contemplated hereby have been duly authorized by all
necessary corporate action on the part of Acquiror and Merger Sub,
subject, in the case of the issuance of Acquiror Common Stock in
connection with the Merger, to the Acquiror Stockholder Approval. This
Agreement has been duly executed and delivered by Acquiror and Merger
Sub and, assuming the due authorization, execution and delivery by the
Company, constitutes a legal, valid and binding obligation of Acquiror
and Merger Sub, enforceable against Acquiror and Merger Sub in
accordance with its terms. The execution and delivery of this Agreement
does not, and the consummation of the transactions contemplated by this
Agreement and compliance with the provisions of this Agreement will not,
conflict with, or result in any violation of, or default (with or
without notice or lapse of time, or both) under, or give rise to a right
of termination, cancellation or acceleration of any obligation or loss
of a benefit under, or result in the creation of any Lien upon any of
the properties or assets of Acquiror or Merger Sub or any of its
subsidiaries under, (i) the certificate of incorporation or by-laws of
Acquiror or the comparable organizational documents of any of its
subsidiaries, (ii) any loan or credit agreement, note, bond, mortgage,
indenture, lease or other agreement, instrument, permit, concession,
franchise, license or similar authorization applicable to Acquiror or
any of its subsidiaries or their respective properties or assets or
(iii) subject to the governmental filings and other matters referred to
24
in the following sentence, any judgment, order, decree, statute, law,
ordinance, rule or regulation applicable to Acquiror or any of its
subsidiaries or their respective properties or assets, other than, in
the case of clauses (ii) and (iii), any such conflicts, violations,
defaults, rights, losses or Liens that individually or in the aggregate
would not (x) have a material adverse effect on Acquiror or (y)
reasonably be expected to materially impair or delay the ability of
Acquiror or Merger Sub to perform its obligations under this Agreement.
No consent, approval, order or authorization of, action by, or in
respect of, or registration, declaration or filing with, any
Governmental Entity is required by Acquiror or any of its subsidiaries
in connection with the execution and delivery of this Agreement by
Acquiror or the consummation by Acquiror of the transactions
contemplated hereby, except for: (1) the filing with the SEC of the
Joint Proxy Statement relating to the Acquiror Stockholders Meeting; (2)
the filing with and declaration of effectiveness by the SEC of the Form
S-4; (3) the filing with the SEC of such reports under Section 13(a),
13(d), 15(d) or 16(a) of the Exchange Act as may be required in
connection with this Agreement and the transactions contemplated hereby;
(4) the filing of the Certificate of Merger with the Secretary of State
of the State of Ohio and such filings with Governmental Entities to
satisfy the applicable requirements of state securities or "blue sky"
laws; (5) such filings with and approvals of the NYSE to permit the
shares of Acquiror Common Stock that are to be issued in the Merger and
under the Company Stock Plan to be listed on the NYSE; (6) the filing of
a premerger notification and report form by Acquiror under the HSR Act;
(7) such filings, consents, approvals, orders or authorizations required
to be made or obtained pursuant to Foreign Antitrust Laws; and (8) such
consents, approvals, orders or authorizations the failure of which to be
made or obtained individually or in the aggregate would not (x) have a
material adverse effect on Acquiror or (y) reasonably be expected to
materially impair or delay the ability of Acquiror or Merger Sub to
perform its obligations under this Agreement.
(f) REPORTS; UNDISCLOSED LIABILITIes. Acquiror has filed all
required reports, schedules, forms, statements and other documents
(including exhibits and all other information incorporated therein) with
the SEC since January 1, 1995 (the "Acquiror SEC Documents"). As of
their respective dates, the Acquiror SEC Documents complied in all
material respects with the requirements of the Securities Act or the
Exchange Act, as the case may be, and the rules and regulations of the
SEC promulgated thereunder applicable to such Acquiror SEC Documents,
and none of the Acquiror SEC Documents when filed contained any untrue
statement of a material fact or omitted to state a material fact
required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were
made, not misleading. Except to the extent that information contained
in any Acquiror SEC Document has been revised or superseded by a later
filed Acquiror SEC Document, none of the Acquiror SEC Documents contains
any untrue statement of a material fact or omits to state any material
fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were
25
made, not misleading. The financial statements of Acquiror included in
the Acquiror SEC Documents comply as to form, as of their respective
dates of filing with the SEC, in all material respects with applicable
accounting requirements and the published rules and regulations of the
SEC with respect thereto, have been prepared in accordance with
generally accepted accounting principles (except, in the case of
unaudited statements, as permitted by Form 10-Q of the SEC) applied on a
consistent basis during the periods involved (except as may be indicated
in the notes thereto) and fairly present in all material respects the
consolidated financial position of Acquiror and its consolidated
subsidiaries as of the dates thereof and the consolidated statements of
income, stockholders' equity and cash flows for the periods then ended
(subject, in the case of unaudited statements, to normal recurring year-
end audit adjustments). Except (A) as reflected in such financial
statements or in the notes thereto or (B) for liabilities incurred in
connection with this Agreement or the transactions contemplated hereby,
neither Acquiror nor any of its subsidiaries has any liabilities or
obligations of any nature which, individually or in the aggregate, would
have a material adverse effect on Acquiror.
(g) INFORMATION SUPPLIED. None of the information supplied
or to be supplied by Acquiror specifically for inclusion or
incorporation by reference in (i) the Form S-4 will, at the time the
Form S-4 becomes effective under the Securities Act, contain any untrue
statement of a material fact or omit to state any material fact required
to be stated therein or necessary to make the statements therein not
misleading or (ii) the Joint Proxy Statement will, at the date it is
first mailed to Acquiror's stockholders or at the time of the Acquiror
Stockholders Meeting, contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading. The Form S-4
and the Joint Proxy Statement will comply as to form in all material
respects with the requirements of the Securities Act and the Exchange
Act, respectively, and the rules and regulations thereunder, except that
no representation or warranty is made by Acquiror with respect to
statements made or incorporated by reference therein based on
information supplied by the Company specifically for inclusion or
incorporation by reference in the Form S-4 or the Joint Proxy Statement.
(h) ABSENCE OF CERTAIN CHANGES OR EVENTS. Except for
liabilities incurred in connection with this Agreement or the
transactions contemplated hereby, since December 31, 1997, Acquiror and
its subsidiaries have conducted their business only in the ordinary
course or as disclosed in any Acquiror Filed SEC Document, and there has
not been (1) any declaration, setting aside or payment of any dividend
or other distribution (whether in cash, stock or property) with respect
to any of Acquiror's capital stock, other than regular quarterly cash
dividends on the Acquiror Common Stock, (2) any split, combination or
reclassification of any of Acquiror's capital stock or any issuance or
the authorization of any issuance of any other securities in respect of,
in lieu of or in substitution for shares of Acquiror's capital stock,
26
except for issuances of Acquiror Common Stock upon the exercise of
Acquiror Employee Stock Options awarded prior to September 30, 1998 in
accordance with their present terms or issued pursuant to Section 4.1(b)
or in accordance with the terms of the Acquiror Stock Plans, (3) (A) any
granting by Acquiror or any of its subsidiaries to any current or former
director, executive officer or other key employee of Acquiror or its
subsidiaries of any increase in compensation, bonus or other benefits,
except for normal increases in the ordinary course of business or as was
required under any employment agreements in effect as of the date of the
most recent audited financial statements included in the Acquiror SEC
Documents filed and publicly available prior to the date of this
Agreement (as amended to the date of this Agreement, the "Acquiror Filed
SEC Documents"), (B) any granting by Acquiror or any of its subsidiaries
to any such current or former director, executive officer or key
employee of any increase in severance or termination pay, except in the
ordinary course of business or pursuant to the Acquiror Stock Plans, or
(C) any entry by Acquiror or any of its subsidiaries into, or any
amendment of, any employment, deferred compensation, consulting,
severance, termination or indemnification agreement with any such
current or former director, executive officer or key employee, other
than in the ordinary course of business, (4) except insofar as may have
been disclosed in the Acquiror Filed SEC Documents or required by a
change in generally accepted accounting principles, any change in
accounting methods, principles or practices by Acquiror materially
affecting its assets, liabilities or business or (5) except insofar as
may have been disclosed in the Acquiror Filed SEC Documents, any tax
election that individually or in the aggregate would reasonably be
expected to have a material adverse effect on Acquiror or any of its tax
attributes or any settlement or compromise of any material income tax
liability.
(i) COMPLIANCE WITH APPLICABLE LAWS; LITIGATION. Acquiror,
its subsidiaries and employees hold all permits, licenses, variances,
exemptions, orders, registrations and approvals of all Governmental
Entities which are required for the operation of the businesses of
Acquiror and its subsidiaries (collectively, the "Acquiror Permits")
except where the failure to have any such Acquiror Permits individually
or in the aggregate would not have a material adverse effect on
Acquiror. Acquiror and its subsidiaries are in compliance with the
terms of the Acquiror Permits and all applicable statutes, laws,
ordinances, rules and regulations, except where the failure so to comply
individually or in the aggregate would not have a material adverse
effect on Acquiror. As of the date of this Agreement, except as
disclosed in the Acquiror Filed SEC Documents, no action, demand,
requirement or investigation by any Governmental Entity and no suit,
action or proceeding by any person, in each case with respect to
Acquiror or any of its subsidiaries or any of their respective
properties is pending or, to the knowledge of Acquiror, threatened,
other than, in each case, those the outcome of which individually or in
the aggregate would not (i) reasonably be expected to have a material
adverse effect on Acquiror or (ii) reasonably be expected to materially
27
impair or delay the ability of Acquiror or Merger Sub to perform its
obligations under this Agreement.
(j) ABSENCE OF CHANGES IN BENEFIT PLANS. Since February 1,
1998, there has not been any (i) adoption by Acquiror or any of its
subsidiaries of any collective bargaining agreement or any material
bonus, pension, profit sharing, deferred compensation, incentive
compensation, stock ownership, stock purchase, stock option, phantom
stock, retirement, vacation, severance, disability, death benefit,
hospitalization, medical or other plan, arrangement or understanding
providing benefits to any current or former employee, officer or
director of Acquiror or any of its wholly owned subsidiaries
(collectively, the "Acquiror Benefit Plans") to which any of Acquiror's
executive officers is a participant or (ii) amendment to any Acquiror
Benefit Plan that resulted in a material increase in the benefits
received or to be received thereunder by any executive officer of
Acquiror. Since January 1, 1998, there has not been any material
increase in the aggregate benefits provided under the Acquiror Benefits
Plans.
(k) ERISA COMPLIANCE.
(i) With respect to the Acquiror Benefit Plans, no event has
occurred and, to the knowledge of Acquiror, there exists no
condition or set of circumstances, in connection with which
Acquiror or any of its subsidiaries could be subject to any
liability that individually or in the aggregate would have a
material adverse effect on Acquiror under ERISA, the Code or any
other applicable law.
(ii) Each Acquiror Benefit Plan has been administered in
accordance with its terms, all applicable laws, including ERISA and
the Code, and the terms of all applicable collective bargaining
agreements, except for any failures so to administer any Acquiror
Benefit Plan that individually or in the aggregate would not
reasonably be expected to have a material adverse effect on
Acquiror. Acquiror, its subsidiaries and all the Acquiror Benefit
Plans are in compliance with the applicable provisions of ERISA,
the Code and all other applicable laws and the terms of all
applicable collective bargaining agreements, except for any
failures to be in such compliance that individually or in the
aggregate would not reasonably be expected to have a material
adverse effect on Acquiror. Each Acquiror Benefit Plan that is
intended to be qualified under Section 401(a) or 401(k) of the Code
has received a favorable determination letter from the IRS that it
is so qualified and each trust established in connection with any
Acquiror Benefit Plan that is intended to be exempt from federal
income taxation under Section 501(a) of the Code has received a
determination letter from the IRS that such trust is so exempt. To
the knowledge of Acquiror, no fact or event has occurred since the
date of any determination letter from the IRS which is reasonably
likely to affect adversely the qualified status of any such
28
Acquiror Benefit Plan or the exempt status of any such trust,
except for any occurrence that individually or in the aggregate
would not reasonably be expected to have a material adverse effect
on Acquiror, and to the knowledge of Acquiror, all contributions
to, and payments from, such Plans which are required to be made in
accordance with such Plans, ERISA or the Code have been timely made
other than any failures that individually or in the aggregate would
not reasonably be expected to have a material adverse effect on
Acquiror.
(iii) Except as any of the following either individually or in
the aggregate would not reasonably be expected to have a material
adverse effect on Acquiror, (x) neither Acquiror nor any ERISA
Affiliate of Acquiror, which together with Acquiror would be deemed
to be a "single employer" within the meaning of Section 4001(b) of
ERISA, has incurred any liability under Title IV of ERISA and no
condition exists that presents a risk to Acquiror or any ERISA
Affiliate of Acquiror of incurring any such liability (other than
liability for benefits or premiums to the Pension Benefit Guaranty
Corporation arising in the ordinary course), (y) no Acquiror
Benefit Plan has incurred an "accumulated funding deficiency"
(within the meaning of Section 302 of ERISA or Section 412 of the
Code) whether or not waived and (z) to the knowledge of Acquiror,
there are not any facts or circumstances that would materially
change the funded status of any Acquiror Benefit Plan that is a
"defined benefit" plan (as defined in Section 3(35) of ERISA) since
the date of the most recent actuarial report for such plan.
(iv) Neither Acquiror nor any of its subsidiaries is a party
to any collective bargaining or other labor union contract
applicable to persons employed by Acquiror or any of its
subsidiaries and no collective bargaining agreement is being
negotiated by Acquiror or any of its subsidiaries, in each case
that is material to Acquiror and its subsidiaries taken as a whole.
As of the date of this Agreement, there is no labor dispute, strike
or work stoppage against Acquiror or any of its subsidiaries
pending or, to the knowledge of Acquiror, threatened which may
interfere with the respective business activities of Acquiror or
any of its subsidiaries, except where such dispute, strike or work
stoppage individually or in the aggregate would not reasonably be
expected to have a material adverse effect on Acquiror. As of the
date of this Agreement, to the knowledge of Acquiror, none of
Acquiror, any of its subsidiaries or any of their respective
representatives or employees has committed any unfair labor
practice in connection with the operation of the respective
businesses of Acquiror or any of its subsidiaries, and there is no
charge or complaint against Acquiror or any of its subsidiaries by
the National Labor Relations Board or any comparable governmental
agency pending or threatened in writing, except for any occurrence
that individually or in the aggregate would not reasonably be
expected to have a material adverse effect on Acquiror.
29
(v) No Acquiror Benefit Plan provides medical benefits
(whether or not insured) with respect to current or former
employees after retirement or other termination of service the cost
of which is material to Acquiror and its subsidiaries taken as a
whole.
(vi) No amounts payable under the Acquiror Benefit Plans
solely as a result of the consummation of the transactions
contemplated by this Agreement will fail to be deductible for
federal income tax purposes by virtue of Section 280G of the Code.
The consummation of the transactions contemplated by this Agreement
will not, either alone or in combination with another event, (A)
entitle any current or former employee, officer or director of
Acquiror or any ERISA Affiliate of Acquiror to severance pay,
unemployment compensation or any other payment, except as expressly
provided in this Agreement (B) accelerate the time of payment or
vesting, or increase the amount of compensation due any such
employee, officer or director or (C) constitute a "change of
control" under any Acquiror Benefit Plan.
(vii) With respect to each Acquiror Benefit Plan: (x) no
actions, suits, claims or disputes are pending or, to the knowledge
of Acquiror, threatened, other than claims for benefits made in
accordance with the terms of such Acquiror Benefit Plan, except for
such actions, suits, claims or disputes that individually or in the
aggregate would not reasonably be expected to have a material
adverse effect on Acquiror; (y) no audits are pending with any
governmental or regulatory agency and to the knowledge of Acquiror
there are no facts which could give rise to any liability in the
event of such an audit that either individually or in the aggregate
would have a material adverse effect on the Acquiror; and (z) to
the knowledge of Acquiror, all reports and returns required to be
filed with any governmental agency or distributed to any
participant in any Acquiror Benefit Plan have been so duly filed or
distributed other than any failure to file or distribute such
reports or returns that individually or in the aggregate would not
reasonably be expected to have a material adverse effect on
Acquiror.
(viii) Acquiror has not incurred any liability under Code
Section 4975, and no fact exists which could result in a liability
to Acquiror under Code Section 4975 that would reasonably be
expected to have a material adverse effect on the Company.
(ix) Neither Acquiror nor any ERISA Affiliate contributes to a
multiemployer plan described in Section 3(37) of ERISA, no
withdrawal liability has been incurred with respect to any such
plan and no withdrawal liability would be incurred upon the
withdrawal from any such plan by Acquiror or any ERISA Affiliate as
of the date hereof, except for any withdrawal that individually or
in the aggregate would not have a material adverse effect on
Acquiror.
30
(l) TAXES
(i) Each of Acquiror and its subsidiaries has filed all
material tax returns and reports required to be filed by it and all
such returns and reports are complete and correct in all material
respects, or requests for extensions to file such returns or
reports have been timely filed, granted and have not expired,
except to the extent that such failures to file, to be complete or
correct or to have extensions granted that remain in effect
individually or in the aggregate would not have a material adverse
effect on Acquiror. Acquiror and each of its subsidiaries has paid
(or Acquiror has paid on its behalf) all taxes shown as due on such
returns, and the most recent financial statements contained in the
Acquiror SEC Documents reflect an adequate reserve for all taxes
payable by Acquiror and its subsidiaries for all taxable periods
and portions thereof accrued through the date of such financial
statements.
(ii) No deficiencies for any taxes have been proposed,
asserted or assessed against Acquiror or any of its subsidiaries
that are not adequately reserved for, except for deficiencies that
individually or in the aggregate would not have a material adverse
effect on Acquiror.
(iii) Neither Acquiror nor any of its subsidiaries has taken
any action or knows of any fact, agreement, plan or other
circumstance that is reasonably likely to prevent the Merger from
qualifying as a reorganization within the meaning of Section 368(a)
of the Code.
(m) VOTING REQUIREMENTS. The affirmative vote at the
Acquiror Stockholders Meeting (the "Acquiror Stockholder Approval") of
the holders of a majority of the voting power of all outstanding shares
of Acquiror Common Stock is the only vote of the holders of any class or
series of Acquiror's capital stock necessary to approve the issuance of
Acquiror Common Stock to be issued pursuant to this Agreement. The
Board of Directors of Acquiror has duly and validly approved and taken
all corporate action required to be taken by the Acquiror Board of
Directors for the consummation of the transactions contemplated by this
Agreement.
(n) STATE TAKEOVER STATUTES. The Board of Directors of
Acquiror has taken all necessary action so that no Takeover Statute
(including the interested stockholder provisions codified in Section 203
of the Delaware General Corporation Law) or any applicable anti-takeover
provision in the Acquiror's certificate of incorporation or by-laws is
applicable to the Merger and the other transactions contemplated by this
Agreement. To the knowledge of Acquiror, no other state takeover
statute is applicable to the Merger or the other transactions
contemplated by this Agreement.
31
(o) ACCOUNTING MATTERS. Acquiror has disclosed to its
independent public accountants all actions taken by it or its
subsidiaries that would impact the accounting of the business
combination to be effected by the Merger as a pooling of interests. As
of the date hereof, Acquiror believes that the Merger will qualify for
"pooling of interests" accounting.
(p) BROKERS. Except for Robert W. Baird & Co. Incorporated,
no broker, investment banker, financial advisor or other person is
entitled to any broker's, finder's, financial advisor's or other similar
fee or commission in connection with the transactions contemplated by
this Agreement based upon arrangements made by or on behalf of Acquiror
or Merger Sub.
(q) OWNERSHIP OF THE COMPANY CAPITAL STOCK. Except for
shares owned by Acquiror Benefit Plans or shares held or managed for the
account of another person or as to which Acquiror is required to act as
a fiduciary or in a similar capacity, as of the date hereof, neither
Acquiror nor, to its knowledge without independent investigation, any of
its affiliates, (i) beneficially owns (as defined in Rule 13d-3 under
the Exchange Act), directly or indirectly, or (ii) is party to any
agreement, arrangement or understanding for the purpose of acquiring,
holding, voting or disposing of, in each case, shares of capital stock
of the Company.
(r) CERTAIN CONTRACTS. Except as set forth in the Acquiror
Filed SEC Documents or as permitted pursuant to Section 4.1(b), neither
Acquiror nor any of its subsidiaries is a party to or bound by (i) any
agreement relating to the incurring of indebtedness (including sale and
leaseback and capitalized lease transactions and other similar financing
transactions but excluding commercial paper) providing for payment or
repayment in excess of $100.0 million, (ii) any "material contract" (as
such term is defined in Item 601(b)(10) of Regulation S-K of the SEC) or
(iii) any non-competition agreement which purports to limit in any
material respect the manner in which, or localities in which, all or any
substantial portion of the business of Acquiror and its subsidiaries,
taken as a whole, is or would be conducted.
(s) OPINION OF FINANCIAL ADVISOR. Acquiror has received the
opinion of Robert W. Baird & Co. Incorporated, dated the date of this
Agreement, to the effect that, as of such date, the Exchange Ratio for
the conversion of Company Common Stock into Acquiror Common Stock
pursuant to the Merger is fair to Acquiror from a financial point of
view, a signed copy of which opinion will be made available to the
Company promptly after the date hereof.
(t) ENVIRONMENTAL MATTERS.
(i) During the three-year period immediately preceding the
date of this Agreement, neither Acquiror nor any of its
subsidiaries has received any written communication, whether from a
Governmental Entity, citizens' group, employee or otherwise,
32
alleging that Acquiror or any of its subsidiaries is not in
compliance with applicable Environmental Laws, other than those
instances of alleged noncompliance which individually or in the
aggregate would not (x) reasonably be expected to have a material
adverse effect on Acquiror or (y) reasonably be expected to
materially impair or delay the ability of Acquiror to perform its
obligations under this Agreement.
(ii) There is no Environmental Claim pending or, to the
knowledge of Acquiror, threatened, against Acquiror or any of its
subsidiaries or, to the knowledge of Acquiror, against any person
whose liability for any Environmental Claim Acquiror or any of its
subsidiaries has or may have retained or assumed either
contractually or by operation of law, other than those
Environmental Claims which individually or in the aggregate would
not (x) reasonably be expected to have a material adverse effect on
Acquiror or (y) reasonably be expected to materially impair or
delay the ability of Acquiror to perform its obligations under this
Agreement.
(iii) There are no present actions, activities,
circumstances, conditions, events or incidents, including, without
limitation, the Release or presence of any Hazardous Material at
any property, that could reasonably be expected to result in
liability under any Environmental Law for Acquiror or any of its
subsidiaries or, to the knowledge of Acquiror, for any person whose
liability for any Environmental Claim Acquiror or any of its
subsidiaries has or may have retained or assumed either
contractually or by operation of law, other than those liabilities
which individually or in the aggregate would not (x) reasonably be
expected to have a material adverse effect on Acquiror or (y)
reasonably be expected to materially impair or delay the ability of
Acquiror to perform its obligations under this Agreement.
(u) INTELLECTUAL PROPERTY.
(i) Acquiror and its subsidiaries own or have a binding,
enforceable right to use all letters patent, patent applications,
trade names, brand names, trademarks, service marks, trademark and
service mark registrations and applications, copyright
registrations and applications, both domestic and foreign
(collectively, the "Acquiror Intellectual Property") used in their
businesses substantially as currently conducted except for such
Acquiror Intellectual Property, the failure of which to own or have
a binding, enforceable right to use individually or in the
aggregate would not reasonably be expected to have a material
adverse effect on Acquiror. Neither Acquiror nor any of its
subsidiaries has received any written notice of infringement of or
conflict with and, to the knowledge of the Acquiror, there are no
infringements of or conflicts with, the rights of others with
respect to the use of any Acquiror Intellectual Property that
individually or in the aggregate, in either such case, would
33
reasonably be expected to have a material adverse effect on
Acquiror or would reasonably be expected to materially impair or
delay the ability of Acquiror to perform its obligations under this
Agreement. Neither Acquiror nor any of its subsidiaries has
received any written notice that the conduct of another person's
business or the nature of any of products sold or services provided
by another person infringes upon or conflicts with Acquiror's
registered trademarks set forth in its Annual Report on Form 10-K
for the fiscal year ended December 31, 1997 other than those
infringements or conflicts that individually or in the aggregate
would not reasonably be expected to have a material adverse effect
on Acquiror or would not reasonably be expected to materially
impair or delay the ability of Acquiror to perform its obligations
under this Agreement.
(ii) Acquiror has conducted a comprehensive review of its
computer systems' ability to process properly year date codes after
December 31, 1999, has formulated a plan to modify or replace
programs where necessary and believes that all necessary
reprogramming efforts will be completed prior to December 31, 1999,
except for any failures to complete such reprogramming efforts as
would not individually or in the aggregate have a material adverse
effect on Acquiror.
ARTICLE 4
COVENANTS RELATING TO CONDUCT OF BUSINESS
Section 4.1 CONDUCT OF BUSINESS.
(a) CONDUCT OF BUSINESS BY THE COMPANY. Except as set forth
in Section 4.1(a) of the Company Disclosure Schedule, except as
otherwise expressly contemplated by this Agreement or except as
consented to by Acquiror, such consent not to be unreasonably withheld
or delayed, during the period from the date of this Agreement to the
Effective Time, the Company shall, and shall cause its subsidiaries to,
carry on their respective businesses in the ordinary course consistent
with past practice and in compliance in all material respects with all
applicable laws and regulations and, to the extent consistent therewith,
use all reasonable efforts to preserve intact their current business
organizations (other than internal organizational realignments), use all
reasonable efforts to keep available the services of their current
officers and other key employees and preserve their relationships with
those persons having business dealings with them to the end that their
goodwill and ongoing businesses shall be unimpaired at the Effective
Time. Without limiting the generality of the foregoing (but subject to
the above exceptions), during the period from the date of this Agreement
to the Effective Time, the Company shall not, and shall not permit any
of its subsidiaries to:
34
(i) other than dividends and distributions by a direct or
indirect wholly owned subsidiary of the Company to its parent, or
by a subsidiary that is partially owned by the Company or any of
its subsidiaries, provided that the Company or any such subsidiary
receives or is to receive its proportionate share thereof, and
other than the regular quarterly cash dividends with respect to the
Company Common Stock, (x) declare, set aside or pay any dividends
on, or make any other distributions in respect of, any of its
capital stock, (y) split, combine or reclassify any of its capital
stock or issue or authorize the issuance of any other securities in
respect of, in lieu of or in substitution for shares of its capital
stock, except for issuances of the Company Common Stock upon the
exercise of the Company Employee Stock Options under the Company
Stock Plan or in connection with other awards under the Company
Stock Plan, in each case, outstanding as of September 30, 1998 and
in accordance with their present terms or issued pursuant to
Section 4.1(a)(ii) or (z) except pursuant to agreements entered
into with respect to the Company Stock Plan that are in effect as
of the close of business on September 30, 1998, purchase, redeem or
otherwise acquire any shares of capital stock of the Company or any
of its subsidiaries or any other securities thereof or any rights,
warrants or options to acquire any such shares or other securities;
(ii) issue, deliver, sell, pledge or otherwise encumber or
subject to any Lien any shares of its capital stock, any other
voting securities or any securities convertible into, or any
rights, warrants or options to acquire, any such shares, voting
securities or convertible securities, other than the issuance of
Company Common Stock upon the exercise of the Company Employee
Stock Options or in connection with other awards under the Company
Stock Plan (I) outstanding as of September 30, 1998 and in
accordance with their present terms or granted after the date
thereof in the ordinary course of business consistent with past
practice or (II) after consulting with Acquiror, otherwise granted
after the date hereof so long as (x) the amount of the Company
Common Stock subject to the Company Employee Stock Options and/or
other awards under the Company Stock Plan granted after September
30, 1998 do not exceed 1,100,000 shares of Company Common Stock in
the aggregate; and (y) the amount of performance shares under the
Company Stock Plan granted after September 30, 1998 do not exceed
125,000 performance shares in the aggregate; PROVIDED, HOWEVER,
that any such grants made after the date of this Agreement shall
not have terms that would impair the parties' ability to obtain
pooling of interests accounting treatment for the Merger
(including, without limitation, provisions for accelerated vesting
upon a "change of control" of the Company);
(iii) amend its articles of incorporation, code of regulations
or other comparable organizational documents, or, in the case of
the Company, merge or consolidate with any person;
35
(iv) acquire or agree to acquire by merging or consolidating
with, or by purchasing a substantial portion of the assets of, or
by any other manner, any business or any person, except for such
acquisitions for which the aggregate consideration (including
indebtedness directly or indirectly assumed) is less than $200.0
million;
(v) sell, lease, license, mortgage or otherwise encumber or
subject to any Lien or otherwise dispose of any of its properties
or assets (x) other than in the ordinary course of business
consistent with past practice or (y) for an aggregate consideration
(including indebtedness directly or indirectly assumed) in excess
of $200.0 million; PROVIDED, HOWEVER, that, prior to effecting any
such sale or disposition, the Company obtains written assurance
from its independent public accountants that such sale or
disposition will not impair the parties' ability to obtain pooling
of interests accounting treatment for the Merger;
(vi) take any action that would cause the representations and
warranties set forth in clauses (3), (4) or (5) of Section 3.1(g)
to no longer be true and correct (with each reference in Section
3.1(g) to "ordinary course of business" being deemed for purposes
of this Section 4.1(a)(vi) to be immediately followed by
"consistent with past practice");
(vii) except as provided in Section 4.2, the Company shall
not amend, modify or waive any provision of the Company Rights
Agreement, and shall not take any action to redeem the rights
issued thereunder or render the rights issued thereunder
inapplicable to a transaction, other than to permit another
transaction that the Board of Directors of the Company has
determined is a Company Superior Proposal;
(viii) license (other than pursuant to agreements outstanding
as of the date hereof), transfer or otherwise dispose of, or permit
to lapse, any rights in the Material Company Trademarks other than
licenses in the ordinary course of business consistent with past
practice; or
(ix) authorize, or commit or agree to take, any of the
foregoing actions;
PROVIDED that the limitations set forth in this Section 4.1(a) (other
than clause (iii)) shall not apply to any transaction to which the only
parties are the Company and any wholly owned subsidiary or subsidiaries
of the Company.
(b) CONDUCT OF BUSINESS BY ACQUIROR. Except as otherwise
expressly contemplated by this Agreement or except as consented to by
the Company, such consent not to be unreasonably withheld or delayed,
during the period from the date of this Agreement to the Effective Time,
Acquiror shall, and shall cause its subsidiaries to, carry on their
36
respective businesses in the ordinary course consistent with past
practice and in compliance in all material respects with all applicable
laws and regulations and, to the extent consistent therewith, use all
reasonable efforts to preserve intact their current business
organizations (other than internal organizational realignments), use all
reasonable efforts to keep available the services of their current
officers and other key employees and preserve their relationships with
those persons having business dealings with them to the end that their
goodwill and ongoing businesses shall be unimpaired at the Effective
Time. Without limiting the generality of the foregoing (but subject to
the above exceptions), during the period from the date of this Agreement
to the Effective Time, Acquiror shall not, and shall not permit any of
its subsidiaries to:
(i) other than dividends and distributions by a direct or
indirect wholly owned subsidiary of Acquiror to its parent, or by a
subsidiary that is partially owned by Acquiror or any of its
subsidiaries, provided that Acquiror or any such subsidiary
receives or is to receive its proportionate share thereof, and
other than the regular quarterly cash dividends with respect to the
Acquiror Common Stock, (x) declare, set aside or pay any dividends
on, or make any other distributions in respect of, any of its
capital stock, (y) split, combine or reclassify any of its capital
stock or issue or authorize the issuance of any other securities in
respect of, in lieu of or in substitution for shares of its capital
stock, except for issuances of Acquiror Common Stock upon the
exercise of Acquiror Employee Stock Options under the Acquiror
Stock Plans or in connection with other awards under the Acquiror
Stock Plans, in each case, outstanding as of September 30, 1998 and
in accordance with their present terms or issued pursuant to
Section 4.1(b)(ii) or (z) purchase, redeem or otherwise acquire any
shares of capital stock of Acquiror or any of its subsidiaries or
any other securities thereof or any rights, warrants or options to
acquire any such shares or other securities;
(ii) issue, deliver, sell, pledge or otherwise encumber or
subject to any Lien any shares of its capital stock, any other
voting securities or any securities convertible into, or any
rights, warrants or options to acquire, any such shares, voting
securities or convertible securities, other than (x) the issuance
of shares of Acquiror Common Stock permitted by Section 4.1(b)(iv),
(y) the issuance of up to an aggregate of 9,865,000 shares of
Acquiror Common Stock upon the conversion of outstanding
convertible trust preferred securities of a subsidiary trust of
Acquiror pursuant to the Trust Documents and (z) the issuance of
Acquiror Common Stock or options to purchase shares of Acquiror
Common Stock upon the exercise of Acquiror Employee Stock Options
or in connection with other awards under the Acquiror Stock Plans
(I) outstanding as of September 30, 1998 and in accordance with
their present terms or granted after the date thereof in the
ordinary course of business consistent with past practice or (II)
after consulting with the Company, otherwise granted after the date
37
hereof so long as the amount of Acquiror Common Stock subject to
Acquiror Employee Stock Options and/or other awards under the
Acquiror Stock Plans granted after September 30, 1998 do not exceed
1,100,000 shares of Acquiror Common Stock in the aggregate;
PROVIDED, HOWEVER, that any such grants made after the date of this
Agreement shall not have terms that would impair the parties'
ability to obtain pooling of interests accounting treatment for the
Merger;
(iii) amend its certificate of incorporation, by-laws or other
comparable organizational documents;
(iv) acquire or agree to acquire by merging or consolidating
with, or by purchasing a substantial portion of the assets of, or
by any other manner, any business or any person, except for such
acquisitions for which the aggregate consideration (including
indebtedness directly or indirectly assumed) is not more than
$500.0 million, of which not more than $300.0 million may be paid
through the issuance of shares of Acquiror Common Stock which shall
be valued at the closing price of the Acquiror Common Stock on the
NYSE on the day prior to the announcement of any such acquisition;
(v) sell, lease, license, mortgage or otherwise encumber or
subject to any Lien or otherwise dispose of any of its properties
or assets (x) other than in the ordinary course of business
consistent with past practice or (y) for an aggregate consideration
(including indebtedness directly or indirectly assumed) in excess
of $200.0 million; PROVIDED, HOWEVER, that, prior to effecting any
such sale or disposition, Acquiror obtains written assurance from
its independent public accountants that such sale or disposition
will not impair the parties' ability to obtain pooling of interests
accounting treatment for the Merger;
(vi) take any action that would cause the representations and
warranties set forth in clauses (3), (4) or (5) of Section 3.2(h)
to no longer be true and correct (with each reference in Section
3.2(h) to "ordinary course of business" being deemed for purposes
of this Section 4.l(b)(vi) to be immediately followed by
"consistent with past practice");
(vii) except as provided in Section 4.3, Acquiror shall not
amend, modify or waive any provision of the Acquiror Rights
Agreement, and shall not take any action to redeem the rights
issued thereunder or render the rights issued thereunder
inapplicable to a transaction, other than to permit another
transaction that the Board of Directors of Acquiror has determined
is an Acquiror Superior Proposal; or
(viii) authorize, or commit or agree to take, any of the
foregoing actions;
38
PROVIDED that the limitations set forth in this Section 4.1(b) (other
than clause (iii)) shall not apply to any transaction to which the only
parties are Acquiror and any wholly owned subsidiary or subsidiaries of
Acquiror.
(c) COORDINATION OF DIVIDENDS. Subject to Section 5.14, each
of Acquiror and the Company shall coordinate with the other regarding
the declaration and payment of dividends in respect of the Acquiror
Common Stock and the Company Common Stock and the record dates and
payment dates relating thereto, it being the intention of Acquiror and
the Company that any holder of the Company Common Stock or Acquiror
Common Stock shall not receive two dividends, or fail to receive one
dividend, for any single calendar quarter with respect to its shares of
the Company Common Stock and/or shares of Acquiror Common Stock,
including shares of Acquiror Common Stock that a holder receives in
exchange for shares of the Company Common Stock pursuant to the Merger.
(d) OTHER ACTIONS. Except as required by law, the Company
and Acquiror shall not, and shall not permit any of their respective
subsidiaries to, voluntarily take any action that would reasonably be
expected to result in any of the conditions to the Merger set forth in
Article 6 not being satisfied.
(e) ADVICE OF CHANGES. The Company and Acquiror shall
promptly advise the other party orally and in writing to the extent it
has knowledge of any change or event having, or which, insofar as can
reasonably be foreseen, would reasonably be expected to have a material
adverse effect on such party or on the truth of their respective
representations and warranties or the ability of the conditions set
forth in Article 6 to be satisfied; PROVIDED, HOWEVER, that no such
notification shall affect the representations, warranties, covenants or
agreements of the parties (or remedies with respect thereto) or the
conditions to the obligations of the parties under this Agreement.
(f) CONTROL OF OTHER PARTY'S BUSINESS. Nothing contained in
this Agreement shall give Acquiror, directly or indirectly, the right to
control or direct the Company's operations prior to the Effective Time.
Nothing contained in this Agreement shall give the Company, directly or
indirectly, the right to control or direct Acquiror's operations prior
to the Effective Time. Prior to the Effective Time, each of Acquiror
and the Company shall exercise, consistent with the terms and conditions
of this Agreement, complete control and supervision over its respective
operations.
Section 4.2 NO SOLICITATION BY THE COMPANY.
(a) The Company shall not, nor shall it permit any of its
subsidiaries to, nor shall it authorize or permit any of its directors,
officers or employees or any investment banker, financial advisor,
attorney, accountant or other representative retained by it or any of
its subsidiaries to, directly or indirectly through another person, (i)
solicit, initiate or encourage (including by way of furnishing
39
information), or take any other action designed to facilitate, any
inquiries or the making of any proposal which constitutes any Company
Takeover Proposal (as defined below) or (ii) participate in any
discussions or negotiations regarding any Company Takeover Proposal;
PROVIDED, HOWEVER, that if, at any time, the Board of Directors of the
Company determines in good faith, after consultation with outside
counsel, that it is necessary to do so in order to act in a manner
consistent with its fiduciary duties to the Company's stockholders under
applicable law, the Company may, in response to a Company Superior
Proposal (as defined in Section 4.2(b)) which was not solicited by it or
which did not otherwise result from a breach of this Section 4.2(a) and
subject to providing prior written notice of its decision to take such
action to Acquiror (the "Company Notice") and compliance with Section
4.2(c), following delivery of the Company Notice (x) furnish information
with respect to the Company and its subsidiaries to any person making a
Company Superior Proposal pursuant to a customary confidentiality
agreement (as determined by the Company after consultation with its
outside counsel) that is no less restrictive than the Confidentiality
Agreement and (y) participate in discussions or negotiations regarding
such Company Superior Proposal. For purposes of this Agreement,
"Company Takeover Proposal" means any inquiry, proposal or offer from
any person relating to any (w) direct or indirect acquisition or
purchase of a business that constitutes 15% or more of the net revenues,
net income or the assets of the Company and its subsidiaries, taken as a
whole, (x) direct or indirect acquisition or purchase of 15% or more of
any class of equity securities of the Company or any of its subsidiaries
whose business constitutes 15% or more of the net revenues, net income
or assets of the Company and its subsidiaries, taken as a whole, (y)
tender offer or exchange offer that if consummated would result in any
person beneficially owning 15% or more of any class of equity securities
of the Company or any of its subsidiaries whose business constitutes 15%
or more of the net revenues, net income or assets of the Company and its
subsidiaries, taken as a whole, or (z) merger, consolidation, business
combination, recapitalization, liquidation, dissolution or similar
transaction involving the Company or any of its subsidiaries whose
business constitutes 15% or more of the net revenues, net income or
assets of the Company and its subsidiaries, taken as a whole, other than
the transactions contemplated by this Agreement.
(b) Except as expressly permitted by this Section 4.2,
neither the Board of Directors of the Company nor any committee thereof
shall (i) withdraw or modify, or propose publicly to withdraw or modify,
in a manner adverse to Acquiror, the approval or recommendation by such
Board of Directors or such committee of the Merger or this Agreement,
(ii) approve or recommend, or propose publicly to approve or recommend,
any Company Takeover Proposal or (iii) cause the Company to enter into
any letter of intent, agreement in principle, acquisition agreement or
other similar agreement (each, a "Company Acquisition Agreement")
related to any Company Takeover Proposal. Notwithstanding the
foregoing, in the event that the Board of Directors of the Company
determines in good faith, after consultation with outside counsel, that
in light of a Company Superior Proposal it is necessary to do so in
40
order to act in a manner consistent with its fiduciary duties to the
Company's stockholders under applicable law, the Board of Directors of
the Company may (subject to this and the following sentences) terminate
this Agreement in order to concurrently enter into such Company
Acquisition Agreement with respect to a Company Superior Proposal;
PROVIDED, HOWEVER, that the Company may not terminate this Agreement
pursuant to this Section 4.2(b) unless and until (i) three business days
have elapsed following the delivery to Acquiror of a written notice of
such determination by the Board of Directors of the Company and (x) the
Company has delivered to Acquiror the written notice required by Section
4.2(c) below, and (y) during such three business day period, the Company
otherwise cooperates with Acquiror with respect to the Company Takeover
Proposal that constitutes a Company Superior Proposal with the intent of
enabling Acquiror to engage in good faith negotiations so that the
transactions contemplated hereby may be effected and (ii) at the end of
such three business day period the Board of Directors of the Company
continues reasonably to believe that the Company Takeover Proposal
constitutes a Company Superior Proposal. For purposes of this
Agreement, a "Company Superior Proposal" means any proposal made by a
third party to acquire, directly or indirectly, including pursuant to a
tender offer, exchange offer, merger, consolidation, business
combination, recapitalization, liquidation, dissolution or similar
transaction, for consideration consisting of cash and/or securities,
more than 50% of the combined voting power of the shares of Company
Common Stock then outstanding or all or substantially all the assets of
the Company and otherwise on terms which the Board of Directors of the
Company determines in its good faith judgment (based on the advice of a
financial advisor of nationally recognized reputation) to be more
favorable to the Company's stockholders than the Merger and for which
financing, to the extent required, is then committed or which, in the
good faith judgment of the Board of Directors of the Company, is
reasonably capable of being obtained by such third party.
(c) In addition to the obligations of the Company set forth
in paragraphs (a) and (b) of this Section 4.2, the Company shall
immediately advise Acquiror orally and in writing of any request for
information or of any Company Takeover Proposal, the material terms and
conditions of such request or Company Takeover Proposal and the identity
of the person making such request or Company Takeover Proposal. The
Company will keep Acquiror reasonably informed of the status and details
(including amendments and proposed amendments) of any such request or
Company Takeover Proposal.
(d) Nothing contained in this Section 4.2 shall prohibit the
Company from taking and disclosing to its stockholders a position
contemplated by Rule 14e-2(a) promulgated under the Exchange Act or from
making any disclosure to the Company's stockholders if, in the good
faith judgment of the Board of Directors of the Company, after
consultation with outside counsel, failure so to disclose would be
inconsistent with its obligations under applicable law; PROVIDED,
HOWEVER, that, except as expressly permitted by paragraph (a) of this
Section 4.2 in connection with a Company Superior Proposal, neither the
41
Company nor its Board of Directors nor any committee thereof shall
withdraw or modify, or propose publicly to withdraw or modify, its
position with respect to this Agreement or the Merger or approve or
recommend, or propose publicly to approve or recommend, a Company
Takeover Proposal.
Section 4.3 NO SOLICITATION BY ACQUIROR.
(a) Acquiror shall not, nor shall it permit any of its
subsidiaries to, nor shall it authorize or permit any of its directors,
officers or employees or any investment banker, financial advisor,
attorney, accountant or other representative retained by it or any of
its subsidiaries to, directly or indirectly through another person, (i)
solicit, initiate or encourage (including by way of furnishing
information), or take any other action designed to facilitate, any
inquiries or the making of any proposal which constitutes any Acquiror
Takeover Proposal (as defined below) or (ii) participate in any
discussions or negotiations regarding any Acquiror Takeover Proposal;
PROVIDED, HOWEVER, that if, at any time, the Board of Directors of
Acquiror determines in good faith, after consultation with outside
counsel, that it is necessary to do so in order to act in a manner
consistent with its fiduciary duties to Acquiror's stockholders under
applicable law, Acquiror may, in response to an Acquiror Superior
Proposal (as defined in Section 4.3(b)) which was not solicited by it or
which did not otherwise result from a breach of this Section 4.3(a) and
subject to providing prior written notice of its decision to take such
action to the Company (the "Acquiror Notice") and compliance with
Section 4.3(c), following delivery of the Acquiror Notice (x) furnish
information with respect to Acquiror and its subsidiaries to any person
making an Acquiror Superior Proposal pursuant to a customary
confidentiality agreement (as determined by Acquiror after consultation
with its outside counsel) that is no less restrictive than the
Confidentiality Agreement and (y) participate in discussions or
negotiations regarding such Acquiror Superior Proposal. For purposes of
this Agreement, "Acquiror Takeover Proposal" means any inquiry, proposal
or offer from any person relating to any (w) direct or indirect
acquisition or purchase of a business that constitutes 15% or more of
the net revenues, net income or the assets of Acquiror and its
subsidiaries, taken as a whole, (x) direct or indirect acquisition or
purchase of 15% or more of any class of equity securities of Acquiror or
of 15% or more of any class of equity securities of any of its
subsidiaries whose business constitutes 15% or more of the net revenues,
net income or assets of Acquiror and its subsidiaries, taken as a whole,
(y) tender offer or exchange offer that if consummated would result in
any person beneficially owning 15% or more of any class of equity
securities of Acquiror or any of its subsidiaries whose business
constitutes 15% or more of the net revenues, net income or assets of
Acquiror and its subsidiaries, taken as a whole, or (z) merger,
consolidation, business combination, recapitalization, liquidation,
dissolution or similar transaction involving Acquiror or any of its
subsidiaries whose business constitutes 15% or more of the net revenues,
42
net income or assets of Acquiror and its subsidiaries, taken as a whole,
other than the transactions contemplated by this Agreement.
(b) Except as expressly permitted by this Section 4.3,
neither the Board of Directors of Acquiror nor any committee thereof
shall (i) withdraw or modify, or propose publicly to withdraw or modify,
in a manner adverse to the Company, the approval or recommendation by
such Board of Directors or such committee of the Merger, this Agreement
or the issuance of Acquiror Common Stock in connection with the Merger,
(ii) approve or recommend, or propose publicly to approve or recommend,
any Acquiror Takeover Proposal or (iii) cause Acquiror to enter into any
letter of intent, agreement in principle, acquisition agreement or other
similar agreement (each, an "Acquiror Acquisition Agreement") related to
any Acquiror Takeover Proposal. Notwithstanding the foregoing, in the
event that the Board of Directors of Acquiror determines in good faith,
after consultation with outside counsel, that in light of an Acquiror
Superior Proposal it is necessary to do so in order to act in a manner
consistent with its fiduciary duties to Acquiror's stockholders under
applicable law, the Board of Directors of Acquiror may (subject to this
and the following sentences) terminate this Agreement in order to
concurrently enter into such Acquiror Acquisition Agreement with respect
to an Acquiror Superior Proposal; PROVIDED, HOWEVER, that Acquiror may
not terminate this Agreement pursuant to this Section 4.3(b) unless and
until (i) three business days have elapsed following the delivery to the
Company of a written notice of such determination by the Board of
Directors of Acquiror and (x) Acquiror has delivered to the Company the
written notice required by Section 4.3(c) below, and (y) during such
three business day period, Acquiror otherwise cooperates with the
Company with respect to an Acquiror Takeover Proposal that constitutes
an Acquiror Superior Proposal with the intent of enabling the Company to
engage in good faith negotiations so that the transactions contemplated
hereby may be effected and (ii) at the end of such three business day
period the Board of Directors of Acquiror continues reasonably to
believe that the Acquiror Takeover Proposal constitutes an Acquiror
Superior Proposal. For purposes of this Agreement, an "Acquiror
Superior Proposal" means any proposal made by a third party to acquire,
directly or indirectly, including pursuant to a tender offer, exchange
offer, merger, consolidation, business combination, recapitalization,
liquidation, dissolution or similar transaction, for consideration
consisting of cash and/or securities, more than 50% of the combined
voting power of the shares of Acquiror Common Stock then outstanding or
all or substantially all the assets of Acquiror and otherwise on terms
which the Board of Directors of Acquiror determines in its good faith
judgment (based on the advice of a financial advisor of nationally
recognized reputation) to be more favorable to Acquiror's stockholders
than the Merger and for which financing, to the extent required, is then
committed or which, in the good faith judgment of the Board of Directors
of Acquiror, is reasonably capable of being obtained by such third
party.
(c) In addition to the obligations of Acquiror set forth in
paragraphs (a) and (b) of this Section 4.3, Acquiror shall immediately
43
advise the Company orally and in writing of any request for information
or of any Acquiror Takeover Proposal, the material terms and conditions
of such request or Acquiror Takeover Proposal and the identity of the
person making such request or Acquiror Takeover Proposal. Acquiror will
keep the Company reasonably informed of the status and details
(including amendments and proposed amendments) of any such request or
Acquiror Takeover Proposal.
(d) Nothing contained in this Section 4.3 shall prohibit
Acquiror from taking and disclosing to its stockholders a position
contemplated by Rule 14e-2(a) promulgated under the Exchange Act or from
making any disclosure to Acquiror's stockholders if, in the good faith
judgment of the Board of Directors of Acquiror, after consultation with
outside counsel, failure so to disclose would be inconsistent with its
obligations under applicable law; PROVIDED, HOWEVER, that, except as
expressly permitted by paragraph (a) of this Section 4.3 in connection
with an Acquiror Superior Proposal, neither Acquiror nor its Board of
Directors nor any committee thereof shall withdraw or modify, or propose
publicly to withdraw or modify, its position with respect to this
Agreement, the Merger, the issuance of Acquiror Common Stock in
connection with the Merger, or approve or recommend, or propose publicly
to approve or recommend, an Acquiror Takeover Proposal.
ARTICLE 5
ADDITIONAL AGREEMENTS
Section 5.1 PREPARATION OF THE FORM S-4 AND THE JOINT PROXY
STATEMENT; STOCKHOLDERS MEETINGS.
(a) As soon as practicable following the date of this
Agreement, the Company and Acquiror shall prepare and file with the SEC
the Joint Proxy Statement and Acquiror shall prepare and file with the
SEC the Form S-4, in which the Joint Proxy Statement will be included as
a prospectus. Each of the Company and Acquiror shall use reasonable
best efforts to have the Form S-4 declared effective under the
Securities Act as promptly as practicable after such filing. The
Company will use all reasonable best efforts to cause the Joint Proxy
Statement to be mailed to the Company's stockholders, and Acquiror will
use all reasonable best efforts to cause the Joint Proxy Statement to be
mailed to Acquiror's stockholders, in each case as promptly as
practicable after the Form S-4 is declared effective under the
Securities Act. Acquiror shall also take any action (other than
qualifying to do business in any jurisdiction in which it is not now so
qualified or to file a general consent to service of process) required
to be taken under any applicable state securities laws in connection
with the issuance of Acquiror Common Stock in the Merger and the Company
shall furnish all information concerning the Company and the holders of
the Company Common Stock as may be reasonably requested in connection
with any such action. No filing of, or amendment or supplement to, the
Form S-4 will be made by Acquiror or to the Joint Proxy Statement will
44
be made by Acquiror or the Company without providing the other party the
opportunity to review and comment thereon. Acquiror will advise the
Company, promptly after it receives notice thereof, of the time when the
Form S-4 has become effective or any supplement or amendment has been
filed, the issuance of any stop order, the suspension of the
qualification of the Acquiror Common Stock issuable in connection with
the Merger for offering or sale in any jurisdiction, or any request by
the SEC for amendment of the Joint Proxy Statement or the Form S-4 or
comments thereon and responses thereto or requests by the SEC for
additional information. If at any time prior to the Effective Time any
information relating to the Company or Acquiror, or any of their
respective affiliates, officers or directors, should be discovered by
the Company or Acquiror which should be set forth in an amendment or
supplement to any of the Form S-4 or the Joint Proxy Statement, so that
any of such documents would not include any misstatement of a material
fact or omit to state any material fact necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading, the party which discovers such information shall promptly
notify the other party hereto and an appropriate amendment or supplement
describing such information shall be promptly filed with the SEC and, to
the extent required by law, disseminated to the stockholders of the
Company and Acquiror.
(b) The Company shall, as soon as practicable following the
date of this Agreement, duly call, give notice of, convene and hold a
meeting of its stockholders (the "Company Stockholders Meeting") for the
purpose of obtaining the Company Stockholder Approval and shall, through
its Board of Directors, recommend to its stockholders the approval and
adoption of this Agreement, the Merger and the other transactions
contemplated hereby. Without limiting the generality of the foregoing
but subject to its rights pursuant to Section 4.2 and Section 7.1(f),
the Company agrees that its obligations pursuant to the first sentence
of this Section 5.1(b) shall not be affected by the commencement, public
proposal, public disclosure or communication to the Company of any
Company Takeover Proposal.
(c) Acquiror shall, as soon as practicable following the date
of this Agreement, duly call, give notice of, convene and hold a meeting
of its stockholders (the "Acquiror Stockholders Meeting") for the
purposes of obtaining the Acquiror Stockholder Approval and the change
of Acquiror's name to "Newell Rubbermaid Inc." and shall, through its
Board of Directors, recommend to its stockholders the approval of the
issuance of Acquiror Common Stock to be issued pursuant to this
Agreement. Without limiting the generality of the foregoing but subject
to its rights pursuant to Section 4.3 and Section 7.1(d), Acquiror
agrees that its obligations pursuant to the first sentence of this
Section 5.1(c) shall not be affected by the commencement, public
proposal, public disclosure or communication to Acquiror of any Acquiror
Takeover Proposal.
(d) Acquiror and the Company will use all reasonable efforts
to hold the Company Stockholders Meeting and the Acquiror Stockholders
45
Meeting on the same date and as soon as practicable after the date
hereof.
Section 5.2 LETTERS OF THE COMPANY'S ACCOUNTANTS.
(a) The Company shall use reasonable best efforts to cause to
be delivered to Acquiror two letters from the Company's independent
accountants, one dated a date within two business days before the date
on which the Form S-4 shall become effective and one dated a date within
two business days before the Closing Date, each addressed to Acquiror,
in form and substance reasonably satisfactory to Acquiror and customary
in scope and substance for comfort letters delivered by independent
public accountants in connection with registration statements similar to
the Form S-4.
(b) The Company shall use reasonable best efforts to cause to
be delivered to Acquiror and Acquiror's independent accountants two
letters from the Company's independent accountants addressed to Acquiror
and the Company, one dated as of the date the Form S-4 is effective
reporting that, as of the date of the letter, the Company qualifies as a
"combining company" under Opinion 16 of the Accounting Principles Board
and applicable SEC rules and regulations, and one dated as of the
Closing Date reporting that the Merger will qualify as a "pooling of
interests" transaction under Opinion 16 of the Accounting Principles
Board and applicable SEC rules and regulations.
Section 5.3 LETTERS OF ACQUIROR'S ACCOUNTANTS.
(a) Acquiror shall use reasonable best efforts to cause to be
delivered to the Company two letters from Acquiror's independent
accountants, one dated a date within two business days before the date
on which the Form S-4 shall become effective and one dated a date within
two business days before the Closing Date, each addressed to the
Company, in form and substance reasonably satisfactory to the Company
and customary in scope and substance for comfort letters delivered by
independent public accountants in connection with registration
statements similar to the Form S-4.
(b) Acquiror shall use reasonable best efforts to cause to be
delivered to the Company and the Company's independent accountants two
letters from Acquiror's independent accountants addressed to the Company
and Acquiror, one dated as of the date the Form S-4 is effective
reporting that, as of the date of the letter, Acquiror qualifies as a
"combining company" under Opinion 16 of the Accounting Principles Board
and applicable SEC rules and regulations, and one dated as of the
Closing Date reporting that the Merger will qualify as a "pooling of
interests" transaction under Opinion 16 of the Accounting Principles
Board and applicable SEC rules and regulations.
Section 5.4 ACCESS TO INFORMATION; CONFIDENTIALITY. To the
extent permitted by applicable law and subject to the Agreement dated
October 2, 1998, between Acquiror and the Company (the "Confidentiality
46
Agreement"), each of the Company and Acquiror shall, and shall cause
each of its respective subsidiaries to, afford to the other party and to
the officers, employees, accountants, counsel, financial advisors and
other representatives of such other party, reasonable access during
normal business hours during the period prior to the Effective Time to
all their respective properties, books, contracts, commitments,
personnel and records and, during such period, each of the Company and
Acquiror shall, and shall cause each of its respective subsidiaries to,
furnish promptly to the other party (a) a copy of each report, schedule,
registration statement and other document filed by it during such period
pursuant to the requirements of federal or state securities laws and (b)
all other information concerning its business, properties and personnel
as such other party may reasonably request. Any review pursuant to this
Section 5.4 shall be for the purposes of confirming the accuracy of any
representation or warranty contained in this Agreement given by Acquiror
and Merger Sub to the Company, or by the Company to Acquiror and Merger
Sub and facilitating transition planning. Each of the Company and
Acquiror will hold, and will cause its respective officers, employees,
accountants, counsel, financial advisors and other representatives and
affiliates to hold, any nonpublic information in accordance with the
terms of the Confidentiality Agreement.
Section 5.5 REASONABLE BEST EFFORTS; COOPERATION.
(a) Upon the terms and subject to the conditions set forth in
this Agreement, each of the parties agrees to use reasonable best
efforts to take, or cause to be taken, all actions, and to do, or cause
to be done, and to assist and cooperate with the other parties in doing,
all things necessary, proper or advisable to consummate and make
effective, in the most expeditious manner practicable, the Merger and
the other transactions contemplated by this Agreement, including (i) the
obtaining of all necessary actions or nonactions, waivers, consents and
approvals from Governmental Entities and the making of all necessary
registrations and filings and the taking of all steps as may be
necessary to obtain an approval or waiver from, or to avoid an action or
proceeding by, any Governmental Entity, (ii) the obtaining of all
necessary consents, approvals or waivers from third parties, (iii) the
defending of any lawsuits or other legal proceedings, whether judicial
or administrative, challenging this Agreement or the consummation of the
transactions contemplated hereby, including seeking to have any stay or
temporary restraining order entered by any court or other Governmental
Entity vacated or reversed, and (iv) the execution and delivery of any
additional instruments necessary to consummate the transactions
contemplated by, and to fully carry out the purposes of, this Agreement.
Nothing set forth in this Section 5.5(a) will limit or affect actions
permitted to be taken pursuant to Sections 4.2 and 4.3.
(b) In connection with and without limiting the foregoing,
the Company and Acquiror shall (i) take all action necessary to ensure
that no state takeover statute or similar statute or regulation is or
becomes applicable to the Merger, this Agreement or any of the other
transactions contemplated hereby and (ii) if any state takeover statute
47
or similar statute or regulation becomes applicable to the Merger, this
Agreement or any of the other transactions contemplated hereby, take all
action necessary to ensure that the Merger and the other transactions
contemplated hereby may be consummated as promptly as practicable on the
terms contemplated by this Agreement and otherwise to minimize the
effect of such statute or regulation on the Merger and the other
transactions contemplated by this Agreement.
(c) Each of Acquiror and the Company shall cooperate with
each other in obtaining opinions of Schiff Hardin & Waite, counsel to
Acquiror, and Jones, Day, Reavis & Pogue, counsel to the Company, dated
as of the Closing Date, to the effect that the Merger will constitute a
reorganization within the meaning of Section 368(a) of the Code. In
connection therewith, each of Acquiror and the Company shall deliver to
Schiff Hardin & Waite and Jones, Day, Reavis & Pogue customary
representation letters in form and substance reasonably satisfactory to
such counsel and the Company shall obtain any representation letters
from appropriate stockholders and shall deliver any such letters
obtained to Schiff Hardin & Waite and Jones, Day, Reavis & Pogue (the
representation letters referred to in this sentence are collectively
referred to as the "Tax Certificates").
(d) Each of Acquiror and the Company shall consult and
cooperate with the other with respect to significant developments in its
business and shall give reasonable consideration to the other's views
with respect thereto.
(e) Each of Acquiror and the Company shall (i) make the
filings required of such party under the HSR Act with respect to the
Merger and the other transactions contemplated by this Agreement within
ten days after the date of this Agreement, (ii) comply at the earliest
practicable date with any request under the HSR Act for additional
information, documents or other materials received by such party from
the Federal Trade Commission or the Department of Justice or any other
Governmental Entity in respect of such filings or the Merger and the
other transactions contemplated by this Agreement, and (iii) cooperate
with the other party in connection with making any filing under the HSR
Act and in connection with any filings, conferences or other submissions
related to resolving any investigation or other inquiry by any such
Governmental Authority under the HSR Act with respect to the Merger and
the other transactions contemplated by this Agreement.
Section 5.6 STOCK OPTIONS, RESTRICTED STOCK AND EMPLOYMENT
AGREEMENTS.
(a) As of the Effective Time, (i) each outstanding Company
Employee Stock Option shall be converted into an option (an "Adjusted
Option") to purchase the number of shares of Acquiror Common Stock equal
to the number of shares of Company Common Stock subject to such Company
Employee Stock Option immediately prior to the Effective Time multiplied
by the Exchange Ratio (rounded to the nearest whole number of shares of
Acquiror Common Stock), at an exercise price per share equal to the
48
exercise price for each such share of Company Common Stock subject to
such option divided by the Exchange Ratio (rounded down to the nearest
whole cent), and all references in each such option to the Company shall
be deemed to refer to Acquiror, where appropriate, and (ii) Acquiror
shall assume the obligations of the Company under the Company Stock
Plan. The other terms of each Adjusted Option, and the plans or
agreements under which they were issued, shall continue to apply in
accordance with their terms. The date of grant of each Adjusted Option
shall be the date on which the corresponding Company Employee Stock
Option was granted.
(b) To the extent that there are any outstanding awards
(including restricted stock, deferred stock and performance shares)
(each, a "Company Award") under the Company Stock Plan at the Effective
Time, then, as of the Effective Time, (i) each such Company Award shall
be converted into the same instrument of Acquiror, in each case with
such adjustments (and no other adjustments) to the terms of such Company
Awards as are necessary to preserve the value inherent in such Company
Awards with no detrimental effects on the holder thereof and (ii)
Acquiror shall assume the obligations of the Company under the Company
Awards. The other terms of each Company Award, and the plans or
agreements under which they were issued, shall continue to apply in
accordance with their terms.
(c) The Company and Acquiror agree that each of the Company
Stock Plan and Acquiror Stock Plans shall be amended, to the extent
necessary, to reflect the transactions contemplated by this Agreement,
including, but not limited to the conversion of shares of the Company
Common Stock held or to be awarded or paid pursuant to such benefit
plans, programs or arrangements into shares of Acquiror Common Stock on
a basis consistent with the transactions contemplated by this Agreement.
The Company and Acquiror agree to submit the amendments to the Acquiror
Stock Plans or the Company Stock Plan to their respective stockholders,
if such submission is determined to be necessary by counsel to the
Company or Acquiror after consultation with one another; PROVIDED,
HOWEVER, that such approval shall not be a condition to the consummation
of the Merger.
(d) Acquiror shall (i) reserve for issuance the number of
shares of Acquiror Common Stock that will become subject to the benefit
plans, programs and arrangements referred to in this Section 5.6 and
(ii) issue or cause to be issued the appropriate number of shares of
Acquiror Common Stock pursuant to applicable plans, programs and
arrangements, upon the exercise or maturation of rights existing
thereunder on the Effective Time or thereafter granted or awarded. No
later than the Effective Time, Acquiror shall prepare and file with the
SEC a registration statement on Form S-8 (or other appropriate form)
registering a number of shares of Acquiror Common Stock necessary to
fulfill Acquiror's obligations under this Section 5.6. Such
registration statement shall be kept effective (and the current status
of the prospectus required thereby shall be maintained) for at least as
long as Adjusted Options or the Company Awards remain outstanding.
49
(e) As soon as practicable after the Effective Time, Acquiror
shall deliver to the holders of the Company Employee Stock Options and
Company Awards appropriate notices setting forth such holders' rights
pursuant to the Company Stock Plan and the agreements evidencing the
grants of such Company Employee Stock Options and Company Awards and
that such Company Employee Stock Options and Company Awards and the
related agreements shall be assumed by Acquiror and shall continue in
effect on the same terms and conditions (subject to the adjustments
required by this Section after giving effect to the Merger).
(f) Following the Effective Time, (i) Acquiror shall cause
the Surviving Corporation to honor in accordance with their terms all
written employment, severance and other compensation agreements of the
Company and its subsidiaries and (ii) Acquiror shall cause the Surviving
Corporation to provide severance benefits to employees of the Surviving
Corporation in accordance with Section 5.6(f) of the Acquiror Disclosure
Schedule.
Section 5.7 INDEMNIFICATION.
(a) From and after the Effective Time, Acquiror shall, to the
fullest extent not prohibited by applicable law, indemnify, defend and
hold harmless each person who is now, or has been at any time prior to
the date hereof, or who becomes prior to the Effective Time, an officer,
director or employee of the Company or any of its subsidiaries (each, an
"Indemnified Party" and collectively, the "Indemnified Parties") against
(i) all losses, expenses (including reasonable attorneys' fees and
expenses), claims, damages or liabilities or, subject to the proviso of
the next succeeding sentence, amounts paid in settlement, arising out of
actions or omissions occurring at or prior to the Effective Time (and
whether asserted or claimed prior to, at or after the Effective Time)
that are, in whole or in part, based on or arising out of the fact that
such person is or was a director, officer or employee of the Company or
any of its subsidiaries or served as a fiduciary under or with respect
to any employee benefit plan (within the meaning of Section 3(3) of
ERISA) at any time maintained by or contributed to by the Company or any
of its subsidiaries ("Indemnified Liabilities"), and (ii) all
Indemnified Liabilities to the extent they are based on or arise out of
or pertain to the transactions contemplated by this Agreement. In the
event of any such loss, expense, claim, damage or liability (whether or
not arising before the Effective Time), (i) Acquiror shall pay the
reasonable fees and expenses of counsel selected by the Indemnified
Parties, which counsel shall be reasonably satisfactory to Acquiror,
promptly after statements therefor are received and otherwise advance to
such Indemnified Party upon request reimbursement of documented expenses
reasonably incurred, (ii) Acquiror and the Company will cooperate in the
defense of such matter and (iii) any determination required to be made
with respect to whether an Indemnified Party's conduct complies with the
standards set forth under applicable law and the articles of
incorporation or code of regulations shall be made by independent
counsel mutually acceptable to Acquiror and the Indemnified Party;
PROVIDED, HOWEVER, that Acquiror shall not be liable for any settlement
50
effected without its written consent (which consent shall not be
unreasonably withheld or delayed). In the event that any Indemnified
Party is required to bring any action to enforce rights or to collect
moneys due under this Agreement and is successful in such action,
Acquiror shall reimburse such Indemnified Party for all of its expenses
in bringing and pursuing such action. Each Indemnified Party shall be
entitled to the advancement of expenses to the full extent contemplated
in this Section 5.7(a) in connection with any such action. In addition,
from and after the Effective Time, directors and officers of the Company
who become directors or officers of Acquiror will be entitled to
indemnification under Acquiror's Restated Certificate of Incorporation
and Bylaws, as the same may be amended from time to time in accordance
with their terms and applicable law, and to all other indemnity rights
and protections as are afforded to other directors and officers of
Acquiror.
(b) In the event that Acquiror or any of its successors or
assigns (i) consolidates with or merges into any other person and is not
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, then, and in each such case, proper
provision will be made so that the successors and assigns of Acquiror
assume the obligations set forth in this Section 5.7.
(c) For six years after the Effective Time, Acquiror shall
maintain in effect the Company's current directors' and officers'
liability insurance covering acts or omissions occurring prior to the
Effective Time with respect to those persons who are currently covered
by the Company's directors' and officers' liability insurance policy on
terms with respect to such coverage and amount no less favorable than
those of such policy in effect on the date hereof, PROVIDED that
Acquiror may substitute therefor policies of Acquiror or its
subsidiaries containing terms with respect to coverage and amount no
less favorable to such directors or officers; PROVIDED, FURTHER, that in
no event shall Acquiror be required to pay aggregate premiums for
insurance under this Section 5.7(c) in excess of 200% of the aggregate
premiums paid by the Company in 1998 for such purpose; PROVIDED,
FURTHER, that if the annual premiums of such insurance coverage exceed
such amount, Acquiror shall be obligated to obtain a policy with the
best coverage available, in the reasonable judgment of the Board of
Directors of Acquiror, for a cost up to but not exceeding such amount.
In addition, for six years after the Effective Time, Acquiror shall
maintain in effect the Company's current fiduciary liability insurance
policies for employees who serve or have served as fiduciaries under or
with respect to any employee benefit plans described in Section 5.7(a)
with coverages and in amounts no less favorable than those of such
policy in effect on the date hereof.
(d) The provisions of this Section 5.7 (i) are intended to be
for the benefit of, and will be enforceable by, each indemnified party,
his or her heirs and his or her representatives and (ii) are in addition
51
to, and not in substitution for, any other rights to indemnification or
contribution that any such person may have by contract or otherwise.
Section 5.8 FEES AND EXPENSES.
(a) Except as provided in this Section 5.8, all fees and
expenses incurred in connection with the Merger, this Agreement and the
transactions contemplated hereby shall be paid by the party incurring
such fees or expenses, whether or not the Merger is consummated, except
that each of Acquiror and the Company shall bear and pay one-half of the
costs and expenses incurred in connection with the filing, printing and
mailing of the Form S-4 and the Joint Proxy Statement (including SEC
filing fees).
(b) In the event that (i) this Agreement is terminated by the
Company pursuant to Section 7.1(f), then the Company shall promptly, but
in no event later than two days after the date of termination pursuant
to this clause (i), pay Acquiror a fee equal to $140.0 million (the
"Company Termination Fee"), payable by wire transfer of same day funds,
or (ii)(x) a Company Takeover Proposal shall have been made known to the
Company or any of its subsidiaries or has been made directly to its
stockholders generally or any person shall have publicly announced an
intention (whether or not conditional) to make a Company Takeover
Proposal which, in any such case, has not been publicly withdrawn prior
to the Company Stockholders Meeting, (y) thereafter, this Agreement is
terminated by either the Company or Acquiror pursuant to Section
7.1(b)(ii), and (z) within 18 months of such termination the Company or
any of its subsidiaries enters into any Company Acquisition Agreement or
consummates any Company Takeover Proposal (for the purposes of the
foregoing proviso the terms "Company Acquisition Agreement" and "Company
Takeover Proposal" shall have the meanings assigned to such terms in
Section 4.2 except that the references to "15%" in the definition of
"Company Takeover Proposal" in Section 4.2(a) shall be deemed to be
references to "35%" and "Company Takeover Proposal" shall only be deemed
to refer to a transaction involving the Company, or with respect to
assets (including the shares of any subsidiary), the Company and its
subsidiaries, taken as a whole, and not any of its subsidiaries alone),
then the Company shall pay Acquiror the Company Termination Fee, payable
by wire transfer of same day funds, no later than two days after the
first to occur of the execution of a Company Acquisition Agreement or
the consummation of a Company Takeover Proposal. The Company
acknowledges that the agreements contained in this Section 5.8(b) are an
integral part of the transactions contemplated by this Agreement, and
that, without these agreements, Acquiror would not enter into this
Agreement.
(c) In the event that (i) this Agreement is terminated by
Acquiror pursuant to Section 7.1(d), then Acquiror shall promptly, but
in no event later than two days after the date of such termination, pay
the Company a fee equal to $140.0 million (the "Acquiror Termination
Fee"), payable by wire transfer of same day funds, or (ii) (x) an
Acquiror Takeover Proposal shall have been made known to Acquiror or any
52
of its subsidiaries or has been made directly to its stockholders
generally or any person shall have publicly announced an intention
(whether or not conditional) to make an Acquiror Takeover Proposal
which, in any such case, has not been publicly withdrawn prior to the
Acquiror Stockholders Meeting, (y) thereafter, this Agreement is
terminated by either the Company or Acquiror pursuant to Section
7.1(b)(iii), and (z) within 18 months of such termination Acquiror or
any of its subsidiaries enters into any Acquiror Acquisition Agreement
or consummates any Acquiror Takeover Proposal (for the purposes of the
foregoing proviso the terms "Acquiror Acquisition Agreement" and
"Acquiror Takeover Proposal" shall have the meanings assigned to such
terms in Section 4.3 except that the references to "15%" in the
definition of "Acquiror Takeover Proposal" in Section 4.3(a) shall be
deemed to be references to "35%" and "Acquiror Takeover Proposal" shall
only be deemed to refer to a transaction involving Acquiror, or with
respect to assets (including the shares of any subsidiary), Acquiror and
its subsidiaries, taken as a whole, and not any of its subsidiaries
alone), then Acquiror shall pay the Company the Acquiror Termination
Fee, payable by wire transfer of same day funds, no later than two days
after the first to occur of the execution of an Acquiror Acquisition
Agreement or the consummation of an Acquiror Takeover Proposal.
Acquiror acknowledges that the agreements contained in this Section
5.8(c) are an integral part of the transactions contemplated by this
Agreement, and that, without these agreements, the Company would not
enter into this Agreement.
Section 5.9 PUBLIC ANNOUNCEMENTS. Acquiror and the Company
will consult with each other before issuing, and provide each other the
opportunity to review, comment upon and concur with, any press release
or other public statements with respect to the transactions contemplated
by this Agreement, including the Merger, and shall not issue any such
press release or make any such public statement prior to such
consultation, except as either party may determine is required by
applicable law, court process or by obligations pursuant to any listing
agreement with any national securities exchange. The parties agree that
the initial press release to be issued with respect to the transactions
contemplated by this Agreement shall be in the form heretofore agreed to
by the parties.
Section 5.10 AFFILIATES.
(a) Not less than 45 days prior to the Effective Time, the
Company shall deliver to Acquiror a list of names and addresses of each
person who, in the Company's reasonable judgment, is an affiliate within
the meaning of Rule 145 of the rules and regulations promulgated under
the Securities Act or otherwise applicable SEC accounting releases with
respect to pooling of interests accounting treatment (each such person,
a "Pooling Affiliate") of the Company. The Company shall provide
Acquiror such information and documents as Acquiror shall reasonably
request for purposes of reviewing such list. The Company shall deliver
or cause to be delivered to Acquiror, not later than 30 days prior to
the Effective Time, an affiliate letter in the form attached hereto as
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Exhibit 5.10(a), executed by each of the Pooling Affiliates of the
Company identified in the foregoing list. Acquiror shall be entitled to
place legends as specified in such affiliate letters on the certificates
evidencing any of the Acquiror Common Stock to be received by the
Pooling Affiliates of the Company pursuant to the terms of this
Agreement, and to issue appropriate stop transfer instructions to the
transfer agent for the Acquiror Common Stock, consistent with the terms
of such letters.
(b) Not less than 45 days prior to the Effective Time,
Acquiror shall deliver to the Company a list of names and addresses of
each person who, in Acquiror's reasonable judgment is a Pooling
Affiliate of Acquiror. Acquiror shall provide the Company such
information and documents as the Company shall reasonably request for
purposes of reviewing such list. Acquiror shall deliver or cause to be
delivered to the Company, not later than 30 days prior to the Effective
Time, an affiliate letter in the form attached hereto as Exhibit
5.10(b), executed by each Pooling Affiliate of Acquiror identified in
the foregoing list.
Section 5.11 NYSE LISTING. Acquiror shall use its
reasonable best efforts to cause the Acquiror Common Stock issuable to
the Company's stockholders as contemplated by this Agreement to be
approved for listing on the NYSE, subject to official notice of
issuance, as promptly as practicable after the date hereof, and in any
event prior to the Closing Date.
Section 5.12 STOCKHOLDER LITIGATION. Each of the Company
and Acquiror shall give the other the reasonable opportunity to
participate in the defense of any stockholder litigation against the
Company or Acquiror, as applicable, and its directors relating to the
transactions contemplated by this Agreement.
Section 5.13 TAX TREATMENT. Each of Acquiror and the
Company shall use reasonable best efforts to cause the Merger to qualify
as a reorganization under the provisions of Section 368(a) of the Code
and to obtain the opinions of counsel referred to in Sections 6.2(c) and
6.3(c), including, without limitation, forebearing from taking any
action that would cause the Merger not to qualify as a reorganization
under the provisions of Section 368(a) of the Code.
Section 5.14 POOLING OF INTERESTS. Each of the Company and
Acquiror shall use their respective reasonable best efforts to cause the
transactions contemplated by this Agreement, including the Merger, to be
accounted for as a pooling of interests under Opinion 16 of the
Accounting Principles Board and applicable SEC rules and regulations,
and such accounting treatment to be accepted by each of the Company's
and Acquiror's independent certified public accountants, respectively,
and to be accepted by the SEC, and each of the Company and Acquiror
agrees that, notwithstanding any action permitted by Section 4.1(a) or
4.1(b), it will not knowingly take any action that would cause such
accounting treatment not to be obtained.
54
Section 5.15 STANDSTILL AGREEMENTS; CONFIDENTIALITY
AGREEMENTS. During the period from the date of this Agreement through
the Effective Time, neither the Company nor Acquiror shall terminate,
amend, modify or waive any provision of any confidentiality or
standstill agreement to which it or any of its respective subsidiaries
is a party, other than (a) the Confidentiality Agreement, pursuant to
its terms or by written agreement of the parties thereto, (b)
confidentiality agreements under which the Company or Acquiror, as the
case may be, does not provide any confidential information to third
parties or (c) standstill agreements that do not relate to the equity
securities of the Company or any of its subsidiaries or Acquiror or any
of its subsidiaries, as the case may be. During such period, the
Company or Acquiror, as the case may be, shall enforce, to the fullest
extent permitted under applicable law, the provisions of any such
agreement, including by obtaining injunctions to prevent any breaches of
such agreements and to enforce specifically the terms and provisions
thereof in any court of the United States of America or of any state
having jurisdiction.
Section 5.16 EMPLOYEE BENEFIT PLANS.
(a) For a period of at least three years after the Effective
Time but subject to the next sentence, Acquiror shall, or shall cause
the Surviving Corporation and each subsidiary of the Surviving
Corporation to, provide employees of the Company and each subsidiary of
the Company with either benefits that are substantially similar to those
provided under the Company Benefit Plans as of the date hereof or
benefits that are substantially similar to those provided to similarly
situated employees of the Acquiror. For a period of at least one year
after the Effective Time, Acquiror shall, or shall cause the Surviving
Corporation and each subsidiary of the Surviving Corporation to, provide
to each continuing employee of the Company and each subsidiary of the
Company: (i) annual salary compensation in an amount not less than the
annual salary compensation such employee was entitled to receive from
the Company or such subsidiary of the Company immediately prior to the
Effective Time based on such employee's base salary then in effect, and
(ii) payments under incentive bonus and profit sharing plans with
respect to the year ended December 31, 1999, including, without
limitation, the Company's ISP Plan (the "Incentive Compensation"),
based on the greater of: (A) the Incentive Compensation to which such
employee would have been entitled pursuant to the Company's Incentive
Compensation plans in effect immediately prior to the Effective Time, or
(B) the Incentive Compensation to which such employee would be entitled
pursuant to any alternative Incentive Compensation plan as to which such
employee may become entitled to participate, at the option of the
Acquiror, after the Effective Time.
(b) For purposes of (i) eligibility to participate, (ii)
vesting and (iii) eligibility for early retirement under Acquiror's
defined benefit pension plans (but not for benefit accrual or any other
purposes), employees of the Company and its subsidiaries as of the
Effective Time shall receive credit under any employee benefit plan,
55
program or arrangement established or maintained by Acquiror or the
Surviving Corporation or any of its subsidiaries and made available to
such employees for service accrued prior to the Effective Time with the
Company or any of its subsidiaries.
Section 5.17 POST-MERGER OPERATIONS.
(a) For a period of at least two years after the Effective
Time, Acquiror and its subsidiaries shall provide charitable
contributions within the service areas of the Company and its
subsidiaries at levels substantially comparable to the levels of
charitable contributions provided by the Company and its subsidiaries
within the two-year period immediately prior to the Effective Time.
(b) Acquiror and the Company acknowledge that after the
Effective Time and in connection with the integration process Acquiror
will undertake a study of all of the plants and headquarters of Acquiror
and its subsidiaries in an effort to rationalize the operations of
Acquiror and its subsidiaries. Any decision as part of this process
that would materially adversely affect the communities in which the
headquarters of each of the Company's Home, Juvenile, Infant and
Commercial operating divisions are located must be approved or ratified
by the Acquiror Board.
Section 5.18 ACQUIROR CORPORATE OFFICE. Promptly after the
date hereof, Acquiror and the Company will undertake a study to (i)
determine a new location for Acquiror's corporate offices for its senior
executive officers and (ii) develop a timetable pursuant to which the
move of Acquiror's corporation offices for its senior executive officers
to such new location will be effected. The Company and Acquiror
acknowledge that such new location will not be Wooster, Ohio, Freeport,
Illinois or Beloit, Wisconsin.
Section 5.19 ACQUIROR BOARD OF DIRECTORS; ACQUIROR OFFICERS.
(a) Prior to the Effective Time, Acquiror's Board of
Directors (the "Acquiror Board") shall take such action as may be
necessary to cause the number of directors comprising the Acquiror
Board at the Effective Time to be 15 persons, consisting of (i) 9
persons designated by the Chairman of the Nominating Committee of the
Acquiror Board and (ii) 6 persons designated by the Chairman of the
Nominating Committee of the Company Board of Directors ("Company Board")
and reasonably acceptable to the Chairman of the Nominating Committee of
Acquiror. Acquiror shall take such action as may be necessary to cause
such persons to become directors of Acquiror. In furtherance thereof,
Acquiror shall use its reasonable best efforts to obtain the resignation
of such directors of Acquiror as is necessary to permit the Company's
designees to be elected to the Acquiror Board. The initial designation
of the Company's director designees among the three classes of the
Acquiror Board shall be as designated by the Chairman of the Nominating
Committee of Acquiror and reasonably acceptable to the Chairman of the
56
Nominating Committee of the Company. If, prior to the Effective Time,
any Company director designee shall decline or be unable to serve, the
Company shall designate another person to serve in such person's stead.
(b) Effective as of the Effective Time, William P. Sovey
shall be Chairman of the Acquiror Board, John J. McDonough shall be Vice
Chairman of the Acquiror Board and Chief Executive Officer of Acquiror
and Wolfgang R. Schmitt shall be Vice Chairman - Integration and
Strategy of the Acquiror Board, in each case, until the earlier of their
death, resignation or removal or until their respective successors are
duly elected and qualified, as the case may be.
ARTICLE 6
CONDITIONS PRECEDENT
Section 6.1 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT
THE MERGER. The respective obligation of each party to effect the
Merger is subject to the satisfaction or waiver on or prior to the
Closing Date of the following conditions:
(a) STOCKHOLDER APPROVALS. Each of the Company Stockholder
Approval and the Acquiror Stockholder Approval shall have been obtained.
(b) GOVERNMENTAL AND REGULATORY APPROVALS. All consents,
approvals and actions of, filings with and notices to any Governmental
Entity required of the Company, Acquiror or any of their subsidiaries to
consummate the Merger and the other transactions contemplated hereby,
the failure of which to be obtained or taken is reasonably expected to
have a material adverse effect on the Surviving Corporation and its
subsidiaries, taken as a whole, shall have been obtained in form and
substance reasonably satisfactory to each of Acquiror and the Company.
(c) NO INJUNCTIONS OR RESTRAINTS. No judgment, order,
decree, statute, law, ordinance, rule or regulation, entered, enacted,
promulgated, enforced or issued by any court or other Governmental
Entity of competent jurisdiction or other legal restraint or prohibition
(collectively, "Restraints") shall be in effect (i) preventing the
consummation of the Merger, (ii) prohibiting or limiting the ownership
or operation by the Company or Acquiror and their respective
subsidiaries of any material portion of the business or assets of the
Company or Acquiror and their respective subsidiaries taken as a whole,
or compelling the Company or Acquiror and their respective subsidiaries
to dispose of or hold separate any material portion of the business or
assets of the Company or Acquiror and their respective subsidiaries,
taken as a whole, as a result of the Merger or any of the other
transactions contemplated by this Agreement or (iii) which otherwise is
reasonably likely to have a material adverse effect on the Company or
Acquiror, as applicable; PROVIDED, HOWEVER, that each of the parties
shall have used its reasonable best efforts to prevent the entry of any
57
such Restraints and to appeal as promptly as possible any such
Restraints that may be entered.
(d) FORM S-4. The Form S-4 shall have become effective under
the Securities Act and shall not be the subject of any stop order or
proceedings seeking a stop order.
(e) NYSE LISTING. The shares of Acquiror Common Stock
issuable to the Company's stockholders as contemplated by this Agreement
shall have been approved for listing on the NYSE, subject to official
notice of issuance.
(f) POOLING. Each of Acquiror and the Company shall have
received a letter of its independent public accountants, dated as of the
Closing Date, in form and substance reasonably satisfactory, in each
case, to Acquiror and the Company, stating that the Merger will qualify
as a "pooling of interests" transaction under Opinion 16 of the
Accounting Principles Board and applicable SEC rules and regulations.
(g) DISSENTING SHARES. Dissenting Shares shall not exceed 9%
of the shares of Company Common Stock outstanding on the Closing Date.
(h) HSR ACT. The waiting or similar period (including any
extension thereof) applicable to the consummation of the Merger under
the HSR Act and any applicable Foreign Antitrust Law shall have expired
or been terminated.
Section 6.2 CONDITIONS TO OBLIGATIONS OF ACQUIROR. The
obligation of Acquiror to effect the Merger is further subject to
satisfaction or waiver of the following conditions:
(a) REPRESENTATIONS AND WARRANTIES. The representations and
warranties of the Company set forth herein shall be true and correct
both when made and at and as of the Closing Date, as if made at and as
of such time (except to the extent expressly made as of an earlier date,
in which case as of such date), except where the failure of such
representations and warranties to be so true and correct (without giving
effect to any limitation as to "materiality" or "material adverse
effect" set forth therein) would not have, individually or in the
aggregate, a material adverse effect on the Company.
(b) PERFORMANCE OF OBLIGATIONS OF THE COMPANY. The Company
shall have performed in all material respects all obligations required
to be performed by it under this Agreement at or prior to the Closing
Date.
(c) TAX OPINION. Acquiror shall have received from Schiff
Hardin & Waite, counsel to Acquiror, an opinion dated as of the Closing
Date, to the effect that the Merger will constitute a "reorganization"
within the meaning of Section 368(a) of the Code, and Acquiror and the
Company will each be a party to such reorganization within the meaning
58
of Section 368(b) of the Code. In rendering such opinion, counsel for
Acquiror may require delivery of, and rely upon, the Tax Certificates.
(d) NO MATERIAL ADVERSE CHANGE. At any time after the date
of this Agreement there shall not have occurred any material adverse
change relating to the Company; provided that this condition shall no
longer be applicable following Acquiror Stockholder Approval.
Section 6.3 CONDITIONS TO OBLIGATIONS OF THE COMPANY. The
obligation of the Company to effect the Merger is further subject to
satisfaction or waiver of the following conditions:
(a) REPRESENTATIONS AND WARRANTIES. The representations and
warranties of Acquiror set forth herein shall be true and correct both
when made and at and as of the Closing Date, as if made at and as of
such time (except to the extent expressly made as of an earlier date, in
which case as of such date), except where the failure of such
representations and warranties to be so true and correct (without giving
effect to any limitation as to "materiality" or "material adverse
effect" set forth therein) would not have, individually or in the
aggregate, a material adverse effect on Acquiror.
(b) PERFORMANCE OF OBLIGATIONS OF ACQUIROR. Acquiror shall
have performed in all material respects all obligations required to be
performed by it under this Agreement at or prior to the Closing Date.
(c) TAX OPINION. The Company shall have received from Jones,
Day, Reavis & Pogue, counsel to the Company, an opinion dated as of the
Closing Date, to the effect that the Merger will constitute a
"reorganization" within the meaning of Section 368(a) of the Code, and
Acquiror and the Company will each be a party to such reorganization
within the meaning of Section 368(b) of the Code. In rendering such
opinion, counsel for the Company may require delivery of, and rely upon,
the Tax Certificates.
(d) NO MATERIAL ADVERSE CHANGE. At any time after the date
of this Agreement there shall not have occurred any material adverse
change relating to Acquiror; provided that this condition shall no
longer be applicable following the Company Stockholder Approval.
Section 6.4 FRUSTRATION OF CLOSING CONDITIONS. Neither
Acquiror nor the Company may rely on the failure of any condition set
forth in Section 6.1, 6.2 or 6.3, as the case may be, to be satisfied if
such failure was caused by such party's failure to use reasonable best
efforts to consummate the Merger and the other transactions contemplated
by this Agreement, as required by and subject to Section 5.5.
59
ARTICLE 7
TERMINATION, AMENDMENT AND WAIVER
Section 7.1 TERMINATION. This Agreement may be terminated at
any time prior to the Effective Time, whether before or after the
Company Stockholder Approval or the Acquiror Stockholder Approval:
(a) by mutual written consent of Acquiror and the Company;
(b) by either Acquiror or the Company:
(i) if the Merger shall not have been consummated by June 30,
1999; PROVIDED, HOWEVER, that the right to terminate this Agreement
pursuant to this Section 7.1(b)(i) shall not be available to any
party whose failure to perform any of its obligations under this
Agreement results in the failure of the Merger to be consummated by
such time;
(ii) if the Company Stockholder Approval shall not have been
obtained at a Company Stockholders Meeting duly convened therefor
or at any adjournment or postponement thereof,
(iii) if the Acquiror Stockholder Approval shall not have
been obtained at an Acquiror Stockholders Meeting duly convened
therefor or at any adjournment or postponement thereof, or
(iv) if any Restraint having any of the effects set forth in
Section 6.1(c) shall be in effect and shall have become final and
nonappealable; PROVIDED, that the party seeking to terminate this
Agreement pursuant to this Section 7.1(b)(iv) shall have used
reasonable best efforts to prevent the entry of and to remove such
Restraint;
(c) by Acquiror, if the Company shall have breached or failed
to perform in any material respect any of its representations,
warranties, covenants or other agreements contained in this Agreement,
which breach or failure to perform would give rise to a material adverse
change relating to the Company and (A) is not cured within 30 days after
written notice thereof or (B) is incapable of being cured by the
Company;
(d) by Acquiror in accordance with Section 4.3(b); PROVIDED
that, in order for the termination of this Agreement pursuant to this
paragraph (d) to be deemed effective, Acquiror shall have complied with
all provisions contained in Section 4.3, including the notice provisions
therein, and the applicable requirements, including the payment of the
Acquiror Termination Fee, of Section 5.8;
(e) by the Company, if Acquiror shall have breached or failed
to perform in any material respect any of its representations,
warranties, covenants or other agreements contained in this Agreement,
which breach or failure to perform would give rise to a material adverse
change relating to Acquiror and (A) is not cured within 30 days after
written notice thereof or (B) is incapable of being cured by Acquiror; or
60
(f) by the Company in accordance with Section 4.2(b);
PROVIDED that, in order for the termination of this Agreement pursuant
to this Section 7.1(f) to be deemed effective, the Company shall have
complied with all provisions of Section 4.2, including the notice
provisions therein, and the applicable requirements, including the
payment of the Company Termination Fee, of Section 5.8.
Section 7.2 EFFECT OF TERMINATION. In the event of
termination of this Agreement by either the Company or Acquiror as
provided in Section 7.1, this Agreement shall forthwith become void and
have no effect, without any liability or obligation on the part of
Acquiror or the Company, other than the provisions of Section 3.1(o),
Section 3.2(p), the last sentence of Section 5.4, Section 5.8, this
Section 7.2 and Article 8, which provisions survive such termination,
PROVIDED, HOWEVER, that nothing herein shall relieve any party from any
liability for any willful and material breach by such party of any of
its representations, warranties, covenants or agreements set forth in
this Agreement.
Section 7.3 AMENDMENT. This Agreement may be amended by the
parties at any time before or after the Company Stockholder Approval or
the Acquiror Stockholder Approval; PROVIDED, HOWEVER, that after any
such approval, there shall not be made any amendment that by law
requires further approval by the stockholders of the Company or Acquiror
without the further approval of such stockholders. This Agreement may
not be amended except by an instrument in writing signed on behalf of
each of the parties.
Section 7.4 EXTENSION; WAIVER. At any time prior to the
Effective Time, a party may (a) extend the time for the performance of
any of the obligations or other acts of the other party, (b) waive any
inaccuracies in the representations and warranties of the other party
contained in this Agreement or in any document delivered pursuant to
this Agreement or (c) subject to the proviso of Section 7.3, waive
compliance by the other party with any of the agreements or conditions
contained in this Agreement. Any agreement on the part of a party to
any such extension or waiver shall be valid only if set forth in an
instrument in writing signed on behalf of such party. The failure of
any party to this Agreement to assert any of its rights under this
Agreement or otherwise shall not constitute a waiver of such rights.
Section 7.5 PROCEDURE FOR TERMINATION, AMENDMENT, EXTENSION
OR WAIVER. A termination of this Agreement pursuant to Section 7.1
shall, in order to be effective, require, in the case of Acquiror or the
Company, action by its Board of Directors or, with respect to any
amendment to this Agreement, the duly authorized committee of its Board
of Directors to the extent permitted by law.
61
ARTICLE 8
GENERAL PROVISIONS
Section 8.1 NONSURVIVAL OF REPRESENTATIONS AND WARRANTIES.
None of the representations and warranties in this Agreement or in any
instrument delivered pursuant to this Agreement shall survive the
Effective Time. This Section 8.1 shall not limit any covenant or
agreement of the parties which by its terms contemplates performance
after the Effective Time.
Section 8.2 NOTICES. All notices, requests, claims, demands
and other communications under this Agreement shall be in writing and
shall be deemed given if delivered personally, telecopied (which is
confirmed) or sent by overnight courier (providing proof of delivery) to
the parties at the following addresses (or at such other address for a
party as shall be specified by like notice):
(a) if to the Company, to:Rubbermaid Incorporated
1147 Akron Road
Wooster, Ohio 44691
Telecopy No.: (330) 287-2982
Attention: Chief Executive
Officer
with a copy to: Jones, Day, Reavis & Pogue
North Point
901 Lakeside Avenue
Cleveland, Ohio 44114
Telecopy No.: (216) 579-0212
Attention: Lyle G. Ganske,
Esq.
(b) if to Acquiror or
Merger Sub, to Newell Co.
4000 Auburn Street
Rockford, Illinois 61101
Telecopy No.: (815) 969-6106
Attention: General Counsel
with a copy to: Schiff Hardin & Waite
6600 Sears Tower
Chicago, Illinois 60606
Telecopy No.: (312) 258-5600
Attention: Frederick L.
Hartmann, Esq.
Section 8.3 DEFINITIONS. For purposes of this Agreement:
(a) an "affiliate" of any person means another person that
directly or indirectly, through one or more intermediaries, controls, is
controlled by, or is under common control with, such first person, where
"control" means the possession, directly or indirectly, of the power to
direct or cause the direction of the management policies of a person,
whether through the ownership of voting securities, by contract or
otherwise;
62
(b) "knowledge" of any person which is not an individual
means the knowledge of such person's executive officers;
(c) "material adverse change" or "material adverse effect"
means, when used in connection with the Company, Acquiror or Merger Sub,
any change, effect, event, occurrence or state of facts that is, or
would reasonably be expected to be, materially adverse to the business,
financial condition or results of operations of such party and its
subsidiaries taken as a whole, other than any change, effect, event or
occurrence (i) relating to the economy or securities markets of the
United States or any other region in general, (ii) resulting from
entering into this Agreement or the consummation of the transactions
contemplated hereby or the announcement thereof, or (iii) relating to
its business, financial condition or results of operations that has been
disclosed in writing to the other party prior to the date of this
Agreement, and the terms "material" and "materially" have correlative
meanings;
(d) "person" means an individual, corporation, partnership,
limited liability company, joint venture, association, trust,
unincorporated organization or other entity; and
(e) a "subsidiary" of any person means another person, an
amount of the voting securities, other voting ownership or voting
partnership interests of which is sufficient to elect at least a
majority of its Board of Directors or other governing body (or, if there
are no such voting interests, 50% or more of the equity interests of
which) is owned directly or indirectly by such first person.
Section 8.4 INTERPRETATION. When a reference is made in this
Agreement to an Article, Section or Exhibit, such reference shall be to
an Article or Section of, or an Exhibit to, this Agreement unless
otherwise indicated. The table of contents and headings contained in
this Agreement are for reference purposes only and shall not affect in
any way the meaning or interpretation of this Agreement. Whenever the
words "include", "includes" or "including" are used in this Agreement,
they shall be deemed to be followed by the words "without limitation".
The words "hereof", "herein" and "hereunder" and words of similar import
when used in this Agreement shall refer to this Agreement as a whole and
not to any particular provision of this Agreement. All terms defined in
this Agreement shall have the defined meanings when used in any
certificate or other document made or delivered pursuant hereto unless
otherwise defined therein. The definitions contained in this Agreement
are applicable to the singular as well as the plural forms of such terms
and to the masculine as well as to the feminine and neuter genders of
such term. Any agreement, instrument or statute defined or referred to
herein or in any agreement or instrument that is referred to herein
means such agreement, instrument or statute as from time to time
amended, modified or supplemented, including (in the case of agreements
or instruments) by waiver or consent and (in the case of statutes) by
succession of comparable successor statutes and references to all
63
attachments thereto and instruments incorporated therein. References to
a person are also to its permitted successors and assigns.
Section 8.5 COUNTERPARTS. This Agreement may be executed in
one or more counterparts, all of which shall be considered one and the
same agreement and shall become effective when one or more counterparts
have been signed by each of the parties and delivered to the other
parties.
Section 8.6 ENTIRE AGREEMENT: NO THIRD-PARTY BENEFICIARIES.
This Agreement (including the documents and instruments referred to
herein), and the Confidentiality Agreement (a) constitute the entire
agreement, and supersede all prior agreements and understandings, both
written and oral, among the parties with respect to the subject matter
of this Agreement and (b) except for the provisions of Article 2,
Section 5.6 and Section 5.7, are not intended to confer upon any person
other than the parties any rights or remedies.
Section 8.7 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED
BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF OHIO,
REGARDLESS OF THE LAWS THAT MIGHT OTHERWISE GOVERN UNDER APPLICABLE
PRINCIPLES OF CONFLICT OF LAWS THEREOF.
Section 8.8 ASSIGNMENT. Neither this Agreement nor any of
the rights, interests or obligations under this Agreement shall be
assigned, in whole or in part, by operation of law or otherwise by
either of the parties hereto without the prior written consent of the
other party. Any assignment in violation of the preceding sentence
shall be void. Subject to the preceding two sentences, this Agreement
will be binding upon, inure to the benefit of, and be enforceable by,
the parties and their respective successors and assigns.
Section 8.9 CONSENT TO JURISDICTION. Each of the parties
hereto (a) consents to submit itself to the personal jurisdiction of any
federal court located in the State of New York or any New York state
court, in either case located in the Southern District of New York, in
the event any dispute arises out of this Agreement or any of the
transactions contemplated by this Agreement, (b) agrees that it will not
attempt to deny or defeat such personal jurisdiction by motion or other
request for leave from any such court, and (c) agrees that it will not
bring any action relating to this Agreement or any of the transactions
contemplated by this Agreement in any court other than a federal court
sitting in the State of New York or a New York state court, in either
case located in the Southern District of New York.
Section 8.10 HEADINGS. 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.
Section 8.11 SEVERABILITY. If any term or other provision of
this Agreement is invalid, illegal or incapable of being enforced by any
rule of law or public policy, all other conditions and provisions of
64
this Agreement shall nevertheless remain in full force and effect. Upon
such determination that any term or other provision is invalid, illegal
or incapable of being enforced, the parties hereto shall negotiate in
good faith to modify this Agreement so as to effect the original intent
of the parties as closely as possible to the fullest extent permitted by
applicable law in an acceptable manner to the end that the transactions
contemplated hereby are fulfilled to the extent possible.
65
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement and Plan of Merger to be signed by their respective officers
thereunto duly authorized, all as of the date first written above.
RUBBERMAID INCORPORATED
By: /s/ James A. Morgan
--------------------------------------
Name: James A. Morgan
Title: Senior Vice President,
General Counsel and Secretary
NEWELL CO.
By: /s/ William T. Alldredge
--------------------------------------
Name: William T. Alldredge
Title: Vice President
ROOSTER COMPANY
By: /s/ Dale L. Matschullat
--------------------------------------
Name: Dale L. Matschullat
Title: Vice President
EXHIBIT 99.1
------------
[NEWELL LOGO] [RUBBERMAID LOGO]
CONTACTS FOR NEWELL CO.: CONTACTS FOR RUBBERMAID
INCORPORATED:
MEDIA AND INVESTORS: MEDIA:
Names: William T. Alldredge Name: Lorrie Paul Crum
Ross A. Porter, Jr. Phone: (330) 264-6464 Ext. 2970
Phone: (815) 969-6113 INVESTORS:
Name: William H. Pfund
Phone: (330) 264-6464 Ext. 2477
NEWELL AND RUBBERMAID IN $14 BILLION COMBINATION
CREATES CONSUMER PRODUCTS POWERHOUSE
FREEPORT, IL and WOOSTER, OH -- October 21, 1998 -- Newell Co. [NYSE,
CSE: NWL] and Rubbermaid Incorporated [NYSE: RBD] today announced that
they have approved a definitive agreement to merge through a tax-free
exchange of shares valued at approximately $5.8 billion. The combined
company, which will be called Newell Rubbermaid Inc., combines the
powerful brand franchises of Rubbermaid with the exceptional financial
performance and superior customer service of Newell. Newell Rubbermaid
would have pro forma 1998 sales in excess of $6 billion and a total
equity market capitalization of approximately $14 billion. The
transaction, which is expected to close in early 1999, will be accounted
for as a pooling of interests and is anticipated to be accretive to
earnings on a full year basis in 2000.
The merger agreement, which has been approved unanimously by the boards
of directors of both companies, calls for Rubbermaid shareholders to
receive 0.7883 shares of Newell common stock for each share of
Rubbermaid common stock they own. Based on the closing stock price of
Newell on October 20, 1998, this represents $38.68 per Rubbermaid share
or a premium of 49% over Rubbermaid's closing stock price of $25.88.
Newell will issue approximately 118 million shares of common stock to
Rubbermaid stockholders and will assume approximately $500 million in
net debt. Rubbermaid stockholders will own approximately 40% of the
combined company.
Newell Rubbermaid will have leading brand names in housewares, hardware
and home furnishings, office, infant/juvenile and commercial products.
Its roster of leading brands will include Rubbermaid(TM), Anchor
Hocking(TM), Calphalon(TM), Century(TM), Curver(TM), Goody(TM),
Graco(TM), Kirsch(TM), Levolor(TM), Little Tikes(TM), Mirro(TM),
Rolodex(TM) and Sanford(TM). These brands offer a full palette of
internal and acquisition growth opportunities on a global basis.
"Rubbermaid and Newell are a terrific strategic fit," said John J.
McDonough, vice chairman and chief executive officer of Newell. "The
Rubbermaid brands are universally recognized and synonymous with value
for customers. Their reputation for innovation and new product
development is legendary. In addition, they bring us further breadth of
distribution, increased shelf space and an enhanced presence in Europe.
This combination is totally consistent with our strategy and we are
fully confident in our ability to integrate Rubbermaid into our
operating and customer service systems. Newell Rubbermaid will be a
company with great global strengths, enhanced internal growth prospects
and broader acquisition opportunities."
"Newell is the ideal strategic partner for Rubbermaid," said Wolfgang R.
Schmitt, chairman and chief executive officer of Rubbermaid. "No one
manages the blocking and tackling of consumer products customer service
better than Newell. Their disciplines and systems are exactly what we
need if we're to optimize the value of our brands and innovations. This
transaction provides superior value for our shareholders and we look
forward to working with the Newell team to realize the major upside
potential stemming from the power of this combination. In the
competitive arena of global retailers, together we will be an invaluable
resource to our customers and create exciting new products for
consumers."
Once the transaction has been completed, Newell will begin the
systematic process of integrating Rubbermaid operations and practices
through the process, known colloquially, as "Newellization." This
process is intended to produce 98% on-time and line-fill performance and
a minimum 15% pretax profit margin. As a result, the company intends to
meaningfully improve Rubbermaid operating efficiency and margins. The
companies also expect that the merger will create revenue and operating
synergies through the leveraging of the Newell Rubbermaid brands;
innovative product development; improved service performance; stronger
combined presence in dealing with common customers; broader acquisition
opportunities; and increased ability to serve European markets. By
2000, these efforts and opportunities are expected to produce increases
over anticipated 1998 results of $300 million to $350 million in
operating income for the combined company.
William P. Sovey, chairman of the board of Newell, will become chairman
of Newell Rubbermaid. Mr. John J. McDonough, vice chairman and chief
executive officer of Newell, will become vice chairman and chief
executive officer of Newell Rubbermaid, and Mr. Wolfgang R. Schmitt,
chairman and chief executive officer of Rubbermaid, will become vice
chairman of Newell Rubbermaid. The Newell Rubbermaid board of directors
will consist of fifteen members, nine representing Newell and six
representing Rubbermaid, reflecting the respective ownership of the
company.
The transaction is subject to normal regulatory approvals and to the
approval of Rubbermaid and Newell shareholders. Newell expects to
continue its current $0.18 per share quarterly dividend on the shares of
the combined company.
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Robert W. Baird & Co. Incorporated acted as financial advisor and
provided a fairness opinion to Newell. Goldman, Sachs & Co. acted as
financial advisor and provided a fairness opinion to Rubbermaid.
Rubbermaid Incorporated, headquartered in Wooster, Ohio, is a multi-
national, leading-brand manufacturer and marketer of high-quality,
innovative products, including Rubbermaid consumer and commercial
products; Little Tikes(TM) traditional toys and commercial play systems,
and Graco(TM) and Century(TM) infant furnishings. The company employs
about 12,000 people around the world.
Based in Freeport, Illinois, Newell Co. is a multi-national manufacturer
and marketer of high-volume staple consumer products with 1997 sales
exceeding $3 billion and net income of almost $300 million. Their
products are sold through a variety of retail and wholesale distribution
channels. Product groups include hardware and home furnishings,
including Amerock(TM) cabinet hardware, Bulldog(TM) home hardware, EZ
Paintr(TM) paint applicators, BernzOmatic(TM) torches, Kirsch(TM),
Levolor(TM) and Newell(TM) window treatments, Intercraft(TM),
Decorel(TM) and Holson Burnes(TM) picture frames and LeeRowan home
storage; housewares, including Mirro(TM), WearEver(TM), Panex(TM) and
Calphalon(TM) cookware, Anchor Hocking(TM) glassware and Goody hair
accessories; and office products such as Sanford(TM), Berol(TM),
Eberhard Faber(TM) and rotring writing instruments and Eldon(TM) and
Rolodex(TM) office storage and organization products. The company has
approximately 32,000 employees.
# # #
The statements contained in this press release that are not historical
in nature are forward-looking statements. Forward-looking statements
are not guarantees since there are inherent difficulties in predicting
future results, and actual results could differ materially from those
expressed or implied in the forward-looking statements. These factors
include, without limitation, those disclosed in the Form 10-K filings
with the Securities and Exchange Commission for Rubbermaid and Newell.
Note to editors: today's news release, along with the other news about
Newell and Rubbermaid, is available on the Internet at
http://www.newellco.com and http://www.rubbermaid.com.
Abernathy MacGregor Frank Fax-on-Demand service at (800) 281-3244 is
available to send the following documents:
Press Release . . . . . . . . . . . . . . . . . . . . . . . . . . . #460
Newell Co. Fact Sheet . . . . . . . . . . . . . . . . . . . . . . . #461
Rubbermaid Incorporated Fact Sheet . . . . . . . . . . . . . . . . #462
Bios . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . #463
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